Unit 6 - Cash vs Accrual Accounting Pt 2


Accounts Payable – money the company owes its creditors

Accounts Receivable – money owed to the company by debtors

Salary Payable – money the company owes workers for outstanding wages

Interest Payable – the amount of interest yet to be paid

Telephone Payable – money owed to the telephone company

Depreciation - reduction in the value of an asset over time, mainly due to wear and tear

Accumulated Depreciation - total amount of depreciation for a fixed asset that has been charged to expense since that asset was acquired. It is an asset account that has a credit balance.

Retained Earnings - profits that a company has earned to date, less any dividends or other distributions paid to investors.

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You are employed as a bookkeeper in Maria’s Bakery. You have the above transactions at the end of December 20x1.

Additional information for the month of December are as follows:

1. Purchased 20 bags of flour for $2000

2. Salaries paid $500

3. Mr. Charles bought 20 cakes at $1,500 to be paid for in January

4. Capital injection of $2,500.00 by Maria

Prepare relevant journals entries, ledger accounts and the trial balance, as at the end of December 20x1.

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