Century 21 Accounting, 8e



Century 21 Accounting, 9e

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Chapter Outlines

PART 1 DEPARTMENTALIZED ACCOUNTING

Chapter 1 Recording Departmental Purchases and Cash Payments

Using Accounting Principles and Records

Accounting Equation

Accounting Records

General Journal

Normal Balances of Accounts

Ledgers

General and Subsidiary Ledger File Maintenance

Journalizing and Posting Purchases and Purchases Returns

Departmental Accounting System

Journalizing Purchases on Account

Posting from a Purchases Journal

Posting the Totals of a Purchases Journal

Journalizing Purchases Returns and Allowances

Journalizing and Posting Cash Payments

Departmental Cash Payments

Cash Payment on Account

Journalizing a Purchases Discount

Taking a Discount after a Purchase Return

Recording Entries in a Cash Payments Journal

Cash Payment to Replenish Petty Cash

Posting from a Cash Payments Journal

Chapter 2 Recording Departmental Sales and Cash Receipts

Departmental Sales on Account and Sales Returns and Allowances

Departmental Sales on Account

Journalizing Sales on Account

Posting from a Sales Journal to the Accounts Receivable Ledger

Posting from a Sales Journal to a General Ledger Account

Journalizing Sales Returns and Allowances

Posting from a General Journal

Steps for Posting from a General Journal

Journalizing and Posting Cash Receipts

Departmental Cash Receipts

Cash Receipts on Account

Journalizing a Cash Receipt with a Sales Discount

Journalizing a Cash Receipt with a Sales Return and a Sales Discount

Journalizing Cash and Credit Card Sales

Posting from a Cash Receipts Journal

Order of Posting from Journals

Chapter 3 Calculating and Recording Departmental Payroll Data

Completing Payroll Records for Employee Earnings and Deductions

Payroll Deductions

Calculating Employee Earnings

Commissions Record

Preparing a Payroll Register (Left Page)

Preparing a Payroll Register (Right Page)

Using the Federal Income Tax Withholding Table

Preparing an Employee Earnings Record

Recording a Payroll and Payroll Taxes

Payroll Bank Account

Automatic Check Deposit

Employer Payroll Taxes

Journalizing Payment of a Payroll

Calculating Employer Payroll Taxes

Journalizing Employer Payroll Taxes

Journalizing Payment of Federal Income Tax, Social Security Tax, and Medicare Tax Liability

Journalizing Payment of Federal Unemployment Tax Liability

Chapter 4 Financial Reporting for a Departmentalized Business

Responsibility Accounting for a Merchandising Business

Features of a Responsibility Accounting System

Recording a Direct Expense

Recording an Indirect Expense

Interim Departmental Statement of Gross Profit

Interim Financial Statements

Determining Ending Merchandise Inventory

Estimating Ending Merchandise Inventory

Interim Departmental Statement of Gross Profit

Analyzing an Interim Departmental Statement of Gross Profit

Cost of Merchandise Sold and Gross Profit Percentages

Determining Acceptable Levels of Performance

Preparing a Work Sheet for a Departmentalized Business

Proving the Accuracy of Posting to Subsidiary Ledgers

Expanded Work Sheet

Trial Balance on a Departmental Work Sheet

Adjustments on a Work Sheet with Departmental Margins

Departmental Work Sheet (Top Half)

Departmental Work Sheet (Bottom Half)

Adjustment Information

Adjustments Shown on Work Sheet

Uncollectible Accounts Expense Adjustment

Merchandise Inventory Adjustments

Supplies Adjustments

Prepaid Insurance Adjustment

Depreciation Expense Adjustments

Federal Income Tax Expense Adjustment

Departmental and Company Loss on a Work Sheet

Responsibility Statements for a Merchandising Business

Departmental Margin Statement—Audio

Component Percentages on Departmental Margin Statements

Departmental Margin Statement—Video

Income Statement with Departmental Margin

Statement of Stockholders’ Equity

Balance Sheet

End-of-Period Work for a Departmentalized Business

Journalizing Adjusting Entries for a Departmentalized Business

Journalizing Closing Entries for a Departmentalized Business

Explanation of Closing Entries

Recording Closing Entries on Two General Journal Pages

Closing Entry for Income Statement Accounts with Credit Balances

Closing Entry for Income Statement Accounts with Debit Balances

Closing Entry to Record Net Income or Net Loss in the Retained Earnings Account and to Close the Income Summary Account

