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Let’s look at E3‐3
• A popular ski magazine company receives a total of $11,980 today from subscribers. The subscriptions begin in the next fiscal year. Answer from the perspective of the magazine company:
• What do you do with each edition of the magazine that is sent out?
Account Name Debit Credit
Cash $11,980
Unearned Subscription Revenue $11,980
Cash Flow Category?
• On September 1, 2013, a bank lends $1,200 to a company; the note principal and $144 annual interest are due in one year (1,200 X 12%). Answer from the Bank’s perspective.
• NOW:
• In 1 year (assuming no other transactions are recorded?
Account Name Debit Credit
Note Receivable $1,200
Cash $1,200
Cash flow Category?
• Fucillo Hyundai, Inc, sells a truck with a list, or sticker, price of $20,050 for $18,050 cash.
Account Name Debit Credit
Cash $18,050
Sales Revenue $18,050
Cash Flow Category?
• Macy’s Department Store orders 1,000 men’s shirts for $15 each for future delivery from Phillips‐Van Heusen Corporation. The terms require full payment within 30 days of delivery. Answer from Phillips‐Van Heusen’s standpoint.Account Name Debit Credit
No Entry
• Phillips‐Van Heusen completes production of the shirts described in part d and delivers the order (answer from Phillips‐Van Heusen perspective)
Account Name Debit Credit
Accounts Receivable $15,000
Sales Revenue $15,000
Cash Flow Category?
• Phillips‐Van Heusen receives payment from Macy’s for the order described in part d. Answer from the perspective of Phillips‐Van Heusen.
Account Name Debit Credit
Cash $15,000
Accounts Receivable $15,000
Cash Flow Category?
• A customer purchases a ticket from American Airlines for $610 cash to travel the following January. Answer from American Airlines perspective.
Account Name Debit Credit
Cash $610
Unearned Airfare Revenue $610
Cash Flow Category?
• Ford Motor Company issues $20 million in new common stock
Account Name Debit Credit
Cash $20,000,000
Contributed Capital $20,000,000
Cash Flow Category?
• Penn State University receives $18,300,000 cash for 80,000 five‐game season football tickets.
Account Name Debit Credit
Cash $18,300,000
Unearned Football Ticket Revenue $18,300,000
Cash Flow Category?
• Penn State plays the first football game described in the previous transaction.
Account Name Debit Credit
Unearned Football Ticket Revenue $3,660,000
Football Ticket Revenue $3,660,000
Cash Flow Category?
• Precision Construction Company signs a contract with a customer for the construction of a new $1,500,000 warehouse. At the signing, Precision receives a check for $150,000 as a deposit on the future construction project. Answer from the perspective of Precision.
Account Name Debit Credit
Cash $150,000
Unearned Construction Revenue $150,000
Cash Flow Category?
• A customer orders and receives 10 personal computers from Dell; the customer promises to pay $18,400 within three months. Answer from Dell’s standpoint. What about cost info?
Account Name Debit Credit
Accounts Receivable $18,400
Sales Revenue $18,400
Cash Flow Category?
• Sears, a retail store, sells a $100 lamp to a customer who charges the sale on his store credit card. Answer from Sear’s perspective.
Account Name Debit Credit
Accounts Receivable $100
Sales Revenue $100
Cash Flow Category?
• E3‐4
McGraw‐Hill Publishing Company uses $2,754 worth of electricity and natural gas in its headquarters building for which it has not yet been billed.
Note: Expense is incurred when utilities are used and can be recorded when amount is known.
Account Name Debit Credit
Utilities Expense $2,754
Utilities Payable $2,754
At the beginning of January, Turner Construction Company pays $846 for magazine advertising to run in monthly publications of the first three months of the year.
Account Name Debit Credit
Prepaid Advertising $846
Cash $846
Dell pays its computer service technicians $379,500 in salaries for two weeks ended January 7.
• ASSUME: No Salaries Payable has been previously recorded.
• If they recorded Salaries Expense/Salaries Payable properly in December
Account Name Debit Credit
Salaries Expense $379,500
Cash $379,500
Account Name Debit Credit
Salaries Expense $189,750
Salaries Payable $189,750
Cash $379,500
The University of Florida orders 60,000 season football tickets from its printer and pays $7,610 in advance for the custom printing. The first game will be paid in September. Answer from the University's standpoint.
Account Name Debit Credit
Prepaid Tickets $7,610
Cash $7,610
The campus bookstore receives 500 accounting texts at a cost of $89 each. The terms indicate that payment is due within 30 days of delivery.
Account Name Debit Credit
Inventory $44,500
Accounts payable $44,500
During the last week of January, the campus bookstore sold 450 accounting texts received in part e at a sales price of $150 each.
Assume cost data from part e (cost of $89 per book)
Account Name Debit Credit
Cash $67,500
Sales Revenue $67,500
Account Name Debit Credit
Cost of Goods Sold $40,050
Inventory $40,050
Fucillo Hyundai, Inc. pays its salespersons $13,200 in commissions related to December automobile sales.
Assume: Company had previously recorded commissions payable.
Account Name Debit Credit
Commissions Payable $13,200
Cash $13,200
On January 31, Fucillo Hyundai, Inc. determines that it will pay its salespersons $14,470 in commissions related to January sales. The payment will be made in early February. Answer from Fucillo’s perspective.Account Name Debit Credit
Commissions Expense $14,470
Commissions Payable $14,470
A new grill is purchased and installed at a Wendy’s restaurant at the end of the day on January 31; a $12,750 cash payment was made on that day.
Account Name Debit Credit
Equipment $12,750
Cash $12,750
Carousel Center Mall had janitorial supplies costing $4,000 in storage. An additional $2,600 worth of supplies was purchased during January. At the end of January, $1,410 worth of janitorial supplies remained in storage.
Assume: Purchase of supplies was properly recorded, just recording the supplies used.
Account Name Debit Credit
Supplies Expense $5,190
Supplies $5,190
An Iowa State University employee works eight hours, at $13 per hour, on January 31; however, payday is not until February 3. Answer from the perspective of the university.Account Name Debit Credit
Wages Expense $104
Wages Payable $104
Wang Company paid $3,600 for a fire insurance policy on January 1. The policy covers 12 months beginning January 1.Account Name Debit Credit
Prepaid Insurance $3,600
Cash $3,600
Darrius Incorporated has its delivery van repaired in January for $300 and charges the amount on account.
Account Name Debit Credit
Repairs & Maintenance Expense $300
Accounts Payable (Maint. Payable) $300
Hass Company, a farm equipment company, receives its phone bill at the end of January for $202 for January calls. The bill has not been paid to date.
Account Name Debit Credit
Telephone Expense $202
Accounts Payable $202
Martin Company receives and pays in January a $1,285 invoice (bill) from a consulting firm for services received in January.
Account Name Debit Credit
Consulting Expense $1,285
Cash $1,285
Parillo’s Taxi Company pays a $595 invoice from a consulting firm for services received and recorded in December.Account Name Debit Credit
Accounts payable $595
Cash $595
Phillips‐Van Heusen Corporation completes production of 500 men’s shirts ordered by Macy’s Department Store at a cost of $10 each and delivers the order.
Note: No information was provided about sales information. Would have been Accounts Receivable and Sales Revenue.
Account Name Debit Credit
Cost of Goods Sold $5,000
Inventory $5,000