# APPENDIX 23: A DEBIT/CREDIT ACCOUNTING SYSTEM

The main section of this reading presented a basic accounting system represented as a spreadsheet. An alternative system that underlies most manual and electronic accounting systems uses debits and credits. Both a spreadsheet and a debit/credit system are based on the basic accounting equation:

Assets = Liabilities + Owners’ equity

Early generations of accountants desired a system for recording transactions that maintained the balance of the accounting equation and avoided the use of negative numbers (which could lead to errors in recording). The system can be illustrated with T-accounts for every account involved in recording transactions. The T-account is so named for its shape:

T-Account
DebitCredit

The left-hand side of the T-account is called a “debit,” and the right-hand side is termed a “credit.” The names should not be construed as denoting value. A debit is not better than a credit and vice versa. Debit simply means the left side of the T-account, and credit simply means the right side. Traditionally, debit is abbreviated as “DR,” whereas credit is abbreviated “CR.” The T-account is also related to the balance sheet and accounting equation as follows:

Balance Sheet
AssetsLiabilities
Owners’ Equity

Assets are referred to as the left side of the balance sheet (and accounting equation) and hence are on the left side of the T-account. Assets are, therefore, recorded with a debit balance. In other words, to record an increase in an asset, an entry is made to the left-hand side of a T-account. A decrease to an asset is recorded on the right side of a T-account. Liabilities and owners’ equity are referred to as the right side of the balance sheet (and accounting equation). Increases to liabilities and owners’ equity are recorded on the right side of a T-account; decreases to liabilities and owners’ equity are recorded on the left side.

At any point in time, the balance in an account is determined by summing all the amounts on the left side of the account, summing all the amounts on the right side of the account, and calculating the difference. If the sum of amounts on the left side of the account is greater than the sum of amounts on the right side of the account, the account has a debit balance equal to the difference. If the sum of amounts on the right side of the account is greater than the sum of amounts on the left side of the account, the account has a credit balance.

A T-account is created for each asset account, liability account, and owners’ equity account. The collection of these T-accounts at the beginning of the year for a fictitious company, Investment Advisers, Ltd. (IAL), is presented in Exhibit 1. Each balance sheet T-account is termed a “permanent” or “real” account because the balance in the account carries over from year-to-year.

Exhibit 1. Balance Sheet T-Accounts for Investment Advisers, Ltd.
Cash Accounts Receivable Inventory
Investments Office Equipment Accumulated Depreciation
Deposits Prepaid Rent Accounts Payable
Accrued Wages Unearned Fees Bank Debt
Accrued Interest Contributed Capital Retained Earnings

T-accounts are also set up for each income statement account. These T-accounts are referred to as “temporary” or “nominal” accounts because they are transferred at the end of each fiscal year by transferring any net income or loss to the balance sheet account, Retained Earnings. Income statement T-accounts for IAL are presented in Exhibit 2.

Exhibit 2. Income Statement T-Accounts for Investment Advisers, Ltd.
Fee Revenue Book Sales Revenue Investment Income
Cost of Goods Sold Advertising Expense Rent Expense
Depreciation Expense Wage Expense Interest Expense

The collection of all business transactions sorted by account, real and temporary, for a company comprise the general ledger. The general ledger is the core of every accounting system, where all transactions are ultimately entered. To illustrate the use of T-accounts, we will use the transactions for IAL summarized in Exhibit 3. We will first enter each transaction into the general ledger T-accounts, then use the information to prepare financial statements.

131 December 2005
• File documents with regulatory authorities to establish a separate legal entity. Initially capitalize the company through deposit of $150,000 from the three owners. 22 January 2006 • Set up a$100,000 investment account and purchase a portfolio of equities and fixed-income securities.

32 January 2006
• Pay $3,000 to landlord for office/warehouse.$2,000 represents a refundable deposit, and $1,000 represents the first month’s rent. 43 January 200 • Purchase office equipment for$6,000. The equipment has an estimated life of two years with no salvage value.

