Declaration of Dividends Journal Entry A dividend is a distribution of profits by a company to its shareholders. It is a way for companies to share their earnings with their owners. The amount and frequency of dividends are determined by the board of directors, who decide how much of the earnings to distribute and how …
Bond Redemption Journal Entry Bond redemption refers to the process of paying back the principal sum of a bond, along with any accrued interest, to the bondholder. Bonds are financial instruments that are used to raise capital for businesses and governments. They are issued by an issuer, such as a company or a government entity, …
Investment In Subsidiary Journal Entry Investing in a subsidiary is a strategy used by companies to benefit from the advantages that come with the ownership of a business. Subsidiaries are separate legal entities owned by a parent company and are usually used to expand operations, diversify assets, or gain access to new markets. A subsidiary …
Bad Debts Expense Journal Entry Bad debt expense is an accounting term used to describe a type of loss incurred when a customer fails to pay a debt. It is an important concept to understand for anyone involved in the accounting and financial management of a business. Bad debt expense is an unavoidable cost of …
Journal Entry for Periodic Inventory System A periodic inventory system is a type of inventory control system that relies on physical inventory counts at predetermined intervals to track inventory levels and values. This method is often used by small businesses and those with low-volume sales as it is easier and more cost-effective to implement than …
Additional Paid-In Capital Journal Entry Additional paid-in capital (APIC) is an accounting term that refers to capital paid into a company above the par value of its stock. This excess amount is paid by investors and recorded as equity in the balance sheet. This amount may also include contributions that do not result in new …
Journal Entry for Assets Capitalization Asset capitalization is a process by which a company records the value of its assets that are employed in an income-producing activity. This process involves making a journal entry to record the cost of the asset and the associated depreciation expense. The value of the asset is then recognized in …
Collect Accounts Receivable Journal Entry Accounts receivable is a form of payment that a company receives from customers who have purchased goods or services on credit terms, typically within a short time period. Receivable is payment not yet realized because the company has extended a credit line to customers. This means that goods or services …
Purchase Discount Journal Entry Purchase discounts are a form of a deduction from the invoice amount offered to customers in exchange for prompt payment of the invoice. This type of discount is used by sellers to accelerate the inflow of cash and is usually associated with a high effective interest rate. While purchase discounts can …
Accrued Vacation Journal Entry Accrued vacation is a type of employee benefit that allows employees to accumulate vacation time based on the number of hours worked. It is an important tool for employers to attract and retain employees, as well as to comply with relevant labor regulations. Accrued vacation pay is a form of compensation …