Journal Entry - Inventory Topic 3
Prepare the journal entry for the following transaction:
Purchased $16,000 of inventory, paid $12,000 in cash and the rest remained on account.
Journal Entry - Sales Topic 3
Prepare the journal entry for the following transaction:
Sold $90,000 of goods to customers, receiving $65,000 in cash and the remained on account.
Land Purchased With Cash Topic 3
Determine the effect on a company’s Assets and Net Income from the following transaction: land is purchased with cash.
| Assets | Net Income | |
|---|---|---|
| A | Decreased | Decreased |
| B | Decreased | No effect |
| C | Increased | No effect |
| D | Increased | Increased |
| E | None of the above | |
T/F: Liabilities and Equity Topic 3
The payment of a liability in cash will decrease stockholders’ equity.
True / False
T/F: T-Account Logic Topic 3
A T-account shows total debits of $26,000 and total credits of $20,000; therefore, it has a $6,000 debit balance.
True / False?
Normal Balances Topic 3
For each account listed below, mark whether it has a debit or credit normal balance.
| Account | Debit | Credit |
|---|---|---|
| Revenues | ||
| Assets | ||
| Retained Earnings | ||
| Inventory | ||
| Prepaid Insurance | ||
| Prepaid Rent | ||
| Prepaid Expenses | ||
| Accounts Receivable | ||
| Expenses | ||
| Insurance Expense | ||
| Accounts Payable | ||
| Cost of Goods Sold | ||
| Dividends | ||
| Land | ||
| Liabilities | ||
| Cash | ||
| Notes Payable | ||
| Rent Expense | ||
| Capital Stock |
The Effect of Journal Entries Topic 3
For each transaction, select the two effects it will have.
| Transaction | Effect 1 | Effect 2 | |
|---|---|---|---|
| 1 | Provided services and received cash | ||
| 2 | Provided services on account | ||
| 3 | Received payment from customers on account | ||
| 4 | Received payment in advance from customers | ||
| 5 | Paid wages earned this week | ||
| 6 | Paid 6 month’s rent in advance | ||
| 7 | Borrowed cash from the bank and signed a note | ||
| 8 | Loaned cash to employee who signed a note | ||
| 9 | Purchased equipment with cash | ||
| 10 | Purchases supplies on account | ||
| 11 | Received cash and issued stock | ||
| 12 | Paid for supplies bought earlier on account | ||
| 13 | Paid dividends to stockholders |
What Should Be Journaled Topic 3
A company experienced the following financial events on Sept. 29, Year 1. How many of these economic events would require a journal entry on that day?
- The company signed a new contract with an employees’ union that requires a $2.00 per hour increase in wages and a longer lunch break, effective 10/1/Y1.
- The company president is retiring and will be replaced by the vice president of finance who will be paid $50,000 more per year.
- The company purchased a fire insurance policy for $5,000 that will pay $1,000,000 if the facility is destroyed. The policy insures the company from 11/1/Y1 - 10/31/Y2
- One
- Two
- Three
- None