Table 3.1
Business transactions and the double entry
Business eventTransactionSource
documentAccountsaffectedType ofaccountIncrease ordecreaseInstall new equipment forproductionBuy equipment for cash£25,000ChequeEquipmentBankAssetAssetIncrease £25,000Decrease £25,000Receive stock of goods forresalePurchase stock on credit£15,000Invoice fromsupplierInventoryCreditorAssetLiabilityIncrease £15,000Increase £15,000Pay weekly wagesPay wages £3,000ChequeWagesBankExpenseAssetIncrease £3,000Decrease £3,000Sell goods to customer fromstockSell stock on credit £9,000Invoice to customerDebtorsSalesAssetIncomeIncrease £9,000Increase £9,000Deliver goods from stockThe goods that were sold for£9,000 cost £4,000 to buyGoods delivery noteCost of SalesInventoryExpenseAssetIncrease £4,000Decrease £4,000AdvertisingPay £1,000 for advertisingChequeAdvertisingBankExpenseAssetIncrease £1,000Decrease £1,000Receive payment fromcustomer for earlier sale oncreditReceive £4,000 from debtorBank depositBankDebtorAssetAssetIncrease £4,000Decrease £4,000Pay supplier for goodspreviously bought on creditPay £9,000 to creditorChequeBankCreditorAssetLiabilityDecrease £9,000Decrease £9,000