So here we continue to explore how to generalize transactions and we go to our company Zeta and we start from the first transaction. Here Zeta was established and the cash was invested by shareholders into bank accounts and petty cash and activities for Zeta is renting of office space and selling different inventory so let’s see how we can generalize this transaction in previous steps in previous videos we are analyzing how these transactions impact accounting equations.
And here we will be generalizing this transactions or recording them into the general journal. So we have increase in assets it is bank and cash and we make debit entries to bank account and to cash accounts so we have separate, two separate accounts in order to categorize their data and to record it separately and we debit those accounts since there was a decree. There was an increase in assets.
On the other side we have equity and we have an increase in share capital so cash was invested and there was an increase in equity and since increases in equity are recorded on the credit side the credit share capital account by $19,000 and below we include description of the transaction its establishment of Zeta. So this is the generalizing of the first transaction and recorded it in the general journal.
And then we can go to the second transaction here office space was acquired and part of that was paid by cash from bank and remaining amount will be paid much so let’s see how to generalize this transaction. We have increase in assets office space since the Zeta acquired of space and we have decreasing cash in data. Increase assets office space is reflected on the debit side and we include name of the account and account for office space separately in order to classify accounting data into different categories which might be important for the users of the accounting information and we credit bank account since there was a decrease in asset so if you go back to the double entry accounting principle you should remember that any decrease in assets is reflected on the credit side.
And in addition, since we have not paid all the cost of the office space we have an increase in liabilities and increase in liabilities is reflected on the credit side accounts payable and again we include description of the transaction so this is generalizing of the second transaction for the company Zeta.