Century 21 Accounting, 9e

Multicolumn Journal
Chapter Outlines
PART 1

ACCOUNTING FOR A SERVICE BUSINESS ORGANIZED AS A

PROPRIETORSHIP

Chapter 1

Starting A Proprietorship: Changes that Affect the Accounting

Equation

The Accounting Equation

What Is Accounting?
The BusinessTechKnow Consulting
The Accounting Equation
How Business Activities Change the Accounting Equation
Receiving Cash
Received Cash from Owner as an Investment
Paying Cash
Paid Cash for Supplies
Paid Cash for Insurance
Transactions on Account
Bought Supplies on Account
Paid Cash on Account
How Transactions Change Owners Equity in an Accounting Equation
Revenue Transactions
Received Cash from Sales
Sold Services on Account
Expense Transactions
Paid Cash for Rent
Paid Cash for Telephone Bill
Other Cash Transactions
Received Cash on Account
Paid Cash to Owner for Personal Use
Summary of Changes in Owners Equity

2009 South-Western, Cengage Learning

Chapter 2

Analyzing Transactions into Debit and Credit Parts

Using T Accounts
Analyzing the Accounting Equation
Accounts
Account Balances
Increases and Decreases in Accounts
Analyzing How Transactions Affect Accounts
Received Cash from Owner as an Investment
Paid Cash for Supplies
Paid Cash for Insurance
Bought Supplies on Account
Paid Cash on Account
Analyzing How Transactions Affect Owners Equity Accounts
Received Cash from Sales
Sold Services on Account
Paid Cash for an Expense
Received Cash on Account
Paid Cash to Owner for Personal Use

2009 South-Western, Cengage Learning

Chapter 3

Journalizing Transactions

Journals, Source Documents, and Recording Entries in a Journal

Journals and Journalizing
A Five-Column Journal
Using a Journal
Accuracy
Chronological Record
Double-Entry Accounting
Source Documents
Checks
Sales Invoices
Other Source Documents
Receipts
Memorandums
Calculator Tapes
Received Cash from Owner as an Investment
Paid Cash for Supplies
Journalizing Buying Insurance, Buying on Account, and Paying on Account
Paid Cash for Insurance
Bought Supplies on Account
Paid Cash on Account
Journalizing Transactions that Affect Owners Equity and Receiving Cash on Account
Received Cash from Sales
Sold Services on Account
Paid Cash for an Expense
Received Cash on Account
Paid Cash to Owner for Personal Use
Proving and Ruling a Journal
Proving a Journal Page
Ruling a Journal Page
Starting a New Journal Page
Proving and Ruling a Journal at the End of a Month
Proving Cash
Ruling a Journal at the End of a Month
Standard Accounting Practices

2009 South-Western, Cengage Learning

Chapter 4

Posting to a General Ledger

Preparing a Chart of Accounts

Account Form
Relationship of a T Account to an Account Form
Chart of Accounts
Preparing a Chart of Accounts
Account Numbers
Assigning Account Numbers
Opening an Account in a General Ledger
Posting Separate Amounts from a Journal to a General Ledger
Posting an Amount from a General Debit Column
Posting a Separate Amount from a General Debit Column
Posting a Second Amount to an Account
Posting an Amount from a General Credit Column
Posting Column Totals from a Journal to a General Ledger
Check Marks Show that Amounts Are Not Posted
Journal Entries that Are Not Posted Individually
Totals of General Debit and General Credit Amount Columns
Posting the Total of the Sales Credit Column
Posting the Total of the Cash Debit Column
Posting the Total of the Cash Credit Column
Completed Accounting Forms and Making Correcting Entries
Journal Page with Posting Completed
General Ledger with Posting Completed
Memorandum for a Correcting Entry
Journal Entry to Record a Correcting Entry

