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Flashcards in Journal Entries Deck (89):
1

Journal Entries under the Equity Method Pg. 4-4, 4-7
a) Acq of investment at cost (BUY)
b) Investor income (Company Earns Money)
c) % of cash dividend (Investee get paid)
d) Record Amort/Depre/Impair of excess of BV and purchase price (Amortize/Depre/Imapir of excess)

*When company earns money, the investment of investee goes up b/c of significant influence; when company pays dividends, investment goes down
a) Invest: debit includes BV, PP&E, goodwill
Cash: credit
b) Invest: debit
Equity in earnings: credit (I/S acctg goes to non-
operating)
c) Cash: debit
Invest: credit b/c paid out of dividends and lowers invest
since it comes out of retained earnings (b/c owns >20%)
d) Equity in earnings: debit include goodwill, PP&E (from the write up from BV, FMW, and purchase price (I/S acctg) => comes from non-operating
Invest: credit (B/S acctg)

2

Journal Entries under the Cost Method Pg. 4-5, 4-7
a) Buy the investment
b) Investor income (Company Earns Money)
c) Record % of cash dividend (Investee gets paid)
d) Record Amort/Depre/Impair of excess of BV and purchase price (Amortize/Depre/Imapir of excess)

*When company earns money, the investment of investee doesn't change b/c no significant influence
a) Invest: debit
Cash: credit
b) No entry because only owns comes from non-
operating (Not credit invest b/c owns b/c they dont have significant
influence in company

**No change in investment in T-acctg

3

Changes in ownership Pg. 4-7
a) Equity to Cost
b) Cost to Equity

a) Prospective: cost method going forward
b) Retrospectively apply equity method b/c now have to add journal entries for record % of cash dividend & record amort/depre/impair

4

Journal Entry Trading Securitites Pg. 5-2
a) To purchase investment
b) Unrealized gain
c) Unrealized loss

*Significance?

a) Invest in Trading Securities: debit
Cash: credit
b) Mkt adj - Trading securities (B/S): debit
Unrealized gain (I/S): credit
c) Unrealized loss (I/S): debit
Mkt adj - Trading securities (B/S): credit

*Since its I/S it is "this year only"

5

Journal Entry Available for Sale Pg. 5-3
a) To purchase investment
b) Unrealized gain
c) Unrealized loss

*Significance?

a) Invest in Trading Securities: debit
Cash: credit
b) Mkt adj - AVS securities (B/S): debit
Unrealized gain (B/S): credit
c) Unrealized loss (B/S): debit
Mkt adj - AVS securities (B/S): credit

*Think of DENT pg. 2-3
*Since its B/S it is cumulative balance Pg. 5-3 (Get NET)

6

Journal Entry on Fair Value Hedge Pg. 6-4
The asset then dropped in price

Its your asset:
Inventory: debit (b/c our asset)
Cash: credit

Decline in price:
Loss on market decline in inventory: debit
Inventory: credit

Hedge for loss:
Receivable on derivative: debit (B/S)
Gain on fair value hedge: credit (I/S)

**No NET income b/c hedge

7

Journal Entry on Cash Flow Hedge Pg. 6-5

Its your asset:
Inventory: debit (b/c our asset)
Cash: credit

Decline in price:
Loss on market decline in inventory: debit
Inventory: credit

Hedge for loss:
Other comprehensive income-loss on cash flow hedge: debit
(Goes to OCI b/c DENT) B/S
Payable on derivative: credit

8

Journal Entry on foreign currency: buying equipment Pg. 6-2 update

Equipment: debit
Due to X Company: credit
(convert from spot rate)

*Goes to income statement (remeasure)

9

Journal Entry on financial instruments DENOMINATED in foreign currency Pg. 6-2 update

Foreign currency exchange loss: debit
Due to X Company: credit

*Goes to income statement (remeasure)

10

Journal Entry on Inventory (Perpetual)

At the time of purchase

At sales occur

*Ongoing, real-time count

Inventory: debit
A/P: credit

A/R: debit
Sales Revenue: credit
COGS: debit
Inventroy credit

11

Journal Entry on Inventory (Periodic)

At the time of purchase

At year end

*Physical inventory count

Purchase: debit
COGS (plug at year end): debit
Purchases: credit

12

Journal Entry on buying and selling inventory

a) Buying

b) Selling

a) Inventory: debit
A/P: credit

b) A/R: debit
Sales Revenue: credit

COGS: debit
Inventory: credit

13

Journal Entry on Life insurance in finding life insurance expense Pg. 4-7

If there is dividend received? Also include in addition

Cash surrender value: debit
Insurance expense: debit
Cash: credit

Cash: debit
Insurance expense: credit

14

Journal Entry for Propery, Plant, and Equipment?

