All other trademarks and copyrights are the property of their respective owners. and you must attribute OpenStax. A journal entry lists the amount of debits and credits made to the accounts involved in a transaction. Cash decreases (credit) for $12,200, which is the principal plus the interest due. Journal Entries A Beginner's Guide to Notes Payable - The Motley Fool _________ refers to a company's ability to pay liabilities as they come due in the short run. Interest-bearing note payable is the type of promissory note that we issue to the holder of the note with the interest attached. To record a dividend payment made in December, 1. This website helped me pass! (Check all that apply), A promise to pay is given A reversing entry is typically an adjusting entry that is reversed as of the beginning of the following period, usually because an expense was to be accrued in the preceding period, and is no longer needed. About This Article For the first journal entry, you would debit your cash account in the amount of the loan: $50,000, since your cash increases once the loan has been received. WebACTG 2010 - Chapter 2 (LS2) Term. For example, some car dealers are willing to sell automobiles with no down payment if they are carrying too much inventory. This is posted - Definition & Rules, Working Scholars Bringing Tuition-Free College to the Community. Depreciation refers to the loss in value of an asset as time goes by. Sierra does not have enough cash on hand currently to pay for the machine, but the company does not need long-term financing. The ending balance in Acme's Accounts Payable was a credit of: Complete the accounting equation: Assets = __________ + Stockholders' Equity. This journal entry is made to eliminate the interest payable that we have recorded above as well as to account for the cash outflow for the interest payment on the note payable. Additionally, you will learn how to classify notes payable on the balance sheet. Squid Roe, Inc., purchased equipment that cost $20,000 by promising to pay $15,000 next month and paying the remainder in cash. Select all that apply), A stockholders' equity account decreases by $100 Some key characteristics of this written promise to pay (see Figure 12.12) include an established date for repayment, a specific payable amount, interest terms, and the possibility of debt resale to another party. To record a loan originated for expanding the warehouse. WebIn the journal entry, Equipment has a debit of $3,500. Suppose you arrange to purchase a new piece of equipment with no down payment. - Definition & Examples, What Are Short-Term Investments? 1. (1) Purchase of equipment on account What is Net Income and Why is it Important? Match the invoice to negative lines in the purchase order to record the In this journal entry, the purchase discounts is a temporary account which will be cleared to zero at the end of the period. WebPrepare closing journal entries and year-end General Fund financial statements. Immediately after Thanksgiving, JCC sells out of a few key items. trade in Land purchased many years ago is reported on the ______________. The logic behind a journal entry is to record every business transaction in at least two places (known as double entry accounting). The attorney, knowing your company is tight for cash, agrees to accept payment in one year with 10% interest at that time for his current invoice of $1,000. The journal entry on the books of the vendor is: The customer will record the signing of the note as follows: Notes payable can be issued to independent contractors for performing services. (1) Issuing a note payable. Although many companies use accounting software nowadays to book journal entries, journals were the predominant method of booking entries in the past. (Check all that apply). This data can help save money and increase profit margins, but only if you carefully specify which transactions to enter. WebUnder periodic inventory system, the company needs to make the purchase discount journal entry by debiting accounts payable and crediting cash account and purchase discounts. In Jareds situation, he pays around US$1,000 every month in utilities. To record the depreciation expense of a forklift purchased in January, 1. Are there alternatives? The Accounts Payable ending balance equals a ______________ balance. Click the link below to learn more about T-Accounts. This data can be very useful, especially because it may reveal that the cost of goods sold in this situation was a little bit too high. Entries Related to Notes Payable | Financial Accounting - Lumen Notes Payable. - Definition & Examples, What is a Stock? In many cases, the interest rate is lower than long-term debt, because the loan is considered less risky with the shorter payback period. During the month, Lucre borrowed $5,000 cash from Last National Bank and paid a supplier $500. Because this is a loan, the business has to pay US$35 in interest as well. To record the accrual of a utility expense, 1. Of course, it can even be more than one year for a long-term note payable. The minimum duration period for journal entries should be included in the corporate archiving policy. A business may choose this path when it does not have enough cash on hand to finance a capital expenditure immediately but does not need long-term financing. Creative Commons Attribution-NonCommercial-ShareAlike License On July 1, 2021, we