53 January 2006
• Receive $1,200 cash for a one-year subscription to the monthly newsletter. 610 January 2006 • Purchase and receive 500 books at a cost of$20 per book for a total of $10,000. Invoice terms are that payment from IAL is due in 30 days. No cash changes hands. These books are intended for resale. 710 January 2006 • Spend$600 on newspaper and trade magazine advertising for the month.

815 January 2006
• Borrow $12,000 from a bank for working capital. Interest is payable annually at 10 percent. The principal is due in two years. 915 January 2006 • Ship first order to a customer consisting of five books at$25 per book. Invoice terms are that payment is due in 30 days. No cash changes hands.

1015 January 2006
• Sell for cash 10 books at $25 per book at an investment conference. 1130 January 2006 • Hire a part-time clerk. The clerk is hired through an agency that also handles all payroll taxes. The company is to pay$15 per hour to the agency. The clerk works six hours prior to 31 January, but no cash will be paid until February.

1231 January 2006
• Mail out the first month’s newsletter to customer. This subscription had been sold on 3 January. See item 5.

1331 January 2006
• Review of the investment portfolio shows that $100 of interest income was earned and the market value of the portfolio has increased by$2,000. The balance in the investment account is now $102,100. Securities are classified as “trading” securities. Because this is a new business, the company’s general ledger T-accounts initially have a zero balance. 31 December 2005 (excerpt from Exhibit 3) #Business ActivityAccounting Treatment 1 • File documents with regulatory authorities to establish a separate legal entity. Initially capitalize the company through deposit of$150,000 from the three owners.

• Cash [A] is increased by $150,000, and contributed capital [E] is increased by$150,000.

Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X).

This transaction affects two accounts: cash and contributed capital. (Cash is an asset, and contributed capital is part of equity.) The transaction is entered into the T-accounts as shown below. The number in parenthesis references the transaction number.

Cash Contributed Capital
150,000 (1) 150,000 (1)

Cash is an asset account, and assets are on the left-hand side of the balance sheet (and basic accounting equation); therefore, cash is increased by recording the $150,000 on the debit (left) side of the T-account. Contributed capital is an equity account, and equity accounts are on the right-hand side of the balance sheet; therefore, contributed capital is increased by recording$150,000 on the credit (right) side of the T-account. Note that the sum of the debits for this transaction equals the sum of the credits:

DR = $150,000 CR =$150,000

DR = CR

Each transaction must always maintain this equality. This ensures that the accounting system (and accounting equation) is kept in balance. At this point in time, the company has assets (resources) of $150,000, and the owners’ claim on the resources equals$150,000 (their contributed capital) because there are no liabilities at this point.

Transactions are recorded in a journal, which is then “posted to” (recorded in) the general ledger. When a transaction is recorded in a journal, it takes the form:

DateAccount DRCR
13 Dec 2005Cash 150,000
Contributed Capital 150,000

This kind of entry is referred to as a “journal entry,” and it is a summary of the information that will be posted in the general ledger T-accounts.

2 January 2006 (excerpt from Exhibit 3)
2
• Set up a $100,000 investment account and purchase a portfolio of equities and fixed-income securities. • Investments [A] were increased by$100,000, and cash [A] was decreased by $100,000. Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X). This transaction affects two accounts but only one side of the accounting equation. Cash is reduced when the investments are purchased. Another type of asset, investments, increases. The T-account entries are shown below: Cash Investment 150,000 (1)100,000 (2) 100,000 (2) The cash account started with a$150,000 debit balance from the previous transaction. Assets are reduced by credit entries, so the reduction in cash is recorded by entering the $100,000 on the credit (right) side of the cash T-account. The investment account is also an asset, and the increase in investments is recorded by entering$100,000 on the debit side of the investments T-account. Transaction 2 balances because Transaction 2 debits equal Transaction 2 credits.

Going forward, we will use the traditional accounting terms of debit (debiting, debited) to indicate the action of entering a number in the debit side of an account, and credit (crediting, credited) to indicate the action of entering an amount on the credit side of an account.

2 January 2006 (excerpt from Exhibit 3)
3
• Pay $3,000 to landlord for office/warehouse.$2,000 represents a refundable deposit, and $1,000 represents the first month’s rent. • Cash [A] was decreased by$3,000, deposits [A] were increased by $2,000, and prepaid rent [A] was increased by$1,000.

Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X).

Cash is reduced once again by crediting the account by $3,000. On the other side of the transaction, two asset accounts increase. Deposits are increased by debiting the account for$2,000, while prepaid rent is increased by debiting that account for $1,000: Cash Deposits Prepaid Rent 150,000 (1)100,000 (2) 2,000 (3) 1,000 (3) 3,000 (3) The sum of the debits for Transaction 3 equals the sum of the credits (i.e.,$3,000).

3 January 2006 (excerpt from Exhibit 3)
4
• Purchase office equipment for $6,000 in cash. The equipment has an estimated life of two years with no salvage value. • Cash [A] was decreased by$6,000, and office equipment [A] was increased by $6,000. Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X). Cash is credited for$6,000, while office equipment is debited for $6,000. Both are asset accounts, so these entries reflect a reduction in cash and an increase in office equipment. Cash Office Equipment 150,000 (1) 100,000 (2) 6,000 (4) 3,000 (3) 6,000 (4) 3 January 2006 (excerpt from Exhibit 3) #Business ActivityAccounting Treatment 5 • Receive$1,200 cash for a one-year subscription to the monthly newsletter.

• Cash [A] was increased by $1,200, and unearned fees [L] was increased by$1,200.

Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X).

In this transaction, the company has received cash related to the sale of subscriptions. However, the company has not yet actually earned the subscription fees because it has an obligation to deliver newsletters in the future. So, this amount is recorded as a liability called “unearned fees” (or “unearned revenue”). In the future, as the company delivers the newsletters and thus fulfills its obligation, this amount will be transferred to revenue. If they fail to deliver the newsletters, the fees will need to be returned to the customer. To record the transaction, cash is debited (increased), while a liability account, unearned fees, is credited. Liabilities are on the right-hand side of the balance sheet and are, therefore, increased by crediting the T-account.

Cash Unearned Fees
150,000 (1)100,000 (2) 1,200 (5)
1,200 (5)3,000 (3)
6,000 (4)

The sum of Transaction 5 debits and credits each equal $1,200. 10 January 2006 (excerpt from Exhibit 3) #Business ActivityAccounting Treatment 6 • Purchase and receive 500 books at a cost of$20 per book for a total of $10,000. Invoice terms are that payment from IAL is due in 30 days. No cash changes hands. These books are intended for resale. • Inventory [A] is increased by$10,000, and accounts payable [L] is increased by $10,000. Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X). The company has obtained an asset, inventory, which can be sold to customers at a later date. Rather than paying cash to the supplier currently, the company has an obligation to do so in 30 days. This represents a liability (“accounts payable”) to the supplier. Inventory is debited for$10,000, while the liability, accounts payable, is credited for $10,000. Note that there is no impact on the cash account. Inventory Accounts Payable 10,000 (6) 10,000 (6) 10 January 2006 (excerpt from Exhibit 3) #Business ActivityAccounting Treatment 7 • Spend$600 on newspaper and trade magazine advertising for the month

• Cash [A] was decreased by $600, and advertising expense [X] was increased by$600.

Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X).

Unlike the previous expenditures, advertising is not an asset. Its future economic benefits are unclear, unlike equipment, which is expected to be useful over multiple periods. Expenditures such as advertising are recorded as an expense when they are incurred. To record the advertising expense, cash is credited for $600, and advertising expense is debited for$600. Expenses reduce net income, and thus reduce retained earnings. Decreases in retained earnings, as with any equity account, are recorded as debits. The entries with respect to retained earnings will be presented later in this section after the income statement.

150,000 (1)100,000 (2) 600 (7)
1,200 (5)3,000 (3)
6,000 (4)
600 (7)

15 January 2006 (excerpt from Exhibit 3)
8
• Borrow $12,000 from a bank for working capital. Interest is payable annually at 10 percent. The principal is due in two years. • Cash [A] is increased by$12,000, and Bank debt [L] is increased by $12,000. Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X). Cash is debited, and a corresponding liability is credited. Initially, no entry is made for interest that is expected to be paid on the loan. Interest will be recorded in the future as time passes and interest accrues (accumulates) on the loan. Cash Bank Debt 150,000 (1)100,000 (2) 12,000 (8) 1,200 (5)3,000 (3) 12,000 (8)6,000 (4) 600 (7) The debits and credits of Transaction 8 each total$12,000.