2009 South-Western, Cengage Learning

Chapter 5

Cash Control Systems

Checking Accounts
How Businesses Use Cash
Depositing Cash
Deposit Recorded on a Check Stub
Blank Endorsement, Special Endorsement, and Restrictive Endorsement
Blank Endorsement
Special Endorsement
Restrictive Endorsement
Completed Check Stub and Check
Recording a Voided Check
Bank Reconciliation
Bank Statement
Bank Statement Reconciliation
Recording a Bank Service Charge on a Check Stub
Journalizing a Bank Service Charge
Dishonored Checks and Electronic Banking
Recording a Dishonored Check on a Check Stub
Journalizing a Dishonored Check
Journalizing an Electronic Funds Transfer
Journalizing a Debit Card Transaction
Petty Cash
Establishing a Petty Cash Fund
Making Payments from a Petty Cash Fund with a Petty Cash Slip
Replenishing Petty Cash

2009 South-Western, Cengage Learning

Chapter 6

Work Sheet for a Service Business

Creating a Work Sheet

Consistent Reporting
Fiscal Periods
Work Sheet
Preparing the Heading of a Work Sheet
Preparing a Trial Balance on a Work Sheet
Planning Adjusting Entries on a Work Sheet
Planning Adjustments on a Work Sheet
Supplies Adjustment on a Work Sheet
Prepaid Insurance Adjustment on a Work Sheet
Proving the Adjustments Columns of a Work Sheet
Summary of Preparation of a Work Sheet for a Service Business
Preparing a Work Sheet
Extending Financial Statement Information on a Work Sheet
Extending Balance Sheet Account Balances on a Work Sheet
Extending Income Statement Account Balances on a Work Sheet
Recording Net Income, and Totaling and Ruling a Work Sheet
Calculating and Recording a Net Loss on a Work Sheet
Finding and Correcting Errors on the Work Sheet
Correcting Accounting Errors on the Work Sheet
Checking for Typical Calculation Errors
Checking for Errors in the Work Sheet
Check for Errors in the Trial Balance Column
Check for Errors in the Adjustments Columns
Check for Errors in the Income Statement and Balance Sheet Columns
Correcting an Error in Posting to the Wrong Acc
Correcting an Incorrect Amount and an Amount Posted to the Wrong Column
Checking for Errors in Journal Entries
Preventing Errors

2009 South-Western, Cengage Learning

Chapter 7

Financial Statements for a Proprietorship

Preparing an Income Statement

Reporting Financial Information
Income Statement Information on a Work Sheet
Heading of an Income Statement
Revenue, Expenses, and Net Income Sections of an Income Statement
Component Percentage Analysis of an Income Statement
Acceptable Component Percentages
Total Expenses Component Percentage
Net Income Component Percentage
Income Statement with Two Sources of Revenue and a Net Loss
Balance Sheet Information on a Work Sheet
Balance Sheet
Heading of a Balance Sheet
Assets and Liabilities Sections of a Balance Sheet
Owners Equity Section of a Balance Sheet
Owners Equity Reported in Detail on a Balance Sheet

2009 South-Western, Cengage Learning

Chapter 8

Recording Adjusting and Closing Entries for a Service Business

Adjusting Entries
Recording Adjusting Entries
Adjusting Entries
Adjusting Entry for Supplies
Adjusting Entry for Prepaid Insurance
Recording Closing Entries
Need for Permanent and Temporary Accounts
Need For Closing Temporary Accounts
Need for the Income Summary Account
Closing Entry for an Income Statement Account with a Credit Balance
Closing Entry for Income Statement Accounts with Debit Balances
Closing Entry to Record Net Income or Loss and Close the Income Summary
Account
Closing Entry for the Owners Drawing Account
Preparing a Post-Closing Trial Balance
General Ledger Accounts after Adjusting and Closing Entries Are Posted
Post-Closing Trial Balance
Accounting Cycle for a Service Business

