ACC 100 Chapter Notes - Chapter 9: Accounts Payable, Current Liability, Financial Statement

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4 Dec 2018

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Acc100 chapter 9 liabilities credit terms cash inflow delayed. Purchasing on account delays outflow of cash. Businesses not able to expand without borrowing money from creditors and lenders most frequent liabilities account. Used when purchase from a supplier on account. Goods/ service you owe the supplier due to a past purchase. Divided into current and long term liabilities: generally paid within 12 months (current liability) Cyu9-1 unearned revenue liability account? customer that pay you in advance. Advance payment from customers not revenue because the business has not done their job yet but will in the future. Business received cash but provided nothing in return. Unearned revenue: good/ service owed to a customer in the future which is due to the past receipt of cash from that customer example pre- order a book from a book store, +cash, +unearned revenue. Book store bought books on account from publisher: +inventory, + ap. Books shipped to customers who bought on account.

Related Questions

NEED ANSWERS ASAP

Question 23

If a resource has been consumed but a bill hasnot been received at the end of the accountingperiod, then

		an expense should be recorded when the bill is received.
		an expense should be recorded when the cash is paid out.
		an adjusting entry should be made recognizing the expense.
		it is optional whether to record the expense before the bill isreceived.

3 points

Question 24

Prepaid expenses are

		paid and recorded in an asset account before they are used orconsumed.
		paid and recorded in an asset account after they are used orconsumed.
		incurred but not yet paid or recorded.
		incurred and already paid or recorded.

3 points

Question 25

If a business has received cash in advance of services performedand credits a liability account, the adjusting entry needed afterthe services are performed will be

		debit Unearned Service Revenue and credit Cash.
		debit Unearned Service Revenue and credit Service Revenue.
		debit Unearned Service Revenue and credit Prepaid Expense.
		debit Unearned Service Revenue and credit AccountsReceivable.

3 points

Question 26

The preparation of adjusting entries is

		straight forward because the accounts that need adjustment willbe out of balance.
		often an involved process requiring the skills of aprofessional.
		only required for accounts that do not have a normalbalance.
		optional when financial statements are prepared.

3 points

Question 27

On January 1 of the current year, Doolittle Company purchasedfurniture for $7,560. The company expects to use the furniture for3 years. The asset has no salvage value. The book value of thefurniture at December 31of this year is

		$0.
		$2,520.
		$5,040.
		$7,560.

3 points

Question 28

Husker Du Supplies Inc. purchased a 12-month insurance policy onMarch 1 of the current year for $1,800. At March 31, the adjustingjournal entry to record expiration of this asset will include a

		debit to Prepaid Insurance and a credit to Cash for $1,800.
		debit to Prepaid Insurance and a credit to Insurance Expense for$200.
		debit to Insurance Expense and a credit to Prepaid Insurance for$150.
		debit to Insurance Expense and a credit to Cash for $150.

I need some help with general journal entries.

1. On July 1, receive 69,100 cash from new investors and issue69,100 common stock to them.

Debit cash for 69100, credit common stock?

2. On July 1, Purchase 93,000 of new mowing equipment, payingcash to mower dealer.

Debit Equpment for 93,000 Credit cash for 93,000?

3. July 1 Pay 500 cash for july truck rental.

Debit truck rental expense, Credit cash?

4. July 3, invoice a customer 1870 for completed mowing job,customer will pay in 10 days.

Debit Accounts Receivable 1870, Credit Unearned revenue for1870? Not sure if this one is right.

*****5. July 5, The board of directors declares a cash dividend,the total amount of the dividend is 27000, the date of record isset as July 15, the Date of payment is set as July 31.

I'm not sure how to enter this one. Debit Dividends payableCredit Accounts receivable????*****

6. July 7, pay the employees 12,000 for work performed duringthe first week of july.

Debit Wages expense 12,000, Credit cash 12,000?

7. July 10, Complete a mowing job for a new customer. Customerpays 950 cash for the job.

Debit cash 950, Credit service revenue 950?

8. July 12 collect 3,500 cash from a golf course for a specialrush mowing job completed on May 31.

Debit 3,500 cash, but what do I credit? Can I get an explanationon this one too please?

9. July 14, pay employees 7200 for work performed during thesecond week of july.

Debit Wages Expense 7200, credit cash 7200.

***What's the difference between wages payable and wagesexpense? When do I know to use the expense vs liability account? Iswages payable when they are owed money in the future?

10. July 15, purchase $750 of supplies from the mower dealer.The supplies are consumed immediately. The mower dealer will bepayed in two weeks.

Debit Supplies expense $750, Credit accounts payable 750? Isthere anything else to this?

