Ahlers Clocks is a retailer of wall, mantle, and grandfather clocks and is located in the EmpireMall in Sioux Falls, South Dakota. Assume that a grandfather clock was sold for $10,000 cash plus4 percent sales tax. The clock had originally cost Ahlers $6,000. Show the accounting equationeffects and prepare the journal entries related to this transaction. Assume Ahlers uses a perpetualinventory system, as explained in Chapter 6
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Ahlers Clocks is a retailer of wall, mantle, and grandfather clocks and is located in the Empire
Mall in Sioux Falls, South Dakota. Assume that a grandfather clock was sold for $10,000 cash plus
4 percent sales tax. The clock had originally cost Ahlers $6,000. Show the accounting equation
effects and prepare the
inventory system, as explained in Chapter 6
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- The following transactions were completed by Hammond Auto Supply during January, which is the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Hammond Auto Supply does not track cash sales by customer. Jan. 2Issued Ck. No. 6981 to JSS Management Company for monthly rent, 775. 2J. Hammond, the owner, invested an additional 3,500 in the business. 4Bought merchandise on account from Valencia and Company, invoice no. A691, 2,930; terms 2/10, n/30; dated January 2. 4Received check from Vega Appliance for 980 in payment of 1,000 invoice less discount. 4Sold merchandise on account to L. Paul, invoice no. 6483, 850. 6Received check from Petty, Inc., 637, in payment of 650 invoice less discount. 7Issued Ck. No. 6982, 588, to Fischer and Son, in payment of invoice no. C1272 for 600 less discount. 7Bought supplies on account from Doyle Office Supply, invoice no. 1906B, 108; terms net 30 days. 7Sold merchandise on account to Ellison and Clay, invoice no. 6484, 787. 9Issued credit memo no. 43 to L. Paul, 54, for merchandise returned. 11Cash sales for January 1 through January 10, 4,863.20. 11Issued Ck. No. 6983, 2,871.40, to Valencia and Company, in payment of 2,930 invoice less discount. 14Sold merchandise on account to Vega Appliance, invoice no. 6485, 2,050. Jan. 18Bought merchandise on account from Costa Products, invoice no. 7281D, 4,854; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to the invoice, 147 (total 5,001). 21Issued Ck. No. 6984, 194, to M. Miller for miscellaneous expenses not recorded previously. 21Cash sales for January 11 through January 20, 4,591. 23Issued Ck. No. 6985 to Forbes Freight, 96, for freight charges on merchandise purchased on January 4. 23Received credit memo no. 163, 376, from Costa Products for merchandise returned. 29Sold merchandise on account to Bruce Supply, invoice no. 6486, 1,835. 31Cash sales for January 21 through January 31, 4,428. 31Issued Ck. No. 6986, 53, to M. Miller for miscellaneous expenses not recorded previously. 31Recorded payroll entry from the payroll register: total salaries, 6,200; employees federal income tax withheld, 872; FICA Social Security tax withheld, 384.40, FICA Medicare tax withheld, 89.90. 31Recorded the payroll taxes: Social Security tax, 384.40, FICA Medicare tax, 89.90; state unemployment tax, 334.80; federal unemployment tax, 37.20. 31Issued Ck. No. 6987, 4,853.70, for salaries for the month. 31J. Hammond, the owner, withdrew 1,000 for personal use, Ck. No. 6988. Required 1. Record the transactions for January using a sales journal, page 73; a purchases journal, page 56; a cash receipts journal, page 38; a cash payments journal, page 45; and a general journal, page 100. Assume the periodic inventory method is used. 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily those entries involving the Other Accounts columns and the general journal to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Add the columns of the special journals and prove the equality of the debit and credit totals. 