132A 132B GA T CH06 INT 140092 - Amazon S3 · Math Skill Practice, pp. 144, 145 ... Exercising...

Accounting

Accounting

GlencoeTE Teacher Edition

mheducation.com/prek-12

Guerrieri

Haber

Hoyt

Turner

SCS_T3_ACCOUNTING_TE_COV_140092.indd 1 1/8/16 10:52 AM

CHAPTER 6 • PLANNING GUIDE

SECTION RESOURCESSection College & Career Readiness Professional Development

SECTION 6.1 THE ACCOUNTING CYCLE Reading Strategy, p. 135Writing Support, pp. 136, 137Critical Thinking, pp. 135, 136, 137Math Skill Practice, p. 136

Connect to History, p. 136

The accounting cycle is a series of steps done in each accounting period to keep records in an orderly fashion.

SECTION 6.2 RECORDING TRANSACTIONS IN THE GENERAL JOURNAL Critical Thinking, pp. 139, 140, 141, 142,

143, 144, 146, 147, 148, 149Differentiated Instruction, pp. 140, 145 Reading Strategy, pp. 139, 142, 144, 146, 147, 148, 150, 151Writing Support, pp. 142, 148, 150, 151Math Skill Practice, pp. 144, 145, 146, 147, 150

Extended Skill Practice, pp. 141, 143, 144, 145, 148, 150Extending the Content, pp. 146, 147, 149Common Mistakes, p. 15121st Century Skills, p. 162Spotlight on Personal Finance, p. 163H.O.T Audit, p. 163

You can use the general journal to record all the transactions of a business.

PACING YOUR LESSONS

Chapter Introduction Section 1 Section 2 Chapter Assessment

1 period 1 period 2 periods 1 period

*This pacing guide is based on a traditional 36-week course.

132A Chapter 6

132A_132B_GA_T_CH06_INT_140092.indd 132A132A_132B_GA_T_CH06_INT_140092.indd 132A 3/18/15 12:00 PM3/18/15 12:00 PM

PLANNING GUIDE • CHAPTER 6

PROFESSIONALDEVELOPMENT

Targeted professional development is correlated throughout the textbook. The McGraw-Hill Professional Development Mini Clip Video Library provides teaching strategies to strengthen academic and learning skills. Log on to connect.mheducation.com.

In this Chapter, you will fi nd these Mini Clips:• Reading: Strategic Readers, p. 137• Math: Classroom and Instructional Management, p. 137• ELL: Direct Vocabulary Instruction, p. 144• Math: Multiple Approaches to Problem Solving, p. 146• Reading: Bridging Cultural Gaps, p. 149• ELL: Language Practice

*Highlighted blocks indicate areas covered in the chapter. Additional skills are also covered throughout the Teacher Edition.

Resources: Allocating Time Allocating Money Allocating Material and Facility Resources

Allocating Human Resources

Information:Acquiring and

Evaluating Information

Organizing and Maintaining Information

Interpreting and Communicating

Information

Using Computers to Process Information

Interpersonal Skills: Participating as a Member of a Team Teaching Others Serving Clients/

Customers Exercising Leadership Negotiating to Arrive at a Decision

Working With Cultural Diversity

Systems: Understanding Systems

Monitoring and Correcting Performance

Improving and Designing Systems

Technology: Selecting Technology Applying Technology to Task

Maintainingand Troubleshooting

Technology

21st Century Skills Correlations

Chapter 6 132B

132A_132B_GA_T_CH06_INT_140092.indd 132B132A_132B_GA_T_CH06_INT_140092.indd 132B 5/7/15 9:44 PM5/7/15 9:44 PM

FOCUS

The Night Agency established its reputation early with unconventional activities. The agency still promotes its “youthful energy,” but it has become an award-winning, highly regarded voice in interactive communication and social media. Its three founders laid a careful groundwork and planned for the success that helps the agency continue to grow.

Analyze Possible answer: Entrepreneurs starting an advertising agency would need to record a variety of expenses, including the costs of equipment, space rental or purchase, payment to employees, and various forms of advertising needed to make the agency known to potential consumers. They would also need to record income from investments and from customer payments.

FOCUS ON THE PHOTO Visual LiteracyPossible answer: Students should note that without complete accurate financial records, businesses do not know how much they have earned and spent. Ask: What are five business transactions that can happen in a workplace of your choice? Possible answer: Answers will vary, depending on the business. For example, a movie theater would have sales of food items, sales of movie tickets, food purchases, payment of fees to show movies, payment of rent or mortgage, etc. A clothing store would buy merchandise on credit, sell merchandise to customers, pay its liabilities to wholesalers, issue payroll checks, and pay mortgage or rent.

Th Ni h A bli h d i

REAL-WORLD Business Connection

132_134_GA_S_CH06_CO_140088.indd 133 2/13/15 9:32 AM

C H A P T E R REAL-WORLD Business Connection

FOCUS ON THE PHOTOWith numerous high-profi le clients and projects, the daily fi nancial transactions at a busy digital agency like The Night Agency can include everything from paying for advertising to hiring SEO specialists. Why is it important for any business to keep accurate records of daily transactions?

The Night AgencyEven advertising agencies need to advertise. New York City-based The Night Agency, founded by three Syracuse University graduates, enjoyed early success in 2004 on the streets and in the subways of New York with creative “guerilla-style” campaigns that earned plenty of media attention. Businesses called on The Night Agency for their digital advertising needs; the company has come through with innovative, award-winning campaigns.

Connect to the BusinessAccountants for The Night Agency rely on the activities of the accounting cycle to keep accounting records accurate and in order. The records are kept for a certain period of time, usually a year. Just as most school years do not begin in January, the 12-month accounting cycle can begin in any month, depending on the business.

AnalyzeIf you were just starting an advertising agency, what types of f inancial information would you record?

BIG IDEAEvery transaction you

have with a business is documented in some way.

Companies keep permanent records of transactions.

RECORDING TRANSACTIONS IN A GENERAL JOURNAL

6

132_134_GA_S_CH06_CO_140088.indd 132 2/13/15 9:31 AM

INTRODUCING CHAPTER 6

All business transactions have to be recorded. A company is responsible for keeping permanent records of their transactions. Ask students why permanent records are so important. Under what circumstances might a company need to access records that are years or even decades old?

BIG IDEA

132 Chapter 6

132_134_GA_T_CH06_CO_140092.indd 132132_134_GA_T_CH06_CO_140092.indd 132 3/18/15 11:59 AM3/18/15 11:59 AM

TEACH Previewing the Main IdeasUse these questions and activities at the beginning of the sections to focus on the Main Ideas.

SECTION 6.1 THE ACCOUNTING CYCLEAsk: How might a business prove that it earned money? Answers may include invoices or copies of receipts given. Tell students that companies keep documents as evidence of business transactions. The first step of the accounting cycle is collecting and verifying source documents.

SECTION 6.2 RECORDING TRANSACTIONS IN THE GENERAL JOURNALAsk: Why do people use journals? Journals are a way to keep track of daily activities, travels, expenses, calorie counts, and other things a person may find helpful or interesting to record. Tell students that they will learn how a business uses a journal to record transactions.

133

The

Nig

ht A

genc

y

132_134_GA_S_CH06_CO_140088.indd 133 2/13/15 9:32 AM132_134_GA_S_CH06_CO_140088.indd 132 2/13/15 9:31 AM


Chapter 6 133

132_134_GA_T_CH06_CO_140092.indd 133132_134_GA_T_CH06_CO_140092.indd 133 3/18/15 12:00 PM3/18/15 12:00 PM

Before You ReadBefore You Read

READING GUIDE

Main IdeaThe accounting cycle is a series of steps done in each accounting period to keep records in an orderly fashion. You can use the general journal to record all of the transactions of a business.

CHAPTER 6

The Essential Question How do businesses keep permanent records of transactions?

Concepts

C1 Explain the first three steps in the accounting cycle.(p. 135)

C2 Give and describe several examples of source documents. (p. 136)

Analysis

A3 Explain the purpose of journalizing. (p. 137)

A4 Apply information from source documents.(p. 139)

Procedures

P1 Describe the steps to make a general journal entry. (p. 140)

P2 Make general journal entries.(p. 140)

P3 Correct errors in general journal entries. (p. 151)

Chapter Objectives

134 Chapter 6 Recording Transactions in a General Journal

132_134_GA_S_CH06_CO_140088.indd 134 2/27/15 12:02 PM


FOCUS READING GUIDE

Before You Read

The Essential Question The essential question encourages students to inquire about the underlying purpose of accounting. Use the essential question as a discussion starter, emphasizing to students that there are no right or wrong answers.

Main IdeaHave students read the Main Idea in Before You Read. Ask: What happens if you don’t keep fi nancial records in an orderly fashion? Possible answers include wasted time, unpaid bills, and overdrawn accounts.

Chapter Objectives Have students review the objectives to set expectations for what they’ll learn in Chapter 6.

Connect to the Reading Guide Use the following questions to help students connect to the reading.1. What does the chapter title tell you?

Predict2. What do you already know about this

subject from personal experience? Activate Prior Knowledge

3. What have you learned about this in the earlier chapters? Make Connections

4. What gaps exist in your knowledge of this subject? Set a Purpose for Reading

134 Chapter 6

132_134_GA_T_CH06_CO_140092.indd 134132_134_GA_T_CH06_CO_140092.indd 134 3/18/15 12:00 PM3/18/15 12:00 PM

SECTION VOCABULARY

Content Vocabulary• accounting cycle

• source document

• invoice

• receipt

• memorandum

• check stub

• journal

• journalizing

• fiscal year

• calendar year

Academic Vocabulary• occurs

THE ACCOUNTING CYCLE SECTION 6.1

In earlier chapters you learned to use the accounting equation and T accounts to analyze business transactions. In this chapter you will learn how to record business transactions in a journal.

The Steps of the Accounting CycleWhat Is the Accounting Cycle?

The accounting period of a business is separated into activities called the accounting cycle. These activities help the business keep its accounting records in an orderly fashion. Take a look at Figure 6–1, which describes accounting activities and their sequence.

In this chapter you will use Steps 1, 2, and 3 of the accounting cycle:

1. Collect and verify source documents. 2. Analyze each transaction. 3. Journalize each transaction.

After studying Chapters 3 through 10, you will have covered the entire accounting cycle for a service business organized as a sole proprietorship.

4 4

5 5 6 6 7 7 8 8

9 9

Collect and verify source documents

Analyze eachtransaction

Journalizeeach transaction

Post to the ledger

Prepare a trial balance

Prepare a work sheet

Prepare financial statements

Journalize and post closing entries

Prepare a post-closing trial balance

INVOICE

RECEIPT

MEMORANDUM

LEDGER

GENERAL JOURNAL

TRIAL BALANCE

WORK SHEETINCOME

STATEMENTSTATEMENT OF

CHANGES INOWNER'S EQUITY

BALANCESHEET

POST-CLOSINGTRIAL BALANCE

GENERAL JOURNAL

LEDGER

ACCOUNT

DEBIT CREDIT

ACCOUNT

DEBIT CREDIT

22 3311

Figure 6–1 Steps in the Account ing Cycle with Steps 1, 2, 3 Highlighted

Section 6.1 The Accounting Cycle 135

135_152_GA_S_CH06_SEC_140088.indd 135 3/10/15 9:19 AM

C

R

SECTION 6.1

FOCUSBell Ringer • Creating Analogies: Have students

choose an activity they do every day, such as using their lockers. Ask students to write the steps they follow. Have volunteers share their steps. Make the point that accountants follow a set of steps to make the accounting system work.

