1. LESSON 14-1 Distributing Corporate Earnings to Stockholders
4/10/2019
LESSON 14-1
Distributing Corporate Earnings to Stockholders

2. STOCKHOLDERS’ EQUITY ACCOUNTS USED BY A CORPORATION
page 405
(3000) STOCKHOLDERS’ EQUITY
3110 Capital Stock
3120 Retained Earnings
3130 Dividends
3140 Income Summary
LESSON 14-1

3. DECLARING A DIVIDEND
page 406
December 15. Hobby Shack’s board of directors declared a quarterly dividend of $2.00 per share; capital stock issued is 2,500 shares; total dividend, $5, Date of payment is January 15. Memorandum No. 79. 2 4 3 1 5 6
1. Write the date.
4. Write the debit amount.
2. Write the title of the account debited.
5. Write the title of the account credited.
3. Write the memorandum number.
6. Write the credit amount.
LESSON 14-1

4. PAYING A DIVIDEND
page 407
January 15. Paid cash for quarterly dividend declared December 15, $5, Check No. 379. 1 2 3 4 5
1. Write the date.
2. Write the account title.
3. Write the check number.
4. Write the debit account.
5. Write the credit amount.
LESSON 14-1

5. TERMS REVIEW retained earnings dividends board of directors
page 408
retained earnings
dividends
board of directors
declaring a dividend
LESSON 14-1

6. Beginning an 8-Column Work Sheet for a Merchandising Business
LESSON 14-2
4/10/2019
LESSON 14-2
Beginning an 8-Column Work Sheet for a Merchandising Business

7. RECORDING A TRIAL BALANCE ON A WORK SHEET
page 410 1 2
1. Account title
2. Account balance
3. Total, prove, and rule the debit and credit columns 3
LESSON 14-2

8. ANALYZING AND RECORDING SUPPLIES ADJUSTMENTS
page 411
Adj. (a) 2,730.00
Supplies Expense—Office
Dec. 31 Bal. 3, Adj. (a) 2,730.00
(Adj Bal )
Supplies—Office
Adj. (b) 2,910.00
Supplies Expense—Store
Dec. 31 Bal. 3, Adj. (b) 2,910.00
(Adj Bal. 1,034.00)
Supplies—Store
LESSON 14-2

9. RECORDING SUPPLIES ADJUSTMENTS ON A WORK SHEET
page 412 3 2 1
1. Write the debit amounts in the Adjustments Debit column.
2. Write the credit amounts in the Adjustments Credit column.
3. Label the two parts of the Supplies—Office adjustment with small letter a and small letter b in parentheses.
LESSON 14-2

10. ANALYZING AND RECORDING A PREPAID INSURANCE ADJUSTMENT
page 413 3 1 2
1. Enter the amount of insurance used in the Adjustments Credit column.
2. Enter the same amount in the Adjustments Debit column.
3. Label the two parts of the adjustment with a small letter c in parentheses.
LESSON 14-2

11. LESSON 14-3 Planning and Recording a Merchandise Inventory Adjustment
4/10/2019
LESSON 14-3
Planning and Recording a Merchandise Inventory Adjustment

12. MERCHANDISE INVENTORY
page 415
LESSON 14-3

13. ANALYZING AND RECORDING A MERCHANDISE INVENTORY ADJUSTMENT
page 416 3 2 1
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment with a small letter d in parentheses.
LESSON 14-3

14. Merchandise Inventory
ANALYZING AN ADJUSTMENT WHEN ENDING MERCHANDISE INVENTORY IS GREATER THAN BEGINNING MERCHANDISE INVENTORY
page 417
Jan. 1 Bal. 294,700.00
Adj. (d) 4,200.00
(New Bal. 298,900.00)
Merchandise Inventory
Income Summary
LESSON 14-3