6. Post the appropriate totals of the special journals to the general ledger. 7. Prepare a trial balance. 8. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?The following transactions were completed by Hammond Auto Supply during January, which is the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Hammond Auto Supply does not track cash sales by customer. Jan. 2Issued Ck. No. 6981 to JSS Management Company for monthly rent, 775. 2J. Hammond, the owner, invested an additional 3,500 in the business. 4Bought merchandise on account from Valencia and Company, invoice no. A691, 2,930; terms 2/10, n/30; dated January 2. 4Received check from Vega Appliance for 980 in payment of 1,000 invoice less discount. 4Sold merchandise on account to L. Paul, invoice no. 6483, 850. 6Received check from Petty, Inc., 637, in payment of 650 invoice less discount. 7Issued Ck. No. 6982, 588, to Fischer and Son, in payment of invoice no. C1272 for 600 less discount. 7Bought supplies on account from Doyle Office Supply, invoice no. 1906B, 108; terms net 30 days. 7Sold merchandise on account to Ellison and Clay, invoice no. 6484, 787. 9Issued credit memo no. 43 to L. Paul, 54, for merchandise returned. 11Cash sales for January 1 through January 10, 4,863.20. 11Issued Ck. No. 6983, 2,871.40, to Valencia and Company, in payment of 2,930 invoice less discount. 14Sold merchandise on account to Vega Appliance, invoice no. 6485, 2,050. Jan. 18Bought merchandise on account from Costa Products, invoice no. 7281D, 4,854; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to the invoice, 147 (total 5,001). 21Issued Ck. No. 6984, 194, to M. Miller for miscellaneous expenses not recorded previously. 21Cash sales for January 11 through January 20, 4,591. 23Issued Ck. No. 6985 to Forbes Freight, 96, for freight charges on merchandise purchased on January 4. 23Received credit memo no. 163, 376, from Costa Products for merchandise returned. 29Sold merchandise on account to Bruce Supply, invoice no. 6486, 1,835. 31Cash sales for January 21 through January 31, 4,428. 31Issued Ck. No. 6986, 53, to M. Miller for miscellaneous expenses not recorded previously. 31Recorded payroll entry from the payroll register: total salaries, 6,200; employees federal income tax withheld, 872; FICA Social Security tax withheld, 384.40, FICA Medicare tax withheld, 89.90. 31Recorded the payroll taxes: Social Security tax, 384.40, FICA Medicare tax, 89.90; state unemployment tax, 334.80; federal unemployment tax, 37.20. 31Issued Ck. No. 6987, 4,853.70, for salaries for the month. 31J. Hammond, the owner, withdrew 1,000 for personal use, Ck. No. 6988. Required 1. Record the transactions in the general journal for January. If you are using Working Papers, start with page 1 in the journal. Assume the periodic inventory method is used. The chart of accounts is as follows: 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily the general journal entries to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Prepare a trial balance. 6. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and disbursements journal. At the end of the year (2019), the company hires you to convert the cash receipts and disbursements into accrual basis revenues and expenses. The total cash receipts are summarized as follows. The accounts receivable from customers at the end of the year are 120,000. You note that the accounts receivable at the beginning of the year were 190,000. The cash sales included 30,000 of prepayments for services to be provided over the period January 1, 2019, through December 31, 2021. a. Compute the companys accrual basis gross income for 2019. b. Would you recommend that Blue use the cash method or the accrual method? Why? c. The company does not maintain an allowance for uncollectible accounts. Would you recommend that such an allowance be established for tax purposes? Explain.
