Posted: November 7th, 2020

ACC 204 – Chapter 1 Accounting Elements – In class practice

ACC
204 - Chapter 1 Accounting Elements – In class practiceIs the account anAsset,Liability,Capital/Equity,Revenue,Expense?
On which financial statement does the account appear?Land Rent Expense
Inventory Retained Earnings
Accounts Payable Accounts
Receivable
Utilities Expense Common Stock
Wages Payable Wages Expense
Rent Expense Notes Payable
Equipment Sales
Supplies Supplies Expense
Service Revenue Fee Revenue
Dividends Dividend Income
Interest Expense Interest Payable
Interest Income Interest Receivable
Cost of Goods Sold Building
Income Tax Expense Income Tax Payable
Insurance Expense Cash
Prepaid Insurance Unearned RevenueACC
204 - Chapter 1 Accounting Elements – In class practiceClassify each
account as anAsset,Liability,Capital,Revenue,Expense and indicate on which financial
statement(s) the account appears.Advertising Expense Automobiles
Common Stock Buildings
Cash Sales of Services
Accounts Payable Inventory
Office Supplies Notes
Payable
Land Retained Earnings
Accounts Receivable Equipment
Sales of Products Interest
Income
Bonds Payable Wages Payable
Office Supplies Exp. Dividends
Prepaid Insurance Unearned Rental IncomeWhat is the income
statement equation?What is the
statement of retained earnings equation?
What makes Retained Earnings increase?
What makes Retained Earnings decrease?What is the link
between the income statement and the statement of retained earnings?What is the
balance sheet equation?What is the link
between the statement of retained earnings and the balance sheet?ACC 204 –
Chapter 2 Review
Prepare the journal entry and/or t-accounts for the
following transactions.1.
A
two-year promissory note is signed at the local bank. The cash received from
the loan is $3,000.
2.
Equipment
is purchased with a $1,000 check.
3.
Sales
on account are $2,000.
4.
The
monthly utility bill of $100 is received and paid.
5.
Received
$800 from customers as payment on account.ACC 204 – Chapter 2 Practice ProblemAnalyze the following transactions and
record them in t-accountsa. Stockholders invested $20,000 cash in
the company in exchange for common stock.
b. Paid $800 cash for office rent.
c. Purchased office equipment for $3,000
for cash.
d. Purchased on account advertising in the
newspaper for $300.
e. Earned $9,000 for services provided on
account.
f. Earned $1,000 for services provided for
cash.
g. Paid $400 cash dividends.
h. Paid for the advertising in item d.
i. Collected $4,000 from customers on
account.
j. Paid $500 for employee salaries.
k. Purchased $600 of office supplies on
account.Assets=LiabilitiesEquityCashAPCommon
Stock20,00030020,0008003003,0006001,000400300Dividends4,000400500EquipmentRevenues3,0009,0001,000Rent ExpAR8009,0004,000Ad Exp300Supplies600Sal Exp500General JournalDateDescriptionDebitCreditaCash20,000
Common Stock20,000bRent Expense800
Cash800cEquipment3,000Cash3,000dAdvertising
Expense300Accounts Payable300eAccounts Receivable9,000
Revenue/Sales9,000fCash1,000
Revenues/Sales1,000gDividends400
Cash400hAccounts Payable300
Cash300iCash4000
Accounts Receivable4,000jSalaries Expense500
Cash500kOffice Supplies600
Accounts Payable600ACC 204 Chapter 3 ReviewNominal accounts Matching
principle Contra
account
Deferred revenue Accrual
basis Cash basis
Recognition1.
A
system of accounting in which revenues are recognized when earned and expenses
when incurred.
2.
The
process of recording an item in the financial statements as an asset,
liability, revenue, expense, or the like.
3.
The
name given to revenue, expense, and dividend accounts because they are
temporary and are closed at the end of the period.
4.
The
association of revenue of a period with all of the costs necessary to generate
that revenue.
5.
An
account with a balance that is opposite that of a related account.6.
Provide
a specific example of the matching principle.1.
Accrual; 2 recognition; 3. Nominal accounts; 4. Matching
principle; 5. Contra; 6. Recording a sale; adjusting journal entries
ACC 204 Chapter 3 ReviewShow the adjusting journal entries for the year ending
December.
Adjustments are made once, at the end of the year.
1.
At the
beginning of the year, two year’s of rent was paid in advance, $19,200.
2.
At the
beginning of the year, furniture and fixtures were purchased for $40,000 cash.
Annual depreciation is $7,000.Also, show
the balance sheet presentation of the furniture and fixtures on Dec. 31.
3.
On
July 1, the firm paid $3,000 for a three-year insurance policy.
4.
On
November 1, the firm accepted a $15,000 note receivable for services rendered.
The note has a 10 percent interest rate. Both the note and the interest will be
paid on May 1 of the following year. The interest for November and December is
$250.
5.
