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Preparation of a trial balance is the first step in processing a financial transaction.

Rodriguez owns an asset that cost $87,000 with accumulated depreciation of $40,000. The company sells the equipment for cash of $42,000. At the time of sale, the company should record:

Celebration Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

Chapman Consulting paid $2,500 cash for a 5-month insurance policy which begins on December 1. Given the choices below, determine the general journal entry that Chapman Consulting will make to record the cash payment. Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.

On November 1, Elizabeth Company loaned another company $100,000 at a 6.0% interest rate. The note receivable plus interest will not be collected until March 1 of the following year. The company’s annual accounting period ends on December 31, and adjustments are only made at year-end. The adjusting entry needed on December 31 is:

Castleberry Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The correct journal entry to record the payment on August 16 is:

A balance sheet lists:

On January 1, Year 1, Samford, Inc. borrowed $100,000 on a 10-year, 7% installment note payable. The terms of the note require Samford to pay 10 equal payments of $14,238 each December 31 for 10 years. The required general journal entry to record the first payment on the note on December 31, Year 1 is:

Celebration Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

The first step in the accounting cycle is to analyze transactions and events to prepare for journalizing.