Journal Entries Flashcards
When stock is exchanged for an asset in a non-cash transaction, how is the asset valued?
The fair value of the stock or the asset is used, whichever is more determinable. If the fair value of both the stock and asset are known, then it does not matter which is used. If the fair value of neither are known, then a consultant will need to assign a value
How are property dividends recorded?
- Increase or decrease the property so that it equals FMV
- Debit RE and Credit Dividends Payable (to record declaration)
- Debit Dividends Payable and Credit Property (to record payment of dividends)
How is a liquidating dividend recorded?
When declared, The amount in excess on a return on income is a return on investment. Retained Earnings is debited for the return on income, and APIC is debited for the return on investment
What is the entry for stock compensation on the grant date?
There is not an entry
What is the debit and credit for stock compensation?
Dr: Compensation Expense
Cr: Paid-in Capital Stock Options
*Keiso Page 916
What is the entry for restricted stock compensation on the grand date?
DR: Unearned compensation CR: C/S CR: Paid in Capital *It is then amortized in subsequent periods Dr: Compensation Expense Cr: Unearned Compensation
How is a write down of inventory recorded?
With a contra account.
Dr: Loss due to decline of inventory to market
Cr: Allowance to reduce inventory to market
When market prices drop on a future purchase committment, resulting in a loss, what is the JE to record the loss?
DR: Unrealized Holding Gain or Loss (Purchase Commitments)
CR: Estimated Liability on Purchase Commitments
What is the JE for a Sales-Leaseback Capital Lease that has a gain?
For Sale: DR: Cash CR: Asset CR: Deferred Gain *Gain will be amortized
For Depreciation:
DR: Depreciation Expense
CR: Accumulated Depreciation
For Gain:
DR: Deferred Gain
CR: Depreciation Expense
*Reduces depreciation expense, and balance of Deferred Gain
What is the JE for a Sales-Leaseback Operating Lease that has a gain?
For Sale: DR: Cash CR: Asset CR: Deferred Gain *Gain will be amortized
For Depreciation:
DR: Rent Expense
CR: Cash
For Gain:
DR: Deferred Gain
CR: Rent Expense
*Reduces rent expense, and balance of Deferred Gain
What is the journal entry for stock options that are granted?
DR: Deferred Compensation
CR: APIC Options Outstanding
What is the JE for when stock options are excercised?
DR: Cash
DR: APIC Options Outstanding
CR: C/S
CR: APIC: APIC-C/S
*APIC Options outstanding is an equity account, so the debit would be included in finding the net amount of equity increase as a result of the transaction.
What is the journal entry for a property dividend
The property is issued at FMV. Declared DR: Retained Earnings Cr: Property Dividends Payable *Plug a gain or loss
Paid
Dr: Property Dividends Payable
Cr: THE Property
What is the journal entry for a liquidating dividend?
DR: RE
DR: APIC
CR: Dividends Payable
A liquidating dividend is unique in that it also reduces APIC. All dividends reduce Retained earnings.
What is the JE for a stock dividend?
DR: Retained Earnings
CR: C/S At Par
CR: APIC (Excess of Market over Par)
With the direct method, what is the JE to find cash receipts from sales?
Credit Sales, Debit or Credit for change in A/R, plug is Cash
With the direct method, what is the JE to find cash payments for inventory?
DR: COGS; DR or CR for change in Inventory and A/P, Plug is Cash
With the direct method, what is the JE to find cash payments for operating expenses?
DR: Operating Expense other then Depreciation; DR or Credit Change in Accrued Expenses; Plug is Cash
JE to fund a pension plan?
DR: Pension Expense
CR: Cash
*Prepaid Pension Cost, or Accrued Pension Cost are the plug
What is the JE for a Note Receivable?
DR: N/R
CR: Discount on N/R
CR: Asset
CR: Gain
What is the JE for payroll taxes?
DR: Payroll Expense DR: Payroll Tax Expense CR: Accrued Payroll Taxes Liability CR: Withholding Due to IRS (Employee Withholdings) CR: Cash (Plug)
What is the JE for a long-term contract when costs are incurred?
