Principles of Accounting practice, topic by topic

Find the missing amount: assets, liabilities, owner's equity and the changes in equity, worked from transactions.

What students do

1. Find the missing amount · Easy · free sample Worksheet
2. Changes in owner's equity · Medium Worksheet
3. Transactions and the equation · Hard Worksheet

Mistakes the exercises catch

• Equity is what is left of the assets after the creditors are paid: subtract liabilities from assets. Adding them gives a figure bigger than everything the business owns.
• Your answers are negative. Subtract the known claim from the assets (assets minus liabilities), not the other way round.
• Drawings are money the owner takes out, so they reduce equity. Subtract them, as you subtract expenses.
• Owner investments increase equity even though they are not revenue. Include them in the change in equity.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Sort accounts into the five types and say which side each one normally carries its balance on.

Comes after: The accounting equation.

What students do

1. Name each account's type · Easy · free sample Worksheet
2. Types and normal balances · Medium Worksheet
3. Contra accounts and normal balances · Hard Worksheet

Mistakes the exercises catch

• Unearned Revenue is a liability, not revenue: the customer has paid, but the work is still owed. It becomes revenue only when the work is done.
• Owner's Drawing is not an expense: it is the owner taking money out, not a cost of running the business. It is an equity account with a debit balance, because it reduces equity.
• Not every account carries a debit balance. Liabilities, equity and revenue normally have credit balances; only assets, expenses and contra accounts such as drawings carry debits.
• A contra account carries the opposite balance to its type: Accumulated Depreciation and the Allowance for Doubtful Accounts are assets with credit balances, because they reduce other assets.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record everyday transactions: which accounts change, and which side each goes on.

Comes after: Account types and normal balances.

What students do

1. Record a cash sale · Easy · free sample Worksheet
2. Entries on account and compound entries · Medium Worksheet
3. Owner withdrawals · Medium Worksheet

Mistakes the exercises catch

• Your debits and credits are reversed. Ask whether each account goes up or down: assets and expenses go up with a debit; revenue goes up with a credit.
• Every entry needs at least one debit and one credit of equal total.
• Your debits and credits are reversed. An asset you receive is debited.
• The entry is missing a line, so it doesn't balance. Check what was given up or owed.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Place each account on its financial statement and in its section of a classified balance sheet.

Comes after: Debits and credits.

What students do

1. Which statement reports each account? · Easy · free sample Worksheet
2. Sections of a classified balance sheet · Medium Worksheet
3. Statement and normal balance · Hard Worksheet

Mistakes the exercises catch

• Owner's Drawing is not an expense, so it never reaches the income statement. It is shown on the statement of owner's equity, where it reduces capital.
• Unearned Revenue is a liability, so it belongs on the balance sheet. It moves to the income statement only as the work is done.
• Equipment, buildings and land are used for many years, so they belong under property, plant and equipment, along with their accumulated depreciation, not under current assets.
• Unearned Revenue is owed to customers, so it is a current liability, not part of the owner's equity.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Credit sales, buying inventory, and recording the cost of goods sold.

What students do

1. Sales on account · Easy · free sample Worksheet
2. Buying inventory on account · Easy Worksheet
3. Selling inventory: sale and cost · Hard Worksheet

Mistakes the exercises catch

• The customer hasn't paid yet, so debit Accounts Receivable, not Cash.
• Accounts Receivable increases (debit) and revenue increases (credit).
• Merchandise isn't an expense until it's sold. Debit Inventory.
• Inventory increases (debit) and the amount owed increases (credit).

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record sales and purchase returns and allowances, including putting returned goods back into inventory.

Comes after: Sales and purchases.

What students do

1. An allowance to a customer · Easy · free sample Worksheet
2. Returning goods to a supplier · Easy Worksheet
3. A customer returns goods on account · Medium Worksheet
4. A cash refund for returned goods · Hard Worksheet

Mistakes the exercises catch

• Use Sales Returns and Allowances, not Sales Revenue, so the reduction stays visible in the books.
• The customer kept the goods, so nothing goes back into Inventory. An allowance changes only the price.
• That account belongs to a periodic system. Under a perpetual system, credit Inventory directly.
• Only the returned goods (or the allowance) reduce the debt, not the whole purchase.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Read credit terms like 2/10, n/30, decide whether a payment earns the discount, and record it.

Comes after: Returns and allowances.

What students do

1. A customer pays early · Easy · free sample Worksheet
2. Paying a supplier early · Medium Worksheet
3. Inside or outside the discount period? · Medium Worksheet
4. A return, then an early payment · Hard Worksheet

Mistakes the exercises catch

• The customer paid inside the discount period, so it pays less than the invoice. Debit Sales Discounts for the discount and Cash for the rest.
• The customer's whole invoice is settled. Credit Accounts Receivable for the full invoice and debit Sales Discounts for the difference.
• That account belongs to a periodic system. With perpetual inventory, credit the discount to Inventory.
• The payment is inside the discount period, so pay the invoice less the discount and credit the discount to Inventory.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record sales tax charged on sales as a liability, split tax-included totals, and record paying it over (example rates only).

