ACCT1501 Lecture Notes - Lecture 3: Double-Entry Bookkeeping System, Accrual, Deferral
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Hello,
i am in accounting and having trouble with my general ledger. i need help with the set up and exactly how to do the balances. its not clicking with me at all. below i have included the information on the problem im working on, and would be great if i could some help.
Journal Entries and Trial Balance
On June 1, 2016, Kim Wheeler established an interior decorating business, Intrex Designs. During the month, Kim completed the following transactions related to the business.
June | 1 | Kim transferred cash from a personal bank account to an account to be used for the business, $18,400. |
4 | Paid rent for period of June 4 to end of month, $1,780. | |
6 | Purchased a truck for $15,000, paying $1,000 cash and giving a note payable for the remainder. | |
8 | Purchased equipment on account, $7,180. | |
10 | Purchased supplies for cash, $1,230. | |
12 | Paid annual premiums on property and casualty insurance, $2,760. | |
15 | Received cash for job completed, $7,730. | |
23 | Paid creditor a portion of the amount owed for equipment purchased on June 13, $2,560. | |
24 | Recorded jobs completed on account and sent invoices to customers, $8,800. | |
25 | Received an invoice for truck expenses, to be paid in July, $810. | |
26 | Paid utilities expense, $920. | |
27 | Paid miscellaneous expenses, $330. | |
28 | Received cash from customers on account, $3,680. | |
29 | Paid wages of employees, $2,450. | |
30 | Withdrew cash for personal use, $2,040. |
Required:
1. Journalize each transaction in a two-column journal, beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. For a compound transaction, if an amount box does not require an entry, leave it blank.
11 Cash | 31 Kim Wheeler, Capital |
12 Accounts Receivable | 32 Kim Wheeler, Drawing |
13 Supplies | 41 Fees Earned |
14 Prepaid Insurance | 51 Wages Expense |
16 Equipment | 53 Rent Expense |
18 Truck | 54 Utilities Expense |
21 Notes Payable | 55 Truck Expense |
22 Accounts Payable | 59 Miscellaneous Expense |
General Journal | Page 1 | |||
---|---|---|---|---|
Date | Description | Post. Ref. | Debit | Credit |
2016 | ||||
June 1 | Cash | |||
Kim Wheeler, Capital | ||||
June 4 | Rent Expense | |||
Cash | ||||
June 6 | Truck | |||
Cash | ||||
Notes Payable | ||||
June 8 | Equipment | |||
Accounts Payable | ||||
June 10 | Supplies | |||
Cash | ||||
June 12 | Prepaid Insurance | |||
Cash | ||||
June 15 | Cash | |||
Fees Earned |
General Journal | Page 2 | |||
---|---|---|---|---|
Date | Description | Post. Ref. | Debit | Credit |
2016 | ||||
June 23 | Equipment | |||
Accounts Payable | ||||
June 24 | Accounts Receivable | |||
Fees Earned | ||||
June 25 | Truck Expense | |||
Accounts Payable | ||||
June 26 | Utilities Expense | |||
Cash | ||||
June 27 | Miscellaneous Expense | |||
Cash | ||||
June 28 | Cash | |||
Accounts Receivable | ||||
June 29 | Wages Expense | |||
Cash | ||||
June 30 | Kim Wheeler, Drawing | |||
Cash |
2. Post (in chronological order) the journal to a ledger of four-column accounts, inserting appropriate posting references in the general journal as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. If an amount box does not require an entry, leave it blank.
General Ledger | ||||||
---|---|---|---|---|---|---|
Account | Cash | ACCOUNT NO. | 11 | |||
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 1 | ||||||
June 4 | ||||||
June 6 | ||||||
June 10 | ||||||
June 12 | ||||||
June 15 | ||||||
June 23 | ||||||
June 26 | ||||||
June 27 | ||||||
June 28 | ||||||
June 29 | ||||||
June 30 |
Account | Accounts Receivable | ACCOUNT NO. | 12 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 24 | ||||||
June 28 |
Account | Supplies | ACCOUNT NO. | 13 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 10 |
Account | Prepaid Insurance | ACCOUNT NO. | 14 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 12 |
Account | Equipment | ACCOUNT NO. | 16 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 8 |
Account | Truck | ACCOUNT NO. | 18 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 6 |
Account | Notes Payable | ACCOUNT NO. | 21 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 6 |
Account | Accounts Payable | ACCOUNT NO. | 22 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 8 | ||||||
June 23 | ||||||
June 25 |
Account | Kim Wheeler, Capital | ACCOUNT NO. | 31 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 1 |
Account | Kim Wheeler, Drawing | ACCOUNT NO. | 32 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 30 |
Account | Fees Earned | ACCOUNT NO. | 41 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 15 | ||||||
June 24 |
Account | Wages Expense | ACCOUNT NO. | 51 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 29 |
Account | Rent Expense | ACCOUNT NO. | 53 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 4 |
Account | Utilities Expense | ACCOUNT NO. | 54 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 26 |
Account | Truck Expense | ACCOUNT NO. | 55 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 25 |
Account | Miscellaneous Expense | ACCOUNT NO. | 59 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2016 | ||||||
June 27 |
3. Prepare an unadjusted trial balance for Intrex Designs as of June 30, 2016. For those boxes in which no entry is required, leave the box blank. The first two account titles are filled in as an example.
