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Appendix A
think
• there are two parts to every entrywhat did the Co. receive
why did we receive it
OR
what did it give up
why did we give it up
for each part of the entry - think
• will this go on the
income statement
balance sheet
Sweet TemptationsIncome Statement
for the month ending Jan. 31, 2005
Sales 8,100Cost of goods sold 3,645
Gross profit 4,455Expenses 3,845
Income from operations 610
Interest expense 8
Net Income 602$
Sweet TemptationsStatement of Owners' Equity
for the month ending Jan. 31, 2005
Owners' equity @ 12/31/04 15,000Net income 602less distributions 50Owners' equity @1/31/05 15,552$
Sweet TempationsBalance Sheet
as of Jan. 31, 2005
cash 11,030$ acc payable 4,320$ acc receivable 100 notes payable 1,200$ inventory 2,295 interest payable 8 supplies 670 current liabilities 5,528 prepaid rent 5,000
current assets 19,095$
equipment 2,000 accum dep (15)
long-term assets 1,985$ owners' equity 15,552 #REF!assets 21,080$ liab & owner equity 21,080
for each part of the entry - think
• is this a(n)
revenue (sales)
expense
asset
liability
contribution from the owner
Accounting cycle
• general journal - recording
• general ledger - posting
• trial balance
• adjusting journal entries
• general ledger - posting
• trial balance
• financial statements
general journal - recording
• the general journal is a diary
• it is in chronological order
• in the order transactions or events occur
account title acctdate explanation no debit credit
15-Dec-98 Cash 15,000 Owners' equity 15,000Anna Cox made initial investment
account title acctdate explanation no debit credit
15-Dec-98 Cash 15,000 Owners' equity 15,000Anna Cox made initial investment
16-Dec-98 Prepaid rent 6,000 Cash 6,000Paid 6 months rent in advance toWestw ood Mall
account title acctdate explanation no debit credit
15-Dec-98 Cash 15,000 Owners' equity 15,000Anna Cox made initial investment
16-Dec-98 Prepaid rent 6,000 Cash 6,000Paid 6 months rent in advance toWestw ood Mall
17-Dec-98 Supplies 700 Cash 700purchases office supplies from CitySupply Co.
General ledger - posting
• the general ledger is an account
• your checkbook is a ledger account it shows increases in the account
decreases in the account
the account balance
account title acctdate explanation no debit credit
15-Dec-98 Cash 15,000 Owners' equity 15,000Anna Cox made initial investment
16-Dec-98 Prepaid rent 6,000 Cash 6,000Paid 6 months rent in advance toWestw ood Mall
17-Dec-98 Supplies 700 Cash 700purchases office supplies from CitySupply Co.
account title acctdate explanation no debit credit
15-Dec-98 Cash 101 15,000 Owners' equity 301 15,000Anna Cox made initial investment
16-Dec-98 Prepaid rent 107 6,000 Cash 101 6,000Paid 6 months rent in advance toWestw ood Mall
17-Dec-98 Supplies 106 700 Cash 101 700purchases office supplies from CitySupply Co.