Bell Ringer

TEACHR Reading Strategy

Activating Prior Knowledge Ask: A cycle is a sequence of events that occurs over and over. How have you heard the word cycle used? a cycle on a washing machine; the rotating wheels of a bicycle, etc. BL

C Critical ThinkingMaking Inferences Tell students to examine Figure 6-1. Ask: Why do you think an arrow points from Step 5 back to Step 1? Steps 1 through 5 occur many times throughout the accounting period—typically every day. Steps 6 through 9 occur only once in each accounting period. AL

PRETEACHING SECTION VOCABULARY

Content VocabularyGuide students in reading and discussing the content vocabulary terms. Ask these questions:What does the word cycle tell you about the steps in the accounting cycle? They are repeated in order.

How are the terms source document, invoice, receipt, memorandum, and check stub related? How is each different from the others?How is an accounting journal similar to a diary type of journal?What are the similarities and

differences between a fi scal year and a calendar year?

Academic VocabularyRead the following sentences to students. Ask them to use context clues to defi ne the academic vocabulary word in each sentence.

1. The celebration used to take place once a month, but now it occurs every week. takes place

2. The name of the payee should be indicated on this line of the check, but no name has been designated. indicated

Chapter 6 135

135_152_GA_T_CH06_SEC_140092.indd 135135_152_GA_T_CH06_SEC_140092.indd 135 3/18/15 12:01 PM3/18/15 12:01 PM

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents

Most business transactions take place during the daily operations of a busi-ness. In the course of one day, a business may pay its rent, place an ad in a local newspaper, contract to have a Web site created, pay its employees, sell products, and purchase new equipment. When a business transaction occurs, a paper is prepared as evidence of that transaction. This paper is a source document.

There are several types of source documents that can be prepared by hand, by computer, or by a machine. The type of source document prepared depends on the nature of the transaction. Figure 6–2 describes and illus-trates commonly used source documents.

InvoiceThe invoice lists specific information about a business transaction involving the buying or selling of an item on account. The invoice contains the date of the transaction; the quantity, description, and cost of each item; and the payment terms.

ReceiptA receipt is a record of cash received by a business. It indicates the date the payment was received, the name of the person or business from whom the payment was received, and the amount of the payment.

MemorandumA memorandum is a brief written message that describes a transaction that takes place within a business. A memorandum is often used if no other source document exists for the business transaction.

Check StubThe check stub lists the same information that appears on a check: the date written, the person or business to whom the check was written, and the amount of the check. The check stub also shows the balance in the checking account before and after each check is written.

St b

Dollars Cents

Balance brought forward

Add deposits

Total

Less this check

Balance carried forward

$

Date

To

For

20

25,000 00

25,000 00

250 00

24,750 00

No. 110250.00November 2 --Info-Systemsfax/modem

voice

TO

DATE:ORDER NO.:SHIPPED BY:

TERMS:

QTY. ITEM UNIT PRICE TOTAL

INVOICE NO. 479

Zip Delivery Service155 Gateway Blvd.Sacramento, CA 94230

KELLY’S OFFICE SUPPLIES354 Circle Drive. #150Santa Monica, CA 90405

3 Office Chairs $ 99.00 $ 297.00

Dec. 1, 20--150TruckPayable in 30 days

RECEIVED FROM $

DOLLARS

FOR

RECEIPT

RECEIVED BY

20 --

Greer's Market 200.00

Two hundred and no/100

Deliveries 11/26/20--

Crista Vargas

Nov. 26

No. 2

Zip Delivery Service155 Gateway Blvd.

Sacramento, CA 94230

TO:FROM:DATE:SUBJECT:

MEMORANDUM 1

I have contributed $25,000 from my personal savings to be deposited to the business, Zip Delivery Service.

Accounting ClerkCrista VargasOctober 1, 20--Contributed personal funds to the business



Figure 6–2 Source Documents


135_152_GA_S_CH06_SEC_140088.indd 136 2/13/15 9:33 AM 135_152_GA_S_CH06_SEC_140088.indd 137 2/13/15 9:33 AM

M

W

C

SECTION 6.1

TEACHW Writing SupportExpository Writing Tell students to write down three source documents they might use in their personal lives. Ask: What problems might arise if you did not keep source documents? Have students write a paragraph on the importance of keeping source documents for their personal records. Students might discuss keeping receipts to obtain a refund on a purchased item or to plan a monthly budget, keeping paycheck stubs to compare with the amount reported on the Form W-2. OL

C Critical ThinkingDrawing Conclusions Tell students to examine Figure 6-2. Ask: Would the buyer and seller use the identical invoice? Yes. The seller gives the invoice to the buyer but retains a copy for his or her records. BL

M Math Skill PracticeMaintaining a Checkbook Give students this scenario: Your checkbook balance is $965.00. You then deposit $250.55 into the account. You also write a check for $193.30. What is your new checking account balance? $965.00 � $250.55 � $193.30 � $1,022.25 OL

Connect to HistoryCCoonnnneeccttt tttoo HHHiiissttoorryyrr

136 Chapter 6



Reading: Strategic Readers Author Scott Paris discusses the characteristics of strategic readers.

135_152_GA_S_CH06_SEC_140088.indd 136 2/13/15 9:33 AM

The business owner, accountant, or accounting clerk (depending on the size of the business) uses source documents generated by business transactions to keep the records of the business. The accounting cycle starts by collecting and verifying the accuracy of source documents.

The Second Step in the Accounting Cycle: Analyzing Business Transactions

After collecting and verifying source documents, the second step in the accounting cycle can begin—analyzing information on the source docu-ments to determine the debit and credit parts of each transaction.

You have already learned how to analyze business transactions using the rules of debit and credit. When you learned to analyze transactions, you were given a description of each transaction, such as: Zip Delivery Service bought a computer system from Info-Systems Inc. for $3,000 and issued Check 101 in payment. On the job you will not get a description of the transaction. Instead, you must examine a source document to determine what occurred during a business transaction.

The Third Step in the Accounting Cycle: Recording Business Transactions in a Journal

You are now ready to apply information from source documents. The third step in the accounting cycle is to record the debit and credit parts of each business transaction in a journal. A journal is a record of the transactions of a business. Journals are kept in chronological order, that is, the order in which the transactions occur. The process of recording business transactions in a journal is called journalizing. Keeping a journal can be compared to keeping a diary in which all important events are written. A journal is the only place where complete details of a transaction, including both the debit and credit parts, are recorded. The journal is sometimes called the book of original entrybecause it is where transactions are first entered in the accounting system.

Reading Check Why are source documents necessary to a business?

The Accounting PeriodWhat Are the Two Types of Accounting Periods?

As discussed in Chapter 2, accounting records are summarized for a certain period of time, called an accounting period. An accounting period may be for any designated length of time, such as a month, a quar-ter, or a year. Most businesses use a year as their accounting period. An accounting period of 12 months is called a fiscal year. If the fiscal year for a business begins on January 1 and ends on December 31,it is called a calendar year accounting period. Many businesses start their accounting periods in months other than January. For example, department stores often have fiscal years that begin on February 1 and end on January 31 of the following year. School districts usually have fiscal years that begin on July 1 and end on June 30.

Section 6.1 The Accounting Cycle 137

135_152_GA_S_CH06_SEC_140088.indd 137 2/13/15 9:33 AM

W

C1

C2

SECTION 6.1

TEACHW Writing SupportParts of Speech Have students look up record in a dictionary. Ask them to write one sentence using the word as a verb and one sentence using it as a noun. You record transactions in a journal. In this usage the word is a verb, pronounced re-’cord. The journal is a record of transactions. In this usage the word is a noun, pronounced ’rec-ord. OL

C1 Critical ThinkingConnecting to Financial Literacy Remind students that accounting reports summarize information for a specifi c period. Ask: What accounting period do most individuals use in their personal lives? Most individuals use the calendar year because it is required for income tax reporting. OL

C2 Critical ThinkingMaking Inferences Point out that different kinds of businesses use different accounting periods. Ask: Why do school districts usually have a fi scal year running from July 1 to June 30? June usually marks the end of the school year. After June the school’s activity is at its lowest. Ask: Why do department stores typically have accounting periods that begin February 1 and end January 31? Business activity is at its lowest after the holiday rush and postholiday sales. OL

Reading Check

A source document is evidence of a transaction.

Chapter 6 137


ASSESSSECTION 6.1 ASSESSMENT RESOURCES To assess mastery of section content, assign the Chapter Study Guides and Working Papers Problems 6–1.

SECTION 6.1 ASSESSMENT ANSWERS

Reinforce the Main Idea 1. Collect and Verify Source Documents:

documents all transactions

2. Analyze Business Transactions: ensures correct accounts are used

3. Record Business Transactions in a Journal: provides an easy-to-use record

Math for AccountingNapkins $29.28; salt $9.57; paper plates $21.84; paper cups, medium $32.96; total $93.65 (amount to be used in the journal entry)

PROBLEM 611. JayMax Offi ce Supply2. Dario’s Accounting Services3. April 9, 20-- 4. 4795. Fax Machine6. $2997. Payable in 30 days

CLOSESynthesizing Write the following sentence on the board: Record the debit and credit amounts in a journal. Ask: Which step in the accounting cycle is associated with this activity? Step 3, Journalize each transaction.

SECTION 6.1

1. What is the fi rst step of the accounting cycle? Collect and verify source documents.

2. What is the second step? Analyze each transaction.

3. Where do you get the information used to analyze transactions? source documents

4. What is the third step of the accounting cycle? Journalize each transaction.

5. What is another name for the journal? book of original entryQU

IZ

135_152_GA_S_CH06_SEC_140088.indd 139 3/10/15 9:20 AM

Step Number Step DescriptionHow This Step Helps Organize

Business Records

After You Read

Math for AccountingGlen’s Catering received an invoice from Conover Restaurant Suppliers for the following supplies:• 6 cartons of napkins

at $4.88 per carton• 3 boxes of salt

packets at $3.19 per box

• 3 boxes of paper plates at $7.28 per box

• 4 boxes of medium paper cups at $8.24 per box

Calculate the total for each item on the invoice. Then calculate the total for all items.

PROBLEM 61 Analyzing a Source Document INSTRUCTIONS Analyze the invoice shown below and answer the following questions.

TO

DATE:ORDER NO.:SHIPPED BY:

TERMS:


INVOICE NO. 479

Darioís Accounting Services5821 Gulf Blvd.Naples, FL 33940

1 Fax Machine $ 299.00 $ 299.00

Apr. 9, 20--

TruckPayable in 30 days

554 Town SquareFort Myers, FL 33902

JAYMAX OFFICE SUPPLY

1. What is the name of the company providing the service or merchandise?2. What is the name of the business receiving the service or merchandise?3. What is the date of the invoice?4. What is the invoice number?5. What item was sold?6. What is the price for this item?7. What are the payment terms?

Reinforce the Main IdeaCreate a table similar to this one to describe how the first three steps of the accounting cycle help organize the records of a business.

SECTION 6.1 • ASSESSMENT


135_152_GA_S_CH06_SEC_140088.indd 138 2/27/15 11:59 AM

SEC TION 6.1

138 Chapter 6


FOCUSBell Ringer • Summarizing: Have students think

about the transactions analyzed in earlier chapters. Ask: What information did you gain? Students should include the six items shown in Figure 6-3.

Bell Ringer

TEACHC Critical Thinking

Making Inferences Refer students to Figure 6-3. Ask: Why is it important to follow this format when creating a journal entry? It is standardized and easy to follow. OL

R Reading StrategyReading Accounting Forms Draw students’ attention to the Description column in Figure 6-3. Ask: Where does the debit part of the entry begin? at the left edge of the column Ask: Where does the credit part begin? to the right of the debit part, indented one-half inch from the left edge OL

SECTION VOCABULARY

Content Vocabulary• general journal

Academic Vocabulary• affect

• manual

In Section 6.1 you learned about the first three steps in the accounting cycle. Let’s apply these steps to business transactions for Zip Delivery Service.

Recording a General Journal EntryHow Do You Record a General Journal Entry?

