ACCT620 Final Review
Number 3: Marketable securities
Jayco owns marketable equity securities, which it buys and sells during the year. The controller
made entries for some activities during the year, but he was uncertain how to handle other
ACCT 620 Notes 6
Typical J/E: DR Cash or A/R CR Rev; DR Cash CR Liab and later DR Liab CR Rev (Liab =
Unearned/deferred Rev); DO NOTHING
Recognition Requirements: Revenue must be 1) earned (entity has substantially completed the
process of providing the g
Cash Basis: Recognizes revenue when cash is received and expenses when cash is paid.
Accrual Basis: Recognizes revenue when goods are sold or services are rendered and expenses in
the same period as the good sold.
Installment Method: Use when process is done but realizability of asset is questionable; P= $100,
C=$70, 1st pay $40, 40, 20: @ Sale DR A/R 100 CR Rev & DR COGS 70 DR Inv; @ end
of year DR Rev 100 CR COGS 70 Def Gross Profit 30; @ 1st pay DR Cash