and now let's finally make journal entries
we remember the accounting cycle in the days before the computer involved several steps before
we could find our accumulated totals in the trial balance now with the computer we can go directly
from the journal and it will automatically post the transactions foot the accounts and copy the
results to the trial balance in a split second so all those previous steps we learned about in the
prior video happen immediately so all we have to do is record the transaction in the journal and
the results change in the trial balance like that so if you are using quickbooks online this is
the window that you would enter the transaction in and then the accounts would change immediately
in your quickbooks online trial balance and i'm going to demonstrate this in quickbooks online
if you're using QuickBooks desktop this would be the window that you would record the debits and
credits of a journal entry and again in QuickBooks desktop the results in the trial balance would
be updated immediately so first we will do these transactions with QuickBooks desktop and we
will do the same transactions as before let's get prepared I have my QuickBooks desktop with a
blank general company open and for those of you who are new to QuickBooks you would open the trial
balance by clicking reports accountant and taxes trial balance and for those of you who are new
to my class we always change the date range to all transactions regardless of date and I'm going
to change the shape so we can put it here and put next to this window the window that we actually
record the journal entries in from the main menu click company make journal entry and then
this little pop up don't worry about assigning numbers just click the don't bother me box and
click OK now you can't see much of this window unless you double click the words in the ribbon
to collapse the ribbon now the top half looks a little bit more like the general journal that we
learned about and let's read our transactions and remember as soon as we record the transaction
in the journal it will automatically post the accumulated results to the trial balance now let's
do the same transactions that we did earlier in the course except now we'll do them on QuickBooks
let's imagine on January 1 of 2025 the owner invested $50,000 cash into the business if you
learn your debits and credits properly you would know that that would be $50,000 cash debit and
$50,000 owners capital credit first we put in the correct date by clicking the date box and going
forward or backward or even typing it in manually you should remove this checkmark because this is
not an adjusting entry we will talk about those a little bit later to record a journal entry in
QuickBooks desktop click directly under the word account then click the pull down arrow and choose
the account you want to debit I choose cash in Chase Bank and on the same row as that account I
click under the word debit and type in the $50,000 if I keep clicking tab or pushing the tab key you
will see that most software finishes the journal entry for you by trying to balance it out in other
words QuickBooks knows that there has to be a 50,000 dollar credit somewhere and that account is
owners capital so this is the way that debit and credit would look like in the general journal cash
and bank debit owners capital credit now before we save it the trial balance is blank but when I
click Save and close you can see the numbers show up for the first time on the trial balance cash
in Chase Bank 50,000 and owners capital 50,000 now let's imagine that on January 5th we pay 20,000
more for more equipment if you studied your debits and credits properly that would be equipment debit
and cash credit so company make general journal entry okay the date is January 5th of 2025 this is
our second entry it's not an adjusting entry and the account that will be debit will be equipment
and the amount will be 20,000 keep pushing the tab key and the credit or in the row of credit the
other account is cash because we know that if we pay cash and get equipment its equipment debit
cash credit now here's the question what will the results be after I save this transaction well
cash right now is 50,000 so if I make a credit of 20,000 what do you think the result would be
that's right the result would be 30,000 what about this what do you think the equipment would be well
equipment distorting it's zero so if I save this equipment should show up for the first time as
twenty thousand save and close and don't worry about this just click the don't bother me box
click OK aha cash went down to thirty thousand exactly as we expected and equipment showed up
in the trial balance for the first time as twenty thousand what about this one January 10 the owner
took home equipment worth $5,000 and he's not using it for business anymore well if you studied
your debits and credits you would know that that would be equipment credit and owners withdrawals a
debit again we click company make general journal entry in this case the date is on the tenth and
this is our third such journal entry I'm gonna double click here so we can see it nicely and now
I'm going to choose owners withdrawals debit and put in the row of debit five thousand and I'm
gonna tab over until it puts a credit of five thousand and I'm gonna credit equipment now here's
the question can you predict the results what will equipment become well equipment right now is
twenty thousand so for decreasing it by five thousand it should become fifteen thousand if we
did this right and what will withdrawals become well withdrawals will show up for the first time
here as five thousand save and close aha equipment is down to fifteen thousand and owners withdrawals
is five thousand on the debit side it means we recorded the transaction correctly what about this
one January 15th we borrowed thirty five thousand from the bank what will cash become well right now
cash is only 30,000 so if we borrow more from the bank we'll have more cash so if we record this
transaction properly cash and bank will become 65,000 and bank loan will show up for the first
time in the trial balance so we change the date to the 15th and we make a debit to cash and bank
for the 35,000 because we learned that when cash increases it's a debit and the balancing credit is
here bank loan and when I click Save and close the numbers are exactly as we expected cash becomes
65,000 and bank loan shows up for the first time as 35,000 now we'll do a transaction that would
absolutely require a journal entry what if on January 20 the owner invested a vehicle worth
twenty five thousand into the business what would be debit and what would be credit well we
know capital would be credit because the owner invested in asset and capital right now has a
credit balance of fifty thousand so if the owner invests another twenty five thousand an asset
that's right capital will become seventy five thousand and vehicle will show up for the first
time in the trial balance so from the main menu company make journal entry this time the date is
January 20 and the account that's debit is the new asset that we are getting vehicle and we said that
the vehicles are twenty five thousand or at least they're worth twenty five thousand at the moment
the owner invests it into the company and because the asset came from the owner the owner now has
more capital and we make a credit to capital to increase the owners capital when we click Save and
close capital became the number that we expected it to become and therefore we recorded the journal
entry properly now here's one that you might not need to make a journal entry for but it is one we
learned before 3000 to decrease the bank loan well if this account represents what the bank loan is
now and what we owe if we decrease it what will it become if we record this properly it should become
30 mm and what will cash become well if we pay to decrease the bank loan cash will decrease by 3,000
and it will become 62,000 so we're up to January 25th and we know that it will be cash credit
because we are giving cash so cash and Chase Bank credit by the 3,000 and we know that we're
decreasing the bank loan and the bank loan is a liability so it will be bank loan debit now when
we click Save and close the results are exactly as what we expected the bank loan became 32,000
and cash and Bank became 62,000 let's finish with a transaction that you would definitely
need to make a journal entry for let's imagine on January 27th we borrowed 17,000 more from the
bank and bought equipment that would be the same thing as just taking the equipment and assuming
alone in that case you have more equipment but you also have a higher balance or more of a bank
loan so we know that would be equipment debit and bank loan credit so company make journal entry
and this one is on January 30th and it will be equipment debit for the 17,000 and it will be bank
loan credit can you predict what the results will be well let's see if equipment goes up if bank
loan goes up by 17,000 bank loan should become 49,000 because bank loan is 32,000 right now
and if equipment goes up by 17,000 equipment should become 32,000 because these are the numbers
for equipment and bank loan before I click Save and when I click Save and close you can see the
numbers are exactly as what we predicted bank loan is 49,000 and equipment is 32,000 don't forget to
watch the quickbooks online version of this video
