Week 3: Tutorial Questions DQ3.4) expenses will decrease net profit and therefore shareholder's equity will also decrease as retained profits belongs under shareholder's equity -As other operating expenses occur our assets will also decrease (paying cash for bill) -Liabilities may also increase if bills for operating expenses are not paid immediately but rather later Total Debit = Total Credit 3.12 Increase in Cash = 80,000 Increase in Liabilities = 80,000 Interest expense = 80,000 x 0.1 /12 Unearned revenue = money received for future work not yet done - people may choose to change options and therefore if so you must return it. 3.18 1 Revenue and accounts receivable 2 Revenue and Asset (Cash) 3 Cash and accounts receivable 4 Inventory and accounts payable 5 accounts payable and cash 6 COGS and inventory - 7 Wage expenses and wages payable 8 Wages payable and cash 9 less tax payable and less cash 10 less retained profits (SE) and less cash Dividends are never an expense Less retained profits (DR) and increase in dividend payable (CR) no change in cash because it has not been paid yet - the following once paid will cause a decrease in dividend payable and less cash Less retained profits (DR) and less cash (CR) Increase in cash (50,000) increase in liabilities (50,000) Interest payable is recorded after a month = 50,000 x 0.06/ 12 = 250 Less interest payable less bank loan less cash - to repay bank loan and interest Bank loan (debit) cash (credit) interest payable (Debit) 1.Debit Inventory (3000) Credit Cash (2000) Credit accounts payable (1000)
2.Debit accounts receivable, debit in COGS expenditure 3.Debit of cash 500,000 Credit of liability (unearned revenue)
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