Journal entries chapter 2 Flashcards
perform accounting services on account for $100
Dr. accounts receivable (+A) … 100
Cr. service revenue (+SE)………100
collected cash from customer account
Dr. Cash (+A)…100
Cr. accounts receivable (-A)…100
Issued 10,000 shares of common stock for $50,000 cash
Dr. cash(+A) … $50,000
Cr. common stock (+SE) … $50,000
Purchased $60,000 of office equipment by paying $5000 cash and by signing a one-year, 10% interest-bearing note payable for the remaining balance
Dr. equipment(+A) …$ 60,000
Cr. cash(-A) … 5000
Cr. notes payable (+L) … 55,000
Purchased $3000 supplies on account
Dr. supplies(+A) … $3000
Cr. accounts receivable(-A) … $3000
Performed $4000 of legal services on account
Dr. accounts receivable(+A) … $4000
Cr. service revenue(+SE) … $4000
Received a $1500 cash deposit from a new client for legal work to commence next month
Dr. cash(+A) … $1,500
Cr. unearned service revenue(+L) … $1,500
Paid $5000 cash for a 12-month insurance policy
Dr. prepaid insurance(+A) … $5000
Cr. cash(-A) … $5000
Paid cash to settle the account for supplies
(fact pattern #3) (purchased $3000 supplies on account)
Dr. accounts payable(-L) … $3000
Cr. cash(-A) … $3000
Performed legal services for $5000 cash
Dr. accounts receivable(+A) … $5000
Cr. service revenue(+SE) … $5000
Collected $2000 cash from a customer on account for legal services performed in fact pattern #4
(performed $4000 of legal services on account)
Dr. cash(+A) … $2000
Cr. accounts receivable(-A) … $2000
Paid $3000 cash in salaries for the month of January
Dr. salaries expense(-SE) … $3000
Cr. cash(-A) … $3000
A customer signs up for a snow clearing service and Sconnie snow shovelers. the customer agrees to pay $40 each time snow is removed, and Sconnie Snow Shovelers requires a pre-payment for 3 clearing before winter starts
A) Make a journal entry in October for when they hire us
B) Make a journal entry after the first snow removal
A) October-Hired
Dr. cash(+A) … $120
Cr. unearned service(+L) … $120
B) After the first snow removal
Dr. unearned revenue(-L) … $40
Cr. service expense(+SE) … $40
On October 1, Carl Furniture purchases liability insurance to cover the next 12 months. The insurance costs $2400
A.) Make a journal entry on Oct. 1 when they purchase it
B.) Make a journal entry on Oct 31. after one month of insurance used up
A.) Oct. 1
Dr. prepaid insurance(+A) … $2400
Cr. cash(-A) … $2400
B.) Oct. 31
$2400/12 months = $200 per month
Dr. insurance expense(-SE) … $200
Cr. prepaid insurance(-A) … $200
Divine Canine provides dog training lessons. Divine Canine performs a series of 5 puppy classes for $250. they do not bill until the end of the classes. the client takes 1 class per week and by the end of October has taken 3 lessons
A.) Make a journal entry for Oct. 31 after they take 3 lessons
B.) Make a journal entry for November when they perform the other 2 lessons and collect from customers
A.) Oct. 31
3 lessons * $50/each = $150
Dr. accounts receivable(+A) … $150
Cr. salaries revenue(+SE) … $150
B.) Nov
2 lessons and collect from customer
Dr. Cash(+A) … $250
Cr. accounts receivable(-A) … $150
Cr. service revenue(+SE) … $100
Carl Furniture has a $10,000 note payable and pays 5% interest. What is Carl’s accrual entry? the interest will be re-paid with the balance of the note.
Issue the note payable on Dec .1, due Mar 31
A.) Make a journal entry for Dec. 1 for when the note is issued
B.) Make a journal entry for Dec. 31 for the end of the year due to interest
C.) Make a journal entry for Mar. 31 when we have to repay the note payable
A.) Dec. 1
Dr. cash(+A) … $ 10,000
Cr. Note payable(+L) … $10,000
B.) Dec 31
We owe interest
Face value * Interest rate * amount of time = interest owed
$10,000 * 5% * 1/12 = $42 per month
Dr. interest expense(-SE) … $42
Cr. interest payable(+L) … $42
C.) Mar 31.
repay the note (assume we only made Dec. adj. entry
Dr. note payable(-L) … $10,000 (face value)
Dr. interest payable(-L) … $42 (December interest owed bc its year-end)
Dr. interest expense(-SE) … $126 (Jan, Feb, Mar)
Cr. cash(-A) … $10,168
an airline sells a ticket for a flight 3 months ago for $150. the flight occurred today. what is the airline’s original entry? what is the adjusting entry?