15 January 2006 (excerpt from Exhibit 3)
9
• Ship first order to a customer consisting of five books at $25 per book. Invoice terms are that payment is due in 30 days. No cash changes hands. • Accounts receivable [A] increased by$125, and book sales revenue [R] increased by $125. Additionally, inventory [A] decreased by$100, and cost of goods sold [X] increased by $100. Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X). The company has now made a sale. Sale transaction records have two parts. One part records the$125 revenue to be received from the customer, and the other part records the $100 cost of the goods that have been sold. For the first part, accounts receivable is debited (increased) for$125, and a revenue account is credited for $125. Accounts Receivable Book Sales Revenue 125 (9) 125 (9) For the second part, inventory is credited (reduced) for$100, and an expense, cost of goods sold, is debited (increased) to reflect the cost of inventory sold.

Inventory Cost of Goods Sold
10,000 (6)100 (9) 100 (9)

Note that the sum of debits and the sum of credits for Transaction 9 both equal $225. The$225 is not meaningful by itself. What is important is that the debits and credits balance.

15 January 2006 (excerpt from Exhibit 3)
10
• Sell for cash 10 books at $25 per book at an investment conference. • Cash [A] is increased by$250, and book sales revenue [R] is increased by $250. Additionally, inventory [A] is decreased by$200, and cost of goods sold [X] is increased by $200. Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X). Similar to the previous transaction, both the sales proceeds and cost of the goods sold must be recorded. In this case, however, the sales proceeds are received in cash. To record the sale proceeds, the entries include a debit to cash for$250 and a corresponding credit to book sales revenue for $250. To record cost of goods sold, the entries include a debit to cost of goods sold and a credit to inventory. Cash Book Sales Revenue 150,000 (1)100,000 (2) 125 (9) 1,200 (5)3,000 (3) 250 (10) 12,000 (8)6,000 (4) 250 (10)600 (7) Inventory Cost of Goods Sold 10,000 (6)100 (9) 100 (9) 200 (10) 200 (10) Transaction 10’s debits and credits are equal, maintaining the accounting system’s balance. 30 January 2006 (excerpt from Exhibit 3) #Business ActivityAccounting Treatment 11 • Hire a part-time clerk. The clerk is hired through an agency that also handles all payroll taxes. The company is to pay$15 per hour to the agency. The clerk works six hours prior to 31 January, but no cash will be paid until February.

• The company owes $90 for wages at month-end. Under accrual accounting, expenses are recorded when incurred, not when paid. • Accrued wages [L] is increased by$90, and wage expense [X] is increased by $90. The accrued wage liability will be eliminated when the wages are paid. Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X). Accrued wages is a liability that is increased by crediting that account, whereas payroll is an expense account that is increased with a debit. Accrued Wages Wage Expense 90 (11) 90 (11) 31 January 2006 (excerpt from Exhibit 3) #Business ActivityAccounting Treatment 12 • Mail out the first month’s newsletter to customer. This subscription had been sold on 3 January. • One month (or 1/12) of the$1,200 subscription has been satisfied, and thus $100 can be recognized as revenue. • Unearned fees [L] is decreased by$100, and fee revenue [R] is increased by $100. Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X). To record the recognition of one month of the subscription fee, the account fee revenue is credited (increased) by$100, and the related liability is debited (decreased) by $100. Fee Revenue Unearned Fees 100 (12) 100 (12)1,200 (5) 31 January 2006 (excerpt from Exhibit 3) #Business ActivityAccounting Treatment 13 • Review of the investment portfolio shows that$100 of interest income was earned and the market value of the portfolio has increased by $2,000. The balance in the investment account is now$102,100. The securities are classified as “trading” securities.

• Investment income [R] is increased by $100, and the investments account [A] is increased by$100.

