ACCTG 1 Lecture Notes - Lecture 29: Subledger, General Ledger, Perpetual Inventory
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Document Summary
A receivable is recorded when: service is provided on account, or at point of sale of merchandise on account. Service company = receivable is recorded when a service is provided on account. Merchandising company = receivable is recorded at the point of sale of merchandise on account. Revenue recognized when the performance or sales effort is substantially complete, normally occurs when service is performed or goods are delivered at point of sale. Merchandising entries in a perpetual inventory system include both an entry to record the sale at the sales price and an entry to record the cost of the goods sold. Subsidiary ledger is a group of accounts that share a common characteristic (i. e. they are all receivable accounts) The subsidiary ledger for accounts receivable provides the details that support the total balance for accounts receivable in the general ledger: the single accounts receivable in the general ledger is the control account.
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Exercise 5-7
Presented below are selected accounts of Flounder Company at December 31, 2017.
Inventory (finished goods) | $ 52,400 | Cost of Goods Sold | $2,128,300 | |||
Unearned Service Revenue | 98,100 | Notes Receivable | 41,200 | |||
Equipment | 262,900 | Accounts Receivable | 162,410 | |||
Inventory (work in process) | 35,700 | Inventory (raw materials) | 181,040 | |||
Cash (not including restricted cash) | 37,700 | Supplies Expense | 65,400 | |||
Equity Investments (short-term) | 36,000 | Allowance for Doubtful Accounts | 11,090 | |||
Customer Advances | 52,100 | Licenses | 19,330 | |||
Restricted Cash for Plant Expansion | 51,600 | Additional Paid-in Capital | 93,920 | |||
Treasury Stock | 23,910 |
The following additional information is available.
1. | Inventories are valued at lower-of-cost-or-market using LIFO. | |
2. | Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line basis, is $48,003. | |
3. | The short-term investments have a fair value of $29,840. (Assume they are trading securities.) | |
4. | The notes receivable are due April 30, 2019, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrued interest due on December 31, 2014.) | |
5. | The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of $54,700 are pledged as collateral on a bank loan. | |
6. | Licenses are recorded net of accumulated amortization of $13,670. | |
7. | Treasury stock is recorded at cost. |
Prepare the current assets section of Flounder Companyâs December 31, 2017, balance sheet, with appropriate disclosures. (List Current Assets in order of liquidity. Enter account name only and do not provide the descriptive information provided in the question.)
FLOUNDER COMPANY |