Question 1 sample final
March 31 2021 Pay stock dividends
Dr. Stock dividends 34,320.00
Cr. Common Shares 34,320.00
Sometimes they give you market price at the time of the divident payment
Dollar amout = Unit market price * number of shares issued
Number of shares issued = Existing number of shares * (1+ Dividend rate)
Sep 30 2021 Repurchase shares
*Step 1: Determine the book value of shares repurchased (THIS IS THE MOST CRITIC
Beginning common shares
After paying stock dividends
Total
=> The total book value of shares repurchased = Unit book value * Number of share
36,550.00
Step 2: Determine the total price you have to pay
= price * number of shares repurchased
Step 3: Calculate the gain (or loss) from the repurchase of shares
= total book value - total price
= 36550-22100
14,450.00
Step 4: Write journal entry
If there is a gain, credit "Contributed surplus"
Dr. Common shares
Cr. Cash
Cr. Contributed surplus - common shares
Dec 20 2021 Declared and paid dividends
1. Declared
Dr. Cash dividends 50,000.00
Cr. Dividends payable 50,000.00
2. Paid
Dr. Dividends payable 50,000.00
Cr. Cash 50,000.00
Dec 31 2021 Record income and write closing entries
1. Cash Dividends
Dr. Retained earnings 50,000.00
Cr. Cash dividends
2. Stock dividends
Dr. Retained earnings 34,320.00
Cr. Stock dividends
3. Close net income
If there is a net income, income summary has a CR balance and vi
Dr. Income summary 650,000.00
Cr. Retained earnings
4. Close AOCI Dr. OCI
Cr. AOCI
T accounts for all accounts under equity section
Common Shares
Event: DR CR Event:
Beginning balance 320,000.00 Beginning balance
Stock dividends 34,320.00 Pay cash dividends
Repurchase of shares 36,550.00 Pay stock dividends
Total 317,770.00 Record income
Total
Question 2 sample final
Note: I always look at the "Additional information" section first, and work from there
a. Capital Assets were sold
If I want to know what happed, I need a journal entry
When you sell a long term asset,
1. Lose the asset ( Cr.Asset)
2. Delete accumulated dep (Dr. Accumulated Dep)
3. Earn money from the sale (Dr. Cash)
4. Record a gain or a loss
Equity section
Common shares, number of shares x
Contributed surplus- common shares x
Preferred shares, annual dividend, number of shares x
Retained Earnings x
Accumulated other comprehensive income x
1. Common shares
number of shares 73,900
320000+34320-36550
Dividends to preferred shares + dividends to common shares = total dividend
Total dividends = 50,000
Dividends to preferred shares = 2*6000 12,000.00
Dividends to common shares = 50,000 - 12,000 38,000.00
OCI is a temp account
AOCI is a permanent account
Dr. Accounts receivable
Cr. Cash
Dr. Cash
Cr. Inventory
Question Four Sample Final Exam
a. Capital assets were sold
Dr. Loss on sale of capital asse 2,750.00
Dr. Cash 2,100.00 ?
Dr. Accumulated deppreciatio 32,050.00
Cr. Capital assets 36,900.00
* If they give you the carrying value (Net capital assets)
Dr. Loss on sale 2,750.00
Dr. Cash 2,100.00
Cr. Net capital assets 4,850.00
NET capital assets = Historical cost - Acc dep
DR CR
beg bal 100,250.00
Sale 36,900.00 1. Reduce HISTORICAL COST by 36900
Sale 32,050.00 2. Reduce ACC DEP by 32050
Depreciation 31,550.00
Purchase 44,600.00
Purchase capital assets
end bal 108,450.00 Dr. Capital assets 44,600.00
Cr. Cash 44,600.00
Bonds
DR CR
Beg bal 62,350.00 Pay off bonds
paid off bonds 22,225.00 Dr. Bonds payable 22,250.00
Cr. Cash 22,250.00
End bal 40,125.00
Indirect method Revenue
ABC Inc COGS
Statement of Cash flows Gross profit
For the yeyar ended Dec 31 2020
Cash flow from operating activities Other op exp
Net income 46,750.00 Taxable income
Account for non cash items: Tax expense
depreciation expense 31,550.00
Loss on sale of capital assets 2,750.00 Net income
Account for changes in working capital Non cash items :
Accounts receivable (increase) (21,800.00) 1. Depreciation expense
= 38050 - 16250 2. Gains on sale of long ter
Inventory (decrease) 2,800.00 3. Loss on sale of long term
Prepaid expense ( decrease) 7,850.00 4. Bad debt expense
accounts payable (increase) 5,725.00
Cash flow from op activities 75,625.00 1. Operating activities
Look at income statement
Look at Current Assets and
Cash flow from investing:
Long term investments (5,250.00) 2. Investing
Sale of capital assets 2,100.00 Look at Long term Assets
Purchase other capital assets (44,600.00)
3. Financing
Cash flow from investing activities (47,750.00) Look at the Shareholders'
Look at Long term Liab
Cash flow from financing:
Issuance of common shares 15,000.00 Dr. Long term investments
Repayment of bonds (22,225.00)
(If there is dividends) (Negative)
Cash flow from financing activitites (7,225.00) Common shares
DR
Net cash flow 20,650.00
Beginning bal cash + net cash flow = ending balance
RE
39,500.00 Dr.
