Grade 12 Accounting

Go see the school musical – “The 25th Annual Putnam County Spelling Bee”

It is hilarious!

The formatting didn’t transfer very well but you can still check the accounts and values.

4-7A

2001

a) Jan. 31 Amortization Expense, Equipment                                  6,000

Accumulated Amortization, Equipment 6,000

To record amortization; 72,000/3 yrs = 24,000/yr × 3/12 = 6,000.

b) 31 Unearned Consulting Fees 6,000

Consulting Fees Earned 6,000

To record fees earned.

c) 31 Rent Expense 30,000

Prepaid Rent 30,000

To record expired rent; 45,000 × 4/6 = 30,000.

d) 31 Wages Expense                         19,000

Wages Payable 19,000

To record accrued wages.

e) 31 Interest Expense 1,470

Interest Payable 1,470

To record accrued interest; 84,000 × 7% = 5,880 × 3/12 = 1,470.

f) 31 Accounts Receivable 9,500

Consulting Fees Earned 9,500

To record accrued fees.

g) 31 Insurance Expense 1,500

Prepaid Insurance 1,500

To record expired insurance; 2,700/18 months = 150/month × 10 months.

h) 31 Amortization Expense, Office Furniture                          900

Accumulated Amortization, Office Furniture                             900

To record amortization of office furniture.

i) Jan. 31 Accounts Receivable                                                       4,100

Repair Revenues Earned                                                4,100

To record accrued repair revenues.

j) 31 Store Supplies Expense                                                  4,300

Store Supplies Inventory                                                 4,300

To record store supplies used; 1,600 + 3,000 – 300 = 4,300.

Problem 4-14A (35 minutes) Part 1

2001

Dec. 31      Office Supplies Expense…………………        12,760

Office Supplies…………………………..                           12,760

To record the cost of supplies used during
the year; $3,000 + $12,400 – $2,640.

31      Insurance Expense…………………………        12,312

Prepaid Insurance……………………..                           12,312

To record the cost of insurance coverage
that expired during the year.

Cost per    No. of        2001

Policy      Month     Months      Cost

1            $660           12        $  7,920

2              363             9             3,267

3              225             5         1,125

Total                                         $12,312

31      Salaries Expense…………………………….          2,100

Salaries Payable………………………..                              2,100

To record accrued but unpaid wages.

31      Amortization Expense, Building……..        11,250

Accumulated Amortization, Building                                           11,250

To record amortization expense. Annual
amortization = ($855,000 – $45,000)/30 = $27,000;
amortization for five months = $27,000 × 5/12.

31      Rent Receivable……………………………….          2,400

Rent Earned……………………………….                              2,400

To record earned but unpaid rent.

31      Unearned Rent…………………………………          4,350

Rent Earned……………………………….                              4,350

To record the amount of rent earned; 2 × $2,175.

Jan.   6      Salaries Payable………………………            2,100

Salaries Expense……………………..            8,400

Cash……………………………………                               10,500

To record payment of accrued and current

salaries; 4 × $2,100 = 8,400.

15 Cash………………………………………….            4,800

Rent Receivable………………….                                 2,400

Rent Earned………………………..                                 2,400

To record past due rent for two months.

Textbook Questions:

• pg 168 #QS 4-8, QS 4-9
• pg 170 #4-7
• pg 171 #4-9, 4-10
• pg 174 #4-4A, 4-5A

Textbook Questions:

• pg 167, #QS 4-1, QS 4-3, QS 4-4, QS 4-5
• pg 168, QS 4-6
• pg 169, #4-3,
• pg 173, #4-1A, 4-2A
• pg 174, 4-3A

Main Points Summary- Gee Wiz

The 5 most important points/topics from Chapter 1-3 are the following:

1.)  Types of Business Organizations

2.)  Users of Accounting Information

3.)  GAAPs

4.)  The Accounting Cycle [includes source documents, statements, and other Review from Grade 11 Accounting)

5.)  Correcting Errors

Types of Business Organizations

Chapter 1-3 deals with three different types of business organizations and also  non-business organizations. The three types are sole proprietorship, partnership, and corporation. Non-business organizations are not-for profit and some can be classified as government organizations.  Each type of business organization has distinct characteristics/legal issues attributed to it (taxes, unlimited vs limited liability, etc)

Users of Accounting Information

There are two distinct kinds of users of information- external and internal information users. External information users are not directly involved in running the organization and mostly use financial accounting for their information needs. Internal information users are directly involved in managed and operating the organization and mostly use managerial accounting for their information needs.

GAAPS- General Accepted Accounting Principals

GAAPS are basic assumptions and guidelines that are used when preparing financial statements. The GAAPS we learned in this chapter are: business entity concept, continuing concern concept, principle of conservatism, objectivity principle, revenue recognition convention, matching principle, time period concept, cost principle, consistency principle, materiality principle, and full disclosure principle)

Accounting Cycle

The accounting cycle is the process by which accounting statements/ is prepared. The steps followed on the accounting cycle are: 1.) Analyze Transactions 2.)Journalize 3.)Post 4.) Prepare unadjusted trial balance 4.) Adjust 5.) Prepare post-adjusted trial balance 6.) Prepare statements 7.) Close 8.) Prepare post-closing trial balance 9.) Repeat J

Source documents, general journals, ledgers (including chart of accounts), income statement, balance sheet, and trial balances are all part of the Accounting Cycle.

Correcting Errors

If an error occurs in the trial balance, there are several ways that the error can be found. The steps taken toward identifying an error include checking to see if calculations were completed correctly, checking for transposition errors, checking if debit and credit were correctly listed, and checking errors according to ledger and original journal accounts.

How Does The Unit Relate to GAAPs?

In this unit, we are review the basic GAAPs that we learn in Grade 11 Accounting. The GAAPs that we review are listed above in one of the 5 Key Points.

How does the unit relate to identifying, recording, measuring, and communication information?

In Chapters 1-3, we review how to do the first basic steps of the Accounting Cycle. We identify by examining source documents; record and measure by using the general ledger and journals; and finally communicate information by posting trial balances.

How do the topics covered ensure that accounting information is relevant, reliable, consistent, and comparable?

In Chapters 1-3, we review the GAAPS, whose primary purpose is to make information in financial statements relevant, reliable, consistent, and comparable.

Textbook Questions

Must be done for Friday

• pg 121 Exercises 3-10, 3-11, 3-12

Must be done for Monday

• pg 118, Q-S 3-7
• pg 123, 3-17
• pg 125, 3-20
• pg128, 3-5A

Textbook questions

• page 64, QS 2-3
• page 66, Exercise 2-9
• page 67, Exercise 2-12
• page 68, Exercise 2-13, Exercise 2-15
• page 74, 2-7A

Textbook Questions

• pg 64, QS 2-2
• pg 65, Exercise 2-2
• pg 66, Exercise 2-6
• pg 70, 2-1A

1. Comment on one of the forms of business organization posts.  Remember, no duplicating points!
2. Textbook Questions:

• Page 30,  Exercise 1-4
• Page 31, Exercise 1-6
• Page 32, 1-2A, 1-2B

Why should a person looking to start a new business choose to form a corporation?

What are some examples of corporations?