Transcript Lesson 14-1

Chapter 14
Accounting 1
Distributing Corporate
Earnings to Stockholders
CENTURY 21 ACCOUNTING © Thomson/South-Western
2
STOCKHOLDERS’ EQUITY ACCOUNTS
USED BY A CORPORATION
3110
3120
3130
3140
(3000) STOCKHOLDERS’ EQUITY
Capital Stock
Retained Earnings
Dividends
Income Summary
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 405
3
DECLARING A DIVIDEND
page 406
December 15. Hobby Shack’s board of directors declared a
quarterly dividend of $2.00 per share; capital stock issued is 2,500
shares; total dividend, $5,000.00. Date of payment is January 15.
Memorandum No. 79.
2
4
3
1
5
1. Write the date.
2. Write the title of the account
debited.
3. Write the memorandum number.
CENTURY 21 ACCOUNTING © Thomson/South-Western
6
4. Write the debit amount.
5. Write the title of the account
credited.
6. Write the credit amount.
4
PAYING A DIVIDEND
page 407
January 15. Paid cash for quarterly dividend declared December
15, $5,000.00. Check No. 379.
1
1.
2.
3.
4.
5.
2
3
4
Write the date.
Write the account title.
Write the check number.
Write the debit account.
Write the credit amount.
CENTURY 21 ACCOUNTING © Thomson/South-Western
5
LESSON 14-2
Beginning an 8-Column
Work Sheet for a
Merchandising Business
CENTURY 21 ACCOUNTING © Thomson/South-Western
6
RECORDING A TRIAL BALANCE ON A
WORK SHEET
1
1. Account title
2. Account balance
3. Total, prove, and
rule the debit and
credit columns
page 410
2
3
CENTURY 21 ACCOUNTING © Thomson/South-Western
7
ANALYZING AND RECORDING SUPPLIES
ADJUSTMENTS
Adj. (a)
Dec. 31 Bal.
(Adj Bal.
Adj. (b)
Dec. 31 Bal.
(Adj Bal.
Supplies Expense—Office
2,730.00
Supplies—Office
3,480.00 Adj. (a)
750.00)
2,730.00
Supplies Expense—Store
2,910.00
Supplies—Store
3,944.00 Adj. (b)
1,034.00)
CENTURY 21 ACCOUNTING © Thomson/South-Western
2,910.00
page 411
8
RECORDING SUPPLIES ADJUSTMENTS
ON A WORK SHEET
page 412
3
2
3
1
1. Write the debit amounts in the Adjustments Debit column.
2. Write the credit amounts in the Adjustments Credit column.
3. Label the two parts of the Supplies—Office adjustment with small letter
a and small letter b in parentheses.
CENTURY 21 ACCOUNTING © Thomson/South-Western
9
ANALYZING AND RECORDING A PREPAID
page 413
INSURANCE ADJUSTMENT
3
1
3
2
1. Enter the amount of insurance used
in the Adjustments Credit column.
2. Enter the same amount in the
Adjustments Debit column.
3. Label the two parts of the
adjustment with a small letter c in
parentheses.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 14-3
Planning and Recording a
Merchandise Inventory
Adjustment
CENTURY 21 ACCOUNTING © Thomson/South-Western
11
MERCHANDISE INVENTORY
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 415
12
ANALYZING AND RECORDING A MERCHANDISE
INVENTORY ADJUSTMENT
page 416
3
2
3
1
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this
adjustment with a small letter d
in parentheses.
CENTURY 21 ACCOUNTING © Thomson/South-Western
ANALYZING AN ADJUSTMENT WHEN ENDING
MERCHANDISE INVENTORY IS GREATER THAN
BEGINNING MERCHANDISE INVENTORY
Jan. 1 Bal.
Adj. (d)
(New Bal.
