* inventory inventory accounts payable $100 $100

8/14/2019 * Inventory Inventory Accounts Payable $100 $100

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* Inventory

Inventory $100

Accounts payable $100


Cash $100


Inventory $100

Inventory $15

Cash $15

Accounts receivable $100

Sales (revenue) $100

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Cost of goods sold $60

Inventory $60

Cash $100


Sales return (=Sales) $100


Inventory $60


Raw material $80

Cash (or Accounts payable) $80

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Work-in-process $70

Raw material $70

Work-in-process $55

Cash (or Accrued payable) $55

Finished goods $125

Work-in-process $125


Finished goods $60

) if, Purchase price = $100, credit term; 2 by 15, net 30.

When purchased (delivered, shipped)

Purchase 100 Purchase 98

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Accounts payable 100 Accounts payable 98

if, (015)


Cash 98 Cash 98

Purchase discount 2

if, (16

)


Purchase discount not taken loss 2

Cash 100 Cash 100

< Perpetual method> < periodic method>

When purchased Inventory 60 Purchases 60

(at $60) Cash 60 cash 60

When sold Cash 100 Cash 100

(at $100) Sales 100 Sales 100

CGS 60

Inventory 60 N/A

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() ()

At year (or period) end Inventory xx

N/A Purchases xx

CGS xx

Inventory xx

Direct method() Indirect method()

Cost of goods sold 20 Loss due to market decline 20

Inventory 20 Inventory 20

* Fixed asset

Land/Building/Equipment $1,000

Cash (or Accounts payable) $1,000

Borrow 1,000,000 for construction of building at 10% per year. (11)

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1/1 Cash $1,000,000 Building in progress $400,000

Loan payable $1,000,000 Cash $400,000

7/1 Building in progress $400,000

Cash $400,000

12/31 Interest expense $100,000 Building in progress $400,000

Cash $100,000 Interest expense $60,000

Depreciation expense $200

Accumulated depreciation $200

Work-in-process $200

Accumulated depreciation $200

Cash $5,000

Accumulated depreciation $3,000

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Building $7,000

Gain on sale of building $1,000

Cash $2,500


Loss on sale of building $1,500

Building $7,000

Land $5,000


Loss on sale of machine $2,000

Machine $10,000

Machine $5,000


Loss on sale of machine $2,000

Machine $10,000

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Machine $7,000


Machine $10,000

Machine (new) $5,833


Cash $2,000

Machine (old) $10,000

Gain on sale of machine $833

Building $600,000

Land $400,000

Cash $800,000

Mortgage payable $200,000

Repairs & maintenance expense $500

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Cash $500

Improvement in efficiency or Extension of useful life

Building $500,000 Accumulated depreciation $500,000

Cash $500,000 Cash $500,000

Impairment loss $4,000


Inventory (Coal, Copper) $100,000

Natural resources $100,000

Intangible assets (Patent, Copyrights, Trademark, Goodwill) $200,000

Cash $200,000

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Amortization expense $10,000

Intangible assets (Patents,) $10,000

Impairment loss $4,000

Intangible assets (Patents,) $4,000

Start-up expense $300

Cash (Accrued payables) $300

R & D expense $100,000

Cash (Accrued payables) $100,000

Equipment (R & D Equipment) $100,000

Cash (Accrued payables) $100,000

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* Monetary current asset and current liability

Collection of notes receivable

Cash $300

Notes receivable $300

Recognition of interest income

Cash $200

Interest income (revenue) $200

NSF (not sufficient fund) check

Accounts receivable $2,000

Cash $2,000

Petty Cash $300 Cash $270

Cash $300 ?? expense $30

Petty Cash $300

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) if, sales price = $100 payment(credit) term() = 2/15, n/40

When sold

A/R 100 A/R 98

Sales 100 Sales 98

if, (015)

Cash 98 Cash 98

Sales discount 2 A/R 98

A/R 100

if, (16 )

Cash 100 Cash 100

A/R 98

A/R 100 Sales discount not taken gain 2

12/31-entry for anticipated sales discounts in gross method)

Sales discount $550

Allowance for sales discount $550

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Bad debt expense $5,000

Allowance for uncollectible accounts $5,000


Accounts receivable $2,000

Cash $1,200


Long-term liability $30,000

Current portion of long-term liability $30,000

Retained earnings $20,000

Dividends payable (current liability) $20,000

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Dividends payable $20,000

Cash $20,000

Advertisement (Rent, Interest) expense $600

Accrued payable $600

Payroll Expense $10,000

Salary payable (or cash) $7,235

Income tax payable $1,000

FICA tax payable $765

Union dues payable $200

Medical insurance payable $800

< Payroll tax;(employer)>

Payroll tax expense $965

FICA tax payable $765

Unemployment tax payable $200

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Sale entry Tax payment entry

