Accounting 1: Program #10 – “Wrapping Up Chapters 1 and 2”

Hello how are you guys doing ok lecture number
ten this is our final lecture before you take the test both you all and the folks at home.
So this is kind of wrapping up chapters one and two ok you've learned a lot in ten lecture
hopefully alright and were going to finally take test after today's class and see how
well you all done. Now those face to facers we just took a quiz why don't you just go
ahead and switch that to the Elmo and I want to make sure I always have a test question
like this one for you folks at home why don't you just pause and get out a piece of paper
and act like it's a quiz I can't collect from you or give you points for it but why don't
you just push pause take a look at this and answer those questions and turn it on to play
when you're done.

Now I have a question like this on the test and it's interesting I can
go look at this question and how people did on this one or these ten question on this
one this little section and if they did really good on this section most of the time they
did pretty good on the test, but even more than that if they bomb this section they bombed
the test. Ok cause I really think it gets down to the meat and potatoes of chapters
one and two do you know really what debit and credit balance means do you know how to
affect these account because if you can't do these you probably can't do the journal
entries alright. So I really want you to know that this is important how do you increase
lawn mowing revenue? You credit it. How do you decrease office supplies? Well office
supplies is a debit balance account thus it increases with the debit and it decreases
with the credit. How do you decrease pre-paid rent? Credit it. How do you decrease unearned
revenue? You debit it that's a credit balance account tis a liability thus to decrease it
you debit it.

How do you increase withdrawal? You debit it. How do you decrease capital
for John Smith? Debit it. How do you increase wages payable? Credit it. How do you increase
equipment? Debit it. How do you decrease rent expense? Credit it. How do you increase inventory?
Debit it. Ok look through those do those look alright? I just did them real quick in my
head. I would hate to have this taped and not be right? Is it right? Why do I doubt
myself? Why do I doubt myself Jake? "I don't know" ok alright did anyone get perfect? I
didn't bring Hershey kisses today so I forgot them if you stop by my office I'll give you

Alright one of the um let's take a look at I assigned
problem two dash four (A) correct? Now I am happy to answer questions over that if you
have questions however for you folks here face to face I handed out the photocopied
answer didn't I? And for you folks at home I have the answer in the chapter two handouts
section on angel. Just go to lessons then go to handouts then select chapter two and
you'll see it in there it takes a lot to go over its nothing we haven't done I mainly
did it for extra practice, but if you have a question about it. Kara? You had a question?
"Is it ok on March first that we separated it instead of put it together like capital?"
On March first are you talking about the journal entry? "Yes" let me take a look oh I need
the other page.

That's alright I got it right here let me take a look march first which
journal entry was it? "Equipment and capital" oh ok um oh did you credit capital for twenty
two thousand and then credit capital for one hundred and fifty thousand? Did you do it
one journal entry or two? "two" that's fine same net effect that's ok. So ill she did
was she had one journal entry on March first where she debited cash for one fifty credited
capital for one fifty, and then she added journal entry on march first where she debited
capita- I'm sorry office equipment for twenty two thousand and credited capital for twenty
two thousand that's fine. Sarah? "When I did my general journal I wrote revenue instead
of service fees earned?" Instead of service revenue? Service revenue is the one that they
used so yeah revenue is fine. Yeah there is a lot of synonymous terms for revenue you
could have just said revenue, or service revenue, or revenue earned ok those are all ok.

any other questions on that? You can kind of grade your answer from part three and see
if you got the right trial balance right? Ok let's take a look real quick at the trial
balance. Big question is do your total debits equal your total credits and do those number
do you totals equal those number that are on the screen? Even if they don't you know
you made a mistake even if they equal if they're different numbers than those you made a mistake
alright but you guys have that answer you guys can work through that, and take a look
and see if you have any questions does that sound good? Ok good no more questions on problem
two dahs four eight if not lets go ahead and go to exercise two six now exercise two six
I think is more difficult let me get some paper out ok.

Exercise two
point six on page seventy nine alright use the information in each of the following cases
to calculate the unknown amount. Ok during the month of October Shaundra company had
ninety seven thousands five hundred of cash receipts and one oh one two fifty of cash
dispersements the October thirty one cash balance was sixteen eight determine how much
cash had the company on the close of business on September the thirtieth alright ok. I like
these because they really get to the heart of what is going on in a t account now did
anybody get the answer? What did you get as your answer? "On A?" on exercise two six (A)
"I got twenty thousand five fifty" you are correct twenty thousand five fifty is the
answer now you might have done it differently. But here is how I kind of want to kind of
think about this here we are doing cash right? So let's do a cash t account we know that
this is the debit side and this is the credit side this is a t account for cash is cash
a debit balance account or a credit balance account? Debit ok thus the beginning balances
we show right here correct? And the normal ending balances well show right here is that
correct? What sort of transaction causes cash to be debited or what sort of transaction
causes cash to be increased? Student: "performing a service?" Well specifically in this example
we have cash receipts and cash dispersements going on.

