BMGT 220, Discussion # 3 – Chapter 2

1. BMGT 220, Discussion #3 – Chapter 2 KristianSooklal kristiansooklal@yahoo.com 443-797-4588 (cell) | 410-575-4719 (text)

2. Important News • Wizards vs. Nets (home game) tonight at 7 • Request tickets to Clemson basketball game today • Virginia game on Sunday at 1:00 pm • Wizards beat the Knicks, 106-96

3. Topics in Chapter 2 • Double Entry system • Debits and Credits • DEAD • COLR • Normal Balances • Beginning Balance  Additions and Subtractions  Ending Balance • T Accounts • Posting • Trial Balances

4. Plan for today • Quiz 1 back • Financial Statements • Knowledge Check Questions • Review of class notes + homework • Any questions? • Quiz 2

5. Scott Company Trial Balance December 31, 2011 Debits Credits Cash $ 3,950 The trial balance lists all account balances in the general ledger. If the books are in balance, the total debits will equal the total credits. Accounts receivable 1,500 - Supplies 9,650 Prepaid Insurance 2,400 Equipment 23,500 Accounts payable $ 6,200 Unearned consulting revenue 3,000 Common stock 30,000 Dividends 600 Consulting revenue 5,800 Rental revenue 300 Salaries expense 1,400 Rent expense 2,000 Utilities expense 300 Total $ 45,300 After processing its remaining transactions for December, Scott company prepares a Trial Balance. $ 45,300

6. Using a Trial Balance to prepare Financial Statements Stmt. Of Cash Flows Stmt. of Ret. Earnings Income Statement Beginning Balance Sheet Ending Balance Sheet

7. Use the Trial Balance for Scott company to prepare its financial statements

8. Income Statement

9. Statement of Retained Earnings

10. Balance Sheet

11. Knowledge Check # 5:An accountant for O’Leary Company enters a transaction in which she debits Accounts Receivable and credits Service Revenue. What type of transaction occurred that results in this entry? • O’Leary collected an Account Receivable. • O’Leary performed a service in exchange for cash. • O’Leary performed a service for a client and sent a bill for services rendered • O’Leary wrote off an Account Receivable that it expects not to collect.

12. Knowledge Check # 6:If assets and equity have both been reduced by equal amounts in the same journal entry, what is the most likely explanation? • A fixed asset has been purchased on credit. • An invoice has been received from the cell phone company. • A supplier has been paid. • An owner has received a dividend.