ACC NOTES

Sept 10, 2018

LQ#1 – Sept 26
MT – 2nd week of oct

Business
1. Sole proprietorship
“I am the business”
+ profits = yours
- debts = also yours
unlimited liability

2. Partnership
“we are the business”
unlimited liability

3. Corporation
“it stands on its own”
OE -> SHE (owner’s equity -> shareholders’ equity)
- it is difficult to set up
+ limited liability to “owners” (shareholders)
- double taxation
+ raising new capital

PROBLEM:

During 2016, the digital company has $100,000 cash as its only asset funded using 50,000
initial investment and 50,000 debt at 5% interest per year to be paid after 5 years.

Transactions for the 2017 are as follows:

1. Received $24,000 cash for a 24-month subscription on January 1, 2017 starting

immediately.
2. Purchased land with a fair market value of $30,000 for $25,000 using a bank loan at
0% payable after 10 years.
3. Purchased new equipment costing $5,000 to be used in the existing office space with
a monthly rent of $2,000.
4. Paid 10,000 cash to a contractor to begin constructing a building for the company’s
operations.

A=L+E

1. + cash 24 000, + unearned rev 24 000

2. + land 25 000, + loans payable 25 000
3. + equip. 5 000 and – cash 5000
 4. – cash and + building

Sept 12, 2018

ACC FS.

Record
Summ.
Comm.

Equations to remember:

A=L+E
End = Beg + -
Debits = Credits
(Left) (Right)

Transaction Analysis

1. Look for the actual exchange (filter out unnecessary info)

2. Identify the accounts that are affected by the transaction
3. Determine actual impact or change to the accounts
4. Record (Journalize)

Notes from the samples (pic on phone)

1.
A = L + E
Cash + 23,000 Pense, Capital + 35,000
Equipment + 12,000

debits = credits

This is an example of journal entries

Dr. Cash I 23,000 I

Dr. Equipment I 12,000 I
Cr. Pense, capital I I 35,000
--------------------------------------------------
I 35,000 I 35,000
2.
A = L + E
- Cash +N/P
+ Land
+ Building

Cr. Cash 15,000

Dr. Land 8,000
Dr. Bldg 33,000
Cr. N/P 26,000

3.
Dr. Office Supplies 600
Cr. Loans Payable 600

4.
Dr. Automobile 7,000
Cr. Pense, Capital 7,000

5.
Dr. Office Equipment 1,100
Cr. Loans Payable 1,100

6.
Dr. Salaries Expense 800
Cr. Cash 800