Many kinds of accounting journals are used in business. One of the most common is the general journal. As its name suggests, the general journalis an all-purpose journal in which all of the transactions of a business may be recorded. Figure 6–3 shows the general journal you will be using throughout the accounting cycle for Zip Delivery Service. The general journal has two amount columns. The first amount column, the amount column on the left, is used to record debit amounts. (Remember that debit means left.) The second amount column, the amount column on the right, is used to record credit amounts. (Remember that credit means right.) Look at Figure 6–3 to find where each component of a general journal entry appears.

GENERAL JOURNAL PAGE

1

2

3

4

5

1

2

3

4

5

DEBIT CREDITDESCRIPTIONDATEPOST. REF.

YearMonth 1 0 0 0 00

1 0 0 0 00Debited Account Name

Credited Account NameExplanation

Day

1 Date of the transaction

2 Name of the account debited 3 Amount of the debit

4 Name of the account credited 5 Amount of the credit

6 Source document referenceor an explanation

In Chapters 4 and 5, you learned a step-by-step method for analyzing business transactions. In this chapter you will learn to complete the journal entry for a business transaction in the same manner. Review the following steps before you continue.

RECORDING TRANSACTIONS IN THE GENERAL JOURNAL

SECTION 6.2

Figure 6–3 General Journal for Zip Delivery Service

Section 6.2 Recording Transactions in the General Journal 139

135_152_GA_S_CH06_SEC_140088.indd 139 3/10/15 9:20 AM

R

C

135_152_GA_S_CH06_SEC_140088.indd 138 2/27/15 11:59 AM

SECTION 6.2

Content VocabularyTo introduce the content vocabulary term, ask students these questions:What is a journal? What is an antonym of specialized? Based on these ideas, what do you think the vocabulary

term general journal means?Then have students compare their responses to the Glossary defi nition.

Academic VocabularyTell students that knowing the derivation, or origin, of words can

help us recall and understand their meaning. The word manual comes from a Latin word, manus, meaning “hand.” A manual system of journalizing transactions, then, is done by hand. Ask students to suggest

other contexts in which they use the word manual. How are those uses related to the derivation of the word?

PRETEACHING SECTION VOCABULARY

Chapter 6 139



Math: Classroom and Instructional Management Dr. Gilbert Cuevas discusses issues of classroom and instructional management

6. What is the complete entry in T-account form?

IdentifyClassify

�/�

T ACCOUNTS

4. Which account is debited? For what amount?5. Which account is credited? For what amount?

DEBIT-CREDIT RULE

1. Identify the accounts affected.2. Classify the accounts affected.3. Determine the amount of increase or decrease for each account

affected.

ANALYSIS

BUSINESS TRANSACTION ANALYSIS: Steps to Success

B u s i n e s s Tr a n s a c t i o n

7. What is the complete entry in general journal form?JOURNAL ENTRY

IdentifyClassify

�/�

4. Increases in asset accounts are recorded as debits. Debit Cash in Bank for $25,000.

5. Increases in the owner’s capital account are recorded as credits. Credit Crista Vargas, Capital for $25,000.

DEBIT-CREDIT RULE

1. The accounts Cash in Bank and Crista Vargas, Capital are affected.2. Cash in Bank is an asset account. Crista Vargas, Capital is an owner’s

equity account.3. Cash in Bank is increased by $25,000. Crista Vargas, Capital is

increased by $25,000.

ANALYSIS

On October 1 Crista Vargas took $25,000 from personal savings and deposited that amount to open a business checking account in the name of Zip Delivery Service, Memorandum 1.

B u s i n e s s Tr a n s a c t i o n 1

Use these steps to determine the debit and credit parts of each journal entry. Remember, it is always helpful to use T accounts to analyze transactions. After analyzing many transactions, you will find that you need these tools less and less to determine the debit and credit parts of a journal entry. After the complete entry is recorded, verify that the total debits and total credits are equal.

Now, let’s examine business transactions and their analysis for Zip Delivery Service.

TO: FROM: DATE: SUBJECT:

MEMORANDUM 1

I have contributed $25,000 from my personal savings for a deposit to the business, Roadrunner Delivery Service.

Accounting ClerkCrista VargasOctober 1, 20--Contributed personal funds to the business





C

SECTION 6.2


Synthesizing Refer students to the Business Transaction model at the top of the page. Tell students to look at the seven numbered steps. Ask: Which step represents the fi rst time the transaction is entered in the formal accounting records? Step 7 AL

D1 Diff erentiated Instruction

Logical-Mathematical Learning Have students read the Memorandum 1 explanation for Business Transaction 1. Ask: Which key words in the explanation indicate that the account Cash in Bank will be affected? “contributed $25,000 from my personal savings” Ask: Which words signal that Crista Vargas, Capital will be affected? “for a deposit to the business” OL


English Learners Obtain copies of source documents printed in other languages. Have students point out the similarities between those documents and the ones illustrated in students’ textbooks. As students identify similarities, use different color markers to highlight the same kind of information on different source documents (e.g., date, customer name, etc.). EL

D1

D2

140 Chapter 6


135_152_GA_S_CH06_SEC_140088.indd 140 2/13/15 9:34 AM

6. T ACCOUNTS

7. JOURNAL ENTRY

Look again at the general journal entry shown above. Notice that in the upper right-hand corner there is a line for the page number. Journal pages are numbered in consecutive order; that is, 1, 2, 3, and so on. When you fill one page with journal entries, go on to the next page. Be sure to properly number each new page.

Cash in Bank

Debit

25,000

Credit

Crista Vargas, Capital

Debit Credit

25,000

1. The accounts Office Equipment and Crista Vargas, Capital are affected.

2. Office Equipment is an asset account. Crista Vargas, Capital is an owner’s equity account.

3. Office Equipment is increased by $400. Crista Vargas, Capital is increased by $400.

On October 2 Crista Vargas took two telephones valued at $200 each from her home and transferred them to the business as office equipment, Memorandum 2.

6.T ACCOUNTS

4. Increases in asset accounts are recorded as debits. Debit Office Equipment for $400.

5. Increases in owner’s capital accounts are recorded as credits. Credit Crista Vargas, Capital for $400.

ANALYSIS Identify

Classify

�/�

DEBIT-CREDIT RULE


Office Equipment

Debit�

400

Credit�


Debit�

Credit�

400


1

2

3

4

1

2

3

4


1

20-- Oct.

Cash in Bank Crista Vargas, Owner’s Equity Memorandum 1

1

25 000 00

25 000 00


MEMORANDUM 2

I have contributed two telephones from my home to the business. The phones are valued at $200 each. Total contribution � $400.

Accounting ClerkCrista VargasOctober 2, 20--Contributed personal phones




135_152_GA_S_CH06_SEC_140088.indd 141 2/13/15 9:34 AM

SECTION 6.2

TEACHC1 Critical ThinkingContrasting For Business Transaction 1, have students trace the information in the T accounts back to the source document. Ask: Which information is used for T-account analysis? account debited and debit amount; account credited and credit amount Ask: Which information is not used for the T-account analysis? transaction date and description Ask: Is the T account a part of the accounting records? No, it is just a tool used for analysis. AL

C2 Critical ThinkingApplying Procedures Have students examine the general journal entry for Business Transaction 1. Ask: Why is Cash in Bank recorded before Crista Vargas, Capital? The debit part of the entry is always recorded fi rst. BL

C3 Critical ThinkingSeparating Parts Refer students to Business Transaction 2 and explain that the steps in the analysis model are not written as formal accounting records. They are simply tools to analyze transactions. Ask: Why is it useful to analyze business transactions before entering them in the formal accounting records? Debits and credits can be entered into their correct accounts without the chance of making mistakes that would become part of the permanent record. OL

Extended Skill PracticeJournalizing TransactionsGo to connect.mheducation.com for Demonstration Problem 6–1 for step-by-step practice recording an owner’s additional investment in the business.

C1

C2

C3

Chapter 6 141


7.

7.

JOURNAL ENTRY

1. The accounts Computer Equipment and Cash in Bank are affected.

2. Computer Equipment and Cash in Bank are asset accounts.

3. Computer Equipment is increased by $3,000. Cash in Bank is decreased by $3,000.

JOURNAL ENTRY

On October 4 Zip issued Check 101 for $3,000 to buy a computer system.

6.T ACCOUNTS

4. Increases in asset accounts are recorded as debits. Debit Computer Equipment for $3,000.

5. Decreases in asset accounts are recorded as credits. Credit Cash in Bank for $3,000.

ANALYSIS Identify

Classify

�/�

DEBIT-CREDIT RULE


Computer Equipment

Debit�

3,000

Credit�

Cash in Bank

Debit�

Credit�

3,000


8

9

10

11

8

9

10

11

DEBIT CREDITDESCRIPTIONDATEPOST.REF.

1

Computer EquipmentCash in Bank

Check 101

4 3 000 003 000 00


5

6

7

5

6

7


1

Oct. Office Equipment Crista Vargas, Capital Memorandum 2

2 400 00400 00

Dollars Cents


Add deposits

Total

Less this check


$

Date

To

For

20

25,000 00

25,000 00

3,000 00

22,000 00

No. 1013,000.00October 4 --Info-Systems Inc.computer



C

R

W

SECTION 6.2


Making Inferences Have students compare the journal entries in Business Transactions 1 and 2. Ask: What do you notice about the dates in these transactions? The fi rst entry includes the year; the second entry does not. Ask: What does this tell you about including the year in a general journal entry? The year is written only for the fi rst transaction recorded on each page. OL

R Reading StrategyPredicting For Business Transaction 3, have students cover everything except the fi rst sentence with a sheet of paper. Ask: What item was purchased? a computer Ask: What accounts are affected by the purchase? Computer Equipment, Cash in Bank Refer students to the chart of accounts on p. 82 as needed. BL

W Writing SupportExpository Writing Ask students to think of a time when something was not communicated properly because of hard-to-read writing. Ask: Why is it important to work neatly when journalizing transactions? Have students write a paragraph about the importance of writing clear journal entries. Responses might describe how entries with unclear numbers can cause errors that are carried forward throughout the accounting process. The journal entry is the fi rst place where information is entered, and errors made here will show up later. OL

142 Chapter 6


135_152_GA_S_CH06_SEC_140088.indd 142 2/13/15 9:34 AM

To separate the amounts to be paid to individual creditors, Zip uses a different account name for each creditor. The account name consists of Accounts Payable followed by the name of the creditor. You may have to abbreviate the name to fit it on one line of the journal. An acceptable abbreviation in the preceding journal entry is Accts. Pay.—Coast to Coast Auto.

Zip uses the same naming system for the amounts to be paid by individual customers. The account name consists of Accounts Receivablefollowed by the customer’s name.

1. The accounts Delivery Equipment and Accounts Payable—Coast to Coast Auto are affected.

2. Delivery Equipment is an asset account. Accounts Payable—Coast to Coast Auto is a liability account.

3. Delivery Equipment is increased by $12,000. Accounts Payable—Coast to Coast Auto is increased by $12,000.

7.JOURNAL ENTRY

On October 9 Zip bought a used truck on account from Coast to Coast Auto for $12,000, Invoice 200.