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
General Ledger 301Owners' equity
creditdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
General Ledger 107Prepaid rent
debitdate ref debit credit balance
16-Dec-98 GJ 6,000 6,000
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
16-Dec-98 GJ 6,000 9,000
General Ledger 106Supplies
debitdate ref debit credit balance
17-Dec-98 GJ 700 700
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
16-Dec-98 GJ 6,000 9,000
17-Dec-98 GJ 700 8,300
account title acctdate explanation no debit credit
20-Dec-98 Inventory 1,620 Accounts payable 1,620purchased inventory on credit fromUnlimited Decadence
account title acctdate explanation no debit credit
20-Dec-98 Inventory 1,620 Accounts payable 1,620purchased inventory on credit fromUnlimited Decadence
29-Dec-98 Store equipment 2,200 Cash 1,000 Notes payable 1,200purchased store equipment fromAce Equip. Co. and signed a 3month note
account title acctdate explanation no debit credit
20-Dec-98 Inventory 1,620 Accounts payable 1,620purchased inventory on credit fromUnlimited Decadence
29-Dec-98 Store equipment 2,200 Cash 1,000 Notes payable 1,200purchased store equipment fromAce Equip. Co. and signed a 3month note
30-Dec-98 Accounts receivable 400 Store equipment 400Sold unneeded desk to TheHardw are Store
account title acctdate explanation no debit credit
20-Dec-98 Inventory 105 1,620 Accounts payable 201 1,620purchased inventory on credit fromUnlimited Decadence
29-Dec-98 Store equipment 123 2,200 Cash 101 1,000 Notes payable 204 1,200purchased store equipment fromAce Equip. Co. and signed a 3month note
30-Dec-98 Accounts receivable 103 400 Store equipment 123 400Sold unneeded desk to TheHardw are Store
General Ledger 105Inventory
debitdate ref debit credit balance
20-Dec-98 GJ 1,620 1,620
General Ledger 201Accounts payable
creditdate ref debit credit balance
20-Dec-98 GJ 1,620 1,620
General Ledger 123Store equipment
debitdate ref debit credit balance
29-Dec-98 GJ 2,200 2,200
General Ledger 204Notes payable
creditdate ref debit credit balance
29-Dec-98 GJ 1,200 1,200
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
16-Dec-98 GJ 6,000 9,000
17-Dec-98 GJ 700 8,300
29-Dec-98 GJ 1,000 7,300
General Ledger 103Accounts receivable
debitdate ref debit credit balance
30-Dec-98 GJ 400 400
General Ledger 123Store equipment
debitdate ref debit credit balance
29-Dec-98 GJ 2,200 2,200
30-Dec-98 GJ 400 1,800
Sweet TemptationsIncome Statement
for the month ending Dec. 31, 2004
Sales 0Cost of goods sold 0
Gross profit 0Expenses 0
Income from operations 00Income tax expense 0
Net Income -$
Sweet TempationsBalance Sheet
as of Dec. 31, 2004
cash 7,300$ acc payable 1,620$ acc receivable 400 notes payable 1,200 inventory 1,620 current liabilities 2,820 supplies 700 prepaid rent 6,000
current assets 16,020$
equipment 1,800 long-term assets 1,800$ owners' equity 15,000 #REF!assets 17,820$ liab & owner equity 17,820
account title acctdate explanation no debit credit
02-Jan-99 Cash 300 Sales 300Cost of goods sold 135 Inventory 135made cash sale
Sweet TemptationsIncome Statement
for the period ending Jan. 2, 2005
Sales 300Cost of goods sold 135
Gross profit 165Expenses 0
Income from operations 165
Income tax expense 0
Net Income 165$
account title acctdate explanation no debit credit
02-Jan-99 Cash 300 Sales 300Cost of goods sold 135 Inventory 135made cash sale
02-Jan-99 Accounts payable 1,620 Cash 1,620paid Unlimited Decadence forinventory purchased on 12/20/98
