GAAP 1- ACC Basics
The "L" in the accounting equation stands for this.
Common Stock 45,000
Calculate net income:
15,000 sales
22,000 consulting revenue
4,000 rent expense
10,000 salaries expense
750 insurance expense
37,000 - 14,750 = 22,250
This account is what we debit when we buy a product or credit when we sell a product.
What is Merchandise Inventory?
Establish a $250 petty cash fund on Feb 1
Petty Cash 250
Cash 250
Revenue minus expenses equals this.
What is net income?
January 5: Provided work for a client and received $5,000 cash.
Cash 5,000
Revenue 5,000
Calculate straight-line depreciation given:
25,000 purchase price
4,000 salvage value
7 year useful life
25,000 - 4,000 / 7
3,000
When we credit Merchandise Inventory after a sale, we also must debit this account.
What is COGS?
Increase petty cash fund from $200 to $350.
Petty Cash 150
Cash 150
Equity equals this amount if assets equal 5,000 and liabilities equal 2,000
What is 3,000
January 10: Paid a $350 cash dividend
Dividends 350
Cash 350
On September 1, 2022, Lopez Company paid $1,200 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31, 2022. Prepare the journal entry to reflect expiration of the insurance as of December 31, 2022.
Insurance expense 800
Prepaid Insurance 800
January 12: Sold merchandise for 5,000 on credit. The merch cost us 2,000.
A/R 5000
Sales 5000
COGS 2000
MI 2000
This account is used when our petty cash receipts do not equal the amount of cash we have remaining in our account.
Cash over and short
Equity consists of retained earnings, revenue, and these two additional components.
What are common stock and expenses
January 15: Prepaid for 2 years of insurance worth $12,000.
Cash 12,000
January 1: Customer paid $3,500 cash for work to be completed January 10.
January 10: Completed work for the customer
1. Cash 3500
Unearned Rev 3500
2. Unearned Rev 3500
Rev 3500
Complete the journal entry for the PAYMENT only. Sold merchandise for 1,000 on credit 2/10, n/30. The customer paid for this merch during the discount period.
Cash 980
Sales Discounts 20
A/P 1,000
A bank service charge is reconciled on this part of the bank reconciliation. (Book Balance, Bank Statement Balance)
What is book balance?