CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 14-1 Distributing Corporate Earnings to Stockholders
LESSON 14-1
Mar 24, 2016
LESSON 14-1. Distributing Corporate Earnings to Stockholders. STOCKHOLDERS’ EQUITY ACCOUNTS USED BY A CORPORATION. page 405. (3000) STOCKHOLDERS’ EQUITY 3110Capital Stock 3120Retained Earnings 3130Dividends 3140Income Summary. DECLARING A DIVIDEND. page 406. - PowerPoint PPT Presentation
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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 14-1
Distributing Corporate Earnings to Stockholders
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
2
LESSON 14-1
STOCKHOLDERS’ EQUITY ACCOUNTS USED BY A CORPORATION page 405
(3000) STOCKHOLDERS’ EQUITY3110 Capital Stock3120 Retained Earnings3130 Dividends3140 Income Summary
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-1
DECLARING A DIVIDEND
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4
5 6
page 406
December 15. Hobby Shack’s board of directors declared a quarterly dividend of $2.00 per share; capital stock issued is 2,500 shares; total dividend, $5,000.00. Date of payment is January 15. Memorandum No. 79.
4. Write the debit amount.
3. Write the memorandum number.
2. Write the title of the account debited.
1. Write the date.5. Write the title of the account
credited.6. Write the credit amount.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-1
PAYING A DIVIDEND
1 2 3 4 5
page 407
January 15. Paid cash for quarterly dividend declared December 15, $5,000.00. Check No. 379.
1. Write the date.2. Write the account title.3. Write the check number.4. Write the debit account.5. Write the credit amount.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-1
TERMS REVIEW
retained earnings dividends board of directors declaring a dividend
page 408
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 14-2
Beginning an 8-Column Work Sheet for a Merchandising Business
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-2
RECORDING A TRIAL BALANCE ON A WORK SHEET page 410
1
3
21. Account title2. Account balance3. Total, prove, and
rule the debit and credit columns
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-2
ANALYZING AND RECORDING SUPPLIES ADJUSTMENTS page 411
Adj. (a) 2,730.00Supplies Expense—Office
Dec. 31 Bal. 3,480.00 Adj. (a) 2,730.00(Adj Bal. 750.00)
Supplies—Office
Adj. (b) 2,910.00Supplies Expense—Store
Dec. 31 Bal. 3,944.00 Adj. (b) 2,910.00(Adj Bal. 1,034.00)
Supplies—Store
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-2
RECORDING SUPPLIES ADJUSTMENTS ON A WORK SHEET page 412
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1
1. Write the debit amounts in the Adjustments Debit column.2. Write the credit amounts in the Adjustments Credit column.3. Label the two parts of the Supplies—Office adjustment with small letter
a and small letter b in parentheses.
3
3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-2
ANALYZING AND RECORDING A PREPAID INSURANCE ADJUSTMENT
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page 413
1. Enter the amount of insurance used in the Adjustments Credit column.
2. Enter the same amount in the Adjustments Debit column.
3. Label the two parts of the adjustment with a small letter c in parentheses.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 14-3
Planning and Recording a Merchandise Inventory Adjustment
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-3
MERCHANDISE INVENTORY page 415
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-3
ANALYZING AND RECORDING A MERCHANDISE INVENTORY ADJUSTMENT
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3
3
page 416
1. Write the debit amount.
3. Label the two parts of this adjustment with a small letter d in parentheses.
2. Write the credit amount.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-3
ANALYZING AN ADJUSTMENT WHEN ENDING MERCHANDISE INVENTORY IS GREATER THAN BEGINNING MERCHANDISE INVENTORY page 417
Jan. 1 Bal. 294,700.00Adj. (d) 4,200.00(New Bal. 298,900.00)
Merchandise Inventory
Adj. (d) 4,200.00Income Summary
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-3
TERM REVIEW
merchandise inventory
page 418
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 14-4
Planning and Recording an Allowance for Uncollectible Accounts Adjustment
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-4
ALLOWANCE METHOD OF RECORDING LOSSES FROM UNCOLLECTIBLE ACCOUNTS page 419
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-4
EstimatedUncollectible
Accounts Expense
=Percentage×Total Saleson Account
$1,245.00=1%×$124,500.00
ESTIMATING UNCOLLECTIBLE ACCOUNTS EXPENSE page 420
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-4
1. Enter the estimated uncollectible amount.
ANALYZING AND RECORDING AN ADJUSTMENT FOR UNCOLLECTIBLE ACCOUNTS EXPENSE
3. Label the two parts with a small letter e in parentheses.
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page 421
2. Enter the same amount in the Adjustments Debit column.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-4
TERMS REVIEW
uncollectible accounts allowance method of recording losses from
uncollectible accounts book value book value of accounts receivable
page 422
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 14-5
Planning and Recording Depreciation Adjustments
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-5
CALCULATING DEPRECIATION EXPENSE AND BOOK VALUE page 424
Estimated TotalDepreciation
Expense=
EstimatedSalvage Value
–OriginalCost
$1,000.00=$250.00–$1,250.00
AnnualDepreciation
Expense=
Years ofEstimated
Useful Life÷
Estimated TotalDepreciation
Expense$200.00=5÷$1,000.00
1. Subtract the asset’s estimated salvage value from original cost.2. Divide the estimated total depreciation expense by the years of
estimated useful life.
1
2
(continued on next slide)
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-5
CALCULATING DEPRECIATION EXPENSE AND BOOK VALUE page 424
20X3AccumulatedDepreciation
=20X3
DepreciationExpense
+20X2
AccumulatedDepreciation
$600.00=$200.00+$400.00
EndingBook Value=Accumulated
Depreciation–Original Cost
$650.00=$600.00–$1,250.00
(continued from previous slide)
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-5
ANALYZING AND RECORDING ADJUSTMENTS FOR DEPRECIATION EXPENSE page 425
1
2
3
3
1. Write the debit amounts.2. Write the credit amounts.3. Label the adjustments.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-5
TERMS REVIEW
current assets plant assets depreciation expense estimated salvage value straight-line method of depreciation accumulated depreciation book value of a plant asset
page 426
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 14-6
Calculating Federal Income Tax and Completing a Work Sheet
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-6
FEDERAL INCOME TAX EXPENSE ADJUSTMENT page 427
Total of Income Statement Credit column $ 500,253.10
Less total of Income Statement Debit column before federal income tax –396,049.91
Equals Net Income before Federal Income Tax $104,203.19
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-6
CALCULATING FEDERAL INCOME TAX page 428
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-6
1. Calculate the amount of federal income tax expense adjustment.
RECORDING THE FEDERAL INCOME TAX ADJUSTMENT
2
3
3
1
1
page 429
2. Total and rule the Adjustments columns.
3. Extend account balances.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-6
COMPLETING A WORK SHEET
1 1
page 430
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1. Total the Income Statement and Balance Sheet columns.
5. Rule double lines.4. Calculate the column totals.3. Extend the net income amount.2. Calculate and enter the net income after federal income tax.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-6
A COMPLETED 8-COLUMN WORK SHEET page 432
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 14-6
A 10-COLUMN WORK SHEET page 434-435
1. Trial balance
46
2 3 5
5. Extend balances2. Adjustments3. Extend adjusted balances4. Total, prove, and rule
6. Calculate net income; total, prove and rule
1
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