issue a 6-month promissory note to one of our suppliers in exchange for the $10,000 merchandise goods. As a result, the company's asset Cash must be increased by $5,000 and its liability Notes Payable must be increased by $5,000. The goal is to fully cover all expenses until revenues are distributed from the state. Notes Payable Journal Entry | Example - Accountinguide The Mortgage Payable account is increased with an entry on the ______ right side of the T-account. Entry 11: Jared decides to take a dividend in the amount of US$2,000 at the end of the year. The asset has a value of $60,000 and you agree to pay $1,000 principal and 10% Tristar signed a $40,000 noninterest-bearing note to purchase equipment. When properly organized, journal entries are the foundation of financial statements. Debits must always equal __________ in each journal entry. 1. There are several types of journal entries, which are noted below. Accrued interest is the interest gained on outstanding debts over a particular financial period. Purchased inventory costing $90,000 for $10,000 in cash and the remaining $80,000 on the account. (2) Transactions are posted to the ledger This typically occurs when the company is in a start-up stage and needs outside professional services to set up the corporation, review contracts, perform accounting services, etc. For example, you could accrue unpaid wages at month-end if the company is on the accrual basis of accounting. The Cash T-account is increased with an entry on the ___________ side of the T-account. The entry to record this transaction would include a ___________ to Cash. Thus, journal entries are not used to record high-volume activities. Capitalized Interest Overview & Rules | What is Capitalized Interest? Journal entry for interest-bearing note payable - Accountingmark To record the purchase of Computer 2022-2 added to inventory. Accounts Payable decreases (debit) and Short-Term Notes Payable increases (credit) for the original amount owed of $12,000. To learn more about how to use accounting to succeed in business, check out Accounting 101: What You Need to Know for a Successful Business. To illustrate, lets revisit Sierra Sports purchase of soccer equipment on August 1. (5) Only transactions that involve cash, (1) Purchase of equipment on account The terms of the agreement will state this resale possibility, and the new debt owner honors the agreement terms of the original parties. Entry 9: Even though Jared is doing very well with general contractors, he wants to encourage more business from homeowners. Notes payable is a promissory note that represents the loan the company borrows from the creditor such as bank. The use of templates is not only efficient, but also reduces errors. Show the effect of recording the borrowing of $10,000 from a bank on the accounting equation, _____________ by $10,000. When a company receives an invoice for goods purchased and received from a supplier, it records _______________. WebThe journal entry is shown as follows: Debit Account Payables Credit Cash / Bank Credit Discount The difference in both the accounts is subsequently shown as a trade discount, and the remainder is subsequently credited from the bank (the amount actually paid). Accounts Payable Conversion. These transactions are handled through specialized software modules that present a standard on-line form to be filled out. credit to Notes Payable. While this may seem like the easiest step, it is also one that is commonly overlooked. list of account titles with corresponding reference numbers used by companies so that transaction items are consistently named. This means the forklift depreciates in value US$1,000 every year. Therefore, the journal entry would look like this: Purchased equipment for $650,000 in cash. For example, if a business purchases three new computers for employees, they may analyze the transaction in this way: Purchased three PCs using cash and then added to our inventory.. Cash increases (debit) as does Short-Term Notes Payable (credit) for the principal amount of the loan, which is $150,000. There are three basic steps when making a journal entry, and writing the actual entry itself comes last. Sea the World Cruises, Inc. recorded a debit to Equipment for $25,000 and a credit to Cash for $5,000 and to Notes Payable for $20,000. (Check all that apply), debit to Equipment A lender may choose this option to collect cash quickly and reduce the overall outstanding debt. Like all new companies, yours is struggling with cash flow. An adjusting entry is used at month-end to alter the financial statements to bring them into compliance with the relevant accounting framework, such as Generally Accepted Accounting Principles or International Financial Reporting Standards. The note payable in this journal entry should be classified in the short-term liability section on the balance sheet if its payment term is within 12 months period. Aqua, Inc. purchased the following assets during the first quarter of 2018: Asset A: land at a price of $10 million, half of which is required to be paid right away and the rest is to be paid after 1-year subject to a 10% interest rate. structure and function of flowering plants ppt. Which of the following is an example of proper accounting when it comes to reporting values on a company's balance sheet? The interest expense would have been previously recorded through the accrual