account title acctdate explanation no debit credit
02-Jan-99 Cash 300 Sales 300Cost of goods sold 135 Inventory 135made cash sale
02-Jan-99 Accounts payable 1,620 Cash 1,620paid Unlimited Decadence forinventory purchased on 12/20/98
04-Jan-99 Inventory 4,320 Accounts payable 4,320purchased inventory from UnlimitedDecadence
account title acctdate explanation no debit credit
02-Jan-99 Cash 101 300 Sales 401 300Cost of goods sold 501 135 Inventory 105 135made cash sale
02-Jan-99 Accounts payable 201 1,620 Cash 101 1,620paid Unlimited Decadence forinventory purchased on 12/20/98
04-Jan-99 Inventory 105 4,320 Accounts payable 201 4,320purchased inventory from UnlimitedDecadence
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
16-Dec-98 GJ 6,000 9,000
17-Dec-98 GJ 700 8,300
29-Dec-98 GJ 1,000 7,300
02-Jan-99 GJ 300 7,600
General Ledger 401Sales
creditdate ref debit credit balance
02-Jan-99 GJ 300 300
General Ledger 501Cost of goods sold
debitdate ref debit credit balance
02-Jan-99 GJ 135 135
General Ledger 105Inventory
debitdate ref debit credit balance
20-Dec-98 GJ 1,620 1,620
02-Jan-99 GJ 135 1,485
General Ledger 201Accounts payable
creditdate ref debit credit balance
20-Jan-98 GJ 1,620 1,620
03-Jan-99 GJ 1,620 0
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
16-Dec-98 GJ 6,000 9,000
17-Dec-98 GJ 700 8,300
29-Dec-98 GJ 1,000 7,300
02-Jan-99 GJ 300 7,600
03-Jan-99 GJ 1,620 5,980
General Ledger 105Inventory
debitdate ref debit credit balance
20-Dec-98 GJ 1,620 1,620
02-Jan-99 GJ 135 1,485
04-Jan-99 GJ 4,320 5,805
General Ledger 201Accounts payable
creditdate ref debit credit balance
20-Jan-98 GJ 1,620 1,620
03-Jan-99 GJ 1,620 0
04-Jan-99 GJ 4,320 4,320
account title acctdate explanation no debit credit
06-Jan-99 Accounts receivable 100 Sales 100Cost of goods sold 45 Inventory 45made credit sale
account title acctdate explanation no debit credit
06-Jan-99 Accounts receivable 100 Sales 100Cost of goods sold 45 Inventory 45made credit sale
07-Jan-99 Cash 400 Accounts receivable 400collected amount ow ed from TheHardw are Store for desk sold on12/30/98
account title acctdate explanation no debit credit
06-Jan-99 Accounts receivable 100 Sales 100Cost of goods sold 45 Inventory 45made credit sale
07-Jan-99 Cash 400 Accounts receivable 400collected amount ow ed from TheHardw are Store for desk sold on12/30/98
20-Jan-99 Withdrawals 50 Cash 50Anna Cox w ithdrew cash forpersonal use
account title acctdate explanation no debit credit
06-Jan-99 Accounts receivable 103 100 Sales 401 100Cost of goods sold 501 45 Inventory 105 45made credit sale
07-Jan-99 Cash 101 400 Accounts receivable 103 400collected amount ow ed from TheHardw are Store for desk sold on12/30/98
20-Jan-99 Withdrawals 304 50 Cash 101 50Anna Cox w ithdrew cash forpersonal use
General Ledger 103Accounts receivable
debitdate ref debit credit balance
30-Dec-98 GJ 400 400
06-Jan-99 GJ 100 500
General Ledger 401Sales
creditdate ref debit credit balance
02-Jan-99 GJ 300 300
06-Jan-99 GJ 100 400
General Ledger 501Cost of goods sold
debitdate ref debit credit balance
02-Jan-99 GJ 135 135
06-Jan-99 GJ 45 180
General Ledger 105Inventory
debitdate ref debit credit balance
20-Dec-98 GJ 1,620 1,620
02-Jan-99 GJ 135 1,485
04-Jan-99 GJ 4,320 5,805
06-Jan-99 GJ 45 5,760
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
16-Dec-98 GJ 6,000 9,000
17-Dec-98 GJ 700 8,300
29-Dec-98 GJ 1,000 7,300
02-Jan-99 GJ 300 7,600
