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Concept explainers
1.a.
Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.
Accounting rules for Journal entries:
- To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
- To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.
To Determine: The sales revenue for the month of December.
1.a.
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Explanation of Solution
Determine the sales revenue for the month of December.
Sales Revenue:
Working Note:
1. b.
The cost of goods sold for the month of December.
1. b.
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Explanation of Solution
Determine the cost of goods sold for the month of December.
Compute the amount of cost of goods sold:
Working Note:
1. c.
The insurance expense for the month of December.
1. c.
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Explanation of Solution
Determine the insurance expense for the month of December.
Insurance Expense:
1. d.
The salaries and wages expense for the month of December.
1. d.
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Explanation of Solution
Determine the salaries and wages expense for the month of December.
Calculate the cash payments for Salaries and wages expenses.
Thus, the Salaries and wages expenses are $8,000.
2.
To Prepare: The summary journal entries to record the month’s sales, nad cost of those sales.
2.
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Explanation of Solution
Sales Entry:
The following is the
Record the following journal entry in the general journal:
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
73,000 | ||||
Sales Revenue (E+) | 73,000 | |||
(To record the revenues on account) |
Table (1)
- Accounts Receivable is an asset account, and increased by $73,000. Therefore, debit accounts receivable account with $73,000.
- Sales revenue is revenue account, and increased by $73,000. Therefore, credit Sales revenue account with $73,000.
Cost of goods sold Entry:
The following is the accounting equation for the entry.
The following is the accounting entry:
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
Cost of Goods Sold (E–) | 64,000 | |||
Inventory (A–) | 64,000 | |||
(To record the cost of goods sold) |
Table (2)
- Cost of goods sold is an expense account, and increased which has decreased the equity by $64,000. Therefore, debit cost of goods sold account with $64,000.
- Inventory is an asset and decreased by $64,000. Therefore, credit the inventory account with $64,000.
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Chapter 2 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
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