accounting process monthly. In this way, you have a concrete description of which assets you reduced and which assets you acquired, as well as the accounts impacted by the transaction. The business may also require an influx of cash to cover expenses temporarily. Accounting for Non-Interest & Interest-Bearing Notes, Calculating & Recording a Non-Monetary Exchange. Notes payable can be issued to acquire property. When a company pays its supplier for amounts owed, its Cash and Accounts ______________ accounts are decreased. Sierra Sports purchased $12,000 of soccer equipment from a supplier on credit. People come in on Saturdays and pay US$15 each to take the classes. A short-term note payable is a debt created and due within a companys operating period (less than a year). To unlock this lesson you must be a Study.com Member. Journalize the companys purchase of merchandise inventory credit to Cash of $5,000, A current ratio that equals 2.0 suggests that a _________. Also, because every journal entry includes a date, Jared can compare the cost of goods sold in two different time periods using this information and determine if theyve gotten any better when it comes to running a lean, efficient business. What are some positives and negatives to the promissory note practice? A journal entry is usually recorded in the general ledger; Later, on January 1, 2022, when we make the payment to honor the promissory note that we have issued, we can make the journal entry as below: Of course, we can combine these two journal entries into one journal entry instead as below: As mentioned, we dont need to record the accrued interest before the payment is made if the interest-bearing notes payable are short-term notes payable that its maturity ends during the accounting period. Sierra Sports requires a new apparel printing machine after experiencing an increase in custom uniform orders. To record the purchase of Computer 2022-3 added to inventory. You can include as much detail as youd like. The hammer cost JCC US$5 and sold for US$10. A journal entry is used to record a business transaction in the accounting records of a business. Current assets divided by current liabilities is the _______ ratio, On May 1, Lord of the Fries, Inc. hires an employee to begin work next month. The company takes out a bank loan to fund the expansion of their storage space in order to accommodate larger orders from these accounts. All rights reserved. International Financial Reporting Standards. Or, if you buy goods on account, this increases both the accounts payable account and the inventory account. 2019 MINI COOPER S COUNTRYMAN SIGNATURE in Edmond, OK Mini Cooper Countryman Features and Specs. For example, if a buyer trades in older equipment when purchasing new equipment, the value of the equipment traded in is created as a negative line on the purchase order. The journal entries would be as follows: The Difference Between Accounts Payable and Notes Payable. Entry 6: JCC needs to purchase some basic supplies for use around the store, such as pens, printer paper, and staples. 1. Cash decreases (credit) for the amount owed, less the discount. Entry 10: JCC has more sales totaling US$5,500, and the cost of goods sold was US$5,100. and Record Transactions for Merchandise 2. We just need to record the face value of the interest-bearing note payable in the journal entry at the time of issuing the promissory note to recognize our liability on the balance sheet. The expansion will cost US$75,000, and Jared agrees to pay US$1,500 every month on the loan. To record the issuance of common stock. Note payable (due in 5 years) Loan calculators can help businesses determine the amount they are able to borrow from a lender given certain factors, such as loan amount, terms, interest rate, and payback categorization (payback periodically or at the end of the loan, for example). - Definition and Use to Categorize Transactions, Ledgers and Chart of Accounts: Definitions and Use, Understanding Debits and Credits in Accounting, Recording Business Transactions in Accounting, Using the Accounting Equation: Analyzing Business Transactions, Journal Entries and Trial Balance in Accounting, What Are Capital Resources? The increase in the land's value: will not be reported in Z Company's financial statements. Adjust the accounts An easy way to understand journal entries is to think of Isaac Newtons third law of motion, which states that for every action, there is an equal and opposite reaction. General Motors builds a new auto factory in North Carolina. The company has purchased the equipment, and it has already been received. This payable account would appear on the balance sheet under Current Liabilities. A gentleman named Jared is opening a hardware store called Jareds Construction Corner (JCC). Hence, we may need to make the journal entry for the accrued interest on the note payable at the period-end adjusting entry even though we have made not the payment yet. For example, should you record if an employee spends US$50 in fuel as they travel to meet with a potential new client? Its like a teacher waved a magic wand and did the work for me. Even if a company finds itself in this situation, bills still need to be paid. Noodlecake signs a contract with an independent developer for program code to be delivered and paid for in 2 months. In this case, we can make the journal entry for this $1,000 interest-bearing note payable on January 1 and June 31 as below: Payment of the note with interest on June 31: Journal Entry for Food Expenses paid by Company. WebWe will begin with two T-accounts: Cash and Notes Payable. Typical steps needed before a business can start selling goods/services to customers include: Burrows, Inc. borrowed $100,000 from Last Bank by signing a formal agreement to repay the bank in 10 years. Transaction analysis is a process that determines whether a particular business event has an economic effect on the assets, liabilities or equity of the business. Match invoices to trade-ins and discounts on the purchase order from the supplier portal. An accrued interest journal entry is a method of recording the amount of interest on a loan that has already occurred but is yet to be paid by the borrower and yet to be received by the lender. Example. Debits and credits either increase or decrease an account, Shoe Fly, Inc, purchased software. Defined Contribution Pension Plans | Accounting, Advantages & Examples, How to Record Notes Receivable on a Balance Sheet. To determine the final monetary value of accounts listed on the financial statements on the companys year-end, multiple journal entries are recorded and tracked in an account called a T-account, which is a visual representation of a general ledger account. - Definition, Types & Examples, Accounting for Notes Issued: Cash, Rights, Property, Goods & Services, Preparing Financial Statements: Help and Review, Internal Controls in Accounting: Help and Review, Merchandising Operations and Inventory in Accounting: Help and Review, Current and Long-Term Liabilities in Accounting: Help and Review, Adjusting Accounts & Preparing Financial Statements: Help and Review, Public Speaking Syllabus Resource & Lesson Plans, Quantitative Analysis Syllabus Resource & Lesson Plans, Principles of Marketing Syllabus Resource & Lesson Plans, Human Resource Management Syllabus Resource & Lesson Plans, UExcel Human Resource Management: Study Guide & Test Prep, UExcel Principles of Marketing: Study Guide & Test Prep, Business Math Curriculum Resource & Lesson Plans, Principles of Microeconomics Syllabus Resource & Lesson Plans, Participating Preferred Stock: Definition & Example, Long-Term Investments: Definition, Types & Examples, Earnings Yield: Definition, Formula & Calculation, Reconciliation in Accounting: Definition & Examples, Total Asset Turnover: Definition, Formula & Analysis, Articles of Incorporation: Definition & Examples, Allowance of Doubtful Accounts Journal Entry, What is a Custodial Account? The transaction of purchasing equipment with note payable is similar to the purchasing with the accounts payable. In this case, we can make the journal entry for the accrued interest on the notes payable by debiting the interest expense account and crediting the interest payable account at the period-end adjusting entry. Purchase Discount Journal Entry Which of the following does NOT add to U.S. GDP? List of Excel Shortcuts Later, on June 30, when we honor this $10,000 promissory note that we have issued by paying back this amount together with a 10% interest or $500 ($10,000 x 10% x 6/12), we can make the journal entry as below: This journal entry will increase total expenses on the income statement by $500 as a result of promising to pay a 10% interest on the note payable on June 30. For example, when you generate a sale for cash, this increases both the revenue account and the cash account. In this case, we can make the journal entry for issuing the $10,000 interest-bearing note on July 1, 2021, by debiting the merchandise inventory with this $10,000 together with the credit of the same amount to the notes payable account as below: In this journal entry of issuing the $10,000 promissory note, both total assets and total liabilities on the balance sheet increase by the same amount of $10,000 as of July 1, 2021. A journal entry is usually recorded in the general ledger; alternatively, it may be recorded in a subsidiary ledger that is then summarized and rolled forward into the general ledger. Stockholders' equity. How to Calculate the Funded Status of a Pension Plan, Interest Expense Formula | How to Calculate Interest Expense, Issuing Premium & Discount Bonds | Process, Advantages & Disadvantages, Journal Entry for Perpetual Inventory System | Types, Steps & Examples, Disclosure Requirements for Cash Flow Statements. Since Sierra paid the full amount due, Short-Term Notes Payable decreases (debit) for the principal amount of the debt. They have to record the fixed assets on the balance sheet. Inc. issued $1,000,000 of common stock for cash. CR Cash 10,000. In this case, we need to make the journal entry for purchasing equipment with the note payable by recording our debt to the note payable account. Accounting for Stock Options & Equity Compensation Plans, Purchase Return & Allowances Journal Entries. I would definitely recommend Study.com to my colleagues. (Check all that apply) When you create the same journal entry on a recurring basis, it makes sense to set up a template for it in the accounting software. (Select all that apply), credit to Accounts Payable of $15,000 You will also The entry at the acquisition date is: Notice the note is now split into a short-term and long-term portion on the classified balance sheet. The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo When Sierra pays cash for the full amount due, including interest, on October 31, the following entry occurs. MMM Pizza bought and received $1,500 of supplies purchased on account. Suppose your company retains an attorney to prepare and file the corporate charter and articles of incorporation for your company. The bank will examine your company's creditworthiness, collateral, ability to make loan payments, and other factors before agreeing to lend it money. The following general address have a bit more detail, particularly an inventory number assigned to each computer based on the year acquired and a number. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license). Current liabilities is where the effect of each transaction is recorded chronologically Company X issued $10,000 of common stock to its owners for cash. (2) Issuing stock. If you are redistributing all or part of this book in a print format, A company purchased a new cash register in exchange for a cash payment of $1,200. Accounts Receivable Journal Entry Purpose & Examples | What Does Accounts Receivable Mean? Accounts Payable decreases (debit) for the original amount owed of $4,020 before any discounts are taken. The same entry (with the corresponding amount) is made for each period. Learn Finance & Accounting from Scratch by an Award Winning MBA Professor, Ivy Grad, worked @ Goldman & VC | By Chris Haroun. In either case, there wont be any interest to be recorded at the time of issuing the interest-bearing note. may have trouble paying its bills on time. Cash is increasing because the company is gaining cash from the bank, and bank loan payable is increasing because the company is increasing its liability to pay back the bank at a later date. Journal Entry to Record Equipment Purchased and Issuance of Notes Payable. How does diversity orientation differ from uniformity orientation? The supplier might require a new agreement that converts the overdue accounts payable into a short-term note payable (see Figure 12.13), with interest added. On December 3, 2017, Accounts Payable had a balance of $10,000. The journal entry to record this transaction would include a ___________ for $300. Transactions are recorded chronologically showing the accounts debited along with the corresponding accounts credited. The most common type of financing is obtaining a loan from your bank in the form of a note payable. Notes Payable - Learn How to Book NP on a Balance Sheet Draw diagrams depicting the direct-material and direct-labor variances. Following this the installment notes journal entries can now be generated as follows: Issuing an Installment Note for Cash Journal Firstly record the issue of the new borrowing. 2. (4) Investing activities Entry 13: Journal entries can also document depreciation. List the steps in the accounting cycle in chronological order. Record a journal entry Another similar scenario is the assumption of a loan payment to take possession of property. The interest expense is a type of expense that occurs through the passage of time. Later, when we make the interest payment on the note payable, we can make another journal entry with the debit of the interest payable account and the credit of the cash account. According to appraisals, the land had a fair value of $75,000 and the building had a fair value of $45,000. Journal entry to record the purchase of equipment Subsidiary Ledger Overview & Examples | What is a Subsidiary Ledger? List from top to bottom. WebPlease prepare journal entry for equipment purchase. WebWhat Is a Journal Entry? In simple terms, the first step to proper financial reporting heavily relies on recording accurate journal entries. 1. He is a writer, editor and has experience in public and private accounting. The other account affected is the companys cash going down because they used the cash to purchase the car. The interest expense for the first month is calculated as 1/10th of the outstanding principal of $60,000 divided by twelve (6,000 12 = 500: number of months in the year). Each compressor costs US$250 for the business, and he can sell them for the same amount he was charging for the compressors from the previous supplier. What did Shoe Fly receive and give in this transaction. To record the pay of seasonal employee. To record the payment of a bank loan and interest. We paid half last year and are licensed under a, Prepare Journal Entries to Record Short-Term Notes Payable, Explain the Importance of Accounting and Distinguish between Financial and Managerial Accounting, Identify Users of Accounting Information and How They Apply Information, Describe Typical Accounting Activities and the Role Accountants Play in Identifying, Recording, and Reporting Financial Activities, Explain Why Accounting Is Important to Business Stakeholders, Describe the Varied Career Paths Open to Individuals with an Accounting Education, Describe the Income Statement, Statement of Owners Equity, Balance Sheet, and Statement of Cash Flows, and How They Interrelate, Define, Explain, and Provide Examples of Current and Noncurrent Assets, Current and Noncurrent Liabilities, Equity, Revenues, and Expenses, Prepare an Income Statement, Statement of Owners Equity, and Balance Sheet, Describe Principles, Assumptions, and Concepts of Accounting and Their Relationship to Financial Statements, Define and Describe the Expanded Accounting Equation and Its Relationship to