Comes after: Sales and purchase discounts (2/10, n/30).

What students do

1. A cash sale with sales tax · Easy · free sample Worksheet
2. An invoice with sales tax · Easy Worksheet
3. Paying over the tax collected · Medium Worksheet
4. A refund that includes tax · Medium Worksheet
5. Splitting a tax-included total · Hard Worksheet

Mistakes the exercises catch

• Sales tax isn't revenue: you collect it for the tax authority. Credit Sales Revenue for the price only and Sales Tax Payable for the tax.
• The customer paid the price plus tax, so Cash includes the tax, and the tax goes to Sales Tax Payable.
• Sales tax isn't revenue. Credit Sales Revenue for the price and Sales Tax Payable for the tax.
• The customer is charged the price plus tax; record the tax in Sales Tax Payable.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record what a sole proprietor puts into and takes out of the business: cash, assets at fair value, goods at cost and personal bills.

Comes after: Sales tax collected and remitted.

What students do

1. The owner invests cash · Easy · free sample Worksheet
2. The owner takes money out · Easy Worksheet
3. Contributing equipment · Medium Worksheet
4. Goods taken for personal use · Medium Worksheet
5. The owner pays a business bill · Hard Worksheet

Mistakes the exercises catch

• Money from the owner isn't earned by selling anything. Credit Owner's Capital.
• The owner doesn't expect repayment, so it's equity, not a note payable. Credit Owner's Capital.
• Personal spending isn't a business expense. Debit Owner's Drawing.
• Cash goes down (credit) and Owner's Drawing goes up (debit).

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record borrowing on a note, converting a supplier account to a note, accruing interest and repaying principal plus interest.

Comes after: Owner investments and drawings.

What students do

1. Borrowing from a bank · Easy · free sample Worksheet
2. Turning a supplier account into a note · Easy Worksheet
3. Repaying a note with interest · Medium Worksheet
4. Accruing interest at year end · Medium Worksheet
5. Repaying after an accrual · Hard Worksheet

Mistakes the exercises catch

• Borrowed money must be repaid, so it's a liability. Credit Notes Payable.
• Notes Payable is a liability: it increases with a credit.
• No cash changed hands. The note replaces the account payable: debit Accounts Payable.
• The goods were already recorded when they were bought. Only the form of the debt changes: debit Accounts Payable.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Post a month's journal entries to T-accounts, then total each side and find each account's balance.

What students do

1. A short month · Easy · free sample Worksheet
2. A busier month · Medium Worksheet
3. A full month · Hard Worksheet

Mistakes the exercises catch

• Debits go on the left of the T-account and credits on the right, exactly as in the entry.
• For credit-balance accounts (liabilities, equity, revenue), the balance is credits − debits. Enter it as a positive amount.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Keep a ledger account in balance-column form: work out the balance after every debit and credit, on the account's normal side.

Comes after: Post to T-accounts.

What students do

1. The Cash account · Easy · free sample Worksheet
2. A customer receivable · Medium Worksheet
3. A credit-balance account · Medium Worksheet
4. A longer revenue ledger · Hard Worksheet

Mistakes the exercises catch

• For a debit-balance account, a debit adds to the balance and a credit subtracts.
• A credit to Cash is money going out: subtract it.
• Collections and credit memos are credits: subtract them.
• For a credit-balance account, a credit adds to the balance and a debit subtracts.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Find each account's balance from its T-account and prove debits equal credits.

Comes after: General ledger running balances.

What students do

1. A short ledger · Easy · free sample Worksheet
2. A month of entries · Medium Worksheet
3. A busy month · Hard Worksheet

Mistakes the exercises catch

• Enter each account's balance (the difference between its two sides), on one side only.
• Assets and expenses normally have debit balances; liabilities, equity and revenue have credit balances.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Fix transpositions, slides, wrong accounts and duplicated entries with correcting entries, without erasing the original.

Comes after: Trial balance.

What students do

1. The wrong account · Easy · free sample Worksheet
2. A transposition · Medium Worksheet
3. Slides and transpositions · Medium Worksheet
4. An entry recorded twice · Medium Worksheet
5. Wrong account and wrong amount · Hard Worksheet

Mistakes the exercises catch

• Recording it again would pay it twice. Only move the amount from the wrong account to the right one.
• The wrong account has an extra debit, so credit it; debit the right account.
• The entry is already there at the wrong amount. Record only the difference.
• Compare the recorded amount with the real one: if too much was recorded, debit Cash and credit the expense for the difference.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Pay in advance, then adjust for the part used up.