6.T ACCOUNTS

4. Increases in asset accounts are recorded as debits. Debit Delivery Equipment for $12,000.

5. Increases in liability accounts are recorded as credits. Credit Accounts Payable—Coast to Coast Auto for $12,000.

ANALYSIS Identify

Classify

�/�

DEBIT-CREDIT RULE


Debit Credit

12,000

Accounts Payable—Coast to Coast AutoDelivery Equipment

CreditDebit

12,000


11

12

13

14

11

12

13

14


1

Delivery Equipment Accts. Pay.—Coast to Coast Auto Invoice 200

9 12 000 0012 000 00

TO

DATE:ORDER NO.:

SHIPPED BY:TERMS:


INVOICE NO. 200


440 Lake DriveSacramento, CA 94230

1 Dodge Truck Used $ 12,000.00 $ 12,000.00

Oct. 9, 20--99674n/aInstallment

Coast to Coast Auto


135_152_GA_S_CH06_SEC_140088.indd 143 2/13/15 9:34 AM

SECTION 6.2

TEACHC1 Critical ThinkingApplying Procedures Have students look at Business Transaction 4. Ask: How would you know to debit an account named “Delivery Equipment” instead of an account named “Truck” or “Delivery Vehicle”? by referring to the chart of accounts Refer students to the chart of accounts on p. 82. Ask: If Zip wrote a check to repair a plumbing problem, which account would be debited? Maintenance Expense OL

C2 Critical ThinkingDifferentiating Have students list three different accounts that could be credited when a company acquires an asset. A different asset such as Cash in Bank, a liability such as Accounts Payable—Coast to Coast Auto, or the Owner’s Capital account AL

C3 Critical ThinkingMaking Inferences Have students explain why they think dollar signs are not used on accounting stationery. A sloppy dollar sign might be mistaken for a number. Ask: What problem might this cause? If a dollar sign is mistaken for a number, it will cause an error in the records. AL

Extended Skill PracticeJournalizing Transactions Go to connect.mheducation.com for Demonstration Problem 6–2 for step-by-step practice recording an asset purchase account.

C1

C2

C3

Chapter 6 143



ELL: Direct Vocabulary Instruction A teacher has students create vocabulary cards to build a personal dictionary.

1. The accounts AccountsReceivable—Green Company and Office Equip ment are affected.

2. Both accounts are asset accounts.3. Accounts Receivable—Green Company is increased by $200. Office

Equipment is decreased by $200.

7.JOURNAL ENTRY

On October 11 Zip sold one telephone on account to Green Company for $200, Memorandum 3.

6.T ACCOUNTS

4. Debit Accounts Receivable—Green Company for $200.5. Credit Office Equipment for $200.

ANALYSIS Identify

Classify�/�

DEBIT-CREDIT RULE


Office Equipment

Credit�

200

Debit�

Accounts Receivable—Green Company

Credit�

Debit�

200


14

15

16

17

14

15

16

17


1

Accts. Rec.—Green Company Office Equipment Memorandum 3

11

200 00

200 00

1. The accounts Accounts Payable—Coast to Coast Auto and Cash in Bank are affected.

2. Accounts Payable—Coast to Coast Auto is a liability account. Cash in Bank is an asset account.

3. Both accounts are decreased by $350.

On October 12 Zip mailed Check 102 for $350 as the first installment on the truck purchased from Coast to Coast Auto on October 9.

Identify

Classify

�/�



MEMORANDUM 3

Sold one telephone on account to Green Company for $200.

Accounting ClerkCrista VargasOctober 11, 20--Sold telephone



ANALYSIS

Dollars Cents


Add deposits

Total

Less this check


$

Date

To

For

20

22,000 00

22,000 00

350 00

21,650 00

No. 102350.00October 12 --Coast to Coast Autoinstallment on truck



C

R

M

SECTION 6.2


Reading Source Documents Have students examine the source document for Business Transaction 5. Ask: Which words on the source document indicate that Zip Delivery Service will receive money for the telephone in the future? on account BL

C Critical ThinkingDrawing Conclusions Ask: How does Zip Delivery Service earn revenue? from selling delivery services Ask: Why is the money from the sale of the telephone not considered revenue for the business? It is the sale of an asset. The sale of assets is generally not a major source of cash for a business because the business uses its assets to generate revenue. AL

M Math Skill PracticeCalculating a Loan Term In Business Transaction 6, Zip makes the fi rst payment on the truck. Ask: What is the total number of payments required to pay off the $12,000 purchase price of the truck? 34 payments of $350 and a last payment of $100 � $12,000 OL

Extended Skill PracticeJournalizing Transactions Go to connect.mheducation.com for Demonstration Problem 6–3 for step-by-step practice recording a payment on account.

144 Chapter 6


135_152_GA_S_CH06_SEC_140088.indd 144 2/13/15 9:34 AM

7.JOURNAL ENTRY

6.T ACCOUNTS

4. Debit Accounts Payable—Coast to Coast Auto for $350.5. Credit Cash in Bank for $350.

DEBIT-CREDIT RULE

Cash in Bank

Credit

350

Debit

Accounts Payable—Coast to Coast Auto

CreditDebit

350


17

18

19

20

17

18

19

20


1

Accts. Pay.—Coast to Coast Auto Cash in Bank Check 102

12

350 00

350 00

1. The accounts Cash in Bank and Accounts Receivable—Green Company are affected.

2. Cash in Bank is an asset account. Accounts Receivable—Green Company is an asset account.

3. Cash in Bank is increased by $200. Accounts Receivable—Green Company is decreased by $200.

On October 14 Zip received and deposited a check for $200 from Green Company, Receipt 1. The check is full payment for the telephone sold on account to Green on October 11.

6.T ACCOUNTS

4. Debit Cash in Bank for $200.5. Credit Accounts Receivable—Green Company for $200.

ANALYSIS Identify

Classify

�/�

DEBIT-CREDIT RULE


Accounts Receivable—Green Company

Credit�

200

Debit�

Cash in Bank

Credit�

Debit�

200

RECEIVED FROM $

DOLLARS

FOR

RECEIPT

RECEIVED BY

20 --

Green Company 200.00

Two hundred and no/100

Telephone

Crista Vargas

Oct. 14

No. 1




135_152_GA_S_CH06_SEC_140088.indd 145 2/13/15 9:34 AM

D1

D2

M

SECTION 6.2

TEACHD1

Diff erentiated Instruction

Verbal-Linguistic Learning Emphasize the spelling of receipt. Give students a memory device to help avoid transposing the i and e. For example, “I before E except after C, or pronounced A as in weightor I as in height” Have students apply the memory device to spell one or more of these words: receivable, eight, Heisman, believe. Explain that although this rule has some exceptions (e.g., foreign), it is a good general guideline. OL

M Math Skill PracticeCalculating Time Periods Have students look at the source document in Business Transaction 7. Ask: For how many days did Zip extend credit to Green Company? (Hint: Look at the source document for Business Transaction 5 on p. 144) 3 days OL


Visual-Spatial Learning Have students contact a local business and gather samples of source documents the business uses in its daily operations. Then have students display the various types of source documents on a bulletin board. Ask students to highlight the portions of each source document that provide the data for journal entries. OL

Extended Skill PracticeJournalizing Transactions Go to connect.mheducation.com for Demonstration Problem 6–4 for step-by-step practice recording a payment received on account.

Chapter 6 145



Math: Multiple Approaches to Problem Solving A teacher and students discuss various options for problem solving and then apply one, working backwards, to a problem situation.

7.JOURNAL ENTRYGENERAL JOURNAL PAGE

20

21

22

23

20

21

22

23


1

Cash in Bank Accts. Rec.—Green Company Receipt 1

14 200 00200 00

1. The accounts Cash in Bank and Delivery Revenue are affected.

2. Cash in Bank is an asset account. Delivery Revenue is a revenue account.

3. Cash in Bank is increased by $1,200. Delivery Revenue is increased by $1,200.

7.JOURNAL ENTRY

On October 15 Zip provided delivery services for Sims Corporation. A check for $1,200 was received in full payment, Receipt 2.

6.T ACCOUNTS

4. Increases in asset accounts are recorded as debits. Debit Cash in Bank for $1,200.

5. Increases in revenue accounts are recorded as credits. Credit Delivery Revenue for $1,200.

ANALYSIS Identify

Classify

�/�

DEBIT-CREDIT RULE


Credit�

Debit�

1,200

Cash in Bank

Credit�

1,200

Debit�

Delivery Revenue


23

24

25

26

23

24

25

26


1

Cash in Bank Delivery Revenue Receipt 2

15 1 200 001 200 00

RECEIVED FROM $

DOLLARS

FOR

RECEIPT

RECEIVED BY

20 --

Sims Corporation 1,200.00

One thousand two hundred and no/100

Delivery services

Crista Vargas

Oct. 15

No. 2





SECTION 6.2


Drawing Conclusions Point out to students that Sims Corporation is a customer. Ask: Why did Zip not issue an invoice? because it is a cash transaction, not a credit transaction BL

R Reading StrategyReading Source Documents Have students examine Receipt 2 from Business Transaction 8. Ask: Which key words on the receipt indicate that the transaction will affect Zip’s revenue account? “delivery services” Ask: How does revenue affect owner’s equity? Revenue increases owner’s equity. OL

M Math Skill PracticeReading Accounting Forms Have students examine the amount columns in the journal entry in Business Transaction 8. Ask: How do we know where the commas and decimal points occur in a number? Vertical lines and shading in the form take the place of commas and decimal points. OL

Flowcharts A fl owchart is a diagram that shows a step-by-step progression through a process. It usually has connecting lines between steps. Have students develop a fl owchart that shows the steps for completing a simple transaction such as a cash sale and recording the transaction in the general journal. For example, when a customer purchases long-distance moving services, the customer receives a receipt showing the dates, the details of the delivery, and the amount. The business keeps a copy of the receipt. The receipt is the source document used to journalize the transaction.

EXTENDING THE CONTENT

C R

M

146 Chapter 6


135_152_GA_S_CH06_SEC_140088.indd 146 2/13/15 9:34 AM

1. The accounts Rent Expense and Cash in Bank are affected.

2. Rent Expense is an expense. Cash in Bank is an asset.

3. Rent Expense is increased by $700. Cash in Bank is decreased by $700.

7.JOURNAL ENTRY

On October 16 Zip mailed Check 103 for $700 to pay the month’s rent.

6.T ACCOUNTS

4. Increases in expense accounts are recorded as debits. Debit Rent Expense for $700.

5. Decreases in asset accounts are recorded as credits. Credit Cash in Bank for $700.

ANALYSIS Identify

Classify

�/�

DEBIT-CREDIT RULE


Cash in Bank

Credit�

700

Debit�

Rent Expense

Credit�

Debit�

700


26

27

28

29


1

Rent Expense Cash in Bank Check 103

16

700 00

700 00

1. The accounts Advertising Expense and Accounts Payable—Rockport Advertising are affected.

2. Advertising Expense is an expense account. Accounts Payable—Rockport Advertising is a liability account.

3. Advertising Expense is increased by $75. Accounts Payable—Rockport Advertising is increased by $75.

On October 18 Rockport Advertising prepared an advertisement for Zip. Zip will pay Rockport’s $75 fee later, Invoice 129.

ANALYSIS Identify

Classify

�/�


Dollars Cents


Add deposits 10/14

10/15

Total

Less this check


$

Date

To

For

20

21,650 00

200 00

1,200 00

23,050 00

700 00

22,350 00

No. 103700.00October 16 --Tooley & Co. Managementrent

TO

DATE:ORDER NO.:

SHIPPED BY:TERMS:


INVOICE NO. 129


1 Print Ad $ 75.00 $ 75.00

Oct. 18, 20--699n/aPayable in 30 days

Rockport Advertising10200 Prairie ParkwaySacramento, CA 94206

R

OCKPORT

Advertising


135_152_GA_S_CH06_SEC_140088.indd 147 2/13/15 9:34 AM

SECTION 6.2


Reading Source Documents Have students examine Business Transaction 9. Ask: What type of source document is used? a check stub Ask: Which key word indicates that Zip is paying an expense? “Rent.” Rent is an operating expense. Ask: How does an expense affect owner’s equity? Expenses decrease owner’s equity. OL

M Math Skill PracticeComputing Dates Refer students to Invoice 129 in Business Transaction 10. Ask: What is the due date of this invoice? November 17 October 18−31 � 13 days November 1−17 � 17 days 13 days � 17 days � 30 days AL

C Critical ThinkingDifferentiating Have students look at the source document for Business Transaction 10. Ask: Why is this transaction represented by an invoice rather than a check stub? The purchase was on account rather than for cash. BL

Source Documents Ask students to collect source documents for business transactions in their daily lives for a period of one week. Have students prepare journal entries from the documents they collect. (Samples of source documents that students might collect include cash register receipts, handwritten receipts, employee time cards, paycheck stubs, invoices, credit card receipts, and telephone bills.)


