Posts in the Financial Accounting category:

Financial Accounting

Notes Payable Payments Journal Entry – Payment on Installment Note Using Amortization Table

Written by Bob Steele CPA - Accounting Instruction, Help & How To on . Leave a comment

Notes payable payments journal entry will enter the journal entry for making a payment on an installment note using an amortization table. We will enter the transaction in the general journal, post it to the general ledger, and see the effect on the trial balance. To record a financial transaction for the payment of an installment note we need an amortization table to determine the amount allocated to interest and the amount allocated to principle. Although the payment amount will often not change on an installment note, the amount allocated to interest and principle will change with each payment. We will enter a journal entry debiting interest expense, debiting notes payable, and crediting cash. The accounting transaction for payment on installment not will decrease cash, increase expenses, decrease the principal portion of the note, bring net income down, and bring total equity down.
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Financial Accounting

Corporation Comp Prob Revenue for Cash – 110 Journal Entry to Record Cash Received for Work Done

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Corporation comprehensive problem journal entry to record cash received for work done will record the debits and credits for the financial transaction.
We will record the accounting journal entry in the general journal, post it to the general ledger, and create the trial balance from the general ledger.
We will debit cash and credit revenue. This is our favorite journal entry when we see both cash and revenue increase.
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Financial Accounting

Statement of Cash Flows-Direct Method vs Indirect Method

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Statement of cash flows direct method vs indirect method will compare and contrast the direct method and indirect method forms of the cash flow statement. When comparing the direct and indirect method we are focusing in on the cash flows from operation section of the statement of cash flows as opposed to the financing or investing sections. In other words, the financing and investing sections will remain the same under either method. The direct method can be thought of as reworking the income statement line by line, adjusting each line from an accrual basis to a cash basis. The direct method makes intuitive seance and and is easy to explain to readers but is the less used method. One reason is that the indirect method is often required even if the direct method is used. The indirect method provides a kind of reconciliation between net income on an accrual method and net income on a cash method or cash provided by operating activities. The bottom line should be the same using either the direct or indirect method.
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Financial Accounting

Statement of Cash Flow Direct Method – Make Statement of Cash Flows Using Direct Method

Written by Bob Steele CPA - Accounting Instruction, Help & How To on . Leave a comment

Statement of cash flows direct method will construct the statement o flows using the direct method. The direct method is less common then the indirect method for multiple reasons. One reason the indirect method is more common is that it is often required weather we use the direct method or not. In other words, we often have to use a an indirect method calculation even if we include the direct method. The indirect method provides a reconciliation between net income and cash provided by operations. The direct method generally makes more intuitive scene however. The difference between the direct method and the indirect method is found on the cash flows from operations. In other words, the cash flows from investing activities and financing activities will be the same when using either direct or indirect methods. The direct method is like taking the income statement accounts and converting each account from an accrual method to a cash method.
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Financial Accounting

Corporation Comp Prob Receive Cash on Account -100 Debit Cash Credit Accounts Receivable

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Corporation comprehensive problem recording the journal entry for receiving cash on account. We will record the journal entry to the general journal, post it to the general ledger, and create the trial balance from the general ledger. We will debit cash and credit accounts payable .
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Financial Accounting

Bond Price Present Value Tables – Present Value (PV) Calculations

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Present value calculations using bond price will use present value tables to calculate the market value of bond price. Present value calculations can be done multiple ways either with tables, with algebra, with Excel, or with financial calculators. Each format for calculating present value has its pros and cons. It is helpful to know that each form of calculating present value is designed to get at the same thing so that we can recognize present value calculations when we see them. Calculating bond prices is a perfect example for present value calculations because it include two present value streams, a present value of one, and present value of an annuity.
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Financial Accounting

Bond Present Value Excel – PV Calculations Using Bond Price Example

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Use Excel to calculate present value PV using bond price as an example. There are many ways to calculate the present value. We can use present value tables, a financial calculator, math and formulas, or Excel. Each method has its pros and cons but it is important to know that are all doing much the same thing, leading to the same outcome. Excel has many advantages including formatting the present value calculations in different ways to pull more information. Calculating the bond price is a common example for present value calculations because bond prices have two separate cash flows, one being the present value of one and the other being an annuity. The two present value requirements of bonds are perfect for thinking about the main two present value types of calculations.
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Financial Accounting

Premium Amortization Effective Method – Effective Method Calculation

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We will calculate the amortization of a bond premium using the effective method the preferred method under GAAP. The effective method can be compared to the straight line method. Under the straight line method we divide the premium by the number of payments and reduce it by an even amount each period. Under the effective method we calculate the amount allocated to interest each period using the carrying value and the market interest rate..
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Financial Accounting

Notes Payable Current vs. Non Current – Financial Statements

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Financial statement, balance sheet, liabilities section needs to be broken out between current liabilities and non current liabilities. The concepts is simple; the practice less simple. In concepts, current liabilities are those that will be due within a year. Given this definition we should be able to go through are liabilities, determine which are due in a year, and put them in the current liabilities section. The problem is that some liabilities have a current and long term component. Notes payable or loans payable set up as installment notes often have a current and long term component. We will need to use amortization table do break out the current and long term portion of these notes. We will also discuss different options for reporting installments notes.
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