Journal Entry : It means recording of financial data related to business transactions in a journal in a manner so that debit equals credit. They provide an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health. Rules of Journal Entry: To increase the balance of account one needs to debit assets, expenses, losses and credit all the liabilities, revenues and gains including capital. To decrease the balance of account credit all assets, expenses, losses and debit all liabilities, revenues and gains including capital. Perpetual Inventory System: It is a inventory system wherein the accounts related to inventory are updated on each purchase and sale happening. Quantities of inventory are updated on continuous basis. This can be done by integrating the inventory system to order entry and to the retail sale point of system. Gross Method: Under this method, all the purchases are recorded in the books of account without taking into account the trade discount, returns and allowances. T he purchases are to be recorded at full cost. General ledger: General ledger includes all the accounts for recording of various transactions in relation to income, expenses, assets, liabilities and owner’s equity. It is backbone of any accounting software. To prepare: Journal entries in the books of Company L.

Question

Want to see the full answer?

Answer 1

Question

Chapter 4, Problem 2GLP

To determine

Journal Entry:

It means recording of financial data related to business transactions in a journal in a manner so that debit equals credit. They provide an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

To increase the balance of account one needs to debit assets, expenses, losses and credit all the liabilities, revenues and gains including capital. To decrease the balance of account credit all assets, expenses, losses and debit all liabilities, revenues and gains including capital.

Perpetual Inventory System:

It is a inventory system wherein the accounts related to inventory are updated on each purchase and sale happening. Quantities of inventory are updated on continuous basis. This can be done by integrating the inventory system to order entry and to the retail sale point of system.

Gross Method:

Under this method, all the purchases are recorded in the books of account without taking into account the trade discount, returns and allowances. T
he purchases are to be recorded at full cost.

General ledger:

General ledger includes all the accounts for recording of various transactions in relation to income, expenses, assets, liabilities and owner’s equity. It is backbone of any accounting software.

To prepare: Journal entries in the books of Company L.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Required information [The following information applies to the questions displayed below.] Kitimat Company manufactures winter hats that sell for $42 per unit. The following information pertains to the company's first year of operations in which it produced 40,100 units and sold 37,600 units. Variable costs per unit: Manufacturing: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 16 LA LA LA LA $ $ 6612 $401,000 $247,000 4. What is the company's operating income under variable costing?

Do fast answer of this general accounting question

Using the high-low method, estimate a cost formula for power cost. ??