1. Journal Entries for Expense Transactions
Chapter 3
Journal Entries for Expense Transactions

2. Homework E3-5 + NE - Transaction Assets Liab SE Revenues Expenses
Net Income
a. Issued stock to organizers for cash + NE
Purchased equipment on credit
c. Declared and paid cash dividends -
d. Earned revenue, collected cash
e. Incurred expenses, on credit
f. Earned revenue, on credit
g. Paid cash on account
h. Incurred expenses, paid cash

3. Homework E3-5 + NE +/- - Transaction Assets Liab SE Revenues Expenses
Net Income
i. Earned revenue, collected 3/4ths in cash, balance on credit. + NE
j. Borrowed cash from local bank
Collected cash from customers on account
+/-
l. Experienced theft (a loss) of $100 cash -
m. Incurred expenses, paid 4/5ths in cash, balance on credit
n. Paid income tax expense for the period

4. E3-4

5. McGraw-Hill Publishing Company uses $2,754 worth of electricity and natural gas in its headquarters building for which it has not yet been billed.
Note: Expense is incurred when utilities are used and can be recorded when amount is known.
Account Name
Debit
Credit
Utilities Expense
$2,754
Utilities Payable

6. At the beginning of January, Turner Construction Company pays $846 for magazine advertising to run in monthly publications of the first three months of the year.
Account Name
Debit
Credit
Prepaid Advertising
$846
Cash

7. ASSUME: No Salaries Payable has been previously recorded.
Dell pays its computer service technicians $379,500 in salaries for two weeks ended January 7.
ASSUME: No Salaries Payable has been previously recorded.
Account Name
Debit
Credit
Salaries Expense
$379,500
Cash

8. The University of Florida orders 60,000 season football tickets from its printer and pays $7,610 in advance for the custom printing. The first game will be paid in September. Answer from the University's standpoint.
Account Name
Debit
Credit
Prepaid Tickets
$7,610
Cash

9. The campus bookstore receives 500 accounting texts at a cost of $89 each. The terms indicate that payment is due within 30 days of delivery.
Account Name
Debit
Credit
Inventory
$44,500
Accounts payable

10. During the last week of January, the campus bookstore sold 450 accounting texts received in part e at a sales price of $150 each.
Assume cost data from part e (cost of $89 per book)
Account Name
Debit
Credit
Cash
$67,500
Sales Revenue
Account Name
Debit
Credit
Cost of Goods Sold
$40,050
Inventory

11. Fucillo Hyundai, Inc. pays its salespersons $13,200 in commissions related to December automobile sales.
Assume: Company had previously recorded commissions payable.
Account Name
Debit
Credit
Commissions Payable
$13,200
Cash

12. On January 31, Fucillo Hyundai, Inc
On January 31, Fucillo Hyundai, Inc. determines that it will pay its salespersons $14,470 in commissions related to January sales. The payment will be made in early February. Answer from Fucillo’s perspective.
Account Name
Debit
Credit
Commissions Expense
$14,470
Commissions Payable

13. A new grill is purchased and installed at a Wendy’s restaurant at the end of the day on January 31; a $12,750 cash payment was made on that day.
Account Name
Debit
Credit
Equipment
$12,750
Cash

14. Carousel Center Mall had janitorial supplies costing $4,000 in storage
Carousel Center 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, $1,410 worth of janitorial supplies remained in storage.
Assume: Purchase of supplies was properly recorded, just recording the supplies used.
Account Name
Debit
Credit
Supplies Expense
$5,190
Supplies

15. An Iowa State University employee works eight hours, at $13 per hour, on January 31; however, payday is not until February 3. Answer from the perspective of the university.
Account Name
Debit
Credit
Wages Expense
$104
Wages Payable

16. Wang Company paid $3,600 for a fire insurance policy on January 1
Wang Company paid $3,600 for a fire insurance policy on January 1. The policy covers 12 months beginning January 1.
Account Name
Debit
Credit
Prepaid Insurance
$3,600
Cash

17. Darrius Incorporated has its delivery van repaired in January for $300 and charges the amount on account.
Account Name
Debit
Credit
Repairs & Maintenance Expense
$300
Accounts Payable (Maint. Payable)

