33:010:272 Lecture Notes - Lecture 3: Trial Balance, Matching Principle, Revenue Recognition

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25 Aug 2016

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Chapter 2 (cont": asset + expense + dividends, dr: increase (normal balance, cr: decrease, liabilities + common stocks +revenue, dr: decrease, cr: increase (normal balance) Journal: definition: recording journal entries, *list the debit side first, **credit is a little indented, example. Data/ account name/ ref/ dr / cr / journal entry. Cash (purchase of equip: ledger, definition: listing of all accounts in an order (all of the daily activities that are related with, *reference number is the ledger refers to the number of journal entry number, example. 8,000 17,000: chart of accounts, listed in financial statement order a. i. a. ii. Balance sheet income statement: you use it on reference column b. i. example b. i. 1. b. i. 2. cash 101 equipment 102, accounts, there are many types, unearned service revenue b. i. When cash is received before the service is performed: prepaid account c. i. Supply is actually prepaid accounts: trial balance, listing of all ending balances, purpose: to make sure dr=cr at the end.

Related Questions

Transactions related to revenue and cash receipts completed byAspen Architects Co. during the period June 2â30, 2016, are asfollows:

June 2.		Issued Invoice No. 793 to Nickle Co., $7,330.
June 5.		Received cash from Mendez Co. for the balance owed on itsaccount.
June 6.		Issued Invoice No. 794 to Preston Co., $2,640.
June 13.		Issued Invoice No. 795 to Shilo Co., $3,930.
		Post revenue and collections to the accounts receivablesubsidiary ledger.
June 15.		Received cash from Preston Co. for the balance owed on June1.
June 16.		Issued Invoice No. 796 to Preston Co., $8,210. Post revenue and collections to the accounts receivablesubsidiary ledger.
June 19.		Received cash from Nickle Co. for the balance due on invoice ofJune 2.
June 20.		Received cash from Preston Co. for invoice of June 6.
June 22.		Issued Invoice No. 797 to Mendez Co., $10,820.
June 25.		Received $2,990 note receivable in partial settlement of thebalance due on the Shilo Co. account.
June 30.		Recorded cash fees earned, $18,460. Post revenue and collections to the accounts receivablesubsidiary ledger.

Required:

1. Insert the following balances in the generalledger as of June 1:

11	Cash	$16,240
12	Accounts Receivable	19,780
14	Notes Receivable	8,610
41	Fees Earned	-

After completing the recording of the transactions in thejournals in part 3, total each of the columns of the specialjournals, and post the individual entries and totals to the generalledger. Insert account balances after the last posting. Whenposting to the general ledger, post in chronological order.However, if there is more than one entry on the same date, be sureto post transactions from the revenue journal before postingtransactions from the cash receipts journal.

If an amount box does not require an entry, leave it blank.

GENERAL LEDGER
Date	Item	Post. Ref.	Debit	Credit	Balance Dr.	Balance Cr.

Account: Cash # 11
2016
June 1	Balance	â


Account: Accounts Receivable # 12
2016
June 1	Balance	â



Account: Notes Receivable # 14
2016
June 1	Balance	â

Account: Fees Earned # 41
2016

2. Insert the following balances in theaccounts receivable subsidiary ledger as of June 1:

Mendez Co.	$11,370
Nickle Co.	-
Preston Co.	8,410
Shilo Co.	-

After completing the recording of the transactions in thejournals in part 3, post to the accounts receivable subsidiaryledger in chronological order, and insert the balances at thepoints indicated in the narrative of transactions. Determine thebalance in the customer's account before recording a cash receipt.If an amount box does not require an entry, leave it blank.

ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
Date	Item	Post. Ref.	Debit	Credit	Balance
Account: Mendez Co.
2016
June 1	Balance	â


Account: Nickle Co.
2016


Account: Preston Co.
2016
June 1	Balance	â




Account: Shilo Co.
2016

3. Prepare a single-column revenue journal (p.40) and a cash receipts journal (p. 36). Use the following columnheadings for the cash receipts journal: Fees Earned Cr., AccountsReceivable Cr., and Cash Dr. The Fees Earned column is used torecord cash fees.

4. Using the two special journals and thetwo-column general journal (p. 1), journalize the transactions inchronological order for June. Post to the accounts receivablesubsidiary ledger (in part 2), and insert the balances at thepoints indicated in the narrative of transactions. Determine thebalance in the customer's account before recording a cashreceipt.

5. Total each of the columns of the specialjournals, and post the individual entries and totals to the generalledger (in part 1). Insert account balances after the lastposting.

If an amount box does not require an entry, leave it blank.

