14. Sample Transactions
The key to doing transactions is to understand Account Normal Balances Debit (DR) or Credit (CR) and the effect on the Normal Balance of the accounts. A summary is included below.
The next is to know that total Debits = total Credits in transactions.
For a simple journal entry, one Debit = one Credit.
Account Numbering and Normal Balances
| Numbering | Account Type | Normal Balance | Balance Change |
| 100’s or 1000’s | Assets | Debit (DR) | DR increases, CR decreases |
| 200’s or 2000’s | Liability | Credit (CR) | CR increases, DR decreases |
| 300’s or 3000’s | Capital | Credit (CR) | CR increases, DR decreases |
| 400’s or 4000’s | Income | Credit (CR) | CR increases, DR decreases |
| 500+’s or 5000+’s | Expense | Debit (DR) | DR increases, CR decreases |
Sample Entries
- Bank Deposit - Accounts Receivable
- Sale > Non-Inventory
- Purchase > Inventory Item
- Adjusting Journal Entries
Bank Deposit - Accounts Receivable
You received a payment 'on account' for $300 to deposit in the bank.
| Number | Account | DR | CR |
| 1100 | Bank | 300.00 | |
| 1400 | Accounts Receivable | 300.00 |
You made a sale not involving an inventory item.
| Number | Account | Description | DR | CR |
| 1400 | Accounts Receivable | ABC Company | 107.00 | |
| 4000 | Sales | Software Consulting | 100.00 | |
| 2200 | Sales Tax Payable | Software Consulting | 7.00 |
You made a Purchase involving an inventory item.
| Number | Account | Description | DR | CR |
| 1300 | Inventory | Acme Company | 200.00 | |
| 5300 | Shipping Expense | Acme Company | 20.00 | |
| 5350 | Tax Expense | Acme Company | 15.40 | |
| 2000 | Accounts Payable | Acme Company | 235.40 |
You made an error involving tax. The following example shows on
paper the results, but the software is handled differently.
| Number | Account | Description | DR | CR |
| 5350 | Tax Expense | Original entry | 15.40 | |
| 5350 | Accounts Payable | Correct entry | 15.40 | |
| 5350 | Accounts Payable | New entry | 15.70 |
To Reverse an entry in HOME BOOKS software right click on the DR or CR entry field
to get the following option.
Click to set the value to zero. Change the value to the correct entry.
Wrong Account Used: If the correct was due to using the wrong account, then use the method
above to zero the original entry, select the correct account and input
the correct amount.