Journal Entry Practice
E3-3
Recording the Transactions
A customer orders and receives 10 personal computers from
Dell; the customer promises to pay $18,400 within three
months. Answer from Dell’s standpoint. What about cost
info?
Account Name
Debit
Accounts Receivable
$18,400
Sales Revenue
Credit
$18,400
Fucillo Hyundai, Inc, sells a truck with a list, or sticker, price
of $20,050 for $18,050 cash.
Account Name
Debit
Cash
$18,050
Sales Revenue
Credit
$18,050
Bon-Ton Department Store orders 1,000 men’s shirts from
Arrow Shirt Company for $15 each for future delivery. The
terms require full payment within 30 days of delivery.
Answer from Arrow’s standpoint.
Account Name
No Entry
Debit
Credit
Arrow Shirt Company completes production of the shirts
described in part c and delivers the order (answer from
Arrow Shirt Company perspective)
Account Name
Debit
Accounts Receivable
$15,000
Sales Revenue
Credit
$15,000
Arrow receives payment from Bon-Ton for the order
described in part c. Answer from the perspective of Arrow
Shirt Company.
Account Name
Debit
Cash
$15,000
Accounts Receivable
Credit
$15,000
A customer purchases a ticket from American Airlines for
$410 cash to travel the following January. Answer from
American Airlines perspective.
Account Name
Debit
Cash
$410
Unearned Airfare Revenue
Credit
$410
General Motors issues $20 million in new common stock
Account Name
Debit
Cash
$20,000,000
Contributed Capital
Credit
$20,000,000
Pen State University receives $18,300,000 cash for 80,000
five-game season football tickets.
Account Name
Debit
Cash
$18,300,000
Unearned Football Ticket Revenue
Credit
$18,300,000
Penn State plays the first football game described in part h.
Account Name
Debit
Unearned Football Ticket Revenue
$3,660,000
Football Ticket Revenue
Credit
$3.660,000
Precision Construction Company signs a contract with a
customer for the construction of a new $500,000 warehouse.
At the signing, Precision receives a $50,000 deposit as a
deposit on the future construction project. Answer from the
perspective of Precision.
Account Name
Debit
Cash
$50,000
Unearned Construction Revenue
Credit
$50,000
On September 1, 2012, a bank lends $1,200 to a company; the
note principal and $144 annual interest are due in one year (1,200
X 12%). Answer from the Bank’s perspective.
NOW:
Account Name
Debit
Note Receivable
$1,200
Cash
Credit
$1,200
In 1 year (assuming no other transactions are recorded?
Account Name
Debit
Cash
$1,344
Credit
Notes Receivable
$1,200
Interest Revenue
$144
A popular ski magazine company receives a total of $1,980
today from subscribers. The subscriptions begin in the next
fiscal year. Answer from the perspective of the magazine
company:
Account Name
Debit
Cash
$1,980
Unearned Subscription Revenue
Credit
$1,980
What do you do with each edition of the magazine that is
sent out (assume 12 issues)?
Account Name
Debit
Unearned Subscription Revenue
$165
Subscription Revenue
Credit
$165
Sears, a retail store, sells a $100 lamp to a customer who charges
the sale on his store credit card. Answer from Sear’s perspective.
Account Name
Debit
Accounts Receivable
$100
Sales Revenue
Credit
$100
E 3-4
Recording the transactions
Dell pays its computer service technicians $79,500 in salaries for
two weeks ended January 7.
Account Name
Debit
Salaries Expense
$79,500
Cash
Credit
$79,500
ASSUME: No Salaries Payable has been previously recorded.
At the beginning of January, Turner Construction Company pays
$4,410 in worker’s compensation insurance for the first three
months of the year.
Account Name
Debit
Prepaid Insurance
$4,410
Cash
Credit
$4,410
McGraw-Hill Publishing Company uses $754 worth of electricity
and natural gas in its headquarters building for which it has not
yet been billed.
Account Name
Debit
Utilities Expense
$754
Utilities Payable
Credit
$754
Note: Expense is incurred when utilities are used and can be recorded
when amount is known.
Arrow Shirt Company completes production of 500 men’s shirts
ordered by Bon-Ton’s Department Store at a cost of $10 each
and delivers the order.
Account Name
Debit
Cost of Goods Sold
$5,000
Inventory
Credit
$5,000
Note: No information was provided about sales information. Would
have been Accounts Receivable and Sales Revenue.
The campus bookstore receives 500 accounting texts at a cost of
$43 each. The terms indicate that payment is due within 30 days
of delivery.
Account Name
Debit
Inventory
$21,500
Accounts payable
Credit
$21,500
During the last week of January, the campus bookstore sold 450
accounting texts received in part e at a sales price of $92 each.
Account Name
Debit
Cash
$41,400
Sales Revenue
Credit
$41,400
Account Name
Debit
Cost of Goods Sold
$19,350
Inventory
Assume cost data from part e (cost of $43 per book)
Credit
$19,350
Fucillo Hyundai, Inc. pays its salespersons $3,200 in commissions
related to December automobile sales.
Account Name
Debit
Commissions Payable
$3,200
Cash
Credit
$3,200
Assume: Company had previously recorded commissions payable.
Fucillo Hyundai, Inc. determines that it will pay its salespersons
$4,470 in commissions related to January sales. The payment
will be made in early February.
Account Name
Debit
Commissions Expense
$4,470
Commissions Payable
Credit
$4,470
A new grill is purchased and installed at a Wendy’s restaurant at the
end of the day on January 31; $8,750 cash payment was made on
that day.
Account Name
Debit
Equipment
$8,750
Cash
Credit
$8,750
The University of Florida orders 60,000 season football tickets
from its printer and pays $5,410 in advance for the custom
printing. The first game will be paid in September.
Account Name
Debit
Tickets Receivable
$5,410
Cash
Credit
$5,410
Carousel Mall had janitorial supplies costing $4,000 in storage. An
additional $2,600 worth of supplies was purchased during
January. At the end of January, $410 worth of janitorial supplies
remained in storage.
Account Name
Debit
Supplies Expense
$6,190
Supplies
Credit
$6,190
Assume: Purchase of supplies was properly recorded, just recording the
supplies used.
An Iowa State University employee works eight hours, at $13 per
hour, on January 31; however, payday is not until February 3.
Account Name
Debit
Wages Expense
$104
Wages Payable
Credit
$104
Wang Company paid $3,600 for a fire insurance policy on January
1. The policy covers 12 months beginning January 1.
Account Name
Debit
Prepaid Insurance
$3,600
Cash
Credit
$3,600
Darrius Incorporated has its delivery van repaired for $300 and
charges the amount on account.
Account Name
Debit
Repairs & Maintenance Expense
$300
Accounts Payable (Maint. Payable)
Credit
$300
Hass Company, a farm equipment company, receives its phone bill
at the end of January for $202 for January calls. The bill has not
been paid to date.
Account Name
Debit
Phone Expense
$202
Accounts Payable
Credit
$202
Martin Company receives and pays in January a $1,285 invoice
(bill) from a consulting firm for services received in January.
Account Name
Debit
Consulting Expense
$1,285
Cash
Credit
$1,285
Parillo’s Taxi Company pays a $595 invoice from a consulting firm
for services received and recorded in December.
Account Name
Debit
Accounts payable
$595
Cash
Credit
$595