What students do

1. Paying for insurance in advance · Easy · free sample Worksheet
2. Adjusting prepaid insurance · Medium Worksheet
3. Adjusting prepaid rent · Medium Worksheet

Mistakes the exercises catch

• The policy covers future months, so record it as an asset (Prepaid Insurance) now.
• Prepaid Insurance increases (debit) and Cash decreases (credit).
• Only the months already used become an expense. The rest stays prepaid.
• Count every month of coverage used since the policy started.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Customer payments received before the work is done, and earning them over time.

Comes after: Prepaid expenses.

What students do

1. Receiving payment in advance · Easy · free sample Worksheet
2. Earning unearned revenue · Medium Worksheet
3. Advances and adjustments · Medium Worksheet

Mistakes the exercises catch

• Revenue isn't earned until the services are provided. Credit Unearned Revenue.
• Cash increases (debit) and the liability increases (credit).
• Only the months of service already provided are earned.
• No cash changes hands now. The cash came in earlier; reduce Unearned Revenue instead.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Expenses incurred but not yet paid at the end of a period: wages, interest and bills.

Comes after: Unearned revenue.

What students do

1. Unpaid bills · Easy · free sample Worksheet
2. Accrued wages · Medium Worksheet
3. Accrued interest · Hard Worksheet

Mistakes the exercises catch

• Nothing has been paid yet. Credit a payable, not Cash.
• The expense increases (debit) and the amount owed increases (credit).
• The wages haven't been paid yet. Credit Wages Payable, not Cash.
• Wages Expense increases (debit) and Wages Payable increases (credit).

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record revenue earned but not yet billed or collected at the end of a period: unbilled services and interest on notes receivable, then the later collection.

Comes after: Accrued expenses.

What students do

1. Unbilled services · Easy · free sample Worksheet
2. Interest earned on a note · Medium Worksheet
3. Collecting accrued revenue · Medium Worksheet
4. A note repaid with interest · Hard Worksheet

Mistakes the exercises catch

• No cash has come in yet. The client owes the money, so debit Accounts Receivable.
• Unearned Revenue is for cash received before the work. Here the work came first, so credit Service Revenue.
• The receivable increases (debit) and revenue increases (credit).
• Only accrue the months that have passed: multiply by months / 12.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record depreciation and the sale of equipment. Uses the same assets as the Excel depreciation lesson.

Comes after: Accrued revenue.

What students do

1. Annual depreciation · Easy · free sample Worksheet
2. Monthly depreciation · Medium Worksheet
3. Selling equipment · Hard Worksheet

Mistakes the exercises catch

• Subtract the salvage value from the cost before dividing by the useful life.
• Credit Accumulated Depreciation, so the asset's original cost stays on the books.
• The books close monthly: record one twelfth of the annual depreciation.
• Remove the accumulated depreciation too (debit it), then compare the price with the book value.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Bring Supplies and Inventory in line with a physical count: record supplies used and inventory shrinkage.

Comes after: Depreciation entries.

What students do

1. Supplies used · Easy · free sample Worksheet
2. Inventory shrinkage · Easy Worksheet
3. Shrinkage in units · Medium Worksheet
4. Year-end counts, one entry · Hard Worksheet

Mistakes the exercises catch

• What's on hand is still an asset. Expense what was used: opening balance + purchases - on hand.
• Include the opening balance: supplies used = opening balance + purchases - on hand.
• Supplies Expense increases (debit) and the Supplies asset decreases (credit).
• The count is what you still have. The adjustment is the shortfall: record minus count.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Apply the month-end adjustments to an unadjusted trial balance and prepare the adjusted trial balance, with every account on its debit or credit side.

What students do

1. Three adjustments · Easy · free sample Worksheet
2. Accruals, deferrals and depreciation · Medium Worksheet
3. Both sides of every adjustment · Hard Worksheet

Mistakes the exercises catch

• Your trial balance still shows the unadjusted balances. Apply each adjustment: it changes two accounts, one on the balance sheet and one on the income statement.
• Supplies on hand is what is left, not what was used. Supplies Expense = Supplies balance − supplies on hand, and the Supplies account keeps the on-hand amount.
• Adjustments often create accounts that weren't on the unadjusted trial balance, such as Wages Payable, Interest Payable and the new expense accounts. Add a line for each.
• Each adjustment changes two accounts. You updated the revenue and expense accounts but not the balance sheet side: the asset, the contra asset or the liability.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Build an income statement from an adjusted trial balance: revenues, expenses, totals and net income or loss.

Comes after: Adjusted trial balance.