****11. July 15, collect 1870 on account. The cash that isreceived is from the new customer For the job completed on July3.

If looking back at #4, would I debit Cash for 1870, creditAccounts Receivable for 1870, then what else??*****

If anyone could help it would be greatly appreciated. I'm reallystruggling in this class and am trying to understand things, butnot having much luck.

Instructions: PLEASE ONLY SELECT THE CORRECT LETTER CHOICE AT THE END.

Use the following balance sheet information from Aggie Health and Fitness Centersâ month-end financial statements dated August 31, 2016 and open t-accounts for each balance sheet line item. Then use the enclosed TRANSACTIONS AND ADDITIONAL INFORMATION to complete the General Journal, Ledger, Worksheet and Financial Statements for the second month of operations. Use the Perpetual Inventory method as discussed in class for all sales of merchandise.

Aggie Health and Fitness Center

Balance Sheet

As of August 31, 2016

Assets: Liabilities:

Cash $4,500 Accounts Payable $2,900

Accounts Receivable 6,500 Salaries Payable 5,600

Inventory â Concessions 1,100 Interest Payable 1,375

Supplies 400 Unearned Revenue 500

Prepaid Insurance 4,400 Note Payable 330,000

Total Current Assets 16,900 Total Current Liabilities 340,375

Land 80,000 Stockholderâs Equity

Building 408,000 Common Stock 245,500

Equipment 67,200 Retained Earnings 3,563

Furniture and Fixtures 20,016 Total Liab. and SHE $589,438

Accumulated Depreciation (2,678)

Total Assets $589,438

Fiscal Year

Aggie Health and Fitness Center was established as a business in August 2016. Aggie Health and Fitness Center follows a fiscal year end of July 31.

Inventories

Inventories consist of concessions available for resale to members. These concessions consist of energy drinks, nutritional supplements, etc. Inventories are valued on a first-in, first-out basis, using the perpetual method. (Note: The Center plans to expand its inventory during September to include logo-based apparel.)

Prepaid Insurance

Aggie Health and Fitness Center carries property insurance through Good Hands Insurance Co. The Center purchased a 12 month policy on August 1, 2016 for $4,800.

Fixed Assets

Property and Equipment are stated on the basis of historical cost.

Land and Building: The Land and Building was a group purchase made on August 1, 2016. The total purchase price amounted to $488,000. On the date of purchase the land was appraised at $80,000 and the building was appraised at $408,000. The Health and Fitness Center paid $158,000 down and signed a $330,000, 12-month, 5% note for the balance. Depreciation on the building is computed using the straight-line basis with no salvage value. The life of the building is estimated to be 20 years.

Equipment and Furniture and Fixtures: All equipment and furniture and fixtures were purchased for cash on August 1, 2016. Both equipment and furniture and fixtures are depreciated using the straight-line method of depreciation. No salvage value is anticipated. The useful life of the equipment is 8 years. The useful life of the furniture and fixtures is 6 years.

The book values of these assets are presented below:

Land $80,000 $80,000

Building 408,000

Less: Accumulated Depr 1,700 406,300

Equipment 67,200

Less: Accumulated Depr 700 66,500

Furniture and Fixtures 20,016

Less: Accumulated Depr 278 19,738

Net Plant, Property, and Equipment $572,538

Unearned Revenue

The balance in the unearned revenue account is due to the sale of gift certificates redeemable for massage therapy.

Revenue Recognition

The Company recognizes service revenue upon providing services for customers. Sales revenue is recognized upon customer receipt of goods. Revenue for gift certificate sales is recognized at redemption. (Note: all memberships sold during the first month of operations were for one month only).

Instructions

Use the following TRANSACTIONS AND ADDITIONAL INFORMATION to complete the General Journal, Ledger, Worksheet and Financial Statements for the second month of operations for Aggie Health & Fitness Center (The Fitness Center). Use the Perpetual Inventory method as discussed in class for all sales of merchandise.

11	Sept 13	The owners of the company invested an additional $18,000 into Aggie Health and Fitness Center in exchange for common stock
12	Sept 14	Gift certificates totaling $300 were redeemed for massage therapy performed

What are the journal entries for Transactions #11 and #12?

Common Stock	18,000
Accounts Receivable	18,000
Unearned Revenue	300
Service Revenue	300

Accounts Receivable	18,000
Common Stock	18,000
Unearned Revenue	300
Sales Revenue	300

Common Stock	18,000
Cash	18,000
Service Revenue	300
Unearned Revenue	300

Cash	18,000
Common Stock	18,000
Unearned Revenue	300
Service Revenue Please select the correct letter choice.	300

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ACC 100 Chapter Notes - Chapter 9: Accounts Payable, Current Liability, Financial Statement

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