term1 Definition1term2 Definition2term3 Definition3
Please sign in to your Google account to access your documents:
You sold $99 of product all on credit. Are you generating revenue? How do you book this?
Yes - cash or cash equivalents are coming in so revenue is generated.
Debit A/R $99
Credit Sales Rev $99
You collected $123 of accounts receivable during this period. Are you generating rev? How do you book this?
No - cash is coming in but no rev was generated. You sold something on credit in a previous period, thus generating rev, but no rev this time.
Debit Cash $123
Credit A/R $123
You purchased inventory (all on account) totaling $111 and paid off a total of $200 of accounts payable. Is there any expense associated with these transactions?
Yes - cash or cash equivalents are being spent in this period so an expense needs to be booked.
Debit Inventory $111
Credit Inv. Expense $111
Debit A/P $200
Credit Cash $200
Paid salaries of $95 to staff, which included both the $15 beginning balance of accrued salaries on the BS and $80 of salaries for work performed this period. How do you book this?
First thing to note here is that accrued salaries, although being paid off now, are actually salaries payable and are therefore not treated as an expense at this time. However, the other $80 is an expense. SG&A = Selling, General and Administrative.
Credit Cash $95
Debit Salaries Payable $15
Debit SG&A Expense $80
Paid interest of $18 during the quarter; a total of $21 of interest was owed and unpaid at quarter-end.
2 Parter! You had an interest payable that had built up so:
Credit Cash $18
Debit Int. Payable $18
You also built up an interest expense now so:
Debit Int. Expense $21
Credit Int. Payable $21
Declared and paid a dividend of $3.
Credit Cash $3
Debit Owners Equity $3
Long Term Debt $23
Cash $23
Need help typing ? See our FAQ (opens in new window)
Please sign in to create this set. We'll bring you back here when you are done.
Discard Changes Sign in
Please sign in to add to folders.
Sign in
Don't have an account? Sign Up »
You have created 2 folders. Please upgrade to Cram Premium to create hundreds of folders!