Journal Entries Flashcards
Stock Dividend at Date of Declaration
Dr: Retained Earnings
Cr: Common Stock to be distributed
Foreign Currency - Initial purchase
Foreign Currency - Payment made with currency gain
Dr: Purchase
Cr: Accounts Payable
Dr: Accounts Payable
Cr: Foreign exchange transaction gain
Cr: Cash
Shareholder’s Equity
It consists of Capital Stock, Additional paid-in capital (APIC), Retained earnings.
Foreign currency conversion
Under the remeasurement method, currency gain or loss is included in the net income of the company.
Under the translation method, the gain or loss is included as a part of other comprehensive income.
Foreign currency transaction
A transaction denominated in a foreign currency is recorded at the spot rate on the date of the transaction.
Change in common stock outstanding
If stock dividend or a stock split (or reverse split) changes common stock outstanding, the computation of EPS shall give retroactive recognition for all periods presented using the new number of shares because the reader’s primary interest is presumed to be related to current capitalization.
Form 8-K information
The form reports on major corporate events, including corporate asset acquisitions/disposals, accountant changes, financial statement changes, management changes, changes in securities, etc. Quarterly results of operations will be reported using Form 10-Q.
During consolidation, intercompany sale of inventory from parent to subsidiary was recorded incorrectly
Before closing books:
Dr: Inventory (S)
Cr: Intercompany Payable (S)
After closing books:
Dr: Retained Earnings (S)
Cr: Intercompany Payable (S)
For Subsidiary Company (S) to record the missing invoice:
Dr: Intercompany Expense 10,000
Cr: Intercompany Payable 10,000
To Eliminate Intercompany Balances in Consolidation:
Dr: Intercompany Payable (on S’s books) 150,000
Cr: Intercompany Receivable (on P’s books) 150,000
Sale of Equipment by Landon to Jacobs. Cash received in July and delivered goods in August. Journal Entry for the whole process
July Entry:
Dr: Cash 215,000
Cr: Unearned sales revenue 215,000
August Entry:
Dr: Unearned sales revenue 215,000
Cr: Sales revenue 215,000
Cost of goods sold 175,000
Inventory 175,000
Large stock dividend (more than 20% to 25% of previously outstanding shares)
Dr: Retained Earnings (Par value)
Cr: Common stock to be distributed (Par value)
Asset’s fair value increases subsequent to recording an impairment loss
Under U.S. GAAP, long-lived assets that are impaired can only have their carrying value restored if they are held for disposal. Assets that are held for continued use that are impaired are not permitted to have any restoration of carrying value. Keep in mind that any write-ups are limited to previous write-downs.
Entry to record the write-off of a specific account
Dr: Allowance for uncollectable accounts
Cr: Accounts receivable
Gross Method - Trade Receivables
(a) Journal Entry on Date of Sale:
Dr: Trade Receivables 1,000
Cr: Sales Revenue 1,000
(b) Entry if payment received within discount period:
Dr: Cash 980
Dr: Sales Discounts 20
Cr: Trade Receivables 1,000
(c) Entry if payment not received within discount period:
Dr: Cash 1,000
Cr: Trade Receivables 1,000
