Study sheet · Chapter 1

Accounting in Business

No notes for this chapter yet.

Study sheet · Chapter 2

Accounting for Business Transactions

Entries the chapter teaches

(1) Owner invested $30,000 cash in exchange for common stock

Cash	30,000
Common stock		30,000

(2) Purchased supplies for cash

Supplies	2,500
Cash		2,500

(3) Purchased equipment for cash

Equipment	26,000
Cash		26,000

(4) Purchased supplies on credit

Supplies	7,100
Accounts payable		7,100

(5) Provided consulting services for cash

Cash	4,200
Consulting revenue		4,200

(6) Paid December rent

Rent expense	1,000
Cash		1,000

(7) Paid employee salary to date

Salaries expense	700
Cash		700

(8) Provided consulting and rented facilities on credit

Accounts receivable	1,900
Consulting revenue		1,600
Rental revenue		300

(9) Collected cash on account

Cash	1,900
Accounts receivable		1,900

(10) Paid part of the account payable

Accounts payable	900
Cash		900

(11) Paid cash dividend

Dividends	200
Cash		200

(12) Received cash in advance for 60 days of consulting

Cash	3,000
Unearned consulting revenue		3,000

(13) Paid for a 24-month insurance policy

Prepaid insurance	2,400
Cash		2,400

(14) Purchased supplies for cash

Supplies	120
Cash		120

(15) Paid employee salary

Salaries expense	700
Cash		700

(16) Paid utilities

Utilities expense	230
Cash		230

No notes for this chapter yet.

Study sheet · Chapter 3

Adjusting Accounts for Financial Statements

Entries the chapter teaches

(a) Insurance expired: one month of the $2,400 24-month policy

Insurance expense	100
Prepaid insurance		100

(b) Supplies used: $9,720 available less $8,670 on hand

Supplies expense	1,050
Supplies		1,050

Depreciation expense—Equipment	375
Accumulated depreciation—Equipment		375

(d) Unearned revenue earned: 5 days at $50/day

Unearned consulting revenue	250
Consulting revenue		250

(e) Accrued salaries: 3 days at $70/day

Salaries expense	210
Salaries payable		210

(f) Accrued consulting revenue: 20 days at $90/day

Accounts receivable	1,800
Consulting revenue		1,800

No notes for this chapter yet.

Study sheet · Chapter 4

Accounting for Merchandising Operations

Entries the chapter teaches

(1) Buys $500 of merchandise for cash

Merchandise inventory	500
Cash		500

(2) Buys $500 of merchandise on credit, terms 2/10, n/30

Merchandise inventory	500
Accounts payable		500

(3) Pays the invoice from entry 2 within the discount period

Accounts payable	500
Merchandise inventory		10
Cash		490

(4) Returns $50 of defective goods bought on credit

Accounts payable	50
Merchandise inventory		50

(5) Keeps damaged goods and receives a $30 allowance

Accounts payable	30
Merchandise inventory		30

(6) Pays $75 freight on goods bought FOB shipping point

Merchandise inventory	75
Cash		75

(7-price) Sells goods on credit for $2,400 — the price entry

Accounts receivable	2,400
Sales		2,400

(7-cost) The goods sold cost $1,600 — the cost entry

Cost of goods sold	1,600
Merchandise inventory		1,600

(8-price) Customer returns $800 of those goods — the price entry

Sales returns and allowances	800
Accounts receivable		800

(8-cost) The returned goods cost $600 and go back to inventory — the cost entry

Merchandise inventory	600
Cost of goods sold		600

(9) Customer pays a $1,000 invoice within terms 2/10, n/30

Cash	980
Sales discounts	20
Accounts receivable		1,000

(10) Pays $60 to deliver goods sold FOB destination

Delivery expense	60
Cash		60

(11) Year-end count: inventory is $250 less than the records show

Cost of goods sold	250
Merchandise inventory		250

No notes for this chapter yet.

