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Midterm Review

This review covers various transactions and journalizing in accounting, including receiving cash, paying cash, transactions on account, revenue transactions, balance sheet preparation, analyzing transactions, journalizing transactions, and posting to a general ledger.

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Midterm Review

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  1. Midterm Review Accounting I

  2. CHAPTER 1 Starting a Proprietorship

  3. THE ACCOUNTING EQUATION Lesson 1-1, page 7

  4. RECEIVING CASH Transaction 1 August 1. Received cash from owner an an investment, $10,000.00. Lesson 1-2, page 9

  5. PAYING CASH Transaction 2 August 3. Paid cash for supplies, $1,577.00. Transaction 3 August 4. Paid cash for insurance, $1,200.00. Lesson 1-2, page 10

  6. TRANSACTIONS ON ACCOUNT Transaction 4 August 7. Bought supplies on account from Ling Music Supplies, $2,720.00. Transaction 5 August 11. Paid cash on account to Ling Music Supplies, $1,360.00. Lesson 1-2, page 11

  7. CHAPTER 2 Starting a proprietorship: Changes that affect owner’s equity

  8. REVENUE TRANSACTIONS Transaction 6 August 12. Received cash from sales, $325.00. Transaction 7 August 12. Sold services on account to Kids Time, $200.00. Lesson 2-1, page 26

  9. BALANCE SHEET PREPARATION 1 2 3 4 6 5 7 8 Lesson 2-2, page 30

  10. CHAPTER 3 Analyzing Transactions into debit and credit parts

  11. PAID CASH FOR AN EXPENSE August 12. Paid cash for rent, $250.00. 2 2 1 4 3 1 1. Rent Expense and Cash are affected. 4 2. Cash is an asset. RentExpense is an expense account that affects owner’s equity. 3 3 3. Assets are decreased. Owner’s equity is decreased; expenses are increased. 4. Rent Expense is debited. Cash is credited. Lesson 3-3, page 53

  12. CHAPTER 4Journalizing Transactions

  13. Journal Source Documents CONCEPT: Objective EvidenceWhen a source document is prepared for each transaction. Encore Music Uses five source documents Checks Sales invoices Receipts Calculator tape memorandums

  14. STEPS- JOURNALIZING • Step 1: Date-write the date • Step 2: Debit • Step 3 Credit • Step 4 Source Document

  15. 1 2 4 2 3 PAID CASH FOR SUPPLIES 1. Write the date. 2. Debit Supplies. 3. Credit Cash. 4. Write the source document number. Lesson 4-1, page 70

  16. Prepaid Insurance Cash PAID CASH FOR INSURANCE August 4. Paid cash for insurance, $1,200.00. Check No. 2. 1. Which accounts are affected? Prepaid Insurance Cash Debit Normal Balance 1,200.00 ↑ 2. How is each account classified? Prepaid Insurance is as asset account. Cash is as asset account. 3. How is each classification changed? Assets are increased. Assets are decreased. 1,200.00 Debit Normal Balance ↑ 4. How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. Lesson 4-2, page 72

  17. 2 PAID CASH FOR INSURANCE (continued) August 4. Paid cash for insurance, $1,200.00. Check No. 2. 3 1 4 1. Write the date. 2. Debit Prepaid Insurance. 3. Credit Cash. 4. Write the source document number. Lesson 4-2, page 72

  18. Accts. Pay.—Ling Music Supplies Supplies BOUGHT SUPPLIES ON ACCOUNT August 7. Bought supplies on account from Ling Music Supplies, $2,720.00. Memorandum No. 1. 1. Which accounts are affected? Supplies Accounts Payable—Ling Music Supplies Debit Normal Balance 2,720.00 2. How is each account classified? Supplies is an asset account. Accts. Pay.—Ling Music Suppliesis a liability account. ↑ 3. How is each classification changed? Assets are increased. Liabilities are increased. Credit Normal Balance 2,720.00 ↑ 4. How is each amount entered in the accounts? Assets increase on the debit side. Liabilities increase on the credit side.