Closing Entry for the Dividends Account

Post-Closing Trial Balance for a Departmentalized Business

Summary of Accounting Cycle

PART 2 ACCOUNTING ADJUSTMENTS AND VALUATION

Chapter 5 A Voucher System

Vouchers and Voucher Registers

Verifying an Invoice

A VOUCHER

PREPARING A VOUCHER FROM AN INVOICE

SECTION 1—PAYEE INFORMATION

Section 2—Accounts Affected

Section 3—Voucher Approval

Voucher Register (Left Side)

Journalizing a Voucher in a Voucher Register’s Special Columns

Section 4 of a Voucher—Where the Voucher Is Recorded

Voucher Register (Right Side)

JOURNALIZING A VOUCHER IN THE GENERAL COLUMNS OF A VOUCHER REGISTER

PROVING, RULING, AND POSTING A VOUCHER REGISTER

VOUCHER CHECK AND CHECK REGISTERS

PREPARING A VOUCHER CHECK

SECTION 5 OF A VOUCHER—PAYMENT OF A VOUCHER

JOURNALIZING CASH PAYMENTS

MAINTAINING BANK COLUMNS IN A CHECK REGISTER

JOURNALIZING CHECKS IN A CHECK REGISTER

Proving, Ruling and Posting a Check Register

Starting a New Page of a Check Register

Selected Transactions in a Voucher System

Purchases Returns And Allowances

RECORDING PAYROLL IN A VOUCHER REGISTER (LEFT SIDE)

A PAYROLL VOUCHER

RECORDING PAYROLL IN A VOUCHER REGISTER (RIGHT SIDE)

