ORIE3150 Journal Entries and T-accounts Sample Assignment

ORIE 3150

Practice with journal entries and T-accounts.

I. Journal Entries

Recall that a journal entry has three important types of information:

Date of the transaction.
Accounts affected
Dollar amounts associated with each account for the transaction

Also:

Each transaction has its own journal entry, they are not combined or summarized.
The total amount in the debit column must equal the total amount in the credit column.
All of the accounts with debits are listed first.
The titles of the credit accounts are indented 5 spaces.
A journal entry is a concise way to record a business transaction.

II. T-accounts

T-accounts have the following features:

A title at the top
A t-shaped figure to clearly depict a debit side and a credit side
Non-negative dollar amounts on the debit side and/or the credit side

Also:

A T-account balance consists of a dollar figure and the word debit or the word credit. The dollar amount is not sufficient.{" "}
Numbers are entered on either the debit side or on the credit side.
Negative numbers never appear in a T-account
Many problems must be solved using T-accounts. There is no other method.{" "}

1. Zippy Chemicals Inc. has had several transactions over the past few days. The balance in the cash account was $7,765 at the start of business on September 2. Show the journal entry for each transaction and show the Cash T-account and find its balance as of the end of business on September 5, 2009.{" "}

September 2, 2009 Sold 4 cases of synthetic oil to Penske Racing for a total of $1,280. The gross margin on this product was 38%. The sale was made on account with the terms net 30.{" "}

September 3, 2009 Purchased 12 cases of degreaser from W. Hazel Supplies for $100 per case. The purchase was made on account with the terms net 30 days.{" "}

September 4, 2009 Sold 6 cases of degreaser to Stan’s Vintage Typewriter Repair for a total of $820. The sale was made on account with the terms net 30 days.{" "}

September 4, 2009 Zippy does not own its building, but rents it. Paid $2,800 September rent to the building owner, Johnson Properties.{" "}

September 5, 2009 Received a check from Westwood Racing for $2,400. The check was payment in full for a sale made on account to Westwood Racing on August 14. The sale was for 9 cans of surface etcher. The gross margin on the surface etcher was 38%.{" "}

September 5, 2009 Received a check from the QWR Bank for $22,500. This was for a loan due in 180 days to cover some short term expenses. The annual interest on the loan was 9.00%.{" "}

2. PointPark Engines sold a racing camshaft to Eddy Driscoll Racing for $1,400 on account on August 22, 2009. The camshaft had cost PointPark Engines $950 to make. Eddy Driscoll Racing sent PointPark a check for the full amount due on September 1, 2009. PointPark Engines received the check on September 3, 2009. Show the journal entries needed for PointPark Engines and for Eddy Driscoll Racing.{" "}

3. Hipster Incorporated keeps all of its manufacturing machinery in a single account, Machinery. The company started the year with a debit balance of $485,000 in Machinery. The company paid $275,500 for new machinery during the year, and ended the year with a debit balance of $540,800. Describe what happened during the year.{" "}

4. Boomers Manufacturing had a debit balance of $1,150,768 in Accounts Receivable at the start of the second quarter of 2009. At the end of the quarter, the Accounts Receivable account had a debit balance of $980,654. Total sales were $4,567,988 during the quarter, all of which were on account. Find the amount of cash collected from customers during the second quarter.{" "}

5. Catera Candies Inc. has a fiscal year that ends December 31 each year. The company had revenue of $2,406,458 in fiscal 2008. In January 2009, revenue was $240,450, in February 2009 it was $206,579, and in March 2009 it was $290,670. The company uses a single account, Sales Revenue, to record revenue. Find the balance in Sales Revenue at the end of March 2009.{" "}