Chapter 3 - ACCT20100

Report
Journal Entries for Expense Transactions
Transaction
Assets
Liab
SE
Revenues
Expenses
Net
Income
a. Issued stock to organizers for cash
+
NE
+
NE
NE
NE
b. Purchased equipment on credit
+
+
NE
NE
NE
NE
c. Declared and paid cash dividends
-
NE
-
NE
NE
NE
d. Earned revenue, collected cash
+
NE
+
+
NE
+
NE
+
-
NE
+
-
f. Earned revenue, on credit
+
NE
+
+
NE
+
g. Paid cash on account
-
-
NE
NE
NE
NE
h. Incurred expenses, paid cash
-
NE
-
NE
+
-
e. Incurred expenses, on credit
Transaction
Assets
Liab
SE
Revenues
Expenses
Net
Income
i. Earned revenue, collected 3/4ths in cash,
balance on credit.
+
NE
+
+
NE
+
j. Borrowed cash from local bank
+
+
NE
NE
NE
NE
+/-
NE
NE
NE
NE
NE
l. Experienced theft (a loss) of $100 cash
-
NE
-
NE
+
-
m. Incurred expenses, paid 4/5ths in cash,
balance on credit
-
+
-
NE
+
-
n. Paid income tax expense for the period
-
NE
-
NE
+
-
k. Collected cash from customers on
account

E3-4
McGraw-Hill Publishing Company uses $2,754
worth of electricity and natural gas in its
headquarters building for which it has not yet
been billed.
Account Name
Debit
Utilities Expense
$2,754
Utilities Payable
Credit
$2,754
Note: Expense is incurred when utilities are used
and can be recorded when amount is known.
At the beginning of January, Turner
Construction Company pays $846 for
magazine advertising to run in monthly
publications of the first three months of the
year.
Account Name
Debit
Prepaid Advertising
$846
Cash
Credit
$846
Dell pays its computer service technicians
$379,500 in salaries for two weeks ended
January 7.
Account Name
Debit
Salaries Expense
$379,500
Cash

Credit
$379,500
ASSUME: No Salaries Payable has been
previously recorded.
The University of Florida orders 60,000 season
football tickets from its printer and pays
$7,610 in advance for the custom printing.
The first game will be paid in September.
Answer from the University's standpoint.
Account Name
Debit
Prepaid Tickets
$7,610
Cash
Credit
$7,610
The campus bookstore receives 500
accounting texts at a cost of $89 each. The
terms indicate that payment is due within 30
days of delivery.
Account Name
Debit
Inventory
$44,500
Accounts payable
Credit
$44,500
During the last week of January, the campus
bookstore sold 450 accounting texts received
in part e at a sales price of $150 each.
Account Name
Debit
Cash
$67,500
Sales Revenue
$67,500
Account Name
Debit
Cost of Goods Sold
$40,050
Inventory
Credit
Credit
$40,050
Assume cost data from part e (cost of $89 per book)
Fucillo Hyundai, Inc. pays its salespersons
$13,200 in commissions related to December
automobile sales.
Account Name
Debit
Commissions Payable
$13,200
Cash
Credit
$13,200
Assume: Company had previously recorded
commissions payable.
On January 31, Fucillo Hyundai, Inc. determines
that it will pay its salespersons $14,470 in
commissions related to January sales. The
payment will be made in early February.
Answer from Fucillo’s perspective.
Account Name
Debit
Commissions Expense
$14,470
Commissions Payable
Credit
$14,470
A new grill is purchased and installed at a
Wendy’s restaurant at the end of the day on
January 31; a $12,750 cash payment was
made on that day.
Account Name
Debit
Equipment
$12,750
Cash
Credit
$12,750
Carousel Center 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, $1,410
worth of janitorial supplies remained in
storage.
Account Name
Debit
Supplies Expense
$5,190
Supplies
Credit
$5,190
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.
Answer from the perspective of the
university.
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 in January 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
Telephone 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
Phillips-Van Heusen Corporation completes
production of 500 men’s shirts ordered by
Macy’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.

1.
2.
Do in your Groups
PREPARE JOURNAL ENTRIES
Determine Cash Flow Category
◦ (Operating, Investing, Financing, Non-Cash
Operating, Non-Cash Investing and Financing)
a. Received $80,000 cash from each of the two
shareholders to form the corporation, in
addition to $2,000 in accounts receivable,
$5,300 in equipment, a van (equipment)
appraised at a fair market value of $13,000
and $1,200 in supplies.
Account Name
Debit
Cash
$160,000
Accounts Receivable
$
Equipment
$ 18,300
Supplies
$
Credit
2,000
1,200
Contributed Capital
Cash flow from FINANCING ACTIVITIES.
$181,500
b. Purchased a vacant store for sale in a good
location for $360,000, making a $72,000
cash down payment and signing a 10-year
mortgage from a local bank for the rest.
Account Name
Debit
Building
$360,000
Credit
Cash
$ 72,000
Notes Payable
$288,000
Cash flow from INVESTING ACTIVITIES ($72,000) and NonCash Investing and Financing Activity ($288,000).
c. Borrowed $50,000 from the local bank on a
10%, one year note.
Account Name
Debit
Cash
$50,000
Notes Payable
Cash flow from FINANCING ACTIVITIES.
Credit
$50,000
d.
Purchased and used food and paper supplies
costing 10,830 in March; paid cash.
Purchase of Supplies:
Account Name
Debit
Supplies
$10,830
Cash
Credit
$10,830
Cash flow from OPERATING ACTIVITIES.
Use of Supplies:
Account Name
Debit
Supplies Expense
$10,830
Supplies
Non-Cash OPERATING ACTIVITIES.
Credit
$10,830
e. Catered four parties in March for $4,200;
$1,600 was billed and the rest was received
in cash.
Account Name
Debit
Cash
$2,600
Accounts Receivable
$1,600
Catering Revenue
Credit
$4,200
Cash flow from OPERATING ACTIVITIES ($2,600); NonCash Operating Activity ($1,600).
f. Made and sold food at the retail store for
$11,900 cash. (assume the cost of these
sales was already recorded as part of
transaction d.)
Account Name
Debit
Cash
$11,900
Food Sales Revenue
Cash flow from OPERATING ACTIVITIES.
Credit
$11,900
g. Received a telephone bill for March to be
paid in April.
Account Name
Debit
Telephone Expense
$420
Telephone Payable
Non-Cash OPERATING ACTIVITIES.
Credit
$420
h. Paid $363 in gas for the van in March.
Account Name
Debit
Gas Expense
$363
Cash
Cash flow from OPERATING ACTIVITIES.
Credit
$363
i. Paid $6,280 in wages to employees who
worked in March.
Account Name
Debit
Wages Expense
$6,280
Cash
Cash flow from OPERATING ACTIVITIES.
Credit
$6,280
j. Paid a $300 dividend from the corporation
to EACH owner.
Account Name
Debit
Retained Earnings
$600
Cash
Cash flow from FINANCING ACTIVITIES.
Credit
$600
k. Purchased $50,000 of equipment
(refrigerated display cases, cabinets, tables,
and chairs) and renovated and decorated the
new store for $20,000 (added to the cost of
the building); paid cash.
Account Name
Debit
Equipment
$50,000
Building
$20,000
Cash
Cash flow from INVESTING ACTIVITIES.
Credit
$70,000

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