*Reason for journal entry?

Asset: debit; include purchase price, legal fees, delinquent taxes, title insurance, transportation (freight in), installation, test runs, and sales taxes
Cash: credit

*Because we are capitalizing since we are matching the cost of the aseet with the period's benefit

15

Journal Entry for Lump Sum Purchases Pg. 8-1

Land: debit
Building: debit
Cash: credit

16

Journal Entry for Asset Retirement Obligation Pg. 8-3

Accretion Expense: debit
ARO Liability: credit

17

Journal Entry for asset as a donation Pg. 8-3

Land: debit
Other income (Contribution Revenue): credit

18

Journal Entry for capitalization of interest; interest from money used to build asset Pg. 8-3

Building WIP: debit
Interest Expense: debit
Cash: credit

19

Journal Entry for repairs and maintenance expense Pg. 8-5

Repairs and Maintence Expense: debit
Cash: credit

20

Journal Entry how to sell an asset and replace with new asset Pg. 8-5

Accummulated Depreciation: debit
Loss: debit
Asset: credit

Asset: debit
Cash: credit

21

Journal Entry to record depreciation Pg. 8-6

Depreciation Expense I/S: debit
Accumulated Depreciation: credit (B/S contra asset account => reduction of asset)

22

Journal Entry to Selling an asset Pg. 8-10

Cash: debit
Accumulated Depreciation: debit
Loss: NONE
Asset: credit
Gain: NONE

*Assume cash received is book value

23

Journal Entry of Disposal of fixed assets Pg. 8-14

Cash: debit
Loss on sale: debit
Accumulated depreciation: debit
Asset: credit

24

Journal Entry for Impairment loss Pg. 8-12

Loss on Impairment (I/S): debit
Accumulated Depreciation: credit

25

Journal Entry for Accured revenue Pg. 9-6 Def
Journal Entry for Accured expense

*Significance?

Revenue that is earned but not received
Receivable: debit
Revenue: credit (I/S)
Then receive...
Cash: debit
Receivable: credit

Expense that is incurred but has not been paid
Expense: debit (I/S)
Payable: credit
Then pay...
Payable: debit
Cash: credit

*Income statement is "hit" at different times

26

Journal Entry for Deferred Revenue Pg. 9-6 Def
Journal Entry for Deferred expense

*Significance?

Money that you received but have not earned
Cash: debit
Deferred Revenue: credit (liabitility)
When you earn it...
Deferred Revenue: debit
Revenue: credit (I/S)

Something you paid but is not yet expensed
Deferred Expense: debit (pre-paid) => (asset)
Cash: credit

Expense: debit (I/S)
Deferred Expense: credit

*Income statement is "hit" at different times

27

Journal Entry for Prepaid Insurance Pg. 9-7

Insurance Expense: debit
Prepaid insurance: debit
Cash: credit

28

Journal Entry for Royalties Pg. 9-8

Royalty expense: debit
Prepaid royalties: debit
Accured royalties: credit
Cash: credit

29

Journal Entry for Life Insurance Pg. 9-8

Cash surrender value: debit
Life insurance: debit
Cash: credit

30

Journal Entry for Goodwill impairment loss Pg. 9-4

Impairment loss: debit (I/S: income from continuing operations)
Goodwill: credit

31

Journal Entry for Uncollectible Receivable Pg. 13-1
1) First Sale
2) Then What ever you cant collect

1) A/R: debit (B/S)
Sales Revenue: credit (I/S)
2) Bad Debt expense: debit (I/S)
Allowance for Doubtful accounts: credit (contra)

*Difference is NRV

32

Journal Entry for Direct Write-off method Pg. 13-1

*What does it violate?

*Why is this method used even though its not GAAP?

*What is the purpose of having bad debt expense, even though it violates GAAP?

