Handout 03 - INTRODUCTION TO FINANCIAL ACCOUNTING...

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Copyright © 2011 1 You may only share these materials with current term students. I NTRODUCTION TO F INANCIAL A CCOUNTING 33:010:272 S ECTIONS 08 09 |FALL 2011 P ROFESSOR J ULIAN Y EO Class Notes 03: Journal Entries for Our Business Simulation Game This document contains most of the journal entries that we will come across during the business simulation game. Below is an index of accounts (by alphabetical order) you will find: Accrued Consulting Revenue p.9 Accumulated Depreciation p.9 Advances from Customers p.8 Buildings p.5 Consulting Revenue p.3 Consulting Revenue Receivable p.8 Contributed Capital p.2 Depreciation Expense p.9 Gains/losses on Sales of Properties p.5 Income Tax Refund Receivable p.7 Insurance Expense p.7 Interest Expense p.9 Interest Payable p.9 Loan p.2 Miscellaneous Expenses p.4 Miscellaneous Revenues p.3 Prepaid Income Tax p.7 Prepaid Insurance p.7 Properties p.2 Rental Expense p.4 Rental Receivable p.3 Rental Revenue p.3 Rental Payable p.4 Repair and Maintenance Expense p.4 Write-off Expense p.6 Templates of unadjusted/adjusted Trial Balance can also be found on page 10 of this document. Upon completion of this topic, you should able to: Journalize all transactions that take place in a simulated business environment Make all the necessary adjusting entries Prepare financial statements based on transactions take place is a simulated business environment
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Copyright © 2011 2 You may only share these materials with current term students. Before we start playing… Owners’ contribution to the business Month Accounts Debit Credit 01 Properties xx Contributed Capital/PIC xx Both teams already own properties and both teams are using their properties as their capital contribution. We assume that the prices on the board are the fair values of the properties. CAR’s properties are worth $2,510 and HAT’s properties are worth $3,180. Question: Does HAT have an advantage over CAR? Note that the performance measure we focus on is ROE (Return on owners’ equity) . (Initial) Loan Month Accounts Debit Credit 01 Cash $1,500 Loan $1,500 You need cash as part of the business’ operating activities. As a result of this transaction, you have an increase in asset (cash – debit) and an increase in liabilities (loan – credit). While we are playing… Common Revenues Revenues are inflows of assets or settlements of liabilities, or both, during a period as a result of the delivery or production of goods, the rendering of services, or other earnings activities that constitute an entity’s typical day-to-day activities. Some possible revenues that you will come across in the simulation game include: Rental Revenue Consulting Revenue Miscellaneous Revenue Rental Revenue When another team visits one of your properties, even though they do not pay the rent in the same month of their visit (they pay in the following month), you have performed your services and earned the revenue. Therefore, you can recognize rental revenue in the month when another team stays at one of your properties.
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Handout 03 - INTRODUCTION TO FINANCIAL ACCOUNTING...

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