Friday, January 22, 2010

Everyday Expense Journal Entry

Whenever an expense is paid, the accountants must make the proper journal entry to record it. Use the following accounting journal entries to update each individual account that incurs an expense.


Type of Journal Entry
Account titles
Debit
Credit
Payment of Everyday Expenses

(Utilities, salaries, rents, bills, insurance)
Rent Expense
Cash
XXX

XXX

Wednesday, January 20, 2010

Journalize Paid Dividends

How do you journalize paid dividends? 

For example, suppose that $9,200 in dividends was paid to stockholders.

Accounting Explanation of how to make journal entries for dividends paid to shareholders:

Knowing when the dividend was declared is very important to coming out at the right answer:

If the dividends paid to shareholders were declared in a previous accounting period the journal entry would need to have been the following:  

DEBIT Dividends for 9,200
CREDIT Dividends Payable for 9,200

Next, the journal entry to pay the dividends to the shareholders would be:

DEBIT: Dividends Payable for 9,200
CREDIT: Cash for 9,200

If the Dividends are declared and paid in the same accounting period the journal entry will be much easier and only require the following by the accountant:

DEBIT: Dividends for 9,200
CREDIT: Cash for 9,200

Tuesday, January 19, 2010

What is a Suspense Account?

Suspense accounts are opened when it is not known immediately where to post an amount. When the proper account is determined by an accountant, the suspense account is closed and the amount will be correctly posted using the correct journal entry.

If more than one error occurs during an accounting period, these errors must all be merged together in the same suspense account. Until the causes of the errors are discovered, the accountants are unlikely to know exactly how many errors there are in an account.

What is an example of a globalization driver?

Globalization drivers are conditions in an industry that favor transnational/international strategies over multi-local/regional strategies. These factors generally fall into four categories such as markets, costs, governments, and competition. 

An example of a cost factor would include the search for cheaper local labor and procuring cheaper raw materials in foreign countries.

For further information about international business practices, check these links: 

Advantages and Disadvantages of Globalization
Multi-Domestic Strategy and Transnational Strategy

Thursday, January 14, 2010

Cash Payment Journal Entry

On December 17 a company paid $1,500 to an Insurance company for the purchase premium on a six month insurance policy for fire protection.

What journal entries will the accountant use?


Accounting Answer:

The company paid a bill and cash has been reduced, this means the accountant should credit cash

There is also a prepaid asset which will have to be adjusted every month until the insurance has been used.

Prepaid Insurance Journal Entry

DEBIT Prepaid Insurance 1.500
CREDIT Cash 1,500


Six months of 1,500 is 250 a month. 1500/6 = 250

Journal Entry for first month.

DEBIT Insurance expense
CREDIT Prepaid Insurance expense

Tuesday, January 5, 2010

Using Credit to Purchase Prepaid Expenses

Prepaid expenses can also be purchased on credit instead of cash. The appropriate accounting journal entries are listed below for prepaid expenses that are purchased by a company on credit.


Type of Journal Entry
Account titles
Debit
Credit
Purchase and advance payment of a short-term asset that will be used up in under a years period of time. The purchase is made with cash.

For example, prepaid rent, prepaid insurance, prepaid advertising, and supploes
Prepaid Account
Accounts Payable
XXX

XXX



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