Lizzie Incorporated General Journal

http://www.youtube.com/etramway

JE#
1

Date

Account name/Description

Debit
100

Credit
100

31-Dec-04 Cash Common stock Sold common stock 29-Jun-05 Inventory Accounts payable Purchased inventory on account

18,839 18,839

30-Jun-05 Note payable Cash Sold 2 year note, interest payable annually at 10%

20,000 20,000

30-Jun-05 Property, plant and equipment Cash Purchased equipment with 5 year life, no residual value

5,800 5,800

30-Jun-05 Prepaid insurance Cash Purchased 1 year liability policy 30-Aug-05 Cash Accounts payable

750 750

14,050 14,050

Paid a portion of Accounts payable balance

7 29-Nov-05 Sales Accounts receivable Sold product on account 8 30-Dec-05 Cash Accounts receivable Received partial payment on accounts receivable 30-Dec-05 Inventory Cost of goods sold Periodic inventory, physical count is zero 30-Dec-05 Interest expense Accounts payable Record 6 months of interest on Note payable 14,500 14,500 21,000 21,000

18,839 18,839

10

1,000 1,000

11

30-Dec-05 Depreciation expense 580 Accumulated depreciation Record 6 months of depreciation expense on equipment 30-Dec-05 Prepaid insurance

580

12

375

Insurance expense Remaining balance in Prepaid insurance is 375 13 30-Dec-05 Sales Accounts receivable Record sales for product sold in 2009

375

2,200 2,200

etramway YouTube videos: Introductio n to Financial http://www.youtube.com/watch?v=l2mFEBrfR Accounting Ww Preparation of Financial Statements Accounting Journal Entries Accrual and adjusting entries Statement of Cash Flows Preparation http://www.youtube.com/watch?v=LsOGkKbZ vlg

http://www.youtube.com/watch?v=Ooibihp3Q Po

http://www.youtube.com/watch?v=1222W0P 5Wr0

http://www.youtube.com/etramway

#1

Periodic inventory adjustment: Lizzie performed a physical count at yearend and determined there were zero units remaining Accrue interest payable: Lizzie's 2 year Note accrued 6 months (july through december) of interest at 10%.

#2

#3

Accrue depreciation expense: Lizzie's equipment was used for 6 months helping her generate revenue. She needs to record the depreciation related to this equipment.

#4

Accrue depreciation expense: Half (6 months) of Lizzie's liability insurance policy expired. This insurance policy helping her generate revenue. She needs to record the Accrue revenue but not yet paid: Lizzie sold someearned additional product that she neglected to tell us about.

#5

Introductio n to Financial Accounting Preparation of Financial Statements Accounting Journal Entries Accrual and adjusting entries

Statement of Cash Flows

THE MATCHING PRINCIPLE

Recording expenses in the same period as the revenues they helped generate.

The balance in inventory is a debit of $18,839 and it needs to be $0. Therefore we credit Inventory for $18,839 in journal entry #9

P*R*T $20,000*10%*(6/12)=$1,000. Increase Interest expense (Expense) and Interest Payable (Liability) in journal entry #10

(Cost - Residual Value)/Useful Life= Annual Depreciation. ($5,800-0)/5=$1,160. 1/2 year in 2009 so record $580 increase in Depreciation expense (Expense) and Accumulated depreciation (contra asset) in journal entry #11

Policy amount/term of policy=monthly insurance expense. 1/2 year remaining at 12/31/2009 so record $750/12*6=$375 increase in Insurance expense (Expense) and decrease in Prepaid insurance (asset) in journal entry #12 but not yet paid: Increase to Sales (Revenue) and increase to Accounts receivable (Asset) in journal entry #13.

http://www.youtube.com/watch?v=l2mFEBrfRWw

http://www.youtube.com/watch?v=LsOGkKbZvlg

http://www.youtube.com/watch?v=Ooibihp3QPo

http://www.youtube.com/watch?v=1222W0P5Wr0

Prepaid Insurance
5-7/1 12-12/31 750 375

Balance 12/31

375

Lizzie Incorporated General Ledger

http://www.youtube.com/etramway Cash
1-1/1 3-7/1 4-7/1 5-7/1 6-8/31 8-12/31 100 20000 5800 750 14050 14500 1-1/1