Intrex Designs Unadjusted Trial Balance June 30, 2016 | ||
---|---|---|
Debit Balances | Credit Balances | |
Cash | ||
Accounts Receivable | ||
Totals |
4. Determine the excess of revenues over expenses for June.
$
NEED ANSWERS ASAP
Question 23
If a resource has been consumed but a bill hasnot been received at the end of the accountingperiod, then
an expense should be recorded when the bill is received. | ||
an expense should be recorded when the cash is paid out. | ||
an adjusting entry should be made recognizing the expense. | ||
it is optional whether to record the expense before the bill isreceived. |
3 points
Question 24
Prepaid expenses are
paid and recorded in an asset account before they are used orconsumed. | ||
paid and recorded in an asset account after they are used orconsumed. | ||
incurred but not yet paid or recorded. | ||
incurred and already paid or recorded. |
3 points
Question 25
If a business has received cash in advance of services performedand credits a liability account, the adjusting entry needed afterthe services are performed will be
debit Unearned Service Revenue and credit Cash. | ||
debit Unearned Service Revenue and credit Service Revenue. | ||
debit Unearned Service Revenue and credit Prepaid Expense. | ||
debit Unearned Service Revenue and credit AccountsReceivable. |
3 points
Question 26
The preparation of adjusting entries is
straight forward because the accounts that need adjustment willbe out of balance. | ||
often an involved process requiring the skills of aprofessional. | ||
only required for accounts that do not have a normalbalance. | ||
optional when financial statements are prepared. |
3 points
Question 27
On January 1 of the current year, Doolittle Company purchasedfurniture for $7,560. The company expects to use the furniture for3 years. The asset has no salvage value. The book value of thefurniture at December 31of this year is
$0. | ||
$2,520. | ||
$5,040. | ||
$7,560. |
3 points
Question 28
Husker Du Supplies Inc. purchased a 12-month insurance policy onMarch 1 of the current year for $1,800. At March 31, the adjustingjournal entry to record expiration of this asset will include a
debit to Prepaid Insurance and a credit to Cash for $1,800. | ||
debit to Prepaid Insurance and a credit to Insurance Expense for$200. | ||
debit to Insurance Expense and a credit to Prepaid Insurance for$150. | ||
debit to Insurance Expense and a credit to Cash for $150. |
Solve for the adjusting entry:-
2018
Debit Balance Credit Balance
100000 Bank Account dr $300,318
110100 Accounts Receivable (Direct Posting Account) dr 94,670
110150 Allowance for Bad Debts cr 2,600
200600 Inventory-Operating Supplies dr 8,832
200900 Inventory-Raw Materials (Direct Post) dr 52,000
200910 Inventory-Finished Goods (Direct Post) dr 281,298
200920 Inventory-Trading Goods (Direct Post) dr 66,474
210000 Prepaid Insurance dr 3,000
212000 Prepaid Advertising dr 2,400
220110 Land (Direct Post) dr 528,000
220210 Production Machinery, Equip & Fixtures (Dir.Post) dr 915,000
220310 Accumulated Depreciation-Machinery (Direct Post) cr 408,000
300200 Accounts Payable (Direct Posting Account) cr 48,000
300700 Payables-Salaries and Wages cr 94,313
300800 Accrued Expenses cr 2,200
320000 Accrued Tax â Output cr 4,000
329000 Common Stock cr 1,010,000
329100 Additional Paid-in-Capital cr 52,870
330010 Retained Earnings (Direct Posting) cr 630,009
Payables-Salaries and Wages | 94,313 | |
Bank Account | 94,313 | |
to record payment of salaries and wages | ||
Inventory-Trading Goods (Direct Post) | 60,600 | |
Inventory-Raw Materials (Direct Post) | 40,900 | |
Accounts Payable (Direct Posting Account) | 100,000 | |
Bank Account | 1,500 | |
to record acquisition of invemtory and payment of shipment | ||
Accounts Receivable (Direct Posting Account) | 22,500 | |
Cost of Goods Sold | 15,000 | |
Sales Revenue | 22,500 | |
Inventory-Trading Goods (Direct Post) | 15,000 | |
to record the sale of accessories | ||
Bank Account | 24,000 | |
Accounts Receivable (Direct Posting Account) | 24,000 | |
to record payment receipt from Northwest bikes | ||
Accrued Expenses | 2,200 | |
Bank Account | 2,200 | |
to record payment of utilities | ||
Advertising Expense | 1,100 | |
Prepaid Advertising | 1,100 | |
to record advertisiment expense | ||
Inventory-Operating Supplies | 380 | |
Accounts Payable (Direct Posting Account) | 380 | |
to record receipt of Staples | ||
Bank Account | 21,825 | |
Sales Discount | 675 | |
Accounts Receivable (Direct Posting Account) | 22,500 | |