Bad Debt Expense: debit
A/R: credit

*Violates GAAP because it does not follow matching; bad debt expense not recorded at time of sale
Also not Conservative because stated at FACE and not at NRV => it is overstated

*Used for tax purposes

33

TESTED
Journal Entry for Accounts Receivable Pg. 13-3
a) To record bad debt expense
b) Write-Off receivable
c) Recovery of A/R

a) Bad debt expense: debit
Allowance for doubtful: credit (B/S)
b) Means that the company will not collect the money
Allowance for doubtful: debit
A/R: credit
*No net effect on value when write off happens
c) Customer decided to pay you back
A/R: debit
Allowance: credit
Cash: debit
A/R: credit

34

Journal Entry for pledging or assigning (borrow) Pg. 13-4

Cash: debit
Note payable: credit

35

Journal Entry for impairments or receivables Pg. 13-8

Bad debt expense: debit
Allowance for impaired loan: credit

36

Journal Entry for notes received soley for cash Pg. 13-9

Journal Entry for good or services
(TESTED)

N/R: debit (company asset)
Cash: credit (company lends out cash)

Notes receivable: debit
Discount on N/R: credit
Asset: credit
Gain on sale: credit

37

Journal Entry for factoring
Pg. 13-5

Cash: debit
Loss on factoring: debit
Allowance for bad debts: debit
A/R: credit

38

Journal Entry bond issued at par value Pg. 10-2

How to account for interest issued?

Cash: debit
Bonds Payable: credit

Interest Expense: debit
Cash: credit

39

Journal Entry for bond issued at discount Pg. 10-2

How to account for interest expense?

Starts small then gets bigger
Cash: debit
Discount: debit
Bonds payable: credit

Interest Expense: debit (use market, effective, yield rate)
Discount: credit
Cash: credit

40

Journal Entry for bond issued at a premium Pg. 10-2

How to account for interest expense

Starts big then gets small
Cash: debit
Premium: credit
Bonds Payable: credit

Interest expense: debit (use market, effective, yield rate)
Premium: debit
Cash: credit

41

What is the Journal Entry of a bond at issuance (with BIC and Accrued Interest) Pg. 10-6

*What is the order?

*How do you calculate the carrying value or face

3. Cash (% face + Accrued Interest - BIC)
4. BIC
5. Discount (plug)
1. Bond Payable (face)
2. Accrued Interest Payable (face x(stated rate) x (time -
since last interest paid)
5. Premium (plug)

*bonds payable net of discount or premium (NOT net of BIC)

42

Journal Entry of Bond Retirement def? Pg. 10-8

When bond is called, retired or redeemed prior to maturity (opposite of issuing bonds)

Bonds payable: debit (face)
Premium: debit (unamortized)
Loss (plug): debit
BIC: credit
Discount: credit
Cash: credit (amount to retire)
Gain (plug): credit

43

Journal Entry for convertible bonds Pg. 10-9 def

Book Value VS Market Value

*What kind of gain/loss is convertible bond?

Get rid of bond (retired) to get common stock

Bonds payable: debit (face)
Premium: debit
BIC: credit
Common stock: credit (par value)
Additional Paid-in capital: credit

Bonds payable: debit (face)
Premium: debit
Loss: debit
BIC: credit
Common stock: credit (par value)
Additional Paid-in capital: credit
Gain: credit

*Not extraordinary because its not uncommon to convert bonds

44

Journal Entry for bonds with detachable stock purchase warrants Pg. 10-9

Cash: debit
Discount: debit
Bond Payble: credit (par)
APIC - Warrants: credit

*Looks like a premium but isn't because 2 securities in 1; give value for both bond and warrant

*Same as issuing a bond but with APIC

45

Journal Entry for lease Pg. 11-4
a) Day one
b) First Payment (day 1)
c) Second Payment (one day later)

a) Leased asset: debit
Leased Liability: credit
b) Lease Liability: debit
Cash: credit
c) Leased Liability: debit
Interest Expense: debit => use effective interest method
to amortize
Cash: credit

46

Journal Entry for Sales type lease Pg. 11-5

Gross investment in lease: debit (face)
Sales Revenue: credit
Unearned interest revenue: credit

Cost of goods sold: debit
Inventory: credit

47

Journal Entry for Direct financing lease Pg. 11-6

Lease payment receivables: debit
Equipment: credit
Unearned interest revenue: credit

48

Journal Entry for Sale-leaseback Pg. 11-6

What do you do with deferred gain under capital lease?

What do you do with deferred gain under an operating lease?

