Concept explainers
Journal:
Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.
Rules of debit and credit:
“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.
Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.
To journalize: The issuance of common stock, the bank loan obtained by issuing note, the purchase of equipment, The payment made for office rent, the payment of supplies, the purchase of advertisement on account, the service rendered partly for cash, and partly on accounts, the dividend paid to stockholders, the payment made for the utility bill, the payment of due for advertisement, the payment of interest for bank loan, the payment of salaries, The cash received from customer, the income tax paid.
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Financial Accounting: Tools for Business Decision Making, 8th Edition
- Prepare the journal entries for the following transactions: May 1 Sold $150,000 of goods to Georgia Co. on account. May 30 Collected $30,000 from Georgia Co. June 1 Accepted a $120,000, one-year, 10% note from Georgia Co. for the amount remaining on the account. July 30 After 60 days, discounted the note from Georgia Co. at First National Bank at a 12% interest rate. Required: Prepare the journal entries for the transactions listed. Assume a 360 day year.arrow_forwardJournal Entries for Accounts and Notes ReceivableLancaster, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $15,000, 60 day, eight percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep.1 Received a $18,000, 120 day, nine percent note from B. Shore Company on account. Dec.16 Received a $14,400, 45 day, ten percent note from C. Judd on account. Dec.30 B. Shore Company failed to pay its note. Dec.31 Wrote off B. Shore’s account as uncollectible. Lancaster, Inc., uses the allowance method of providing for credit losses. Dec.31 Recorded expected credit losses for the year by an adjusting entry. Accounts written off during this first year have created a debit balance in the Allowance for Doubtful Accounts of $22,600. An analysis of aged receivables indicates that the desired balance of the allowance account should be $19,500. Dec.31 Made the…arrow_forwardThe following notes receivable transactions occurred for Harris Company during the last three months of the current year. (Assume all notes are dated the day the transaction occurred.) Oct. 9 Received a $5,000, 12%, 60-day note from K. Weedon, a customer, for merchandise originally purchased on account. 12 Received a $6,000, 10%, 90-day note from M. Black, a customer, for merchandise originally purchased on account. 15 Sold the Weedon note with recourse at the bank at 14%. The fair value of the recourse liability is estimated to be $1,230. Nov. 11 Sold the Black note with recourse at the bank at 15%. The fair value of the recourse liability is estimated to be $850. 16 Received an $8,000, 12%, 60-day note from B. Butcher, a customer, for merchandise originally purchased on account. 20 Received a $6,000, 11%, 120-day note from D. Goldman, a customer, for merchandise originally purchased on account. Dec. 1 Received a $9,000, 13%, 60-day note from S. Lambert, a…arrow_forward
- The following were selected from among the transactions completed by Caldemeyer Co. during the current year. Caldemeyer Co. sells and installs home and business security systems. Jan. 3 Loaned $18,000 cash to Trina Gelhaus, receiving a 90-day, 8% note. Feb. 10 Sold merchandise on account to Bradford & Co., $24,000. The cost of the merchandise sold was $14,400. 13 Sold merchandise on account to Dry Creek Co., $60,000. The cost of merchandise sold was $54,000. Mar. 12 Accepted a 60-day, 7% note for $24,000 from Bradford & Co. on account. 14 Accepted a 60-day, 9% note for $60,000 from Dry Creek Co. on account. Apr. 3 Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account. Use a compound journal entry with debits before credits.) May 11 Received from Bradford & Co. the amount due on the note of March 12. 13 Dry Creek Co.…arrow_forwardJournal Entries for Accounts and Notes ReceivableLancaster, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $18,000, 60 day, eight percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep.1 Received a $21,000, 120 day, nine percent note from B. Shore Company on account. Dec.16 Received a $17,000, 45 day, ten percent note from C. Judd on account. Dec.30 B. Shore Company failed to pay its note. Dec.31 Wrote off B. Shore's account as uncollectible. Lancaster, Inc., uses the allowance method of providing for credit losses. Dec.31 Recorded expected credit losses for the year by an adjusting entry. Accounts written off during this first year have created a debit balance in the Allowance for Doubtful Accounts of $25,600. An analysis of aged receivables indicates that the desired balance of the allowance account should be $22,500. Dec.31 Made the…arrow_forwardJournal Entries for Accounts and Notes ReceivableLancaster, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $18,000, 60 day, eight percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep.1 Received a $21,000, 120 day, nine percent note from B. Shore Company on account. Dec.16 Received a $17,000, 45 day, ten percent note from C. Judd on account. Dec.30 B. Shore Company failed to pay its note. Dec.31 Wrote off B. Shore's account as uncollectible. Lancaster, Inc., uses the allowance method of providing for credit losses. Dec.31 Recorded expected credit losses for the year by an adjusting entry. Accounts written off during this first year have created a debit balance in the Allowance for Doubtful Accounts of $25,600. An analysis of aged receivables indicates that the desired balance of the allowance account should be $22,500. Dec.31 Made the…arrow_forward
