Basic Journal Entries
Bought a building for $50,000 cash.
Building 50,000
Cash 50,000
The accounting equation
What is A = L + SHE
The purpose of adjusting entries
What is to correct and update accounts
Methods of calculating BDE
What is Income Statement, Balance Sheet, Aging of Accounts
Issued common stock for cash, $100,000.
Cash 100,000
Common Stock 100,000
The formula for ending retained earning
What is ERE = BRE + NI - DIV
The account that is never involved in ADJ entries
Net A/R
What is the "the total amount of money that a business expects to collect within a period of time"
Bought supplies on account for $45
Supplies 45
Cash 45
Calculating gross profit
What is Revenue = Net Sales - COGS
Maintenance expense includes $1,100 representing the cost of maintenance supplies used during 2014.
Maintenance expense 1,100
Maintenance supplies 1,100
The difference between the balance sheet and income statement method
Balance sheet method gives ADA balance & you have to solve for BDE. Income statement directly gives you the BDE amount.
Sold $300,000 worth of goods & 40% paid in cash.
Cash 120,000
Accounts Receivable 180,000
Revenue 300,000
Formula for Net Sales
What is Net Sales = Total sales - Sales R&A - Credit Card Discount - Sales Discount
The company earned service revenue of $6,000 on a job that was completed December 13, 2021. Collection will be made in January 2022.
12/13 A/R 6000
Service Revenue 6000
Credit sales are $300,000. ADA account begins with a credit balance of $1,000. Calculate BDE, assuming 1% of credit sales are uncollectible.
BDE = 1% * 300k = 3k
Sold merchandise worth $2,000 which was charged on a Visa credit card. Visa charges a 2 percent credit card fee.
Cash 1960
Credit Card Discount 40
Revenue 2000
Finding interest expense
What is Interest expense = FV * % * (# months/12)
Comet Spirit, Inc. signed a five-month, 12% note payable in the amount of $10,000 on Oct. 1. Comet’s year-end is Dec. 31.
12/31 Interest Expense 300
Interest Payable 300
Final A/R Balance
A/R beginning balance + Credit sale – Cash collections – Write-offs = A/R ending balance