Handouts to be used in Dave Krug’s Accounting 1 Course Bring this packet each day, as we will be working on these handouts in class. \Note on the top right of each page the Lecture # in which each handout is used.fo] 1am glad that my accounting videos are helping you. Attached are the handouts used in the videos (the 3 page and pages following it have the info needed to make your Dasheards). These shouldbe useful for yo. [know some people sometimes ask as wel forthe PowerpoinsLlsture with, but unfortuntely Iam notable to provide tose to people for various reasons. Work along on these exercises just s if you ae one of my faceto- face students ‘To whoever receives these Accounting I handouts: Toften have people ask me why I spend so much time and effort on this class, putting it on Youtube, and in responding to students across the world. (certainly do not gt paid anything extra for doing so). 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And T have confidence that if you work hard, you can lear this material and it ean benefit you and those loved ones around you. Have confidence in yourself! ‘You CAN do this! God Bless! ne eric ota, ‘on yh, Mary purchases sone ere eupment $5,020 by malig a don ert S500 ca ar etn pant pyar emo. ‘on ay 2g 860 Jane a eer ans pay Bw eran othe ‘money tb es Many ory Lecua *7ACCT6 I -- CHap 2%. *- Compre End Belen leet 3 CAs oo. oops Ale Bee co Uoee ee 2. 2500 CASH AIR WAGES Payable CASH Joo ooleave ¥/, ee PREPAID ASSET AJEs Forsch COMPANY BELOW: a ey Gent eg 4 aotope rereriame e ach Company makes AJ Bsa yuaceni only (L.n0 monly ATEs are msde) Anan each Comper separately 8) COMPANY A: The Prepatd Insurance account as a $4,700 debit balance before adjustment. An ‘examination of insurance polis shows $900 of unexpired insurance remaining. ‘Key Question: How mach ofthe asset was USED UP and tha needs be expensed? ME: >) COMPANY B: The Prepaid Insurance account as a $5,390 debit balance before adjustment. An cvamination of insurance policin shows $1040 of intnrance has expired Key Question: How much ofthe asset was USED UP and ths needs to be expensed? ME (9 COMPANY C: On September 1, 2011 when we prepaid $24,000 for cwo yeurs of rent, we debited Prepaid Reat and credited Cash. ‘Key Question: How mach ofthe asset was USED UP and ths meds to be expensed? ME:Leer #/) gap ‘ORFICE SUPPLIES AEs Forsch COMPANY BELOW. yun tat ge {pu ng yo Dent 21 Copy mts Ee et oly Ee ml no eh Comp rey 4) COMPANY D: Te Ota Supls wun ad $50 dit tale on Deer 3,200 No se supplies were purchased during the year. The December 31, 2011 physieal count showed $110 of soplies available, Key Question: How much of the assei was USED UP and thu needs to be expensed? AE: 9) COMPANY Es The Office Supplies aosount had an $60 debit balance on Desember 31,2010. Offs supplies of 2,100 were purchased during the year and eed othe Office Supplies account. The December 31,2011 physical cout showed $650 of supplies avalable, ‘Key Question: How much ofthe asset was USED UP and thas needs be expensed? AE: 1) COMPANY F: The Ofice Supplies account stared the yar with a $4,000 belance, During 201, the company purchased ofie supplies for $9,400, which was added tothe Ofice Supplies account. The lnvemory of supplies avilable at Docember 31, 2011, totaled $2,650. Key Question: How mach ofthe asset was USED UP and thus neds to be expensed? Ae:leer #// ‘Acs 1—Chap 3 DEPRECIATION AJEs Por eich COMPANY BELOW: ‘+ Answer the Key Question hts en “+ Prope the AE (adjusting jura ny) pale on December 31,2011 Bach Company makes AES at 3ea:epoaly (12:20 monly AEs we made). Anajx each Comp separa, 8) COMPANY G: ‘The Company needs to record $13,50 of depreciation expense for the yer Kay Question: What amount needs tobe recorded as deprecation expense forthe year? _ AE: 'b) COMPANY H: The Compacy bis oly one fed set a thy purchased ito aouary {of 011. Tha ase Ind acs of $4.00 and anette Ii ofS years, Slvage vue is estinsted tbe zro tthe endo the S yer Key Question: What amount needs to be recorded as depreciation expense