Basic Journal Entries Flashcards
Prepare a journal entry to record the following sale using the gross method. Company sells $2,000 of goods, terms 3/10 n30. The sale is subject to a 5% trade discount.
Dr: Accounts Receivable - $1,900
Cr: Sales Revenue - $1,900
Prepare a journal entry to record the receipt of the following account receivable within the 10 day discount period using the gross method. Company sells $2,000 of goods, terms 3/10 n30. The sale is subject to a 5% trade discount.
Dr: Cash - $1,843
Dr: Sales Discounts - $57
Cr: Accounts Receivable - $1,900
Prepare a journal entry to record the following sale using the net method. Company sells $2,000 of goods, terms 3/10 n30. The sale is subject to a 5% trade discount.
Dr: Accounts Receivable - $1,843
Cr: Sales - $1,843
Prepare a journal entry to record the receipt of the following account receivable within the 10 day discount period using the net method. Company sells $2,000 of goods, terms 3/10 n30. The sale is subject to a 5% trade discount.
Dr. Cash - $1,843
Cr. Accounts Receivable - $1,843
Prepare a journal entry to record the receipt of the following account receivable after the 10 day discount period using the gross method. Company sells $2,000 of goods, terms 3/10 n30. The sale is subject to a 5% trade discount.
Dr: Cash - $1,900
Cr: Accounts Receivable - $1,900
Prepare a journal entry to record the receipt of the following account receivable after the 10 day discount period using the net method. Company sells $2,000 of goods, terms 3/10 n30. The sale is subject to a 5% trade discount.
Dr: Cash - $1,900
Cr: Sales Discounts Forfeited - $57
Cr. Accounts Receivable - $1, 843
A company sells $2,000 of goods, terms 3/10 n30. The sale is subject to a 5% trade discount. After the sale, a $200 allowance is made for a defect in the merchandise during the discount period. Record the entry using both the gross and net methods.
Gross:
Dr: Sales Returns and Allowances - $200
Cr: Accounts Receivable - $200
Net:
Dr: Sales Returns and Allowances - $194
Cr: Accounts Receivable - $194
At the end of the year, a firm estimates that $30,000 of cash discounts will be taken by customers in the next year on current year’s sales. Prepare the adjusting entry.
Dr: Sales Discounts - $30,000
Cr: Allowance for Sales Discounts - $30,000
Prepare an adjusting entry to record the estimate of $30,000 in bad debt expense.
Dr: Bad Debt Expense - $30,000
Cr: Allowance for Doubtful Accounts - $30,000
Assume that $10,000 is deemed uncollectible. Prepare the proper journal entry to record this uncollectible account.
Dr: Allowance for Doubtful Accounts - $10,000
Cr: Accounts Receivable - $10,000
$10,000 previously written off has been recovered. Prepare the journal entries for this event.
Dr: Accounts Receivable - $10,000
Cr: Allowance for Doubtful Accounts - $10,000
Dr: Cash - $10,000
Cr: Accounts Receivable - $10,000
On July 1, Y1, a company sold equipment and accepted as payment a $10,000, 3-year, 6% note. Record this sales transaction and the adjusting entry at the end of the year for accrued interest receivable.
Dr: Note Receivable - $10,000
Cr: Sales Revenue - $10,000
Dr: Interest Receivable - $300 ($10,000 x .06 x 6/12)
Cr: Interest Revenue - $300
On January 1, Y1, a company sold equipment and executed a $25,000, 2-yr., non-interest bearing note as payment. The current market interest rate is 8%. How would the sale be recorded? How would the interest be recorded? How would the final payment be recorded?
PV of $1 at 8% for 2 periods is .85734
Multiply .85734 x $25,000 to get the present value of the note.
Dr: Note Receivable - $21,434
Cr: Sales Revenue - $21,434
Interest recognized using the effective interest rate method as follows:
Dr: Note Receivable - $1,715 (21,434 x .08 x 12/12)
Cr: Interest Revenue - $1,715
When cash collected:
Dr: Cash - $25,000
Cr: Note Receivable - $25,000
What are the journal entries to retire preferred stock? What are the two scenarios?