What students do

1. Prepare a simple income statement · Easy · free sample Worksheet
2. Leave out what doesn't belong · Medium Worksheet
3. A month with a net loss · Hard Worksheet

Mistakes the exercises catch

• Net income is revenues minus expenses. Your figure has the right size but the wrong sign.
• Net income is what is left after expenses: subtract total expenses from total revenues.
• Owner's Drawing is not an expense: it is money the owner takes out, not a cost of earning revenue. It goes on the statement of owner's equity, not the income statement.
• Unearned Revenue is a liability: the customer has paid for work not yet done. Only earned revenue goes on the income statement.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Prepare the statement of owner's equity: beginning capital, owner investments, net income or loss, drawings and ending capital.

Comes after: Income statement.

What students do

1. Capital, net income and drawing · Easy · free sample Worksheet
2. An investment during the month · Medium Worksheet
3. A month with a net loss · Hard Worksheet

Mistakes the exercises catch

• What the owner withdraws reduces capital. Enter Owner's Drawing and subtract it: ending capital = beginning capital + investments + net income − drawing.
• Net income belongs to the owner, so it increases capital. Add it before subtracting drawing.
• The Owner's Capital balance on the trial balance already includes this month's investment. Subtract the investment to get the capital at the start of the month, or you count it twice.
• A net loss reduces capital. Enter it as a negative number so the ending capital goes down by the loss.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Prepare a classified balance sheet: current assets, property and equipment net of depreciation, current and long-term liabilities, and ending owner's capital.

Comes after: Statement of owner’s equity.

What students do

1. From a post-closing trial balance · Easy · free sample Worksheet
2. Before closing: update capital · Medium Worksheet
3. A note repaid in installments · Hard Worksheet

Mistakes the exercises catch

• Accumulated Depreciation is a contra asset: it reduces Equipment. Enter it as a negative amount, so net property, plant and equipment = Equipment − Accumulated Depreciation.
• The note isn't due for more than a year, so it is a long-term liability. Current liabilities are the ones due within the next 12 months.
• Before closing, the Owner's Capital balance doesn't include this month's net income or drawing yet. Use the ending capital: trial balance capital + net income − drawing.
• The part of a note due within the next 12 months is a current liability. Show it under current liabilities and only the rest under long-term liabilities.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Close revenues, expenses and drawing at year end through Income Summary.

What students do

1. Close the revenue accounts · Easy · free sample Worksheet
2. Close the expense accounts · Medium Worksheet
3. Close Income Summary and drawing · Hard Worksheet

Mistakes the exercises catch

• Close revenues to Income Summary first; Income Summary is closed to capital afterwards.
• Revenue accounts have credit balances, so close them with debits.
• Close expenses to Income Summary first; Income Summary is closed to capital afterwards.
• Owner's Drawing isn't an expense. It is closed directly to Owner's Capital, not through Income Summary.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Prepare the trial balance after closing: only permanent accounts remain, with capital updated for net income and drawings.

Comes after: Closing entries.

What students do

1. Capital after closing · Easy · free sample Worksheet
2. Work out net income first · Medium Worksheet
3. A full post-closing trial balance · Medium Worksheet

Mistakes the exercises catch

• Closing moves net income and drawing into capital. Capital after closing = capital + net income − drawing.
• Owner's Drawing is closed to capital too. Leave it blank and subtract it from capital.
• Revenues, expenses and drawing are zero after closing. Leave them blank.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Reverse year-end accruals on January 1, then record the later payment or receipt with and without a reversal.

Comes after: Post-closing trial balance.

What students do

1. Reverse a wage accrual · Easy · free sample Worksheet
2. Reverse any accrual · Medium Worksheet
3. Payday after a reversal · Medium Worksheet
4. With or without a reversal? · Hard Worksheet

Mistakes the exercises catch

• A reversal swaps the sides: debit Wages Payable and credit Wages Expense.
• Reverse only what was accrued on December 31: the December days.
• No cash moves on January 1. The reversal clears the payable against Wages Expense.
• A reversal swaps the sides of the adjusting entry.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

One company, one month, start to finish: record a transaction, prepare the trial balance, adjust, prepare the adjusted trial balance and income statement, and close the books.

Comes after: Reversing entries.

What students do

1. Step 1: record a transaction · Easy · free sample Worksheet
2. Step 2: the unadjusted trial balance · Medium Worksheet
3. Step 3: the adjusting entries · Medium Worksheet
4. Step 4: the adjusted trial balance · Medium Worksheet
5. Step 5: the income statement · Medium Worksheet
6. Step 6: close the books · Hard Worksheet

Mistakes the exercises catch

• The customer paid for work that will be done next month, so it hasn't been earned yet. Credit Unearned Revenue, a liability; it becomes revenue when the work is done.
• Cash increased, so it is debited; the obligation to do the work increased, so Unearned Revenue is credited.
• Enter each account's balance (the difference between its two sides), on one side only.
• Each account starts the month with its opening balance (Bal.). Include it: the balance is the opening balance plus this month's debits and credits.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record the book-side items a bank reconciliation finds. Uses the same statements as the Excel bank reconciliation lesson.

