ADM 1340 Lecture Notes - Lecture 5: The Ledger, Trial Balance, General Ledger

19 views6 pages

7 Mar 2016

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

ceruleanclam927 and 54 others unlocked

ADM 1340 Full Course Notes

Verified Note

42 documents

Document Summary

Transaction analysis: accounting transactions occur when assets, liabilities, or shareholders" equity items change as a result of some economic event. This accounting equation needs to always be balanced. Receipt of cash in advance from customers. An account is an individual accounting record of increases and decreases specific asset, liability, or shareholders" equity item. The journal has a place to record the debit and credit effects on specific accounts for each transaction. Transactions are entered in the journal in chronological order. Contains all of the asset, liability and shareholders" equity accounts, as well as revenue and expense accounts. Provides mgt with the balances (or subtotals) in various accounts. The process of transferring journal entries to the ledger accounts. It accumulates the effects of journal transactions in the individual ledger accounts. Provides a list of accounts and their balances at a specific time. Proves the mathematical equality of debits and credits after posting.

Related Questions

The income statement, balance sheets, and additional information for Great Adventures, Inc., are provided below.

GREAT ADVENTURES, INC.
Income Statement
For the year ended December 31, 2014
Revenues:
Service revenue (clinic, racing, TEAM) $ 568,000
Sales revenue (MU watches) 124,000

Total revenues $ 692,000
Expenses:
Cost of goods sold (watches) 69,400
Operating expenses 289,276
Depreciation expense 48,900
Interest expense 29,556
Income tax expense 56,500

Total expenses 493,632

Net income $ 198,368

GREAT ADVENTURES, INC.
Balance Sheet
December 31, 2014 and 2013
2014 2013 Increase (I)
or
Decrease (D)
Assets
Current assets:
Cash $ 394,496 $ 150,400 $ 244,096 (I)
Accounts receivable 43,900 33,300 10,600 (I)
Inventory 16,800 12,300 4,500 (I)
Other current assets 12,200 10,000 2,200 (I)
Long-term assets:
Land 480,000 0 480,000 (I)
Buildings 1,000,000 0 1,000,000 (I)
Equipment 63,300 63,300
Accumulated depreciation (74,850) (25,950) 48,900 (I)

Total assets $ 1,935,846 $ 243,350

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 13,700 $ 10,400 $ 3,300 (I)
Interest payable 850 850
Income tax payable 57,900 39,400 18,500 (I)
Long-term liabilities:
Notes payable 503,528 31,900 471,628 (I)
Stockholders' Equity:
Common stock 116,000 19,000 97,000 (I)
Paid-in capital 1,072,900 0 1,072,900 (I)
Retained earnings 227,968 141,800 86,168 (I)
Treasury stock (57,000) 0 (57,000) (I)

Total liabilities and stockholdersâ equity $ 1,935,846 $ 243,350

Additional Information for 2014:

1.

Borrowed $510,000 in January 2014. Made 12 monthly payments during the year, reducing the balance of the loan by $38,372.

2. Issued common stock for $1.164 million.
3. Purchased 9,700 shares of treasury stock for $15 per share.
4. Reissued 5,900 shares of treasury stock at $16 per share.
5. Declared and paid a cash dividend of $112,200.

Required:

Prepare the statement of cash flows for the year ended December 31, 2014, using the indirect method.(Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)

GREAT ADVENTURES, INC.
Statement of Cash Flows
For the year ended December 31, 2012
Cash Flows from Operating Activities

(Click to select)
Net loss
Net income
$
Adjustments for noncash effects:

(Click to select)
Increase in accounts payable
Purchase of buildings
Payment of dividends
Increase in other current assets
Increase in inventory
Depreciation expense
Purchase of land
Increase in accounts receivable

Changes in current assets and current liabilities:

(Click to select)
Decrease in accounts payable
Depreciation expense
Decrease in inventory
Increase in accounts receivable
Increase in income tax payable
Increase in inventory
Increase in other current assets
Increase in accounts payable

(Click to select)
Decrease in inventory
Increase in accounts receivable
Decrease in accounts payable
Increase in accounts payable
Depreciation expense
Increase in other current assets
Increase in inventory
Increase in income tax payable

(Click to select)
Decrease in inventory
Depreciation expense
Increase in income tax payable
Increase in other current assets
Increase in inventory
Increase in accounts receivable
Decrease in accounts payable
Increase in accounts payable