Merchandise Inventory
294,700.00
4,200.00
298,900.00)
Income Summary
Adj. (d)
CENTURY 21 ACCOUNTING © Thomson/South-Western
4,200.00
13
page 417
LESSON 14-4
Planning and Recording an
Allowance for Uncollectible
Accounts Adjustment
CENTURY 21 ACCOUNTING © Thomson/South-Western
15
ALLOWANCE METHOD OF RECORDING LOSSES
page 419
FROM UNCOLLECTIBLE ACCOUNTS
CENTURY 21 ACCOUNTING © Thomson/South-Western
16
ESTIMATING UNCOLLECTIBLE ACCOUNTS
page 420
EXPENSE
Total Sales
on Account
×
Percentage
=
Estimated
Uncollectible
Accounts
Expense
$124,500.00
×
1%
=
$1,245.00
CENTURY 21 ACCOUNTING © Thomson/South-Western
17
ANALYZING AND RECORDING AN ADJUSTMENT
page 421
FOR UNCOLLECTIBLE ACCOUNTS EXPENSE
3
1
3
2
1. Enter the estimated uncollectible
amount.
2. Enter the same amount in the
Adjustments Debit column.
3. Label the two parts with a small
letter e in parentheses.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 14-5
Planning and Recording
Depreciation Adjustments
CENTURY 21 ACCOUNTING © Thomson/South-Western
19
CALCULATING DEPRECIATION EXPENSE
page 424
AND BOOK VALUE (continued on next slide)
1. Subtract the asset’s estimated salvage value from original cost.
2. Divide the estimated total depreciation expense by the years of
estimated useful life.
–
Estimated
Salvage Value
=
Estimated Total
Depreciation
Expense
–
$250.00
=
$1,000.00 1
Estimated Total
Depreciation
Expense
÷
Years of
Estimated
Useful Life
=
Annual
Depreciation
Expense
$1,000.00
÷
5
=
$200.00
Original
Cost
$1,250.00
CENTURY 21 ACCOUNTING © Thomson/South-Western
2
20
CALCULATING DEPRECIATION EXPENSE
AND BOOK VALUE (continued from previous slide) page 424
20X2
Accumulated
Depreciation
+
20X3
Depreciation
Expense
=
20X3
Accumulated
Depreciation
$400.00
+
$200.00
=
$600.00
Original Cost
–
Accumulated
Depreciation
=
Ending
Book Value
$1,250.00
–
$600.00
=
$650.00
CENTURY 21 ACCOUNTING © Thomson/South-Western
21
ANALYZING AND RECORDING ADJUSTMENTS
FOR DEPRECIATION EXPENSE
page 425
3
2
3
1
1. Write the debit amounts.
2. Write the credit amounts.
3. Label the adjustments.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 14-6
Calculating Federal
Income Tax and
Completing a Work Sheet
CENTURY 21 ACCOUNTING © Thomson/South-Western
23
FEDERAL INCOME TAX EXPENSE
ADJUSTMENT
Total of Income Statement Credit column
Less total of Income Statement Debit column
before federal income tax
Equals Net Income before Federal Income Tax
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 427
$ 500,253.10
–396,049.91
$ 104,203.19
24
CALCULATING FEDERAL INCOME TAX
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 428
25
RECORDING THE FEDERAL INCOME TAX
page 429
ADJUSTMENT
3
1
1
1. Calculate the amount
of federal income tax
expense adjustment.
2
3
2. Total and rule the Adjustments
columns.
3. Extend account balances.
CENTURY 21 ACCOUNTING © Thomson/South-Western
26
COMPLETING A WORK SHEET
page 430
1
1
2
4
1.
2.
3.
4.
5.
5
Total the Income Statement and Balance Sheet columns.
Calculate and enter the net income after federal income tax.
Extend the net income amount.
Calculate the column totals.
Rule double lines.
CENTURY 21 ACCOUNTING © Thomson/South-Western
3
27
A COMPLETED 8-COLUMN
WORK SHEET
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 432
28
A 10-COLUMN WORK SHEET
1
2
3
page 434-435
5
4
6
1.
2.
3.
4.
Trial balance
Adjustments
Extend adjusted balances
Total, prove, and rule
CENTURY 21 ACCOUNTING © Thomson/South-Western
5. Extend balances
6. Calculate net income; total,
prove and rule
29
Chapter 14 Calendar
 March 19 – chapter lecture (with partner), Aplia Study Guide parts
1, 2, and 3 (with partner), Application 14-1 (with partner)
 March 23 – Applications 14-2, 14-3, 14-4 (with partner)
 March 25 – Applications 14-5, 14-6 (with partner)
 March 27 – Application 14-8 (alone)
 March 31 – Chapter 14 test (alone or averaged with your partner)
CENTURY 21 ACCOUNTING © Thomson/South-Western