Salaries
of $2,300 were earned but unpaid at the end of the year.Dr rent expense 9.600; Cr prepaid rent 9,600
Dr depreciation expense 7,000; Cr accumulated depreciation
7,000
Dr insurance expense 500; Cr prepaid insurance 500 [half a
year]
Dr interest receivable 250; Cr interest income 250
Dr salaries expense 2,300; Cr salaries payable 2,300Long-Term Assets/PPE
Furniture and Fixtures
$40,000
Accumulated Depr – F&F ( 7,000)
Book value or carrying value $33,000
ACC 204 Chapter 3 ReviewPrepare the adjusting journal entries for themonth of April. For each adjustment indicate the impact on net
income.1.
In
March a van was purchased for $30,000 cash. Depreciation on the van is $6,000
peryear. Also show the balance
sheet presentation of the van on April 30.
2.
Last
year a 3-year insurance policy was purchased for $6,000 cash.
3.
In
January the company received $12,000 in cash for annual subscriptions to the
company’s monthly newsletter. During the month subscriptions worth $1,000 were
used.
4.
On
April 30 wages owed to employees, but unpaid, were $3,000.1. Dr depreciation expense 500;
Cr accumulated depreciation 500
2. Dr insurance expense 167; Cr
prepaid insurance 167
3. Dr unearned revenue 1,000; Cr
revenue 1,000
4. Dr wages expense 3,000; Cr
wages payable 3,000Total Assets/PPE
Equipment $30,000
Accumulated depr – Equip (1,000) [depreciation
for March and April]
Book value/Carrying value $29,000ACC
204, Chapter 4 handout
Jan 2 Sold merchandise to Ace
Company, on account, for $4,000, terms 2/10, n/30. The cost of the merchandise
sold was $2,600.Jan 6 Ace Company returned
merchandise that was sold for $525. The cost of the merchandise was $340.Jan 10 Received payment from
Ace Company, in full, less discount.Jan 20 Purchased merchandise
from Beta Corp., on account, for $1,540 terms 1/10, n30.Jan 23
Paid $200 cash for
freight
charges on the
Jan
20 purchase.Jan 25 Received credit from Beta
Corp. for $35 of merchandise that was returned because it was damaged.Jan 29Paid Beta Corp. in full,
less discount.2-JanA/Rec
- Ace4,00020-JanM
Inv1,540Sales/Rev4,000AP
- Beta1,540COGS2,600M
Inv2,60023-JanM
Inv200Cash2006-JanSales
R&A525A/Rec
- Ace52525-JanAP-
Beta35M
Inv340M
Inv35COGS34029-JanAP-Beta1,50510-JanCash3,405M
Inv15Sales
Discounts70Cash1,490A/Rec
- Ace3,4752-JanRev$4,000COGS(2,600)GP$1,400GM35%Company
NameMulti-Step
Income StatementFor the
Period Ended …..Sales$
688,250Less:
Sales Returns and Allowances0Sales Discounts0-Net
Sales$
688,250Cost
of Goods Sold(422,745)Gross
Profit$
265,505Operating
ExpensesAdvertising
Expense$
7,345Rent
Expense23,456Depreciation
Expense9,000Wages
Expense112,144Total Operating Expenses151,945Operating
Income$
113,560Other
Revenues and GainsInterest/Dividend/Rent Income$ 24,600Other
Expenses and LossesInterest Expense(3,246)21,354Income
Before Income Taxes (IBT)$
134,914Income
Tax Expense(30,000)Net
Income$
104,914Company
NameStatement
of Retained EarningsFor the
Period Ended …..Beginning
Retained Earnings446,560Net
Income104,914Dividends(41,000)Ending
Retained Earnings$
510,474Company NameBalance SheetDateAssetsLiabilitiesCurrent
AssetsCurrent
LiabilitiesCash$95,000Accounts
Payable$60,000Accounts
Receivable90,000Travel
Payable50,000Supplies5,000Total
Current Liabilities$
110,000Total
Current Assets$
190,000Long-Term
LiabilitiesLong-term
AssetsBonds
Payable75,000Land165,474Total
Liabilities$
185,000Furniture$ 95,000Stockholders'
EquityAccum.
Depr. - Furniture(45,000)50,000Common
Stock$10,000Building425,000Retained
Earnings510,474Accum.
Depr. - Building(125,000)300,000Total SE520,474Total Assets$
705,474Total
Liabilities and SE$
705,474M.A. Houston
ACC 204
Chapter 5 QuestionsWhich method (LIFO, FIFO, Weighted Average,
Specific Identification)-
Results in cost of goods sold
being closest to current product costs?-
Results in highest income
during periods of inflation?-
Results in highest ending
inventory during period of inflation?-
Smoothes out costs during
periods of inflation?-
Is not practical for most
businesses?-
Puts more weight on the cost of
the larger number of units purchased?-
Results in the ending inventory
being closest to current product costs?-
Most closely reflects the
physical flow of goods for most businesses?Chapter 8 Handout1. The Corporation
purchased machinery for $40,000. The machinery has an estimated salvage value
of $5,000 and an estimated useful life of 10 years.
A.
Compute
straight-line depreciation for year two.