(Click to select)
Decrease in inventory
Increase in accounts receivable
Increase in income tax payable
Increase in accounts payable
Increase in inventory
Depreciation expense
Increase in other current assets
Decrease in accounts payable

(Click to select)
Decrease in accounts payable
Increase in accounts payable
Increase in inventory
Increase in accounts receivable
Increase in income tax payable
Increase in other current assets
Decrease in inventory
Depreciation expense

Net cash flows from operating activities $

Cash Flows from Investing Activities

(Click to select)
Purchase of buildings
Decrease in accounts payable
Increase in inventory
Purchase of furniture
Cash
Increase in accounts payable
Decrease in inventory
Purchase of land

(Click to select)
Purchase of furniture
Purchase of buildings
Purchase of land
Decrease in accounts payable
Cash
Decrease in inventory
Increase in accounts payable
Increase in inventory

Net cash flows from investing activities
Cash Flows from Financing Activities

(Click to select)
Payment of dividends
Decrease in accounts payable
Repayment of notes payable
Purchased treasury stock
Issued common stock
Reissued treasury stock
Increase in accounts payable
Issued note payable

(Click to select)
Decrease in accounts payable
Purchased treasury stock
Increase in accounts payable
Repayment of notes payable
Issued common stock
Issued note payable
Reissued treasury stock
Payment of dividends

(Click to select)
Increase in accounts payable
Issued note payable
Repayment of notes payable
Decrease in accounts payable
Payment of dividends
Purchased treasury stock
Issued common stock
Reissued treasury stock

(Click to select)
Repayment of notes payable
Issued common stock
Purchased treasury stock
Reissued treasury stock
Decrease in accounts payable
Issued note payable
Payment of dividends
Increase in accounts payable

(Click to select)
Decrease in accounts payable
Purchased treasury stock
Issued common stock
Reissued treasury stock
Repayment of notes payable
Payment of dividends
Issued note payable
Increase in accounts payable

(Click to select)
Decrease in accounts payable
Repayment of notes payable
Payment of dividends
Issued common stock
Increase in accounts payable
Reissued treasury stock
Purchased treasury stock
Issued note payable

Net cash flows from financing activities

(Click to select)
Net decrease in cash
Net increase in cash

Cash at the beginning of the period

Cash at the end of the period $

References

orchidfrog938

Statement of Cash Flows Using A method of preparing the statement of cash flows that reconciles net income with net cash flows from operating activities.Indirect Method

For the year ending March 31, 20Y5, Omega Systems Inc. reported net income of $105,450 and paid dividends of $7,500. Comparative balance sheets as of March 31, 20Y5 and 20Y4, are as follows:

OMEGA SYSTEMS INC.
Balance Sheets
	March 31,		Changes Increase (Decrease)
	20Y5	20Y4	Changes Increase (Decrease)
Assets
Current assets:
Cash	$ 39,500	$ 29,250	$ 10,250
Accounts receivable	114,120	78,000	36,120
Inventory	126,550	117,550	9,000
Estimated Returns Inventory	6,600	5,000	1,600
Office supplies	4,255	4,435	(180)
Prepaid insurance	3,975	4,500	(525)
Total current assets	$ 295,000	$238,735	$ 56,265
Property, plant, and equipment:
Land	$ 30,000	$ 30,000	$ 0
Store equipment	350,000	285,000	65,000
Accumulated depreciationâstore equipment	(118,550)	(93,900)	(24,650)
Office equipment	23,355	15,000	8,355
Accumulated depreciationâoffice equipment	(7,080)	(3,345)	(3,735)
Total property, plant, and equipment	$ 277,725	$232,755	$ 44,970
Total assets	$ 572,725	$471,490	$101,235
Liabilities
Current liabilities:
Accounts payable	$ 24,630	$ 13,905	$ 10,725
Customer refunds payable	9,000	7,500	1,500
Notes payable (current portion)	7,500	7,500	0
Salaries payable	1,710	2,250	(540)
Unearned rent	2,700	3,600	(900)
Total current liabilities	$ 45,540	$ 34,755	$ 10,785
Long-term liabilities:
Notes payable (final payment due in eight years)	30,000	37,500	(7,500)
Total liabilities	$ 75,540	$ 72,255	$ 3,285
Stockholdersâ Equity
Common stock	$ 37,500	$ 37,500	$ 0
Retained earnings	459,685	361,735	97,950
Total stockholdersâ equity	$ 497,185	$399,235	$ 97,950
Total liabilities and stockholdersâ equity	$ 572,725	$471,490	$101,235

Instructions:

1. Prepare a statement of cash flows, using the indirect method. Enter account decreases, cash outflows, and the income statement effects that reduce net income as negative amounts.

