Financial Accounting Final Exam petty cash fund replenishing credited cash should be amount starting amount amount left ex 100 13 cash over and short should be 87 all expenses depreciation prepaid expense accumulated depreciation contra asset cash not affected by adjusting entries LCM debit cost exp credit inventory temporary nominal accounts rev exp div RE closed at end of period permanent real accounts assets liabilities SE all balance sheet accounts income summary temporary account liquidity cash short term investments accts receivable notes receivable supplies prepaid exp beginning purchases ending usage expense buyer pays freight costs D merchandise inventory C cash seller pays freight costs D freight out delivery exp C cash discount within period buyer D accts receivable C cash and C mer inventory seller 2 entries to record a sale selling price and COGS COGS expense sales returns and allowances and discount contra revenue account normal balance is debit discount within period seller D cash and D sales discount C accts rec income statement sales revenue deduct contra revenues net sales deduct COGS gross profit deduct operating exp income from operations add other gains deduct other losses net income gross profit rate gross profit net sales net sales COGS net sales fifo lifo avg cost avg cost COG available for sale total units available for sale weighted unit average cost apply the weighted unit avg cost to all units on hand to get cost of end inv inventory turnover ratio COGS beg inv end inv 2 days in inventory 365 inv turnover ratio gross profit method net sales estimated gross profit est COGS COG available for sale est COGS est cost of end inv retail inv method goods available for sale at retail net sales end inv at retail goods available for sales at cost goods available for sale at retail cost to retail ratio end in at retail x cost to retail ratio est cost of end inv cash balance per bank per book deposit in transit notes collected by bank outstanding checks NSF bounced checks bank errors printing service charge company errors correct balance accounts receivable recognizing valuing disposing of direct write off not accepted under GAAP D BDE C accts rec allowance D BDE C allowance for doubtful accts to record estimate of uncollectibles D ADA C accts rec to write off recovery D accts rec C ADA to reverse write off D cash C accts rec to record collection ADA contra asset balance sheet percentage of sales income statement percentage of receivables balance sheet selling receivables D cash and D service charge C accts rec for credit card sales D cash and D service fee C sales disposing of notes receivable D cash C notes rec and C interest revenue D interest rec C interest rev D cash C notes rec and C interest rec and C interest rev BDE and Service Charge Exp operating expenses net credit sales avg net acct rec AR turnover ratio 365 AR turnover ratio avg collection period in days cost of land purchase price closing costs title and attorney fees real estate broker fees property taxes cost of draining clearing etc cost of equipment purchase price sales taxes freight charges insurance during transit assembling testing etc straight line cost salvage value depreciable cost depreciable cost useful life annual depreciation expense units of activity depreciable cost total units of activity depreciation cost per unit dep cost per unit x units of activity during year annual dep expense declining balance book value at beginning of year x declining balance rate annual dep exp rate 100 years ignore salvage value revenue expenditures maintain operating efficiency and productive life capital expenditures increase operating efficiency or useful life retiring plant assets D acc dep and loss on disposal or C gain on sale C equipment loss on disposal other losses and expenses sale of plant assets dep for first 6 months is 8000 D dep exp for 8000 C acc dep for 8000 also D cash and D acc dep C furniture and C gain on disposal dep exp income statement acc dep balance sheet depletion for natural resources amortization intangibles D amortization exp patent C patent amortization exp is an operating expense on income statement amortization is always straight line asset turnover ratio net sales average total assets ending book value salvage value ending acc dep amount dep cost current liabilities notes pay accts pay unearned revs accrued liabilities taxes salaries interest pay sales tax payable D cash C sales and C sales tax payable to determine sales cash rate ex if rate is 6 then do 10600 1 06 payroll taxes payable D salaries expense C FICA taxes payable Federal income taxes payable state income taxes payable salaries and wages payable record payroll and withholding taxes D salaries and wages payable C cash record payment of payroll D payroll tax expense C FICA taxes payable federal unemployment taxes payable state unemployment taxes payable record employer s payroll taxes unearned revenue D cash C unearned football ticket revenue record sale of tickets D unearned revenue C ticket revenue record revenue earned if only 1 out of 5 games so far only record 1 5 revenue working capital current assets current liabilities current ratio current assets current liabilities bondholders don t have voting rights bond interest is deductible earnings per share may be higher for bonds for bonds company must pay interest periodically and pay principal on due date secured bonds secured by an asset for ex real estate unsecured bonds debenture bonds issued against general credit of borrower term bonds due for payment at a specific date serial bonds mature in installments face value par value principal amount paid at maturity date not amount that was paid for it market interest rate effective interest yield entries for bonds D cash C bonds payable D bond interest expense C cash D bond interest expense C bond interest payable discount market interest rare contractual interest rate debited when issued contra acct to bonds payable premium market interest rate contractual interest rate credited when issued added to bonds payable redemption of bonds at maturity D bonds payable C cash redemption before maturity D bonds payable premium on bonds payable loss on bond redemption C cash converting bonds into CS D bonds payable C CS and C paid in capital in excess of par value ignore market value mortgage notes payable D cash C mortgage notes payable record mortgage loan D interest expense and D mortgage notes payable C cash record