Cash: debit
Equipment (asset): credit
DEFERRED gain: credit

Depreciation Expense: debit
Accumulated Depreciation: credit
Deferred gain: debit
Depreciation Expense: credit
**reduces future expense

Rent Expense: debit
Cash: credit
Deferred gain: debit
Rent expense: credit
**reduces future expense

49

Journal Entry for Accounts Payable WITH discount Pg. 12-1
a) Gross method
b) Net method

a) Purchases: debit
A/P: credit

A/P: debit
Cash: credit
Discount: credit (lowers COGS)

b) Purchases: debit
A/P: credit

A/P: debit
Expense: debit
Cash: credit

50

Journal Entry for Accured Liabilities/Expense Pg. 12-2 def?

An expense that is incurred but not yet paid in cash

Expense: debit (I/S)
Accured Liability (Salaries payable B/S): credit (current liability)

Accured Liability: debit
Cash: credit

51

Journal Entry for Prepaid Expenses (Current Asset) Pg. 12-2 def?

Expenses paid in cash, but not yet incurred (like asset)

Prepaid Expense: debit (current asset)
Cash: credit

Expense: debit (I/S)
Prepaid Expense: credit

52

Journal Entry for Deferred Revenue Pg 12-2 def?

Revenue collected but not yet earned

Cash: debit
Unearned Revenue: credit (B/S) (current liability)

Unearned Revenue: debit
Revenue: credit (I/S)

53

Journal Entry for Revenue Receivable Pg. 12-3 def?

Revenue earned but not yet collected (asset)

Receivable: debit
Revenue: credit (I/S)

Cash: debit
Receivable: credit

54

Journal Entry for Warranty costs Pg. 12-3

a) Warranty cost
b) The amount spent on actual repairs is applied to the liability

a) Warranty expense: debit
Estimated warranty liability: credit
b) Estimated warranty liability: debit
Cash: credit

55

Journal Entry for Pension (defined contribution) Pg. 14-1
Rarely Tested

Pension Expense: debit
Cash: credit

56

Journal Entry for Issuing Common Stock Pg. 15-1

Cash: debit
Common Stock: credit
APIC - common stock: credit

57

Journal Entry for buying back stock (treasury stock) via cost method Pg. 15-3

*Repurchase

*Resell

Cash: debit
Common stock: credit (par) B/S
APIC - common stock: credit B/S

*Repurchase
Treasury stock: debit (contra equity) => reduction of total equity outstanding VERY IMPORTANT
Cash: credit

Cost in, cost out!!!
*Resell
Cash: debit
APIC - treasury stock: debit

58

What is a contra account? Example

Treasury stock cost is a debit account even though it is from an equity account (supposed to be credit); therefore, it is considered a contra equity account

59

Journal Entry for giving out dividends Pg. 15-11 def for each
a) Declaration date
b) Record date
c) Payment date

a) The board of directors commits to the dividend
Retained earnings: debit
Dividend payable: credit
b) The shareholders at this date are identified as the ones entitled to the dividend
No Journal Entry
c) Distribution is made to the shareholders of record
Dividends Payble: debit
Cash: credit

60

Journal Entry for Tax Liability: Pg. 19-3
a) Book
b) Tax

a) X1: Expense: debit
Prepaid Expense: debit
Cash: credit
X2: Expense: debit
Prepaid: credit

b) X1: Expense: debit
Cash: credit
X2: Already expensed all out, therefore it is 0

61

Journal Entry for Net Operating Loss Pg. 19-7

Income tax refund receivable: debit
Deferred tax asset: debit
Income tax benefit: credit (I/S)

62

Journal Entry for Normal Accrual Method: Profit is recognized at point of sale Pg. 22-2

Journal Entry for the inventory that goes out?

*What do you have to add for installment sales?

Cash: debit
A/R: debit
Sales revenue: credit (I/S)

COGS: debit (I/S)
Inventory: credit

*Unrealized Gross Profit: debit
Deferred Gross Profit: credit

63

Journal Entry for Billings Pg. 23-3
a) Completed Contract Method
b) Percentage of Completion

a) Construction Receivable: debit
Billings: credit (current liability)
b) Construction Receivable: debit
Billings: credit (current liability)

64

Journal Entry for Collections Pg. 23-3
a) Completed Contract Method
b) Percentage of Completion

a) Cash: debit
Construction Receivable: credit
b) Construction Receivable: debit
Billings: credit (current liability)

