Certificate of Deposit in Accounting

A business pays cash to purchase a certificate of deposit. The certificate matures after a term of 60 days and has a fixed annual interest rate of 2.5%. The journal entries to show the purchase and maturity are described.

Last modified March 21st, 2019 by Michael Brown
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Accounting for Funds held in Escrow

A business pays cash into an escrow account held by a third party in respect of a property transaction. The amount remains the property of the business until the transaction is complete and shows as a current asset in the balance sheet of the business.

Last modified January 8th, 2019 by Michael Brown
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Opening Entry In Accounting

An opening journal entry is used to post the opening assets, liabilities, and equity of a business when it first establishes a double entry bookkeeping system.

Last modified November 8th, 2018 by Michael Brown
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Current Portion of Long Term Debt

The current portion of long term loan or long term debt is a current liability. It is the amount of debt principal repayable within 12 months of the balance sheet date. The current portion of long-term debt is not the same as short term debt.

Last modified March 20th, 2019 by Michael Brown
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Property Purchase Deposit Journal Entry

A business pays a cash deposit to secure the acquisition of a property. At the end of the accounting period the contract is not completely satisfied and the deposit is held on the balance sheet as a current asset. Subsequent to the year end the property purchase is completed and the deposit is used in part settlement for the purchase.

Last modified June 7th, 2018 by Michael Brown
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Purchase Allowance Journal Entry

A business receives a purchase allowance from a supplier in respect of faulty goods. The supplier issues a credit note for 1,500 and the amount is posted to the purchase allowance contra expense account.

Last modified October 16th, 2018 by Michael Brown
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Petty Cash Replenishment

When a business maintains an imprest system of petty cash it is necessary to replenish the fund at the end of an accounting period. A journal entry is used to record the petty cash expenditure incurred during the period and to reflect the cash used for replenishment.

Last modified September 28th, 2017 by Michael Brown
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Stock Option Compensation Accounting

Stock options are a form of equity based compensation. When a business purchases the services of key personnel and pays for those services using stock options, it must record the expense in the income statement over the vesting period using stock based compensation accounting journal entries.

Last modified April 24th, 2019 by Michael Brown
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Capitalized Interest Cost

Capitalized borrowing costs are those added to the cost of acquiring an asset to bring it to the condition and location necessary for its intended use.

Last modified November 13th, 2017 by Michael Brown
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Lump Sum Purchase Calculator

This Excel basket purchase allocation calculator can allocate the total cost of a lump sum purchase over a maximum of 12 assets based on their relative fair market value.

Last modified August 11th, 2017 by Michael Brown
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Relative Fair Value Method

When a business purchases an asset which includes several assets such as land, land improvements, and buildings which have dissimilar depreciation rates, it needs to be able to allocate the total cost of the asset to its component parts. The relative fair market value method is one technique used to carry out this allocation.

Last modified August 9th, 2017 by Michael Brown
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