intl finance session3 session4 gea upmf ferry jaolis
DESCRIPTION
Accounting and financial analysisTRANSCRIPT
Reference—Weygandt, Kimmel, Kieso: Financial Accounting, IFRS Edition, 2e, Chapter 2
No.
1
2
3
4
5
6
7
8
9
10
No. Date1 Oct. 1
2 Oct. 1
3 Oct. 2
4 Oct. 3
5 Oct. 4
6 Oct. 5
7 Oct. 98 Oct. 20
9 Oct. 26
10 Oct. 31
Reference—Weygandt, Kimmel, Kieso: Financial Accounting, IFRS Edition, 2e, Chapter 2
Event—daily business operations
On Oct. 1, Pioneer purchases office equipment costing $5,000 by signing a 3-month, 12%, $5,000 note payable
On Oct. 3, Pioneer pays office rent for October in cash, $900
On Oct. 4, Pioneer pays $600 for a one-year insurance policy that will expire next year on September 30
On Oct. 20, Pioneer's board of directors declares and pays a $500 cash dividend to stockholders
On Oct. 26, Pioneer owes employee salaries of $4,000 and pays them in cash (see Oct. 9 transaction)
On Oct. 31, Pioneer receives $10,000 in cash from Copa Company for advertising services provided in October
On Oct. 1, C.R. Byrd invests $10,000 cash in an advertising company to be known as Pioneer Advertising Agency Inc.
On Oct. 2, Pioneer receives a $1,200 cash advance from R. Knox, a client, for advertising services that are expected to be completed by December 31
On Oct. 5, Pioneer purchases an estimated 3-month supply of advertising materials on account from Aero Supply for $2,500
On Oct. 9, Pioneer hires four employees to begin work on Oct. 15. Each employees is to receive a weekly salary of %500 for a 5-day work week, payable every 2 weeks—first payment made on October 26
General JournalAccount Titles and Explanation Ref. Cash 101 Share Capital—Ordinary 311Equipment 157 Notes Payable 200 (Issued 3-month, 12% note for office equip.)Cash 101 Unearned Service Revenue 209 (Received cash from R. Knox for future service)Rent Expense 729 Cash 101 (Paid October rent)Prepaid Insurance 130 Cash 101 (Paid one-year policy; effective date October 1)Supplies 126 Accounts Payable 201 (Purchased supplies on account from Aero Supply)No entries (no transaction yet occurred)Dividends 332 Cash 101 (Declared and paid a cash dividend)Salaries and Wages Expense 726 Cash 101 (Paid salaries to date)Cash 101 Service Revenue 400 (Received cash for services provided)
Reference—Weygandt, Kimmel, Kieso: Financial Accounting, IFRS Edition, 2e, Chapter 2 Reference—Weygandt, Kimmel, Kieso: Financial Accounting, IFRS Edition, 2e, Chapter 3
Event—daily business operations No.
On Oct. 1, Pioneer purchases office equipment costing $5,000 by signing a 3-month, 12%, $5,000 note payable 3
6
4
On Oct. 3, Pioneer pays office rent for October in cash, $900
On Oct. 4, Pioneer pays $600 for a one-year insurance policy that will expire next year on September 30 2
1
On Oct. 20, Pioneer's board of directors declares and pays a $500 cash dividend to stockholders
On Oct. 26, Pioneer owes employee salaries of $4,000 and pays them in cash (see Oct. 9 transaction) 7
On Oct. 31, Pioneer receives $10,000 in cash from Copa Company for advertising services provided in October
On Oct. 1, C.R. Byrd invests $10,000 cash in an advertising company to be known as Pioneer Advertising Agency
On Oct. 2, Pioneer receives a $1,200 cash advance from R. Knox, a client, for advertising services that are
On Oct. 5, Pioneer purchases an estimated 3-month supply of advertising materials on account from Aero Supply
On Oct. 9, Pioneer hires four employees to begin work on Oct. 15. Each employees is to receive a weekly salary of %500 for a 5-day work week, payable every 2 weeks—first payment made on October 26
5
J1 Debit Credit No. Date
10,000 10,000 1 Oct. 31
5,000 5,000
2 Oct. 31 1,200
1,200 3 Oct. 31
900 900
4 Oct. 31 600
600 5 Oct. 31
2,500 2,500
6 Oct. 31
500 500 7 Oct. 31
4,000 4,000
10,000 10,000
Reference—Weygandt, Kimmel, Kieso: Financial Accounting, IFRS Edition, 2e, Chapter 3
Events—end of accounting period at Oct. 31 (Revenue recognition, expense recognition)
Pioneer Advertising estimates depreciation on the office equipment to be $480 a year, or $40 per month.
Pioneer Advertising Agency signed a three-month note payable in the amount of $5,000 on October 1. The note requires Pioneer to pay interest at an annual rate of 12%, or 1% per month.
Pioneer Advertising Agency received $1,200 on October 2 from R. Knox for advertising services expected to be completed by December 31. Unearned Service Revenue shows a balance of $1,200 in the October 31 trial balance. Analysis reveals that the company earned $400 of those fees in October.
On October 4, Pioneer Advertising Agency paid $600 for a one-year fire insurance policy. Coverage began on October 1. Pioneer recorded the payment by increasing (debiting) Prepaid Insurance. This account shows a balance of $600 in the October 31 trial balance. Insurance of $50 ($600 / 12) expires each month.
Pioneer Advertising Agency purchased advertising supplies costing $2,500 on October 5. Pioneer recorded the payment by increasing (debiting) the asset Advertising Supplies. This account shows a balance of $2,500 in the October 31 trial balance. An inventory count at the close of business on October 31 reveals that $1,000 of supplies are still on hand.
Pioneer Advertising Agency last paid salaries on October 26; the next payment of salaries will not occur until November 9. The employees receive total salaries of $2,000 for a five-day work week, or $400 per day. Thus, accrued salaries at October 31 are $1,200 ($400 x 3 days).
General JournalAccount Titles and Explanation
Adjusting EntriesSupplies Expense Supplies (To record supplies used)Insurance Expense Prepaid Insurance (To record insurance expired)Depreciation Expense Acc. Depreciation–Equipment (To record monthly depreciation)Unearned Service Revenue Service Revenue (To record revenue for services performed)Accounts Receivable Service Revenue (To record revenue for services performed)Interest Expense Interest Payable (To record interest on notes payable)Salaries and Wages Expense Salaries and Wages Payable (To record accrued salaries and wages)
In October Pioneer Advertising Agency earned $200 for advertising services that had not been recorded (had not received any cash payment).
Reference—Weygandt, Kimmel, Kieso: Financial Accounting, IFRS Edition, 2e, Chapter 3
Events—end of accounting period at Oct. 31 (Revenue recognition, expense recognition)
DEFERRALSDepreciation
ACCRUALSAccrued Expenses
DEFERRALSUnearned Revenues
DEFERRALSPrepaid Expenses—Insurance
DEFERRALSPrepaid Expenses—Supplies
ACCRUALSAccrued Expenses