General Terms
They tell an end user (i.e. a bank or investor) the financial condition of a company at a point in time. Name two of them.
Financial statements: Balance Statement, Statement of Owner's (stockholder's) Equity, Income Statement, Statement of Cash Flow
10/1 Client pays company $300 for services to be provided from 10/1 to 1/31. What is the adjusting entry on 12/31?
DR Deferred Revenue 225
CR Service Revenue 225
5/1 Company pays $2400 for one year of advertising services. What is the adjusting entry on 12/31?
DR Advertising Expense 1600
CR Prepaid Advertising 1600
Record the journal entry:
You sell equipment you no longer need for $4000 in cash.
DR Cash 4000
CR Equipment 4000
Record the t-account (general ledger) entries:
You provide $100 of consulting services to a client. They write you a check as you prepare to leave.
Consulting Revenue Cash
| 100 100 |
These can also be called "business events." They impact a company in some monetary way. They drive the accounting cycle.
Transactions
6/1 Company pays $1200 for next year of rent. What is the initial journal entry?
DR Prepaid Rent 1200
CR Cash 1200
11/1 Company borrows $1000 at an interest rate of 5%. Note and interest are due in 5 months.
DR Interest Expense 8.33
CR Interest Payable 8.33
Record the journal entry:
You sell $500 worth of goods to a client. They promise to pay you within 30 days.
DR Accounts Receivable 500
CR Sales Revenue 500
Record the t-account (general ledger) entries:
You sell a revolutionary new item. A client buys 60 for $10 each on credit.
Sales revenue Accounts Receivable
| 600 600 |
Name the 5 steps of the accounting cycle.
1. Capture transactions
2. Journal Entries
3. General Ledger Entries
4. Trial Balance
5. Financial Statements
6/1 Company pays $1200 for next year of rent. What is the adjusting journal entry on 12/31?
CR Prepaid Rent 700
12/1 Company loans $3000 at an interest rate of 8%. Note and interest are due in 6 months. What is the initial entry on 12/1?
DR Note Receivable 3000
CR Cash 3000
Record the journal entry:
You pay your employees $300 for their work this month. Because you like to do business different than most, you pay in cash at the close of business on the last day of the month.
DR Wage Expense 300
CR Cash 300
Record the t-account (general ledger) entries:
You buy $400 of office supplies from Walmart. You charge it to your company's credit card.
Supplies Accounts Payable
400 | | 400
T/F: Land and Buildings are equity accounts.
False. They are asset accounts.
8/1 Company has beginning supplies balance of $4000. At the end of the month, a count shows $200 of supplies available. No supplies were purchased during the month. What is the adjusting entry on 8/31?
DR Supplies Expense 3800
CR Supplies 3800
12/1 Company loans $3000 at an interest rate of 8%. Note and interest are due in 6 months. What is the adjusting entry on 12/31?
DR Interest Receivable 20
CR Interest Revenue 20
Record the journal entry:
You buy $1000 of new equipment for your new business. You sign an agreement with the seller to pay in 3 months.
DR Equipment 1000
CR Note Payable 1000
Record the t-account (general ledger) entries:
You buy a new house for $300k.
Mortgage House
| 30,000 30,000 |
We report the revenues and expenses of our business on this report.
Income statement.
3/1 Company borrows $120,000 from the bank with an interest rate of 10%. Note and interest are due in 2 years. What is the adjusting entry for 12/31?
DR Interest Expense 1000
CR Interest Payable 1000
1/1 Company has a supply account balance of $3000. On 1/10 company purchases $500 in supplies. On 1/31 a count shows $1000 of supplies. What is the adjusting entry on 1/31?
DR Supplies Expense 2500
CR Supplies 2500
Record the journal entry:
You overdraw your bank account and the bank charges you $40. They withdraw it directly from your overdraft account.
DR Bank Fee 40
CR Cash 40
Record the t-account (general ledger) entries:
You want to buy a new truck. The truck costs $10,000. You put down $2000. You finance the rest.
Truck Note payable Cash
10,000 | | 8000 | 2000