ACCT 102 Chapter Notes - Chapter 2.1-2.2: Retained Earnings, Accounts Payable, Income Statement

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20 Feb 2017

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Called a t-account cause it looks like a t. Debits and credits: debit (dr. ) = left side, credit (cr. ) Called a debit balance if the total of debits is greater than credits. Called a credit balance if the total of credits is greater than debits: double-entry system of transaction. Helps insure accuracy of recorded amounts and detecting of errors: for assets, credits = decrease, debits = increase. Normal balance is usually debits: for liabilities, credits = increase, debits = decrease. Se relationships: common stock and retained earnings are reported on the se part of the balance sheet, net income/loss and dividends are reported on retained earnings report. Net income/loss is calculated using revenues and expenses: revenues and expenses are reported on income statement. Three basic steps: 1. analyze each transaction. Using business documents as evidence of the transaction: 2. enter transaction information in journal, 3. transfer journal information into the correct accounts in ledger.

Related Questions

1. Accounts are classified in the ledger

a. chronologically

b. alphabetically

c. in accordance with their appearance in the financial statements

d. so that accounts used most often are listed first

2. Which of the following accounts is an owner's equity account?

a. Cash

b. Accounts Payable

c. Prepaid Insurance

d. Ross Morris, Capital

3. The debit side of an account

a. depends on whether the account is an asset, liability, or owner's equity

b. can be either side of the account depending on how the accountant set up the system

c. is the right side of the account

d. is the left side of the account.

4. Which statement(s) concerning cash is (are) true?

a. cash will always have more debits than credits

b. cash will never have a credit balance

c. cash is increased by debiting

d. all of the above

amaranthpanda447

1. Total each column of the special journals. Show that thetotal debits equal the total credits in each special journal.

2. Balance or reconcile the amounts receivable subsidiary ledgerand accounts receivable in the general ledger. Do the same for theaccounts payabel subsidiary ledger and accounts payable in thegeneral ledger.

SalesJournal PAGE 7
DATE		INVOICE NO.	ACCOUNTS DEBITED	POST. REF.	ACCOUNTS RECEIVABLE DR. SALES REVENUE CR.	COST OF GOODS SOLD DR. INVENTORY CR.
July	2	913	Ishikawa Corp		24600	10800
July	9	914	Bell Ltd		33300	13860
July	15	915	M.O.Brown		3990	1440
July	18	916	Ishikawa Corp		2142	762
July	29	917	Bell Ltd		2976	1320

Cash ReceiptsJournal PAGE 5
		DEBITS		CREDITS					COST OF GOODS SOLD DR. INVENTORY CR.
						OTHER ACCOUNTS
DATE		CASH	SALES DISCOUNTS	ACCOUNTS RECEIVABLE	SALES REVENUE	ACCOUNT TITLE	POST. REF.	AMOUNT
July	5	6462			6462	Cash sales			2880
July	8	6650				Interest revenue		6650
July	9	32967	333	33300		Bell Ltd
July	12	24354	246	24600		Ishikawa Corp
July	31	2142		2142		Ishikawa Corp

Req.

PurchasesJournal PAGE 10

CREDITS

DEBITS

OTHER ACCOUNTS

DATE

ACCOUNT CREDITED

INVOICE DATE

TERMS

POST REF.

ACCOUNTS PAYABLE

INVENTORY

SUPPLIES

ACCOUNT TITLE

POST. REF.

AMOUNT

July

Nakkach

14802

July

Burgess

12282

July

Manley

8050

Cash PaymentsJournal PAGE 8
					DEBITS		CREDITS
DATE		CHQ. NO.	ACCOUNTS DEBITED	POST REF.	OTHER ACCOUNTS	ACCOUNTS PAYABLE	INVENTORY	CASH
July	5		Furniture					13110
July	10		Purchases					6858
July	13		Nakkach			14802		14358
July	22		Prepaid insurance					6000
July	25		Utilities					6718
July	30		Manley Inc			8050		7889
July	31		Salaries					14082

Accounts Receivable SubsidiaryLedger

ACCOUNT BELLLTD.
DATE		ITEM	JRNL. REF.	DEBIT	CREDIT	BALANCE
July	9	Bell Ltd	6	33300		33300
July	19	Bell Ltd	13	32967		32967
July	19	Bell Ltd Discount	13		333	333
July	29	Bell Ltd	21	2976		2976

ACCOUNT M.O.BROWN
DATE		ITEM	JRNL. REF.	DEBIT	CREDIT	BALANCE
July	15	M.O.Brown (credit sale)	11	3990		3990
July	15	M.O.Brown (Sold to)	11		1440	1440

ACCOUNT ISHIKAWAINC.
DATE		ITEM	JRNL. REF.	DEBIT	CREDIT	BALANCE
July	2	Ishikawa Inc (credit sale)	1	24600		24600
July	10	Ishikawa Inc (discount)	8	246		246
July	10	Ishikawa Inc	8		24354	-24354
July	18	Ishikawa Inc (credit sale)	13		2142	-2142

Accounts Payable SubsidiaryLedger

ACCOUNT BURGESSDISTRIBUTINGLTD.
DATE		ITEM	JRNL. REF.	DEBIT	CREDIT	BALANCE
July	15	Burgess Distribution Ltd (Purchases)	15		$12,282	-$12,282

ACCOUNT NAKKACHCORP.
DATE		ITEM	JRNL. REF.	DEBIT	CREDIT	BALANCE
July	3	Nakkach Corp (purchase of inventory)	2		$14,802	-$14,802
July	13	Nakkach Corp (Discount)	9	$444.06		$444.06
July	22	Nakkach Corp (Furniture Purchase)	16		$3870	-$3870

ACCOUNT MANLEY,INC.
DATE		ITEM	JRNL. REF.	DEBIT	CREDIT	BALANCE
July	13	Manley Inc (Purchase of supplies)	10		$8646	-$8646
July	28	Manley Inc	19		$805	-$805
July	29	Manley Inc (Return)	20	$4050		$4050

pucecockroach350

Identify a business or personal financial transaction. (You canchoose any one you like, it doesn't have to be one in thetextbook). Then answer the following questions which should resultin correctly identifying the accounts to be debited and credited:REQUIRED: 1) What are the specific accounts that are affected?(i.e. Cash, Accounts Receivable, Land, etc.) REMEMBER THAT THEREMUST BE AT LEAST 2 SPECIFIC ACCOUNTS AFFECTED. 2) What BROAD typeof Account do they belong to? (i.e. Asset, Liability or Equity) 3)Does this transaction result in an INCREASE or DECREASE to theaccount(s) in #2 above? 4) Using the rules for Debits and Creditsidentify which SPECIFIC ACCOUNT (#1) is to be debited and which isto be credited. REMEMBER: 1. ASSETS are on the LEFT side of theaccounting equation and therefore they INCREASE on the LEFT, DEBITSIDE; LIABILITIES AND EQUITY are on the RIGHT SIDE of the equationand therefore they INCREASE on the RIGHT, CREDIT side. 2. TOTALDEBITS MUST EQUAL TOTAL CREDITS!

ACCT 102 Chapter Notes - Chapter 2.1-2.2: Retained Earnings, Accounts Payable, Income Statement

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