Could someone tell me if I have these correct and if not what'd I do wrong. Thank you.

January 8 Purchased a one-year insurance policy, effective February 1, for $3,360.

Debit: Insurance Expense

Credit: Prepaid Insurance

Completed several consulting jobs, which totaled $52,000. Cash of $26,000 was collected with the balance due in 30 days.

Credit: Consulting Revenue 52,000

Debit: Cash 26,000

Debit: Accounts Receivable 26,000

Placed an order in the local newspaper for advertising, which will run during January, February, and March. The advertising, which cost $4,500, was paid for on this date in order to obtain a lower price.

Debit Advertising Expense: 4500

Credit Prepaid Advertising: 4500

CaptainForest

1) Incorrect

Should be:
Jan 8.
Debit: Prepaid Insurnace 3,360
Credit: Cash or AP 3,360

2) Correct, as long as you are suppost to ignore Tax considerations

3) Incorrect.

I am assuming the date here is Jan 1?
Debit: Prepaid Advertising 4,500
Credit: Cash or AP 4,500

on Jan 31, Feb 28, and March 31:

Debit: Prepaid Avertising 1,500
Credit: Advertising Expense 1,500

Charlize

THANKS

The date on the thrid one is January 7, sorry I left that out. How would I figure the dates in that case.

Question about the first one? I wouldn't do it like the thrid one?

Deb: Ppaid Insurance 3360
Crd: Insurance Expense 3360

Deb: Advertising Expense 280
Crd: Prepaid Insurance 280

CaptainForest

no, for the first one....

You are buying it on Jan 8, but it does not take effect until Feb 1.

Therefore, you cannot accure any expense until you start using it. So until Feb 1, it is ALL Prepaid.


and for the 3rd one....

My answer is still the same with the date being Jan 7.
You wont accure anything really until your fiscal end (be it annual, quarterlly, monthly).

Charlize

Right, that's the expense recognition rule: recognize expenses when you incur them not when you pay for them, i just looked through my notes Thx...So for February 1 I should make those entries for 280?

Is it okay if I ask you another one?

It deals with this one, I'd asked before:

January 10 Completed several consulting jobs, which totaled $52,000. Cash of $26,000 was collected with the balance due in 30 days.

Credit: Consulting Revenue 52,000
Debit: Cash 26,000
Debit: Accounts Receivable 26,000

January 31 Collected $10,000 of the receivable recorded on January 10. In addition, a client indicated that a $9,000 receivable due to Bayou would not be paid for 6 months. Bayou accepted an 8% 6-month note receivable on this date.

This is what I figured:

Credit Accounts Receivable 10,000

Debit Cash 120

Debit Notes Receivable 8880

I divided 9,000 by 6, got 1500, found 8% of 1500 which came out to be 120...I guess that's how much was paid that date, 8880 is how much of the note is left to pay

Does that seem right?

CaptainForest

the Jan 10 entry is correct

But are you suppost to record Sales Tax? Such as here in Ontario Canada, its 7% GST and 8% Provincial. If you are to ignore taxes, which in highschools typically do, then it is correct.

Jan 31.

to record the collection of $10,000

Debit: Cash 10,000
Credit: A/R 10,000

to record the $9,000 6-month note at 8%.....

Debit: Notes Receivable 9,000
Credit : A/R 9,000

becuase in essence, the customer has just paid you the 9,000 he owes you from A/R. You are simply financing him the money (similar to if he went to a bank to borrow money to pay you back)

Then, when it is time to do your financial statments, you would accure the interest. Or after 6 months, record it when they pay the loan back to you plus the interest.....

so on July 31...the entry would be..

Debit: Cash 9,360
Credit: Interest Earned 360
Credit: Notes Receivable 9,000

Interest Earned calculation:
You loaned them $9,000 and they promised to pay you interst at 8% per year. However, the loan comes due after 6 months, so the interest rate is only 8%/2 = 4%

9,000 x .04 = 360

Charlize

Okay, that makes sense...Are you an accountant, accounting major? I appreciate you taking the time out to help me. Accounting gives me headaches

January 15: Paid the semi-monthly payroll, which totalled $35,000, to the firm's consultants, all of which are classified as independent contractors.

My initial thought was to Debit: Payroll Expense, Crd: Cash

Then on January 31: Paid the payroll for the second half of January

CaptainForest

your J/E for Jan 15 and 31 seem to be correct.

im a university student, majoring in accounting.

Your quite welcome.

Charlize

Well, you're my angel, cause I sure have been praying for one lately to help me with this. Don't wanna be all mushy up in here lol I have an accounting practice set due next Tuesday. This is Thanksgiving break so I can't go to the Accounting Lab and get help. I doubt if even get all of this done.

How do I figure the payroll for the second half of January though?

Charlize

Could somebody help me with this transaction?

January 16 Declared a cash divedend of $.75 per share on this date payable on February 18.

Does this deal with the Common Stock I already have.