What students do

1. Bank service fees · Easy · free sample Worksheet
2. NSF checks · Medium Worksheet
3. All book-side adjustments · Hard Worksheet

Mistakes the exercises catch

• The fee is an expense (debit) and reduces Cash (credit).
• Every entry needs at least one debit and one credit of equal total.
• The customer still owes the money, so debit Accounts Receivable, not an expense.
• Accounts Receivable goes back up (debit) and Cash goes down (credit).

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Tick and match the bank statement against the Cash account, list the reconciling items and find the adjusted balance.

Comes after: Bank reconciliation adjustments.

What students do

1. Tick and match a short statement · Easy · free sample Worksheet
2. A bounced customer check · Medium Worksheet
3. A busy month · Hard Worksheet

Mistakes the exercises catch

• A deposit in transit is money already in the books that the bank hasn't recorded yet. Add it to the bank balance.
• An outstanding check has left the books but not yet the bank. Deduct it from the bank balance.
• An NSF check is a customer's check that bounced: the bank took the money back out. Deduct it from the book balance.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Set up a petty cash fund, replenish it from the receipts with any cash short or over, and increase it.

Comes after: Reconcile a bank statement.

What students do

1. Setting up the fund · Easy · free sample Worksheet
2. Replenishing the fund · Medium Worksheet
3. Cash short or over · Medium Worksheet
4. Replenish and increase the fund · Hard Worksheet

Mistakes the exercises catch

• Setting up the fund only moves cash. Expenses are recorded when the fund is replenished from the receipts.
• Petty Cash increases (debit) and the bank balance, Cash, decreases (credit).
• The box is refilled to its full amount, so the Petty Cash balance doesn't change. Credit Cash (the bank account) for the check.
• The receipts show what was spent. Debit those expenses; Petty Cash stays at the fund amount.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Post a month's transactions to customer and supplier accounts, then check that the control account equals their total.

What students do

1. Customer accounts · Easy · free sample Worksheet
2. Supplier accounts · Medium Worksheet
3. Leave out the cash sales · Hard Worksheet
4. Four suppliers, cash purchases mixed in · Hard Worksheet

Mistakes the exercises catch

• A credit memo for returned goods reduces what the customer owes. Subtract it.
• The control account changes by the same total as the subsidiary accounts. Its ending balance is the sum of the ending subsidiary balances.
• A credit memo from a supplier reduces what you owe. Subtract it.
• A cash sale is paid immediately, so it never goes into Accounts Receivable or the customer's account.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Estimate uncollectible accounts with the allowance method (percent of sales and aging of receivables) and write off accounts that won't be paid.

Comes after: Subsidiary ledgers and control accounts.

What students do

1. Percent of credit sales · Easy · free sample Worksheet
2. Writing off an account · Easy Worksheet
3. Aging with a credit balance · Medium Worksheet
4. Aging with a debit balance · Hard Worksheet

Mistakes the exercises catch

• The percent-of-sales method estimates the expense, not the ending allowance. Ignore the existing balance and record credit sales x the rate.
• You don't know yet which customers won't pay, so credit the contra account Allowance for Doubtful Accounts, not Accounts Receivable.
• Under the allowance method the expense was recorded when it was estimated. The write-off debits Allowance for Doubtful Accounts instead.
• Writing off an account uses up the allowance (debit) and removes the receivable (credit Accounts Receivable).

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Accept a note from a customer, accrue interest earned, collect principal plus interest, and record a dishonored note.

Comes after: Bad debts: the allowance method.

What students do

1. Accepting a note from a customer · Easy · free sample Worksheet
2. Collecting at maturity · Medium Worksheet
3. Accruing interest at year end · Medium Worksheet
4. Collecting after an accrual · Hard Worksheet
5. A dishonored note · Hard Worksheet

Mistakes the exercises catch

• The sale was recorded when it was made. A note replaces the account receivable: credit Accounts Receivable.
• No cash changed hands. Debit Notes Receivable.
• The rate is annual. Multiply by the note's months ÷ 12.
• The customer pays the principal plus interest. Credit Interest Revenue for the interest.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record merchandise purchases, freight, returns, discounts and sales when Inventory is updated with every transaction.

