DEBIT AND CREDIT

• THE T-ACCOUNT

• BUSINESS TRANSACTIONS CAUSE INCREASES AND DECREASES IN THE

ACCOUNTING VALUES. TO RECORD THESES CHANGES, A BUSINESS FIRM
MAKES USE OF ACCOUNTS.

• AN ACCOUNT IS AN ACCOUNTING DEVICE USED TO SUMMARIZE THE

INCREASES AND DECREASES IN THE ASSET, LIABILITY, PROPRIETORSHIP,
INCOME, AND EXPENSES OF THE BUSINESS.
• A SIMPLE FORM OF ACCOUNT LOOKS LIKE A BIG LETTER “T,” THUS IT IS CALLED
A “T-ACCOUNT”. IT HAS A LEFT SIDE AND A RIGHT SIDE. IT APPEARS AS
FOLLOWS:
NAME OF THE ITEM
LEFT SIDE RIGHT SIDE

THE LEFT SIDE OF A T-ACCOUNT IS THE DEBIT (DR) SIDE AND THE RIGHT SIDE
IS THE CREDIT (CR) SIDE.
“TO DEBIT” IS TO ENTER THE AMOUNT ON THE
LEFT SIDE OF A T-ACCOUNT AND “TO CREDIT” IS
TO ENTER ON THE RIGHT SIDE OF A T-
ACCOUNT.
THE AMOUNTS ENTERED ON THE LEFT SIDE OF A
T-ACCOUNT ARE “DEBITS” AND THOSE ON THE
RIGHT SIDE ARE “CREDITS”.
•“TO DEBIT” AND “TO CREDIT”, HOIWEVER SHOULD
NOT BE CONFUSED WITH “TO INCREASE” AND TO
DECREASE”.

• TO DEBIT AND TO CREDIT MAY MEAN EITHER A

DECREASE OR AN INCREASE DEPENDING ON THE
ACCOUNTS AFFECTED. THUS, THE RULE OF DEBIT
AND CREDIT IS AS FOLLOWS:
 DEBIT TO:
1. INCREASE ASSETS
2. DECREASE LIABILITIES
3. DECREASE PROPRIETORSHIP DUE TO:
A. WITHDRAWAL OF ASSET BY THE OWNER
B. INCREASE IN EXPENSES & LOSSES
C. DECREASE IN INCOME
CREDIT TO:
1. DECREASE ASSETS
2. INCREASE LIABILITIES
3. INCREASE PROPRIETORSHIP DUE TO:
A. INVESTMENT BY THE OWNER
B. DECREASE IN EXPENSES & LOSSES
C. INCREASE IN INCOME
2019 – JUNE

1 - MISS VON DR CR
INVESTED P300K CASH 300,000
IN THE BUSINESS. VON, CAPITAL 300,000
TO RECORD INITIAL INVESTMENT
2- PURCHASED TABLES
AND CHAIRS, P23K
AND PLAY
DR CR
EQUIPMENT FOR P47K
FROM ALMAR FURNITURE & FIXTURE 23,000
NURSERY AND HOME PLAY EQUIPMENT 47,000
FURNITURE AND ACCOUNTS PAYABLE 70,000
EQUIPMENT ON
TO RECORD PURCHASED OF
CREDIT.
CHAIRS, TABLES, & EQUIPMENT
4- PAID 12K CASH
TO A LOCAL
NEWSPAPER FOR DR CR
ADVERTISING OF ADVERTISING 12,000
THE OPENING OF CASH 12,000

THE NURSERY TO RECORD PAYMENT TO LOCAL

NEWSPAPER FOR ADVERTISING THE
SCHOOL
OPENING OF THE SCHOOL.
5 – PURCHASED
NURSERY
SUPPLIES FROM DR CR
LEO NURSERY NURSERY SUPPLIES 7,500
SUPPLIES ON ACCOUNTS PAYABLE 7,500
CREDIT P7.5K TO RECORD PURCHASED OF NURSERY
SUPPLIES ON ACCOUNT
7–
RECEIVED
DR CR
P8K FROM A
CASH 8,000
CLIENT FEES INCOME 8,000
TO RECORD CASH RECEIVED FROM
SERVICES RENDERED
8 – PAID P10K TO
ALMAR NURSERY
AND HOME
FURNITURE AND DR CR
EQUIPMENT ACCOUNTS PAYABLE 10,000
PARTIAL CASH 10,000
SETTLEMENT OF THE TO RECORD PARTIAL PAYMENT TO
ACCOUNT ALMAR NURSERY AND HOME
FURNITURE & EQUIPMENT
10 – SENT A BILL
TO P.PALOMA
DR CR
FOR FEES
ACCOUNTS RECEIVABLE 6,500
AMOUNTING TO
FEES INCOME 6,500
P6.5K
TO RECORD SERVICES RENDERED
ON ACCOUNT TO P.PALOMA
11 – PAID LEO
NURSERY
DR CR
SUPPLIES THE ACCOUNTS PAYABLE 7,500
FULL AMOUNT CASH 7,500
DUE TO IT TO RECORD FULL PAYMENT TO LEO
NURSERY SUPPLIES
15- PAID THE
MONTHLY RENT DR CR

OF THE SPACE RENT EXPENSE 10,000

CASH 10,000
P10K.
TO RECORD PAYMENT OF
MONTHLY RENTAL
15- PAID THE
WAGES OF THE DR CR

NURSERY HELPER, WAGES 5,000

CASH 5,000
P5K.
TO RECORD PAYMENT OF
HELPER’S WAGES
18- COLLECTED P3K
FROM P.PALOMA
AS PARTIAL DR CR

SETTLEMENT OF CASH 3,000

HER ACCOUNT. ACCOUNTS RECEIVABLE 3,000

TO RECORD PARTIAL PAYMENT
FROM P.PALOMA
20-RECEIVED
P50.5K FROM DR CR

VARIOUS CASH 50,500

FEES INCOME 50,500
CUSTOMERS.
TO RECORD CASH RECEIVED
FROM VARIOUS CLIENTS
25-PAID UTILITY
BILLS FOR THE
DR CR
MONTH, P1.8K UTILITY EXPENSE 1,800
CASH 1,800
TO RECORD PAYMENT OF
MONTHLY UTILITY BILLS
26- PURCHASED
ADDITIONAL
NURSERY DR CR

SUPPLIES FOR NURSERY SUPPLIES 15,000

CASH 15,000
CASH, P15K
TO RECORD PURCHASED OF
ADDITIONAL SUPPLIES
28- WITHDRAW
DR CR
P5K FOR
VON, CAPITAL 5,000
PERSONAL USE.
CASH 5,000
TO RECORD WITHDRAWAL OF
THE OWNER FOR PERSONAL USE
30- PAID THE
DR CR
WAGES OF THE
WAGES 5,000
NURSERY
CASH 5,000
HELPER, P5K TO RECORD PAYMENT OF
HELPER’S WAGES