18. 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
Credit
Telephone Expense
$202
Accounts Payable

19. Martin Company receives and pays in January a $1,285 invoice (bill) from a consulting firm for services received in January.
Account Name
Debit
Credit
Consulting Expense
$1,285
Cash

20. Parillo’s Taxi Company pays a $595 invoice from a consulting firm for services received and recorded in December.
Account Name
Debit
Credit
Accounts payable
$595
Cash

21. Phillips-Van Heusen Corporation completes production of 500 men’s shirts ordered by Macy’s Department Store at a cost of $10 each and delivers the order.
Note: No information was provided about sales information. Would have been Accounts Receivable and Sales Revenue.
Account Name
Debit
Credit
Cost of Goods Sold
$5,000
Inventory

22. E3-13 Do in your Groups PREPARE JOURNAL ENTRIES
Determine Cash Flow Category
(Operating, Investing, Financing, Non-Cash Operating, Non-Cash Investing and Financing)

23. a. Received $80,000 cash from each of the two shareholders to form the corporation, in addition to $2,000 in accounts receivable, $5,300 in equipment, a van (equipment) appraised at a fair market value of $13,000 and $1,200 in supplies.
Account Name
Debit
Credit
Cash
$160,000
Accounts Receivable
$ 2,000
Equipment
$ 18,300
Supplies
$ 1,200
Contributed Capital
$181,500
Cash flow from FINANCING ACTIVITIES.

24. b. Purchased a vacant store for sale in a good location for $360,000, making a $72,000 cash down payment and signing a 10-year mortgage from a local bank for the rest.
Account Name
Debit
Credit
Building
$360,000
Cash
$ 72,000
Notes Payable
$288,000
Cash flow from INVESTING ACTIVITIES ($72,000) and Non-Cash Investing and Financing Activity ($288,000).

25. c. Borrowed $50,000 from the local bank on a 10%, one year note.
Account Name
Debit
Credit
Cash
$50,000
Notes Payable
Cash flow from FINANCING ACTIVITIES.

26. Purchased and used food and paper supplies costing 10,830 in March; paid cash.
Purchase of Supplies:
Use of Supplies:
Account Name
Debit
Credit
Supplies
$10,830
Cash
Cash flow from OPERATING ACTIVITIES.
Account Name
Debit
Credit
Supplies Expense
$10,830
Supplies
Non-Cash OPERATING ACTIVITIES.

27. e. Catered four parties in March for $4,200; $1,600 was billed and the rest was received in cash.
Account Name
Debit
Credit
Cash
$2,600
Accounts Receivable
$1,600
Catering Revenue
$4,200
Cash flow from OPERATING ACTIVITIES ($2,600); Non-Cash Operating Activity ($1,600).

28. f. Made and sold food at the retail store for $11,900 cash
f. Made and sold food at the retail store for $11,900 cash. (assume the cost of these sales was already recorded as part of transaction d.)
Account Name
Debit
Credit
Cash
$11,900
Food Sales Revenue
Cash flow from OPERATING ACTIVITIES.

29. g. Received a telephone bill for March to be paid in April.
Account Name
Debit
Credit
Telephone Expense
$420
Telephone Payable
Non-Cash OPERATING ACTIVITIES.

30. h. Paid $363 in gas for the van in March.
Account Name
Debit
Credit
Gas Expense
$363
Cash
Cash flow from OPERATING ACTIVITIES.

31. i. Paid $6,280 in wages to employees who worked in March.
Account Name
Debit
Credit
Wages Expense
$6,280
Cash
Cash flow from OPERATING ACTIVITIES.

32. j. Paid a $300 dividend from the corporation to EACH owner.
Account Name
Debit
Credit
Retained Earnings
$600
Cash
Cash flow from FINANCING ACTIVITIES.

33. k. Purchased $50,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $20,000 (added to the cost of the building); paid cash.
Account Name
Debit
Credit
Equipment
$50,000
Building
$20,000
Cash
$70,000
Cash flow from INVESTING ACTIVITIES.