- Journal Entries for Accounts and Notes ReceivableLancaster, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $18,000, 60 day, eight percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep.1 Received a $21,000, 120 day, nine percent note from B. Shore Company on account. Dec.16 Received a $17,000, 45 day, ten percent note from C. Judd on account. Dec.30 B. Shore Company failed to pay its note. Dec.31 Wrote off B. Shore's account as uncollectible. Lancaster, Inc., uses the allowance method of providing for credit losses. Dec.31 Recorded expected credit losses for the year by an adjusting entry. Accounts written off during this first year have created a debit balance in the Allowance for Doubtful Accounts of $25,600. An analysis of aged receivables indicates that the desired balance of the allowance account should be $22,500. Dec.31 Made the…arrow_forwardbusiness had a balance at the bank of $2,500 at the start of the month. During the following month, it paid for materials invoiced at $1,000 less trade discount of 20% and cash discount of 10%. It received a cheque from a customer in respect of an invoice for $200, subject to cash discount of 5%. What was the balance at the bank at the end of the month?arrow_forwardOn December 1, Williams Company borrowed $50,000 cash from Second National Bank by signing a 90-day, 5% note payable. a. Prepare Williams' journal entry to record the issuance of the note payable. b. Prepare Williams' journal entry to record the accrued interest due at December 31. C. Prepare Williams' journal entry to record the payment of the note on March 1 of the next year. Essay Toolbar navigation BIUS = 山 EE三、arrow_forward
- The following were selected from among the transactions completed by Caldemeyer Co. during the current year. Caldemeyer Co. sells and installs home and business security systems. Jan. 3. Loaned $18,000 cash to Trina Gelhaus, receiving a 90-day, 8% note. Feb. 10. Sold merchandise on account to Bradford & Co., $24,000. The cost of the merchandise sold was $14,400. Feb. 13. Sold merchandise on account to Dry Creek Co., $60,000. The cost of merchandise sold was $54,000. Mar. 12. Accepted a 60-day, 7% note for $24,000 from Bradford & Co. on account. Mar. 14. Accepted a 60-day, 9% note for $60,000 from Dry Creek Co. on account. Apr. 3. Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account.) May 11Received from Bradford & Co. the amount due on the note of March 12. May 13. Dry Creek Co. dishonored its note dated March 14. July 12. Received from Dry Creek…arrow_forwardThe accounting records and bank statement of Jeff's Seashell Store provide the following information at the end of April. The closing 'Cash' account balance was $29000, and the bank statement shows a closing balance of $31000. On reviewing the bank statement it is found an account customer has deposited $2500 into the bank account for a March sale and the monthly insurance premium of $550 was automatically charged to the account. Interest of $1500 was paid by the bank and a bank fee of $50 was charged to the account. A payment of $950 to a supplier has been recorded twice in the accounts. After the calculation of the "ending reconciled cash balance", what is the balance of the 'cash' account?A. 33,350 B. None of the other answers C. 31,450 D. 29,000 E. 35,350arrow_forwardJack Hammer Company completed the following transactions. The annual accounting period ends December 31. Apr. 30 Received $600,000 from Commerce Bank after signing a 12-month, 6 percent, promissory note. June 6 Purchased merchandise on account at a cost of $75,000. (Assume a perpetual inventory system.) July 15 Paid for the June 6 purchase. Aug. 31 Signed a contract to provide security service to a small apartment complex starting in September, and collected six months’ fees in advance, amounting to $24,000. Dec. 31 Determined salary and wages of $40,000 were earned but not yet paid as of December 31 (ignore payroll taxes). Dec. 31 Adjusted the accounts at year-end, relating to interest. Dec. 31 Adjusted the accounts at year-end, relating to security service. Required: For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation. For each item, indicate whether the debt-to-assets ratio is increased or decreased or there…arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College