Accounting Equation & Process
Liabilities equal $500,000 and equity equals $100,000. This is the total amount of assets that the company must have.
What is $600,000?
Assets = Liabilities + Equity
Assets = $500,000 + $100,000
Assets = $600,000
On October 1,Reyes Plumbing Company provided $295 of plumbing services to a customer on credit. This is the journal entry for the transaction.
Debit Accounts Receivable $295
Credit Plumbing Services Revenue $295
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The unadjusted trial balance columns of ABC's worksheet shows a balance of $6000 in Salaries Expense. There is an adjustment of $1,200 in the debit adjustments column of the worksheet. This is the adjusted balance for Salaries Expense.
What is $7,200?
$6,000 debit balance + $1,200 debit adjustment
Temporary vs. Permanent:
Accounts Receivable is a ____________ account, but Telephone Expenses and Sales Revenue are ___________ accounts.
What are permanent and temporary?
This is a record of all accounts with a balance column that lists the account balances after journal entries are posted.
What is the general ledger?
Determine the amount of equity that the company has based on the following account balances:
Cash $50,000
Supplies $5,000
Land $125,000
Accounts Receivable $10,000
Accounts Payable $50,000
What is $140,000?
Assets = Liabilities + Equity
Assets: Cash $50,000 + Supplies $5,000 + Land $125,000 + A/R $10,000 =
Liabilities: A/P $50,000
$190,000 = $50,000 + Equity
-$50,000 on each side
$140,000 = Equity
What is:
Debit Cash $200
Credit Accounts Receivable $200
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The unadjusted trial balance columns of ABC's worksheet shows a balance of $490 in Prepaid Insurance. There is an adjustment of $100 in the credit adjustments column of the worksheet. This is the adjusted balance for Prepaid Insurance
What is $390 debit?
$490 debit balance - $100 credit adjustment
S. Maze, the owner of Maze & Company withdrew $250 from the business throughout the current year. This is the journal entry on December 31, the journal entry to close the withdrawal account.
What is:
Debit S. Maze, Capital $250
Credit S. Maze, Withdrawals $250
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This report organizes assets and liabilities into subgroups, which makes it easier to calculate the current ratio.
What is a classified balance sheet?
Identify the impact on the accounting equation:
The company purchases office supplies on credit.
Hint: two part answer
What is increases an asset & a liability?
On June 14, Reyes Company received their telephone bill for $130 and sent a check for payment. This is the journal entry for the transaction.
What is:
Debit Telephone Expense $130
Credit Cash $130
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The Supplies account had a $250 debit balance at the beginning of the year. During the year, $500 of supplies are purchased. A physical count of supplies at December 31 shows $435 of unused supplies . This is the journal entry to record on December 31.
What is:
debit Supplies Expense 315
credit Supplies 315
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This is the closing entry for expenses based on the following account balances:
Salaries Expense $15,000
Supplies Expense $3,000
Insurance Expense $5,000
Misc. Expense $5,000
What is:
Debit Income Summary $28,000
Credit Salaries Expense $15,000
Credit Supplies Expense $3,000
Credit Insurance Expense $5,000
Credit Misc. Expense $5,000
Current vs. Noncurrent:
Wages payable is a ____________ liability, but notes payable (due in 3 years) is a _____________ liability.
What are current and noncurrent?
Identify the impact on the accounting equation:
The company purchases a company car for cash.
What is increases an asset & decreases an asset?
On July 3, Reyes company paid Office Depot $140 for Office Supplies. This is the journal entry to reflect that transaction.
What is:
Office Supplies $140
Cash $140
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Insurance expense of $4,200 is accrued but not paid as of March 31. The company recorded an adjusting journal entry at that time. This is the journal entry for the $6,000 insurance payment on April 4.
What is:
Debit Insurance Payable $4,200
Debit Insurance Expense $1,800
Credit Cash $6,000
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Ruby Inc. had revenues of $15,000 and expenses of $20,000 throughout the year. They already closed out revenues and expenses, but need to close out income summary. This is the journal entry to close out income summary.
What is:
Debit Owner Capital $5,000
Credit Income Summary $5,000
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*Original entries already completed:
Debit Revenues $15,000 & Credit Income Summary $15,000
Credit Expenses $20,000 & Debit Income Summary $20,000
Income Summary Account Activity:
$20,000 debits and $15,000 credits
Balance = $5,000 debit
This assets section of a classified balance sheet usually includes the subgroups current assets, long-term investments, plant assets, and this.
What are intangible assets?
These are the steps in the accounting process.
What is:
1) Analyze Transactions
2) Journalize
3) Post
4) Prepare Unadjusted Trial Balance
5) Adjust and Post Accounts
6) Prepare Adjusted Trial Balance
7) Prepare Financial Statements
8) Close Accounts
9) Prepare Post-Closing Trial Balance
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On November 15, Reyes Company paid salaries to their employees of $1,250 for the current pay period. This is the journal entry to reflect that tranaction.
What is:
Debit Salaries Expense $1,250
Credit Cash $1,250
The company's general ledger shows a supplies account balance of $4,755. Upon a physical count, they have $155 of supplies available. This is the required adjusting journal entry.
What is:
Debit Supplies Expense $4,600
Credit Supplies $4,600
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ABC Company had $25,000 in revenues and $5,000 in expenses this year. The owner capital account had a balance of $4,000 at the beginning of the year and the owner withdrew $1,000 throughout the year. This is the ending owner capital account balance on the post-closing trial balance.
What is $23,000?
Beginning $4,000
+ Net Income $20,000 ($25,000 rev - $5,000 exp)
- Owner Withdrawals $1,000
Ending Owner Capital: $4,000+$20,000-$1,000
The adjusted trial balance shows the following information:
Cash $125,000
Accounts Receivable $10,000
Prepaid Insurance $10,000
Notes Payable $50,000
Owner, Capital $95,000
Services Revenue $30,000
Wages Expense $15,000
Supplies Expense $3,000
Interest Expense $2,000
Insurance Expense $5,000
The accountant determines this is the net income.
What is $5,000?
Net income = revenues - expenses
Revenues: $30,000
Expenses: $15,000 + $3,000 + $2,000 + $5,000 = $25,000
Net Income = $30,000 - $25,000 = $5,000