Examples of T-Account
The following T-account examples provide an outline of the most common T-accounts. It is impossible to provide a complete set of examples that address every variation in every situation since there are hundreds of such T-accounts. The visual presentation of journal entries which are recorded in the general ledger account is known as the T-Account. It is called the T-account because entries of bookkeeping are shown in a way that resembles the shape of alphabet T. It depicts graphically credits on the right side and debits on the left side. Each example of the T-account states the topic, the relevant reasons, and additional comments as needed
Mr. X took a shop on rent on which he is doing the business from Mr. Y. At the end of the month of March -2019, Mr. X receives the invoice of $ 50,000 from the landlord Mr. Y for the rent of the March month on March 31st, 2019. After a few days of receiving the invoice for the rent i.e., on April 7th, 2019, Mr. X makes the payment of the same. Record the transactions in the T- account.
In this case, three accounts will get affected which are rent expense account, Accounts payable account and cash account. In the initial transaction when the company got the invoice for the rent payment, there will be a debit of $ 50,000 to rent expense account and corresponding credit will be to accounts payable account. This transaction shows expense incurred by the company along with the creation of liability to pay off that expense.
After a few days when the payment is done, then the accounts payable liability will be eliminated by debiting that account with the corresponding credit to the cash account leading to the decrease in the cash balance.
T–accounts will be as follows:
Rent Expense Account
Accounts Payable Account
Mr. Y started the business. During the month of April 19, he identified the following transactions. Prepare the necessary journal entries after reviewing the transactions and post them to necessary T- Accounts.
For the transactions during the month of April-2019, firstly the journal entries are posted and on the basis of which the T- Accounts are prepared as follows:
Prepaid Rent Account
Computer Equipment Account
Office Expense Account
Thus the T-account is the term that is used for the set of the financial records which use the double-entry bookkeeping. The accounts have the format of letter T and are thus referred to as the T accounts. In the T- Accounts, the debit side always lies at the left side of the T outline and the credit side always lies at the right side of the T outline. T-account is very helpful to the user as it provides the guideline to the accountants that what is to be entered in the ledger for getting an adjusting balance of the accounts so that revenues amount equals to the amount of the expense.
This has been a guide to T-Account Examples. Here we discuss top examples including rent expense, accounts payable, salary expense, office expense, etc along with its journal entries. You can learn more financing from the following articles –