to recors payment of windy city bikes | ||
Accounts Payable (Direct Posting Account) | 100,000 | |
Bank Account | 100,000 | |
to record payment to Dallas Bike Basics | ||
Deposits on Purchases | 8,800 | |
Bank Account | 2,000 | |
Accounts Payable (Direct Posting Account) | 6,800 | |
to record the purchase of barcoding | ||
Accounts Payable (Direct Posting Account) | 15,890 | |
Bank Account | 15,890 | |
to record payment of Lightbulb Accesorry Kits | ||
Accounts Receivable (Direct Posting Account) | 128,000 | |
Cost of Goods Sold | 78,000 | |
Sales Revenue | 128,000 | |
Inventory-Finished Goods (Direct Post) | 78,000 | |
to record sale to Rocky Mountain Bikes(Denver) | ||
Inventory-Raw Materials (Direct Post) | 75,600 | |
Accounts Payable (Direct Posting Account) | 75,600 | |
to record purchase of raw material(Space Bike) | ||
Allowance for Bad Debts | 4,200 | |
Accounts Receivable (Direct Posting Account) | 4,200 | |
to record Bad debt expense | ||
Bank Account | 90,000 | |
Accounts Receivable (Direct Posting Account) | 90,000 | |
to record payment from Sillicon Valley Bikes | ||
Accounts Payable (Direct Posting Account) | 380 | |
Bank Account | 380 | |
Accounts Receivable (Direct Posting Account) | 2,977 | |
Cost of Goods Sold | 1,300 | |
Sales Revenue | 2,750 | |
Accrued Tax- Input | 227 | |
Inventory-Trading Goods (Direct Post) | 1,300 | |
to record sale of inventory | ||
Prepaid Advertising | 9,000 | |
Bank Account | 9,000 | |
to record payment for advertising | ||
Bank Account | 27,000 | |
Cost of Goods Sold | 17,000 | |
Sales Revenue | 27,000 | |
Inventory-Finished Goods (Direct Post) | 17,000 | |
to record sale to Beantown Bikes | ||
Accounts Payable (Direct Posting Account) | 32,000 | |
Bank Account | 32,000 | |
to record payment to Night Rider Aluminum | ||
Accrued Tax â Output | 3,000 | |
Bank Account | 3,000 | |
to record payment sale tax | ||
Prepaid Rent | 4,000 | |
Bank Account | 4,000 | |
to record prepaid rent | ||
Accounts Payable (Direct Posting Account) | 6,800 | |
Bank Account | 6,800 | |
to record payment for barcoding system | ||
Accounts Receivable (Direct Posting Account) | 358,500 | |
Cost of Goods Sold | 250,000 | |
Sales Revenue | 358,500 | |
Inventory-Trading Goods (Direct Post) | 65,000 | |
Inventory-Finished Goods (Direct Post) | 185,000 | |
to record sale to Big Apple Bikes | ||
Adjustment information as of January 31, not already given in the original transaction(s):
1. Based on prior experience, GBI estimates that approximately 1.5 % of the credit sales from each month will become bad debt. GBI writes off bad debts as they occur and recognizes bad debt expense based on percentage of credit sales as an adjusting entry each month.
2. As a control measure, physical inventories are taken on a periodic basis alternating between the raw materials inventory, finished goods inventory and trading goods inventory. Physical inventory of the finished goods inventory was taken at the end of January. It was determined that the value of the finished goods merchandise on hand was $1,200.
3. GBI counted the office (operating) supplies on hand after the close of business on the last day of the month and determined the cost of the unused office supplies to be $1000.
4. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2013, with no salvage value. The bar-code system has a 5-year life and no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets placed in service in the first half of the months are depreciated for the entire month, while fixed assets placed in service during the last half of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar and assets are depreciated on a monthly basis (i.e. number of days in the month is not of consequence).
5. GBI used the Internet to review the monthly charges for utilities the business consumed during January. Based on the Internet report, the amount to be billed by the utilities company for January usage is the same as was billed for December.
6. Liability insurance for the six-month period ending on January 31 was paid last August on the first of the month. Liability insurance is assumed to be utilized uniformly over the six-month policy period.
7. GBI needs to recognize the wages expense for the month. Since all employees are paid salaries and no changes have been made, this amount is the same as the previous month salaries. (For purposes of this assignment, ignore manufacturing, office, and administrative payrolls and assume all wages expense is towards labor expense.