Tutorials Amsterdam Business School Accounting 2016-2017 P 6011P0148 / PE 6011P0150 Tutorials Amsterdam Business School

Where are we…? So far: Getting familiar with financial statements and understanding the relationship between them Getting familiar with using accounts Practicing economic transactions with assets Today: Continuing practicing with accounts and the journal entry methods The liability and owner’s equity side of the balance sheet Accounting week 46

Contents Today CH7 (liabilities): E7.23, P7.26, C7.34 CH8 (owner’s equity): P8.28, P8.32 Accounting week 46

E7.23 (page 261-262) Practicing how to register transactions related to bonds and notes payable Practicing the accounting language related to bonds and notes payable We use the journal entry methods (the horizontal method should be practiced at home) Accounting week 46

A. Income tax expense of $1,400 for the currrent period is accrued A. Income tax expense of $1,400 for the currrent period is accrued. Of the accrual, $400 represents deferred tax liabilities. Accounting week 46

B. Bonds payable with a face amount of $15,000 are issued at a price of 98. Accounting week 46

C. Of proceeds from the bonds in part b), $9,000 is used to purchase land for future expansion. Accounting week 46

D. Because of warranty claims, finished goods inventory costing $128 is sent to customer to replace defective products. Accounting week 46

E. A three-month, 9% note payable with a face amount of $60,000 was signed. The bank made the loan on a discount basis. Note: here we just use a simple discounting (not with the present value formula) as shown in the lecture slides (Lecture 3, slide number 14-19). Reason: short-term (within a year) Accounting week 46

F. The next installment of a long term serial bond requiring an annual principal repayment of $70,000 will become due within the current year. Accounting week 46

Accounting week 46

P7.26 (page 263) Practicing how to register unearned revenue Helps practicing/understanding the accrual concept Accounting week 46

Accounting week 46

P8.28 (page 304) Practicing how to register transactions related to owner’s equity Understanding the types of stocks Accounting week 46

A. Sold 2,700 shares of $50 par value preferred stock at $53 A. Sold 2,700 shares of $50 par value preferred stock at $53.50 per share. Accounting week 46

C. Issued 5,000 shares of $50 par value preferred stock in exchange for a building when the market price for the share was $53. Accounting week 46

Declared the annual cash dividend of $3. 70 per share on common stock Declared the annual cash dividend of $3.70 per share on common stock. There were 7,300 share of $1 par value common stock issued and outstanding throughout the year. Accounting week 46

D. Purchased 1,400 shares of preferred stock for the treasury at a price of $56 per share. Accounting week 46

E. Sold 500 shares of the preferred stock held in treasury (see d) at a price of $57 per share. Accounting week 46

F. Declared and issued a 15% stock dividend on the $1 par value common stock when the market price per share was $36. Accounting week 46

P8.32 (page 306-307) Practicing working with various stock types Accounting week 46

Accounting week 46

Accounting week 46

Accounting week 46

Accounting week 46