Term
Booking cash-based sales involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Cash (increase asset)
Cr. Sales Revenue (increase revenue) |
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Term
Booking credit-based sales involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Accounts Receivable (increase asset)
Cr. Sales Revenue (increase revenue) |
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Term
Purchase of office supplies on credit involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Office Supplies (increase asset)
Cr. Accounts Payable (increase liability) |
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Term
Booking receipt of client advance payments involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Cash (increase asset)
Cr. Client Advances (increase liability)
NOTE: Some companies use liability accounts called "Unearned Revenue" to house advances and deposits from customers/clients. |
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Term
Paying the utility bill involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Utilities Expense (increase expense)
Cr. Cash (decrease asset) |
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Term
Renewing the annual Worker's Comp Insurance Policy involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Prepaid Workers' Comp Insurance (increase asset)
Cr. Cash (decrease asset) |
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Term
Collecting cash from on-account credit sales involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Cash (increase asset)
Cr. Accounts Receivable (decrease asset) |
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Term
Purchase $5,000 worth of merchandise inventory-- pay 10% down and place balance on-account with the vendor:
Dr. __________
Cr. __________
Cr. __________ |
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Definition
Dr. Merchandise Inventory $5,000 (increase asset)
Cr. Cash $500 (decrease asset)
Cr. Accounts Payable $4,500 (increase liability) |
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Term
Sold $10,000 worth of merchandise inventory-- customer pays 20% down and places the rest on-account with your store:
Dr. __________
Dr. __________
Cr. __________ |
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Definition
Dr. Cash $2,000 (increase asset)
Dr. Accounts Receivable $8,000 (increase asset)
Cr. Sales Revenue $10,000 (increase revenue) |
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Term
Recognize annual Research & Development payments:
Dr. __________
Cr. __________ |
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Definition
Dr. R&D Expenses (increase expense)
Cr. Cash (decrease asset) |
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Term
Recording the issuing of $3mm worth of 15 year, 6% Bonds involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Cash $3mm (increase asset)
Cr. Bonds Payable $3mm (increase liability) |
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Term
Recording the sale of 5,000,000 shares of Common Stock at their $2 par value involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Cash $10,000,000 (increase asset)
Cr. Common Stock $10,000,000 (increase this Stockholders' Equity account) |
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Term
Booking a $200,000 30 year (i.e., long-term), 4% loan involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Cash $200,000 (increase asset)
Cr. LongTerm Loans Payable $200,000 (increase liability) |
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Term
Paying a vendor's invoice for items you had purchased on-account involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Accounts Payable (decrease liability)
Cr. Cash (decrease asset) |
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Term
Paying the quarterly interest obligation for the Bonds Payable:
Dr. __________
Cr. __________ |
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Definition
Dr. Bond Interest Expense (increase expense)
Cr. Cash (decrease asset)
Remember: Bonds Payable will not be reduced until the time comes to retire this LongTerm Liability. In the meantime, the Bond's interest payments will paid out each quarter. |
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Term
Returning defective Merchandise Inventory, originally purchased on-account with your vendor, involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Accounts Payable (decrease liability)
Cr. Merchandise Inventory (decrease asset) |
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Term
Customer returning items, originally purchased with cash, to your store involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Sales Returns & Allowances (increase contra-revenue account)
Cr. Cash (decrease asset) |
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Term
Paying employee wages for pay periods that DO NOT involve prior period wage accruals involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Wage Expense (increase expense)
Cr. Cash (decrease asset) |
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Term
Paying employee wages for pay periods that DO involve prior period wage accruals involves:
Dr. __________
Dr. __________
Cr. __________ |
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Definition
Dr. Wage Expense (increase expense for current period part)
Dr. Wages Payable (decrease liability for prior period accrual)
Cr. Cash (decrease asset) |
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Term
Paying interest obligations for periods that DO NOT involve prior period interest accruals involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Interest Expense (increase expense)
Cr. Cash (decrease asset) |
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Term
Paying interest obligations for periods that DO involve prior period interest accruals involves:
Dr. __________
Dr. __________
Cr. __________ |
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Definition
Dr. Interest Expense (increase expense for current period part)
Dr. Interest Payable (decrease liability for prior period accrual)
Cr. Cash (decrease asset) |
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Term
Declaring Dividends for holders of the company's Common Stock involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Dividends (increase this component of Stockholders' Equity)
Cr. Dividends Payable (increase liability)
NOTE: Dividends are always declared in one accounting period and "paid out" in a subsequent period due to legal requirements. |
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Term
"Paying out" previously declared Dividends to holders of the company's Common Stock involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Dividends Payable (decrease liability)
Cr. Cash (decrease asset) |
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Term
Paying a warranty claim submitted by an authorized repairman involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Warranties Payable (decrease liability)
Cr. Cash (decrease asset) |
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Term
Purchasing meals for staff who worked through lunch to finish up a big project involves:
Dr. __________
Cr. __________ |
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Definition
Dr. Meals Expense (increase expense)
Cr. Cash (decrease asset) |
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Term
A competitor is retiring, so you buy the business for $90,000 cash.