Dr: Preferred Stock
Dr: APIC
Cr: APIC - Retirement of stock
Cr: Cash
or
Dr: Preferred Stock
Dr: APIC
Dr: Retained Earnings
Cr: Cash
What are the journal entries to convert bonds into common stock under the market value method?
Using the market value of the stock or bond, whichever is more reliable, make the following entries:
Dr: Loss on redemption Dr: Bonds payable Dr: Premium on BP Cr: Common Stock Cr: APIC - CS
or
Dr: Bonds payable
Cr: Discount on BP
Cr: Common Stock
$20,000 of accounts receivable have been factored without recourse. The fact charges 5% and hold back an additional 3% for sales returns. Assume that actual sales returns equals estimated amount. What are the journal entries?
Dr: Cash - $20,000 (1.00 - .05 - .03) = $18,400
Dr: Receivable from factor ($20,000 x .03) = $600
Dr: Loss on sale of receivables ($20,000 x .05) = $1,000
Cr: Accounts receivable = $20,000
$20,000 of accounts receivable have been factored with recourse. The factor charges 2%. The firm estimates its liability for bad debts (recourse liability) is $1,000. What are the journal entries to record this transaction if treated as a sale?
Dr: Cash - $20,000 (1.00-.02) = $19,600
Dr: Loss on sales $20,000(.02) + $1000 = $1,400
Cr: Accounts receivable $20,000
Cr: Recourse liability $1,000
$20,000 of accounts receivable have been factored with recourse. The factor charges 2%. The firm estimates its liability for bad debts (recourse liability) is $1,000. What are the journal entries to record this transaction if treated as a loan?
Dr: Cash - $20,000 (1.00 -.02) = $19,600
Dr: Discount on factor liability $20,000 (.02) = 400
Cr: Factor liability = $20,000
Assume in the firm’s first year the LCM valuation method is applied and cost exceeds market by $4,000. What are the journal entries using the direct method?
Direct method -
Dr: Cost of goods sold = $4,000
Cr: Inventory = $4,000
Assume in the firm’s first year the LCM valuation method is applied and cost exceeds market by $4,000. For the beginning inventory, cost exceeded market by $1,000. What are the journal entires using the allowance method?
Allowance method -
Dr: Holding loss = $3,000
Cr: Allowance for LCM = $3,000
A loss on purchase contract is both probable and estimable. Record the adjusting year-end entry.
Dr: Loss on purchase contract
Cr: Liability on purchase commitment
A firm sells goods with a total sales value of $80,000. The cost of the items sold is $60,000. During the year, the firm collects $25,000. The firm is uncertain about collecting the remaining sales price and elects to use the installment method of revenue recognition. How is the gross profit percentage calculated? What are the journal entries?
Gross profit percentage equals (80,000-60,000)/80,000
Dr: Installment accounts receivable = 80,000
Cr: Installment sales = 80,000
EOY Adjusting Entries:
Dr: Installment Sales
Cr: Deferred gross profit (gross profit percentage in cash)
Cr: Cost of goods sold
Dr: Deferred gross profit (% x cash payments received)
Cr: Recognized gross profit
A contractor begins construction of a building for a client. The contract price is $10,000.
Costs incurred in Year 1: $2,000 Year 2: $4000
Estimated remaining cost Y1: $6,000 Y2: $1,500
Progress billings: Y1: $1,000 Y2: $3.500
Collections on billings Y1: $800 Y2: 3,000
Year 1 Journal Entries: Dr: Construction in progress = $2,000 Cr: Materials, cash, etc. = $2,000 Dr: Accounts receivable = $1,000 Cr: Billings = $1,000 Dr: Cash = $800 Cr: Accounts receivable = $800
Adjusting entry:
Dr: Construction in progress = $500
Dr: Construction expenses = $2,000
Cr: Construction revenue = $2,500
The journal entries to complete the contract and close the accounts for the completed contract and percentage of completion methods are:
Completed contract: Dr: Billings Dr: Construction Expense Cr: Construction in progress Cr: Construction revenue
Percentage of completion:
Dr: Billings
Cr: Construction in progress
What are the journal entries to record an overall loss for both the completed contract method and the percentage of completion method?
Completed contract:
Dr: Loss on construction contract
Cr: Construction in progress
Percentage of completion:
Dr: Construction expenses
Cr: Construction in progress
Cr: Construction revenue