2009 South-Western, Cengage Learning

PART 2

ACCOUNTING FOR A MERCHANDISING BUSINESS

ORGANIZED AS A CORPORATION

Chapter 9

Journalizing Purchases and Cash Payments

Journalizing Purchases Using a Purchases Journal

Merchandising Businesses
The BusinessHobby Shack, Inc.
Using Special Journals
Purchasing Merchandise
Purchases on Account
Purchases Journal
Purchase Invoice
Purchasing Merchandise on Account
Totaling and Ruling a Purchases Journal
Journalizing Cash Payments Using a Cash Payments Journal
Cash Payments Journal
Cash Payment of an Expense
Buying Supplies for Cash
Cash Payments for Purchases
Trade Discount
Cash Purchases
Cash Payments on Account with Purchases Discounts
Cash Payments on Account without Purchases Discounts
Performing Additional Cash Payments Journal Operations
Petty Cash Report
Replenishing a Petty Cash Fund
Totaling, Proving, and Ruling a Cash Payments Journal Page to Carry Totals Forward
Starting a New Cash Payments Journal Page
Totaling, Proving, and Ruling a Cash Payments Journal at the End of a Month
Journalizing Other Transactions Using a General Journal
General Journal
Memorandum for Buying Supplies on Account
Buying Supplies on Account
Debit Memorandum for Purchases Returns and Allowances
Journalizing Purchases Returns and Allowances

2009 South-Western, Cengage Learning

Chapter 10

Journalizing Sales and Cash Receipts Using Special Journals

Journalizing Sales on Account Using a Sales Journal

Sales Tax
Sales of Merchandise on Account
Sales Journal
Sales Invoice
Sale on Account
Totaling, Proving, and Ruling a Sales Journal
Journalizing Cash Receipts Using a Cash Receipts Journal
Processing Sales Transactions
Processing Credit Cards
Cash Receipts Journal
Cash and Credit Card Sales
Cash Receipts on Account
Calculating Cash Receipts on Account with Sales Discount
Journalizing Cash Receipts on Account with Sales Discounts
Totaling, Proving, and Ruling a Cash Receipts Journal
Proving Cash at the End of a Month
Recording Transactions Using a General Journal
Credit Memorandum for Sales Returns and Allowances
Sales Returns and Allowances
Journalizing Sales Returns and Allowances

2009 South-Western, Cengage Learning

Chapter 11

Posting To General and Subsidiary Ledgers

Posting to an Accounts Payable Ledger

Ledgers and Controlling Accounts
General Ledger
Subsidiary Ledgers
Accounts Payable Ledger and General Ledger Controlling Account
Accounts Payable Ledger Forms
Posting from a Purchases Journal to an Accounts Payable Ledger
Posting from a Cash Payments Journal to an Accounts Payable Ledger
Posting Credit and Debit Entries from a General Journal to an Accounts Payable
Completed Accounts Payable Ledger
Proving the Accounts Payable Ledger
Posting to an Accounts Receivable Ledger
Accounts Receivable Ledger and General Ledger Controlling Account
Accounts Receivable Ledger Forms
Posting From a Sales Journal to an Accounts Receivable Ledger
Posting From a Cash Receipts Journal to an Accounts Receivable Ledger
Posting a Credit Entry from a General Journal to an Accounts Receivable Ledger
Completed Accounts Receivable Ledger
Proving the Accounts Receivable Ledger
Posting from Journals to a General Ledger
Starting a New Page for an Account in a General Ledger
Posting from the General Amount Columns of a Cash Payments Journal to a General
Ledger
Posting a Debit Entry from a General Journal to a General Ledger
Posting a Credit Entry from a General Journal to a General Ledger
Posting Special Journal Totals to a General Ledger
Posting the Total of a Purchases Journal to a General Ledger
Posting Special Amount Column Totals of a Cash Receipts Journal to a General
Ledger
Posting Special Amount Column Totals of a Cash Payments Journal to a General
Ledger
Order of Posting from Special Journals
Correcting Errors in Subsidiary Ledger Accounts
Journalizing Correcting Entries Affecting Customer Accounts
Posting Correcting Entries Affecting Customer Accounts

2009 South-Western, Cengage Learning

Chapter 12

Preparing Payroll Records

Preparing Payroll Time Cards

Paying Employees
Analyzing a Payroll Time Card
Calculating Employee Hours Worked
Calculating Employee Total Earnings
Determining Payroll Tax Withholding
Payroll Taxes
Employee Income Tax
Employees Withholding Allowance Certificate
Employees Income Tax WithholdingSingle Persons
Employees Income Tax WithholdingMarried Persons
Employee Social Security and Medicare Tax
Preparing Payroll Records
Payroll Register
Employee Earnings Records
Preparing Payroll Checks
Payroll Bank Account
Employees Payroll Check
Electronic Funds Transfer

