ACCTG 101 Lecture Notes - Lecture 4: Accounts Payable, Promissory Note, Trial Balance

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18 Dec 2020

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Notes payable different from accounts payable because liability is evidenced by a promissory note or bill of exchange. = liabilities + issued capital + opening retained profits + net profit dividend. = liabilities + issued capital + opening retained profits + revenue expenses . Expenses are recognised in the period when service received. Sum of the debit balance must equal credit balance. Trial balance is a list of account balances to make sure debit = credit. An account is a record of the dollar amount comprising a particular asset, liability, equity, revenue or expense. Net effect of these amounts is a debit or credit and is called the accounts balance. Since profit is a part of retained profit which is an equity account and therefore credit account on the balance sheet, anything helping profit (revenue) is a credit. One way of decreasing retained profits is declaring dividends which results in a debit entry.

Related Questions

Question 18

FICA Tax Payable would appear on the:

		Balance Sheet
		Income Statement
		Statement of Owner's Equity

4 points

Question 19

Decrease Utilities Expense with a:

		Debit
		Credit

4 points

Question 20

The normal balance for Accounts Receivable is:

		Debit
		Credit

4 points

Question 21

Consulting Revenue would appear on the:

		Balance Sheet
		Income Statement
		Statement of Owner's Equity

4 points

Question 22

The normal balance for Rent Expense is:

		Debit
		Credit

4 points

Question 23

The normal balance for Interest Expense is:

		Debit
		Credit

4 points

Question 24

The account classification for Allowance for Doubtful Accountsis contra:

		Asset
		Liability
		Equity
		Revenue
		Expense

4 points

Question 25

The account classification for Owner's Capital is:

		Asset
		Liability
		Equity
		Revenue
		Expense

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.

orangedolphin256

Statement of cash flowsâindirect method

Instructions

Labels and Amount Descriptions

Statement of Cash Flows

Instructions

The comparative balance sheet of Whitman Co. at December 31, 2016 and 2015, is as follows:

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$918,000.00	$964,640.00
4	Accounts receivable (net)	â828,530.00	761,860.00
5	Inventories	1,267,840.00	1,162,650.00
6	Prepaid expenses	28,510.00	35,920.00
7	Land	316,660.00	480,600.00
8	Buildings	1,462,690.00	901,830.00
9	Accumulated depreciation-buildings	(409,440.00)	(381,440.00)
10	Equipment	513,200.00	454,090.00
11	Accumulated depreciation-equipment	(141,800.00)	(158,860.00)
12	Total assets	$4,784,190.00	$4,221,290.00
13	Liabilities and Stockholdersâ Equity
14	Accounts payable (merchandise creditors)	$922,640.00	$958,010.00
15	Bonds payable	271,000.00	0.00
16	Common stock, $25 par	307,000.00	117,000.00
17	Paid-in capital: Excess of issue price over parâcommon stock	754,600.00	557,000.00
18	Retained earnings	2,528,950.00	2,589,280.00
19	Total liabilities and stockholdersâ equity	$4,784,190.00	$4,221,290.00

The noncurrent asset, noncurrent liability, and stockholdersâ equity accounts for 2016 are as follows:

ACCOUNT Land

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance			480,600
Apr.	20	Realized $151,550 cash from sale		163,940	316,660

ACCOUNT Buildings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance			901,830
Apr.	20	Acquired for cash	560,860		1,462,690

ACCOUNT Accumulated DepreciationââBuildings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				381,440
Dec.	31	Depreciation for year		28,000		409,440

ACCOUNT Equipment

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance			454,090
	26	Discarded, no salvage		46,790	407,300
Aug.	11	Purchased for cash	105,900		513,200

ACCOUNT Accumulated Depreciation ââEquipment

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				158,860
	26	Equipment discarded	46,790			112,070
Dec.	31	Depreciation for year		29,730		141,800

ACCOUNT Bonds Payable

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
May	1	Issued 20-year bonds		271,000		271,000

ACCOUNT Common Stock $25 par

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				117,000
Dec.	7	Issued 7,600 shares of common stock for $51 per share		190,000		307,000

ACCOUNT Paid-In Capital in Excess of ParââCommon Stock

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				557,000
Dec.	7	Issued 7,600 shares of common stock for $51 per share		197,600		754,600

ACCOUNT Retained Earnings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				2,589,280
Dec.	31	Net loss	28,750			2,560,530
	31	Cash dividends	31,580			2,528,950

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section.

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ACCTG 101 Lecture Notes - Lecture 4: Accounts Payable, Promissory Note, Trial Balance

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