REVENUE JOURNAL				PAGE 40
Date	Invoice No.	Account Debited	Post. Ref.	Accounts Rec. Dr. Fees Earned Cr.
2016
			â
			â
			â
			â
			â

CASH RECEIPTS JOURNAL					PAGE 36
Date	Account Credited	Post. Ref.	Fees Earned Cr.	Accts. Rec. Cr.	Cash Dr.
2016
		â
		â
		â
		â
		â

JOURNAL				PAGE 1
Date	Description	Post Ref.	Debit	Credit
2016

6. What is the sum of the customerbalances?
$

Does the sum of the customer balances agree with the accountsreceivable controlling account in the general ledger?

7. Would an automated system omit postings to acontrolling account as performed in step 5 for AccountsReceivable?

yellowcaribou307

A depreciation schedule for semi-trucks of MartinezManufacturing Company was requested by your auditor soon afterDecember 31, 2018, showing the additions, retirements,depreciation, and other data affecting the income of the company inthe 4-year period 2015 to 2018, inclusive. The following data wereascertained.

Balance of Trucks account, Jan. 1, 2015
Truck No. 1 purchased Jan. 1, 2012,cost		$21,780
Truck No. 2 purchased July 1, 2012,cost		26,620
Truck No. 3 purchased Jan. 1, 2014,cost		36,300
Truck No. 4 purchased July 1, 2014,cost		29,040
Balance, Jan. 1, 2015		$113,740

The Accumulated Depreciation-Trucks account previously adjusted toJanuary 1, 2015, and entered in the ledger, had a balance on thatdate of $36,542 (depreciation on the four trucks from therespective dates of purchase, based on a 5-year life, no salvagevalue). No charges had been made against the account before January1, 2015.

Transactions between January 1, 2015, and December 31, 2018, whichwere recorded in the ledger, are as follows.

July 1, 2015		Truck No. 3 was traded for a larger one (No. 5), the agreedpurchase price of which was $48,400. Martinez. paid the automobiledealer $26,620 cash on the transaction. The entry was a debit toTrucks and a credit to Cash, $26,620. The transaction hascommercial substance.
Jan. 1, 2016		Truck No. 1 was sold for $4,235 cash; entry debited Cash andcredited Trucks, $4,235.
July 1, 2017		A new truck (No. 6) was acquired for $50,820 cash and wascharged at that amount to the Trucks account. (Assume truck No. 2was not retired.)
July 1, 2017		Truck No. 4 was damaged in a wreck to such an extent that it wassold as junk for $847 cash. Martinez received $3,025 from theinsurance company. The entry made by the bookkeeper was a debit toCash, $3,872, and credits to Miscellaneous Income, $847, andTrucks, $3,025.

Entries for straight-line depreciation had been made at the closeof each year as follows: 2015, $25,410; 2016, $27,225; 2017,$30,311; 2018, $36,784.

For each of the 4 years, compute separately the increase ordecrease in net income arising from the companyâs errors indetermining or entering depreciation or in recording transactionsaffecting trucks, ignoring income tax considerations.(Enter credit, understated and decrease amounts usingeither a negative sign preceding the number e.g. -45 or parenthesese.g. (45).)

Per Company Books

As Adjusted

Net

Trucks dr. (cr.)

Acc. Dep. Trucks dr. (cr.)

Retained Earnings dr. (cr.)

Trucks dr. (cr.)

Acc. Dep., Trucks dr, (cr.)

Retained Earnings dr, (cr.)

Income Overstated (Understated)

1/1/15

Balance

7/1/15

Purchase Truck #5

Trade Truck #3

12/31/15

Depreciation

12/31/15

Balances

1/1/16

Sale of Truck #1

12/31/16

Depreciation

12/31/16

Balances

7/1/17

Purchase of Truck #6

7/1/17

Disposal of Truck #4

12/31/17

Depreciation

12/31/17

Balances

12/31/18

Depreciation

12/31/18

Balance

Prepare one compound journal entry as of December 31, 2018, foradjustment of the Trucks account to reflect the correct balances asrevealed by your schedule, assuming that the books have not beenclosed for 2018. (If no entry is required, select "NoEntry" for the account titles and enter 0 for the amounts. Creditaccount titles are automatically indented when the amount isentered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

maroonwallaby67

Required information

Problem 7-1A Special journals, subsidiary ledgers, trialbalance-perpetual LO C3, P1, P2

[The following information applies to the questionsdisplayed below.]

Church Company completes these transactions and events during Marchof the current year (terms for all its credit sales are 3/10,n/30).