2009 South-Western, Cengage Learning

Chapter 13

Payroll Accounting, Taxes, and Reports

Recording a Payroll
Different Forms of Payroll Information
Payroll Register
Analyzing Payment of a Payroll
Journalizing Payment of a Payroll
Recording Employer Payroll Taxes
Calculating Employer Payroll Taxes
Employer Social Security and Medicare Taxes
Unemployment Taxable Earnings
Unemployment Taxes
Federal Unemployment Tax
State Unemployment Tax
Journalizing Employer Payroll Taxes
Reporting Withholding and Payroll Taxes
Employer Annual Report to Employees of Taxes Withheld
Employers Quarterly Federal Tax Return
Preparing Employers Quarterly Federal Tax Return
Employer Annual Reporting of Payroll Taxes
Paying Withholding and Payroll Taxes
Paying the Liability for Employee Income Tax, Social Security Tax, and Medicare
Tax
Form 8109, Federal Deposit Coupon
Journalizing Payment of Liability for Employee Income Tax, Social Security Tax, and
Medicare Tax
Paying the Liability for Federal Unemployment Tax
Journalizing Payment of Liability for Federal Unemployment Tax
Journalizing Payment of Liability for State Unemployment Tax

2009 South-Western, Cengage Learning

Chapter 14

Distributing Dividends and Preparing a Work Sheet for a

Merchandising Business

Distributing Corporate Earnings to Stockholders

Financial Information
Stockholders Equity Accounts Used by a Corporation
Declaring a Dividend
Paying a Dividend
Beginning an 8-Column Work Sheet for a Merchandising Business
Entering a Trial Balance on a Work Sheet
Planning Adjustments on a Work Sheet
Recording a Trial Balance on a Work Sheet
Analyzing and Recording Supplies Adjustments
Analyzing Supplies Adjustments
Recording Supplies Adjustments on a Work Sheet
Analyzing and Recording a Prepaid Insurance Adjustment
Analyzing a Prepaid Insurance Adjustment
Recording a Prepaid Insurance Adjustment
Planning and Recording a Merchandise Inventory Adjustment
Merchandise Inventory
Analyzing and Recording a Merchandise Inventory Adjustment
Analyzing an Adjustment When Ending Merchandise Inventory Is Greater Than
Beginning Merchandise Inventory
Planning and Recording an Allowance for Uncollectible Accounts Adjustment
Allowance Method of Recording Losses from Uncollectible Accounts
Estimating Uncollectible Accounts Expense
Analyzing and Recording an Adjustment for Uncollectible Accounts Expense
Planning and Recording Depreciation Adjustments
Categories of Assets
Depreciating Plant Assets
Calculating Depreciation Expense and Book Value
Straight-Line Depreciation
Calculating Accumulated Depreciation
Calculating Book Value
Analyzing and Recording Adjustments for Depreciation Expense
Calculating Federal Income Tax and Completing a Work Sheet
Federal Income Tax Expense Adjustment
Calculating Federal Income Tax
Recording the Federal Income Tax Adjustment
Completing a Work Sheet
A Completed 8-Column Work Sheet
A 10-Column Work Sheet (left page)
A 10-Column Work Sheet (right page)

2009 South-Western, Cengage Learning

Chapter 15

Financial Statements for a Corporation

Preparing an Income Statement

Uses of Financial Statements
Income Statement Information on a Work Sheet
Revenue Section of an Income Statement for a Merchandising Business
Cost of Merchandise Sold Section of an Income Statement for a Merchandising
Business
Completing an Income Statement for a Merchandising Business
Analyzing an Income Statement
Using Component Percentages
Acceptable Component Percentages
Analysis of Component Percentages
Cost of Merchandise Sold Component Percentage
Gross Profit on Sales Component Percentage
Total Expenses Component Percentage
Net Income before Federal Income Tax Component Percentage
Analyzing an Income Statement Showing a Net Loss
Actions to Correct Unacceptable Component Percentages
Unacceptable Component Percentage for Gross Profit on Sales
Unacceptable Component Percentage for Total Expenses
Unacceptable Component Percentage for Net Income before Federal Income Tax
Financial Ratios
Earnings per Share
Price-Earnings Ratio
Preparing a Statement of Stockholders Equity
Capital Stock Section of the Statement of Stockholders Equity
Retained Earnings Section of the Statement of Stockholders Equity
Preparing a Balance Sheet
Balance Sheet Information on a Work Sheet
Current Assets Section of a Balance Sheet
Plant Assets Section of a Balance Sheet
Liabilities Section of a Balance Sheet
Stockholders Equity Section of a Balance Sheet
Completed Balance Sheet
Supporting Schedules for a Balance Sheet

