Issuance:

      Cash (# x Par Value)              xxx

           Preferred Stock                     xxx

issuance:

        Cash                         xxx

               Com. Stk (# x par/SV)             xxx

               PIC Excess Par/SV                  xxx

Record Transaction of Selling Equiptment

      Cash                          xxx

      Acc. Depr.                   xxx

      Loss on Sale (*)          xxx

                Equiptment                        xxx

                Gain on Sale (*)                  xxx

Record Warranty Expense:

        Warranty Expense               xxx

               Est. War. Pay.                    xxx

Record Repair:

        Est. War. Pay                     xxx

                  Cash or Inv                     xxx

           Assets              xxx

           Goodwill            xxx

                      Liabilities              xxx

                      Cash                     xxx

creates Allowance for Bad Debt (contra) and has no effect on Assets

When created:

           Bad Debt Exp.           xxx

                      Allow                      xxx

Write off:

           Bad Debt Exp.           xxx

                      A/R                         xxx

           Bad Debt Exp.                  xxx

                      A/R                             xxx

Declared:

           Ret. Ear.                      xxx

                      Dividend Pay           xxx

Payment:

           Dividend Pay                xxx

                      Cash                      xxx

Treasury Stock Transaction

Issuance:

           Treas. Stock            xxx

                   Cash                     xxx

Selling:          

           Cash                      xxx

                   Treas. Stock           xxx

                   PIC TS                   xxx

Premium / Discounts on Bonds

Premium:

        Cash                xxx

                Premium                xxx

                Bonds Pay              xxx

Discount:

        Cash                xxx

        Discount           xxx

                Bonds Pay              xxx        

Return on Assets

Net Income + Interest Exp

Avg. Total Assets

• measures company's success in using its assets to earn income for people who finance the business

Net Income - Prefered Dividends

Avg. Common Stock Equity

Salary Payroll Expense

Salary Payable:

        Salary Exp.            xxx

                Taxes                      xxx

                more taxes...            xxx

                ....                          xxx

                ....                          xxx

                ....                          xxx

                Salary Payable          xxx             

Income Statement

Net Sales

       - COGS

=Gross Profit

       -operating expense

=Income before Income Tax

       -Income Tax

=Net Income

Balance Sheet: Assets

 

Cash

Acc Rec

Inventory

Equiptment

Notes Receivable

Balance Sheet: Liabilities

 

Acc Payable

Salary Payable

Interest Payable

Dividends Payable

Notes Payable

Balance Sheet: SE

 

Common Stk

Preferred Stk

    Less: Treasury Stk

Paid-in-Capital

Retained Earnings

 

Inventory Turnover

COGS

((Beg. Inv + Ending Inv) /2)

*could use "avg inventory" as denomenator

Stock Dividend Transations

>20% : Small : recorded at Market Value

<20% : Large : recorded at Par Value

Small:    *(% x Outstanding) = How many are being issued as div

    Retained Earn (% x Outstanding x MV)

                Common Stk (% x Outstanding x Par)

                PIC EP

Large:

    Retained Earn (% x Outstanding x Par)

        Common Stk

Aging Method of Calculating Bad Debt Expense

• % x Age Accounts in A/R creates desired allowance Amount
• Desired - existing amount in Bad Debt Exp. = New Bad Debt Exp.

Accountings Four Elements

Beginning Bal.

    +purchases or similar

    - COGS or similar      

=Ending Bal.

Gross Profit %

COGS %

How do you calculate COGS estimate?

Gross Profit

Net Sales

100% - Gross Profit %

*take Net Sales x COGS % to get COGS est.

Acid Test Ratio

Cash + ST Investments + A/R

Current Liabilities

or

Currents Assets

Current Liabilities

Interest on Notes Receivable

principles x % x (days/365)

*finds interest

Bank Reconciliation: Bank Side

Bank:

        Bal

                +Deposites in Transf

                - Outstanding Checks

                +/- Errors

        = Adjusted balance

*John DOE's bank

Bank Reconciliation: Book Side

Books:

        Balance

                +Bank Collections (EFT)

                +Interest

                - Service Charge

                - NSF

                +/- Errors

        = Adjusted balance

Net Realizable Value

A/R - allowance for bad debt

How Do You Get From One to the Next?

1. Net Sales ->
2. GAFS -->
3. COGS -->
4. Gross Profit -->
5. Operating Income -->
6. Income before Tax -->
7. Net Income

1. sales revenue +/- allow/returns/discounts =     Net Sales
2. beginning inv + purchases =                          GAFS
3. beginning inv + purchases - ending =              COGS
4. net sales - COGS (+freight*) =                      Gross Profit
5. Gross Profit - Operating Exp =                        Op Income
6. Operating Income - Other Rev/Exp =               Income
7. Income before Tax - income tax =                  NetIncome

Weighted Average

GAFS $

GAFS#

*avg cost of inventory

Cash Flow from Operating Activities

Net Income

        + Expenses of Depr.

        -  Δ Current Assets (-inc / +dec)

        + Δ Current Liablities (+inc / -dec)

        + losses on investments

        - gains on investments

Cash Flow from Investing Activities

  - Purchases of L/T Assets (equiptment/land/building)

  + Collections of Notes Receivables

Cash Flows from Financing Activities

+ L/T Liablities (+ inc / - dec)

+ Stocks Issued (CS is like a liability)

- Dividends