65

Journal Entry for Costs Pg. 23-3
a) Completed Contract Method
b) Percentage of Completion

a) Construction in Progress (CIP): debit
Cash: credit
b) Construction Receivable: debit
Billings: credit (current liability)

66

Journal Entry for Profit Pg. 23-3
a) Completed Contract Method
b) Percentage of Completion

a) NONE, no income until its done
b) CIP: debit
Gross profit on CIP (I/S): credit

67

Journal Entry for Government Interfund transaction (Operating transfers)
Pg. 30-17 => from general fund to service fund

*Getting out of general fund
Other financial uses: debit
Cash: credit

*Get into debt service fund
Cash: debit
Other financial sources: credit

68

Journal Entry for Government Interfund transaction (Quasi-external transactions) => "as if" it was an external transaction (one fund pays another fund for services or goods) Pg. 30-17 => Capital fund pays enterprise fund

*Capital fund pays
Expenditures - utilities: debit
Cash: credit

*Enterprise fund receives
Cash: debit
Revenues: credit

69

Journal Entry for Government Interfund transaction (Reimbursement)

*General fund spent money
Expenditure - conference: debit
Cash: credit

*General gets money back
Cash: debit
Expenditure: credit

*The fund that pays for it (modified acrrual)
Expenditure: debit
Cash: credit

*The fund that pays for it (acrrual)
Expense: debit
Cash: credit

70

Journal Entry for Goverment Interfund transaction (Loan)

*Fund lending out the money
Due from special revenue fund: debit
Cash: credit

*Fund that receives the moeny
Cash: debit
Due to enterprise fund: credit

71

Journal Entry for Government Accounting: Set-up Budget (Revenue)
Pg. 30-15

Estimated Revenue: debit
Estimated other financing sources: debit (bonds & transfer in)
Budgetary Fund Balance - unreserved: credit (plug)
Appropriations: credit (authorize to spend on budget)
Estimated other financing uses: credit (spent)

72

Journal Entry for Government Accounting:
*Assess Property Taxes (Revenue) Pg. 30-15
*a) Collect Property Taxes
b) Over-collection of property taxes
c) Write off Property Tax receivables

*Assess Property Tax
Property Tax Receivable: debit
Allowance for Uncollectibles: credit (dont think gonna get)
Revenues: credit (net)
Deferred Revenue: credit

*a) Collect property tax
Cash: debit
Tax Receivable: credit
b) Over-collection of property taxes
Allowance for uncollectibles: debit
Revenues: credit
c) Write off Property Tax receivables
Allowance for uncollectibles: debit
Taxes Receivable: credit

73

Journal Entry for Government Accounting: Pg. 30-15 (Revenue)
a) Bill business licenses
b) Collect business licenses

a) No journal entry because cannot accrue => only journal entry when received
b) Cash: debit
Revenues: credit

74

Journal Entry for Government Accounting:
Pg. 30-7 (Expenditures)
a) Order Goods
b) Receive Goods
c) Actual invoice from vendor is recorded
d) Actual payment of the voucher

a) Encumbrances: debit
Reserved for Encumbrances: credit
b) Reserved for Encubrances: debit
Encumbrances: credit
c) Expenditures: debit
Vouchers Payable: credit
d) Vouchers payable: debit
Cash: credit

75

Journal Entry for Government Accounting:
Pg. 30-9 (Closing Entries)
a) Closing Budgetary Entries
b) Closing Accrual Accounts

a) Flip set-up budget
Appropriations: debit
Estimated Other Financing Use: debit
Budgetary Fund Balance - Unreserved: debit
Estimated Revenue: credit
Estimated Other financing source: credit
b) Revenues: debit
Fund Balance - unreserved: debit
Other financing sources: debit
Expenditures: credit
Encumbrances: credit
Other financing uses: credit

76

TESTED
Journal Entry for Contributions (Not for profit) Pg. 32-6
a) Received unrestricted net asset
b) Received temporary restricted net asset
c) When you actually spend the temporary restricted net asset
d) Received permanently restricted net asset

*What is significant with an increase in "unrestricted net assets" and the increase in the "expense"

a) Cash: debit (operating cash inflow)
Revenues (Unrestricted net asset): credit
b) Cash: debit (operating cash inflow)
Revenues (Temporary restricted net asset): credit
c) Have to convert from temporarily restricted net asset to
unrestricted net asset
Net assets released (TRNA): debit
Net assets released (UNA): credit
Expenses (UNA): debit
Cash: credit
d) Cash: debit (financing cash inflow)
Revenue (PRNA): credit