R

MC

Chapter 6 147


7.JOURNAL ENTRY

6.T ACCOUNTS

4. Increases in expense accounts are recorded as debits. Debit Advertising Expense for $75.

5. Increases in liability accounts are recorded as credits. Credit Accounts Payable—Rockport Advertising for $75.

DEBIT-CREDIT RULE

Advertising Expense

CreditDebit

75

Accounts Payable—Rockport Advertising

Credit

75

Debit

GENERAL JOURNAL 1

Advertising Expense Accts. Pay.—Rockport Adv. Invoice 129

18 75 0075 00

1. The accounts Accounts Receivable—City News and Delivery Revenue are affected.

2. Accounts Receivable—City News is an asset account. Delivery Revenue is a revenue account.

3. Accounts Receivable—City News is increased by $1,450. Delivery Revenue is increased by $1,450.

On October 20 Zip provided delivery services for a customer, City News. Zip billed City News $1,450, Sales Invoice 1.

6.T ACCOUNTS

4. Increases in asset accounts are recorded as debits. Debit Accounts Receivable—City News for $1,450.

5. Increases in revenue accounts are recorded as credits. Credit Delivery Revenue for $1,450.

ANALYSIS Identify

Classify

�/�

DEBIT-CREDIT RULE


Delivery Revenue

Credit�

1,450

Debit�

Accounts Receivable—City News

Credit�

Debit�

1,450

TO

DATE:ORDER NO.:

SHIPPED BY:TERMS:


City News10900 Main St.Sacramento, CA 94230

1 Delivery Services $ 1,450.00 $ 1,450.00

Oct. 20, 20--300n/aPayable in 30 days

SALES INVOICE NO. 1Zip Delivery Service155 Gateway Blvd.



135_152_GA_S_CH06_SEC_140088.indd 148 2/13/15 9:34 AM 135_152_GA_S_CH06_SEC_140088.indd 149 3/11/15 3:51 PM

SECTION 6.2


Drawing Conclusions Refer students to the journal entry in part 7 of Business Transaction 10 at the top of the page. Ask: Why is “Invoice 129” entered? It refers to the source document for this transaction, which is Invoice 129. If more information about the transaction is needed or questions about it should arise, that invoice provides the detailed documentation. OL

R Reading StrategyComparing-Contrasting Have students examine the invoice in Business Transaction 11 and contrast it with the one in Business Transaction 10. Ask: What determines whether an invoice is a sales invoice or a purchase invoice? It depends on whether you are the seller or the buyer. To the seller, it is a sales invoice; to the buyer, a purchase invoice. OL

W Writing SupportWriting Clearly Have students write a short paragraph describing how to journalize Business Transaction 11. Students’ paragraphs should detail the systematic process of transferring information from the source document to the journal. OL

Extended Skill PracticeJournalizing Transactions Go to connect.mheducation.com for Demonstration Problem 6–5 for step-by-step practice recording a revenue transaction on account.

C

R

W

148 Chapter 6


135_152_GA_S_CH06_SEC_140088.indd 148 2/13/15 9:34 AM

1. The accounts Utilities Expense and Cash in Bank are affected.

2. Utilities Expense is an expense account. Cash in Bank is an asset account.

3. Utilities Expense is increased by $125. Cash in Bank is decreased by $125.

7.GENERAL JOURNAL PAGE

32

33

34

35

32

33

34

35


1

Accts. Rec.—City News Delivery Revenue Sales Invoice 1

20

1 450 00

1 450 00

JOURNAL ENTRY

7.JOURNAL ENTRY

On October 28 Zip paid a $125 telephone bill with Check 104.

6.

4. Increases in expense accounts are recorded as debits. Debit Utilities Expense for $125.


DEBIT-CREDIT RULE

Utilities Expense

Credit�

Debit�

125

Cash in Bank

Credit�

125

Debit�


35

36

37

38

35

36

37

38


1

Utilities Expense Cash in Bank Check 104

28

125 00

125 00

Identify

Classify

�/�

B u s i n e s s T r a n s a c t i o n 1 2

T ACCOUNTS

ANALYSISDollars Cents


Add deposits

Total

Less this check


$

Date

To

For

20

22,350 00

22,350 00

125 00

22,225 00

No. 104125.00October 28 --Pacific Bell Telephonetelephone bill


Ken

Cav

anag

h/M

cGra

w-H

ill E

duc

atio

n

135_152_GA_S_CH06_SEC_140088.indd 149 3/11/15 3:51 PM

SECTION 6.2

TEACHC1 Critical ThinkingApplying GAAP Have students examine the journal entry in Business Transaction 11. Point out that Zip records the revenue even though the customer has not yet paid for the delivery service. Ask: Which GAAP principle requires this? revenue recognition, discussed in Chapter 5 AL

C2 Critical ThinkingDifferentiating Refer students to Business Transaction 12. Ask: The telephone bill is an expense, but the telephone is an asset. Why? The telephone is property owned by the business. The telephone bill is for something “consumed” by the business during the accounting period. AL

C3 Critical ThinkingDrawing Conclusions Draw the students’ attention to the line numbers that appear on both sides of a general journal page (Lines 32−35 in the general journal at the top of this page and Lines 35−38 at the bottom of this page). Ask: What is the purpose of these numbers? to provide reference points for each line so that it is easier to make entries Ask: Do you skip a line between journal entries? No. Although Line 35 appears blank in the fi rst journal entry, it is used for the second journal entry. OL

Interviewing Employers Encourage students who have part-time jobs to interview their employers regarding how the business keeps track of business transactions. Ask students to obtain samples of blank general journal pages or input forms and computer-generated reports, if possible. Have students share their fi ndings with the class. Students should be able to list the names of the computer applications and describe their use.



Reading: Bridging Cultural Gaps A teacher models the use of context clues.

C1

C2

C3

Chapter 6 149


1. The accounts Maintenance Expense and Cash in Bank are affected.

2. Maintenance Expense is an expense account. Cash in Bank is an asset account.

3. Maintenance Expense is increased by $600. Cash in Bank is decreased by $600.

7.JOURNAL ENTRY

On October 29 Zip wrote Check 105 for $600 to have the office repainted.

6.T ACCOUNTS

4. Increases in expense accounts are recorded as debits. Debit Maintenance Expense for $600.


ANALYSIS Identify

Classify

�/�

DEBIT-CREDIT RULE


Maintenance Expense

Credit�

Debit�

600

Cash in Bank

Credit�

600

Debit�


38

39

40

41

38

39

40

41


1

Maintenance Expense Cash in Bank Check 105

29 600 00600 00

1. The accounts Crista Vargas, Withdrawals and Cash in Bank are affected.

2. Crista Vargas, Withdrawals is an owner’s equity account. Cash in Bank is an asset account.

3. Crista Vargas, Withdrawals is increased by $500. Cash in Bank is decreased by $500.

On October 31 Crista Vargas wrote Check 106 to withdraw $500 cash for personal use.

ANALYSIS Identify

Classify

�/�


Dollars Cents


Add deposits

Total

Less this check


$

Date

To

For

20

22,225 00

22,225 00

600 00

21,625 00

No. 105600.00October 29 --Rainbow Paintingoffice painted

Dollars Cents


Add deposits

Total

Less this check


$

Date

To

For

20

21,625 00

21,625 00

500 00

21,125 00

No. 106500.00October 31 --Crista Vargaswithdrawal



SECTION 6.2

TEACHW Writing SupportPersuasive Writing Refer students to Business Transaction 13. Painting the offi ce is an expense that is not directly related to this company’s source of revenue (delivery services). Ask students to think about whether this is a necessary expense. Have students write a paragraph stating and defending their opinion. Responses may include: yes, because the offi ce should have a professional appearance; no, because customers don’t come to the offi ce. OL

M Math Skill PracticeCalculating Amounts Remind students that in Business Transaction 1, the owner deposited $25,000 cash into the business checking account. Have students look at the “Balance carried forward” on Check Stub 105. Ask: How much money has Zip spent so far? $25,000 � $21,625 � $3,375 OL

R Reading StrategyReading Source Documents Tell students to examine the source document for Business Transaction 14. Ask: What is the key word that identifi es this transaction? “withdrawal” Ask: What effect does a withdrawal have on owner’s equity? A withdrawal decreases owner’s equity. OL

Costs The term cost means the amount charged or paid for something. A cost can be for an asset or for an expense. Draw a diagram with headings for COSTS, Assets, and Expenses. Have students review Zip’s costs and determine which are assets and which are expenses. Write the transaction number and description in the appropriate column. Note: Transaction 6 reduced a liability, and 14 was a withdrawal. Neither are costs.


COSTS

Assets Expenses3. computer 9. rent4. truck 10. advertising

12. phone bill13. maintenance


ELL: Language Practice Students of varying language profi ciencies work together to review the content they have just read.

W

M

R

150 Chapter 6


135_152_GA_S_CH06_SEC_140088.indd 150 2/13/15 9:34 AM

7.JOURNAL ENTRY

6.T ACCOUNTS

4. Increases in the owner’s withdrawals account are recorded as debits. Debit Crista Vargas, Withdrawals for $500.


DEBIT-CREDIT RULE

Crista Vargas, Withdrawals

CreditDebit

500

Cash in Bank

Credit

500

Debit

GENERAL JOURNAL 1

Crista Vargas, Withdrawals Cash in Bank Check 106

31 500 00500 00

Correcting the General Journal How Do You Correct Errors in the General Journal?

Occasionally, errors occur when journalizing transactions. When an error is discovered, it must be corrected.

In a manual system, an error should never be erased. An erasure looks suspicious. It might be seen as an attempt to cover up a mistake or, worse, to change the accounting records illegally. To correct errors, use a pen and a ruler to draw a horizontal line through the entire incorrect item and write the correct information above the crossed-out error. A correction for an erroneous amount is shown in the general journal as follows:


1

2

3

4

1

2

3

4


0 0 0 0052

1

20--Oct. 52 0 0 0 00

25 0 0 0 00

25 0 0 0 00Cash in Bank Crista Vargas, Capital Memorandum 1

1


1

2

3

4

1

2

3

4

DEBIT CREDIT DESCRIPTION DATE POST. REF.

0 0 0 00 25

1

20-- Oct.

25 0 0 0 00

Cash in Bank Delivery Revenue Memorandum 1

1


To correct for an erroneous account name, cross out the incorrect infor-mation and write the correct account name above.

Writing too large When entering data in the general journal, be sure not to write too large. You will leave little space to write in correct data if you have to cross out incorrect information. Account titles and amounts should be written no larger the 3 __ 4 of the line space.

CommonMistakes


135_152_GA_S_CH06_SEC_140088.indd 151 2/13/15 9:34 AM

SECTION 6.2


Making Inferences Point out to students that using a pencil for accounting exercises is different from how information is recorded in the business world. Ask: What methods are used in the real world to record transactions? computers or ink on paper Ask: Why is it not acceptable to use a pencil? Pencil entries can be erased. OL

R Reading StrategyReading Accounting Forms Ask: What amount was originally recorded? 52,000.00 Ask: Why is it crossed out? It is the wrong amount. Ask: What is the correct amount? 25,000.00 BL

W Writing SupportWriting Clearly Write the defi nition of audit trail on the chalkboard: “a chain of references that makes it possible to trace information and locate errors.” Have students write a paragraph describing the audit trail for the second corrected journal entry shown on this page. Students should discuss how the source document reference in the Description column—Memorandum 1— is the fi rst step in the audit trail. AL

Common Mistakes Remind students that any hand-written financial data must be legible in order to be understood by other employees who need to review it.

