Ch03 Lecture Notes

Declaredacashdividendof5000 assets assets liabilities

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Unformatted text preview: + Stockholders’ Stockholders’ Equity Equity + 4,000 (revenue) 15 Double-Entry System Illustration Double-Entry System Illustration 6. Declared a cash dividend of $5,000. Assets Assets = Liabilities Liabilities + 5,000 16 + Stockholders’ Stockholders’ Equity Equity - 5,000 Double-Entry System Illustration Double-Entry System Illustration 8. Pay cash of $16,000 for a delivery van. Assets Assets = Liabilities Liabilities + Stockholders’ Stockholders’ Equity Equity - 16,000 + 16,000 Note that the accounting equation equality is maintained after Note that the accounting equation equality is maintained after recording each transaction. recording each transaction. 17 Financial Statements and Ownership Structure Financial Statements and Ownership Structure Ownership structure dictates the types of accounts that are part of the equity section. Proprietorship or Proprietorship or Partnership Partnership Capital Account Drawing Account Corporation Corporation Common Stock Additional Paid-in Capital Dividends Retained 18 Declared Earnings Financial Statements and Ownership Structure Financial Statements and Ownership Structure Illustration 3­4 Balance Sheet Stockholders’ Equity Common Stock (Investment by Common Stock (Investment by stockholders) stockholders) Dividends Retained Earnings (Net Retained Earnings (Net income retained in business) income retained in business) Net income or Net loss ((Revenues Revenues less expenses) less expenses) Income Statement Statement of Retained Earnings 19 The Accounting Cycle The Accounting Cycle Illustration 3­6 Transactions 9. Reversing entries 1. Journalization 8. Post­closing trail balance 2. Posting 7. Closing entries 3. Trial balance 6. Financial Statements Work Sheet 5. Adjusted trial balance 20 4. Adjustments 1. Journalizing 1. Journalizing General Journal – a chronological record of transactions. Journal Entries are recorded in the journal. September 1: Stockholders invested $15,000 cash in the corporation in exchange for shares of stock. Illustration 3-7 21 2. Posting 2. Posting Posting – Transferring a...
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