Week 2- Analyzing Transactions and the Adjusting Process Define the following: Accrual basis of accounting Book value Chart of accounts Credit Debit Double- entry accounting Journal entry Posting Rules of debits and credits Write the journal entries for each transaction. Post the totals for each account in the end- of- period spreadsheet Receive cash in exchange for common stock- $25000 Purchase supplies for cash- $250 Prepay insurance for the year- $1000 Purchase land for $50,000. Pay $10,000 cash and finance the rest Purchased a building for $75,000. Pay $10,000 cash and finance the rest. Paid advertising expense $50 Mow lawns for the week- $500- send bills to customers Mow lawns for the week and receive cash- $100 Paid salaries $150 Paid utilities $150 Purchase supplies on account $300 Collect from customers $250 Pay supplies on account bill- $150 Paid stockholder dividends $1000 Make the following adjustments. Record the journal entries as well as posting the numbers to the end- of- period spreadsheet Used $200 of supplies Depreciate building $5,000 Record income not recorded- $750 Phone bill arrived- record $150 Classify each of the following accounts as to whether it appears on the income statement (IS), the balance sheet (BS) or owner’s equity statement (OE) _____1. Merchandise Inventory _____ 6. Int. Revenue ____11. Wales, Drawing _____2. Accumulated Depreciation—Truck _____ 7. Interest Receivable ____12. Wales, Capital _____3. Depreciation Expense _____ 8. Notes Receivable ____13. Sales Discounts _____4. Cost of Goods Sold _____ 9. Interest Expense ____14. Prepaid Insurance _____5. Unearned Revenue _____10. Freight Out _____15. Sales Closing Entries and Completing the Accounting Cycle Define the following: Accounting cycle Closing entry End- of- period worksheet Fiscal business year Income Summary Natural business year Nominal account Permanent account List the steps to the accounting cycle Using the end- of- period spreadsheet for week 2- make all appropriate closing entries and post them to the spreadsheet. Prepare the Income Statement, Balance Sheet and Statement of Retained Earnings Accounting for Merchandising Businesses and Inventory and Assets Define the following: Cost of goods sold Credit memo Credit terms Debit memo FIFO FOB Gross profit Invoice LIFO Net sales Periodic inventory Perpetual inventory Sales Selling expense Subsidiary ledger Trade discount Weighted average Below are the purchases and sales for your business. Use the inventory spreadsheet to assist you in completing the journal entries related to each transaction. Complete this first for FIFO, then LIFO, then Weighted Average. What is the ending inventory for each method? Date Transaction Number of Units Per Unit Total Jan 3 Beginning Inventory 50 $1100 Jan 8 Purchase 100 $1300 Jan 11 Sale 80 $1800 Jan 30 Sale 50 $1900 Feb 8 Purchase 150 $900 Feb 10 Sale 30 $1500 Feb 19 Sale 20 $1750 Feb 28 Purchase 125 $1450 Mar 5 Sale 60 $1200 Mar 16 Sale 80 $1800 Mar 21 Purchase 175 $1500 Mar 28 Sale 100 $2000 FIFO Amount for purchase of inventory Units sale price Value of sale in journal entry Units Cost Units Per unit Purchase Qty Purchase Cost Total Sale Sale Price COGS Ending Inventory Beginning Inventory
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Week 2- Analyzing Transactions and the Adjusting Process
- Define the following:
- Accrual basis of accounting
- Book value
- Chart of accounts
- Credit
- Debit
- Double- entry accounting
Journal entry - Posting
- Rules of debits and credits
- Write the journal entries for each transaction. Post the totals for each account in the end- of- period spreadsheet
- Receive cash in exchange for common stock- $25000
- Purchase supplies for cash- $250
- Prepay insurance for the year- $1000
- Purchase land for $50,000. Pay $10,000 cash and finance the rest
- Purchased a building for $75,000. Pay $10,000 cash and finance the rest.
- Paid advertising expense $50
- Mow lawns for the week- $500- send bills to customers
- Mow lawns for the week and receive cash- $100
- Paid salaries $150
- Paid utilities $150
- Purchase supplies on account $300
- Collect from customers $250
- Pay supplies on account bill- $150
- Paid stockholder dividends $1000
- Make the following adjustments. Record the journal entries as well as posting the numbers to the end- of- period spreadsheet
Used $200 of supplies
Record income not recorded- $750
Phone bill arrived- record $150
- Classify each of the following accounts as to whether it appears on the income statement (IS), the balance sheet (BS) or owner’s equity statement (OE)
_____1. Merchandise Inventory _____ 6. Int. Revenue ____11. Wales, Drawing
_____2.
_____3. Depreciation Expense _____ 8. Notes Receivable ____13. Sales Discounts
_____4. Cost of Goods Sold _____ 9. Interest Expense ____14. Prepaid Insurance
_____5. Unearned Revenue _____10. Freight Out _____15. Sales
Closing Entries and Completing the Accounting Cycle
- Define the following:
- Accounting cycle
- Closing entry
- End- of- period worksheet
- Fiscal business year
- Income Summary
- Natural business year
- Nominal account
- Permanent account
- List the steps to the accounting cycle
- Using the end- of- period spreadsheet for week 2- make all appropriate closing entries and post them to the spreadsheet. Prepare the Income Statement, Balance Sheet and Statement of
Retained Earnings
Accounting for Merchandising Businesses and Inventory and Assets
- Define the following:
- Cost of goods sold
- Credit memo
- Credit terms
- Debit memo
- FIFO
- FOB
- Gross profit
- Invoice
- LIFO
- Net sales
- Periodic inventory
- Perpetual inventory
- Sales
- Selling expense
- Subsidiary ledger
- Trade discount
- Weighted average
- Below are the purchases and sales for your business. Use the inventory spreadsheet to assist you in completing the journal entries related to each transaction. Complete this first for FIFO, then LIFO, then Weighted Average. What is the ending inventory for each method?
|
Date |
Transaction |
Number of Units |
Per Unit |
Total |
|
Jan 3 |
Beginning Inventory |
50 |
$1100 |
|
|
Jan 8 |
Purchase |
100 |
$1300 |
|
|
Jan 11 |
Sale |
80 |
$1800 |
|
|
Jan 30 |
Sale |
50 |
$1900 |
|
|
Feb 8 |
Purchase |
150 |
$900 |
|
|
Feb 10 |
Sale |
30 |
$1500 |
|
|
Feb 19 |
Sale |
20 |
$1750 |
|
|
Feb 28 |
Purchase |
125 |
$1450 |
|
|
Mar 5 |
Sale |
60 |
$1200 |
|
|
Mar 16 |
Sale |
80 |
$1800 |
|
|
Mar 21 |
Purchase |
175 |
$1500 |
|
|
Mar 28 |
Sale |
100 |
$2000 |
|
|
|
FIFO |
|
Amount for purchase of inventory |
Units |
sale price |
Value of sale in journal entry |
Units |
Cost |
|
Units |
Per unit |
|
|
|
Purchase Qty |
Purchase Cost |
Total |
Sale |
|
Sale Price |
|
|
COGS |
|
|
Ending Inventory |
|
Beginning Inventory |
|
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