FAR - Journal Entries

Question 1

Recording PV of Note Receivable (exchange for property)

Answer 1

1.) Dr NR
      Cr Discount on NR
      Cr Asset
2.) Dr Discount on NR
       Cr Interest Revenue

Question 2

Recording Interest Revenue

Answer 2

Dr Discount on NR

Cr Interest Revenue

Question 3

Date of grant, stock options recognized over service period

Answer 3

Dr Compensation Expense

Cr APIC - stock options

Question 4

At exercise of stock options

Answer 4

Dr Cash (for amount employees must pay)
Dr APIC - stock options
Cr Common stock (par or stated value of shares issued)
Cr Capital in excess of par, common

Question 5

Journal entries for a lessor

Answer 5

1/1/20x1:
Dr Min Lease payments Receivable 1,180
  Cr Equipment 1000
  Cr Unearned Income 180
31/12/20x1:
Dr Cash 295
  Cr Min Lease Payments Receivable 295
Dr Unearned Income 70
  Cr Interest Income 70

Question 6

Journal Entry for a Non-Monetary Exchange, when boot received, worked example

Answer 6

Dr Cash (boot received) 4k
Dr New Truck (plug) 9.6k
Cr Gain on exchange (realized value * boot %) 1.6k
Cr Old Truck carrying 12k

Realized gain = FV - carrying value. Recognized = (boot $)/total consideration * realized gain

Question 7

Journal Entry for a Non-Monetary Exchange, general

Answer 7

Dr New Asset (FV of consideration given)
Dr Accum Depreciation Asset Given Up
Dr Cash Received
Dr Loss (if any)
  Cr Old Asset @ historic cost
  Cr Cash Given
  Cr Gain if any

Question 8

IFRS exchange of dissimilar assets, cash paid, FV of equip exchanged equal

Answer 8

Treated as revenue generating, all g/l recorded:
Dr Equip Received
Dr Loss on Exchange
  Cr Equip given up
  Cr Cash

Question 9

JE for issuing a purchase order (governmental fund so modified accrual)

Answer 9

Dr Encumbrance

Cr Budgetary Control

Question 10

JE for recording property taxes (governmental)

Answer 10

Dr Property taxes receivable
Cr Allowance for uncollectible property taxes
Cr Revenue

Question 11

JE for recording governmental estimated revenue (budgetary account)

Answer 11

Dr Estimated Revenue Control

Cr Budgetary Control

Question 12

JE for purchase of general fixed assets (governmental)

Answer 12

Dr Expenditures

Cr Vouchers Payable

Question 13

JE for governmental when appropriations exceed revenues at beginning of year and year end

Answer 13

Start of Year:
Dr Estimated Revenue 5000
Dr Budgetary Control 1000 (bal fig)
  Cr Appropriations Control 6000
End of Year:
Dr Appropriations Control 6000
  Cr Estimated Revenue 5000
  Cr Budgetary Control 1000

Question 14

JE for capital lease which represents acquisition of a general fixed asset

Answer 14

Dr Expenditure Capital Lease

Cr Other financing source - Capital Lease

Question 15

JE for billings for transportation services provided to other governmental units recorded in the internal service fund

Answer 15

Dr Due from other funds

Cr Operating Revenues

Question 16

JE for a County that collects taxes on behalf of cities/districts in its borders and charges a fee (JE for fees received)

Answer 16

Dr Cash 1000
Cr Due to other governments (taxes) 950
Cr Due to other funds (fees) 50

Question 17

JE for acquisition, cost method (also called available for sale & FV method),

Answer 17

Dr Investment in Investee
Cr Cash

Dr Unrealised holding losses (OCI)
Cr Investment in Investee (or valuation account)

Dr Investment in investee (or valuation account)
Cr Unrealized holding gains

Dr Cash
Cr Investment in Investee

Question 18

JE to recognize gain on life insurance policy at time of death of covered officer/employee

Answer 18

Dr Cash
Cr Cash surrender value
Cr Gain from proceeds of life insurance

Question 19

JE for company used to combine 2 companies using acquisition method (use FMV of stock issued in combination)

Answer 19

Dr Investment in Sub
Cr Common Stock par
Cr APIC

Question 20

JE for detachable warrants using the warrants only method

Answer 20

Dr Cash
Dr Discount on bonds payable
Cr Bonds Payable
Cr APIC - warrants

Question 21

JE for amortization of bond discount

Answer 21

Dr Interest Expense
Cr Amortization of Bond Discount
Cr Cash (or interest payable)

Question 22

JE for IFRS carrying value of bond liability

Answer 22

Bond issues costs reduce cash received from bond issuance - deducted from libaility.

Dr Cash 201 (200k face @ 103 = 206 - 5k issse costs)
Cr Premium on Bond 1 (206-5)
Cr Bond Liability 200 (face)

Diff between liability & bond issuance can be added to discount (if issued at a discount). E.g.

Dr Cash
Dr Discount
Cr Bond Payable

Question 23

JE for converting bonds into common stock

Answer 23

Dr Bond Payable
Cr Unamortized Discount
Cr Common Stock
Cr APIC

Question 24

JE for inventory write-down

Answer 24

Dr loss on inventory due to market value decline

Cr Inventory

Question 25

JE for gain on pension return

Answer 25

Dr Pension Benefit asset/liability
Cr OCI
Dr Deferred Tax Expense OCI
Cr Deferred tax liability