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Unformatted text preview: A continuing case study CHINA TRADE, INC. Background You have recently graduated from National University with a degree in International Business. While at National, you became closely acquainted with a fellow student from the Peoples Republic of China, with whom you have made arrangements to buy various types of merchandise for sale to specialty stores in your area. In July, 20x1, you formed a corporation under the name China Trade, Inc. The transactions listed below occurred in August. Requirement a. Record common transactions Each of the numbered tabs contains a common type of business transaction, which is of each account that is affected by the transaction, and also to enter the Amount by which that account is to be increased or decreased. To decrease an account balance, use a minus sign to enter a negative amount. Note that each transaction Do NOT type the Account title. Instead link to the appropriate account title appearing in the balance sheet, income statement or statement of retained earnings. [In order for the entry to be posted properly by the spreadsheet formulas, the Account title has to To enter a link formula in a destination cell, type "=" in the destination cell, click on the source cell, then press ENTER. The destination cell now contains a linking formula. For hints on journal entries, read the explanation to the right of the Transaction Journal. Notice that as soon as you enter a transaction, the financial statements below reflect the posting of that transaction. Until the journal entry has been completed, the balance sheet may show an out-of-balance condition, and some grand totals may after you have completed your entries, then one or more of your entries is incorrect. After entering the transaction, look at the balance sheet and income statement and ask yourself "do they make sense"? For example, it is unusual for accounts to have negative balances. Note: 'The first entry for the first transaction has been provided for you as an example. b. Complete the Financial Statements Part I - How various types of transactions impact the financial statements displayed in blue. Your task is to enter in the Transaction Journal the Account title affects at least two accounts, though some types of transactions affect three or four. be exactly the same as it appears on the financial statement.] appear in in lavendar to indicate that they are incorrect. If the error indicators remain In a manual accounting system, it would be necessary to prepare financial statements from the account balance contained in the General Ledger at the end of the period (say, the end of the month.) In many computerized accounting systems, the financial statements are updated dynamically as soon as the transaction has been recorded, which is the approach used here except for Transaction 10....
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This note was uploaded on 03/28/2011 for the course ACC 501 taught by Professor Patriciam.casey during the Spring '07 term at National.
- Spring '07