Posts with the Cash tag

QuickBooks

Premium Amortization & Interest

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

 

In this presentation, we will discuss the amortization of a bond premium and the recording of interest expense on bonds. This is going to be our starting point. This is the initial transaction in order to get the bonds on the books. Here’s our data down here we’ve got the number of years we’ve got the face amount of the bonds, we’ve got the issue price 270, we see that the interest on the market rate is different than the contract rate. The result then is that cash is going to be increased by the 217. The bonds payable went on the books for the face amount of the bond, the amount that’s on the bonds of the 240, which is a liability. And then we have the premium being the difference increasing the premium here by the 30. The 240 plus 230 is going to be equal to the 270,000 carrying amount book value of the bonds. Now we’re going to go through the process of recording the interest we can see that this is going to have 15 years bonds, we’re going to pay the bonds semi annually. So we’re going to have to record the interest on them. And we’re gonna have to reduce this premium in some way as well. Remember, at the end of the bonds, we’re not going to pay back the 270. We’re only going to pay back 240. So how are we going to get rid of that the premium on the bond and why are we going to do it in the way we will. We’ll start off by amortize in the premium using a straight line the method. Note that the effective method is the preferred method for amortize in a premium for generally accepted accounting principles, but the straight line method will be appropriate in some cases, if the difference is going to be a non material. And the straight line method is a simplified method and it’s easy for us to see what is going on. So we’ll start off with the straight line method.

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QuickBooks

Bond Issued at Premium

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

In this presentation, we will take a look at the journal entries related to issuing a bond at a premium. When considering the journal entry for a bond, remember what can change and what is the same for a bond. When we think about a bond, it’s already been printed, we know the amount of the bond, the interest on the bond, the maturity date of the bond, these are already set. So if we’re making a negotiation with the bond after it had already been printed, then we can’t change the face amount. We can’t change the interest due dates. What can we change in order to negotiate and make a sales price on the bond, we can change the amount that we issue it for. So keep that in mind. Whenever you think about these bond problems. That’s the thing that’s going to differ from a bond to a note. The thing that changes when we want to loan is the interest rate. The thing that changes when we want to issue a bond that’s already been made is going to be the amount we receive For the bond being different than the face amount of the bond if there’s a difference in the market rate and the contract rate. So in this example, we’re saying that we issued a bond. Now note that when we think about the issuance of the bond, just like a note, we often have more information than we really need. And that can be a little bit confusing for us.

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QuickBooks

Accounts Receivable Journal Entries

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

Hello in this presentation we will be recording that journal entries for business transactions related to accounts receivable otherwise known as the revenue cycle. We will be recording these using debits and credits. At the end of this we will be able to list transactions involving accounts receivable record transactions involving accounts receivable using debits and credits and explain the effect of transactions on assets liabilities, equity, revenue, expenses and net income. We’re going to be recording these transactions up here on the left hand side constructing those journal entries in accordance with our thought process our list of questions to most efficiently construct the journal entries. We will then be posting them not to the general ledger but to this worksheet here so that we can see the quick calculation of the beginning balance and what is happening to the individual accounts as well. account types, in that we have the accounts categorized, as is the case for all trial balances. accounts have been in order that order been assets in this case in green, the liabilities in orange of the equity, light blue and the income statement accounts of Revenue and Expense Type accounts. first transaction perform work on account for $10,000.

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QuickBooks

Receivables Introduction

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

In this presentation we will take a look at receivables. The major two types of receivables and the ones we will be concentrating on here are accounts receivable and notes receivable. There are other types of receivables we may see on the financial statements or trial balance or Chart of Accounts, including receivables, such as rent receivable, and interest receivable. Anything that has a receivable, it basically means that someone owes us something in the future. We’re going to start off talking about accounts receivable that’s going to be the most common most familiar most used type of receivable and that means something someone, some person some company, some customer typically owes us money for a transaction happening in the past, typically some type of sales transaction. So if we record the sales transaction, that would typically be the way accounts receivable would start within the financial statements, meaning If we made a sale, we would credit the revenue account, we’ll call it sales. If we sell inventory, it would be called sales. If we sold something else, it might be called fees earned, or just revenue or just income, increasing income with a credit, and then the debit not going to cash. But going to accounts receivable.

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QuickBooks

Special Journals Subsidiary Ledgers 2

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

In this presentation, we’re going to talk about special journals and subsidiary ledgers. First, we’re going to list out the special journals and talk about when we would use them, why we would use them and how they fit into the accounting system. The special journals are basically going to group types of transactions. So when we think about all the transactions that happened during the month, we typically see them in order of when they happen in the accounting system, we’re going to record transactions in other words, by date as they occur. But if we are able to group those transactions into special journals that can simplify the process.

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