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Case Study - General Journals (Part 2)

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Transcript

Well, transaction purchase supplies for $15,000 on account with supply Bay terms 30 days. So this is very similar to question we had prior where we've actually purchased supplies. Supplies are a future economic benefit. They're an asset. They're like inventory. And we've got terms that we need to pay the supplier.

So it's supplies accounts receivable, and that we paid next month. And so therefore, we're going to increase our supplies by $15,000. And we're going to increase the liability by $15,000, and we'll pay that next month. Purchased purchase supplies from From supply okay so the 15th transaction customer say my upfront payment of $1,000 for work to be completed next week so first of all you know cash has been affected here because the customers made an upfront payment for thousand dollars when a cash has gone up, how about the work is going to be completed next week and hasn't yet been completed. And if you recall from a previous lecture, we talked about that when work is not yet completed, then this is actually called unearned revenue. So what that and that's actually a liability.

So what's actually gonna happen is cash is gonna go up and the mat is fantastic, fantastic bolos and we're also going to increase the liability for unearned revenue customer paid up But the work not completed. This could be quite This is quite common in practice to do this with a customer's pay up front, and so it should should technically be sitting as a liability until it's been a slow 14th transaction. Okay, so customer day pay $2,500 cash work performed on a car. So customers pay cash, which means cash affects gone up and the work has been performed therefore it's been earned. So therefore we've just made a sale and customer D is a new customer. There's no previous account or anything so cash at bank will go up and in this case, it's for $2,500 and the prepping is gonna go Cash sale customer.

Okay 15th transaction, purchase a new crane lift to $15,000 50 50% was paid cash and 50% through a new bank loan. So, a crane lifter, you could think of it almost like a long term asset, because you're going to use it in the future within your business. You remember the category we're talking about tangible assets of property plant equipment. This is intangible, but this looks pretty tangible. We know that cash has been affected because we've paid for it. And therefore cash is going down by 50% of that amount.

And we're also going to have to take up a loan on that books because we've also funded some of that crazy stuff via a lot So what's actually going to happen here is we're going to increase that property plant equipment account. That's gonna make sure $10,000 because that's the full amount of the asset. The cash at Bank has gone down for 50% should be $5,000. And for the loan itself, we're actually going to take out a loan from a bank client. So they would have just paid the money straight to whoever we bought this crane lift the front and that will speak for $5,000. So therefore, we can see that we're going to have 5000 that came out of our bank account, and 5000 that we still have to pay back to the bank, but it's gonna be sitting as a liability.

So purchased crane lifta pot cash, pot 16th transaction paid electricity. From 1250. So, paid cash has gone down lectricity is generally an expense, there is no indication that we've previously put a bill through onto accounts payable. So therefore it looks like it's just going to go straight to expense and therefore we're going to put it to electricity expense. When this is not prepaid or anything like this, it's no indication in this question, that we're actually preparing this. So that's just expenses for 1250 and a cash at Bank.

Thousand 250 and we've incurred the cost of it. So we have here paid or incurred the cost for electricity 17th transaction received a water bill for $250 June next month. month. So in this case we've received the stability, it implies we've incurred a cost for what orders expense or expense, and it's due next month, so no impact of cash, but we will have to pay the future economic sacrifice. So it's an accounts payable. So this will be going to an account that was on a chart of accounts called water expense.

Name at least for $250 and accounts payable, capital increase, which is our ability to do lists. Okay, so the next question is that we need to organize a we need to organize by Brian glass works to fix a smash window in the shop which we were invoiced for $500 Okay, so we need to now in this case there's no indication here we've actually paid for this so it doesn't appear to be caches affected. Looks like we're going to repair repairs cost of business and therefore they will need to be an expense for your repairs maintenance and it's going to be looks like it will be paid. Doesn't look like we've paid it yet. There's no indication in the question. So we're going to put it on our accounts payable.

So looking to repairs and maintenance. That's $500. And if you have a sock have the accounts payable. Okay, so a few months ago nonscience transaction paid wages For stuff of the week $3,500. So again, paid cash has gone down, wages have been incurred for the week. So it's already passed.

And therefore we've been cutting costs, therefore, that's going to go to wages expense, in this case 3500 poppin solos and it's got come out of a cash 20th transaction, purchase amenities for the staff room for $300. So purchased. So in this case, it would indicate that we've now paid cash for this. So, amenities are a cost of doing business for you know, tea, coffee and supplies for the staff. So that's we're going to book that to an essential account called amenities expense $300 and this is going to come out of a cash back because it's been paid cash $300 okay 21st transaction hate supply for $10,000 so paid, we've actually paid a surplus of cash has gone down and when you pay suppliers suppliers the liability sits as accounts payable. To reduce it it actually gets debited as you know.

So in this case, we're going to debit accounts payable $10,000 and that will offset the actual liability. We no longer owe them any money and it will come out of our cash And fun transaction work was completed for customer c plus a further $1,000 for other charges. So, customer C was back on Question number 13. We had $1,000 for that Pettit up front. So if you recall, we had an on an ad revenue and now that that revenue has actually been earned, so we're going to move it from unearned revenue which originally it was credits, it's it now gets debited and we move that across to revenue. $1,000 however, the question also says that there's been a further $1,000 of other charges.

So they originally paid us $1,000. And then now that money is what's earned that revenue, however, it looks like it's extra charges. So that's actually going to increase the revenue to $2,000. Because we've actually earned $2,000, not 1000. And I mean, in terms of how they pay that, let's assume that they've actually paid us when the job was when I took the vehicle away. So we've made another $1,000.

And that is the 22 transactions, you can see immediately here that the left side equals the right side in total. That's the debits and that's the credits. So we must have put both sides correct in terms of just numerically like we put the right numbers in each side. So that's a good sign. In in the next section, we're actually going to translate from these general journals across to the T accounts. And that's been the next step to getting us one step closer to preparing a trial balance.

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