Explanation Journal: Journal is the book of original entry. Journal consists of the day today financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect. Accounting Equation : The accounting equation implies the relationship between the assets, liabilities, and the stockholders equity. The balance of both the assets and the liabilities, stockholders equity must be equally balanced. The accounting equation is as follows; Assets = Liabilities + Stockholders Equity Accrual basis of accounting: In accrual Basis of accounting, the company records all the transaction that brings changes in the financial statement of the company. In accrual basis of accounting, the revenue is recognized for the accounting period, in which the goods are sold, or the service performed even if cash is not exchanged. Similarly the expenses are recognized for the accounting period, in which the business incurred expenses even if cash is not exchanged. a. Journalize the issuance of common stock: Date Account Title and Explanation Debit ($) Credit ($) Cash (A+) 25,000 Common stock (SE+) 25,000 ( To record the issuance of common stock ) Table (1) Cash is an asset account. Thus, an increase in cash increases the asset account. Hence, debit cash account by $25,000. Common stock is a component of stockholder equity account. Thus, an increase in common stock increases the stockholders equity account. Hence, common stock account is being credited to increase its balance by $25,000. b. Journalize the utilities cost incurred: Date Account Title and Explanation Debit ($) Credit ($) Utilities expenses (E+, SE–) 600 Accounts payable (L+) 600 ( To record the Utilities expenses incurred ) Table (3) Utilities expense is a component of stockholder equity account. Thus, an increase in Utilities expenses decreases the stockholders equity account. Hence, Utilities expenses account is being debited to increase its balance by $600. Accounts payable is a liability account. Thus, an increase in accounts payable increases the liability account. Hence, account payable account is being credited to increase its balance by $600. c

GEN COMBO LL FUNDAMENTALS OF FINANCIAL ACCOUNTING; CONNECT ACCESS CARD

6th Edition

ISBN: 9781260260083

Author: Fred Phillips Associate Professor

Publisher: McGraw-Hill Education

See similar textbooks

Concept explainers

The Effect Of Prepaid Taxes On Assets And Liabilities

Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can resu…

Final Accounts

Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.

Ledger Posting

A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the a…

Trial Balance and Final Accounts

In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately…

Adjustment Entries

At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial repor…

Videos

Question

Chapter 3, Problem 14ME

To determine

To prepare: The journal entries of each transaction under accrual basis expenses.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 3, Problem 13ME

Chapter 3, Problem 15ME

Students have asked these similar questions

Subject : Financial Accounting

1. Data Trust Incorporated, manufactures Poke Monster figures and has the following data from its operation for the year just completed. Actual A Flexible Budget B Master Budget Units 1,540 1,240 Sales (dollars) $ 101,000 C $ 20,400 F Variable cost E $ 64,480 Contribution Margin $ 1,400 U D Fixed cost F $ 5,080 Operating income $ 15,200 The sales volume variance in terms of operating income is: 2. Distill Company manufactures only one product and uses a standard cost system. During the past month, manufacturing operations for the company had the following variances: direct labor rate variance = $45,600 favorable; direct labor efficiency variance = $76,000 unfavorable. Distill allows 4 standard direct labor hours per unit produced, and its standard direct labor hourly pay rate is $50. During the month, the company used 20% more direct labor hours than the standard allowed for the output achieved. What was the direct labor…

Please help this question general accounting

Chapter 3 Solutions

GEN COMBO LL FUNDAMENTALS OF FINANCIAL ACCOUNTING; CONNECT ACCESS CARD

Ch. 3 - Prob. 1Q Ch. 3 - When accounting was developed in the 14th and 15th...Ch. 3 - Define accrual basis accounting and contrast it...Ch. 3 - Prob. 4Q Ch. 3 - What two questions are answered by the core...Ch. 3 - Prob. 6Q Ch. 3 - What is a performance obligation?Ch. 3 - How do you report revenue from a contract that...Ch. 3 - Explain the expense recognition principle...Ch. 3 - Explain why stockholders equity is increased by...

