1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 14-1 Distributing Corporate Earnings to Stockholders

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 14-1 STOCKHOLDERS’ EQUITY ACCOUNTS USED BY A CORPORATION page 405 (3000) STOCKHOLDERS’ EQUITY 3110Capital Stock 3120Retained Earnings 3130Dividends 3140Income Summary

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 14-1 DECLARING A DIVIDEND 1 2 3 4 56 page 406 December 15. Hobby Shack’s board of directors declared a quarterly dividend of $2.00 per share; capital stock issued is 2,500 shares; total dividend, $5,000.00. Date of payment is January 15. Memorandum No. 79. 4.Write the debit amount. 3.Write the memorandum number. 2.Write the title of the account debited. 1.Write the date. 5.Write the title of the account credited. 6.Write the credit amount.

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 14-1 PAYING A DIVIDEND 12345 page 407 January 15. Paid cash for quarterly dividend declared December 15, $5,000.00. Check No. 379. 1. Write the date. 2. Write the account title. 3. Write the check number. 4. Write the debit account. 5. Write the credit amount.

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 14-1 TERMS REVIEW retained earnings dividends board of directors declaring a dividend page 408

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 14-2 Beginning an 8-Column Work Sheet for a Merchandising Business

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 14-2 RECORDING A TRIAL BALANCE ON A WORK SHEET page 410 1 3 2 1.Account title 2.Account balance 3.Total, prove, and rule the debit and credit columns

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 14-2 ANALYZING AND RECORDING SUPPLIES ADJUSTMENTS page 411 Adj. (a)2,730.00 Supplies Expense—Office Dec. 31 Bal.3,480.00Adj. (a)2,730.00 (Adj Bal. 750.00) Supplies — Office Adj. (b)2,910.00 Supplies Expense — Store Dec. 31 Bal.3,944.00Adj. (b) 2,910.00 (Adj Bal.1,034.00) Supplies — Store

9. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 14-2 RECORDING SUPPLIES ADJUSTMENTS ON A WORK SHEET page 412 2 1 1.Write the debit amounts in the Adjustments Debit column. 2.Write the credit amounts in the Adjustments Credit column. 3.Label the two parts of the Supplies—Office adjustment with small letter a and small letter b in parentheses. 3 3

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 14-2 ANALYZING AND RECORDING A PREPAID INSURANCE ADJUSTMENT 1 2 3 3 page 413 1.Enter the amount of insurance used in the Adjustments Credit column. 2.Enter the same amount in the Adjustments Debit column. 3.Label the two parts of the adjustment with a small letter c in parentheses.

11. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 14-3 Planning and Recording a Merchandise Inventory Adjustment

12. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 14-3 MERCHANDISE INVENTORY page 415

13. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 14-3 ANALYZING AND RECORDING A MERCHANDISE INVENTORY ADJUSTMENT 1 2 3 3 page 416 1.Write the debit amount. 3.Label the two parts of this adjustment with a small letter d in parentheses. 2.Write the credit amount.

14. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 14 LESSON 14-3 ANALYZING AN ADJUSTMENT WHEN ENDING MERCHANDISE INVENTORY IS GREATER THAN BEGINNING MERCHANDISE INVENTORY page 417 Jan. 1 Bal.294,700.00 Adj. (d)4,200.00 (New Bal.298,900.00) Merchandise Inventory Adj. (d)4,200.00 Income Summary

15. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 15 LESSON 14-3 TERM REVIEW merchandise inventory page 418

16. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 14-4 Planning and Recording an Allowance for Uncollectible Accounts Adjustment

17. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON 14-4 ALLOWANCE METHOD OF RECORDING LOSSES FROM UNCOLLECTIBLE ACCOUNTS page 419

18. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 14-4 Estimated Uncollectible Accounts Expense =Percentage× Total Sales on Account $1,245.00=1%×$124,500.00 ESTIMATING UNCOLLECTIBLE ACCOUNTS EXPENSE page 420

19. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 14-4 1.Enter the estimated uncollectible amount. ANALYZING AND RECORDING AN ADJUSTMENT FOR UNCOLLECTIBLE ACCOUNTS EXPENSE 3.Label the two parts with a small letter e in parentheses. 1 2 3 3 page 421 2.Enter the same amount in the Adjustments Debit column.

20. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 14-4 TERMS REVIEW uncollectible accounts allowance method of recording losses from uncollectible accounts book value book value of accounts receivable page 422

21. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 14-5 Planning and Recording Depreciation Adjustments

22. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 22 LESSON 14-5 CALCULATING DEPRECIATION EXPENSE AND BOOK VALUE page 424 Estimated Total Depreciation Expense = Estimated Salvage Value – Original Cost $1,000.00=$250.00–$1,250.00 Annual Depreciation Expense = Years of Estimated Useful Life ÷ Estimated Total Depreciation Expense $200.00=5÷$1,000.00 1.Subtract the asset’s estimated salvage value from original cost. 2.Divide the estimated total depreciation expense by the years of estimated useful life. 1 2 (continued on next slide)

23. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 23 LESSON 14-5 CALCULATING DEPRECIATION EXPENSE AND BOOK VALUE page 424 20X3 Accumulated Depreciation = 20X3 Depreciation Expense + 20X2 Accumulated Depreciation $600.00=$200.00+$400.00 Ending Book Value = Accumulated Depreciation –Original Cost $650.00=$600.00–$1,250.00 (continued from previous slide)

24. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 24 LESSON 14-5 ANALYZING AND RECORDING ADJUSTMENTS FOR DEPRECIATION EXPENSE page 425 1 2 3 3 1.Write the debit amounts. 2.Write the credit amounts. 3.Label the adjustments.

25. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 25 LESSON 14-5 TERMS REVIEW current assets plant assets depreciation expense estimated salvage value straight-line method of depreciation accumulated depreciation book value of a plant asset page 426

26. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 14-6 Calculating Federal Income Tax and Completing a Work Sheet

27. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 27 LESSON 14-6 FEDERAL INCOME TAX EXPENSE ADJUSTMENT page 427 Total of Income Statement Credit column$500,253.10 Less total of Income Statement Debit column before federal income tax–396,049.91 Equals Net Income before Federal Income Tax$104,203.19

28. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 28 LESSON 14-6 CALCULATING FEDERAL INCOME TAX page 428

29. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 29 LESSON 14-6 1. Calculate the amount of federal income tax expense adjustment. RECORDING THE FEDERAL INCOME TAX ADJUSTMENT 2 3 3 1 1 page 429 2. Total and rule the Adjustments columns. 3. Extend account balances.

30. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 30 LESSON 14-6 COMPLETING A WORK SHEET 11 page 430 2 4 3 5 1.Total the Income Statement and Balance Sheet columns. 5.Rule double lines. 4.Calculate the column totals. 3.Extend the net income amount. 2.Calculate and enter the net income after federal income tax.

31. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 31 LESSON 14-6 A COMPLETED 8-COLUMN WORK SHEET page 432

32. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 32 LESSON 14-6 A 10-COLUMN WORK SHEET page 434-435 1.Trial balance 4 6 23 5 5.Extend balances 2.Adjustments 3.Extend adjusted balances 4.Total, prove, and rule 6.Calculate net income; total, prove and rule 1