Cash $10,600 Sales tax payable $600

Sales $10,000

Sales tax payable $600 Cash $600

7/1 6/30fiscal period of taxing authority. X Co.'s buildingproperty tax$ 24,000 / year,

Pay semi-annually on 11/1 & 5/1 of $12,000

Accounting policy of X Co. = monthly accrual of property tax expense

7/31) Property tax expense 2,000 1/31) Property tax expense 2,000

Property tax payable 2,000 Property tax payable 2,000







11/1) Property tax payable 8,000 5/1) Property tax payable 8,000

Prepaid property tax 4,000 Prepaid property tax 4,000

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Cash 12,000 Cash 12,000





Deposit Liability Unearned Revenue

a. ,

Cash $800 Cash $800

Deposit Liability $800 Unearned Revenue $800

b. Refund Revenue(completion of earning process)

Deposit Liability $800 Unearned Revenue $800

Cash $800 Revenue $800

Unrealized losses on purchase commitment $10,000

Accrued liability on purchase commitment $10,000

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Warranty expense $50,000 Warranty liability $15,000

Warranty liability $50,000 Cash, parts inventory, etc. $15,000

Sale/mailing

entry

Actual expenditure

entry

Premium expense $3,000 Liability for premium $300

Liability for premium $3,000 Premiums (,) $300

Unrealized losses from litigation $30,000

Accrued liability from litigation $30,000

* Present value

Cash 9,522 Cash 10,517

Discount on B/P 478 Bond Payable 10,000

Bond Payable 10,000 Premium on B/P 517

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Interest expense 1,142 Interest expense 841

Cash (Accrued interest payable) 1,000 Premium on B/P 159

Discount on B/P 142 Cash (Accrued interest payable) 1,000

Bond Payable 10,000 Bond Payable 10,000

Cash 10,000 Cash 10,000

a. Recording bonds issue cost

Bond issue cost $200,000

Cash $200,000

b. Amortization of bonds issue costs

Bond issue expense (= amortization expense for bond issue cost) $10,000

Bond issue cost $10,000

Bond sinking funds $5,000

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Cash $5,000

Bond sinking funds $500

Interest income $500 (Fund)

Bonds payable $100,000

Bond sinking funds $100,000 (Fund)

When cash received

Cash 200,000

Discount on N/P 40,000

Note payable 200,000.... face amount = principal amount

Deferred sales revenue 40,000 (..)

When normal sales price = $500,000 inventory sold

Cash (or A/R) 460,000

Deferred sales revenue 40,000

Sales (Revenue) 500,000

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4/1/2000, Sky Co. issued 2-year $100,000 noninterest bearing note in exchange for a machine. The machine has not

determinable market value, and prevailing interest rate of this type of note was 10%. The present value of $1 for 2 periods

at 10% interest rate is 0.826

Machine 82,600

Discount on Note payable 17,400

Note payable 100,000

Interest expense 6,195 82,60010%9/12

Discount on Note payable 6,195

) If Face value = 500,000

Unamortized Disc. = 2,000

Unamortized bond issue costs = 4,000 Reacquisition Cost = 510,000

Bonds payable 500,000

Loss on redemption of bonds 16,000

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Discounts on bonds payable 2,000

Bond issue costs 4,000

Cash 510,000

)1. rent building for 3 years rent for )2. Rent building for 3 years rent for

1st year = 300,000 2nd=200,000 3rd=100,000 1st year = 0 2nd=250,000 3rd=350,000

Rent expense 200,000 Rent expense 200,000

Prepaid rent 100,000

Cash 300,000 Accrued rent payable 200,000


Prepaid rent 100,000 Accrued rent payable 200,000

Cash 100,000


Cash 100,000 Cash 250,000

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Cash 100,000 Cash 350,000

When costs incurred During lease term()

Initial direct cost $300 Amortization expense $100

Cash $300 Initial direct cost $100

When costs incurred D uring lease term

Leaseholds improvement $50,000 Depreciation expense $10,000

Cash $50,000 Accumulated depreciation $10,000

Leased asset (PP&E) $200,000

Lease obligation (liability) $200,000

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12/31/98 3-year equipment lease started. Fair value of equip ment = 144,288 useful life = 5 years, $50,000 3 equal annual

payment beginning at 12/31/98(), Bargain purchase option by lessee at the end of lease term = $10,000, expected

residual value at the end of useful life = $1,000, interest rate = 10%/year, use S-L depreciation.

criteria 2BPO.

