Accounting 221 Exam Final Review Revenue Debit Service Revenue Interest Revenue Credit Equity Debit Credit Common Stock Retained Earnings APIC Treasury Stock Contra equity Credit Expenses Debit Salaries Expenses Insurance Expenses Advertising Expenses Supplies Expenses Operating Expenses Cost of Goods Sold Transportation Out Uncollectible Accounts Expense Depreciation Expense Amortization Expense Warranty Expense Credit Liabilities Debit Accounts Payable Salaries Payable Notes Payable Interest Payable Unearned Revenue Warranty Payable Bonds Payable Discount on Bonds Payable Contra Liability Premium on Bonds Payable Contra Liability Credit Assets Debit Cash Accounts Receivable Interest Receivable Prepaid Insurance Prepaid Rent Supplies Land Inventory Transportation In Allowance for Doubtful Accounts contra asset Notes Receivable Interest Receivable Accumulated Depreciation contra asset Accrual Event happens before the cash is exchanged Deferral Event happens after cash is exchanged Income Statement Revenue Expenses Net Income Revenue Multi Step Income Statement Beginning RE Net Income Dividends Ending RE Beginning Supplies Additions Amount Available for use Ending Balance Usage During the Period Statement of Stockholders Equity COGS Gross Margin Less Operating Exp Gains Losses Net Income Beginning CS Plus Issued End CS Beginning RE Plus Net Income Less Dividends Balance Sheet End RE Total SE Assets Liabilities SE Statement of Changes in Cash Flow Cash flow from OA Cash flow from IA Cash flow from FA Beg Cash Plus RE End cash Closing Entries Close salary and expense accounts move funds to RE Beginning Inventory Balance Purchases Cost of Goods Available for Sale Cost of Goods Available for Sale End Inventory Cost of Goods Sold Sales Revenue COGS Gross Margin Profit Discounts 2 10 x 30 discount how many days discount is available net amount due in x days Discount Debit Accounts Payable Credit Inventory FOB Shipping Point Buyers pay FOB Destination Seller incurs cost FIFO First In First Out LIFO Last In First Out Gain Loss come from transactions that don t involve normal business Weighted Average Total COGAFS Total Quantity Net Realizable Value A R Allowance for Doubtful Accounts Percentage of Sales Method Percentage of Receivables Method Journal Entry MAKE T ACCOUNTS 2 x x Dr Uncollectible Accounts Expense x Cr Allowance x Direct Write Off Method Dr Uncollectible Accounts Expense Cr A R Lower of cost or market rule Ratios to know 1 Decide which is lower cost or market 2 Make write down if market is lower TC TM 3 Don t do anything if cost is Dr COGS Cr Inventory lower Current Ratio Current Assets Current Liabilities Return on Assets Net income Total assets Debt to asset Total debt Total Assets Return on Equity Net Income Owners Equity Gross Margin Ratio Gross Margin Net Sales Net Income Net Income Net Sales 3 Cost Salvage Value Depreciation Cost Book Value Cost Accumulated Depreciation 3 methods of calculating depreciation Inventory Turnover COGS Inventory Average Number of Days in Inventory 365 Inventory Turnover Accts Rec Turnover Sales Accts Rec Average Number of Days to Correct 365 Accts Rec Turnover 1 Straight Line Method same amount depreciated each year a Depreciation Cost Useful Life Depreciation Expense 2 Double Declining Method a Calculate straight line rate 1 Useful Life b Multiply by 2 2 Useful Life Double Declining rate c Multiply DD rate x BV at beginning of period depreciation expense for period 3 Units of Production a Use table given b Determine cost per unit Depreciation cost units c Multiply by units of production for period Dr Deprciation Exp Cr Accumulated Depreciation Patents Grant owners exclusive legal rights to produce product with unique feature Copyrights Protect writings musical compositions art or other intellectual property Notes Payable Accounts Cash Notes Payable Debit Credit Contingent Liabilities potential obligation arising from a past event 1 Probable and reasonably estimated recognized on financial statements 2 Reasonably possible but not likely or cannot be reasonably estimated not reported on FS maybe in footnotes 3 Remote possibility Not reported on FS Interst Expense Interest Payable Interest Payable Notes Payable Cash Warranties Account Warranty Expense Warranty Payable Warranties Payable Cash Bonds Bonds Issued at Face Value Accounts Cash Bonds Payable Interest Expense Interest Payable Bonds Payable Interest Payable Cash Bonds Issued at a Discount Accounts Cash Discount on Bonds Payable Bonds Payable Debit Debit Debit Face Value Discount Premium Stated Rate MR Stated Rate MR Stated Rate MR Face Value Cash Face Value Cash Face Value Cash Credit Credit Credit Debit Interest Expense Bonds Payable Cash Discount on Bonds Payable Bonds Issued at Premium Accounts Cash Bonds Payable Premium on Bonds Payable Interest Expense Premium on Bonds Payable Bonds Payable Cash Straight Line Interest Discount years Discount per year Interest Expense Discount cash Cash FV x SR Bond EX Credit Discount FV 75 000 4 SR 5 MR 10 years 75 000 x 6139 taken from PV of 1 table using MR 46 043 3 000 interest x 7 721 taken from PV of annuity table using MR 23 165 Cost to buy 46 043 23 165 69 208 Additional paid in Capital in excess of par stated value APIC Cash par stated value