  19. 2 3 BOUGHT SUPPLIES ON ACCOUNT (continued) August 7. Bought supplies on account from Ling Music Supplies, $2,720.00. Memorandum No. 1. 1 4 1. Write the date. 2. Debit Supplies. 3. Credit Accounts Payable—Ling Music Supplies. 4. Write the source document number.

  20. 3 RECEIVED CASH FROM SALES (continued) August 12. Received cash from sales, $325.00. Tape No. 12. 1 2 4 1. Write the date. 2. Debit Cash. 3. Credit Sales. 4. Write the source document number. Lesson 4-3, page 76

  21. 2 SOLD SERVICES ON ACCOUNT (continued) August 12. Sold services on account to Kids Time, $200.00. Sales Invoice No. 1. 1 4 3 1. Write the date. 2. Debit Cash. 3. Credit Sales. 4. Write the source document number. Lesson 4-3, page 77

  22. 4 RULING A JOURNAL PAGE 1 5 2 3 1. Rule a single line. 2. Write the date. 3. Write Carried Forward. 4. Write each column total. 5. Rule double lines. Lesson 4-4, page 83

  23. CHAPTER 5 Posting to a general ledger

  24. RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM Lesson 5-1, page 98

  25. You should make a numbering system for your chart of accounts. • A block of numbers is usually assigned to each of the categories that make up the chart of accounts and blank numbers are left at the end for additional accounts to be added in the future. • As a part of the accounting cycle, the chart of accounts is used in journal transactions. There are five categories on the chart of accounts. • Five Categories on the Chart of Accounts • Assets • Liabilities • Owner's Equity • Revenue • Expenses https://www.thebalance.com/develop-the-chart-of-accounts-for-your-small-business-392997

  26. CHART OF ACCOUNTS Lesson 5-1, page 99

  27. 1 2 OPENING AN ACCOUNT IN A GENERAL LEDGER 1. Write the account title. 2. Write the account number. Lesson 5-1, page 101

  28. 1 5 3 4 2 POSTING A SECOND AMOUNT TO AN ACCOUNT 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4. Write the new account balance. 5. Write the account number in the Post. Ref. column of the journal. Lesson 5-2, page 104

  29. CHECK MARKS SHOW THAT AMOUNTS ARE NOT POSTED Check mark indicates that amounts ARE NOT posted individually. Check marks indicate that general amount column totals ARE NOT posted. Lesson 5-3, page 107

  30. 3 1 5 4 2 POSTING THE TOTAL OF THE SALES CREDIT COLUMN 1. Write the date. 2. Write the journal page number. 3. Write the column total in the Credit amount column. 4. Write the new account balance. 5. Return to the journal and write the account number in parentheses. Lesson 5-3, page 108

  31. 1 5 3 4 2 POSTING THE TOTAL OF THE CASH DEBIT COLUMN 1. Write the date. 2. Write the journal page number. 3. Write the column total in the Debit amount column. 4. Write the new account balance. 5. Return to the journal and write the account number in parentheses. Lesson 5-3, page 109

  32. JOURNAL PAGE WITH POSTING COMPLETED Lesson 5-4, page 112

  33. CHAPTER 6 Cash Control Systems

  34. BLANK ENDORSEMENT, SPECIAL ENDORSEMENT, AND RESTRICTIVE ENDORSEMENT Blank Endorsement Special Endorsement Restrictive Endorsement Lesson 6-1, page 127

  35. COMPLETED CHECK STUB AND CHECK 1 2 7 3 4 8 9 10 11 12 5 6 Preparing checks Preparing check stubs 7. Write the date. 1. Write the amount of the check. 8. Write to whom the check is to be paid. 2. Write the date of the check. 3. Write to whom the check is to be paid. 9. Write the amount in figures. 10. Write the amount in words. 4. Record purpose of the check. 11. Write the purpose of the check. 5. Write the amount of the check. 6. Calculate the new account balance. Lesson 6-1, page 128-129 12. Sign the check.

