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LABS.docx

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Department
Administrative Studies
Course
ADMS 2500
Professor
All Professors
Semester
Fall

Description
Lab 2 question 2 Unearned revenue debit or credit (+Liabilities). Sales revenue credit >> increase in revenue Subscription Cash debit , unearned revenue credit (revenue will be recorded in future period). Shirts >> a/c receivable debit , sales revenue credit. (will be recorded in future). Purchases ticket to be follow in janaury Cash debit , unearned revenue credit. Lab2 question 3 • Lab2 question 4 • Invoice means money is coming to you. • On the same day payment (expense will be recorded in future). • Expense incurred (+E – SE) • Purchased in advance(prepaid account) and look for months and divide by the amount. • Whenever we are getting money in advance its unearned revenue and cash account should be credited and with each revenue entry tell what happens with revenue. • Account receivable credit should be decrease in assets. • Selling merchandise is a revenue received. • Increase in revenue +R + SE. • When revenue is unearned and you will receive cash in future period you , so when you credit cash it should be +A. • Accounts Payable Debit Means we have paid the money. • When we are paying something for the things previously bought we have already recognized as expense before so we don’t need to enter that its expense incurred in the current month. • Earned Revenue Debit and Cash Credit. • For the prepaid expense account +A Callaho Inc. pays a $630 invoice from a consulting firm for services received and recorded in Accounts Payable in October. My entry: Cash $360+A (incorrect) Accounts payable –L Lab 2 Question 5 Retained earnings + A/C Payable – A/ Receivable to get cash basis income. +A/C >> + RE +L >>> - RE -A>>> - RE To calculate Accrual basis income (Add all revenues – Expenses). When does it effects cash and when does it effects retained earnings??? (Bills >>>> Retained Earnings) Accounts Receivable Effects >>> Retained Earnings. Billed received today to be paid >>> + A/C Payable and - retained earnings. Collected $500 regarding customer’s credit >>> + Cash – Accounts Receivable Bill received and paid >>>> - Cash – Retained Earnings. Rented On Credit >>>> + A/C Interest Collected >>> + Cash + Retained Earnings Rent Received >>>>> + Cash + Retained Earnings Commissions earned >>> +Cash + retained earnings Collected $200 >>>> + Cash + Retained Earnings. • Investment – Accounts receivable(No Effect) = Share capital Billed a customer $2,750 as fees for services provided today. Will it effect cash or a/c receivable. How to calculate cash basis net income and how to calculate accrual base income. Question 6 : Expenses >>>> - SE – Income before tax. -Assets >>>> - SE • Interest On investments (Asset increase, Shareholder increase, Revenue increase, IBeforetax increase). • Increase in liabilities >>> Decrease in S.E>> >> increase in expenses. Decrease in Ibefore tax (expenses yet to be paid). • Increase in liabilities >> Increase in assets (long-term notes payable). • Sold Products >>> Assets >>> S.E>> Revenues >> Expenses> IBefore Tax. • Incurred Expenses (asset decrease , S.E decrease , Liability increase , Expenses decrease , Ibefore tax decrease). Purchase inventory on account. Lab 3 Question 3. Investment decrease (-Assets). Lab3 Question 5 Entry 5 + 8000 in liabilities and 550 in shareholders Revenues (16000): + 300 + 15700 = 16000 revenues 100% correct Expenses (9250): 9000 + 250 = 9250 100% Correct Net Income(6750): 100% Correct Assets(80300) -84450 = (+4150): Liabilities(55300) (-1200) : 350 +250 - 1800 = (-1200) 100% correct Shareholder’s Equity(25000) - (30350) = (+5350): Lab 4 Question1 Unearned revenue: Revenue earned but not recorded should be understated. Overstated can be understated but understated cannot be overstated unless its supplies or revenue earned. • Revenue earned but not recorded either collected. • Amount recorded as expense in 2009 but not expense until 2010. • Amortization expense but not recorded , Asset and income should be overstated. 2010 asset overstated. (no effect on net income). • When revenue earned asset is understated. • Amortization expense recorded to credit no effect on income asset overstated, liabilities overstated. • Bought land on credit no effect on 2009 & 2010 income 2010 asset. • Wages earned by employees understated liabilities. • Unearned revenue, worked done in early 2010 , not adjusted in 2009 liabilities overstated . • Supplies excluded from inventory. • Accrued expenses no effect on Assets. Net income understated.. Assets should be understated too .. *Sales of services for 2010 income no effect. Asset understated 2009 and 2010. Expense >>> Asset LAB4 QUESTION 5: • AMORTIZATION >> NET INCOME AND TOTAL ASSETS, SHAREHOLDER’S EQUITY. • WAGES >> NET INCOME (-) , TOTAL LIABILITIES (+) , SHAREHOLDER’S EQUITY(-). • RENT REVENUE ( '$5,400 × 1/3 = $1,800 rent reve>> NET INCOME (+), LIABILITIES(-) AND SHARE HOLDER’S EQUITY.(+). • Effect of income taxes ON NET INCOME (-) , TOTAL ASSETS 0 , LIABILITES(+) , SHAREHOLDER’S (-) • TAX APPLIES ON NET INCOME. LAB 4 QUESTION 6 (A) • If written 6 years , add one more year. • For month dep 24000 / 8 = 3000 / 12 = 250 * number of months 11 = 2750 • Calculate depreciate expense even for months and then year and then add it. • Carrying book value add all 3 years depreciation. For the balance sheet, assets would be reduced to: Office equipment $19,800 Less:Accumulated amortization 8,250 Carrying (book) value $11,550 • The carrying book value should be $11,550, (B) For the income statement, only the portion of the entire rent amount that has expired through to the end of 2010 should be reported as rent revenue. On November 1, 2010, Barton Corporation collected $38,000 for rent of office space. This amount represented rent for a ten-month period, November 1, 2010, through August 31, 2011. Unearned rent revenue was increased (credited), and Cash was increased (debited) for $38,000. (2) 38000/ 10 = 3800 * number of months 2 times = 7600 The rent revenue reported should be $7,600, (3) And the left 38000 – 7600 = 30400 For journal entries (with amount in 2). Part c , only 1 year. Part (d) Amount divide by phases – entry amount = is amount in journal entries 1 Journal entries a/c receivable +assets service revenue + Equity Cash + assets a/c receivable – assets with the divded phase amount. service revenue Lab4 question 7 Earnings per share : net income / number of shares. Balance sheet • Prepaid rent and prepaid should be included under prepaid expenses • Property plant equipment.. write down after subtracting accumulated amortization expense. • Longterm notes payable and mortgage payable are written under one. • Do not include supplies in prepaid expenses.(il include in cash). • Other assets and other longterm liabilities does not belong on this balance sheet. The net profit Net Income × 100 = margin = Total Revenue $190,00 × 100 0 = $444,00 42.79% 0 ab 4 question 6 LAB 5 QUESTION 7 GROSS PROFIT >> INCOME BEFORE TAXES + OPERATING EXPENSES. NET SALES REVENUE SALES RETURN AND ALLOWANCES. Marking: Case A: The Sales revenue should be $22,800, but you have not entered this. This amount can be calculated using the formula : 'Sales returns and allowances (190) + Net sales revenue (22,610)'. This will cost you 1 mark. The Purchase returns should be $730, but you hav
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