Slide 1 - ACCT20100

Report
Journal Entry Practice
E3-3
Recording the Transactions
 A customer orders and receives 10 personal computers from
Dell; the customer promises to pay $18,400 within three
months. Answer from Dell’s standpoint. What about cost
info?
Account Name
Debit
Accounts Receivable
$18,400
Sales Revenue
Credit
$18,400
 Fucillo Hyundai, Inc, sells a truck with a list, or sticker, price
of $20,050 for $18,050 cash.
Account Name
Debit
Cash
$18,050
Sales Revenue
Credit
$18,050
 Bon-Ton Department Store orders 1,000 men’s shirts from
Arrow Shirt Company for $15 each for future delivery. The
terms require full payment within 30 days of delivery.
Answer from Arrow’s standpoint.
Account Name
No Entry
Debit
Credit
 Arrow Shirt Company completes production of the shirts
described in part c and delivers the order (answer from
Arrow Shirt Company perspective)
Account Name
Debit
Accounts Receivable
$15,000
Sales Revenue
Credit
$15,000
 Arrow receives payment from Bon-Ton for the order
described in part c. Answer from the perspective of Arrow
Shirt Company.
Account Name
Debit
Cash
$15,000
Accounts Receivable
Credit
$15,000
 A customer purchases a ticket from American Airlines for
$410 cash to travel the following January. Answer from
American Airlines perspective.
Account Name
Debit
Cash
$410
Unearned Airfare Revenue
Credit
$410
 General Motors issues $20 million in new common stock
Account Name
Debit
Cash
$20,000,000
Contributed Capital
Credit
$20,000,000
 Pen State University receives $18,300,000 cash for 80,000
five-game season football tickets.
Account Name
Debit
Cash
$18,300,000
Unearned Football Ticket Revenue
Credit
$18,300,000
 Penn State plays the first football game described in part h.
Account Name
Debit
Unearned Football Ticket Revenue
$3,660,000
Football Ticket Revenue
Credit
$3.660,000
 Precision Construction Company signs a contract with a
customer for the construction of a new $500,000 warehouse.
At the signing, Precision receives a $50,000 deposit as a
deposit on the future construction project. Answer from the
perspective of Precision.
Account Name
Debit
Cash
$50,000
Unearned Construction Revenue
Credit
$50,000
 On September 1, 2012, a bank lends $1,200 to a company; the
note principal and $144 annual interest are due in one year (1,200
X 12%). Answer from the Bank’s perspective.
 NOW:
Account Name
Debit
Note Receivable
$1,200
Cash
Credit
$1,200
 In 1 year (assuming no other transactions are recorded?
Account Name
Debit
Cash
$1,344
Credit
Notes Receivable
$1,200
Interest Revenue
$144
 A popular ski magazine company receives a total of $1,980
today from subscribers. The subscriptions begin in the next
fiscal year. Answer from the perspective of the magazine
company:
Account Name
Debit
Cash
$1,980
Unearned Subscription Revenue
Credit
$1,980
 What do you do with each edition of the magazine that is
sent out (assume 12 issues)?
Account Name
Debit
Unearned Subscription Revenue
$165
Subscription Revenue
Credit
$165
 Sears, a retail store, sells a $100 lamp to a customer who charges
the sale on his store credit card. Answer from Sear’s perspective.
Account Name
Debit
Accounts Receivable
$100
Sales Revenue
Credit
$100
E 3-4
Recording the transactions
Dell pays its computer service technicians $79,500 in salaries for
two weeks ended January 7.
Account Name
Debit
Salaries Expense
$79,500
Cash
Credit
$79,500
 ASSUME: No Salaries Payable has been previously recorded.
At the beginning of January, Turner Construction Company pays
$4,410 in worker’s compensation insurance for the first three
months of the year.
Account Name
Debit
Prepaid Insurance
$4,410
Cash
Credit
$4,410
McGraw-Hill Publishing Company uses $754 worth of electricity
and natural gas in its headquarters building for which it has not
yet been billed.
Account Name
Debit
Utilities Expense
$754
Utilities Payable
Credit
$754
Note: Expense is incurred when utilities are used and can be recorded
when amount is known.
Arrow Shirt Company completes production of 500 men’s shirts
ordered by Bon-Ton’s Department Store at a cost of $10 each
and delivers the order.
Account Name
Debit
Cost of Goods Sold
$5,000
Inventory
Credit
$5,000
Note: No information was provided about sales information. Would
have been Accounts Receivable and Sales Revenue.
The campus bookstore receives 500 accounting texts at a cost of
$43 each. The terms indicate that payment is due within 30 days
of delivery.
Account Name
Debit
Inventory
$21,500
Accounts payable
Credit
$21,500
During the last week of January, the campus bookstore sold 450
accounting texts received in part e at a sales price of $92 each.
Account Name
Debit
Cash
$41,400
Sales Revenue
Credit
$41,400
Account Name
Debit
Cost of Goods Sold
$19,350
Inventory
Assume cost data from part e (cost of $43 per book)
Credit
$19,350
Fucillo Hyundai, Inc. pays its salespersons $3,200 in commissions
related to December automobile sales.
Account Name
Debit
Commissions Payable
$3,200
Cash
Credit
$3,200
Assume: Company had previously recorded commissions payable.
Fucillo Hyundai, Inc. determines that it will pay its salespersons
$4,470 in commissions related to January sales. The payment
will be made in early February.
Account Name
Debit
Commissions Expense
$4,470
Commissions Payable
Credit
$4,470
A new grill is purchased and installed at a Wendy’s restaurant at the
end of the day on January 31; $8,750 cash payment was made on
that day.
Account Name
Debit
Equipment
$8,750
Cash
Credit
$8,750
The University of Florida orders 60,000 season football tickets
from its printer and pays $5,410 in advance for the custom
printing. The first game will be paid in September.
Account Name
Debit
Tickets Receivable
$5,410
Cash
Credit
$5,410
Carousel Mall had janitorial supplies costing $4,000 in storage. An
additional $2,600 worth of supplies was purchased during
January. At the end of January, $410 worth of janitorial supplies
remained in storage.
Account Name
Debit
Supplies Expense
$6,190
Supplies
Credit
$6,190
Assume: Purchase of supplies was properly recorded, just recording the
supplies used.
An Iowa State University employee works eight hours, at $13 per
hour, on January 31; however, payday is not until February 3.
Account Name
Debit
Wages Expense
$104
Wages Payable
Credit
$104
Wang Company paid $3,600 for a fire insurance policy on January
1. The policy covers 12 months beginning January 1.
Account Name
Debit
Prepaid Insurance
$3,600
Cash
Credit
$3,600
Darrius Incorporated has its delivery van repaired for $300 and
charges the amount on account.
Account Name
Debit
Repairs & Maintenance Expense
$300
Accounts Payable (Maint. Payable)
Credit
$300
Hass Company, a farm equipment company, receives its phone bill
at the end of January for $202 for January calls. The bill has not
been paid to date.
Account Name
Debit
Phone Expense
$202
Accounts Payable
Credit
$202
Martin Company receives and pays in January a $1,285 invoice
(bill) from a consulting firm for services received in January.
Account Name
Debit
Consulting Expense
$1,285
Cash
Credit
$1,285
Parillo’s Taxi Company pays a $595 invoice from a consulting firm
for services received and recorded in December.
Account Name
Debit
Accounts payable
$595
Cash
Credit
$595

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