  36. ✓ RECORDING A VOIDED CHECK 4 1 2 3 5 1. Record the date. 2. Write the word VOID in the account title. 3. Write the check number. 4. Place a check mark in the Post. Ref. column. 5. Place a dash in the Cash Credit column. Lesson 6-1, page 129

  37. 10 BANK STATEMENT RECONCILIATION 1. Date 1 2. Check Stub Balance 2 5 3. Service Charge 3 6 4. Adjusted Check Stub Balance 7 8 5. Bank Statement Balance 6. Outstanding Deposits 9 4 7. Subtotal 8. Outstanding Checks 9. Adjusted Bank Balance Lesson 6-2, page 132 10. Compare Adjusted Balances

  38. JOURNALIZING A BANK SERVICE CHARGE 1 2 4 3 1. Write the date. 2. Debit Miscellaneous Expense. 3. Credit Cash. 4. Write the source document number. Lesson 6-2, page 134

  39. Accounts Rec.—Learn N Play Cash JOURNALIZING A DISHONORED CHECK November 29. Received notice from the bank of a dishonored check from Learn N Play, $35.00, plus $15.00 fee; total, $50.00. Memorandum No. 55. 1. Which accounts are affected? Accounts Receivable—Learn N Play Cash Debit Normal Balance 50.00 ↑ 2. How is each account classified? Accounts Receivable—Learn N Play is an asset account. Cash is an asset account. Debit Normal Balance 3. How is each classification changed? Assets are increased. Assets are decreased. 50.00 ↑ 4. How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. Lesson 6-3, page 137

  40. 2 JOURNALIZING A DISHONORED CHECK 4 3 1 1. Write the date. 2. Debit Accounts Receivable—Learn N Play. 3. Credit Cash. 4. Write the source document number. Lesson 6-3, page 137

  41. Petty Cash Cash ESTABLISHING A PETTY CASH FUND August 17. Paid cash to establish a petty cash fund, $200.00. Check No. 8. 1. Which accounts are affected? Petty Cash Cash Debit Normal Balance 200.00 ↑ 2. How is each account classified? Petty Cash is an asset account. Cash is an asset account. Debit Normal Balance 3. How is each classification changed? Assets are increased. Assets are decreased. 200.00 ↑ 4. How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. Lesson 6-4, page 141

  42. 2 ESTABLISHING A PETTY CASH FUND 4 3 1 1. Write the date. 2. Debit Petty Cash. 3. Credit Cash. 4. Write the source document number. Lesson 6-4, page 141

  43. 2 REPLENISHING PETTY CASH 4 3 1 1. Write the date. 2. Debit Miscellaneous Expense and Advertising Expense. 3. Credit Cash. 4. Write the source document number. Lesson 6-4, page 143

  44. CHAPTER 7 Work sheet for a service business

  45. PREPARING A TRIAL BALANCE ON A WORK SHEET 2 1. Account Titles 1 2. Account Balances 3. Single Rule 4. Add Totals 5. Write Totals 6. Double Rule 3 4 & 5 6 Lesson 7-1, page 157

  46. 3 SUPPLIES ADJUSTMENT ON A WORK SHEET 2 1 1. Write the debit amount. 2. Write the credit amount. 3. Label the two parts of this adjustment with a small letter a in parentheses, (a). Lesson 7-2, page 161

  47. 3 PREPAID INSURANCE ADJUSTMENT ON A WORK SHEET 2 1 1. Write the debit amount. 2. Write the credit amount. 3. Label the two parts of this adjustment with a small letter b in parentheses, (b). Lesson 7-2, page 162

  48. 1 2 3 EXTENDING BALANCE SHEET ACCOUNT BALANCES ON A WORK SHEET 1. Debit Balances without Adjustments 2. Debit Balances with Adjustments 3. Credit Balances without Adjustments Lesson 7-3, page 165

  49. 2 3 EXTENDING INCOME STATEMENT ACCOUNT BALANCES ON A WORK SHEET 1 1. Sales Balance 2. Expense Balances without Adjustments 3. Expense Balances with Adjustments Lesson 7-3, page 166

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