What students do

1. A sale and its cost · Easy · free sample Worksheet
2. A purchase with freight-in · Medium Worksheet
3. Paying within the discount period · Medium Worksheet
4. Returning goods to a supplier · Medium Worksheet
5. A customer return · Hard Worksheet

Mistakes the exercises catch

• In a perpetual system Inventory is updated at every sale. Add Cost of Goods Sold (debit) and Inventory (credit) at cost.
• Inventory is carried at cost. Cost of goods sold is units x what each unit cost, not what it sold for.
• Shipping to bring goods in (freight-in) is part of their cost. Add it to Inventory; Delivery Expense is for shipping to customers.
• Purchases and Freight-In are periodic-system accounts. In a perpetual system debit Inventory.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record purchases in temporary accounts during the year, then work out cost of goods sold from a year-end count.

Comes after: Perpetual inventory entries.

What students do

1. A purchase on account · Easy · free sample Worksheet
2. Paying within the discount period · Medium Worksheet
3. A return and freight-in · Medium Worksheet
4. Cost of goods sold at year end · Hard Worksheet

Mistakes the exercises catch

• That's the perpetual way. In a periodic system debit Purchases; Inventory is only updated after the count.
• Nothing has been sold yet. Debit Purchases; cost of goods sold is worked out at year end.
• Paying within the discount period saves the discount: cash paid = invoice - discount.
• That's the perpetual way. In a periodic system credit Purchase Discounts.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Build a cost-flow schedule in a spreadsheet: ending inventory and cost of goods sold under FIFO, LIFO and weighted average.

Comes after: Periodic inventory and cost of goods sold.

What students do

1. FIFO · Easy · free sample Worksheet
2. LIFO · Medium Worksheet
3. Weighted average · Medium Worksheet
4. Compare the three methods · Hard Worksheet

Mistakes the exercises catch

• That's LIFO. Under FIFO the oldest units are sold, so what's left is costed at the newest purchases.
• There are more units left than the last purchase holds. Cost the last purchase in full, then the rest at the purchase before it.
• Units in ending inventory = units available - units sold.
• That's FIFO. Under LIFO the newest units are sold, so what's left is costed at the oldest layers.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Value inventory at the lower of cost and net realizable value in a spreadsheet, item by item, and work out the write-down.

Comes after: FIFO, LIFO and weighted average.

What students do

1. Value each item · Easy · free sample Worksheet
2. The write-down · Medium Worksheet
3. Item by item or as a whole · Hard Worksheet

Mistakes the exercises catch

• Net realizable value is what you'll actually net: selling price minus the costs to complete and sell.
• Inventory is written down when its NRV falls below cost, but never written up. Take the lower of the two.
• Net realizable value is selling price minus the costs to complete and sell.
• Items worth more than cost stay at cost, so they can't offset the others. Write down to the total of the item-by-item lower amounts (I10).

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Decide which costs become part of a long-term asset (capitalized) and which are expensed, including splitting a lump-sum purchase.

What students do

1. Shipping and installation · Easy · free sample Worksheet
2. What to capitalize · Medium Worksheet
3. The cost of land · Medium Worksheet
4. A lump-sum purchase · Hard Worksheet

Mistakes the exercises catch

• Costs needed to get the machine to your premises and working are part of its cost. Add them to Equipment.
• The cash paid includes shipping and installation. Record all of it, and debit all of it to Equipment.
• The repair was caused by your own staff (an expense), and insurance for the coming year is a prepaid asset. Only the costs that got the machine ready go to Equipment.
• Fixing damage your staff caused doesn't make the machine more useful. Debit Repairs Expense.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Remove equipment from the books when it is sold or scrapped: update depreciation, clear cost and accumulated depreciation, and record the gain or loss.

Comes after: Capitalized asset cost.

What students do

1. Scrapping a fully depreciated asset · Easy · free sample Worksheet
2. Selling equipment · Medium Worksheet
3. Scrapping with book value left · Medium Worksheet
4. Update depreciation, then sell · Hard Worksheet

Mistakes the exercises catch

• The cost has already been expensed as depreciation. Debit Accumulated Depreciation to clear it; book value is zero, so there's no loss.
• Don't expense the cost again. Clear Accumulated Depreciation (debit) against Equipment (credit).
• Selling an asset removes it from the books. Clear Equipment and Accumulated Depreciation; only the difference between the price and book value is a gain or loss.
• Remove the asset's accumulated depreciation too (debit). The gain or loss is measured against book value, not cost.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Split each installment payment between interest on the balance owed and repayment of principal.

What students do

1. The first annual payment · Easy · free sample Worksheet
2. A monthly payment · Medium Worksheet
3. A later payment · Medium Worksheet
4. Equal principal payments · Hard Worksheet

Mistakes the exercises catch

• Part of each payment is interest, an expense. Interest = balance x rate; only the rest reduces Notes Payable.
• Each payment also repays principal. Interest is balance x rate; debit Notes Payable for the rest.
• Part of each payment is interest: balance x annual rate / 12. Only the rest reduces Notes Payable.
• Payments are monthly, so charge one month of interest: balance x annual rate / 12.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record bonds issued at par, at a discount and at a premium, and the first interest payment with straight-line amortization.

