Recording Balance Sheet Transactions - Spreadsheet

Quick Study Sheet

There are 5 general transactions that occur that impact the balance sheet

1)  Receive cash from investors                
2)  Trade an asset for another asset
3)  Buy an asset and pay cash           
4)  Buy an asset and incur a liability – pay later
5)  Pay cash to reduce what is owed – reduce a liability

As you read the transaction ask yourself –

1)  What is the company receiving?
2)  What is the company giving up to get it?  
3)  Does the company owe for it?

Identify the account name that goes with what the company received and what was given up by the company or the liability. Follow this thought process.

1)  Did the company pay or receive cash?  Record any change to cash first

received – increase cash
paid – decrease cash 

2)  Did the company get an asset that is different than cash?

If yes – write the account name of what they received on the line on the asset side and put a positive amount in the column 

3)  Did the company get something it has not yet paid for?

If yes – there is a liability to be paid later – write the account name of the liability on the liability side and write a positive number — increases the liability

4)  Did the company pay and reduce what it owes?

If yes – find the account name of the liability it used to owe for on the liability side and write a negative number in the column 

5)  When the asset was received, was another asset given up in exchange?

If yes –  the account name for that asset given up will already be there.
Put a negative amount in the column to reduce it

You will have columns with each account name at the top

In the column will only be amounts related to each transaction, positive or negative

Each transaction will have its own row

At the end of the period, total each column. The total amounts will be reported on the balance sheet