DR: CIP (Construction In Progress)
CR: Cash
What is the JE for when profits are recognized on a long-term contract?
DR: CIP (Construction In Progress)
CR: Cash Income
What is the JE to fund a pension plan?
DR: Pension Expense
CR: Cash
What is the JE when PBO>FV of plan assets?
PBO>FV = Liability
DR: OCI Net of Tax (1-Tax Rate)
DR: Deferred Tax Asset (Tax Rate)
CR: Accrued Pension Cost Liability
Under the cost method, what is the JE to purchase treasury stock?
DR: Treasury Stock
CR: Cash
Under the cost method, what is the JE to resell Treasury Stock?
DR: Cash
CR: Treasury Stock (At original cost to repurchase)
*Plug will DR: APIC - TS/RE or CR: APIC - TS.
Under the cost method, what is the JE to retire Stock?
DR: C/S
DR: APIC - C/S
CR: T/S (At original cost to repurchase)
CR: APIC - T/S
Under the par method, what is the JE to purchase treasury stock?
DR: APIC - CS (Original bal)
DR: T/S (Par)
CR: Cash (Amount)
CR: APIC - T/S (Plug?)
Under the par method, what is the JE to resell Treasury Stock?
DR: Cash
CR: T/S (Par)
CR: APIC - C/S (Plug)
*Like a new issuance, expect that T/S is credited
Under the par method, what is the JE to retire Stock?
DR: C/S
CR: T/S
What is the JE for an unrealized gain when marking up the security to FMV?
DR: Market Adjustment Trading Security
CR: Unrealized Gain (I/S)
What is the JE for an unrealized loss when marking up the security to FMV?
DR: Unrealized loss (I/S)
CR: Market Adjustment Trading Security
What is the JE for an unrealized gains for an AFS Security?
DR: Marketing Adjustment - AFS Security
CR: Unrealized Gain (OCI)
What is the JE for an unrealized loss for an AFS Security?
DR: Unrealized Gain (OCI)
CR: Marketing Adjustment - AFS Security
What is the JE for a realized loss on the sale of an AFS Security?
DR: Loss (I/S)
CR: Investment in AFS
What is the JE to reclassify a AFS Security to a Trading Security?
DR or CR realized gain or loss on I/S
DR: Trading Security
CR: AFS Security
What is the JE when reclassifying from AFS to HTM?
DR or CR Unrealized gain or loss to B/S as part of OCI
DR: HTM
CR: AFS
What is the JE to reclass HTM to AFS?
DR or CR unrealized gain/loss to OCI
DR: AFS
CR: HTM
What is the journal entry when there is deferred tax asset?
DR: Income Tax Expense (Plug)
DR: Deferred Tax Asset
CR: Current Tax Liability
What is the journal entry when there is a deferred tax liability?
DR: Income Tax Expense (Plug)
CR: Deferred Tax Liability
CR: Current Tax Liability
What is the journal entry when setting up a deferred tax asset valuation allowance?
DR: Income Tax Expense (Plug)
DR: Deferred Tax Asset
CR: Current Tax Liability
CR: Deferred Tax Asset Valuation Allowance
When a deferred tax asset has been realized at the net amount expected, what is the JE to reverse a deferred tax asset valuation allowance?
DR: Deferred Tax Asset Valuation Allowance
CR: Deferred Tax Asset
When a deferred tax asset is not realized at the net amount expected, what is the JE to reverse a deferred tax asset valuation allowance?
DR: Deferred Tax Asset Valuation Allowance
*Income Tax Expense (Plug) is reduced. Is considered a change in estimate.
What is the JE for the retirement of Preferred Stock?
DR: Peferred (Par)
DR: APIC (For number of shares retired)
CR: APIC-Retirement of Stock (Plug)
CR: Cash
When stock is retired with the Par Value Method, and the Debits Side (Treasury Stock, and APIC) do not balance with Cash, what is the plug to balance the JE?
Debit Retained Earnings
When stock is retired with the Par Value Method, and the Credits Side do not balance with Debits (T/S and APIC) what is the plug to balance the JE?
Credit APIC - T/S