Which one of those causes cash to
debit or to increase? Student: "receipts?" Cash receipts so do you see that cash receipts
would go here and cash dispersement which is another word for payments would go here
does that make sense? You got your beginning balance you debit cash when you have cash
receipts you credit it or decrease when you have cash dispersements and that gives you
your ending balance. Now let's fill in the amounts that they gave us and what month are
we dealing with? October aren't we? Ok cause they talked about what's the September balance
what's the October balance so were dealing with October.

Ok they had ninety seven five
hundred of cash receipts. And they had one oh one two fifty of cash dispersements is
that correct? The October thirty one cash balance was sixteen eight is that the ending
or the beginning? Ending and their asking us what the beginning balance is September
thirtieth right so from one number and only one number that goes in that circle that causes
that to work out correct specifically this number plus this number minus this number
has to equal that number correct? And what is that number? Twenty five fifty right? You
just solve that algebraically, does that make sense? Now does twenty five fifty plus ninety
seven hundred minus one oh one two fifty equals sixteen eight hundred yeah it does you can
check that easily on your calculator can't you? Anybody knows how to solve that? Ok good
now may be you did it differently but I like to do it with my t account.

Now let's do it
a little bit differently first of all we are on exercise two B. on September thirty Mortish
company had a ninety seven five hundred balance accounts receivable during the October the
company collected eighty eight nine fifty from its credit costumers the October thirty
one balance was one hundred five hundred determine in the account that occurred in October ? So
what account are we dealing with here? Where dealing with accounts receivable now accounts
receivable a debit or credit balance account? It's another debit one so the beginning balance
would show here and the ending balance would show here is that correct? Now think back
to your journal entries what causes accounts receivable to be debited what sort of journal
entry do you debit accounts receivable? Performing a service on credit ok or they say it sales
on account is another way to say that right sales on account on credit on account is the
same thing they'll pay us later.

Ok so the amount on sales on account goes here. Now
what causes accounts receivable to be credited what causes accounts receivable to be credited
or to decreases? When people pay when people pay on their accounts that causes accounts
receivable to be credited or to decrease so we can call that collections on accounts receivable
that would go here correct? So let's put in the amounts that we have they tell us that
September thirty there was a ninety seven five hundred balance in there they collected
eighty eight nine fifty during October and the October thirty balance was one hundred
five hundred right? So they want to know what the sales on account are correct? So there's
one number and only one number that will go in that circle that will cause that to all
be complete is that correct? What is that number? Ninety one nine fifty do you all know
how to solve for that by the way that's just algebra that's just your unknown again that
plus your unknown minus that has to equal to that.

And there's only number that can
go in there and it is ninety one nine fifty and then I always check does that plus that
minus that equal that it does doesn't it? Sometimes these are kind of hard for people
but I think if you think through with the t account it's a really good way to test to
see if you really know what's really going on. Now there's one more there is C isn't
there? Ok what I want to do now is you might have C done but I want to take about ninety
seconds or so play that JCCC music and if you've done it cover it up see if you can
do it again but I know sometimes people don't understand this one now that I've kind of
shown you how to do it lets see if you can do exercise C I'll give you about two minutes
or so.

Music (16:05-18:10). Okay we are back on ok let's take a look at exercise two six
C. Nassir company had a hundred and forty Seven thousands of accounts payable on September
thirtieth and one thirty six five hundred on October thirty first total purchases on
account during October was two hundred and seventy thousand determine how much cash was
paid on accounts payable during October okay good. So what's the account we are dealing
here? Accounts payable now accounts payable a normal debit or a normal credit balance
account? Credit so the beginning balance would show up here and the ending balance would
show up here correct? What causes accounts payable to be credited or increased think
to your journal entries when do you credit accounts payable? Student: "when you buy something
on credit?" Purchases on credit correct! That's when you cause it to be credited when there
are purchases on credit or we can say on account when does an account payable debited or decrease?
Right we can say payments on accounts payable as we pay that off let see what they give
us so we had one hundred and forty seven thousand for September thirtieth.

And one thirty six
five hundred at the end of the month purchases on account were two hundred and
seventy thousand and they want to know how much cash was paid
on accounts payable so they want to know that goes in that blank or that circle right? So
this plus this minus this has to equal that there's one number and only one number that
goes in that circle that causes it to be valid and what is that number? Two eighty five hundred.
So does that plus that minus that equal that? Yes it does.

Awesome any questions on exercise
two six I usually have a multiple choice question or two on the test cause I want you to be
able to do those. Now Matt was saying on connect the walkthrough was helpful on that is that
what you said Matt? Ok good video not the part that's worth points but the little dumbbell
on its side right? The practice walkthrough "yeah both of them even the one on the points
is good to." Okay good " you can click on hints" okay good well so be using those for
you folks at home you should be registered by now you should have been registered for
connect a long time ago but if you're not now you're way behind because and I notified
you should know now when your chapter one chapter two connect assignments are due as
should you all alright so make sure you're doing those if you don't do those it's going
to affect our grade badly so make sure you're doing those, was there a hand up question?
No Kara? " I was going to ask when is our connect due you said it was going to be opened
at two?" let me let me answer after we stop the cameras rolling cause its going different
for you as opposed to the face to face and I don't want to foul them up so as soon as
we stop the rolling the cameras why don't you ask me that.

