2257 cheat sheet mt 2 PDF

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cheat sheet for the second 2257 midterm...

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Stocks: record # of shares throughout 1-Issue of stock for cash/ asset: # of shares x $ Value of asset= value of stock if exchanged If cash (CR) and shares for asset: asset $- cash paid = shares DR cash/ asset CR Common stock/ preferred stock 2-Preferred conversion to common shares: Always use preferred shares book value x % being converted. *update share #, account for ratio DR Preferred stock CR Common stock 3- Stock Split: No Entry *Update # of shares Ex- 3:1 split= outstanding shares x 3 4- Stock Repurchase: Cash paid: in disbursements, BV= T/B x % or #rep. x T/B/# If purchase is < Book value DB Common shares CR contributed capital (R/E if no CC o/b) CR cash If purchase is > Book value DB Common shares DB Contributed capital (R/E if no CC o/b) CR cash 5-Dividends: Preferred Dividend: $ cumulative x outstanding shares at date of declaration DR Retained Earnings CR Dividend Payable Payment date (only if in fiscal): DR Dividends Payable CR Cash a) Cash dividends: Preferred first** Date of declaration- $ amount x share amount DR Retained Earnings CR Dividends payable (liability) Date of paymentDR Dividends payable CR Cash *Dividends in arrears: account for years not yet paid. Ex: 1000 outstanding shares$2 preferred shares 2 years of dividends declared= $2 per share x 1,000 shares x 3 years (2 outstanding plus this year) b) Stock Dividends: Preferred first** (# of common shares outstanding x % being distributed x Market Rate of stock at the time dividend declared) Date of declarationDR Retained Earnings CR Stock Dividend distributable (equity) No entry on date of recordEntry on date of Distribution: DR Stock dividend distributable CR Common stock

Bonds: 1-Recording bonds: PV factor= (n= nx2, i= mkt rate÷2) A) PV(principal) = (Face value) x PV factor table 1 B) PV(interest) = (FV x Coupon r x 6/12) x PV factor table 2 C) Add two together to get bond price DR Cash CR Bond Payable 2- Interest: CV = use value from last interest payment *First time you pay interest pay off receivable A) Bond interest X: CV x Mkt rate x n/12 B) Interest Payment: FV x Coupon rate x n/12 C) Amortization: difference between the two Discount: (C rate < M rate) DR Bond Interest X CR Bond Payable CR Cash or Int. Payable Premium: (C rate > M rate) DR Bond Interest X DR Bond Payable CR Cash or Int. Payable 3- Recall/ Retirement: a) Calculate interest and amortize: A) B) C) using CV and FV x % being recalled (if happens at regular int. pay date do for all bonds) *use mkt rate from issuance DR Bond Interest X CR Bond Payable CR Cash or Int. Payable b) Compare CV(BV) to cash paid(MV): Cash paid= o Using PV tables: (n= # payments remaining, i= market rate on that day ÷ 2) A) B) C) same as recording *using FV x % of recall o “@ 102”: FV x % of recall x 102% BV= BV adjusted for previous amort. x % of recall c) Gain/Loss: difference between cash paid and CV DR Loss on recall/CR Gain on recall DR Bonds Payable CR cash 4- FYE: Always full entry A) B) C) like normal interest*make sure to use correct CV DR Bond Interest X CR Bond Payable Leases: Finance Lease: more than 1 year or purchase option 1- Set up: (n= n – 1, i= interest rate) table 2 (Annual payment $ x PV factor) + Annual payment $ DR Asset CR Lease obligation (liability) 2- First Payment: (could be same day) DR Lease Obligation Depreciation Methods: CR Cash Straight-line Method: 3- Lease signed in previous year: (HC-RV)/useful life x n/12 months DR Lease Obligation (Cash – InterestUnits-of-Production Payable-Interest Expense) Method: DR Interest Payable (Value from Balance Sheet) [(HC – RV) ÷ total units] x units used DR Interest Expense (O/B of Obligation x Interest Rate x n/12) Method: CR Cash (Value of 1 Lease Payment,Diminishing given or onBalance cash disbursements) life payment) x n/12 months if double=2xBV (n=# of months since the beginningBV/useful of FY till the depreciation * Interest Expense is only applicable when the DR lease payment isexpense NOT made on the CR A/D of the asset first day of the FY. If to WIP: % production x depreciation $ 4-FYE: DR WIP cash disbursements) x a) Accrue Interest= (BV)T/B of lease obligation (including interest rate x n/12 (# of months used in FY) DR Depreciation X CR A/D of the asset DR Lease Interest X Useful life not given or for WIP: if on day of CR Lease Interest payable use A/Dused O/B in FY) ÷ how many b) Depreciate Asset: BV/lease lengthincorporation x n/12 (# of months DR Depreciation expense Loan: CR A/D ofBank the asset Operating Lease: less1-DR thanBank 1 year Interest or no option X CR Current to sell portion (payment – O/B) Bank loan CR Current portion DR Lease 2-DR Expense CR Cash *Bank loan account should be 0 and CP should have that amount