B.
Compute
double declining balance depreciation for year two.
C. What is
the adjusting journal entry to record depreciation?2. The Forum
purchased equipment for $80,000. At the end of 2005 the Accumulated
Depreciation account had a balance of $21,000. On January 1, 2006, the
equipment was sold for $54,000. Compute the amount of gain or loss.3. Dodge Company purchased a machine for $18,000 on
January 1, 2008. The machine is expected to have a salvage value of $2,000 at
the end of its 4-year useful life.
A. Compute
depreciation expense for year two using the straight-line method.
B. What is the
adjusting journal entry to record the depreciation computed in A?
C. Compute the
depreciation expense for year two using the double declining balance method.
D. Assume that
the machine is sold at the end of year 2 for $10,000. Compute the gain or loss on disposal of the machine assuming the
machine was depreciated using double declining balance method.5.Classify the following asLand, Land
Improvements, Building, or Other.1Cost of real estate purchased as a plant site(land $180,000 and
existing building $70,000)$250,0002Accrued real estate taxes paid at time of purchase4,9003Cost to demolish existing building27,0004Cost of filling and grading the land7,2705Excavation cost for new building basement21,9006Architect's fees on building plan51,0007Payment to building contractor629,5008Cost of parking lots and driveways31,8009Real estate taxes on land paid for the current year5,32010Proceeds for salvaged materials from demolished building12,700Chapter
10The bond coupon rate (the stated interest
rate) is rarely exactly equal to the market rate at the time of sale. Market
rates fluctuate constantly, and the market rate that will prevail at the time
of issue cannot be determined accurately in advance. The exact rate that the
bonds will yield is established by issuing the bonds at a price greater or less
than face value.A bond sold to yield an interest rate
greater than the coupon rate will be sold at a discount. Because the prevailing
rate is greater than the coupon rate, the bond is of less value to an investor
than a bond with a comparable face value paying the prevailing rate; hence, the
investor will pay less than the face value for it. A bond discount adjusts the
bond issue price so as to align the coupon rate with the prevailing rate. A
bond discount can be seen as an amount that the investors did not pay “up
front” because the investors will receive “less” interest each year over the
life of the bonds.A bond sold to yield an interest rate less
than the coupon rate will be sold at a premium. Because the prevailing rate is
less than the coupon rate, the bond is of greater value than a bond with a
comparable face value paying the prevailing rate; hence the investor will pay
more than the face value for it. The premium can be seen as interest that
investors paid “up front” to receive “extra” interest each year over the life
of the bonds.Historically, bonds were printed with a
coupon rate days or weeks prior to the issue date and hence there could be a
significant difference between the coupon rate and the prevailing market rate
at the date of sale. Today many bonds are issued in electronic rather than
paper form. Accordingly, premiums and discounts tend to be much smaller than in
the past.ACC 204
Chapter 11 HandoutPrepare journal entries for the following
transactionsJanuary
1 - Issued 3,000 shares of $5 par common stock for $6 per share.
June 1 -
Repurchased 100 share of common stock for $7.
December
1 – Declared a $1 per share cash dividend.
December
15 – Date of record for the December 1 dividend.
December
31 – Paid the dividend declared on December 1.
When is
Retained Earnings reduced … on the date of declaration, record, or
payment?
Do
corporations have to declare dividends?
Dividends
are paid on shares (a) authorized; (b) issued; (c) outstanding.ACC
204
Financial
Accounting TruthsAccrual Accounting
Revenues
are recognized when earned not necessarily when cash is received
Expenses
are recognized when owed/incurred not necessarily when cash is paidDividends are not expensesRetained Earnings is not an asset
Retained Earnings is not cashDepreciation
Never depreciate
land
Do not change
the asset account when recording depreciation
Depreciation
expense is an expense account
Accumulated
depreciation is a contra asset accountAdjustments
Always
at least one B/S and one I/S account
Never
cashWhat is the top line?
What is the bottom line?
What is eps?ACC
204
Rules
of Debits and Credits1.
a ledger is also called a
t-account
2.
debit means left; credit means
right
3.
increase or decrease depends on
the type of account
4.
increase side = normal balance
5.
Equal sign rule
a.
Accounting Equation is A = L +
Capital
b.
For specific accounts, the
increase side is the side on which the account appears in the accounting
equation
c.
For Cash: Cash is an asset;
assets appear on the left side of the accounting equation; increases in cash
are debits.
d.
For Accounts Payable: A/P is a
liability; liabilities appear on the right side of the accounting equation;
increases in A/P are credits.
6.
Equal sign rule holds for all
accounts exceptdividends andexpenses
7.
Capital or Stockholders’ Equity
is
a.
Increased by common stock
b.
Retained earnings is increased
byi.
Net Incomeii.
Revenue
c.
Retained earnings is decreased
byi.
Expensesii.
Dividends
8.
To make a journal entry, answer
these questions:
a.
which accounts are affected?
b.
did the account increase or
decrease?
c.
determine the debit and credit
d.
ensure that debits equal
credits

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