C

R

W

Chapter 6 151


SECTION 6.2

ASSESSSECTION 6.2 ASSESSMENT RESOURCES To assess mastery of section content, assign the Chapter Study Guides and Working Papers Problems 6–2 and 6–3.

SECTION 6.2 ASSESSMENT ANSWERS

Reinforce the Main Idea Answers will include different transactions (e.g., receiving income, paying cash for an expense, etc.). First line: details of date, account debited, and debit amountSecond line: details of account credited and credit amountThird line: detail of source document reference or other explanation

Math for Accounting1. Computer Equipment, 2,400.002. Accounts Payable—Tech World, 2,400.00

PROBLEM 62Step 1 D Step 4 BStep 2 F Step 5 AStep 3 E Step 6 C

PROBLEM 631. Passenger Van, asset, inc., dr.; Cash in

Bank, asset, dec., cr.2. Utilities Expense, expense, inc., dr.;

Cash in Bank, asset, dec., cr.3. Cash in Bank, asset, inc., dr.;

Day Care Fees, revenue, inc., cr.

CLOSESynthesizing Write this transaction on the chalkboard: “On October 31 Zip bought oil from Ace Energy for $32.40 cash, Receipt 4.” Have students journalize this transaction.

SEC TION 6.2

QU

IZ

1. What kind of transactions can go in the general journal? any kind

2. In a general journal entry, what do you write fi rst? date

3. What do you write next? account debited and debit amount

4. What do you write next? account credited and credit amount

5. What do you write last? source document reference or explanation

SEC TION 6 2

BusinessTransaction

First Line of General Journal Entry

Second Line of General Journal Entry

Third Line of General Journal Entry

After You Read

PROBLEM 62 Recording Business Transactions

INSTRUCTIONS The six steps for recording a business transaction in the general journal are shown below, out of order. In your working papers or on a blank sheet of paper, indicate the proper order of these steps.

A. Amount of the credit D. Date of the transactionB. Name of the account credited E. Amount of the debitC. Source document reference F. Name of the account debited

PROBLEM 63 Analyzing TransactionsGlenda Hohn recently started a day-care center. She uses the following accounts.

General Ledger Cash in Bank Glenda Hohn, Capital Accts. Rec.—Tiny Tots Nursery Glenda Hohn, Withdrawals Office Furniture Day-Care Fees Passenger Van Utilities Expense Accts. Pay.—Acme Bus Service Van Expense

INSTRUCTIONS In your working papers or on a separate sheet of paper, for each transaction: Determine which accounts are affected. Classify each account. Determine whether the accounts are being increased or decreased. Indicate which account is debited and which account is credited.

TRANSACTIONS

1. Bought a passenger van for cash.2. Paid the telephone bill for the month.3. Received cash from customers for day-care services.

Math for AccountingHania Dance Company bought a computer system on account from Tech World. The regular price for the system is $3,000, but Tech World reduced the price by 20 percent for a storewide sale. Answer the following questions about the journal entry for this transaction.1. Which account is

debited and for what amount?

2. Which account is credited and for what amount?

Reinforce the Main IdeaThink of three different types of business transactions you might have in the next month. Use a table similar to this one to describe the general journal entry for each transaction.

SECTION 6.2 • ASSESSMENT


135_152_GA_S_CH06_SEC_140088.indd 152 2/27/15 12:00 PM

152 Chapter 6




52 0 00

52 0 00

Nov 220__

Office EquipmentMaintenance Expense

Cash in BankCheck 110



Step 1: Write in the date of the transactionStep 2: Write in the account to debit

Step 6: Write in the source document referenceStep 4: Write in the account to credit Step 5: Write in the credit amount

Step 3: Write in the debit amount

Step 1

Step 2

Step 3

Collect and verify source documents

Analyze each transaction

Journalize each transaction

ACCOUNT

DEBIT CREDIT ACCOUNT

DEBIT CREDIT

INVOICE

RECEIPT

MEMORANDUM

GENERAL JOURNAL

CHAPTER 6 • VISUAL SUMMARY

Co

nce

pts

An

alys

isPr

oce

du

res

Explain the f irst three steps in the accounting cycle.

Describe the steps to make a general journal entry.

Correct errors in general journal entries

Chapter 6 Visual Summary 153

153_154_GA_S_CH06_REV_140088.indd 153 2/27/15 12:04 PM

CHAPTER 6

Visual SummaryAfter students have looked at the Visual Summary, challenge them to create their own diagrams of the Concepts section. Tell them these diagrams could be used to help them remember the steps for completing the first three steps of the accounting cycle. Choose several to discuss and share with the class.

English Language LearnersStudents whose primary language is not English might benefit from extra review or tutoring at this point. You might encourage them to write an example of a corrected journal entry on an index card to use as reference. Pair ELLs with students who are fluent in English to review the Procedures part of the Summary. Provide more examples of journal entries that need corrections for the pairs to work through together.

Chapter 6 153

153_154_GA_T_CH06_REV_140092.indd 153153_154_GA_T_CH06_REV_140092.indd 153 3/18/15 12:02 PM3/18/15 12:02 PM

After You Read

CHAPTER 6 • REVIEW AND ACTIVITIES

1. How do businesses keep permanent records of transactions? Good record keeping in the form of journals make financial information readily available. Why might a business need to refer to a journal entry about a transaction?

Answering the Essential Question

Vocabulary Check 2. Content Vocabulary Arrange the vocabulary terms below into categories—groups of related words.

Explain why you put the words together.• accounting cycle (p.135)• source document (p.136)• invoice (p.136)• receipt (p.136)

• memorandum (p.136)• check stub (p.136)• journal (p.137)• journalizing (p.137)

• fiscal year (p.137)• calendar year (p.137)• general journal (p.139)

3. Academic Vocabulary Use a dictionary to fill in the blanks below. Write a sentence for each word as it is defined by the filled-in statement.• Occur (p.136) is a verb that means .• Affect (p.140) is a verb that means .• Affect is a noun that means .• Manual (p.151) is an adjective that means .• Manual is a noun that means .

Concept Check 4. Evaluate List the first three steps of the accounting cycle. What would happen if you skipped Step 2? 5. Describe four source documents. Be sure to include how and when each is used. 6. Analyze Why is a journal sometimes called the book of first entry? 7. How do you determine the debit and credit parts of a journal entry? 8. List—in the order they are recorded—the six types of information needed in a general journal entry. 9. Analyze Describe the relationship between the amounts entered in both columns of the general

journal. Why must the amounts have this relationship? 10. What procedure is used to correct a general journal entry error in a manual system?

English Language Arts 12. You’ve been chosen as the local Business

Owner of the Year. Write a one-page press release describing your business and why you’ve been successful. Be sure to include the skills you use in running your business, and how you plan to continue being successful in the future.

Math 11. On Sunday, Dawson’s flower shop sold 25

arrangements. The materials needed for 25 arrangements cost $250. If he sold each arrangement for $55, what was the net income?

154 Chapter 6 Review and Activities

153_154_GA_S_CH06_REV_140088.indd 154 2/27/15 12:04 PM

CHAPTER 6

Review and Activities

After You Read

Answering the Essential Question1. The intent of this essential question

is to help students use inquiry to arrive at an understanding of the basic role of accounting. Once they see the importance of effective record-keeping they can generalize and broaden their understanding of fi nancial data.

Vocabulary Check 2. See the glossaries for defi nitions of

these terms. Have students share and discuss their defi nitions.

3. Students’ answers should accurately refl ect the dictionary defi nitions of the Academic Vocabulary terms.

Concept Check4. Step 1: Collect and verify source

documents; Step 2: analyze each transaction; Step 3: journalize each transaction. You could not do Step 3 because you would not have the debit and credit parts.

5. Invoice: date; quantity, description, cost of each item; terms of payment; Receipt: date, person or business paying, amount; Memorandum: date, description of a transaction within a business, amount; Check stub: date, person or business receiving payment, amount, checking account balance

6. It is where transactions are fi rst entered in the accounting records.

7. Analyze the transaction.

8. Date, account debited, debit amount, account credited, credit amount, source document reference or explanation

10. Draw a line through the error; write the correct information above the crossed-out error.

Math11. To calculate net income, subtract overhead

costs from gross income. In this case, overhead is $250 to purchase fl owers. Gross profi t is the total amount of money taken in by a business.

1. Multiply the number of arrangements sold by the retail cost of each arrangement to get the gross profi t.

2. Subtract overhead from gross profi t to calculate the net income.

Gross profi t $1,375 ($55 � 25 � $1375), Net profi t � $1125 ($1375 � $250 � $1,125)

English Language Arts12. Press releases will vary, but should refl ect

students’ thoughts on how a business might become successful.

154 Chapter 6154 Chapter 6

153_154_GA_T_CH06_REV_140092.indd 154153_154_GA_T_CH06_REV_140092.indd 154 3/18/15 12:02 PM3/18/15 12:02 PM

CHAPTER 6 • STANDARDIZED TEST PRACTICE

Multiple Choice1. Which is the purpose of a source document?

a. To describe a transaction that takes place within a businessb. To supply the information for journalizing a transactionc. To serve as evidence of a transactiond. All of these

2. A fiscal year is an accounting period a. that begins on January 1 and ends on December 31.b. of any length other than 12 months.c. of 12 months which begins in the month the business chooses. d. that may be for any designated length of time.

3. Which is the correct journal entry for the following transaction: A business buys $300 of office supplies on account from A1 Office Supply on March 13?a. 3/13 Office Supplies $300.00 A1 Office Supply $300.00b. 3/13 A1 Office Supply $300.00 Office Supplies $300.00c. 3/13 Cash $300.00 Office Supplies $300.00d. 3/13 Office Supplies $300.00 Accts. Pay. –A1 Office Supply $300.00

True or False4. The general journal is a record of all the transactions that occur for a single accounting period.

Short Answer5. Explain why it is important not to use an eraser when correcting entries in the general journal.

Chapter 6 Standardized Test Practice 155

155_156_GA_S_CH06_STP_140088.indd 155 2/27/15 12:16 PM

Standardized Test Practice

Multiple Choice1. d2. c3. d

True or False4. False

Short Answer5. Erasures in the general journal are not

permitted because they can be seen as an attempt to cover up a mistake or to change the accounting records illegally.

CHAPTER 6

Chapter 6 155

155_156_GA_T_CH06_STP_140092.indd 155155_156_GA_T_CH06_STP_140092.indd 155 3/18/15 12:02 PM3/18/15 12:02 PM

CHAPTER 6 • COMPUTERIZED ACCOUNTING

Recording General Journal EntriesMaking the Transition from a Manual to a Computerized System

MANUAL METHODSMANUAL METHODS COMPUTERIZED METHODS

• Analyze the source document to determine which accounts are affected.

• Analyze the source document to de termine which accounts are affected.

• Using a general journal form, enter the details of the transaction.

• Enter the transaction details in the general journal using the account numbers for each ledger account.

• Check for equality of debits and credits. • The software will calculate the equality of debits and credits.

i h

156 Chapter 6 Computerized Accounting

155_156_GA_S_CH06_STP_140088.indd 156 3/10/15 9:22 AM

Computerized Accounting Computerized accounting software automatically checks that the debits in your journal entry are equal to the credits. If the debits and credits are in balance, it will record the transaction. If they are not in balance, it will display a message notifying you that the transaction is not in balance.

CHAPTER 6

156 Chapter 6

155_156_GA_T_CH06_STP_140092.indd 156155_156_GA_T_CH06_STP_140092.indd 156 3/18/15 12:02 PM3/18/15 12:02 PM

CHAPTER 6 • PROBLEMS

PROBLEM 64 Recording General Journal Transactions

Ronald Hicks owns and operates Wilderness Rentals. The following accounts are needed to journalize the month’s transactions.