Prepaid Rent: 1. Make sure to first use up all of the prepaid rent DR Rent Expense CR Prepaid Rent 2. Allocate new rent (if rent differs then add the monthly difference to old rent (If no new period then don’t do anything) (e.x. Old rent = 400 new rent = 900(500 more) then…. DB Prepaid rent 900 CR Rent expense 900 3. Take T/B of the Rent expense, and multiply it by the % given that is used for the building relating to production DB WIP (%50 x 900) 450 CR Rent Expense 450 Utilities: 1. CR utilities from last Fiscal Year and DR those from this one 2. Add up utilities on COFGM + Income Statement exhibits and then divide COFGM utilities by total utilities (two you just added) = % 3. Then take T/B of utilities (including cash disbursement) and multiply by % and allocate to WIP DR WIP CR Utilities expense Merchandising Inventory: Raw Materials inventory O/B Purchases Discounts Duties Returns& Allowances Freight-in (pick up) CORMAFU CORMU E/B Finished Goods Inventory O/B COFGM COGAFS COGS (DR to COGS X account) E/B (weightedaverage)

Wages Payable: 1.Clear last years by DB wages payable and CR Wages and salaries Expense. They expensed too much! 2. Allocate new Wages payable DR WIP (if applicable) CR Salaries and wages payable 3. Find out how much gets put into Expense and WIP. Prepaid Insurance: 1. Clear any old prepaid insurance and expense it appropriately DR Insurance X CR Prepaid Insurance 2. Use cash disbursement given (do not include previous added expense) and multiply that by # of months used in fiscal year out of total insurance Jan1 till Sept. 30= 9 months so 24 months- 9months= 15 (ex. 2520 x 15/24 (2 year policy) = 1575 DR Prepaid Insurance 1575 CR Insurance expense 1575 3. T/B Insurance X and find allocation rate of insurance to WIP DR WIP (FOH) CR Insurance Expense WIP Inventory O/B o DL o FOH: (Depreciation includes patents, Heat and light (utilities), Factory rent, Power Machinery, Supervision, Production manager, Production supplies used, Insurance) o CORMU COWIP COFGM E/B= pRM + pDL +pFOH

Value of Ending Inventory: Order #of Units Cost/unit Total Specific identification: Units on Hand x Unit Cost = EB Inventory Weighted-Average Cost: Total COGAFS ÷ Units Available 4 Sale x E/B (units) UAFS= EB units + units sold FIFO: record last inventory in Start with E/B(units) then subtract

pRM= raw materials (given) pDL= Direct Labour (given) pFOH= Partial Proxy/ Total Proxy x total FOH (proxy is used as “spread evenly” could be DL hours or Dollars)

Trading Investment- Bonds (asset) 1-Purchasing: bought at 94 mean 94% Accrued Interest= FV x coupon r x n/12 FV x % bought at + accrued interest DR T/I- Bonds DR Bond Interest Receivable CR Cash 2-Interest Received: receivable set up at purchase gets collected on first date Revenue= FV x coupon r x n/12 DR Cash CR Bond Interest Receivable CR Bond Interest Revenue 3-Sale of Bond: (compare BV with Mkt) a) Calculate accrued interest since last pay: FV x coupon r x n/12 b) BV= T/B in T/I-bond account c) Proceeds= $ sold for – accrued interest or fees d) Gain/Loss= difference between BV and proceeds (loss)- DR Cash DR Loss on trade investment (expense) CR T/I- Bonds CR Bond Interest Revenue (gain)- DR Cash CR Gain on trade investment (revenue) CR T/I- Bonds CR Bond Interest Revenue 4-FYE: a) Accrued interest: n= months from last payment to FYE FV x coupon r x n/12 DR Bond Int. Receivable CR Bond Int. Revenue b) Unrealized Gain/Loss: BV vs MV PV(principal) = (Face value) x PV factor table 1 PV(interest) = (FV x Coupon r x 6/12) x PV factor table 2 Market value= PV principal + PV interest BV= T/B of T/I-bonds account DR Unrealized loss- T/I DR T/I-bonds CR T/I- bonds CR Unrealized gain- T/I

Trading Investments- Stocks (asset) 1-Purchasing: $ x # of shares + broker/commission fees DR T.I.-Stocks CR Cash 2-Dividend payment= # shares x % given (only on date of payment) DR Cash CR Dividend Revenue 3-Stock Dividend: Multiply % by # of shares owned: *update # of shares 4-Sale of T/I: *update # of shares a) Proceeds= ($ x # of shares sold) – broker fee b) BV= (current value x % sold) c) Gain/Loss = difference between a&b (loss)- DR Cash DR Loss on trade investment (expense) CR T/I- Stocks (gain)-DR Cash CR Gain on trade investment (revenue) CR T/I- Stocks 5-Fiscal Year end: a) Mkt Value= # of shares x market price or PV b) BV= T/B in T/I Shares T-account c) Unrealized Gain/Loss = difference between a&b (Unrealized loss)- DR Unrealized loss- T/I (expense) CR T.I- Stocks (Unrealized Gain)- DR T.I.- stocks CR Unrealized gain-T/I (revenue)...