ADVANTAGES OF A VOUCHER SYSTEM

Chapter 6 Inventory Planning and Valuation

The Nature of Merchandise Inventory

Flow of Inventory Costs

EFFECTS OF ERRORS IN COSTING AN INVENTORY

COSTING AND COUNTING THE INVENTORY

GOODS IN TRANSIT

GOODS ON CONSIGNMENT

STOCK RECORD FOR A PERPETUAL INVENTORY SYSTEM

INVENTORY RECORD USED FOR THE PERIODIC INVENTORY

INVENTORY COSTING

FIRST-IN, FIRST-OUT INVENTORY COSTING METHOD

LAST-IN, FIRST-OUT INVENTORY COSTING METHOD

WEIGHTED-AVERAGE INVENTORY COSTING METHOD

COSTING INVENTORY DURING PERIODS OF INCREASING PRICES

COSTING INVENTORY DURING PERIODS OF DECREASING PRICES

RESULTS OF THE THREE INVENTORY COSTING METHODS COMPARED

LOWER OF COST OR MARKET INVENTORY COSTING METHOD

ESTIMATING THE INVENTORY

GROSS PROFIT METHOD OF ESTIMATING INVENTORY

RETAIL METHOD OF ESTIMATING INVENTORY

MERCHANDISE INVENTORY TURNOVER

MERCHANDISE INVENTORY TURNOVER RATIO

Average Number of Days’ Sales in Merchandise Inventory

PART 3 GENERAL ACCOUNTING ADJUSTMENTS

Chapter 7 Accounting for Uncollectible Accounts

Direct Write-Off Method of Recording Uncollectible Accounts

Recording Uncollectible Accounts Expense

Collecting a Written-Off Account—Direct Write-Off Method

Allowance Method of Recording Uncollectible Accounts Expense

Estimating Uncollectible Accounts Expense

Adjustment Using the Percentage of Sales Method

Adjustment Using Aging of Accounts Receivable

Adjustment Using Percentage of Accounts Receivable

Writing off An Uncollectible Account—Allowance Method

Collecting a Written-Off Account—Allowance Method

Accounts Receivable Turnover Ratio

Calculating the Accounts Receivable Turnover Ratio

Analyzing Accounts Receivable Turnover Ratios

Chapter 8 Accounting for Plant Assets

Buying Plant Assets

Plant Asset Record

Buying a Plant Asset for Cash

Buying a Plant Asset on Account

Calculating and Paying Property Tax

Assessed Value of Property

Calculating Property Tax on Plant Assets

Paying Property Tax on Plant Assets

Calculating and Journalizing Depreciation Expense

Factors Used to Calculate Depreciation

ORIGINAL COST

ESTIMATED SALVAGE VALUE

Estimated Useful Life

Depreciation Methods

Straight-Line Depreciation

Recording Depreciation on Plant Asset Records

Journalizing Annual Depreciation Expense

Calculating Depreciation Expense for Part of a Year

DISPOSING OF PLANT ASSETS

Discarding a Plant Asset with No Book Value

Discarding a Plant Asset with a Book Value

Selling a Plant Asset

Trading a Plant Asset

Selling Land and Buildings

Calculating the Gain on Sale of Land and Buildings

Other Methods of Depreciation

Declining-Balance Method

Sum-of-the-Years’-Digits Method of Depreciation

Comparison of Three Methods of Depreciation

Production-Unit Method of Depreciation

Calculating Depreciation Expense for Income Tax Purposes

Depletion

Chapter 9 Accounting for Notes Payable, Prepaid Expenses, and Accrued Expenses

Notes Payable

Borrowing Money with a Note Payable

Calculating the Maturity Date

Calculating Interest

Paying a Note Payable

Prepaid Expenses

Description of Prepaid Expenses

Supplies Initially Recorded as an Asset

Closing Entries

Supplies Initially Recorded as an Expense

Closing Entry for Supplies Expense

Reversing Entry—Supplies Initially Recorded as an Expense

Prepaid Insurance Initially Recorded as an Expense

Reversing Entry for Prepaid Insurance

Accrued Expenses

Journalizing Accrued Interest Expense

Reversing Entry for Accrued Interest

Payment of Note at Maturity

Journalizing Accrued Salary Expense

Reversing Entry for Accrued Salary

Journalizing Accrued Employer Payroll Taxes Expense

Reversing Entry for Accrued Employer Payroll Taxes

Journalizing Accrued Federal Income Tax Expense

Chapter 10 Accounting for Notes Receivable, Unearned Revenue, and Accrued Revenue

Notes Receivable

Issuing a Note Receivable for an Account Receivable

Issuing a Note for a Sale

Receiving Cash for a Note Receivable

Recording a Dishonored Note Receivable

Receiving Cash for a Dishonored Note Receivable

Unearned and Accrued Revenue

Adjusting Entry for Unearned Revenue Initially Recorded as Revenue

Reversing Entry for Unearned Revenue Initially Recorded as Revenue

Adjusting Entry for Accrued Interest Income

Reversing Entry for Accrued Interest Income

PART 4 CORPORATION ACCOUNTING

Chapter 11 Organizing a Corporation and Paying Dividends

Starting a Corporation

Articles of Incorporation

Legal Requirements for Forming a Corporation

Rights of Stockholders

Capital Stock of a Corporation

Stock Certificates

Value of Stock

Common Stock

Preferred Stock

Transactions Incurred When Starting a Corporation

Capital Accounts of a Corporation

Issuing Capital Stock When Forming a Corporation

Organization Costs of a Corporation

Stock Subscriptions and the Balance Sheet

Journalizing a Stock Subscription

Balance Sheet of a Newly Formed Corporation

Journalizing Cash Received for a Stock Subscription

Journalizing Issuance of Stock Previously Subscribed

Calculating and Journalizing Dividends for a Corporation

Dividends

Calculating a Dividend

Journalizing Declaration of Dividend

Journalizing Payment of a Dividend

Chapter 12 Acquiring Additional Capital for a Corporation

Capital Stock Transactions

Issuing Preferred Stock at Par Value

Issuing Preferred Stock for More than Par Value

Issuing Preferred Stock for Less than Par Value

Issuing Preferred Stock for Assets Other than Cash

Issuing Common Stock with No Par Value

Issuing Common Stock with a Stated Value

Treasury Stock Transactions

Buying Treasury Stock

Selling Treasury Stock for Original Cost

Selling Treasury Stock for More than Original Cost

Selling Treasury Stock for Less than Original Cost

Bonds Payable Transactions

Corporate Bonds Payable

Issuing Bonds

Paying Interest on Bonds

Depositing Cash in a Bond Sinking Fund

Depositing Cash to Sinking Fund and Recording Income Earned

Retiring a Bond Issue

Comparison of Capital Stock and Bonds as a Source of Corporate Capital

Chapter 13 Financial Analysis and Reporting for a Corporation

Work Sheet for a Corporation

Organization Expense Adjustment

Federal Income Tax Expense Adjustment

Calculating Federal Income Tax Expense

Corporate Work Sheet (Top Half)

Corporate Work Sheet (Bottom Half)

