Final Study Guide Flashcards
Adjustments to the bank balance
Will these add or subtract?
Deposits
Corrections not yet made that would increase
Oustanding checks
Corrections not yet made that would decrease
Add: Deposits
Add: Corrections not yet made that would increase
Subtract: Oustanding checks
Subtract: Corrections not yet made that would decrease
Adjustments to the company/book balance
Will these add or subtract?
Items recorded as cash receipts by the bank but not yet recorded in company’s books
Corrections not yet made by the company that will increase the general ledger cash balance
Items recorded as cash disbursements by the bank but not yet recorded in the company’s books
Any corrections not yet made by the company that will decrease the general ledger cash balance (ex. NSF check)
Add: Items recorded as cash receipts by the bank but not yet recorded in company’s books
Add: Corrections not yet made by the company that will increase the general ledger cash balance
Subtract: Items recorded as cash disbursements by the bank but not yet recorded in the company’s books
Subtract: Any corrections not yet made by the company that will decrease the general ledger cash balance (ex. NSF check)
Estimating the amount of accounts receivable that won’t be collected
What journal entries would you add and do they have a debit/credit normal balance?
Debit: Bad Debt Expense
Credit: Allowance for doubtful accounts
Write-off specific accounts once it is determined they will not be collected
What journal entries would you add and do they have a debit/credit normal balance?
Debit: Allowance for doubtful accounts
Credit: Accounts Receivable
Percentage of receivables
A method for estimating uncollectible accounts
An estimate for the ending balance in allowance for uncollectible accounts
Multiply the accounts receivable at the end of the period by the predetermined estimated uncollectible percentage
Accounts receivable aging
A method for estimating uncollectible accounts
An estimate for the ending balance in allowance for uncollectible accounts
Multiply the accounts receivable by their percentage based on their age
Sales returns
What journal entries would you add and do they have a debit/credit normal balance?
Debit Sales returns (Contra revenue) and credit accounts receivable
▪ This is reversing the first entry listed above (Revenue and AR)
Debit Inventory and credit cost of goods sold
▪ This is bringing the returned goods back into your inventory balance and removing the expense from the income statement
Sales discounts
What journal entries would you add and do they have a debit/credit normal balance?
Debit cash for the amount you receive (this is reduced by the discount)
Debit sales discount (contra revenue account)
Credit Accounts Receivable for the full amount due by that customer
Perpetual inventory system
COGS is calculated after every sale and inventory balance is kept up to date
constantly
Purchase discounts
What journal entries would you add and do they have a debit/credit normal balance?
Debit your accounts payable for the full amount due
Credit your inventory for the amount of the discount(reduces the inventory balance because it cost you less)
Credit cash for the actual amount paid (accounts payable-discount)
Returns (from perspective of the buyer)
What journal entries would you add and do they have a debit/credit normal balance?
Debit accounts payable
Credit inventory
Selling inventory
What journal entries would you add and do they have a debit/credit normal balance?
- Record Sales Revenue
a. Debit cash or accounts receivable
b. Credit sales revenue - Record Cost of Goods Sold (COGS)
a. Debit COGS
b. Credit Inventory
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