03-Jan-99 GJ 1,620 5,980
07-Jan-99 GJ 400 6,380
General Ledger 103Accounts receivable
debitdate ref debit credit balance
30-Dec-98 GJ 400 400
06-Jan-99 GJ 100 500
07-Jan-99 GJ 400 100
General Ledger 304Withdrawals
debitdate ref debit credit balance
01-Jan-99 GJ 50 50
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
16-Dec-98 GJ 6,000 9,000
17-Dec-98 GJ 700 8,300
29-Dec-98 GJ 1,000 7,300
02-Jan-99 GJ 300 7,600
03-Jan-99 GJ 1,620 5,980
07-Jan-99 GJ 400 6,380
20-Jan-99 GJ 50 6,330
account title acctdate explanation no debit credit
25-Jan-99 Consulting expense 200 Cash 200paid consultant for promotioncoordination
account title acctdate explanation no debit credit
25-Jan-99 Consulting expense 200 Cash 200paid consultant for promotioncoordination
25-Jan-99 Advertising expense 300 Cash 300
account title acctdate explanation no debit credit
25-Jan-99 Consulting expense 200 Cash 200paid consultant for promotioncoordination
25-Jan-99 Advertising expense 300 Cash 300paid for advertising in promotionalf lyer
29-Jan-99 Store equipment 200 Cash 200purchased store equipment
account title acctdate explanation no debit credit
25-Jan-99 Consulting expense 200 Cash 200paid consultant for promotioncoordination
25-Jan-99 Advertising expense 300 Cash 300paid for advertising in promotionalf lyer
29-Jan-99 Store equipment 200 Cash 200purchased store equipment
30-Jan-99 Salaries expense 2,050 Cash 2,050paid employees' salaries
account title acctdate explanation no debit credit
25-Jan-99 Consulting expense 502 200 Cash 101 200paid consultant for promotioncoordination
25-Jan-99 Advertising expense 503 300 Cash 101 300paid for advertising in promotionalf lyer
29-Jan-99 Store equipment 123 200 Cash 101 200purchased store equipment
30-Jan-99 Salaries expense 504 2,050 Cash 101 2,050paid employees' salaries
General Ledger 502Consulting expense
debitdate ref debit credit balance
25-Jan-99 GJ 200 200
General Ledger 503Advertising expense
debitdate ref debit credit balance
25-Jan-99 GJ 300 300
General Ledger 123Store equipment
debitdate ref debit credit balance
29-Dec-98 GJ 2,200 2,200
30-Dec-98 GJ 400 1,800
29-Jan-99 GJ 200 2,000
General Ledger 504Salaries expense
debitdate ref debit credit balance
30-Jan-99 GJ 2,050 2,050
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
16-Dec-98 GJ 6,000 9,000
17-Dec-98 GJ 700 8,300
29-Dec-98 GJ 1,000 7,300
02-Jan-99 GJ 300 7,600
03-Jan-99 GJ 1,620 5,980
07-Jan-99 GJ 400 6,380
20-Jan-99 GJ 50 6,330
31-Jan-99 GJ 200 6,130
31-Jan-99 GJ 300 5,830
31-Jan-99 GJ 200 5,630
31-Jan-99 GJ 2,050 3,580
account title acctdate explanation no debit credit
31-Jan-99 Telephone expense 60 Cash 60paid telephone bill
account title acctdate explanation no debit credit
31-Jan-99 Telephone expense 60 Cash 60paid telephone bill
31-Jan-99 Utlilites expense 190 Cash 190paid utilities bill
account title acctdate explanation no debit credit
31-Jan-99 Telephone expense 505 60 Cash 101 60paid telephone bill
31-Jan-99 Utlilites expense 506 190 Cash 101 190paid utilities bill
General Ledger 505Telephone expense
debitdate ref debit credit balance
31-Jan-99 GJ 60 60
General Ledger 506Utilities expense
debitdate ref debit credit balance
31-Jan-99 GJ 190 190
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,000
16-Dec-98 GJ 6,000 9,000
17-Dec-98 GJ 700 8,300
29-Dec-98 GJ 1,000 7,300
02-Jan-99 GJ 300 7,600
03-Jan-99 GJ 1,620 5,980
07-Jan-99 GJ 400 6,380
20-Jan-99 GJ 50 6,330
31-Jan-99 GJ 200 6,130