15. TERM REVIEW
page 418
merchandise inventory
LESSON 14-3

16. LESSON 14-4
4/10/2019
LESSON 14-4
Planning and Recording an Allowance for Uncollectible Accounts Adjustment

17. ALLOWANCE METHOD OF RECORDING LOSSES FROM UNCOLLECTIBLE ACCOUNTS
page 419
LESSON 14-4

18. ESTIMATING UNCOLLECTIBLE ACCOUNTS EXPENSE
page 420
Estimated Uncollectible Accounts Expense =
Percentage ×
Total Sales on Account
$124,500.00 × 1% =
$1,245.00
LESSON 14-4

19. ANALYZING AND RECORDING AN ADJUSTMENT FOR UNCOLLECTIBLE ACCOUNTS EXPENSE
page 421 3 1 2
1. Enter the estimated uncollectible amount.
2. Enter the same amount in the Adjustments Debit column.
3. Label the two parts with a small letter e in parentheses.
LESSON 14-4

20. TERMS REVIEW uncollectible accounts
page 422
uncollectible accounts
allowance method of recording losses from uncollectible accounts
book value
book value of accounts receivable
LESSON 14-4

21. LESSON 14-5 Planning and Recording Depreciation Adjustments
4/10/2019
LESSON 14-5
Planning and Recording Depreciation Adjustments

22. CALCULATING DEPRECIATION EXPENSE AND BOOK VALUE
page 424
(continued on next slide)
1. Subtract the asset’s estimated salvage value from original cost.
2. Divide the estimated total depreciation expense by the years of estimated useful life.
Estimated Total Depreciation Expense =
Estimated Salvage Value –
Original Cost
$1,250.00 –
$250.00 =
$1,000.00 1
Annual Depreciation Expense =
Years of Estimated Useful Life ÷
Estimated Total Depreciation Expense
$1,000.00 ÷ 5 =
$200.00 2
LESSON 14-5

23. CALCULATING DEPRECIATION EXPENSE AND BOOK VALUE
page 424
(continued from previous slide)
20X3 Accumulated Depreciation =
20X3 Depreciation Expense +
20X2 Accumulated Depreciation
$400.00 +
$200.00 =
$600.00
Ending Book Value =
Accumulated Depreciation –
Original Cost
$1,250.00 –
$600.00 =
$650.00
LESSON 14-5

24. ANALYZING AND RECORDING ADJUSTMENTS FOR DEPRECIATION EXPENSE
page 425 3 2 1
1. Write the debit amounts.
2. Write the credit amounts.
3. Label the adjustments.
LESSON 14-5

25. TERMS REVIEW current assets plant assets depreciation expense
page 426
current assets
plant assets
depreciation expense
estimated salvage value
straight-line method of depreciation
accumulated depreciation
book value of a plant asset
LESSON 14-5

26. LESSON 14-6 Calculating Federal Income Tax and Completing a Work Sheet
4/10/2019
LESSON 14-6
Calculating Federal Income Tax and Completing a Work Sheet

27. FEDERAL INCOME TAX EXPENSE ADJUSTMENT
page 427
Total of Income Statement Credit column $ 500,253.10
Less total of Income Statement Debit column before federal income tax –396,049.91
Equals Net Income before Federal Income Tax $ 104,203.19
LESSON 14-6

28. CALCULATING FEDERAL INCOME TAX
page 428
LESSON 14-6

29. RECORDING THE FEDERAL INCOME TAX ADJUSTMENT
page 429 1 3 2
1. Calculate the amount of federal income tax expense adjustment.
2. Total and rule the Adjustments columns.
3. Extend account balances.
LESSON 14-6

30. COMPLETING A WORK SHEET
page 430 1 2 3 4 5
1. Total the Income Statement and Balance Sheet columns.
2. Calculate and enter the net income after federal income tax.
3. Extend the net income amount.
4. Calculate the column totals.
5. Rule double lines.
LESSON 14-6

31. A COMPLETED 8-COLUMN WORK SHEET
page 432
LESSON 14-6

32. A 10-COLUMN WORK SHEET 1 2 3 5 4 6 1. Trial balance 5. Extend balances
page 1 2 3 5 4 6
1. Trial balance
5. Extend balances
2. Adjustments
6. Calculate net income; total, prove and rule
3. Extend adjusted balances
4. Total, prove, and rule
LESSON 14-6