Common Stock
100

Balance 12/31

14000

Balance 12/31

100

Accounts payable
2-6/30 6-8/31 10-12/31 18839 14050 1000 3-7/1

Note Payable
20000

Balance 12/31

5789

Balance 12/31

20000

Prepaid Insurance
5-7/1 12-12/31 750 375 7-11/30 13-12/31

Sales
21000 2200

Balance 12/31

375

Balance 12/31

23200

Retained earnings

Dividends

Balance 12/31

Balance 12/31

Interest expense
10-12/31 1000 11-12/31

Depreciation expense
580

Balance 12/31

1000

Balance 12/31

580

Insurance expense
12-12/31 375

Balance 12/31

375

Balance 12/31

Introductio n to Financial Accounting Preparation of Financial Statements Accounting Journal Entries Accrual and adjusting entries Statement of Cash Flows Preparation

http://ww w.youtube. com/watch ?v=l2mFE http://ww w.youtube. com/watch ?v=LsOGk http://ww w.youtube. com/watch ?v=Ooibih

http://ww w.youtube. com/watch ?v=1222W

Inventory
2-6/30 8-12/31 18839 18839

Balance 12/31

Property, plant & equipment

4-7/1 5800

Balance 12/31

5800

Accounts Receivable
7-11/30 8-12/31 13-12/31 21000 14500 2200

Balance 12/31

8700

Cost of goods sold

8-12/31 18839

Balance 12/31

18839

Accumulated Depreciation
11-12/31 580

Balance 12/31

580

Balance 12/31

http://www.youtube.com/etramway Lizzie

Incorporated List of Accounts at 12/31/2010 Amount Account type Debit or Credit

Debit Debit Debit Debit Credit Credit Credit Credit Credit Debit Debit Debit Credit Debit Debit 14,000 Asset-current 8,700 Asset-current 375 Asset-current 5,800 Asset-non-current 5,789 Liability-current 20,000 Liability-non-current 100 Owners' Equity 0 Owners' Equity 23,200 Revenue 0 Dividends 1,000 Expense 580 Expense 580 Asset(contra)-non-current 375 Expense 18,839 Expense 99,338

Account name
Cash Accounts receivable Prepaid insurance Property, plant and equipment, net Accounts payable Long-term Notes Payable Common stock Retained earnings Sales Dividends Interest expense Depreciation expense Accumulated depreciation Insurance expense Cost of goods sold Total

DEA

LOR
http://www.youtube.com/wat ch?v=l2mFEBrfRWw

Introduction to Financial Accounting

Preparation of Financial Statements

http://www.youtube.com/wat ch?v=LsOGkKbZvlg

Accounting Journal Entries Accrual and adjusting entries

http://www.youtube.com/wat ch?v=Ooibihp3QPo

Statement of Cash Flows Preparation

http://www.youtube.com/wat ch?v=1222W0P5Wr0

t or Credit

http://www.youtube.com/etramway Lizzie

Incorporated Trial Balance at 12/31/2010 Amount

14,000 8,700 375 5,800 5,789 20,000 100 0 23,200 0 1,000 580 580 375 18,839

Account name
Cash Accounts receivable Prepaid insurance Property, plant and equipment, net Accounts payable Long-term debt Common stock Retained earnings Sales Dividends Interest expense Depreciation expense Accumulated depreciation Insurance expense Cost of goods sold Total

Debit
14,000 8,700 375 5,800

Credit

5,789 20,000 100 0 23,200 0 1,000 580 580 375 18,839 49,669 49,669

Introduction to Financial Accounting

http://www.youtube.com/wa tch?v=l2mFEBrfRWw

Preparation of Financial Statements

http://www.youtube.com/wa tch?v=LsOGkKbZvlg

Accounting Journal Entries Accrual and adjusting entries

http://www.youtube.com/wa tch?v=Ooibihp3QPo

Statement of Cash Flows Preparation

http://www.youtube.com/wa tch?v=1222W0P5Wr0

http://www.youtube.com/etramway

Lizzie Incorporated Income Statement For the Year Ended 12/31/2010

23,200 18,839 4,361

Revenue (Net Sales) Cost of goods sold Gross Profit Operating expenses: Insurance Depreciation Income from operations Interest expense

