Gggrrrrr! Accounting!

[Tubby & Peanut's Mom]

Builders Supply issues a 90-day note for $200,000 to Gem Lighting Co. for merchandise inventory. Gem Lighting Co discounts the note at 8%

a. Journalize Builder's Supply's entries to record:
1. the issuance of the note
2. the payment of the note at maturity
b. Journalize Gem Lightning Co's entries to record:
1. the receipt of the note
2. the receipt fo the payment of the note at maturity

Builders Supply
issuance of note
Debit-Accounts Receivable $200,000.00 (because they are increasing their asset account)
Credit-Inventory $200,000.00 (because they are decreasing their asset account)

payment of note
Debit - cash $184,000.00 (because they are increasing their asset account)
Debit - Discounts taken by customers $16,000.00 (or some such account, they are recording discounts that their customers take.)
Credit - Accounts Receivable $200,000.00 (because they are decreasing their asset account)

Gem Lighting
receipt of note
Debit-Cash $200,000.00 (they are increasing their asset account)
Credit-Accounts Payable (Note Payable) $200,000.00 (they are increasing their liability account

payment of note
debit-Accounts Payable $200,000.00 (they are decreasing a liability account)
Credit-Cash $184,000.00 (they are decreasing their asset account)
Credit - Purchase Discounts taken (or some such account) $16,000.00 (they are recording discounts that they have taken for paying early)

Hope this helps!

[shutterbug0303]

I am in totally agreement wth you T&P!! Thanks! I pretty much had it to the same affect...but this is what the answer is that we were given...

Ex. 11–2
a.
1.Merchandise Inventory 196,000 (debit)
Interest Expense 4,000 (debit)
Notes Payable 200,000 (credit)


2.Notes Payable 200,000 (debit)
Cash 200,000 (credit)


b.
1.Notes Receivable 200,000 (debit)
Sales 196,000 (credit)
Interest Revenue 4,000 (credit)

2.Cash 200,000 (debit)
Notes Receivable 200,000 (credit)


The 196,000 instead of the 184,000 is because it is pro-rated 200,000 x .08 x (90/360) Don't ask me where the 360 instead of 365 comes from...another accounting phenomenom! lol I was so confused b/c my teacher has stuff backwards it looks like. The company who issued the note should have a accts. receivable, not payable! What a goofy professory I have

Thanks a million though! And thanks for the T account refresher! I remember that from Acc 1 and it is a big help!!! This is slowly starting to make some sort of sense to me

[mina'smomma]

Deb is right. That is what I would do.


Hey Deb we can be freaks together. I love accounting too.

[slick]

Originally posted by mina'smomma
Deb is right. That is what I would do.

Um...yeah....I agree......everything that she said....yeah...um....right on Debbie!

This is slowly starting to make some sort of sense to me

Don't you mean "cents"????

[Tubby & Peanut's Mom]

I just did it quick and didn't think of the proration part of it, but unless your question is actually a little different that what you wrote here, it doesn't say 8% per year, so there was no way for me to know that....but you should have been told that if you were to get the problem done correctly! But the 360 is another accounting phenomenom....to make things easier.....yeah, right!

And yes, I think your professor has it backwards. When you said that was the answer you were given, I was totally confused too until I read through the whole thing and realized it was just backwards. Way to confuse the students prof!

Glad you basically had it right though and it was just the goofy answer from the prof that had you confused. See, you know more than you thought you knew!

[shutterbug0303]

I rewrote the question exactly....I think maybe the proration thing is just assumed throughout the book (??) I did it your way the first time too...then looked at the answer, back through the book and found the 90/360 stuff.

This one question is only the beginning of the absurdities of my prof! I wouldn't have time to explain then all if I had a year...and we've only been in class for 1/2 the semester.

You've been a lifesaver though, T&P! Everything is really starting to make a lot of sense now. I'm going to go back and start from the beginning of the chapter and work step by step...with the right information this time. Sorry to distract you from work today...hope the boss didn't catch ya!

[Tubby & Peanut's Mom]

No problem, glad I could help.

And unfortunately I know exactly what you mean about goofy professors - I've had a few of my own lately. In my last class I actually lost my 4.0 GPA because the professor was an idiot and the text was no better. We were basically left to our own resources to learn the material, and it was extremely difficult stuff that even some of the experienced programmers in the class had difficulty with. By the end of class I was just happy to pass with an 83%. Why do we pay good money for this crap?

We get to rate the class and the professor towards the end of the class. Everyone in that class really let the school have it - about the prof & the text. Didn't help my grade any but hopefully they will improve the class so others can actually learn something from it.

Do you get to rate the classes you take? Like I say, it didn't help my grade but I sure felt better after giving them a piece of my mind!

[dukedogsmom]

I hated math but was really good in accounting back in high school. Then, I missed three days and it went downhill from there. I couldn't get caught up and barely passed.

[catnapper]

I can't help myself... I keep coming back to this thread like watchign a bad car accident... and I have NO CLUE what all this stuff is that is being said! looks impressive though.

[zippy-kat]

Originally posted by Tubby & Peanut's Mom
... I actually lost my 4.0 GPA because the professor was an idiot and the text was no better.

Did the prof write the book?

That's always been an irk of mine. Not only are we paying the prof to teach us, we supplement his/her salary by having to buy his/her textbook, too. And, since s/he wrote the book, of course s/he knows the material inside and out which makes the tests MEGA hard. *sigh*

If I didn't work at a financial firm, my head would be spinnin' too!

How 'bout some cost basis questions? Those are fun! lol

> joins the "freaks" <

[RICHARD]

I can't believe that you all are trying to pad the "One Million Post"
Contest with math problems...


Drop in something spicy.....

The Bunny Ranch in Nevada has a 200,000 dollar a month operating budget....



See, SPICE AND MATH at the same time!!!

------------------------------------------

I forgot to finish the problem.


If the gals at the ranch sit on their assets, no money can be made!!!!!!



Freaks??? Damn straight!

[shutterbug0303]

lol...if I would have known we had some accounting buffs on this site, I would have let you guys help me all along!

P&T - Yes, we do get to rate the class...and they are def. going to get a piece of my mind. I think I am going to go to the Acc. head about this lady...I went to the library to study for the test I needed to take today (which is where I was when I asked this questions). My campus is about an hour away, so it isn't something I like to do for the heck of it...I was preparing to take the test....went to take it and found out.....SHE NEVER SENT THE TESTS TO THE TESTING CENTER!!!!

No one can contact her, she doesn't return emails, phone calls, etc. She will not give us her office hours....and the list goes on. If this was a regular ed class, then it would be easier, but it is an internet class and we depend on her to be available through the net. Some people! Luckily, no one teaching at my school is experienced enough to write a text book, or else I wouldn't buy one.

Sorry for yet again, another rant...I think I need to change schools! lol

[Tubby & Peanut's Mom]

Originally posted by shutterbug0303
I think I am going to go to the Acc. head about this lady

Do that, and do it now. We did that with this last guy too, but it was already towards the end of week 6 in an 8 week class, so it didn't help much. The professors have their requirments too, like you mention how they're supposed to be accessible and return emails and such, and if they're not doing that the school needs to know. I know when we contact student services they immediately hopped on the problem for us.

Good luck.

Zippy, the thing I've noticed with my classes is that so many of the professors are from another country originally. Not that I'm prejudiced or anything, but there is a communication barrier. They get the basic points across but somethings they say just don't come out quite right and we're left to interpret the best we can, which sometimes isn't the right interpretation and we get our scores docked for it.

Richard, back when I was in high school - before computers, us math and science whizzes were the ones considered geeks since there were no computer geeks yet.