Comes after: Installment notes.

What students do

1. Bonds issued at par · Easy · free sample Worksheet
2. Bonds issued at a discount · Medium Worksheet
3. Bonds issued at a premium · Medium Worksheet
4. First interest payment: discount · Hard Worksheet
5. First interest payment: premium · Hard Worksheet

Mistakes the exercises catch

• Bonds have their own liability account. Credit Bonds Payable.
• Borrowing isn't income. The cash comes with a debt: credit Bonds Payable.
• Bonds Payable shows face value, the amount to be repaid. Debit Discount on Bonds Payable for the difference.
• The discount is extra interest spread over the bonds' life. Record it in Discount on Bonds Payable and amortize it later.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record wages, amounts withheld, employer payroll taxes and paying them over. Amounts are given; no tax rules needed.

What students do

1. Recording a payroll · Medium · free sample Worksheet
2. Employer payroll taxes · Easy Worksheet
3. Paying payroll liabilities · Medium Worksheet

Mistakes the exercises catch

• Employees receive gross pay minus withholdings. Credit the withheld amount to Withholdings Payable.
• Wages Expense is the full gross pay, including the amount withheld.
• Withholdings Payable is for amounts taken from employees' pay. The employer's own taxes go to Payroll Taxes Payable.
• The expense increases (debit) and the amount owed increases (credit).

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Split weekly hours into regular and overtime hours and calculate gross pay under an example overtime rule.

Comes after: Payroll entries.

What students do

1. Regular and overtime hours · Easy · free sample Worksheet
2. Regular pay, overtime pay and gross pay · Medium Worksheet
3. Gross pay in one formula · Medium Worksheet
4. From a timecard to gross pay · Hard Worksheet

Mistakes the exercises catch

• An employee who works fewer hours than the threshold has zero overtime, not negative overtime. Take the larger of 0 and hours minus the threshold.
• Regular hours stop at the threshold. Hours above it are overtime, so regular hours are the smaller of the hours worked and the threshold.
• Overtime hours earn the rate times the multiplier in O5, not the plain hourly rate.
• Overtime pay is the full rate times the multiplier (1.5x in this example), not just the extra half. The regular-pay column covers only the hours up to the threshold.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Turn annual salaries into pay per period for weekly, biweekly, semimonthly and monthly schedules, and prorate pay for partial periods under an example policy.

Comes after: Hourly pay and overtime.

What students do

1. Pay per period · Easy · free sample Worksheet
2. Prorate a partial month · Medium Worksheet
3. Mixed schedules and partial periods · Hard Worksheet

Mistakes the exercises catch

• Biweekly means every two weeks, which gives 26 pay periods a year, not 24. Divide the annual salary by 26.
• Semimonthly means twice a month: 24 pay periods a year, not 26. Divide the annual salary by 24.
• An employee who joined or left during the month is paid only for the working days worked. Prorate the full-period pay.
• This exercise's example policy prorates the period's pay by its own working days: full-period pay x days worked / working days in the period, not annual salary / 260 x days.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Calculate flat and tiered commissions and a quota bonus under an example pay plan, then each salesperson's gross pay.

Comes after: Salaried and partial periods.

What students do

1. Flat commission · Easy · free sample Worksheet
2. Tiered commission · Medium Worksheet
3. Commission plus a quota bonus · Hard Worksheet

Mistakes the exercises catch

• Every row should use the commission rate in L4. Lock it with $L$4 before filling down.
• Gross pay is everything earned: the base pay plus the commission.
• The higher rate applies only to the sales above the threshold. Sales up to the threshold still earn the rate in L4.
• Sales above the threshold in L5 earn the higher rate in L6. Split the sales at the threshold.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Work out taxable wages, example withholding and net pay when some deductions come out before tax and some after.

Comes after: Commissions and bonuses.

What students do

1. Taxable wages after pre-tax deductions · Easy · free sample Worksheet
2. Withholding and net pay · Medium Worksheet
3. Two wage bases · Hard Worksheet

Mistakes the exercises catch

• An after-tax deduction is taken from pay after tax is calculated, so it doesn't reduce taxable wages. Subtract only the pre-tax deductions.
• In this example the health premium is a pre-tax deduction, so it reduces taxable wages along with the retirement contribution.
• Withholding is charged on taxable wages, after the pre-tax deductions. That is the point of a pre-tax deduction: it lowers the tax.
• The after-tax deduction still comes out of the paycheck, just after tax. Subtract it to get net pay.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Look up each employee's bracket in a fictional withholding table and work out withholding as a base amount plus a percentage of the excess.

Comes after: Pre-tax vs after-tax deductions.