*Has no net effect on unrestricted net assets

77

Journal Entry for Donations of services
Pg. 32-7

*Recognize expense and revenue that was donated because its a service that you would normally pay
Expense (UNA): debit
Contribution Revenue (UNA): credit

78

Journal Entry for Pledge Pg. 32-9

Then becomes unrestricted net asset

*An unconditional promise to give
Pledges receivable: debit (PV)
Allowance for uncollectible pledges: credit
Revenues (UNA): credit
Revenues (TRNA): credit

Net asset released (TRNA): debit
Net asset released (UNA): credit

79

Journal Entry for Agent or Trustee Pg. 32-9
a) If they have variance power over the donation to redirect the money, and the beneficiary of the donation is financially related => considered revenue
b) When it is considered a liability

Cash: debit
Contribution Revenue: credit

Cash: debit
Refundable advance: credit (liability)

80

Journal Entry for Colleges & Universities Pg. 32-9

*If I go to school, what is it considered?
*What are refunds considered?

Cash: debit
Scholarship expense: debit
Tuition remission: debit
Tuition revenue: credit

*Considered revenues
*NOT revenue

81

Journal Entry to acquire an investment Pg. 31-6

Journal Entry to consolidate the investment; what is the purpose of closing?

Journal Entry to consolidate the investment with a noncontrolling interest

Investment: debit
Cash: credit

*Close out everything from ACQUIREE => because consolidation will go ACQUIRER's books
C/S: debit
APIC: debit
R/E: debit
Equipment: debit (write up to FMV)
Goodwill: debit
Investment: credit
Gain: credit business combination that are not individually identified and separately recognized

*Same as above but add:
Noncontrolling interest: credit

82

Journal Entry Intercompany PP&E Pg, 31-15
a) You sell the PP&E
b) You buy the PP&E
c) To fix/eliminate on gain, payable, and receivable
d) To fix/eliminate over depreciation

a) Cash or A/R: debit => problem b/c cant owe yourself
Accumulated Depreciation: debit
PP&E: credit
*GAIN: credit => problem because it will be a gain to
yourself
b) PP&E: debit
Cash or A/P: credit => problem b/c cant owe yourself
c) Gain: debit
PP&E: debit
Accumulated Depreciation: credit
Also:
A/P: debit
A/R: credit
d) Overdepreciate by gain (Flip depreciation expense)
Accumulated Depreciation: debit
Depreciation Expense: credit

83

Journal Entry Intercompany Bonds Pg. 31-15
a) Company issues bonds at face/par value
b) Subsidiary purchases bonds from an outside investor
c) To Eliminate the gain, and payable

a) Cash: debit
Bonds Payable: credit
b) Investment: debit
Cash: credit
Discount: credit => really a gain to yourself so fix
c) Eliminate the bond
Bonds payable: debit
Investment in bonds: credit
Gain on retirement: credit => only in worksheet

84

Journal Entry Intercompany Inventory Sales Pg. 31-16
a) You sell inventory
b) You buy inventory
c) Then buyer sells inventory
d) To eliminate profit in ending, sales, and PP&E

a) Cash: debit
Sales revenue: credit
COGS: debit
Inventory: credit
b) Inventory: debit => gives you % profit in ending
Cash: credit
c) Cash: debit
Sales revenue: credit
COGS: debit
Inventory: credit
d) Sales revenue: debit
Inventory: credit (% profit in ending)
COGS: credit

85

Journal Entry for Net Income for Cash Flow Pg. 25-10

Net Income: debit
Retained Earnings: credit

86

Journal Entry to convert bonds to common stock? Stockholder's equity #7

Bond payable: debit
Discount: debit
C/S: credit
APIC: credit

87

What is the journal entry for an accrued liability? (An expense incurred but not yet paid in cash) Pg. 12-2

*When you pay

Expense: debit
Accrued liability: credit

*Accrued liability: debit
Cash: credit

88

Journal entry for Prepaid Expense (Expenses paid in cash, but not yet incurred) Pg. 12-2

*When incurred

Prepaid Expense: debit
Cash: credit

Expense: debit
Prepaid Expense: credit

89

Journal entry deferred revenue (Revenue collected, but not yet earned) Pg. 12-2

*When earned

Cash: debit
Unearned Revenue: credit

*Unearned revenue: debit
Revenue: credit (I/S)