So I'm having a hard time figuring out what exact type of transactions each of these are.

May 4 Real estate commissions billed to clients amount to $4,000

7 Received a bill for $500 for advertising for the current month

10 Received a check for $3,000 from a client in payment on account for the commissions
Billed in transaction 4.


My professor never really discussed with us how to journalize bills, so I think that's where my trouble is coming from. Any help would be greatly appreciated! Thank you!

"Bills" mean you have an Accounts Receivable or an Accounts Payable.

Accounts Receivable is an asset and represents how much other people owe to you. So when you do work for someone else and you send them a bill, you are putting it into the Accounts Receivable. You still must record the revenue because you have earned it.

Later that customer will pay you and you get the cash and remove it out of the receivable, cause they don't owe it anymore.

Accounts Payable is a liability and represents how much you owe to other people. So if you receive a bill for services done or some asset you purchased, you put it into Accounts Payable. (Then record the expense for services, or the asset purchased.)

When you pay the bill later, it will come out of your cash and will be removed from the Accounts Payable because it is not owed anymore.

Can you make an attempt to do these with that information? Someone can check it for you if you want to send in your answers.

Try to envision the General Ledger Equation which is Assets + Expenses=Liabilities + Equity + Revenue. Everything on the left side of the equation has a normal balance of + while everything on the right side has a normal balance of -. Then define at least one side of your journal entries above as to where they fall in the general equation above. For example; the entry for the 4th journal would involve an increase in revenue which is a - then the other side of the entry has to be a + to accounts receivable which is an increase to Assets. Then when the customer pays their bill you receive cash which is an Asset so you would + increase Cash then the other side of the entry has to be a - in this case accounts receivable, an Asset, would be reduced.

Where is this coming from? This is the second time recently I've seen someone do this +/- sort of journalizing. (i.e. that a credit is considered a -, instead of just the right side of the equation.) I'd be tempted to believe this is another non-U.S. sort of thing, except that we get a fair amount of non-U.S. posts on here and I've only seen this one other time. So it doesn't appear as though this is the way this is being taught pretty much anywhere. (Most of the differences I see here are in vocabulary, and a few rules that are different between GAAP and international rules, but those are "concept rules," not rules about debits & credits.)

And yet - I've seen this twice. Only recently.

Account receivable (dr) 4000
Revenue (cr) 4000

Cash 4000 (dr)

Account receivable 4000 (cr)
Account payable $500(dr)
Advertisng exp $ 500 (cr)