Ch. 3 - Explain why revenues are recorded as credits and...Ch. 3 - Complete the following table by entering either...Ch. 3 - Complete the following table by entering either...Ch. 3 - Prob. 14Q Ch. 3 - Prob. 15Q Ch. 3 - What is the difference between Accounts Receivable...Ch. 3 - What is the difference between Accounts Payable...Ch. 3 - For each of the following situations, indicate...Ch. 3 - Prob. 19Q Ch. 3 - Which of the following items is not a specific...Ch. 3 - Which of the following accounts normally has a...Ch. 3 - Prob. 3MC Ch. 3 - Which of the following would the core revenue...Ch. 3 - If a company incorrectly records a payment as an...Ch. 3 - Prob. 6MC Ch. 3 - Prob. 7MC Ch. 3 - Which account is least likely to be debited when...Ch. 3 - Webby Corporation reported the following amounts...Ch. 3 - Which of the following is the entry to be recorded...Ch. 3 - Identifying Performance Obligations Lakeside...Ch. 3 - Prob. 2ME Ch. 3 - Identifying Accrual Basis Revenues The following...Ch. 3 - Identifying Accrual Basis Expenses The following...Ch. 3 - Recording Accrual Basis Revenues For each of the...Ch. 3 - Recording Accrual Basis Expenses For each of the...Ch. 3 - Prob. 7ME Ch. 3 - Prob. 8ME Ch. 3 - Prob. 9ME Ch. 3 - Prob. 10ME Ch. 3 - Identifying Accrual Basis Expenses The following...Ch. 3 - Prob. 12ME Ch. 3 - Recording Accrual Basis Expenses For each of the...Ch. 3 - Prob. 14ME Ch. 3 - Preparing Accrual Basis Journal Entries for...Ch. 3 - Preparing Accrual Basis Journal Entries for...Ch. 3 - Preparing Accrual Basis Journal Entries and...Ch. 3 - Determining the Accounting Equation Effects of...Ch. 3 - Prob. 19ME Ch. 3 - Preparing an Income Statement and Calculating Net...Ch. 3 - Preparing Financial Statements from a Trial...Ch. 3 - Preparing an Income Statement and Calculating Net...Ch. 3 - Calculating and Interpreting Net Profit Margin...Ch. 3 - Calculating and Interpreting Net Profit Margin...Ch. 3 - Matching Definitions with Terms Match each...Ch. 3 - Matching Definitions with Terms Match each...Ch. 3 - Identifying Performance Obligations and Timing...Ch. 3 - Identifying Accrual Basis Revenues According to...Ch. 3 - Identifying Accrual Basis Revenues According to...Ch. 3 - Identifying Accrual Basis Expenses Under accrual...Ch. 3 - Identifying Accrual Basis Expenses Under accrual...Ch. 3 - Determining Accounting Equation Effects and Net...Ch. 3 - Determining Accounting Equation Effects and Net...Ch. 3 - Recording Journal Entries and Determining Net...Ch. 3 - Prob. 11E Ch. 3 - Recording Journal Entries and Determining Net...Ch. 3 - Recording and Posting Accrual Basis Journal...Ch. 3 - Analyzing Transactions from the Perspectives of...Ch. 3 - Prob. 15E Ch. 3 - Determining Accounting Equation Effects of Several...Ch. 3 - Preparing Journal Entries For each of the...Ch. 3 - Prob. 18E Ch. 3 - Creating an Unadjusted Trial Balance Based on the...Ch. 3 - Inferring Transactions, Creating Financial...Ch. 3 - Determining the Effects of Various Transactions EZ...Ch. 3 - COACHED PROBLEMS Recording Nonquantitative Journal...Ch. 3 - Prob. 2CP Ch. 3 - Prob. 3CP Ch. 3 - Prob. 4CP Ch. 3 - Prob. 1PA Ch. 3 - Recording Journal Entries Diana Mark is the...Ch. 3 - Analyzing the Effects of Transactions Using...Ch. 3 - Prob. 4PA Ch. 3 - Prob. 1PB Ch. 3 - Prob. 2PB Ch. 3 - Analyzing the Effects of Transactions Using...Ch. 3 - Analyzing, Journalizing, and Interpreting Business...Ch. 3 - Prob. 1COP Ch. 3 - Finding Financial Information Refer to the...Ch. 3 - Comparing Financial Information Refer to the...Ch. 3 - Prob. 4SDC Ch. 3 - Ethical Decision Making: A Mini-Case Mike Lynch is...Ch. 3 - Accounting for Business Operations Starting in...

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

The journal entries of each transaction under accrual basis expenses.

Solution Summary: The author explains the accounting equation, which implies the relationship between the assets, liabilities, and the stockholders equity.

Concept explainers

Videos

To prepare: The journal entries of each transaction under accrual basis expenses.

Want to see the full answer?

Chapter 3 Solutions