31-Jan-99 GJ 300 5,830
31-Jan-99 GJ 200 5,630
31-Jan-99 GJ 2,050 3,580
31-Jan-99 GJ 60 3,520
31-Jan-99 GJ 190 3,330
account title acctdate explanation no debit credit
31-Jan-99 Telephone expense 505 60 Cash 101 60paid telephone bill
31-Jan-99 Utlilites expense 506 190 Cash 101 190paid utilities bill
31-Jan-99 Cash 7,700 Sales 7,700Cost of goods sold 3,465 Inventory 3,465to record cash sales from 1/3/99 -1/31/99
General Ledger 101Cash
debitdate ref debit credit balance
15-Dec-98 GJ 15,000 15,00016-Dec-98 GJ 6,000 9,00017-Dec-98 GJ 700 8,30029-Dec-98 GJ 1,000 7,30002-Jan-99 GJ 300 7,60003-Jan-99 GJ 1,620 5,98007-Jan-99 GJ 400 6,38020-Jan-99 GJ 50 6,33031-Jan-99 GJ 200 6,13031-Jan-99 GJ 300 5,83031-Jan-99 GJ 200 5,63031-Jan-99 GJ 2,050 3,58031-Jan-99 GJ 60 3,52031-Jan-99 GJ 190 3,33031-Jan-99 GJ 7,700 11,030
General Ledger 401Sales
creditdate ref debit credit balance
02-Jan-99 GJ 300 300
06-Jan-99 GJ 100 400
31-Jan-99 GJ 7,700 8,100
General Ledger 501Cost of goods sold
debitdate ref debit credit balance
02-Jan-99 GJ 135 135
06-Jan-99 GJ 45 180
31-Jan-99 GJ 3,465 3,645
General Ledger 105Inventory
debitdate ref debit credit balance
20-Dec-98 GJ 1,620 1,620
02-Jan-99 GJ 135 1,485
04-Jan-99 GJ 4,320 5,805
06-Jan-99 GJ 45 5,760
31-Jan-99 GJ 3,465 2,295
trial balance
• book doesn’t emphasize trail balance as a step
• it is just a listing of account balances
adjusting journal entries
• adjustments that we need to make to account balances
• same old General Journal
• same old General Ledger
debits credits
cash 11,030accounts receivable 100inventory 2,295supplies 700prepaid rent 6,000store equipment 2,000accumulated depreciationaccounts payable 4,320notes payable 1,200interest payableowners' equity 15,000withdrawals 50sales 8,100cost of goods sold 3,645consulting expense 200advertising expense 300salaries expense 2,050telephone expense 60utilities expense 190supplies expenserent expenseinterest expensedepreciation expense
28,620 28,620
Sweet TemptationsIncome Statement
for the month ending Jan. 31, 2005
Sales 8,100Cost of goods sold 3,645
Gross profit 4,455Expenses ??? 2,800
Income from operations 1,655
Interest expense 0
Net Income 1,655$
Sweet TemptationsStatement of Owners' Equity
for the month ending Jan. 31, 2005
Owners' equity @ 12/31/04 15,000Net income 1,655less distributions 50Owners' equity @1/31/05 16,605$
Sweet TempationsBalance Sheet
as of Jan. 31, 2005
cash 11,030$ acc payable 4,320$ acc receivable 100 notes payable 1,200$ inventory 2,295 interest payable - supplies 700 current liabilities 5,520 prepaid rent 6,000
current assets 20,125$
equipment 2,000 accum dep -
long-term assets 2,000$ owners' equity 16,605 #REF!assets 22,125$ liab & owner equity 22,125
account title acctdate explanation no debit credit
31-Jan-99 Supply expense 30 Supplies 30supplies used during Jan.
account title acctdate explanation no debit credit
31-Jan-99 Supply expense 30 Supplies 30supplies used during Jan.
31-Jan-99 Rent expense 1,000 Prepaid rent 1,000expiration of one-month's rent paidin advance on 12/16/98
account title acctdate explanation no debit credit
31-Jan-99 Supply expense 30 Supplies 30supplies used during Jan.
31-Jan-99 Rent expense 1,000 Prepaid rent 1,000expiration of one-month's rent paidin advance on 12/16/98
31-Jan-99 Interest expense 8 Interest payable 8interest accrued on note payable
account title acctdate explanation no debit credit
31-Jan-99 Supply expense 30 Supplies 30supplies used during Jan.