beg bal
Net income
dividends
end bal
Cash flow from operating activities
Cash flow from customers 162,590.00
= 184390 - 21800
credit purchases + cash purchases (from customers) = total revenue
cash purchases = total revenue - credit purchases
cash purchases = 184390 - 21800
Dr. Accounts receivable 21,800.00
Cr. Revenue 21,800.00
Cash flow to suppliers (64,605.00)
Beginning inv + Purchases - COGS = End inv
Purchases = End inv - beginning inventory + COGS
End inv and beg inv is given
COGS is given
total purchases = 48675 - 51475 +73130 70,330.00
total purchases = Cash purchases + credit purchases
Cash purchases = total purchases - Credit purchases
Credit purchase:
Dr. Purchases 5,725.00
Cr. Accounts payable 5,725.00
cash purchases = 70330 - 5725 64,605.00
Cash flow for income tax (9,640.00)
Cash flow for paying interesset (2,865.00)
Cash flow towards other expen (9,855.00)
Operating expense = Cash expense + Paid using prepayment
Cash expense= Operating exp (total) - Portion paid using prepayment
Operating exp is given
Portion paid using prepayment?
Dr. Op exp 7,850.00
Cr. Prepaid op ex 7,850.00
cash expense = 17705 - 7850
9,855.00
Cash flow for an expense = Total expense (Income Statement) - Change in
THIS IS THE MOST CRITICAL PART)
$ # of shares Unit book value
320,000.00 80,000.00
34,320.00 2,400.00
354,320.00 82,400.00 4.30
value * Number of shares repurchased 36,550.00
=2.6*8500 22,100.00
If it's a positive number, you have a gain
and vice versa
Suppose there is a loss, and there is existing contributed surplus, then
36,550.00 Dr. Contributed surplus - common shares
22,100.00 Dr Common shares
urplus - common shares 14,450.00 Cr Cash
If there is no contributed surplus, then
Dr. Retained Earnings
Dr Common shares
Cr. Cash
If there is existing contributed surplus, but it is less than the loss, then
For example, loss = 100, Dr. Retained Earnings 67.00
contributed surplus = 33 Dr. Common Shares
Dr. Contributed surpl 33.00
Cr. Cash
50,000.00
34,320.00
y has a CR balance and vice versa
650,000.00
RE and so on…
DR CR
206,000.00
50,000.00
34,320.00
650,000.00
771,680.00
In this case,
Dr. Cash 2,100.00
Dr. Accumulated Depreciation 32,050.00
Dr. Loss on sale of capital asset 2,750.00
Cr. Capital assets 36,900.00
Net capital assets ( = Capital assets - Accumulated Depreciation)
DR CR
Beg bal 100,250
Sale 36,900.00
Sale 32,050
Depreciation 31,550
Purchase 44,600.00
End bal 108,450
Dr. Capital assets 44,600.00
Cr. Cash 44,600.00
indirect
Net income
Adjust for non cash expense
Adjust for non cash gains and losses
Adjjust for non cash revenye
Adjust for changes in working capital
direct
Cash inflows from customers
Cash outflows to suppliers
Cash outflows to employees
Cash outflows to government
r. Inventory
ther op exp
axable income Dr. Cash
Cr. Revenue
90.00 Dr. Accounts receivable
Cr. Revenue
on cash items :
Depreciation expense
Gains on sale of long term assets
Loss on sale of long term assets
Bad debt expense
Operating activities
ook at income statement
ook at Current Assets and Current Liab
ook at Long term Assets
ook at the Shareholders' Equity Section
ook at Long term Liab
r. Long term investments
Cr. Cash
ommon shares
Cr
85,000.00
100,000.00
Cr.
63,150.00
46,750.00
150,000.00
ment) - Change in respective "payable account" (Balance sheet)
ributed surplus, then
lus - common shares
s than the loss, then