Study sheet · Chapter 5

Inventories and Cost of Sales

Entries the chapter teaches

(fifo-aug3) Aug 3: buys 15 units at $106 on credit

Merchandise inventory	1,590
Accounts payable		1,590

(fifo-aug14-price) Aug 14: sells 20 units at $130 on credit — the price entry

Accounts receivable	2,600
Sales		2,600

(fifo-aug14-cost) Aug 14: the cost entry under FIFO

Cost of goods sold	1,970
Merchandise inventory		1,970

(fifo-aug17) Aug 17: buys 20 units at $115 on credit

Merchandise inventory	2,300
Accounts payable		2,300

(fifo-aug31-price) Aug 31: sells 23 units at $150 on credit — the price entry

Accounts receivable	3,450
Sales		3,450

(fifo-aug31-cost) Aug 31: the cost entry under FIFO

Cost of goods sold	2,600
Merchandise inventory		2,600

(lifo-aug14-cost) Aug 14: the cost entry under LIFO

Cost of goods sold	2,045
Merchandise inventory		2,045

(lifo-aug31-cost) Aug 31: the cost entry under LIFO

Cost of goods sold	2,685
Merchandise inventory		2,685

(wavg-aug14-cost) Aug 14: the cost entry under WAVG

Cost of goods sold	2,000
Merchandise inventory		2,000

(wavg-aug31-cost) Aug 31: the cost entry under WAVG

Cost of goods sold	2,622
Merchandise inventory		2,622

(9) Market value of 100 units falls from $20 cost to $17: write inventory down to market

Cost of goods sold	300
Merchandise inventory		300

No notes for this chapter yet.

Study sheet · Chapter 6

Cash, Fraud, and Internal Control

Entries the chapter teaches

(1) Establish a $100 petty cash fund

Petty cash	100
Cash		100

(2) Replenish: postage $22, delivery $30, office supplies $18, $2 short

Postage expense	22
Delivery expense	30
Office supplies expense	18
Cash over and short	2
Cash		72

(3) Increase the fund to $150

Petty cash	50
Cash		50

(4) Register shows $550 of cash sales; drawer holds $555

Cash	555
Sales		550
Cash over and short		5

(5) Bank collected a $500 note plus $30 interest

Cash	530
Notes receivable		500
Interest revenue		30

(6) Interest earned on the account

Cash	8
Interest revenue		8

(7) Bank service fee

Miscellaneous expenses	15
Cash		15

(8) Customer's check returned NSF

Accounts receivable	220
Cash		220

(9) Check #118 for $56 to a supplier recorded in the books as $65

Cash	9
Accounts payable		9

No notes for this chapter yet.

Study sheet · Chapter 7

Accounting for Receivables

Entries the chapter teaches

(1) $1,000 credit card sale; card company charges 3%, cash received today

Cash	970
Credit card expense	30
Sales		1,000

(2) Year end: aging requires $5,150; allowance has a $650 credit balance

Bad debts expense	4,500
Allowance for doubtful accounts		4,500

(3) Write off a customer's $800 account

Allowance for doubtful accounts	800
Accounts receivable		800

(4) The written-off customer pays the $800 after all — reinstate

Accounts receivable	800
Allowance for doubtful accounts		800

(5) … and collect

Cash	800
Accounts receivable		800

(6) A small company using direct write-off writes off $400

Bad debts expense	400
Accounts receivable		400

(7) Accept a $10,000, 90-day, 12% note for a past-due account on Dec 1

Notes receivable	10,000
Accounts receivable		10,000

(8) Dec 31: accrue 30 days of interest on the note

Interest receivable	100
Interest revenue		100

(9) Mar 1: note paid in full at maturity

Cash	10,300
Interest revenue		200
Interest receivable		100
Notes receivable		10,000

(10) A different $10,000, 12%, 90-day note is dishonored; no interest accrued

Accounts receivable	10,300
Interest revenue		300
Notes receivable		10,000

No notes for this chapter yet.

Study sheet · Chapter 8

Accounting for Long-Term Assets

Entries the chapter teaches

(1) Buy the machine: price $9,500, freight $300, installation $200, all cash

Machinery	10,000
Cash		10,000

(2) Year-1 straight-line depreciation

Depreciation expense—Machinery	1,800
Accumulated depreciation—Machinery		1,800

(3) Year-1 double-declining-balance depreciation

Depreciation expense—Machinery	4,000
Accumulated depreciation—Machinery		4,000

(4) Pay $900,000 for land and a building appraised at $300,000 and $700,000

Land	270,000
Building	630,000
Cash		900,000

(5) Ordinary repair to the machine

Repairs expense	150
Cash		150

(6) Betterment: new part that extends the machine's life

Machinery	1,200
Cash		1,200

(7) Sell the machine after 3 years of straight-line for $5,000

Cash	5,000
Accumulated depreciation—Machinery	5,400
Machinery		10,000
Gain on disposal		400

(8) Discard fully depreciated equipment that cost $8,000

Accumulated depreciation—Equipment	8,000
Equipment		8,000

(9) Mine cost $500,000, 250,000 tons, no salvage; 20,000 tons mined and sold

Depletion expense	40,000
Accumulated depletion—Mine		40,000

(10) Amortize a $30,000 patent over 10 years

Amortization expense—Patents	3,000
Accumulated amortization—Patents		3,000

No notes for this chapter yet.

