L02 - Cases "Reporting Process"

Question 1

Journalize and Post: Obtain Loan

On May 1, Jana Juice borrowed $4,000 cash by signing a note to be repaid on May 31 plus interest of $40.

Answer 1

Account Debit:

• Cash (+A) - This represents the cash received from the loan.

Account Credit:

• Notes Payable (+L) - This represents the liability for the borrowed amount.

Question 2

Journalize and Post: Rental Agreement

Jana Juice signed a rental agreement for its store location and paid $1,800 as a security deposit.

Answer 2

Account Debit:

• Security Deposit (+A)
  (or Prepaid Rent) - This represents the security deposit paid in advance for the rental agreement.

Account Credit:

• Cash (-A) - This records the cash outflow for the security deposit.

Question 3

Journalize and Post: Purchase Inventory

Jana Juice purchased $2,000 of inventory on account, consisting of energy drinks.

Answer 3

Account Debit:

• Inventory (+A) for the cost of the inventory acquired.

Account Credit:

• Accounts Payable (+L)
  (or Cash, if paid immediately) - to record the liability for the amount owed to the supplier.

Question 4

Journalize and Post: Payment of Advertising

Jana Juice paid $900 to advertise in the local newspaper during May.

Answer 4

Account Debit:

• Advertising Expense (+E, -SE) - This represents the cost of the advertising services or materials.

Account Credit:

• Cash (-A) - This records the cash outflow for the payment of advertising expenses.

Question 5

Journalize and Post: Pay Amounts Due

Jana Juice paid $1,500 for inventory previously purchased on account

Answer 5

Account Debit:

• Accounts Payable (-L)
  (or specific liability accounts if applicable) - This represents the reduction in the amounts you owe to creditors or suppliers.

Account Credit:

• Cash (-A)
  (or Bank) - This records the cash outflow for the payment of the amounts due.

Question 6

Journalize and Post: Sell to Customers for Cash

Jana Juice sold $600 of energy drinks to customers for $2,400 cash during May.

Answer 6

Account Debit:

• Cash (+A)
  (or Bank) - This represents the increase in cash from the sale.
• Cost of Goods Sold (+E, -SE)

Account Credit:

• Sales Revenue (+R, +SE) - This records the revenue generated from the sale.
• Inventory (-A)

Question 7

Journalize and Post: Sell to Customers on Account

Jana Juice sold $700 of energy drinks on account for $2,900 to a convenience store during May.

Answer 7

Account Debit:

• Accounts Receivable (+A) - This represents the amount receivable from the customer for the sale (the amount they owe you).
• Cost of goods sold (+E, -SE)

Account Credit:

• Sales Revenue (+R, +SE) - This records the revenue generated from the sale.
• Inventory (-A)

Question 8

Journalize and Post: Pay Wages

Jana Juice paid wages totaling $1,300 to employees during May.

Answer 8

Account Debit:

• Wages Expense (+E, -SE) - This represents the cost of wages paid to employees.

Account Credit:

• Cash (-A) - This records the cash outflow for the payment of wages.

Question 9

Journalize and Post: Sold Membership

During May, Jana Juice received $300 from customers in exchange for a three month membership (June, July and August) to an online health program.

Answer 9

Account Debit:

• Cash (+A) - This represents the cash received from selling the membership.

Account Credit:

• Unearned Revenue (+L) - This records the revenue generated from the sale of the membership.

Question 10

Journalize and Post: Customer Collections

Jana Juice collected $1,200 of the amount owed by customers during May.

Answer 10

Account Debit:

• Cash (+A)
  (or Bank) - This represents the increase in cash or bank balance due to the payment received from customers.

Account Credit:

• Accounts Receivable (-A) - This reduces the amount owed by customers and represents the amount collected.

Question 11

Journalize and Post: Paid Principal and Interest

Jana Juice paid $40 for interest and repaid the $4,000 note payable.

Answer 11

Account Debit:

• Notes Payable (-L)
  (or the specific loan account) - This reduces the outstanding loan balance and represents the payment toward the principal.
• Interest Expense (+E, -SE) - This represents the cost of interest paid.

Account Credit:

• Cash (-A)
  (or Bank) - This records the cash outflow for the payment.

Question 12

Journalize and Post: Paid for Insurance in Advance

Jana Juice paid $800 for a four-month insurance policy

Answer 12

Account Debit:

• Prepaid Insurance (+A)
  (or Prepaid Expenses) - This represents the prepayment made for future insurance coverage.

Account Credit:

• Cash (-A)
  (or Bank) - This records the cash outflow for the payment.

Question 13

Journalize and Post: Paid Rent

Jana Juice paid $700 for rent for May.

Answer 13

Account Debit:

• Rent Expense (+E, -SE) - This represents the cost of renting the property.

Account Credit:

• Cash (-A)
  (or Bank) - This records the cash outflow for the rent payment.

Question 14

Journalize and Post: Paid Dividends

Jana Juice paid $400 for dividends to shareholders during May.

Answer 14

Account Debit:

• Retained Earnings (-SE) - This represents the reduction in retained earnings, as dividends are paid out of accumulated earnings.

Account Credit:

• Cash (-A)
  (or Bank) - This records the cash outflow for the dividend payment.

Question 15

Asset T-Account Transaction:

• Receive outside investment
• Receive a loan
• Receive refund of expense
• Pay Bills
• Repay Loan

Answer 15

Increase assets with a debit and decrease with a credit. Basic entries:

• Receive outside investment:
  Dr Cash (+A), Cr (+SE)
• Receive a loan:
  Dr Cash (+A), Cr Liability (+L)
• Receive refund of expense:
  Dr Cash (+A), Cr Expense (+E)
• Pay Bills:
  Dr Accounts payable (+L), Cr Cash (-A)
• Repay Loan:
  Dr Liability (+L), Cr Cash (-A)