Minimum Lease Payment = 160,000(50,0003 + 10,000)

Present value of Minimum Lease Payment at 10% interest = 144,288

Leased equipment 144,288

Lease obligation 144,288


Cash 50,000

Lease obligation 40,571 (144,288-1,000)1/528,658

Interest expense 9,429 94,28810% Depreciation expense 28,658

Cash 50,000 Accumulated depreciation 28,658

Lease obligation 44,628 (144,288-1,000)1/528,658

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Interest expense 5,372 53,71710% Depreciation expense 28,658

Cash 50,000 Accumulated depreciation 28,658

(144,288-1,000)1/528,658

Interest expense 911 9,08910% Depreciation expense 28,658

Lease obligation 911 Accumulated depreciation 28,658


Cash 10,000 2002/2003.

* Stockholders equity

[(10/15/01)]

Cash 5

Subscription receivable 10(contra-equity account) common stock subscribed(-)

Common stock subscribed 10 par value amountcommon stock

APIC from common stock 5 plug-in

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[(11/15/01)]

Cash 10 []

Subscription receivable 10 Cash 15

Common stock subscribed 10 Common stock $10

Common stock 10 APIC from common stock 5

Stock issue costAPICDecrease

$2stock issue cost,

APIC from common stock 2

Cash 2 net of APIC increased amount = $3(5-2)

) par value $1/share, original issue price=$5/share, bought 10shares at $10/share

1) When purchased treasury stock

Treasury stock 100 Treasury stock 10

APIC from common stock 40

R/E 50R/E

Cash 100 Cash 100

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2) Sell 3 shares at $15/share

Cash 45 Cash 45


APIC from treasury stock 15 APIC APIC from common stock 42


Cash 21 Cash 21

APIC from treasury stock 9 , APIC-t/s Treasury stock 3

Treasury stock 30 APIC from common stock 18


Cash 18 Cash 18

APIC from treasury stock 6 , APIC-t/s Treasury stock 3

R/E 6 , R/E APIC from common stock 15

Treasury stock 30


Cash 20 Cash 20


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APIC from treasury stock 10 APIC-t/s APIC from common stock 19

par value method(R/E debit) original issue price

.(APIC-t/s credit)original issue price.

) par value method"APIC from treasury stock" (If bought 10 shares at $3/share)

Treasury stock 10

APIC...c/s 40

Cash 30

APIC...t/s 20(plug-in)

)Co.Land. LandFair value = $80,000,

If, Book value of Land = 70,000 If, Book value of Land = 90,000

(Revalue land to fair value)

Land 10,000 Loss from Land 10,000

Gain from Land 10,000 Land 10,000

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Retained Earnings 80,000(Fair Value)

Property dividends distributable 80,000

Property dividends distributable 80,000

Land 80,000

Retained Earnings 80,000 Retained Earnings 80,000

Land 70,000 Loss from Land 10,000

Gain from Land 10,000 Land 90,000

) if 100shares outstanding, par value of 1 share = $1 , market price = $ 3 / share declared and issued ... ...

Small stock dividend (10%) Large stock dividend (40%)

(Use FV of stock to R/E) (Use Par value of stock to R/E)

Retained earnings 30(market) Retained earnings 40

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Common stock 10 Common stock 40(par)

APIC-c/s 20(plug-in)

Unappropriated retained earnings $1,000,000

Appropriated retained earnings $1,000,000

* Investments

Date of declare Date of distribution

Dividends receivable 500 Cash 500

Dividend income 500 Dividends receivable 500

At year-end

Investment in S Co. 4,800 (net income x)

Investment income 4,800 (= Equity in earnings of S company)

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When received cash dividends

Cash 2,000

Investment in S Co. 2,000

7/1/99 12/31/99 12/31/2000 4/1/2001

Fair Value $100 $200 $400 $450

If, Trading S. B/S $200 $400

I/S $100 $200 $50

(Unrealized G) (Unrealized G) (Realized G)

If. AFS S. B/S $200 $400 $4500

OCI $100 $200 $50

(Unrealized G) (Unrealized G) (Unrealized G)

AOCI $100 $300 $3500

Cumulative (Unrealized G) (Unrealized G) (Unrealized G)

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I/S $350

(Realized G)

Trading security AFS security

7/1/99

Investment 100 Investment 100

Cash 100 Cash 100

12/31/99

Investment*1 100 Investment*1 100

Unrealized gain (I/S) 100 Unrealized gain(OCI) 100

12/31/2000


Unrealized gain (I/S) 200 Unrealized gain (OCI) 200

4/1/2001


Unrealized gain (I/S)*) 50 unrealized gain (OCI) 50

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Cash 450 Cash 450


Reclassification adjustment 350

Realized gain (I/S) on sale 350

Insurance expense $7,000

Cash surrender value $3,000

Cash $10,000 ( Insurance premium)

* inventory inventory accounts payable $100 $100

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