1. Tutorials Amsterdam Business School
Accounting P 6011P0148 / PE 6011P0150
Tutorials Amsterdam Business School

2. Where are we…?
So far:
Getting familiar with financial statements and understanding the relationship between them
Getting familiar with using accounts
Practicing economic transactions with assets
Today:
Continuing practicing with accounts and the journal entry methods
The liability and owner’s equity side of the balance sheet
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3. Contents Today CH7 (liabilities): E7.23, P7.26, C7.34
CH8 (owner’s equity): P8.28, P8.32
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4. E7.23 (page )
Practicing how to register transactions related to bonds and notes payable
Practicing the accounting language related to bonds and notes payable
We use the journal entry methods (the horizontal method should be practiced at home)
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5. A. Income tax expense of $1,400 for the currrent period is accrued
A. Income tax expense of $1,400 for the currrent period is accrued. Of the accrual, $400 represents deferred tax liabilities.
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6. B. Bonds payable with a face amount of $15,000 are issued at a price of 98.
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7. C. Of proceeds from the bonds in part b), $9,000 is used to purchase land for future expansion.
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8. D. Because of warranty claims, finished goods inventory costing $128 is sent to customer to replace defective products.
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9. E. A three-month, 9% note payable with a face amount of $60,000 was signed. The bank made the loan on a discount basis.
Note: here we just use a simple discounting (not with the present value formula) as shown in the lecture slides (Lecture 3, slide number 14-19). Reason: short-term (within a year)
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10. F. The next installment of a long term serial bond requiring an annual principal repayment of $70,000 will become due within the current year.
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12. P7.26 (page 263) Practicing how to register unearned revenue
Helps practicing/understanding the accrual concept
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14. P8.28 (page 304)
Practicing how to register transactions related to owner’s equity
Understanding the types of stocks
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15. A. Sold 2,700 shares of $50 par value preferred stock at $53
A. Sold 2,700 shares of $50 par value preferred stock at $53.50 per share.
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16. C. Issued 5,000 shares of $50 par value preferred stock in exchange for a building when the market price for the share was $53.
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17. Declared the annual cash dividend of $3. 70 per share on common stock
Declared the annual cash dividend of $3.70 per share on common stock. There were 7,300 share of $1 par value common stock issued and outstanding throughout the year.
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18. D. Purchased 1,400 shares of preferred stock for the treasury at a price of $56 per share.
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19. E. Sold 500 shares of the preferred stock held in treasury (see d) at a price of $57 per share.
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20. F. Declared and issued a 15% stock dividend on the $1 par value common stock when the market price per share was $36.
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21. P8.32 (page 306-307) Practicing working with various stock types
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