Omega Systems Inc.

Statement of Cash Flows

For the Year Ended March 31, 20Y5

Cash flows from operating activities:

Net income

Depreciation expense-store equipment

Depreciation expense-office equipment

Changes in noncash current operating assets and liabilities:

Increase in accounts receivable

Increase in inventory

Increase in estimated returns inventory

Decrease in office supplies

Decrease in prepaid insurance

Increase in accounts payable

Increase in customer refunds payable

Decrease in salaries payable

Decrease in unearned rent

Net cash flows used for investing activities

Cash flows used for financing activities:

Payment of note payable

Payment of dividends

Net cash flows used for financing activities

Net increase in cash

April 1, 20Y4 cash balance

March 31, 20Y5 cash balance

scarletgnu53

The realizationprinciple indicates that revenue usually should be recorded inthe accounting records:

Question 1 options:

A)	when cash is collected from customers

B)	when goods are sold or services are rendered to customers

C)	at the end of the accounting period

D)	only when the revenue can be matched by an equal dollar amountof expenses

E)	both (b) and (d) are correct

Which of the following account(s) would be part ofworking capital?

Question 2 options:

A)	accounts payable

land

supplies

D)	retained earnings

E)	cost of goods sold

F)	two of the above accounts are part of working capital

G)	three of the above accounts are part of working capital

H)	four of the above accounts are part of working capital

I)	all of the above accounts are part of working capital

On May 17, Buckeye Corporation performed $800 ofservices for ABC Company, a customer. ABC paid for one-half ofthe
bill on May 17 and agreed to pay the remainder within 30 days. OnJune 9, ABC paid the remaining amount owed. Which
of the following journal entries would ABC Company make onJune 9?

Question 3 options:

A)	debit accounts receivable $400 and credit cash $400

B)	debit cash $400 and credit service revenue $400

C)	debit accounts payable $400 and credit service revenue$400

D)	debit cash $400 and credit accounts payable $400

E)	debit cash $400 and credit accounts receivable $400

F)	debit accounts payable $400 and credit cash $400

The following information is available for XYZ Company: January 1, 2003 December 31, 2003Assets $500,000 $700,000Liabilities $300,000 $400,000 Equity $200,000 $300,000
XYZ Company reported a net income of $50,000 during 2003.
XYZ Company's return on equity (ROE) for 2003 was equal to:

Fletcher, Inc. reported an ending notes payablebalance of $57,000. An examination of the notes payablet-account
revealed debits of $25,000 and credits of $39,000 during the year.The beginning notes payable balance for Fletcher,
Inc. was equal to:

Question 5 options:

A)	$71,000 credit

B)	$71,000 debit

C)	$43,000 debit

D)	$43,000 credit

E)	none of the above are correct

Indicate the effect each of the following transactions has onthe accounting equation (i.e., assets, liabilities, and equity).Enter the number corresponding to your answer in the box provided.Answer choices may be used once, more than once, or not atall.

Question 6 options:

	ABC Company performed $2,000 of delivery servicesfor a customer who agreed to pay next month
	ABC Company paid $2,000 cash to the bank; $1,800of this amount was the repayment of a bank loan and the other $200paid was interest
	ABC Company made the adjusting entry to accrueincome taxes owed but not yet paid
	ABC Company purchased equipment for $3,000cash

1.	assets increase; liabilities increase; equitydecrease
2.	assets decrease; liabilities decrease; equity noeffect
3.	assets increase; liabilities no effect; equityincrease
4.	assets no effect; liabilities no effect; equity noeffect
5.	assets no effect; liabilities increase; equitydecrease
6.	assets increase; liabilities increase; equityincrease
7.	assets increase; liabilities increase; equity noeffect
8.	assets no effect; liabilities decrease; equityincrease
9.	assets decrease; liabilities no effect; equitydecrease
10.	assets decrease; liabilities decrease; equitydecrease

tanmosquito645

ADM 1340 Lecture Notes - Lecture 5: The Ledger, Trial Balance, General Ledger

ADM 1340 Full Course Notes

Document Summary

Get access

Related Questions