forthe year? AEE: 1) COMPANY I: The Company has only coe fed ast, nd ty pushed ton Jamar 20201. Thal eet ad cost of $32,000 and an estilo? yours. Salvage vals Is estinte o Be $400 a the end fhe ys Key Question: What amount needs tbe recorded as duprecation expense for the year? ME:leer #12 ee UNEARNED REVENUE AJEs Forse COMPANY BELOW — 1 papers AB eden oel wae Dab, ach Company makes AJES st eared only (4 0 monthly AJ ae mae), Ana cock Company separa, 8) COMPANY A: On November 1%,2011, we collected $6,000 rent in advance, debling Cash and crediting Unearned Rent Revenue. The tenant was paying one year's rent in advance. Key Question: How mach ofthat unearned revere has NOW BEEN EARNED? (remember, Company only makes annual AJB), ME; }) COMPANY B: This Company charges S75 per month fora complete house treatment to spray for Inscets. One customer paid $300 on September 12%, 2011 i advance of any treatments, and it 45 racorded with a debit to Cash and a credit to Unearnod Revenue. At ear end the Company has performed three fotal treatments forthe customer. Key Question: How much ofthat wneorned revenue has NOW BEEN EARNED? (remember, Company only makes annua AJES). AE; ©) COMPANY C: On September I of 2011, llat paid us $24,000 for si months of rent revenue (we ‘ease building fo them). We recorded thet amount on Sept I as Unearned Rent Revenue. Thus, ‘adjustment needs fo be made. ‘Key Question: How much ofthat weared revenue has NOW BEEN EARNED? (remember, Company only makes anual AJES) WE:Leer #12 ae ACCRUED EXPENSE AJEs je ouarae deere mete [ee ee or rey ers Fy ep reo ero moe no ee coon ‘Key Question: — What amount of LIABIILTY and EXPENSE is currently not onthe Company's books, bul neds tobe? AB: © COMPANY F: On December 31, the Company owes 250 of interest ona line-f-cedi oan. That ‘ucorest will not be paid until somecme in January. ‘Key Question: What amount of LIBIILTY and EXPENSE ts currently not onthe Company's books but reeds 10 be? Ade: 1) COMPANY F: The Company has mortgage payable and has incurred (bu not recorded) Interest ‘expense of S875 forthe year endod 1231/2011. The company mast pay the interet on Janeary 7, 2012. Kay Question: What amount of LIABULTY and EXPENSE curren not on the Company's books, but eds tobe? Ase:Ceer #2 ‘Acctg1—Chap3 ACCRUED REVENUE AJE: For each COMPANY BELOW: ‘Answer the Key Question tat sive. ‘Prepare te AI (adjusting journal ny) need on December 31,201, "ach Company makes AJB yearend only (1.00 morihly AJEs ar made) Analyo each Company separate ® COMPANY G: The Company has completed consulting services of 19,000 for a lleat, but this tient has not paid the Company, nor has the Company even billed them. Key Question: — What amour of ASSET and REVENUE i carrey not onthe Company's Books, but neds tobe? AE: 2) COMPANY H: rn Company nas ernest nt yet recorded, 390 o ftrest at Bas ere trom Investments in 90-ay Certfeates af Depo for year ended 1251/2011. Key Question: — What amount of ASSET and REVENUE is currently not on the Company's books, but ‘needs tobe? AE: 1) COMPANY: The Company coleets monthly rent rom the tenants a hele Bullng, One tenant whose eat ls $1,300 per mont has not yo paid ws i reat for December. Key Question: What amount of ASSET and REVENUE ts crreily noon the Company's book, but needs tobe? Ak:Lecue * 15 + #16 Chap 4— Accounting 1 (CURRENT ASSETS — Any asset expected to be ‘used up’ within one year. © Cash ‘© Short-term investments AR ‘© Prepaids (e.g. Prepaid Rent, Prepaid Insurance, etc.) Inventory Office Supplies ‘© Short-term N/R (due w/in the year) CURRENT LIABILITIES * Dany ° ° lity due within one year. These typically Include AP Unearned Revenue Short-term N/P If due w/in one year) ‘Accrued Liabilities "Interest payable, salaries payable, wages payable, taxes payable Also." Current portion of Long-term debt”Chee ¥ CLOSING ENTRIES IN A NET LOSS SITUATION ‘Acctg 1, CHAP 4 ~Propare closing entes forthe folowing ested tl balance ‘THEN prepare a post losing Wal balance T2130 750 2100 2100 2000 ‘E00 200 50 100 Leer #/6Things | guarantee you will be on Test #2 over Chap 3, 4 enc (am ot saying that ONLY these hing ar onthe test, bat garantee you thatthe below WIL be on thetest General Accounting stuff: Make sure you know your account balances and can {do something lke QS 2.3 from Chap 2 Chap 3: ‘Make sure you can do AlEs (like EX 3.2 and 3.3) ‘Make sure you can do a salary accrual AE problem like US 3.5 and EX'3.6 chap 4 Make sure you can make Closing journal entries and do a Post closing TB like EX 43) Make sure you can identify accounts as being permanent VS temporary accounts. ‘Make sure you understand the correct order of the Steps of the Accounting Cycle (like Qs 4.2) ‘Make sure you can identify accounts as being current VS non-current Make sure you understand the Current Ratiodeur #19 (Chapter S~ BASIC Purchasing Journal Entries (On August 1", Gilmore Company purchased merchandise from Hendren In.with an invoice ree of $60,000 andere tems of 2/10, n/30. Gilmore Company pad Hendren on August 89, [REQUIRED: Prepare journal entries for Gilmore Company the PURCHASER) on the following dts: uct 22 ‘On September 15% Schneider Company purchased some merchandi Ivetary Pom Makarov Inet an invoie price of $35,000 and ret ems of 210, 130. Scheer Company paid “Makarov on September 28°, ‘REQUIRED: Prepare journal exties fr Scheider Company the PURCHASER) onthe following dates ‘Sotember 50hChap 6, Acctg 1 Apr Ther I7-Ape 22.Apr Lecture ¥2) SPONGEBOB INCORPORATED nts Unicast Bog Inventory 5$ 800 $ 40.00 Purchase 9$ 9.00 $ 81.00 Purch 6 $10.50 $ 63.00 Sales of 12 units at a seling price of $29 each vp dard meh cd Required: SpongeBob uses the perpetual inventory system. Determine the costs ‘assigned to April 30 anding inventory and calculate CGS forthe month under each (of the foliowing 2 cost methods: FIFO UFO cos ENDINV.Chap 6 (ecg 1 ) Inventor Flow Worksheets BxawPLeLedue 2,22 BB's Boating Example Probie # ‘Below ie information forthe merchandising company of BB's Boating Shop who ‘uses the perpetual ventory system. 1-40r Begining Invern of unk @ $17 un ost 9.4 Purchase 6 nts @ $19 nt cost 10#or Purchase s0unts @ S20 unt cost 1.80 ‘Sal of 12unts@ uni sting prc of $45 25 Aor Purchase of 4unks @ $24 uni cost ‘n rogadsto the above data please compet the necessary work and answer each ‘ofthe folowing questions (please place your answer Inthe blanks provided). ‘Answers noed tobe EXACT 0 be core (Here are NO rounding errors) 8) Whotie he voto ofthe ending iment atthe od of Ae ft? 1) Wats the vai of teeing inventory at be end of Ap 1087 ©) Whatwasthe cost of gods ol amount forthe Api 6th le? 4) Watisth vat of to ening inerizy athe endo Ap 167? ||| [11 ©) Whats the value ofthe ening inventory atthe and of Ap 257‘Chap 6 (Acctg # ) Inventory Flow Worksheets EXAMPLEletee 22 ABC Inc. (—- weighted avg) ‘Below infomation forthe merchandising company of ABC ne who ‘teeth perpetual inventory eyetam andthe Weighed Avg methed of costog: {pr Bagong vento of 10 unk @ 548 unt cost £4or Purchase 7unts @ S60 unt cost ‘Apr Puchaso Buns @ $64 unt cost 160 ‘Sel of ants @ unt sting pr of $80 25 hor Purheso of Sunks @ $55 unt cost 'n regards othe above data, please compete the necessary work and answer each ofthe following questions (please place your anewer Inthe blanks provided). 2) Whats the value of tbe ending invertor at ha end of Apa ah? ») What sth vals ofthe ening inventory the end of Ape 17 © What was te cost of goods sot amount rte Api 16 sale? 4) Whats the value fhe ending invertor at he end of Ap 25?(Chap 6 (Acctg 1 ) Inventory Flow Worksheets EXAMPLE,Cectuee 21,22 ‘chap Aecg NEW TEKNIQ CO. [NEW TEKNIQ CO made the folowing merchandise puchases and sles during the manth of May: ‘Alay purchesed £00 units at $18 each My purchased 300 unis at $18 each 10 May sols 450 unis at $80 ach (cling pcs) 20May purchased 150 units at $18.75 each 25.May sod 200 units at $80 each (sling price) ‘There was NO begining inventory. REQUIRED: Lis th Ending Inventory arpeunt snd the Cost of Goods Sold amount uncer EACH of the folowing methods: FIFO Ending Inventory = cos =, UFO Ending ventory = ocs=__ Weighed Avg Ending Inventory = cass ‘Show your workin a clear and erry way you wish fo recaive pat red. Numbers ‘sould rounded to the nearest cant (Le. $07.86 rater than $53 o $97.8) THERE SHOULD BE NO ROUNDING SITUATIONS ON THIS EXERCISE.