Practical Bookkeeping Course #101/#102

Course Outline

Lesson 1: Explains the nature and purpose of accounting. Also introduces the fundamental elements of accounting, the accounting equation, and an accounting form balance sheet. After establishing this foundation, the chapter presents a series of transactions and shows the effect of these transactions on the assets, liabilities, and owner's equity of a business. Each transaction is analyzed and then recorded in the accounting equation. A small service business is used in Chapters 1-6.

Lesson 2: Extends the concept of owner's equity to include revenue and expenses as well as capital. A series of revenue and expense transactions are analyzed and then recorded in the accounting equation. Net income and net loss are explained, and a new balance sheet is presented to show how the net income for the period would be listed in the Owner's Equity section.

Lesson 3: Introduces the concept of accounts and explains what the general ledger is. The rules of debiting and crediting are presented. T accounts are opened for the balance sheet items that were discussed in Chapter 1. The beginning balances and transactions from Chapter 1 are then recorded in the T accounts. Finally, the students learn about the procedures for pencil-footing accounts and determining their balances.

Lesson 4: Shows how revenue and expense transactions are recorded in T accounts. The transactions from Chapter 2 are used. A drawing account is introduced as a means of recording withdrawals by the owner. The Owner's Equity section of the balance sheet is then expanded to include withdrawals as well as net income.

Lesson 5: Introduces the procedures for preparing a trial balance. It also discusses the steps that should be taken to locate errors on the trial balance and in the accounts. The students then learn how to correct the errors.

Lesson 6:. Presents the concept of the accounting period and expands the coverage of financial statements. The income statement and the statement of owner's equity are introduced, and the balance sheet is reviewed. The statement of owner's equity permits the use of a simplified Owner's Equity section on the balance sheet. The financial statements illustrated here reflect the transactions recorded in previous chapters.

Project 1: Involves one month's transactions for a service business - Interior Designs. The students enter transactions in T accounts, pencil-foot the accounts, prepare a trial balance, and prepare financial statements at the end of the month.

Lesson 7:. Introduces the concept of journals. The need for a complete chronological record of transactions is explained and the procedures for using a general journal are presented. A month's transactions for a small service business - Overnight Express - are analyzed and then illustrated in the general journal. The use of a chart of accounts is also discussed here.

Lesson 8: Introduces the four-column balance ledger form for the general ledger accounts. The procedures for opening accounts and posting entries from the general journal are explained. The journal entries shown here were recorded in Chapter 7. The procedures for preparing a trial balance are reviewed.

Lesson 9: Introduces the six-column worksheet and reviews the financial statements. The students are shown how to use the worksheet to prepare the trial balance, compute the net income or net loss, and plan the financial statements. The trial balance from Chapter 8 is recorded on the worksheet, and the steps for completing the worksheet are explained. An income statement, a statement of owner's equity, and a report-form balance sheet prepared from the worksheet are illustrated.

Lesson 10: Introduces the six-column worksheet and reviews the financial statements. The students are shown how to use the worksheet to prepare the trial balance, compute the net income or net loss, and plan the financial statements. The trial balance from Chapter 8 is recorded on the worksheet, and the steps for completing the worksheet are explained. An income statement, a statement of owner's equity, and a report-form balance sheet prepared from the worksheet are illustrated.

Project 2: Takes the students through a one-month accounting cycle for a service business. The students are asked to open general ledger accts, record transactions in the general journal, post entries to the general ledger accts, prepare a worksheet, prepare financial statements, journalize and post closing entries, and prepare a postclosing trial balance.

Lesson 11: Introduces the six-column worksheet and reviews the financial statements. The students are shown how to use the worksheet to prepare the trial balance, compute the net income or net loss, and plan the financial statements. The trial balance from Chapter 8 is recorded on the worksheet, and the steps for completing the worksheet are explained. An income statement, a statement of owner's equity, and a report-form balance sheet prepared from the worksheet are illustrated.report-form balance sheet prepared from the worksheet are illustrated.

Lesson 12: Describes the procedures for handling purchases of merchandise, freight charges, purchases returns and allowances, and purchases discounts. The control of purchase invoices and the use of a tickler file for unpaid invoices are also discussed.

Lesson 13: Introduces the accounts and entries needed to record purchases of merchandise, purchases of supplies, freight charges, purchases discounts, and purchases returns and allowances.

Lesson 14: Explains the procedures for journalizing and posting transactions involving sales of merchandise, sales returns and allowances, and sales tax. This chapter also presents a chart of accounts and one month's transactions for a merchandising business - Avery Office Supply. The entries for all the transactions are shown in a general journal. (Avery Office Supply is used in succeeding chapters to introduce special journals, subsidiary ledgers, and end-of-period activities for a merchandising business.)

Lesson 15: . Introduces the concept of special journals and explains why they are used. A sales journal with columns for Accts Receivable, Sales Tax Payable, and Sales is presented. The procedures for recording transactions in this journal; totaling, cross-footing, and ruling the journal; and posting the totals to the general ledger are explained and illustrated. The transactions used here are the sales of merchandise on credit that were shown in the general journal in Chapter 14.

