CorporateFinancialReporting

Session5:PGP201719
AccountingMechanics

1
PROBLEM47A (b)Journalisation ofNovemberTransactions
Date AccountTitles Debit Credit
Nov.8 SalariesandWagesPayable 620
SalariesandWagesExpense 600
Cash 1,220
10 Cash 1,800
AccountsReceivable 1,800
12 Cash 3,700
ServiceRevenue 3,700
15 Equipment 3,600
AccountsPayable 3,600
17 Supplies 1,300
AccountsPayable 1,300
20 AccountsPayable 2,500
Cash 2,500
22 RentExpense 480
Cash 480
25 SalariesandWagesExpense 1,000
Cash 1,000
27 AccountsReceivable 900
ServiceRevenue 900

29 Cash 750
UnearnedServiceRevenue 750
 AdjustingEntries
PROBLEM47A
Date AccountTitles Debit Credit

1 Nov.30 SuppliesExpense 1,320

Supplies($2,420 $1,100) 1,320
2 30 SalariesandWagesExpense 480
SalariesandWagesPayable 480

3 30 DepreciationExpense 250
AccumulatedDepreciationEquipment 250

4 30 UnearnedServiceRevenue 500
ServiceRevenue 500

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 DeterminingCashFlowsfromAccrualBasedInformation

Eachrevenueandexpenseaccounthasoneormorerelatedaccountson
thebalancesheet,
joinedthroughadjustingentries Balance Sheet Income Statement
Rent Receivable Rent Income
Wages Payable Wages Expense
Unearned Revenue Earned Revenue
Prepaid Insurance Insurance Expense

CashReceipts(Payments)
fromRevenue Revenue (orExpense) +IncreaseinDeferral IncreaseinAccrual
(forExpense) = fortheperiod (Prepaid/Unearned) (Receivables/Payables)

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 TheGeneralRuleanditsapplication

ForDeferrals ForAccruals
PrepaidExpense UnearnedRevenue AccruedPayable AccruedReceivable

EndingBalance EndingBalance Beg.Balance Beg.Balance

+Expensefor +Revenueforthe +Expenseforthe +Revenueforthe
thePeriod Period Period Period
Beginning Beginning Ending Ending
Balance Balance Balance Balance
CashPaymentsfor CashReceiptsfrom CashPaymentsfor CashReceiptsfrom
Expenses Revenues Expenses Revenues

Applythegeneralruledependingontheaccounttype
GeneralRule
Potential cash paym ents or receipts
A m ount not paid or received
Cash flows for expenses or from revenues

Note:Thegeneralruledoesnotapplytodepreciation
CashReceipts Revenue (or +Increasein Increasein
(Payments)for Expense)for Deferral(Prepaid/ Accrual(Receivables
Revenue(Expense) = theperiod Unearned) /Payables)

Revenue (or CashReceipts Increasein +IncreaseinAccrual

Expense)forthe (Payments)for Deferral(Prepaid/ (Receivables/
period= Revenue(Expense) Unearned) Payables)