Mar.	1		Purchased $40,000 of merchandisefrom Van Industries, invoice dated March 1, terms 3/15, n/30.
	2		Sold merchandise on credit to MinCho, Invoice No. 854, for $16,000 (cost is $8,000).
	3	(a)	Purchased $1,200 of office supplieson credit from Gabel Company, invoice dated March 3, terms n/10EOM.
	3	(b)	Sold merchandise on credit to LindaWitt, Invoice No. 855, for $8,000 (cost is $4,000).
	6		Borrowed $72,000 cash from FederalBank by signing a long-term note payable.
	9		Purchased $20,000 of officeequipment on credit from Spell Supply, invoice dated March 9, termsn/10 EOM.
	10		Sold merchandise on credit toJovita Albany, Invoice No. 856, for $4,000 (cost is $2,000).
	12		Received payment from Min Cho forthe March 2 sale less the discount.
	13	(a)	Sent Van Industries Check No. 416in payment of the March 1 invoice less the discount.
	13	(b)	Received payment from Linda Wittfor the March 3 sale less the discount.
	14		Purchased $34,000 of merchandisefrom the CD Company, invoice dated March 13, terms 3/10, n/30.
	15	(a)	Issued Check No. 417, payable toPayroll, in payment of sales salaries expense for the first half ofthe month, $15,200. Cashed the check and paid the employees.
	15	(b)	Cash sales for the first half ofthe month are $64,000 (cost is $51,200). (Cash sales are recordeddaily, but are recorded only twice here to reduce repetitiveentries.)
	16		Purchased $1,720 of store supplieson credit from Gabel Company, invoice dated March 16, terms n/10EOM.
	17		Received a $3,400 credit memorandumfrom CD Company for the return of unsatisfactory merchandisepurchased on March 14.
	19		Received a $600 credit memorandumfrom Spell Supply for office equipment received on March 9 andreturned for credit.
	20		Received payment from Jovita Albanyfor the sale of March 10 less the discount.
	23		Issued Check No. 418 to CD Companyin payment of the invoice of March 13 less the March 17 return andthe discount.
	27		Sold merchandise on credit toJovita Albany, Invoice No. 857, for $12,000 (cost is $4,800).
	28		Sold merchandise on credit to LindaWitt, Invoice No. 858, for $4,800 (cost is $1,920).
	31	(a)	Issued Check No. 419, payable toPayroll, in payment of sales salaries expense for the last half ofthe month, $15,200. Cashed the check and paid the employees.
	31	(b)	Cash sales for the last half of themonth are $70,400 (cost is $42,240).
	31	(c)	Verify that amounts impactingcustomer and creditor accounts were posted and that any amountsthat should have been posted as individual amounts to the generalledger accounts were posted. Foot and crossfoot the journals andmake the month-end postings.

Assume the following ledger account amounts Inventory (March 1 beg.bal. is $63,000), Z. Church, Capital (March 1 beg. bal. is $63,000)and Church Company uses the perpetual inventory system.

Problem 7-1A Part 2

Required:
2-a. Enter the transactions in a sales journal.
2-b. Enter the transactions in a purchasesjournal.
2-c. Enter the transactions in a cash receiptsjournal.
2-d. Enter the transactions in a cashdisbursements journal.
2-e. Enter the transactions in a generaljournal.

Enter the transactions in a sales journal.

SALES JOURNAL
Date	Account Debited	Invoice Number	Accounts Receivable Dr. Sales Cr.	Cost of Goods Sold Dr. Inventory Cr.






Mar.31	Totals		$0	$0

Enter the transactions in a purchases journal.

PURCHASES JOURNAL
Date	Account	Date of Invoice	Terms	Accounts Payable Cr.	Inventory Dr.	Office Supplies Dr.	Other Accounts Dr.






Mar.31	Totals			$0	$0	$0	$0

Enter the transactions in a cash receipts journal.

CASH RECEIPTS JOURNAL
Date	Account Credited	Cash Dr.	Sales Discount Dr.	Accounts Receivable Cr.	Sales Cr.	Other Accts. Cr.	Cost of Goods Sold Dr. Inventory Cr.







Mar.31	Totals	$0	$0	$0	$0	$0	$0

Enter the transactions in a cash disbursements journal.

CASH DISBURSEMENTS JOURNAL
Date	Ck.No.	Payee	Account Debited	Cash Cr.	Inventory Cr.	Other Accounts Dr.	Accounts Payable Dr.





Mar.31		Totals		$0	$0	$0	$0

Enter the transactions in a general journal.

Journal Entry Worksheet

Received a $3,400 credit memorandum from CD Company for thereturn of unsatisfactory merchandise purchased on March 14.

Received a $600 credit memorandum from Spell Supply for officeequipment received on March 9 and returned for credit.

Mar. 17

*Enter debits before credits

Enter the transactions in a general journal.

Journal Entry Worksheet

Received a $3,400 credit memorandum from CD Company for thereturn of unsatisfactory merchandise purchased on March 14.

Received a $600 credit memorandum from Spell Supply for officeequipment received on March 9 and returned for credit.

Mar. 19

*Enter debits before credits

ivoryox215

33:010:272 Lecture Notes - Lecture 3: Trial Balance, Matching Principle, Revenue Recognition

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