Explanation Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. Journalize the given transactions in the books of Company T . Transaction on April 15: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 April 15 Income Tax Expense 40,000 Cash 40,000 (Record payment of income tax expense) Table (1) Description: Income Tax Expense is an expense account. Since losses and expenses decrease equity and a decrease in equity is debited, debit Income Tax Expense account. Cash is an asset account. Since cash is paid, asset value decreased, and a decrease in asset is credited. Transaction on April 25: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 April 25 Cash Dividends 45,000 Common Dividends Payable 45,000 (Record declaration of common dividends) Table (2) Description: Cash Dividends is a contra-capital temporary account. This account decreases stockholders’ equity and is closed as the dividends are paid off. So, the account is debited. Common Dividends Payable is a liability account. Since the liability to pay dividends increased, liability increased, and an increase in liability is credited. Working Notes: Compute amount of common dividends declared . Dividend declared = Number of shares ×Dividend per share = 90,000 shares ×$0 .50 = $45,000 (1) Transaction on May 20: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 May 20 Common Dividends Payable 45,000 Cash 45,000 (Record payment of common dividends) Table (3) Description: Common Dividends Payable is a liability account. Since the liability to pay dividends has been paid off, liability decreased, and a decrease in liability is debited. Cash is an asset account. The amount is decreased because cash is paid as dividends, and a decrease in assets should be credited. Note: Refer to Equation (1) for the value and computation common dividends. Transaction on June 15: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 June 15 Income Tax Expense 40,000 Cash 40,000 (Record payment of income tax expense) Table (4) Description: Income Tax Expense is an expense account. Since losses and expenses decrease equity and a decrease in equity is debited, debit Income Tax Expense account. Cash is an asset account. Since cash is paid, asset value decreased, and a decrease in asset is credited. Transaction on September 15: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 September 15 Income Tax Expense 40,000 Cash 40,000 (Record payment of income tax expense) Table (5) Description: Income Tax Expense is an expense account. Since losses and expenses decrease equity and a decrease in equity is debited, debit Income Tax Expense account. Cash is an asset account. Since cash is paid, asset value decreased, and a decrease in asset is credited. Transaction on October 25: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 20-2 October 25 Cash Dividends 45,000 Common Dividends Payable 45,000 (Record declaration of common dividends) Table (6) Description: Cash Dividends is a contra-capital temporary account

Study Guide for Working Papers for Heintz/Parry's College Accounting, Chapters 16-27, 23rd

23rd Edition

ISBN: 9781337913577

Author: HEINTZ, James A., Parry, Robert W.

Publisher: Cengage Learning

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Chapter 21, Problem 8SPB

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Journalize the given transactions in the books of Company T.

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Study Guide for Working Papers for Heintz/Parry's College Accounting, Chapters 16-27, 23rd

Ch. 21 - Income taxes are a unique expense of the corporate...Ch. 21 - Prob. 2TF Ch. 21 - Prob. 3TF Ch. 21 - Prob. 4TF Ch. 21 - Prob. 5TF Ch. 21 - Prob. 1MC Ch. 21 - Prob. 2MC Ch. 21 - Prob. 3MC Ch. 21 - Prob. 4MC Ch. 21 - Prob. 5MC

Ch. 21 - Prob. 1CE Ch. 21 - Prob. 2CE Ch. 21 - Teway Company declared and paid dividends in the...Ch. 21 - Prob. 4CE Ch. 21 - Prob. 5CE Ch. 21 - Prob. 1RQ Ch. 21 - Prob. 2RQ Ch. 21 - Prob. 3RQ Ch. 21 - Prob. 4RQ Ch. 21 - Prob. 5RQ Ch. 21 - Prob. 6RQ Ch. 21 - Prob. 7RQ Ch. 21 - Prob. 8RQ Ch. 21 - Prob. 9RQ Ch. 21 - Prob. 10RQ Ch. 21 - Prob. 11RQ Ch. 21 - CORPORATE INCOME TAX Stanton Company estimates...Ch. 21 - CLOSING INCOME SUMMARY AND DIVIDENDS TO RETAINED...Ch. 21 - Prob. 3SEA Ch. 21 - STOCK DIVIDENDS Kaufman Company currently has...Ch. 21 - STOCK SPLIT Goldstein Company has 100,000 shares...Ch. 21 - Prob. 6SEA Ch. 21 - STATEMENT OF RETAINED EARNINGS McGregor Company...Ch. 21 - Prob. 8SPA Ch. 21 - Prob. 9SPA Ch. 21 - Prob. 10SPA Ch. 21 - Prob. 11SPA Ch. 21 - Prob. 1SEB Ch. 21 - CLOSING INCOME SUMMARY AND DIVIDENDS TO RETAINED...Ch. 21 - COMMON AND PREFERRED CASH DIVIDENDS Ramirez...Ch. 21 - STOCK DIVIDENDS Martinez Company currently has...Ch. 21 - Prob. 5SEB Ch. 21 - Prob. 6SEB Ch. 21 - Prob. 7SEB Ch. 21 - Prob. 8SPB Ch. 21 - CASH DIVIDENDS, STOCK DIVIDEND, AND STOCK SPLIT...Ch. 21 - Prob. 10SPB Ch. 21 - Prob. 11SPB Ch. 21 - Prob. 1MYW Ch. 21 - Prob. 1EC Ch. 21 - MASTRY PROBLEM On January 1, 20--, Dover Companys...Ch. 21 - CHALLENGE PROBLEM This problem challenges you to...

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Journalize the given transactions in the books of Company T.

Solution Summary: The author explains that journal entry is a set of economic events which can be measured in monetary terms.

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Journalize the given transactions in the books of Company T.

Chapter 21 Solutions