Study sheet · Chapter 9

Accounting for Current Liabilities

Entries the chapter teaches

(1) Cash sale of $1,000 with 5% sales tax

Cash	1,050
Sales		1,000
Sales taxes payable		50

(2) Sell 24 games of season tickets for $120,000 in advance

Cash	120,000
Unearned ticket revenue		120,000

(3) Three of the 24 games have been played

Unearned ticket revenue	15,000
Ticket revenue		15,000

(4) Dec 16: borrow $12,000 on a 90-day, 10% note

Cash	12,000
Notes payable		12,000

(5) Dec 31: accrue 15 days of interest

Interest expense	50
Interest payable		50

(6) Mar 16: pay the note and interest

Notes payable	12,000
Interest payable	50
Interest expense	250
Cash		12,300

(7) Record the $10,000 payroll, employee side

Salaries expense	10,000
FICA—Social Security taxes payable		620
FICA—Medicare taxes payable		145
Employee federal income taxes payable		1,500
Employee medical insurance payable		200
Salaries payable		7,535

(8) Record the employer's payroll taxes

Payroll taxes expense	1,365
FICA—Social Security taxes payable		620
FICA—Medicare taxes payable		145
FUTA payable		60
SUTA payable		540

(9) Accrue warranty cost at 4% of $200,000 sales

Warranty expense	8,000
Estimated warranty liability		8,000

(10) Repair a product under warranty with $1,500 of parts

Estimated warranty liability	1,500
Repair parts inventory		1,500

No notes for this chapter yet.

Study sheet · Chapter 10

Accounting for Long-Term Liabilities

Entries the chapter teaches

(1) Issue $100,000 of 8% bonds at par

Cash	100,000
Bonds payable		100,000

(2) Pay six months' interest on bonds issued at par

Bond interest expense	4,000
Cash		4,000

(3) Issue $100,000 of 8% bonds when the market wants 10%

Cash	93,537
Discount on bonds payable	6,463
Bonds payable		100,000

(4) First interest payment, straight-line amortization

Bond interest expense	4,808
Discount on bonds payable		808
Cash		4,000

(5) First interest payment, effective interest amortization

Bond interest expense	4,677
Discount on bonds payable		677
Cash		4,000

(6) Issue $100,000 of 8% bonds when the market wants 6%

Cash	107,020
Premium on bonds payable		7,020
Bonds payable		100,000

(7) First interest payment, effective interest amortization

Bond interest expense	3,211
Premium on bonds payable	789
Cash		4,000

(8) Call the bonds at 103 with a $96,000 carrying value

Bonds payable	100,000
Loss on bond retirement	7,000
Discount on bonds payable		4,000
Cash		103,000

(9) Borrow $60,000 on an 8% installment note

Cash	60,000
Notes payable		60,000

(10) First annual installment payment

Interest expense	4,800
Notes payable	18,482
Cash		23,282

No notes for this chapter yet.

Study sheet · Chapter 11

Equity

Entries the chapter teaches

(1) Issue 1,000 shares of $10 par common for $25 cash

Cash	25,000
Common stock		10,000
Paid-in capital in excess of par value, common stock		15,000

(2) Issue 1,000 no-par, no-stated-value shares for $25 cash

Cash	25,000
Common stock, no par		25,000

(3) Issue 1,000 shares of $10 par common for land worth $30,000

Land	30,000
Common stock		10,000
Paid-in capital in excess of par value, common stock		20,000

(4) Declare an $11,000 cash dividend (11,000 shares outstanding at $1 a share)

Retained earnings	11,000
Common dividend payable		11,000

(5) Pay the dividend

Common dividend payable	11,000
Cash		11,000

(6) Declare a 10% stock dividend: 1,100 shares, $10 par, $30 market

Retained earnings	33,000
Common stock dividend distributable		11,000
Paid-in capital in excess of par value, common stock		22,000

(7) Distribute the stock dividend

Common stock dividend distributable	11,000
Common stock		11,000

(8) Buy 500 treasury shares at $28

Treasury stock, common	14,000
Cash		14,000

(9) Reissue 200 treasury shares at $32

Cash	6,400
Treasury stock, common		5,600
Paid-in capital, treasury stock		800

(10) Reissue 100 more treasury shares at $20

Cash	2,000
Paid-in capital, treasury stock	800
Treasury stock, common		2,800

No notes for this chapter yet.

Study sheet · Chapter 12

Reporting Cash Flows

No notes for this chapter yet.

Study sheet · Chapter 13

Analysis of Financial Statements

No notes for this chapter yet.