• The $2,000 increase in the value of the portfolio represents unrealized gains that are part of income for traded securities. The investments account [A] is increased by$2,000, and investment income [R] is increased by $2,000. Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X). The investments account is an asset account that is debited (increased) for$2,100, and investment income is a revenue account that is credited (increased) by $2,100. Investments Investment Income 100,000 (2) 2,100 (13) 2,100 (13) These entries complete the recording of the first 13 transactions. In this illustration, there are three adjustments. An adjustment must be made related to Transaction 3 to account for the fact that a month has passed and rent expense has been incurred. We refer to this as Transaction 3a. Adjustments must also be made for an estimate of the depreciation of the office equipment (Transaction 4a) and for interest that has accrued on the loan (Transaction 8a). 31 January 2006 (excerpt from Exhibit 3) #Business ActivityAccounting Treatment 3a • In item 3,$3,000 was paid to the landlord for office/warehouse, including a $2,000 refundable deposit and$1,000 for the first month’s rent.

• Now, the first month has ended, so this rent has become a cost of doing business.

• To reflect the full amount of the first month’s rent as a cost of doing business, prepaid rent [A] is decreased by $1,000, and rent expense [X] is increased by$1,000.

Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X).

Prepaid rent (an asset) is credited for $1,000 to reduce the balance, and rent expense is debited for the same amount to record the fact that the expense has now been incurred. After this entry, the balance of the prepaid rent asset account is$0.

Prepaid Rent Rent Expense
1,000 (3)1,000 (3a) 1,000 (3a)
31 January 2006 (excerpt from Exhibit 3)
4a
• In item 4, office equipment was purchased for $6,000 in cash. The equipment has an estimated life of two years with no salvage value. • Now, one month (or 1/24) of the useful life of the equipment has ended so a portion of the equipment cost has become a cost of doing business. • A portion (1/24) of the total$6,000 cost of the office equipment is allocated to the current period’s cost of doing business.

• Depreciation expense [X] is increased by $250, and accumulated depreciation is increased by$250.

• Accumulated depreciation is a contra asset account to office equipment

Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X).

Because some time has passed, accounting principles require that the estimated depreciation of the equipment be recorded. In this case, one could directly credit office equipment for $250; however, a preferred method is to credit an account called “accumulated depreciation,” which is associated with the office equipment account. This accumulated depreciation account “holds” the cumulative amount of the depreciation related to the office equipment. When financial reports are prepared, a user is able to see both the original cost of the equipment as well as the accumulated depreciation. The user, therefore, has insight into the age of the asset, and perhaps how much time remains before it is likely to be replaced. Accumulated depreciation is termed a “contra” asset account and is credited for$250, while depreciation expense is debited (increased) for $250. Accumulated Depreciation Depreciation Expense 250 (4a) 250 (4a) 31 January 2006 (excerpt from Exhibit 3) #Business ActivityAccounting Treatment 8a • The company borrowed$12,000 from a bank on 15 January, with interest payable annually at 10 percent and the principal due in two years.

• Now, one-half of one month has passed since the borrowing.

• One-half of one month of interest expense has become a cost of doing business. $12,000 times 10% equals$1,200 of annual interest, equivalent to $100 per month and$50 for one-half month.

• Interest expense [X] is increased by $50, and accrued interest [L] is increased by$50.

Accounting elements: Assets (A), Liabilities (L), Equity (E), Revenue (R), and Expenses (X).

Accrued interest is a liability that is credited (increased) for $50, and interest expense is debited (increased) for$50. Accrued interest is also sometimes referred to as “interest payable.”

Accrued Interest Interest Expense
50 (8a) 50 (8a)

Exhibit 4 summarizes the general ledger T-accounts for IAL at this point in time. For accounts with multiple entries, a line is drawn and the debit and credit columns are summed and netted to determine the current balance in the account. The balance is entered below the line. These individual account totals are then summarized in a trial balance as depicted in Exhibit 5. A trial balance is a summary of the account balances at a point in time. An accountant can prepare a trial balance at any time to ensure that the system is in balance and to review current amounts in the accounts. Note that the debit and credit columns each total \$176,065, confirming that the system is in balance. Any difference in the column totals would indicate an error had been made. The trial balance totals have no particular significance and are not used in preparing financial statements. These totals are simply the sum of debits and credits in the accounting system at that point in time.