As a result of this transaction, you get:
$20,000 in Accounts Receivable;
$10,000 in Accounts Payable;
$50,000 in Equipment;
$3,000 in Office Supplies; and
$2,000 in PrePaid Insurance.
What is the Journal Entry to record this event? |
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Definition
Dr. Accounts Receivable $20,000
Dr. Equipment $50,000
Dr. Office Supplies $3,000
Dr. Prepaid Insurance $2,000
Dr. Goodwill $25,000
Cr. Accounts Payable $10,000
Cr. Cash $90,000
Hint: Post all items, except Goodwill, as indicated by this event (i.e., as increases or decreases to impacted accounts).
The difference needed to make your JE balance (i.e., sum of Debits equals sum of Credits) goes to Goodwill! |
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Term
You acquire a business for $200,000 cash.
As a result of this transaction, you get:
$35,000 in Accounts Receivable;
$42,000 in Accounts Payable;
$100,000 in Equipment;
$15,000 in Office Supplies; and
$8,000 in Wages Payable.
What is the Journal Entry to record this event? |
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Definition
Dr. Accounts Receivable $35,000
Dr. Equipment $100,000
Dr. Office Supplies $15,000
Dr. Goodwill $100,000
Cr. Accounts Payable $42,000
Cr. Wages Payable $8,000
Cr. Cash $200,000
Hint: Post all items, except Goodwill, as indicated by this event (i.e., as increases or decreases to impacted accounts).
The difference needed to make your JE balance (i.e., sum of Debits equals sum of Credits) goes to Goodwill! |
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Term
The company vehicle was originally purchased for $30,000. Accumulated Depreciation is currently $26,000.
Should you sell it if a potential buyer offers you $6,000 cash?
If yes, what would be the Journal Entry to record this event? |
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Definition
Yes! The current Net Book Value of the vehicle is $4,000 ($30,000 cost - $26,000 accumulated depreciation).
If you sell it for $6,000, you will see a $2,000 gain (i.e., profit) on this event!
Dr. Cash $6,000
Dr. Accumulated Depreciation $26,000
Cr. Vehicles $30,000
Cr. Gain on Sale of Fixed Assets $2,000
Hint: Recognize Cash received, remove Accumulated Depreciation, and remove the Asset from the books. The amount needed to make your JE balance (i.e., sum of Debits equals sum of Credits) will be either a Gain (credit needed) or Loss (debit needed) on this event. |
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Term
The office manager wants to replace several sets of desks and bookcases.
These assets were originally purchased for a total of $7,000. A store specializing in used office furniture is willing to give her $2,000 cash for everything.
She has asked you to determine if this is a good offer. After updating the Accumulated Depreciation, this account has a $4,500 balance.
Should she accept that offer?
If she accepts, what would be the Journal Entry to record this event? |
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Definition
No!, she should not accept. The updated Net Book Value is $2,500 ($7,000 cost - $4,500 accumulated depreciation).
If she accepts, this event will see a $500 loss!
Dr. Cash $2,000
Dr. Accumulated Depreciation $4,500
Dr. Loss on Sale of Fixed Assets $500
Cr. Office Furniture $7,000
Hint: Recognize Cash received, remove Accumulated Depreciation, and remove the Asset from the books. The amount needed to make your JE balance (i.e., sum of Debits equals sum of Credits) will be either a Gain (credit needed) or Loss (debit needed) on this event. |
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Term
Your company uses the allowance method for handling worthless A/R accounts.
During the year, a client's account with a $15,000 balance is determined to be worthless.
What is the Journal Entry to record this event?
NOTE: This is the actual write-off event. It has nothing to do with a year-end adjusting entry for estimating future doubtful accounts and funding the allowance reserve. |
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Definition
Under the allowance method, the Journal Entry for writing off worthless accounts during the year includes:
Dr. Allowance for Doubtful Accounts (decrease contra asset)
Cr. Accounts Receivable (decrease asset) |
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