375 580 3,406 1,000

Net Income

2,406

Introduction to Financial Accounting

http://www.youtube.com/watch?v=l2m FEBrfRWw

Preparation of Financial Statements

http://www.youtube.com/watch?v=LsO GkKbZvlg

Accounting Journal Entries Accrual and adjusting entries

http://www.youtube.com/watch?v=Ooib ihp3QPo

Statement of Cash Flows Preparation

http://www.youtube.com/watch?v=122 2W0P5Wr0

http://www.youtube.com/etramway

Lizzie Incorporated Statement of Retained Earnings For the Year Ended 12/31/2010
0 2,406 0 2,406

Beginning Retained earnings Plus: Net Income Less: Dividends Ending Retained Earnings

Introduction to Financial Accounting

http://www.youtube.com/watch?v=l2m FEBrfRWw

Preparation of Financial Statements

http://www.youtube.com/watch?v=LsO GkKbZvlg

Accounting Journal Entries Accrual and adjusting entries

http://www.youtube.com/watch?v=Ooib ihp3QPo

Statement of Cash Flows Preparation

http://www.youtube.com/watch?v=122 2W0P5Wr0

Lizzie Incorporated Classified Balance Sheet at 12/31/2010

http://www.youtube.com/etramway Assets Cash Accounts receivable Prepaid insurance Current Assets Property, plant and equipment, net Total Assets Liabilities Accounts payable Long-term debt Total Liabilities Stockholders' Equity Common stock Ending Retained earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 5,789 20,000 25,789 14,000 8,700 375 23,075 5,220 28,295

100 2,406 2,506

28,295

Introduction to Financial Accounting

http://www.youtube.com/watch?v=l2mFE BrfRWw

Preparation of Financial Statements

http://www.youtube.com/watch?v=LsOGk KbZvlg

Accounting Journal Entries Accrual and adjusting entries

http://www.youtube.com/watch?v=Ooibih p3QPo

Statement of Cash Flows Preparation

http://www.youtube.com/watch?v=1222 W0P5Wr0

http://www.youtube.com/etramway

Lizzie Incorporated Statement of Cash Flows For the Year Ended 12/31/2010

Cash provided from (used in) Operations: Net Income Change in current assets and liabilities Depreciation Cash used in Operations Cash used in Investing Cash provided by Financing Net change in Cash Beginning Cash Ending Cash

2,406 (3,286) 580 (300) (5,800) 20,100 14,000 14,000

Review the Cash Flow Worksheet in the next tab and watch the YouTube video on Preparing the Statement of Cash Flows (link provided below)

Introduction to Financial Accounting

http://www.youtube.com/watch?v=l2m FEBrfRWw

Preparation of Financial Statements

http://www.youtube.com/watch?v=LsO GkKbZvlg

Accounting Journal Entries Accrual and adjusting entries

http://www.youtube.com/watch?v=Ooib ihp3QPo

Statement of Cash Flows Preparation

http://www.youtube.com/watch?v=122 2W0P5Wr0

http://www.youtube.co m/watch?v=1222W0P 5Wr0&feature=related Watch the YouTube Balance Sheet video 12/31/2010 Balance Sheet 12/31/2009 Change in 2010 Cash flows provided from (used in) Operations Net Income (from income statement) C change in current assets and liabilites L gains and losses in the income statement (like on disposal of assets) A amortization and depreciation D deferred taxes Net cash used in Operations Cash used in Investing Cash provided from Financing

Cash 14,000 14,000

Accounts receivable, net 8,700 8,700

Prepaid insurance 375 375

2,406 (3,286) (8,700) (375)

580 (300)

(5,800)

20,100

Net Change in Cash (Operations + Investing + Financing) Beginning Cash Ending Cash

14,000 14,000 -

Property, plant & equipment, net 5,220 5,220

Total Assets 28,295 28,295

Accounts payable (5,789) (5,789)

Long-term debt (20,000) (20,000)

Total Liabilities (25,789) (25,789)

5,789

580

(5,800)

20,000

28,295

(25,789)

Common stock (100) (100)

Retained earnings (2,406) (2,406)

Total Liabilities and Owners' Equity (28,295) (28,295)

2,406

100

(28,295)