A.) original entry from 3 months ago
B.) entry for today
A.) 3 months ago
Dr. Cash(+A) … $150
Cr. unearned revenue(+L) … $150
B.) Today
Dr.unearned service revenue(-L) … $150
Cr. service revenue(+SE) … $150
you took care of someone’s house while they were out of town. they agreed to pay you $200 when they return
A.) make a journal entry for before they pay you
A.) took care = earned revenue
Dr. accounts receivable(+A) … $200
Cr. service revenue(+SE) … $200
you run a software firm with 1 employee who makes $3k per week. you pay every other week. the previous pay date was October 24. What accrual entry do you make on Oct. 31 (i.e., the employee has worked one week but will not be paid for one more week)
A.) make a journal entry for Oct 31.
B.) make a journal entry for Nov. 6
A.)
Dr. salaries expense(-SE) … $3000
Cr. salaries payable(+L) … $3000
B.)
Dr. salaries expense(-SE) … $3000 (Nov 1-6)
Dr. salaries payable(-L) … $3000 (Oct 24-31)
Cr. cash(-A) … $6000
your firm purchased $1000 in office supplies for your business on the first day of the month. you expect the supplies to last about 4 months. Entry is for the end of the 1st month.
A.) make a journal entry for Oct. 1
B.) make a journal entry for Oct. 31
A.) Oct.1
Dr. supplies(+A) … $1000
Cr. cash(-A) … $1000
B.) Oct 31.
Dr. supplies expense(-SE) … $250 ($1000/4 months)
Cr. suplies(-A) … $250
equipment is to be depreciated for the full year: cost is $45,000 and the estimated useful life is five years
A.) make a journal entry for the end of the year
A.) Dec. 31
$45,000/5 years = $9000/yr
Dr. depreciation expense(-SE) … $9000
Cr. accumulated depreciation(contra asset)(-A) … $9000
the accounts receivable balance at December 31 is $8000. the company estimates that 5% of receivables will not be collected. (assume a zero balance in the allowance for dooubtul accounts
A.) make a journal entry for the end of the year
B.) make a journal entry for if allowance has a $150 balance (credit)
A.) Dec 31
8000 of AR * 5% = $400 uncollectible
Dr. bad debt expense(-SE) … $400
Cr. allowance for doubtful accounts(contra asset)(-A) … $400
B.) if allowance has a $150 balance (credit)
Dr. bad debt expense(-SE) … $250
Cr. allowance for doubtful accounts(contra asset)(-A) … $250
property taxes for the current year have not yet been recorded on paid. a statement for the current year was received near the end of December for $4000. if paid after February 1, a penalty of 10% will be assessed
A.) make a journal entry for the end of the year
B.) make a journal entry for Feb.1 if we pay late
Dec 31
A.)
Dr. property tax expense(-SE) … $4000
Cr. property tax payable(+L) … $4000
B.) what happens when we pay late on Feb 1
Feb 1.
Dr. property tax payable(-L) … $4000
Dr. property tax expense(-SE) … $400 - penalty
Cr. cash(-A) … $4400
office supplies that cost $400 were purchased during the year and debited to supplies. a physical count of inventory showed $100 of supplies at prior year-end and $150 at the current year-end
A. make a journal entry for the end of the year
A.)
Dr. supplies expense(-SE) … $350
Cr. supplies(-A) … $350
rivers received a note receivable from a customer dated November 1 of the current year. it is a $6000, 10% note, due in one year. at the maturity date, rivers will collect the amount of the note plus interest for one year
A.) make a journal entry for November 1
B.) make a journal entry for December 31
A.) November 1
Dr. note payable(+A) … $6000
Cr. cash(-A) … $6000
B.) December 31
fave value * interest rate * amount of time
6000 * 10% * 2/12
Dr. interest receivable(+A) … $100
Cr. interest revenue(+SE) … $100
salaries earned December 29 through December 31 are of this year, but not yet recorded or paid, are $4800
A.) make a journal entry for December 31
A.)
Dr. salaries expense(-SE) … $4800
Cr. salaries payable(+L) … $4800
interest expense of $400 incurred but not yet recorded for November and December of this year will not be paid until April 30 of next year
A.) make a journal entry
A.)
Dr. interest expense(-SE) … $400
Cr. interest payable(+L) … $400