Exhibit 4. General Ledger T-Accounts for Investment Advisors, Ltd.
Cash Accounts Receivable Inventory
150,000 (1)100,000 (2) 125 (9) 10,000 (6)100 (9)
1,200 (5)3,000 (3) 200 (10)
12,000 (8)6,000 (4) 9,700
250 (10)600 (7)
53,850
Investments Office Equipment Accumulated Depreciation
100,000 (2) 6,000 (4) 250 (4a)
2,100 (13)
102,100
Deposits Prepaid Rent Accounts Payable
2,000 (3) 1,000 (3)1,000 (3a) 10,000 (6)
0
Accrued Wages Unearned Fees Bank Debt
90 (11) 100 (12)1,200 (5) 12,000 (8)
1,100
Accrued Interest Contributed Capital Retained Earnings
50 (8a) 150,000 (1)
Fee Revenue Book Sales Revenue Investment Income
100 (12) 125 (9) 2,100 (13)
250 (10)
375
Cost of Goods Sold Advertising Expense Rent Expense
100 (9) 600 (7) 1,000 (3a)
200 (10)
300
Depreciation Expense Wage Expense Interest Expense
250 (4a) 90 (11) 50 (8a)
Exhibit 5. Investment Advisers, Ltd., Trial Balance
DRCR
Cash53,850
Accounts receivable125
Inventory9,700
Investments102,100
Office equipment6,000
Accumulated depreciation 250
Deposits2,000
Prepaid rent0
Accounts payable 10,000
Accrued wages 90
Unearned fees 1,100
Bank debt 12,000
Accrued interest 50
Contributed capital 150,000
Retained earnings
Fee revenue 100
Book sales revenue 375
Investment income 2,100
Cost of goods sold300
Rent expense1,000
Depreciation expense250
Wage expense90
Interest expense50
Total176,065176,065

After ensuring that the balances in the trial balance are correct (if there are errors, they are corrected and an adjusted trial balance is prepared), we prepare the financial statements. The trial balance provides the information necessary to prepare the balance sheet and the income statement. The detail in the general ledger must be reviewed to prepare the statement of cash flows and statement of owners’ equity. After the income statement is prepared, the temporary accounts are closed out (i.e., taken to a zero balance) by transferring each of their balances to retained earnings. This typically occurs at year-end and is termed the “closing process.” Exhibits 6 and 7 show the post-closing general ledger and trial balance, respectively.

Exhibit 6. Post-Closing General Ledger T-Accounts for Investment Advisors, Ltd.
Cash Accounts Receivable Inventory
150,000 (1)100,000 (2) 125 (9) 10,000 (6)100 (9)
1,200 (5)3,000 (3) 200 (10)
12,000 (8)6,000 (4) 9,700
250 (10)600 (7)
53,850
Investments Office Equipment Accumulated Depreciation
100,000 (2) 6,000 (4) 250 (4a)
2,100 (13)
102,100
Deposits Prepaid Rent Accounts Payable
2,000 (3) 1,000 (3)1,000 (3a) 10,000 (6)
0
Accrued Wages Unearned Fees Bank Debt
90 (11) 100 (12)1,200 (5) 12,000 (8)
1,100
Accrued Interest Contributed Capital Retained Earnings
50 (8a) 150,000 (1) 285
Fee Revenue Book Sales Revenue Investment Income
0 0 0
Cost of Goods Sold Advertising Expense Rent Expense
0 0 0
Depreciation Expense Wage Expense Interest Expense
0 0 0
Exhibit 7. Investment Advisers, Ltd., Post-Closing Trial Balance
DRCR
Cash53,850
Accounts receivable125
Inventory9,700
Investments102,100
Office equipment6,000
Accumulated depreciation 250
Deposits2,000
Prepaid rent0
Accounts payable 10,000
Accrued wages 90
Unearned fees 1,100
Bank debt 12,000
Accrued interest 50
Contributed capital 150,000
Retained earnings 285
Fee revenue 0
Book sales revenue 0
Investment income 0
Cost of goods sold0