Transaction 5. The company made purchases of inventory throughout the year that cost $260,000. $235,000 of that is paid in cash, and the remaining $25,000 was purchased on account. What accounts are affected? Well inventory goes up because we bought that asset. So we make a left hand side to the inventory account, which is an asset debit, it increases by $260,000. Cash of $235,000 was paid for this inventory, so cash decreases. So that's a right side or a credit to the cash account for $235,000. And the remaining 25,000 was purchased on account. So the company has an obligation to pay that in the future, so it's incurred a liability. We will call that liability Accounts Payable. That balance increases by $25,000. Now this is the first time we've seen in The Garden Spot, a journal entry that had two right side entries. So remember, we've gotta make sure that the total of the left side's entries is equal to the total of the right side entries. This total is 260, so these are equal. So we've done the journal entry appropriately. Now, let's post it to T-Accounts. Well, the first time we've seen an inventory asset in this case, so we'll create that T-Account. Its beginning balances is 0. We make a left side entry to that T-account for $260,000. We make a note that that's associated with transaction 5. We see the right side to cash of 235, so let's post that to the right side of the T-account and make a note that that's associated with transaction 5. And then we'll make a right side to the accounts payable T-account as well, which we haven't seen before in this case, so we'll need to create it. We'll give it a beginning balance of 0 because no prior transactions have affected that account. And we'll put the right side entry of 25,000 into that T-account, and we'll denote that that is associated with transaction 5. Now, let's make sure that the equation stays in balance after recording the transaction. Inventory, which is an asset, goes up by $260,000. Cash, which is an asset, goes down by $235,000. Accounts Payable, which is a liability, goes up by $25,000. The assets net effect is to increase by $25,000. So the left side of the equation increases by $25,000 and the right side of the equation increases by $25,000. So we are, yet again, smiling. So now we've completed recording the first five transactions of The Garden Spot.