Ok alright ok I think we've
gone through all the homework haven't we? Ok I want to take some time and I want to
work in class on exercise two point thirteen two point fourteen and two point fifteen on
page eighty and this will be a good refresher because we are going to prepare the three
financial statements again so exercise two thirteen exercise two fourteen and exercise
fifteen on page eight we are going to take at least twelve minutes to do that and so
you folks at home as always when we work on these things work on them at home well go
over the answers when we come back but let's work one exercise two thirteen two fourteen
and two fifteen. Music (23:35-36:55) ok we're back if you folks at home just pause is start
us when you are. But I want to make sure we get through these the answers of to the income
statement and the statement of equity are up on the screen. Now I want to make sure
I say some things here number make sure you prepare these in good form the name of the
company the name of the statement and for the month ended October thirty first.

thing down here the name of the company the name of the statement and for the month ended
august thirty first make sure you do that properly on the test or ill lovingly take
point of ok. Now there is no I think sometimes people get confused with the trial balance
like let me just show an example trial balance it's not for this company in the trial balance
the accounts that are debit balances are listed in the left column and the credit balance
is in the right column and they are labeled as such right? Do not think that on their
way that these people did there income statement that there's any rhyme or reason between the
columns they use there's none ok are you with me? Yes it does so happen that they put their
expenses in their left column and there revenue in the right column but that does not correspond
with debit or credit you don't see debit or credit above here.

Like Marlin I think you
were showing yours was just all one column wasn't it? And that's fine that's what you
were asking wasn't it? So don't think there's any rhyme and reason for that. Ok the net
income flows down to the statement of equity which is why you have to prepare the income
statement before the statement of equity and then the ending balance of capital flows down
to the balance sheet ok make sure that these numbers equal make sure that you have them
labeled and make sure that this one is correctly dated as well it's not for the month ended
its as of august thirty first isn't it? Okay so that is the answers to exercise to two
thirteen two fourteen and two fifteen okay. Now looks like some of you are still copying
that so go ahead and do that make sure when you do your financial statements and I think
I've mentioned this before if it takes you twenty five thirty minutes to do the financial
statements you are not at the level of proficiency you need to be at some people do it first
to get it out of the way, but it should take about ten ten or eleven minutes but don't
get obsessive with it if it doesn't balance move on like I said I've had students spend
thirty five forty minutes because they couldn't get their balance sheet to balance don't do
that you have a lot of other tests here.

Alright I want to make sure I talk about one other
thing real quick we only have about two or three minutes and that is the debt ratio this
is the ratio at the end of chapter two I don't have any homework over it but I do want you
to be aware of it the debt ratio is simply the amount of debt divided by the total assets
of a company so total liabilities divided by total assets and this one helps one monitor
how much liabilities that are on their books of course a company has to pay debt right?
If you have a loan you have to pay it back now this is one of the most important ratios
that I go consult that I monitor for a company over time.

If you see a company's debt ratio
continually going up that means they are taking on more and more debt more and more liabilities
and just like in your personal life if you keep on getting loans if your credit card
bill go up if you buy cars on credit all that sort of stuff things get ugly quick all I
need to do is look around Johnson county and there people take on way too much debt correct?
And their debt ratio over time was just going up and up and up but you're going to have
to repay that debt sooner or later don't you? So I hate to gloss over the debt ratio but
we didn't have a whole of time to go over it there might be like one multiple choice
question like that on the test any last question I'll tell you guys specifically some stuff
after we stop rolling the cameras but any general questions about the test? "What do
you want us to write the t accounts on the journals do you want us to date them?" You
don't have to date the t accounts on the journal entries if I have you do that like said you
have to do journal entries about ten of them and I guarantee you you're going to have to
the three financial statements.

And I've also told some other things I promised will be
on there you're going to have to know financial statements accounts go on your going to need
to know the normal balances on the accounts I'm going to have questions like the quiz
we had today alright. "Are you going to be picky on what the calculator we can use?"
We will talk about that once the cameras stop rolling okay alright any other? "Are you giving
us paper like lined paper" no you're not going to have a ledger you're going to have a blank
piece of paper okay other questions? Remember I think a couple lectures ago I talked about
the best ways to study for my tests what was the number one way redo your homework if you
can't do your homework on a blank sheet of paper you can't do the test okay.

Folks at
home I have emailed you information you should have you should have it in your syllabus as
far as when you need to take your test by there's a seven day window before that you
don't have to take it on that date remember if you haven't taken it by that date its fifteen
extra points off your test so don't put it off okay alright next time well see each other
well start chapters three and four but mainly just three ok bye-bye..

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