General Ledger 101 Cash in Bank 301 Ronald Hicks, Capital 105 Accts. Rec.—Helen Katz 305 Ronald Hicks, Withdrawals 110 Accts. Rec.—Polk and Co. 310 Income Summary 120 Office Equipment 401 Equipment Rental Revenue 125 Camping Equipment 501 Advertising Expense 201 Accts. Pay.—Adventure 505 Maintenance Expense Equipment Inc. 515 Rent Expense 203 Accts. Pay.—Digital Tech 520 Salaries Expense Computers 525 Utilities Expense 205 Accts. Pay.—Greg Mollaro

INSTRUCTIONS Record the following transactions on page 1 of the general journal in your working papers. For each transaction: 1. Enter the date. Use the current year. 2. Enter the name of the account debited. 3. Enter the amount of the debit. 4. Enter the name of the account credited. 5. Enter the amount of the credit. 6. Enter a source document reference.

Date Transactions

Jan. 13

57

11

1214

16

25

30

Wrote Check 310 for the part-time secretary’s salary, $270.Bought $2,000 of camping equipment on account from Adventure Equipment Inc., Invoice 320.Received $500 from a client for equipment rental, Receipt 150.Wrote Check 311 to pay the electricity bill of $110. Billed a client, Polk and Co., $1,700 for rental equipment, Sales Invoice 262. Ronald Hicks withdrew $800 for personal use, Check 312.Bought a $300 scanner for the office computer from Digital Tech Computers, on account, Invoice 270.Wrote Check 313 for $1,000 as an installment payment toward the amount owed to Adventure Equipment Inc.Received $1,700 from Polk and Co. in payment on their account, Receipt 151.Paid Digital Tech Computers $300 for the amount owed, Check 314.

Calculate the amount of cash deducted from the Cash in Bank account in January.

Analyze

connect.mheducation.com

PROBLEMS CAN BE SOLVED USING:

• Print or Online Working Papers

Chapter 6 Problems 157

157_161_GA_S_CH06_PROB_140088.indd 157 5/15/15 9:17 PM

CHAPTER 6

PROBLEM 64Recording General Journal TransactionsJan. 1: Dr. Salaries Exp. $270; Cr. Cash in

Bank $270; Check 310Jan. 3: Dr. Camping Equip. $2,000;

Cr. Accts. Pay.—Adventure Equip. Inc. $2,000; Invoice 320

Jan. 5: Dr. Cash in Bank $500; Cr. Equip. Rental Revenue $500; Receipt 150

Jan. 7: Dr. Utilities Exp. $110; Cr. Cash in Bank $110; Check 311

Jan. 11: Dr. Accts. Rec.—Polk and Co. $1,700; Cr. Equip. Rental Revenue $1,700; Invoice 262

Jan. 12: Dr. Ronald Hicks, Withdrawals $800; Cr. Cash in Bank $800; Check 312

Jan. 14: Dr. Offi ce Equip. $300; Cr. Accts. Pay.—Digital Tech Computers $300; Invoice 270

Jan. 16: Dr. Accts. Pay.—Adventure Equip. Inc. $1,000; Cr. Cash in Bank $1,000; Check 313

Jan. 25: Dr. Cash in Bank $1,700; Cr. Accts. Rec.—Polk and Co. $1,700; Receipt 151

Jan. 30: Dr. Accts. Pay.—Digital Tech Computers $300; Cr. Cash in Bank $300; Check 314

Jan. 1: $270Jan. 7: 110Jan. 12: 800Jan. 16: 1,000Jan. 30: 300Total: $ 2,480

Analyze

connect.mheducation.com

PROBLEMS CAN BE SOLVED USING:

• Print or Online Working Papers

• Problems 6-4, 6-5: QuickBooks

Chapter 6 157

157_161_GA_T_CH06_PROB_140092.indd 157157_161_GA_T_CH06_PROB_140092.indd 157 5/20/15 3:35 PM5/20/15 3:35 PM


Regina Delgado owns a business called Hot Suds Car Wash. She uses the following chart of accounts.

General Ledger 101 Cash in Bank 401 Wash Revenue 105 Accts. Rec.—Linda Brown 405 Wax Revenue 110 Accts. Rec.—Valley Auto 410 Interior Detailing Revenue 125 Office Equipment 501 Advertising Expense 130 Office Furniture 505 Equipment Rental Expense 135 Car Wash Equipment 510 Maintenance Expense 201 Accts. Pay.—Allen 520 Rent Expense Vacuum Systems 525 Salaries Expense 205 Accts. Pay.—O’Brian’s 530 Utilities Expense Office Supply 301 Regina Delgado, Capital 305 Regina Delgado, Withdrawals 310 Income Summary

INSTRUCTIONS Record the following transactions on page 1 of the general journal in your working papers.

Date Transactions

Jan. 1

5

8

10131718

20

2224

26

30

Regina Delgado invested $12,000 in the business, Memorandum 41.Purchased $5,000 in desks, chairs, and cabinets from O’Brian’s Office Supply on account, Invoice 1632.Deposited $1,600 for income received from car washes for the week, Receipt 101.Paid the Village Bulletin $75 for running an ad, Check 301.Regina Delgado withdrew $900 for personal use, Check 302.Billed Valley Auto $400 for interior detailing, Sales Invoice 102.Paid O’Brian’s Office Supply $2,500 as an installment payment on account, Check 303.Regina Delgado transferred to the business an electronic calculator valued at $350, Memorandum 42.Wrote Check 304 for $600 to Shadyside Realty for the office rent.Purchased $1,500 in car wash equipment from Allen Vacuum Systems on account, Invoice 312.Received a $400 check from Valley Auto in full payment of its account, Receipt 102.Issued Check 305 for $2,500 to O’Brian’s Office Supply for the balance due on account.

Identify the revenue account that was not used in the month of January.

Analyze


158 Chapter 6 Problems

157_161_GA_S_CH06_PROB_140088.indd 158 3/10/15 9:26 AM 157_161_GA_S_CH06_PROB_140088.indd 159 3/10/15 9:27 AM

CHAPTER 6

PROBLEM 65Recording General Journal TransactionsJan. 1: Dr. Cash in Bank $12,000; Cr.

Regina Delgado, Capital $12,000; Memo. 41

Jan. 5: Dr. Offi ce Furn. $5,000; Cr. Accts. Pay.—O’Brian’s Offi ce Supply $5,000; Invoice 1632

Jan. 8: Dr. Cash in Bank $1,600; Cr. Wash Revenue $1,600; Receipt 101

Jan. 10: Dr. Advertising Exp. $75; Cr. Cash in Bank $75; Check 301

Jan. 13: Dr. Regina Delgado, Withdrawals $900; Cr. Cash in Bank $900; Check 302

Jan. 17: Dr. Accts. Rec.—Valley Auto $400; Cr. Interior Detailing Revenue $400; Invoice 102

Jan. 18: Dr. Accts. Pay.—O’Brian’s Offi ce Supply $2,500; Cr. Cash in Bank $2,500; Check 303

Jan. 20: Dr. Offi ce Equip. $350; Cr. Regina Delgado, Capital $350; Memo. 42

Jan. 22: Dr. Rent Exp. $600; Cr. Cash in Bank $600; Check 304

Jan. 24: Dr. Car Wash Equip. $1,500; Cr. Accts. Pay.—Allen Vacuum Systems $1,500; Invoice 312

Jan. 26: Dr. Cash in Bank $400; Cr. Accts. Rec.—Valley Auto $400; Receipt 102

Jan. 30: Dr. Accts. Pay.—O’Brian’s Offi ce Supply $2,500; Cr. Cash in Bank $2,500; Check 305

The Wax Revenue account was not used. Students can find this by comparing the recorded transactions to the chart of accounts for Problem 6-5.

Analyze

158 Chapter 6


157_161_GA_S_CH06_PROB_140088.indd 158 3/10/15 9:26 AM


Abe Shultz owns and operates a pet grooming business called Kits & Pups Grooming. The following accounts are used to journalize transactions.

General Ledger 101 Cash in Bank 207 Accts. Pay.—Pet Gourmet 105 Accts. Rec.—Juan Alvarez 301 Abe Shultz, Capital 110 Accts. Rec.—N. Carlsbad 305 Abe Shultz, Withdrawals 115 Accts. Rec.—Martha Giles 310 Income Summary 125 Office Equipment 401 Boarding Revenue 130 Office Furniture 405 Grooming Revenue 135 Computer Equipment 501 Advertising Expense 140 Grooming Equipment 505 Equipment Repair Expense 145 Kennel Equipment 510 Maintenance Expense 201 Accts. Pay.—Able Store 520 Rent Expense Equipment 525 Salaries Expense 205 Accts. Pay.—Dogs & 530 Utilities Expense Cats Inc.


Date Transactions

Jan. 1

3

5

9

1114

1618

23

28

31

Received $125 for boarding a client’s dog for one week, Receipt 300.Abe Shultz contributed to the business a computer valued at $2,500, Memorandum 33.Billed a client, Juan Alvarez, $80 for grooming his pets, Sales Invoice 212.Wrote Check 411 to Allegheny Power Co. for $150 in payment for the month’s electricity bill.Abe Shultz withdrew $700 for personal use, Check 412.Purchased kennel equipment for $2,600 from Dogs & Cats Inc., on account, Invoice DC92.Paid the part-time receptionist’s salary of $400 by issuing Check 413.Abe Shultz took from the business for his personal use a ten-key adding machine valued at $65, Memorandum 34.Juan Alvarez sent a check for $80 in full payment of his account, Receipt 301.Purchased on credit $250 in grooming equipment from the Pet Gourmet, Invoice PG333.Issued Check 414 for $1,300 as an installment payment for the amount owed to Dogs & Cats Inc.

Calculate the total of the Accounts Receivable accounts as of January 31.

Analyze



CHAPTER 6

PROBLEM 66Recording General Journal TransactionsJan. 1: Dr. Cash in Bank $125;

Cr. Boarding Revenue $125; Receipt 300

Jan. 3: Dr. Computer Equip. $2,500; Cr. Abe Shultz, Capital $2,500; Memo. 33

Jan. 5: Dr. Accts. Rec.—Juan Alvarez $80; Cr. Grooming Revenue $80; Invoice 212


Jan. 11: Dr. Abe Shultz, Withdrawals $700; Cr. Cash in Bank $700; Check 412

Jan. 14: Dr. Kennel Equip. $2,600; Cr. Accts. Pay.—Dogs & Cats Inc. $2,600; Invoice DC92

Jan. 16: Dr. Salaries Exp. $400; Cr. Cash in Bank $400; Check 413

Jan. 18: Dr. Abe Shultz, Withdrawals $65; Offi ce Equip. $65; Memo. 34

Jan. 23: Dr. Cash in Bank $80; Cr. Accts. Rec.—Juan Alvarez $80; Receipt 301

Jan. 28: Dr. Grooming Equip. $250; Cr. Accts. Pay.—Pet Gourmet $250; Invoice PG333

Jan. 31: Dr. Accts. Pay.—Dogs & Cats Inc. $1,300; Cr. Cash in Bank $1,300; Check 414

The Accounts Receivable accounts total $0. The business had one sale of services on account (January 5, to Juan Alvarez, for $80; the debit side of the entry is Accts. Rec.—Juan Alvarez).Juan Alvarez paid the amount in full on January 23. (The credit side of the entry is Accts. Rec.—Juan Alvarez.)

Analyze

Chapter 6 159




Juanita Ortega is the owner of Outback Guide Service. The following accounts are used to record the transactions of her business.

