33:010:272 Chapter Notes - Chapter 2: Trial Balance, Financial Statement, Accounts Payable

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2 Mar 2019

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Document Summary

An account is an individual accounting record of increases and decreases in a specific asset, liability, or stockholders" equity item. An account consists of three parts: (1) a title, (2) a left or debit side, and (3) a right or credit side. Debit and credit describe where entries are made in accounts. An account shows a debit balance if the total of the debit amounts exceeds the credits. An account shows a credit balance if the credit amounts exceed the debits. Every positive item in the tabular summary represents a receipt of cash. Every negative amount represents a payment of cash. Balance is determined by netting the two sides (subtracting one amount from the other) Double-entry system- the dual ( two-sided ) effect of each transaction is recorded in appropriate. In the account form, we record the increase in cash as duets and decreases in cash as credits accounts. Provides a logical method for recording transactions in appropriate accounts.

Related Questions

The comparative balance sheet of Whitman Co. at December 31,20Y2 and 20Y1, is as follows:

1		Dec. 31, 20Y2	Dec. 31, 20Y1
2	Assets
3	Cash	$918,000.00	$964,800.00
4	Accounts receivable (net)	ââ828,900.00	761,940.00
5	Inventories	1,268,460.00	1,162,980.00
6	Prepaid expenses	29,340.00	35,100.00
7	Land	315,900.00	479,700.00
8	Buildings	1,462,500.00	900,900.00
9	Accumulated depreciation-buildings	(408,600.00)	(382,320.00)
10	Equipment	512,280.00	454,680.00
11	Accumulated depreciation-equipment	(141,300.00)	(158,760.00)
12	Total assets	$4,785,480.00	$4,219,020.00
13	Liabilities and Stockholdersâ Equity
14	Accounts payable (merchandise creditors)	$922,500.00	$958,320.00
15	Bonds payable	270,000.00	0.00
16	Common stock, $25 par	â317,000.00	117,000.00
17	Paid-in capital: Excess of issue price over parâcommon stock	758,000.00	558,000.00
18	Retained earnings	2,517,980.00	2,585,700.00
19	Total liabilities and stockholdersâ equity	$4,785,480.00	$4,219,020.00

The noncurrent asset, noncurrent liability, and stockholdersâequity accounts for 20Y2 are as follows:

ACCOUNT Land

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance			479,700
Apr.	20	Realized $151,200 cash from sale		163,800	315,900

ACCOUNT Buildings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance			900,900
Apr.	20	Acquired for cash	561,600		1,462,500

ACCOUNT Accumulated DepreciationââBuildings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance				382,320
Dec.	31	Depreciation for year		26,280		408,600

ACCOUNT Equipment

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance			454,680
	26	Discarded, no salvage		46,800	407,880
Aug.	11	Purchased for cash	104,400		512,280

ACCOUNT Accumulated Depreciation ââEquipment

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance				158,760
	26	Equipment discarded	46,800			111,960
Dec.	31	Depreciation for year		29,340		141,300

ACCOUNT Bonds Payable

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
May	1	Issued 20-year bonds		270,000		270,000

ACCOUNT Common Stock $25 par

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance				117,000
Dec.	7	Issued 8,000 shares of common stock for $50 per share		200,000		317,000

ACCOUNT Paid-In Capital in Excess of ParââCommonStock

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance				558,000
Dec.	7	Issued 8,000 shares of common stock for $50 per share		200,000		758,000

ACCOUNT Retained Earnings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance				2,585,700
Dec.	31	Net loss	35,320			2,550,380
	31	Cash dividends	32,400			2,517,980

Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities. Refer to theLabels and Amount Descriptions list provided for the exact wordingof the answer choices for text entries. Be sure to complete theheading of the statement. Use the minus sign to indicate net loss,cash outflows, cash payments, decreases in cash, or any negativeadjustments.

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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

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