31-Jan-99 Rent expense 1,000 Prepaid rent 1,000expiration of one-month's rent paidin advance on 12/16/98
31-Jan-99 Interest expense 8 Interest payable 8interest accrued on note payable
31-Jan-99 Depreciation expense 15 Accumulated depreciation 15depreciation on store equipment
account title acctdate explanation no debit credit
31-Jan-99 Supply expense 507 30 Supplies 106 30supplies used during Jan.
31-Jan-99 Rent expense 508 1,000 Prepaid rent 107 1,000expiration of one-month's rent paidin advance on 12/16/98
31-Jan-99 Interest expense 509 8 Interest payable 205 8interest accrued on note payable
31-Jan-99 Depreciation expense 510 15 Accumulated depreciation 124 15depreciation on store equipment
General Ledger 507Supplies expense
debitdate ref debit credit balance
31-Jan-99 AJE 30 30
General Ledger 106Supplies
debitdate ref debit credit balance
17-Dec-98 GJ 700 700
31-Jan-99 AJE 30 670
General Ledger 508Rent expense
debitdate ref debit credit balance
31-Jan-99 AJE 1,000 1,000
General Ledger 107Prepaid rent
debitdate ref debit credit balance
16-Dec-98 GJ 6,000 6,000
31-Jan-99 AJE 1,000 5,000
General Ledger 509Interest expense
debitdate ref debit credit balance
31-Jan-99 AJE 8 8
General Ledger 205Interest payable
creditdate ref debit credit balance
31-Jan-99 AJE 8 8
General Ledger 510Depreciation expense
debitdate ref debit credit balance
31-Jan-99 AJE 15 15
General Ledger 124Accumulated depreciation
creditdate ref debit credit balance
31-Jan-99 AJE 15 15
trial balance
debits credits
cash 11,030accounts receivable 100inventory 2,295supplies 670prepaid rent 5,000store equipment 2,000accumulated depreciation 15accounts payable 4,320notes payable 1,200interest payable 8owners' equity 15,000withdrawals 50sales 8,100cost of goods sold 3,645consulting expense 200advertising expense 300salaries expense 2,050telephone expense 60utilities expense 190supplies expense 30rent expense 1,000interest expense 8depreciation expense 15
28,643 28,643
Sweet TemptationsIncome Statement
for the month ending Jan. 31, 2005
Sales 8,100Cost of goods sold 3,645
Gross profit 4,455Expenses 3,845
Income from operations 610
Interest expense 8
Net Income 602$
Sweet TemptationsStatement of Owners' Equity
for the month ending Jan. 31, 2005
Owners' equity @ 12/31/04 15,000Net income 602less distributions 50Owners' equity @1/31/05 15,552$
Sweet TempationsBalance Sheet
as of Jan. 31, 2005
cash 11,030$ acc payable 4,320$ acc receivable 100 notes payable 1,200$ inventory 2,295 interest payable 8 supplies 670 current liabilities 5,528 prepaid rent 5,000
current assets 19,095$
equipment 2,000 accum dep (15)
long-term assets 1,985$ owners' equity 15,552 #REF!assets 21,080$ liab & owner equity 21,080
February
a new game
set the score card to Zero
Sweet TemptationsIncome Statement
for the month of FEBRUARY
Sales 0Cost of goods sold 0
Gross profit 0Expenses 0
Income from operations 0
Interest expense 0
Net Income -$
Sweet TemptationsStatement of Owners' Equityfor the month of FEBRUARY
Owners' equity @ 1/31/05 15,552Net income 0less distributions 0Owners' equity @ 2/ 15,552$
Sweet TempationsBalance Sheet
as of Feb. 1, 2005
cash 11,030$ acc payable 4,320$ acc receivable 100 notes payable 1,200$ inventory 2,295 interest payable 8 supplies 670 current liabilities 5,528 prepaid rent 5,000
current assets 19,095$
equipment 2,000 accum dep (15)
long-term assets 1,985$ owners' equity 15,552 #REF!assets 21,080$ liab & owner equity 21,080