Stockholder’s Equity Accounts with Normal Balances

MJC Revised 1/2012 Page 1

Stockholder’s Equity Accounts can be broken down into

two groups, which are money invested by the owners of

the company and money brought into the business in the

course of performing its own business activities. These

accounts do not represent physical assets but are a record

keeping of how the company received its money to invest

in company assets.

Accounts presented on the Balance Sheet only:

Account Title Debit Credit

Common Stock- is to represent money invested by the

owners which includes voting rights at stockholders’

meetings. Recorded at par or stated value at the time of

sale.

Decrease Increase

Preferred Stock-is to represent money invested by the

owners which does not usually entitle voting rights to

stockholders but has other rights to dividends. Recorded at

par or stated value at the time of sale

Decrease Increase

Paid-in Capital in excess of (par or stated) value-

Money received from investors that exceed the par or

stated value of the stock.

Decrease Increase

Retained Earnings- represents the past income that was

retained in the company as either an asset or cash in the

bank.

Decrease Increase

Treasury Stock- is the company’s own stock that was

repurchased for the open markets. This account is

considered a contra equity account since it reduces the

value of the stockholders’ equity section of the balance

sheet.

Increase Decrease

Stockholder’s Equity Accounts with Normal Balances

MJC Revised 1/2012 Page 2

Accounts presented on the Retained Earnings Statement only:

Account Title Debit Credit

Retained Earnings, 1/1/00-Beginning of the fiscal period for which the statement is being prepared. Normal balance is on the credit side of the account.

Decrease Increase

Net Income- This is not an account but is an amount, which is taken from the income statement,’s ending balance.

N/A N/A

Dividends- are the amount of money paid out during the year to owners. This account has a debit normal balance and is considered to be a contra equity accounts.

Increase Decrease

Retained Earnings, 12/31/00-Ending of the fiscal period for which the statement is being prepared. Normal balance is on the credit side of the account and final total is then transferred onto the balance sheet.

Decrease Increase

Accounts presented on the Income Statement only:

Revenues- Section heading only- is any money earned by

performing either services or sales. These accounts have a

normal balance on the credit side and increase the retained

earnings accounts

Account Title Debit Credit

Sales Revenue Decrease Increase

Service Revenue Decrease Increase

Rent Revenue Decrease Increase

Ticket Revenue Decrease Increase

Interest Revenue Decrease Increase

Subscription Revenue Decrease Increase

Stockholder’s Equity Accounts with Normal Balances

MJC Revised 1/2012 Page 3

Accounts presented on the Income Statement only:

Expenses-Section heading only- these are the cost incurred

to produce income for the business. Because expenses

reduce Retained Earnings these accounts have a normal

balance of a debit.

Expenses are subtracted from revenues in order to come up with net income which is then transferred

onto the Retained Earnings Statement. The ending retained earnings is then transferred from the

Retained Earnings Statement onto the balance sheet.

Account Title Debit Credit

Salaries Expense Increase Decrease

Depreciation Increase Decrease

Interest Expense Increase Decrease

Supplies Expense Increase Decrease

Rent Expense Increase Decrease

Utilities Expense Increase Decrease

Advertising Expense Increase Decrease

Gas and Oil Expense Increase Decrease

Travel Expense Increase Decrease