Financial Statements and Analysis

Income Statement for a Corporation

Acceptable and Actual Component Percentages

Share of Net Income Assigned to Preferred and Common Stock

Earnings per Share

Statement of Stockholders’ Equity for a Corporation

Analyzing a Statement of Stockholders’ Equity

Market Value per Share

Price-Earnings Ratio

Equity per Share

Balance Sheet for a Corporation

Accounts Receivable Turnover Ratio

Rate Earned on Average Stockholders’ Equity

Rate Earned on Average Total Assets

Other End-of-Fiscal-Period Work

Adjusting Entries

Closing Entries

Post-Closing Trial Balance

Reversing Entries

Federal Income Tax Return

Dissolving a Corporation

PART 5 MANAGEMENT ACCOUNTING

Chapter 14 Budgetary Planning and Control

Budget Planning

Budget Functions

Budget Period

Sources of Budget Information

Company Records

General Economic Information

Company Staff and Managers

Good Judgment

Comparative Income Statement

Interpreting the Comparative Income Statement

Budgeted Income Statement

Annual Operational Plans and Goals

Sales Budget Schedule

Purchases Budget Schedule

Selling Expenses Budget Schedule

Administrative Expense Budget Schedule

Other Revenue and Expenses Budget Schedule

Budgeted Income Statement

Cash Budgets and Performance Reports

Cash Receipts Budget Schedule

Analysis of Cash Receipts

Cash Payments Budget Schedule

Cash Budget

Quarterly Analysis of Actual Cash Balance

Performance Report

Preparing a Performance Report

Chapter 15 Management Decisions Using Cost-Volume-Profit Analysis

Cost Characteristics that Influence Decisions

Total Costs Versus Unit Cost

Variable Cost Characteristics

Fixed Costs

Gross Profit and Contribution Margin Income Statements

Contribution Margin per Unit

Determining Breakeven

Calculating the Breakeven Point

Calculating Breakeven Point for New Products

Breakeven Income Statement

Decisions that Affect Net Income

Calculating Sales to Earn Planned Net Income

Effect of Volume Changes on Net Income

Effect of Cost Changes at Average Volume

Effect of Cost Changes at Above Average Volume

Effect of Changes in Costs on Contribution Margin Rate

Effect of Change in Sales Price

Using Breakeven to Plan Sales Mix

Chapter 16 Management Decisions Using Present-Value Analysis

Business Decisions Using Present Values

Future Value of Money

Present Value of Money

Business Decisions Using Present Values

Present Value and Annuities

Present Value of an Annuity

Financial Planning Decisions Using the Present Value of an Annuity

Business Decisions using the Present Value of an Annuity

Chapter 17 Financial Statement Analysis

Trend Analysis and Component Percentages

Financial Analysis Objectives

Ratio Analysis

Trend Analysis on the Income Statement

Trend Analysis on the Statement of Stockholders’ Equity

Trend Analysis on the Balance Sheet

Component Percentages on the Income Statement

Component Percentages on the Statement of Stockholders’ Equity

Component Percentages on the Balance Sheet

Calculating Earnings Performance and Efficiency Analysis

Earnings Performance Analysis

Rate Earned on Average Total Assets

Calculating the Rate Earned on Average Total Assets

Rate of Return Earned on Average Stockholders’ Equity

Rate Earned on Net Sales

Earnings per Share

Price-Earnings Ratio

Efficiency Analysis

Accounts Receivable Turnover Ratio

Average Number of Days for Payment

Merchandise Inventory Turnover Ratio

Calculating Financial Strength Analysis

Short-Term Financial Strength Analysis

Working Capital

Current Ratio

Acid-Test Ratio

Long-Term Financial Strength Analysis

Debt Ratio

Equity Ratio

Equity per Share

Chapter 18 Statement of Cash Flows

Understanding Cash Flow Analysis

Cash Flow Analysis

Case Study

Statement of Cash Flows

Timing of Revenue Recognition

Timing of Expense Recognition

Cash Flows from Operating Activities

Cash Flows from Investing Activities

Cash Flows from Financing Activities

Preparing the Operating Activities Section of a Statement of Cash Flows

Determining Cash Flows from Operating Activities

Adjusting Net Income for Depreciation

Analyzing Changes in Current Assets

Analyzing Changes in Current Liabilities

Summary

Reporting Cash Flows from Operating Activities

Completing the Statement of Cash Flows

Preparing the Investing Activities Section

Analyzing Cash Flows from Investing Activities

Preparing the Financing Activity Section

Analyzing Cash Flows from Financing Activities

Calculate the Net Increase or Decrease in Cash

Completing the Statement of Cash Flows

Cash Flow Analysis Summary

PART 6 MANUFACTURING COST ACCOUNTING

Chapter 19 Cost Accounting for a Manufacturing Business

Elements of Manufacturing Cost

Three Cost Elements

Direct Materials

Direct Labor

Factory Overhead

Inventories for a Manufacturing Business

Cost Records

Subsidiary Cost Ledgers

Manufacturing Cost Flows

Maintaining Manufacturing Records

Records for Materials

Recording Direct Materials on a Cost Sheet

Recording Direct Labor on a Cost Sheet

Calculating and Recording Factory Overhead

Completing a Job Cost Sheet

Finished Goods Ledger Card

Chapter 20 Accounting Transactions and Financial Reporting for a Manufacturing Business

