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Journal Entries for Expense Transactions. TransactionAssetsLiabSERevenuesExpensesNet Income a. Issued stock to organizers for cash +NE+ b.Purchased equipment.

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Presentation on theme: "Journal Entries for Expense Transactions. TransactionAssetsLiabSERevenuesExpensesNet Income a. Issued stock to organizers for cash +NE+ b.Purchased equipment."— Presentation transcript:

1 Journal Entries for Expense Transactions

2 TransactionAssetsLiabSERevenuesExpensesNet Income a. Issued stock to organizers for cash +NE+ b.Purchased equipment on credit ++NE c. Declared and paid cash dividends -NE- d. Earned revenue, collected cash +NE++ + e. Incurred expenses, on credit NE+- +- f. Earned revenue, on credit +NE++ + g. Paid cash on account --NE h. Incurred expenses, paid cash -NE- +-

3 TransactionAssetsLiabSERevenuesExpensesNet Income i. Earned revenue, collected 3/4ths in cash, balance on credit. +NE++ + j. Borrowed cash from local bank ++NE k.Collected cash from customers on account +/-NE l. Experienced theft (a loss) of $100 cash -NE- +- m. Incurred expenses, paid 4/5ths in cash, balance on credit -+-NE+- n. Paid income tax expense for the period -NE- +-

4  E3-4

5 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. Note: Expense is incurred when utilities are used and can be recorded when amount is known. Account NameDebitCredit Utilities Expense$2,754 Utilities Payable$2,754

6 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 NameDebitCredit Prepaid Advertising$846 Cash$846

7 Dell pays its computer service technicians $379,500 in salaries for two weeks ended January 7.  ASSUME: No Salaries Payable has been previously recorded. Account NameDebitCredit Salaries Expense$379,500 Cash$379,500

8 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 NameDebitCredit Prepaid Tickets$7,610 Cash$7,610

9 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 NameDebitCredit Inventory$44,500 Accounts payable$44,500

10 During the last week of January, the campus bookstore sold 450 accounting texts received in part e at a sales price of $150 each. Assume cost data from part e (cost of $89 per book) Account NameDebitCredit Cash$67,500 Sales Revenue$67,500 Account NameDebitCredit Cost of Goods Sold$40,050 Inventory$40,050

11 Fucillo Hyundai, Inc. pays its salespersons $13,200 in commissions related to December automobile sales. Assume: Company had previously recorded commissions payable. Account NameDebitCredit Commissions Payable$13,200 Cash$13,200

12 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 NameDebitCredit Commissions Expense$14,470 Commissions Payable$14,470

13 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 NameDebitCredit Equipment$12,750 Cash$12,750

14 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. Assume: Purchase of supplies was properly recorded, just recording the supplies used. Account NameDebitCredit Supplies Expense$5,190 Supplies$5,190

15 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 NameDebitCredit Wages Expense$104 Wages Payable$104

16 Wang Company paid $3,600 for a fire insurance policy on January 1. The policy covers 12 months beginning January 1. Account NameDebitCredit Prepaid Insurance$3,600 Cash$3,600

17 Darrius Incorporated has its delivery van repaired in January for $300 and charges the amount on account. Account NameDebitCredit Repairs & Maintenance Expense$300 Accounts Payable (Maint. Payable)$300

18 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 NameDebitCredit Telephone Expense$202 Accounts Payable$202

19 Martin Company receives and pays in January a $1,285 invoice (bill) from a consulting firm for services received in January. Account NameDebitCredit Consulting Expense$1,285 Cash$1,285

20 Parillo’s Taxi Company pays a $595 invoice from a consulting firm for services received and recorded in December. Account NameDebitCredit Accounts payable$595 Cash$595

21 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. Note: No information was provided about sales information. Would have been Accounts Receivable and Sales Revenue. Account NameDebitCredit Cost of Goods Sold$5,000 Inventory$5,000

22  Do in your Groups 1. PREPARE JOURNAL ENTRIES 2. Determine Cash Flow Category ◦ (Operating, Investing, Financing, Non-Cash Operating, Non-Cash Investing and Financing)

23 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 NameDebitCredit Cash$160,000 Accounts Receivable$ 2,000 Equipment$ 18,300 Supplies$ 1,200 Contributed Capital$181,500 Cash flow from FINANCING ACTIVITIES.

24 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 NameDebitCredit Building$360,000 Cash$ 72,000 Notes Payable$288,000 Cash flow from INVESTING ACTIVITIES ($72,000) and Non- Cash Investing and Financing Activity ($288,000).

25 c. Borrowed $50,000 from the local bank on a 10%, one year note. Account NameDebitCredit Cash$50,000 Notes Payable$50,000 Cash flow from FINANCING ACTIVITIES.

26 d. Purchased and used food and paper supplies costing 10,830 in March; paid cash. Purchase of Supplies: Use of Supplies: Account NameDebitCredit Supplies$10,830 Cash$10,830 Account NameDebitCredit Supplies Expense$10,830 Supplies$10,830 Cash flow from OPERATING ACTIVITIES. Non-Cash OPERATING ACTIVITIES.

27 e. Catered four parties in March for $4,200; $1,600 was billed and the rest was received in cash. Account NameDebitCredit Cash$2,600 Accounts Receivable$1,600 Catering Revenue$4,200 Cash flow from OPERATING ACTIVITIES ($2,600); Non- Cash Operating Activity ($1,600).

28 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 NameDebitCredit Cash$11,900 Food Sales Revenue$11,900 Cash flow from OPERATING ACTIVITIES.

29 g. Received a telephone bill for March to be paid in April. Account NameDebitCredit Telephone Expense$420 Telephone Payable$420 Non-Cash OPERATING ACTIVITIES.

30 h. Paid $363 in gas for the van in March. Account NameDebitCredit Gas Expense$363 Cash$363 Cash flow from OPERATING ACTIVITIES.

31 i. Paid $6,280 in wages to employees who worked in March. Account NameDebitCredit Wages Expense$6,280 Cash$6,280 Cash flow from OPERATING ACTIVITIES.

32 j. Paid a $300 dividend from the corporation to EACH owner. Account NameDebitCredit Retained Earnings$600 Cash$600 Cash flow from FINANCING ACTIVITIES.

33 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 NameDebitCredit Equipment$50,000 Building$20,000 Cash$70,000 Cash flow from INVESTING ACTIVITIES.


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