2009 South-Western, Cengage Learning

Chapter 16

Recording Adjusting and Closing Entries for a Corporation

Recording Adjusting Entries

Adjusting Entries Recorded from a Work Sheet
Adjusting Entry for Allowance for Uncollectible Accounts
Adjusting Entry for Merchandise Inventory
Adjusting Entry for SuppliesOffice
Adjusting Entry for SuppliesStore
Adjusting Entry for Prepaid Insurance
Adjusting Entry for DepreciationOffice Equipment
Adjusting Entry for DepreciationStore Equipment
Adjusting Entry for Federal Income Taxes
Recording Closing Entries for Income Statement Accounts
The Income Summary Account
Closing Entry for Accounts with Credit Balances
Closing Entry for Income Statement Accounts with Debit Balances
Summary of Closing Entry for Income Statement Accounts with Debit Balances
Closing Entry to Record Net Income
Closing Entry for Dividends
Completed Closing Entries for a Corporation Recorded in a Journal
Preparing a Post-Closing Trial Balance
Completed General Ledger After Adjusting and Closing Entries Are Posted
Post-Closing Trial Balance
Accounting Cycle for a Merchandising Business Organized as a Corporation

2009 South-Western, Cengage Learning

PART 3

ACCOUNTING FOR A MERCHANDISING BUSINESS

ORGANIZED AS A CORPORATIONADJUSTMENTS AND
VALUATION

Chapter 17

Accounting for Uncollectible Accounts Receivable

Uncollectible Accounts
The BusinessRestaurant Supply Co.
Estimating and Recording Uncollectible Accounts Expense
Analyzing and Journalizing an Adjustment for Uncollectible Accounts Expense
Posting an Adjusting Entry for Uncollectible Accounts Expense
Writing Off and Collecting Uncollectible Accounts Receivable
Journalizing Writing Off an Uncollectible Account Receivable
Posting an Entry to Write Off an Uncollectible Account Receivable
Reopening an Account Previously Written Off
Recording Cash Received for an Account Previously Written Off
Posting Entries for Collecting a Written-Off Account Receivable

2009 South-Western, Cengage Learning

Chapter 18

Accounting for Plant Assets and Depreciation

Buying Plant Assets and Paying Property Tax

Recording the Buying of a Plant Asset
Calculating and Paying Property Tax
Calculating Depreciation Expense
Straight-Line Depreciation
Calculating Depreciation Expense for Part of a Year
Calculating Accumulated Depreciation and Book Value
Calculating Accumulated Depreciation
Calculating Book Value
Journalizing Depreciation Expense
Preparing Plant Asset Records
Journalizing Annual Depreciation Expense
Posting an Adjusting Entry for Depreciation Expense
Disposing of Plant Assets
Sale of a Plant Asset for Book Value
Recording a Plant Assets Depreciation Expense for a Partial Year
Sale of a Plant Asset for More than Book Value
Sale of a Plant Asset for Less than Book Value
Declining-Balance Method of Depreciation
Calculating Depreciation Using the Double Declining-Balance Method
Calculating the Last Years Depreciation Expense
Comparison of Two Methods of Depreciation

2009 South-Western, Cengage Learning

Chapter 19

Accounting for Inventory

Determining the Quantity of Merchandise Inventory

Why Merchandise Inventory Is Important
The Most Efficient Quantity of Inventory
Methods Used to Determine the Quantity of Merchandise Inventory
Inventory Record
Stock Record
Perpetual Inventory Using a Computer
Determining the Cost of Merchandise Inventory
First-In, First-Out Inventory Costing Method
Last-In, First-Out Inventory Costing Method
Weighted-Average Inventory Costing Method
Calculating the Cost of Merchandise Sold
Comparison of Inventory Methods
Estimating Inventory
Gross Profit Method of Estimating Inventory
Estimating Inventory for Other Months