Journalizing Manufacturing Accounting Transactions

Flow of Manufacturing Costs

Journal Entries to Record Factory Payroll for a Month

Recording Materials Purchases

Recording Materials Requisitions

Materials and Labor Used in Production

Journalizing Actual Factory Overhead

Recording Applied Overhead

Disposing of Overapplied and Underapplied Factory Overhead Balances

Recording Finished Goods Transactions

Recording Sales and Cost of Goods Sold

Manufacturing Accounts in the General Ledger

Preparing End-of-Fiscal Period Statements

Preparing the Work Sheet

Work Sheet (Top Half)

Work Sheet (Bottom Half)

Statement of Cost of Goods Manufactured

Sources of Income Statement Information

Income Statement

Balance Sheet

PART 7 OTHER ACCOUNTING SYSTEMS

Chapter 21 Organizational Structure of a Partnership

Forming a Partnership

Partnership Agreement

Partnership Capital Accounts

Partners’ Initial Investments

Journal Entries to Record Partners’ Initial Investments

Balance Sheet of Existing Business

Admitting Partners to Existing Partnerships

Admitting a Partner with No Change in Total Equity

Admitting a Partner with Equity Equal to New Partner’s Investment

Admitting a Partner with Equity Greater than New Partner’s Investment

Admitting a Partner when Goodwill Is Recognized

Equity Accounts after Goodwill Is Recognized

Chapter 22 Financial Reporting for a Partnership

Distribution and Withdrawal of Partnership Earnings

Distribution of Partnership Earnings

Fixed Percentage

Percentage of Total Equity

Interest on Equity

Salaries

Combination of Methods

Withdrawal of Partnership Earnings

Withdrawal of Cash

Withdrawal of Assets Other than Cash

End-of-Fiscal-Period Work for a Partnership

Adjustments on a Work Sheet

Income Statement

Work Sheet for a Partnership

Component Percentages on the Income Statement

Distribution of Net Income Statement Showing a Net Income

Distribution of Net Income Statement Showing a Deficit

Owners’ Equity Statement

Balance Sheet

Adjusting Entries

Closing Entries

Federal Income Taxes of a Partnership

Post-Closing Trial Balance

Liquidation of a Partnership

Account Balances before Realization

Gain on Realization

Recognizing a Gain on Realization

Loss on Realization

Liquidating Liabilities

Account Balances after Liquidation of Noncash Assets and Payment of Liabilities

Distributing Loss or Gain on Realization to Partners

Distributing Remaining Cash to Partners

Chapter 23 Budgeting and Accounting for a Not-for-Profit Organization

Not-for-Profit Organizations

Nature of Not-for-Profit Organizations

Types of Not-for-Profit Organizations

Purpose of Governmental Organizations

Characteristics of Governmental Organizations

Characteristics of Governmental Accounting Systems

Fund Accounting Balance Sheets

Modified Accrual Accounting

Difference between Expenses And Expenditures

Financial Reporting Emphasis

Budgeting

Chart of Accounts for a Not-for-Profit Organization

Developing an Annual Governmental Operating Budget

Procedures to Prepare Annual Operating Budget

Journalizing an Approved Annual Operating Budget

Journalizing Revenues

Journalizing Current Property Tax Revenues

Collection of Current Property Taxes

Other Revenue

Accounting for Delinquent Property Taxes

Collection of Delinquent Property Taxes

Journalizing Expenditures, Encumbrances, and Other Transactions

Journalizing Expenditures

Journalizing Encumbrances

Journalizing Expenditures for Amounts Encumbered

Journalizing Expenditures Benefiting Future Periods

Journalizing the Issuance of Liabilities

Journalizing the Payment of Liabilities

Investing in Short-Term Investments

Receiving Cash from Short-Term Investments

Chapter 24 Financial Reporting for a Not-for-Profit Organization

Preparing a Work Sheet for a Governmental Organization

Recording a Trial Balance on a Work Sheet

Adjustment for Inventory of Supplies

Inventory of Supplies Adjustment

Adjustment for Interest Revenue and Reserve for Encumbrances

Extending Amounts to Revenues/Expenditures and Balance Sheet Columns

Calculating the Excess of Revenues over Expenditures

Completing the Work Sheet

Preparing Financial Statements for a Governmental Organization

Statement of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual

Balance Sheet

Recording Adjusting and Closing Entries for a Governmental Organization

Adjusting and Closing Entries

Closing Entries

Preparing a Post-Closing Trial Balance for a Governmental Organization

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