Professional Documents
Culture Documents
Wages Payable $2550 It was determined that at the end of the month the cost of
the gasoline, oil, and trash bags still on hand was $150. Cost of supplies (expense)
$850 Supplies $850 l. Customers paid a total of $750 due from mowing services
provided during the first two weeks. The revenue for these services was recognized
in transaction f. Cash $75Accounts Receivable $750 Homework Practice: The firm
was organized and the stockholders invested cash of $7,500. a. Cash $7500 Paid-in
capital $7,500 The firm borrowed $5,700 from the bank; a short-term note was
signed. b. Cash $5,700 Notes Payable $5,700 c. Display cases and other store
equipment costing $1,600 were purchased for cash. The original list pric of the
equipment was $1,950, but a discount was received because the seller was having
a sale. Equipment $1,600 Cash $1,600 A store location was rented, and $1,400 was
paid for the first month's rent. d. Rent Expense $1,400 Cash $1,400 e. Inventory of
$15,100 was purchased; $9,400 cash was paid to the suppliers, and the balance will
be paid within 45 days. Merchandise Inventory $15,100 Cash $9,400f. g. h. i. j. k. l.
Accounts Payable $5,700 During the first week of operations, merchandise that had
cost $3,900 was sold for $6,000 cash. Cash $6000 Sales $6,000 Cost of goods sold
$3,900 Merchandise Inventory $3,900 A newspaper ad costing $130 was arranged
for; it ran during the second week of the store's operations The ad will be paid for in
the next month. Advertising Expense $130 Accounts Payable $130 Additional
inventory costing $4,250 was purchased; cash of $1,200 was paid, and the balance
is due in 30 days. Merchandise Inventory $4,250 Cash $1,200 Accounts Payable
$3,050 In the last three weeks of the first month, sales totaled $14,500, of which
$10,000 was sold on account. The cost of the goods sold totaled $9,500. Accounts
Receivable $10,000 Cash $4,500 Sales $14,500 Cost of goods sold $9,500
Merchandise Inventory $9,500 Employee wages for the month totaled $1,900; these
will be paid during the first week of the next mon Wages Expense $1,900 Wages
Payable $1,900 The firm collected a total of $3,500 from the sales on account
recorded in transaction i. Cash $3500 Accounts Receivable $3500 The firm paid a
total of $4,550 of the amount owed to suppliers from transaction e. Accounts
Payable $4,550 T Cash $4,550 TA Session Practice: Jan 2: sale of $1000 for cash
Cash $1000 Revenue $1000 Jan 5: sale of $1000 which will be paid later Accounts
Receivable $1000 Revenue $1000 Jan 7: collection of $500 of accounts receivable
Cash $500 Accounts Receivable $500 Jan 31: recording of bad debts expense $5
Bad-debts expense (an expense) $5 Allowance for bad-debts (a contra asset) $5
Jan 31: customer goes bankrupt. Write-off accounts receivable of $3 Allowance for
bad debts $3 Accounts Receivables $3 Feb 1: paid cash for 12 months rent ($3600)
for office in advance Prepaid rent (an asset) $3600 Cash $3600 Feb 28: recorded
rent expense for office for month Rent Expense $300 Prepaid Rent $300 Feb 28:
Recorded rent expense for a small machine. This lease does not require payment of
rent in advance. Rent of $150 is paid at the end of the month Rent Expense $150
Cash or Rent Payable $150 *accounts payable = to suppliers! (other types of
liabilities, specify!) March 1: buy land for $100,000 in cash Land $100,000 Cash
$100,000 March 1: take out loan for $100,000 Cash $100,000 Loan Payable
$100,000 March 31: Pay back loan and pay interest of $500 in cash Loan Payable
$100,000 Cash $100,000 Interest Expense $500 Cash $500 April 1: Bought raw
materials for $1,000 but will pay later Materials $1000 Accounts Payable $1000
April 30: paid off $1,000 for raw materials Accounts Payable $1000 Cash $1000 May
1: issued (sold) 1,000 shares of stock of $3 each. The par value of the stock is $2
Cash $3000 Common Stock $2000 Additional paid-in capital $1000 Homework
Practice: Issued 210,000 shares of $6-par-value common stock for $1,260,000 in
cash. Cash $1,260,000 Common Stock $1,260,000 b. Borrowed $510,000 from
Oglesby National Bank and signed a 14% note due in two years. Cash $510,000 a. c.
d. e. f. g. h. i. j. k. l. Notes Payable $510,000 Incurred and paid $390,000 in salaries
for the year. Salaries expense $390,000 Cash $390,000 Purchased $710,000 of
merchandise inventory on account during the year. Merchandise Inventory $710,000
Accounts Payable $710,000 Sold inventory costing $600,000 for a total of $980,000,
all on credit. Accounts Receivable $980,000 Sales $980,000 Cost of Goods Sold
$600,000 Merchandise Inventory $600,000 Paid rent of $220,000 on the sales
facilities during the first 11 months of the year. Rent Expense $220,000 Cash
$220,000 Purchased $150,000 of store equipment, paying $51,000 in cash and
agreeing to pay the difference within 90 days. Equipment $150,000 Cash $51,000
Accounts Payable $99,000 Paid the entire $99,000 owed for store equipment, and
$590,000 of the amount due to suppliers for credit purchases previously recorded.
Accounts Payable $689,000 Cash $689,000 Incurred and paid utilities expense of
$42,000 during the year. Utilities Expense $42,000 Cash $42,000 Collected
$835,000 in cash from customers during the year for credit sales previously
recorded. Cash $835,000 Accounts Receivable $835,000 At year-end, accrued
$71,400 of interest on the note due to Oglesby National Bank. Interest expense
$71,4000 Interest Payable $71,400 At year-end, accrued $20,000 of past-due
December rent on the sales facilities. Rent Expense $20,000 Rent Payable $20,000
STOCK SOLD/ISSUED When company sells/issues stock: Cash Common Stock
Additional Paid in Capital MACHINE PURCHASE AND DEPRECIATION Machine Cash
Depreciation Expense Accumulated Depreciation DEBT AND INTEREST To get a loan:
Cash Notes Payable When paying interest: Interest Expense Cash To pay off loan:
Notes Payable Cash INVENTORY To record purchase of inventory of $75 on credit:
Inventory $75 Accounts Payable $75 To record purchase of inventory of $75 for
cash: Inventory $75 Cash $75 To transfer cost of item sold, $20, to income
statement: Cost of goods sold $20 Inventory $20 ACCRUING EXPENSES (see Ch 4
ppt) To accrue wages owed: Wages Expense Wages Payable Payroll after employee
wages are paid: Wages Expense Wages Payable Cash ACCRUING INCOME (see Ch 4
ppt) To recognize the interest income: Interest Receivable Interest Income To record
interest received: Cash Interest Income Interest Receivable RECLASSIFYING ASSETS
TO EXPENSES Purchased a one-year insurance policy: Prepaid Insurance Cash
Monthly adjusting entry for insurance: Insurance Expense Prepaid Insurance
ACCOUNTS RECEIVABLE To record sales of $100 on account: Accounts Receivable
$100 Sales $100 To record collection of $50 on accounts receivable: Cash $50
Accounts Receivable $50 To record bad debts expense of $5: Bad debts expense $5
Allowance for bad debts $5 To record write-off of a specific bad debt of $2: