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hello everyone this is Larry your instructor for financial accounting I'm going to run through with you a very fast example applying debits and credits specifically we want to show you a sequence of transactions to let you see how these transactions are recorded to the journal and posted to the ledger again I'll be doing this very quickly but you have the option watching it on a video to stop restart the video and also go back and watch sections of it again the other thing I'd like to ask before you go any further with this video make sure that in the financial accounting textbook or your notes or in the online materials that we provided that you please review the standard rules for debiting and crediting that show when you debit a specific type of account and credit the specific type of account those rules are very important and if you're not familiar with them you won't really understand the example that I'm about to show you very quickly so let's take a look now in a new business that we've started up and I have a sequence of transactions here let's look at the first transaction on April 1st investors provided 10000 in cash to start the new business and the bishop business issued common stock to the investment so cash went up for the business by 10000 and also common stock went up equity was issued let's see what that looks like in our journal the first journal entry shows that we have because cash is increased we have debited cash for the 10000 and credited common stock for 10000 and note the standard here that we use we always list the debit before the credit and we've indented the credit a little bit does everyone see how we've done that you can do that in Word or Excel push that credit to the right it will be easier on your eye so that you'll be able to see which account is debited and which is credited so that's the very first entry that was the journal entry now let's go back to our next transaction the second transaction shows that on April 2nd the business borrowed 20000 from the bank to support its initial operations so cash went up in the business by 20000 but we've also encouraged and here's how we've recorded that we have debited cash for 20000 to cash went up and we've also increased a liability called notes payable we've increased that it's gone up by 20000 it is credited according to the rules of how we do debits and credits let's see what came next on the 3rd of April we purchased five thousand dollars of equipment for cash so the asset called equipment went up by five thousand dollars and cash and down by five thousand dollars and here's the entry the journal entry shows we have debited equipment for five thousand dollars and credited cash for five thousand dollars the next entry shows that also on the third of April we have purchased two thousand dollars of supplies on account note that's not with cash cash is not going out of our...