Accounting Homework
NOTES FROM FIRST ASSIGNMENT
1. Start Journal Entry with Debit (s) on the first line (s) and credit (s) on the next lines, e.g.,
Cash xxx
Owner’s Capital xxx
2. No need to write ‘Debit’ and ‘Credit’ when doing a journal entry. Simply indent the credits (including the Account Titles) further to the right and that will signify credits and debits to accountants.
3. Use Account Descriptions that are given in the Problem (e.g., if the problem only has 'Expenses' as a descriptor, then don't use 'Rent Expense' even if the company pays rent). Similarly, when you are dealing with transactions in the ‘real world’, only use descriptions in the company’s ‘Chart of Accounts’ when making journal entries.
4. In this problem, there is no depreciation expense on the Equipment although there should be. We will cover depreciation expense in a later chapter.
5. Also, there is no supplies expense although there should be. We will cover that in Chapter 3.
6. When doing financial statements:
a. Do the Income Statement first, followed by the Owner’s Equity Statement, and followed by the Balance Sheet.
i. The reason is that the net income number is needed on the Statement of Owner’s Equity while the ending balance of Owner’s Capital is needed on the Balance Sheet.
b. Notice the headings on the financial statements in the solutions. For example, notice that the first two statements indicate a period of time (i.e., the month of April) while the balance sheet indicates a specific point in time (i.e., April 30, 20XX):
i. For the income statement:
Vince’s Travel Agency
Income Statement
For the month ended April 30, 20XX
ii. For the owner’s equity statement:
Vince’s Travel Agency
Owner’s Equity Statement
For the month ended
1. Start Journal Entry with Debit (s) on the first line (s) and credit (s) on the next lines, e.g.,
Cash xxx
Owner’s Capital xxx
2. No need to write ‘Debit’ and ‘Credit’ when doing a journal entry. Simply indent the credits (including the Account Titles) further to the right and that will signify credits and debits to accountants.
3. Use Account Descriptions that are given in the Problem (e.g., if the problem only has 'Expenses' as a descriptor, then don't use 'Rent Expense' even if the company pays rent). Similarly, when you are dealing with transactions in the ‘real world’, only use descriptions in the company’s ‘Chart of Accounts’ when making journal entries.
4. In this problem, there is no depreciation expense on the Equipment although there should be. We will cover depreciation expense in a later chapter.
5. Also, there is no supplies expense although there should be. We will cover that in Chapter 3.
6. When doing financial statements:
a. Do the Income Statement first, followed by the Owner’s Equity Statement, and followed by the Balance Sheet.
i. The reason is that the net income number is needed on the Statement of Owner’s Equity while the ending balance of Owner’s Capital is needed on the Balance Sheet.
b. Notice the headings on the financial statements in the solutions. For example, notice that the first two statements indicate a period of time (i.e., the month of April) while the balance sheet indicates a specific point in time (i.e., April 30, 20XX):
i. For the income statement:
Vince’s Travel Agency
Income Statement
For the month ended April 30, 20XX
ii. For the owner’s equity statement:
Vince’s Travel Agency
Owner’s Equity Statement
For the month ended