Analyzing Transactions, Define and Describe the Initial Steps in the Accounting Cycle, Analyze Business Transactions Using the Accounting Equation and Show the Impact of Business Transactions on Financial Statements, Use Journal Entries to Record Transactions and Post to T-Accounts, Explain the Concepts and Guidelines Affecting Adjusting Entries, Discuss the Adjustment Process and Illustrate Common Types of Adjusting Entries, Record and Post the Common Types of Adjusting Entries, Use the Ledger Balances to Prepare an Adjusted Trial Balance, Prepare Financial Statements Using the Adjusted Trial Balance, Describe and Prepare Closing Entries for a Business, Apply the Results from the Adjusted Trial Balance to Compute Current Ratio and Working Capital Balance, and Explain How These Measures Represent Liquidity, Appendix: Complete a Comprehensive Accounting Cycle for a Business, Compare and Contrast Merchandising versus Service Activities and Transactions, Compare and Contrast Perpetual versus Periodic Inventory Systems, Analyze and Record Transactions for Merchandise Purchases Using the Perpetual Inventory System, Analyze and Record Transactions for the Sale of Merchandise Using the Perpetual Inventory System, Discuss and Record Transactions Applying the Two Commonly Used Freight-In Methods, Describe and Prepare Multi-Step and Simple Income Statements for Merchandising Companies, Appendix: Analyze and Record Transactions for Merchandise Purchases and Sales Using the Periodic Inventory System, Define and Describe the Components of an Accounting Information System, Describe and Explain the Purpose of Special Journals and Their Importance to Stakeholders, Analyze and Journalize Transactions Using Special Journals, Describe Career Paths Open to Individuals with a Joint Education in Accounting and Information Systems, Analyze Fraud in the Accounting Workplace, Define and Explain Internal Controls and Their Purpose within an Organization, Describe Internal Controls within an Organization, Define the Purpose and Use of a Petty Cash Fund, and Prepare Petty Cash Journal Entries, Discuss Management Responsibilities for Maintaining Internal Controls within an Organization, Define the Purpose of a Bank Reconciliation, and Prepare a Bank Reconciliation and Its Associated Journal Entries, Describe Fraud in Financial Statements and Sarbanes-Oxley Act Requirements, Explain the Revenue Recognition Principle and How It Relates to Current and Future Sales and Purchase Transactions, Account for Uncollectible Accounts Using the Balance Sheet and Income Statement Approaches, Determine the Efficiency of Receivables Management Using Financial Ratios, Discuss the Role of Accounting for Receivables in Earnings Management, Apply Revenue Recognition Principles to Long-Term Projects, Explain How Notes Receivable and Accounts Receivable Differ, Appendix: Comprehensive Example of Bad Debt Estimation, Describe and Demonstrate the Basic Inventory Valuation Methods and Their Cost Flow Assumptions, Calculate the Cost of Goods Sold and Ending Inventory Using the Periodic Method, Calculate the Cost of Goods Sold and Ending Inventory Using the Perpetual Method, Explain and Demonstrate the Impact of Inventory Valuation Errors on the Income Statement and Balance Sheet, Examine the Efficiency of Inventory Management Using Financial Ratios, Distinguish between Tangible and Intangible Assets, Analyze and Classify Capitalized Costs versus Expenses, Explain and Apply Depreciation Methods to Allocate Capitalized Costs, Describe Accounting for Intangible Assets and Record Related Transactions, Describe Some Special Issues in Accounting for Long-Term Assets, Identify and Describe Current Liabilities, Analyze, Journalize, and Report Current Liabilities, Define and Apply Accounting Treatment for Contingent Liabilities, Record Transactions Incurred in Preparing Payroll, Explain the Pricing of Long-Term Liabilities, Compute Amortization of Long-Term Liabilities Using the Effective-Interest Method, Prepare Journal Entries to Reflect the Life Cycle of Bonds, Appendix: Special Topics Related to Long-Term Liabilities, Explain the Process of Securing Equity Financing through the Issuance of Stock, Analyze and Record Transactions for the Issuance and Repurchase of Stock, Record Transactions and the Effects on Financial Statements for Cash Dividends, Property Dividends, Stock Dividends, and Stock Splits, Compare and Contrast Owners Equity versus Retained Earnings, Discuss the Applicability of Earnings per Share as a Method to Measure Performance, Describe the Advantages and Disadvantages of Organizing as a Partnership, Describe How a Partnership Is Created, Including the Associated Journal Entries, Compute and Allocate Partners Share of Income and Loss, Prepare Journal Entries to Record the Admission and Withdrawal of a Partner, Discuss and Record Entries for the Dissolution of a Partnership, Explain the Purpose of the Statement of Cash Flows, Differentiate between Operating, Investing, and Financing Activities, Prepare the Statement of Cash Flows Using the Indirect Method, Prepare the Completed Statement of Cash Flows Using the Indirect Method, Use Information from the Statement of Cash Flows to Prepare Ratios to Assess Liquidity and Solvency, Appendix: Prepare a Completed Statement of Cash Flows Using the Direct Method, Short-Term Promissory Note.
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