General Ledger 101 Cash in Bank 205 Accts. Pay.—Peak Equipment Inc. 105 Accts. Rec.—M. Johnson 207 Accts. Pay.—Premier Processors 110 Accts. Rec.—Feldman, 301 Juanita Ortega, Capital Jones & Ritter 302 Juanita Ortega, Withdrawals 115 Accts. Rec.—Podaski 310 Income Summary Systems Inc. 401 Guide Service Revenue 130 Office Equipment 501 Advertising Expense 135 Office Furniture 505 Maintenance Expense 140 Computer Equipment 515 Rent Expense 145 Hiking Equipment 520 Salaries Expense 150 Rafting Equipment 525 Utilities Expense 201 Accts. Pay.—A-1 Adventure Warehouse


Date Transactions

Jan. 1

24

6

10

13

15

1822

2530

Juanita Ortega contributed the following assets to her busi ness: cash, $1,500; hiking equipment, $2,000; rafting equip ment, $2,500; and office furniture, $500; Memorandum 21.Issued Check 515 to Town News for a $75 ad.Purchased $3,000 in rafting equipment on account from A-1 Adventure Warehouse, Invoice AW45.A group from Feldman, Jones & Ritter went on a hiking trip. The group was billed $4,800 for guide services, Sales Invoice 300.Paid $300 to Dunn’s Painting and Interior Co. for painting the office, Check 516.Made a $1,000 payment to A-1 Adventure Warehouse toward the amount owed, Check 517.Received a check for $4,800 from Feldman, Jones & Ritter in payment of their account, Receipt 252.Juanita Ortega paid herself $600 by issuing Check 518.Billed a client, Mary Johnson, $1,200 for completing guide services on a hiking expedition, Sales Invoice 301.Paid the monthly telephone bill for $175 by issuing Check 519.Purchased a $3,600 computer system from Premier Processors. Made a down payment for $1,800 and agreed to pay the balance within 30 days, Check 520 and Invoice 749.

Generalize about Outback’s cash sales and credit sales.Analyze

160 Chapter 6 Problems

157_161_GA_S_CH06_PROB_140088.indd 160 3/10/15 9:28 AM 157_161_GA_S_CH06_PROB_140088.indd 161 3/10/15 9:28 AM

CHAPTER 6

PROBLEM 67Recording General Journal TransactionsJan. 1: Dr. Cash in Bank $1,500, Hiking

Equip. $2,000, Rafting Equip. $2,500, Offi ce Furniture $500; Cr. Juanita Ortega, Capital $6,500; Memo. 21

Jan. 2: Dr. Advertising Exp. $75; Cr. Cash in Bank $75; Check 515

Jan. 4: Dr. Rafting Equip. $3,000; Cr. Accts. Pay.—A-1 Adventure Warehouse $3,000; Invoice AW45

Jan. 6: Dr. Accts. Rec.—Feldman, Jones, & Ritter $4,800; Cr. Guide Service Revenue $4,800; Invoice 300

Jan. 10: Dr. Maintenance Exp. $300; Cr. Cash in Bank $300; Check 516

Jan. 13: Dr. Accts. Pay.—A-1 Adventure Warehouse $1,000; Cr. Cash in Bank $1,000; Check 517

Jan. 15: Dr. Cash in Bank $4,800; Cr. Accts. Rec.—Feldman, Jones, & Ritter $4,800; Receipt 252

Jan. 18: Dr. Juanita Ortega, Withdrawals $600; Cash in Bank $600; Check 518

Jan. 22: Dr. Accts. Rec.—M. Johnson $1,200; Cr. Guide Service Revenue $1,200; Invoice 301


Jan. 30: Dr. Computer Equip. $3,600; Cr. Cash in Bank $1,800, Accts. Pay.—Premier Processors $1,800; Invoice 749/Check 520

Outback has more credit sales than cash sales. (A review of the journalized transactions shows that Outback had two credit sales but no cash sales.)

Analyze

160 Chapter 6




Greg Failla operates Showbiz Video. The follow ing accounts are used to record business transactions.

General Ledger 101 Cash in Bank 207 Accts. Pay.—New Media Suppliers 105 Accts. Rec.—G. Cohen 209 Accts. Pay.—Palace Films 110 Accts. Rec.—J. Coletti 301 Greg Failla, Capital 113 Accts. Rec.—S. Flannery 305 Greg Failla, Withdrawals 115 Accts. Rec.—Spring 310 Income Summary Branch School District 401 DVD Rental Revenue 130 Office Equipment 405 HD projector Rental Revenue 135 Office Furniture 501 Advertising Expense 140 Computer Equipment 505 Equipment Repair Expense 145 Blu-ray discs 510 Maintenance Expense 150 Video Equipment 520 Rent Expense 201 Accts. Pay.—Broad Street 525 Salaries Expense Office Supply 530 Utilities Expense 205 Accts. Pay.—Computer Horizons


Date Transactions

Jan. 1

35

7

10

12

15

18

25

Deposited $3,400 in receipts. Of that amount, $1,900 was HD Projector rentals and $1,500 was DVD rentals, Receipt 435.Wrote Check 1250 for $325 of equipment repairs.Purchased $400 in Blu-ray discs from Palace Films on account, Invoice PF32.Bought from New Media Suppliers $2,600 in video equipment. Made a down payment of $600 and agreed to pay the balance in two installments, Check 1251 and Invoice NM101.Rented DVDs to Spring Branch School District. The school district agreed to pay $1,800 at a later date, Sales Invoice 1650.Issued Check 1252 for $750 to Computer Horizons for the amount owed to them.Deposited $5,600 in receipts. HD Projector rentals amounted to $4,400 and DVD rentals were $1,200, Receipt 436.Paid Clear Vue Window Cleaners $100 for monthly window cleaning, Check 1253.Made a $1,000 installment payment toward the amount owed to New Media Suppliers by issuing Check 1254.

CHALLENGEPROBLEM

Problem 6–8

Use the source docu mentsin your working papers to complete this problem.

SOURCE DOCUMENTPROBLEM

Calculate the total expenses incurred in January.Analyze



CHAPTER 6

PROBLEM 68Recording General Journal TransactionsJan. 1: Dr. Cash in Bank $3,400; Cr. DVD

Rental Revenue $1,500; HD Projector Rental Revenue $1,900; Receipt 435

Jan. 3: Dr. Equip. Repair Exp. $325; Cr. Cash in Bank $325; Check 1250

Jan. 5: Dr. Blu-ray Discs $400; Cr. Accts. Pay.—Palace Films $400; Invoice PF32

Jan. 7: Dr. Video Equip. $2,600; Cr. Cash in Bank $600, Accts. Pay.—New Media Suppliers $2,000; Invoice NM101/Check 1251

Jan. 10: Dr. Accts. Rec.—Spring Branch School District $1,800; Cr. DVD Rental Revenue $1,800; Invoice 1650

Jan. 12: Dr. Accts. Pay.—Computer Horizons $750; Cr. Cash in Bank $750; Check 1252

Jan. 15: Dr. Cash in Bank $5,600; Cr. DVD Rental Revenue $1,200; HD Projector Rental Revenue $4,400; Receipt 436

Jan. 18: Dr. Maintenance Exp. $100; Cr. Cash in Bank $100; Check 1253

Jan. 25: Dr. Accts. Pay.—New Media Supply $1,000; Cr. Cash in Bank $1,000; Check 1254

January 3: $325January 18: 100Total: $425

Analyze

CHALLENGEPROBLEM

Chapter 6 161


CHAPTER 6H.O.T.

— Classic Auto Car Wash —— ClClassic Auto Car Wash —

CASE STUDY

WITHHIGHER ORDER THINKINGREAL-WORLD Applications & Connections

PunctualityPeople in different cultures have different ways of understanding and using time. This can be a challenge for businesses in the global workplace.

ACTIVITY Research cultural perceptions of time management and productivity in a country other than the United States. Summarize your findings in a one-page report.

Setting Up Accounting RecordsJasmine Lawrence recently purchased property (land and building) and opened Classic Auto Car Wash. The business provides a variety of services such as brushless automatic exterior car wash, interior shampooing, and detailing. Several workers have been hired to perform a variety of tasks. As Classic Auto’s accountant, you have been asked to offer advice in setting up the accounting records for the business.

ACTIVITY Write Jasmine a business letter in which you suggest how she can set up and maintain accurate accounting records for her business.

INSTRUCTIONS Determine what kind of accounts you will suggest for Classic Auto’s chart of accounts.What financial advice will you offer the owners?

162 Chapter 6 Real-World Applications and Connections

Jup

iterim

ages

/Get

ty Im

ages

162_163_GA_S_CH06_RW_140088.indd 162 3/25/15 4:10 PM 162_163_GA_S_CH06_RW_140088.indd 163 2/27/15 12:02 PM

162 Chapter 6

Setting Up Accounting Records1. Although answers may vary, these

accounts will be needed to start the business: Asset accounts such as Cash in Bank, Land, Building, and Equipment; Liabilities, if Jasmine plans to make purchases on account; Revenue accounts for each source of revenue; various accounts such as salaries and utilities; and owner equity accounts for both withdrawals and capital.

2. Responses may include: deposit all money received by the business into the business account on a daily basis intact, and write checks for all disbursements. Never mingle business accounts with personal assets, especially cash.

PunctualityAnswers will vary.

CASE STUDY

162_163_GA_T_CH06_RW_140092.indd 162162_163_GA_T_CH06_RW_140092.indd 162 3/25/15 5:18 PM3/25/15 5:18 PM

CHAPTER 6

162_163_GA_S_CH06_RW_140088.indd 162 2/27/15 12:01 PM

H.O.T. Audit

Your Personal Finance RecordsYour day-to-day source documents are personal financial records. Personal financial records also include documents that are not related to everyday transactions. Vehicle titles, birth certificates, and tax returns are all personal financial documents. You can store your financial documents in home files, a home safe, or a safe-deposit box. You can also keep some financial records on a home computer.

ACTIVITY Imagine a person your age who drives to a part-time job and has a credit card. Make a list of the types of records and documents such a person would probably have. Create a plan that describes which records and documents to store and where to store them.

Auditing General Journal Entries In the following transactions, find any errors in the general journal entries presented. 1. Compare the transactions given below with the entries

recorded in the general journal.2. If any part of the transaction has been recorded incorrectly,

make the necessary corrections to the journal entries on a sheet of paper.

Date Transactions

Oct. 24

Bought $2,000 in office equipment, Check 601.Received $50 from a charge customer, Jack Lane, to apply to his account, Receipt 120.



002 0 00002 0 00

05 0 0005 0 00

Oct. 220--

Store Equipment Cash in Bank Check 601

4 Cash in Bank Accts. Rec.—Jack Lane Receipt 102

1

1

2

3

4

5

6

7

8

1

2

3

4

5

6

7

8

Chapter 6 Real-World Applications and Connections 163

162_163_GA_S_CH06_RW_140088.indd 163 2/27/15 12:02 PMHave students research how technology has affected fi nancial management for local businesses. Then have students describe how they would use technology if they were opening a business.

FINANCIALLITERACY

Chapter 6 163

Your Personal Finance Records

Answers will vary and may include:• birth certificate: safe-deposit box• social security card: file cabinet or

safe-deposit box• drivers license: wallet or purse• credit card: wallet or purse• vehicle registration: vehicle• vehicle title: file cabinet or safe-deposit

box• vehicle insurance policy: file cabinet• work pay stubs: file cabinet• tax returns: file cabinet

H.O.T. AuditAuditing General Journal Entries

Transaction 1: Cross out “Store” and write “Offi ce” above it.

Transaction 2: Cross out the amount and write “$50” above it. Cross out the receipt number and write “120” beside it.

162_163_GA_T_CH06_RW_140092.indd 163162_163_GA_T_CH06_RW_140092.indd 163 3/18/15 12:03 PM3/18/15 12:03 PM

132A 132B GA T CH06 INT 140092 - Amazon S3 · Math Skill Practice, pp. 144, 145 ... Exercising...

Documents

Transcript of 132A 132B GA T CH06 INT 140092 - Amazon S3 · Math Skill Practice, pp. 144, 145 ... Exercising...