Requirement:

Construct journal entries for each of the following hypothetical transactions during the next quarter. Also, indicate on the chart on page 3 which of the following balance sheet categories are affected by those transactions: current assets (CA), non-current assets (NCA), current liabilities (CL), non-current liabilities (NCL), and equity (E).

Example: Prepaid marketing expenses of $2,150 (short-term)

Solution:[1]

Dr. Prepaid expenses (CA) $2,150

Cr. Cash (CFO, CA) $2,150

Transactions and journal entries:

• 1Purchased $411of equipment on account. (classify the credit as accounts payable)

• 2)Purchased$205of short-term investments.
• 3)Purchased $6,789of inventories on account from vendors.

• 4)Collected $7,999of short-term financing receivables (current portion).

• 5)Paid the vendor for equipment invoice (See (1)).

• 6)Received $9,215advances from customers for support and maintenance services to be delivered next year.

• 7)Paid general and administrative costs of $7,100that had been accrued as liabilities.

• 8)Paid $6,214of accounts payable.