2009 South-Western, Cengage Learning

Chapter 20

Accounting for Notes and Interest

Promissory Notes
When Lending and Borrowing Are Necessary
Uses of Promissory Notes
Interest on Promissory Notes
Maturity Date of Promissory Notes
Notes Payable
Signing a Note Payable
Paying Principal and Interest on a Note Payable
Signing a Note Payable for an Extension of Time
Paying a Note Payable Issued for an Extension of Time
Notes Receivable
Accepting a Note Receivable from a Customer
Collecting Principal and Interest on a Note Receivable
Recording a Dishonored Note Receivable

2009 South-Western, Cengage Learning

Chapter 21

Accounting for Accrued Revenue and Expenses

Accrued Revenue
Accounting for Interest at the Fiscal Year End
Analyzing an Adjustment for Accrued Interest Income
Posting an Adjusting Entry for Accrued Interest Income
Reversing Entry for Accrued Interest Income
Collecting a Note Receivable Issued in a Previous Fiscal Period
Accrued Expenses
Analyzing an Adjustment for Accrued Interest Expense
Posting an Adjusting Entry for Accrued Interest Expense
Reversing Entry for Accrued Interest Expense
Paying a Note Payable Signed in a Previous Fiscal Period
Effect of Not Using Reversing Entries

2009 South-Western, Cengage Learning

Chapter 22

End-Of-Fiscal-Period Work for a Corporation

Preparing a Work Sheet for a Corporation

Preparing Financial Statements
Use of a Work Sheet
Entering a Trial Balance on a Work Sheet
Planning Adjustments on a Work Sheet
Interest Income Adjustment
Supplies Adjustment
Federal Income Tax Adjustment
Completing a Work Sheet
Completed Work Sheet
Preparing an Income Statement
Income Statement
Uses of an Income Statement
Analyzing an Income Statement
Acceptable Component Percentages
Preparing a Statement of Stockholders Equity and Balance Sheet
Statement of Stockholders Equity
Balance Sheet
Preparing a Balance Sheet
Assets
Liabilities
Stockholders Equity
Analyzing a Balance Sheet
Working Capital
Current Ratio
Adjusting, Closing, and Reversing Entries for a Corporation
Adjusting Entries
Closing Entries for a Corporation
Closing Entry for Accounts with Credit Balances
Closing Entry for Accounts with Debit Balances
Closing Entry to Record Net Income
Closing Entry for Dividends
Reversing Entries
Accounting Cycle for a Merchandising Business Organized as a Corporation

2009 South-Western, Cengage Learning

PART 4

ADDITIONAL ACCOUNTING PROCEDURES

Chapter 23

Accounting for Partnerships

Forming a Partnership
Partnerships
The BusinessGiftPak Company
Partnership Agreements
Initial Investments by Owners
Withdrawal of Cash by Partner
Withdrawal of Merchandise by Partner
Distribution of Net Income and Owners Equity Statements
Distribution of Net Income Statement
Distribution of Net Income Statement with Unequal Distribution of Earnings
Partners Capital and Drawing Accounts
Owners Equity Statement
Owners Equity Statement with an Additional Investment and a Net Loss
Balance Sheet for a Partnership
Dissolving a Partnership
Account Balances Before Realization
Gain on Realization
Recognizing a Gain on Realization
Loss on Realization
Liquidating Liabilities
Account Balances After Liquidation of Noncash Assets and Payment of Liabilities
Distributing Loss or Gain on Realization to Partners
Distributing Remaining Cash to Partners

2009 South-Western, Cengage Learning

Chapter 24

Recording International and Internet Sales

Recording International Sales

International Sales
International Sales Compared with Domestic Sales
Processing an International Sale
Collecting Payment for an International Sale
Journalizing an International Sale
Journalizing Time Drafts
Journalizing Cash Receipts from Time Drafts
Trade Acceptances
Recording Internet Sales
Internet Sales
Journalizing an Internet Sale

2009 South-Western, Cengage Learning