What students do

1. Find the bracket · Easy · free sample Worksheet
2. Withholding from the example table · Medium Worksheet
3. Allowances, then the table · Hard Worksheet

Mistakes the exercises catch

• Most wages fall between two 'Wages over' amounts, so an exact-match lookup finds nothing (#N/A). Use an approximate match (TRUE), which returns the bracket the wages fall in.
• The rate on the excess is the third column of the table. The second column is the base withholding amount.
• Each bracket's rate applies only to the wages above where the bracket starts. The base amount covers the wages below it.
• The base withholding column already holds the tax on the wages below the bracket. Add it to the tax on the excess.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Work out the employer's own payroll taxes at example rates, including a tax that stops at an example wage base, and the total cost of each employee.

Comes after: Withholding with an example table.

What students do

1. Employer taxes on gross pay · Easy · free sample Worksheet
2. A tax with an example wage base · Medium Worksheet
3. Total employer cost · Hard Worksheet

Mistakes the exercises catch

• Every employee uses the same example rate. Lock the rate cell with $J$4 or $J$5 before filling down.
• Each tax has its own rate. Example tax 2 uses the rate in J5.
• Example tax 3 stops once an employee's wages for the year reach the base in K6. Only the part of this period's pay below the base is taxable.
• The wage base is for the whole year. Subtract the wages already paid this year (column C) to see how much room is left.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Build a payroll register at example rates, from gross pay to net pay with column totals, and check that every row cross-foots.

Comes after: Employer taxes (example rates).

What students do

1. From gross pay to net pay · Easy · free sample Worksheet
2. A full register from hours · Medium Worksheet
3. Total and check the register · Hard Worksheet

Mistakes the exercises catch

• In this example, social insurance is charged on gross pay; the pre-tax deduction only lowers income tax withholding.
• The pre-tax deduction still comes out of the employee's pay. Net pay = gross - pre-tax deduction - withholding - social insurance.
• Hours above N4 earn the overtime multiplier in N5. Hours x rate is only right up to the threshold.
• Each total must include all eight rows, 5 to 12. A range that stops at row 11 drops the last employee.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Record payroll from register totals or example rates: wages expense, amounts withheld, net pay, and the employer's own payroll taxes.

Comes after: The payroll register.

What students do

1. Record payroll from the register · Easy · free sample Worksheet
2. Payroll at example rates · Medium Worksheet
3. Payroll recorded before it is paid · Medium Worksheet
4. The employer's payroll taxes · Hard Worksheet

Mistakes the exercises catch

• The expense is the full gross wages. The amounts withheld are still part of the employees' pay; the company just sends them somewhere else.
• Pre-tax retirement contributions are withheld too. They are owed to the retirement plan, so they belong in Withholdings Payable, not in the cash paid to employees.
• Employees receive gross pay minus the amounts withheld. Credit the withheld amounts to Withholdings Payable.
• Wages Expense is the full gross pay, including the amounts withheld.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Pay what payroll left owing: net wages, retirement contributions sent to the plan, and withheld and employer taxes worked out at example rates.

Comes after: Payroll journal entries.

What students do

1. Pay the net wages · Easy · free sample Worksheet
2. Send retirement contributions to the plan · Easy Worksheet
3. Pay withheld and employer taxes · Hard Worksheet

Mistakes the exercises catch

• The expense was recorded yesterday with the payroll. Today's payment settles the liability: debit Wages Payable.
• Employees receive their net pay. The amount withheld stays in Withholdings Payable until it is paid to whoever it is owed to.
• The contributions were part of the wages already expensed when payroll was recorded. Paying them over settles the liability in Withholdings Payable.
• Retirement contributions withheld from pay aren't a tax or an expense of the company. Debit Withholdings Payable.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.

Accrue wages earned but not yet paid at period end, add the employer's example payroll taxes, and clear the accrual on the next payday.

Comes after: Paying payroll liabilities.

What students do

1. Accrue wages at month end · Easy · free sample Worksheet
2. Payday after an accrual · Medium Worksheet
3. Accrue wages and employer taxes · Hard Worksheet

Mistakes the exercises catch

• Only the days already worked this month belong to it. The rest of the week's wages are next month's expense.
• An accrual records wages owed but not yet paid. Credit Wages Payable, not Cash.
• The days accrued last month were already expensed. Debiting Wages Expense for the full week counts them twice; debit Wages Payable for the accrued part.
• Wages Payable holds only the amount accrued. The days worked this month are new Wages Expense.

In class

Open the free exercise and choose Learn it: the idea, then a worked example with real numbers. Then solve the exercise together and press New numbers, so everyone gets a fresh version to try alone. The lesson guide is a reading to assign before class.

To assign

Ask students to make each exercise fluent: two versions solved on the first try, without hints. Their Progress page shows it. For a paper or in-class check, print a worksheet: each copy can have different numbers.