Lesson 16: Introduces a purchases journal that provides columns for Accts Payable, Merchandise Purchases, and Freight In. The procedures for recording transactions in this journal; totaling, cross-footing and ruling the journal; and posting the totals to the general ledger are explained and illustrated. The transactions recorded here are the purchases of merchandise on credit that were shown in the general journal in Chapter 14.

Lesson 17: . Introduces a multi-column cash receipts journal. The procedures for recording transactions in this journal; totaling, cross-footing, and ruling the journal; and posting the totals to the general ledger are explained. The transactions used here were shown in the general journal in Chapter 14. Entries for bank credit card sales are also discussed and illustrated.

Lesson 18: Introduces a multicolumn cash payments journal. The procedures for recording transactions in this journal; totaling, cross-footing, and ruling the journal; and posting the totals to the general ledger are explained. The transactions used here were shown in the general journal in Chapter 14. The role of the general journal in an accounting system that uses special journals is also discussed.

Lesson 19: . Introduces the concept of subsidiary ledgers and explains why they are used. The procedures for posting from the sales journal, cash receipts journal, and general journal to the accts receivable ledger are explained. The illustrations show entries that were used in Chapters 14, 15 & 17. The students learn how to prove the accounts receivable ledger by preparing a schedule of accounts receivable and comparing its total with the balance of the control account in the general ledger. The procedure for aging the accts receivable is also discussed. Finally, transactions involving notes receivable are described.

Lesson 20: . Explains the procedures for posting to the accounts payable ledger and proving the accounts payable ledger. The entries illustrated are from the purchases journal shown in Chap 16, the cash payments journal shown in Chap 18, and the general journal shown in Chap 14. Transactions involving notes payable are also explained.

Project 3: Covers part of the accounting cycle for a merchandising business. The students journalize and post one month's transactions. Special journals and subsidiary ledgers are used in addition to the general journal and the general ledger. After the transactions are recorded and posted, the students prepare a trial balance. (The end-of-period procedures for this business are completed in Project 4.)

Lesson 21: Introduces the concept of adjustments. The adjustments for merchandise inventory, for supplies used, expired insurance, depreciation, and doubtful accounts are explained. The chapter describes the procedures for taking a physical count of the merchandise on hand and determining the ending inventory. The students are also shown how to determine the supplied used, compute expired insurance, compute depreciation according to the straight-line method, and estimate the amount of uncollectible accounts receivable. They learn how to use contra accounts, compute the book value of long-term assets, and write off a customer's account. The adjustments are recorded on a ten-column worksheet, and then the procedure for preparing the Adjusted Trial Balance section of the worksheet is explained and illustrated. (The worksheet is completed in Chapter 22.)

Lesson 22: . Shows students how to complete the worksheet and presents financial statements for a merchandising business. An income statement with a Cost of Goods Sold section is introduced. The statement of owner's equity is reviewed, and a classified balance sheet is introduced. These financial statements reflect the transactions that were journalized and posted in Chapters 14-20.

Lesson 23: Complete the accounting cycle for a merchandising business. The students are shown how to journalize and post adjusting and closing entries. Then the procedure for preparing a postclosing trial balance is reviewed.

Project 4: : Involves the end-of-period procedures for the Fine Lumber Company. The students are asked to record adjustments and complete a ten-column worksheet. Then the students prepare financial statements, journalize and post adjusting and closing entries, and prepare a postclosing trial balance.

Lesson 24: . Introduces the banking procedures used in business. The students learn how to make deposits, issue checks, reconcile a bank statement, and record bank debit and credit memorandums. There is also a brief discussion of services other than checking accounts that banks provide to businesses, such as the granting of loans and the processing of bank credit card sales.

Lesson 25: Introduces the procedures for setting up and operating a petty cash fund. The students also learn about funds for travel advances and funds for making change in retail stores. Finally, the procedures for recording cash shortages and overages are discussed.

Lesson 26: Introduces payroll procedures and records. Five widely used pay plans are explained. The students learn how to read a time card and compute hours worked, how to compute gross earnings, how to determine deductions, and how to compute net pay. The deductions covered are federal income tax withholding and social security tax and the medicare tax. This chapter also explains the procedures for preparing a payroll register and employee earnings records, for paying the employees, and for recording the accounting entries for payroll. Finally the students learn about the employer's payroll taxes and the payroll tax forms that businesses must prepare. The payroll taxes covered are the employer's social security tax, medicare tax, federal unemployment tax, and state unemployment tax.

FINAL~THE PRACTICE SET: Involves an entire accounting cycle for a retail merchandising business. The business's accounting system includes special journals and subsidiary ledgers as well as the general journal and the general ledger. To do the necessary work for the set, the students will need a knowledge of the material in chapters 1-26. This set is more extensive than any of the projects. However, to save time for the students, all accounts have been opened and the worksheet and the financial statements have been set up.