ACC1100 Lecture Notes - Lecture 3: Accounts Payable, Trial Balance, Current Liability

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turquoiserat551

14 Aug 2018

School

Monash University

Department

Business - Accounting

Course

ACC1100

Professor

Alan Serry

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Document Summary

Based on the relevant source documents, transactions are recorded by preparing journal entries in the general journal. Businesses don"t use transaction analysis to record transactions. A general journal is like a diary that records all transactions that affect an organisation and records them in chronological order. Journalising: the process of entering transaction data into the journal. The accounts and amounts to be debited. Owner provided cash funds to start the business. Business purchased a vehicle with a bank loan. Assets + expenses + drawings = liabilities + owner"s equity + income + additional capital. Involves only two accounts, one debit and one credit: a business pays for advertising in cash. Involves three or more accounts, with total debit and credit amounts still being equal: buys a vehicle for part cash, part bank loan. *journals, however, are not enough on its own, therefore, we use ledger accounts. Records increases and decreases in asset, liability, owner"s equity, income and expense accounts.

Related Questions

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.
$

greydonkey905

Record (journalize) transactions in the books) Doherty Tree Cellular, Inc.,
completed the following transactions during April 2012, its first month of operations:

Apr 1	Received $19,800 and issued common stock.
2	Purchased $200 of office supplies on account.
4	Paid $14,300 cash for land to use as a building site.
6	Performed service for customers and received cash of $2,600.
9	Paid $100 on accounts payable.
17	Performed service for UFax on account totaling $1,900.
23	Collected $100 from UFax on account.
30	Paid the following expenses: salary, $1,900; rent, $1,300.

1.Record the transactions in the journal of Doherty Tree Cellular, Inc. Key transactions by date and include an explanation for each entry.

CLASS, LETS TAKE RECORDING STEP 1 STEP FURTHER - THE TRIAL BALANCE

Now that we know what the accounting equation is and we have some experience with Journal Entries.

Letâs review the process and take the recording process one step further.

STEP 1) Analyze transaction: As an actual accountant, we determine if a transaction should be recorded by analyzing source documents.

For example: If the Company makes a sale; they will complete a sales document (or sales
tape is generated). If the Company purchases something a purchase invoice is forwarded to Accounting. There is a different type of source documents for different types of transactions.

Note: as an accountant a large part of the battle is making sure there is a source document for all transactions and that all departments capture and forward these documents to Accounting!

STEP 2) Accounting prepares journal entry: for each transaction based on GAAP. (Mostly using the constraints, assumptions, principles we've discussed: materiality, conservatism, matching, revenue recognition, etc).

The entry is entered into a Journal for those types of Transactions (There is a Sales Journal, A/P Journal for purchases, Payroll journal for payroll related entries, General Journal for misc. entries., etc.

Journal entries are made in the proper form, and include: date, description, indent of credit side of each entry.

STEP 3) The Journal entry is posted to General ledger; which includes all activity for all accounts.

However, the recording process is not over. Letâs talk about the trial balance. Please answer ALL however only post ONE question at a time to allow more to participate.

1) Why do we prepare it?

apricotox859

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

ACC1100 Lecture Notes - Lecture 3: Accounts Payable, Trial Balance, Current Liability

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