‘Chap 6 (Acetg 1 ) Inventory Flow Worksheets EXAMPLE,‘Chap 6 (Acctg 1) Inventory Flow Worksheets EXAMPLE,‘Accounting 1 Review Sheet for Test #3 (over Chap 5, 6) ‘Things! GUARANTEE YOU willbe on test rom Chapter 5 {Equations and Inventory Fow equation fo ServiceCo and Merchandle (se au Journal entries for gurchase eye fora merchandiser Journal entries forsale ye fora manufacturer ‘Acid Test Ratio (and how compares to Curent ato), Gross Margin Ratio ‘Things GUARANTEE YOU willbe on tet rom Chapters 1 Detnitions and such re: inventory 1+ Caleulatng CS nd Enng Inventory ung (© FIFO, UFO, Weighted Avg, Specife 1 + Advantages/lsadantags ofthe above methods ‘+ LEM (lower of Costor Market)Eatimato of Bad Debt Expense (Alowance Methods) Chap cig EAUPLE #1 Metz Coad Sees of $1,500,000. Thy uz the Percentage of Sale method for extinaing Bod cat expen. ey estat bod ett tbe 3% ofan, Prepare ‘Mo oural ony to eemate bad det pore AMPLE #2 ‘tomar In utzs te Percentage of AR. method io oma bad det exsene IKetaman has an AR bance of $300,000 oar nd and a CREDIT balance $6,200 n ter Aowance fr Dot Aeoursarcouns prepare the uma erty oetmet bad att xpone ey fol at 2% of AR wl bo unceoctb, Cer #30| WORKSHEET for DOUBLE-DECLINING BALANCE METHOD OF DEFRECATION Chap 10) C€ET ABZ Gy cas Fer Uife = "80: Salvage Valve ‘Note: Keep depreciatingin this manner, However, STOP de 1B when the asset's “BOOK VALUE” (Le. "Cost LESS. “Accumulated Depreciation”) is equal to the SALVAGE VALUE assetdeer #3y ‘Accig I — Chapter 10 Handout ~~ Phil Murray's Vehicle (On January 1 of 2012, Phil Muray's company bough company vehicle for a cost of| ‘48,000, The vehi is emtinatod to last $year. Phil estimates tha the vehicle will be sed a total of 150,000 mils during its lite. The salvage value of the veici is ‘extmated to be $600 at the endof the 5 years. During 2012, Phil's company dove the ‘ehicle 37,500 miles and in 2013, te company drove the vehicle for 48,300 miles. ‘Required: Calculate the anount of depreciation expense fo 2012 AND 2013 under eh ofthe fllowing separate depreciation methods, 2012 2013 Seaght-Line Method Units of prxuston method Double dectning balance methodREVIEW SHEET FOR ACCTG 1 TEST Hover Chap 3, 9and 100 ‘This ists not exhaustive, but | guarantee the following wil be onthe est. ‘chap 8~ princi of internal control + ‘pettycath journal ene, ‘© bank reconciliation chaps "Estimating bad deb expense and wing off accounts under the allowance method 1 How is A/R and ‘allowance for DX presented onthe balance sheet + MR + Geet card recevables Fst part of Chap 10 [pp 394 to 402 in textbook} ‘+ Base fundamentals of plant assets Computing COST of plant assets computing depreciation under the 3 methods © straight tne © units of production double deciningbalnee(know how todo thst Students struggle w/ this method sometimes) Remember! The best way to study forthe tests to RE-DO the HOMEWORK! Also remember that there are practice tests (and answers) on ANGEL[ACCOUNTING 1 FINAL REVIEW chapter 0 " Ast +08 Fharcial Sot (85 18, Smt of Changes) Pncils of accountng asic dural Enis ‘Adjusting Journal Enos ‘ist Batoe Closing Entries Recon purchates and sles using prpetial ventory FIFO, LFO, ws Avg, Spact ‘anh of iwertony eters Wed cover ti chapter, Irtamal Cone nfo Pety cash ‘Bank econliaon (rod Card sales Estimating bad debt expense (Alowance methods) Computation ont on Nols Recelvable Defnion of feed assets Depreciation metieds DDepiton’Arertzaton amp sum pureneses Revenue VS Captal expenatures Asset Disposal ural entries Anything covered in this chap that we had HW problems on, [NO ENO-OF-CHAPTER FINANCIAL RATIOS WALL BE ON TESTI KNOW YOUR ACCOUNTING PRINGIPLESII NOW YOUR ACCOUNT BALANCES AND WHICH FINANCIAL ‘STATEMENT THEY BELONG ONI