Reference table

Your question is “How do I record this in QuickBooks?” This XE "credits" XE "debits" table details some answers, in order by the function to be accomplished. The table tries to be complete, including duplicating those examples just above. The logic flows like the logic of a family tree: there is no way to present it sequentially. Most of these transactions are handled by QuickBooks without showing the debits and credits. When you have to get out and push, general journal transactions are done with Activities|Enter Special Transactions.

Initial investment in company (increases net worth)

DEBIT CREDIT

Cash in Bank (asset) $10000

Capital (equity) $10000

Asset purchased for cash

Desk (asset) $1000

Cash in Bank (asset) $1000

Asset to be re-sold, purchased on credit. QuickBooks could handle this as an inventory item, connected (firstly) to an inventory asset account.

Paper Towels Inventory (asset) $500

Accounts Payable (liability) $500

Pay off purchase debt

Accounts Payable (liability) $500

Cash in Bank (asset) $500

Outside expense purchased with credit card (the payoff is the same as Accounts Payable.)

Travel expenses (expense) $300

UltraPlastic? Card (liability) $300

Cash sale for $1000

DEBIT CREDIT

Cash in Bank (asset) $1000

Services Sold (income) $1000

Sale on credit. Taking this as the sale of the paper towels bought above, the Paper towel Sales account would be the second account attached to the inventory item.

Accounts Receivable (asset) $700

Paper Towel Sales (income) $700

Payment received for credit sale

Cash in Bank (asset) $700

Accounts Receivable (asset) $700

Asset expended in producing income (the above sale was the same paper towels. Cost of Goods Sold (COGS) is a special expense account, and a separate type in QuickBooks.) If Paper Towels had been set up as an inventory item, COGS would be the third account attached to that item.

Cost of Goods Sold (COGS/expense) $500

Paper Towels Inventory (asset) $500

Transfer of retained earnings to capital account. This takes the earnings out of QuickBooks’ special “Retained Earnings” account, as described in the chapter on chart of accounts and transfers it to a true balance-sheet equity account.

Retained earnings (special equity account) $700

Capital (equity) $700

Finally, distribute some of the earnings:

Capital (equity) $700

Cash in Bank (asset) $700