- Review the following transactions, and prepare any necessary journal entries. A. On July 16, Arrow Corp. purchases 200 computers (Equipment) at $500 per computer from a supplier, on credit. Terms of the purchase are 4/10, n/50 from the invoice date of July 16. B. On August 10, Hondo Inc. receives advance cash payment from a client for legal services in the amount of $9,000. Hondo had yet to provide legal services as of August 10. C. On September 22, Jack Pies sells thirty pies for $25 cash per pie. The sales tax rate is 8%. D. On November 8, More Supplies paid a portion of their noncurrent note in the amount of $3,250 cash.Stillwater Designs is a private company and outsources production of its Kicker speaker lines. Suppose that Stillwater Designs provided you the following transactions: a. Sold a warehouse for 750,000. b. Reported a profit of 100,000. c. Retired long-term bonds. d. Paid cash dividends of 350,000. e. Obtained a mortgage for a new building from a local bank. f. Purchased a new robotic system. g. Issued a long-term note payable. h. Purchased a 40% interest in a company. i. Reported a loss for the year. j. Negotiated a long-term loan. Required: Classify each of these transactions as an operating activity, an investing activity, or a financing activity. Also, indicate whether the activity is a source of cash or a use of cash.Air Compressors Inc. purchases compressor parts for its inventory from a supplier. The following transactions take place during the current year: A. On April 5, the company purchases 400 parts for $8.30 per part, on credit. Terms of the purchase are 4/ 10, n/30, invoice dated April 5. B. On May 5, Air Compressors does not pay the amount due and renegotiates with the supplier. The supplier agrees to $400 cash immediately as partial payment on note payable due, converting the debt owed into a short-term note, with a 7% annual interest rate, payable in three months from May 5. C. On August 5, Air Compressors pays its account in full. Record the journal entries to recognize the initial purchase, the conversion plus cash, and the payment.
- Taylor Company recently purchased a piece of equipment for $2,000 which will be paid within 30 days after delivery. At what point would the event be recorded in Taylors accounting system? When Taylor signs the agreement with the seller When Taylor receives an invoice (a bill) from the setter When Taylor receives the asset from the seller When Taylor pays $2.000 cash to the sellerThe following transactions were completed by Yang Restaurant Equipment during January, the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Yang Restaurant Equipment does not track cash sales by customer. Jan. 2Issued Ck. No. 6981 to Tri-County Management Company for monthly rent, 850. 2L. Yang, the owner, invested an additional 4,500 in the business. 4Bought merchandise on account from Valentine and Company, invoice no. A694, 2,830; terms 2/10, n/30; dated January 2. 4Received check from Velez Appliance for 980 in payment of invoice for 1,000 less discount. 4Sold merchandise on account to L. Parrish, invoice no. 6483, 755. 6Received check from Peck, Inc., 637, in payment of 650 invoice less discount. 7Issued Ck. No. 6982, 588, to Frost and Son, in payment of invoice no. C127 for 600 less discount. 7Bought supplies on account from Dudley Office Supply, invoice no. 190B, 93.54; terms net 30 days. 7Sold merchandise on account to Ewing and Charles, invoice no. 6484, 1,115. 9Issued credit memo no. 43 to L. Parrish, 47, for merchandise returned. 11Cash sales for January 1 through January 10, 4,454.87. 11Issued Ck. No. 6983, 2,773.40, to Valentine and Company, in payment of 2,830 invoice less discount. 14Sold merchandise on account to Velez Appliance, invoice no. 6485, 2,100. 14Received check from L. Parrish, 693.84, in payment of 755 invoice, less return of 47 and less discount. Jan. 19Bought merchandise on account from Crawford Products, invoice no. 7281, 3,700; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to invoice, 142 (total 3,842). 21Issued Ck. No. 6984, 245, to A. Bautista for miscellaneous expenses not recorded previously. 21Cash sales for January 11 through January 20, 3,689. 23Received credit memo no. 163, 87, from Crawford Products for merchandise returned. 29Sold merchandise on account to Bradford Supply, invoice no. 6486, 1,697.20. 29Issued Ck. No. 6985 to Western Freight, 64, for freight charges on merchandise purchased January 4. 31Cash sales for January 21 through January 31, 3,862. 31Issued Ck. No. 6986, 65, to M. Pineda for miscellaneous expenses not recorded previously. 31Recorded payroll entry from the payroll register: total salaries, 5,899.95; employees federal income tax withheld, 795; FICA Social Security tax withheld, 365.80, FICA Medicare tax withheld, 85.50. 31Recorded the payroll taxes: FICA Social Security tax, 365.80; FICA Medicare tax, 85.50; state unemployment tax, 318.60; federal unemployment tax, 35.40. 31Issued Ck. No. 6987, 4,653.65, for salaries for the month. 31L. Yang, the owner, withdrew 1,000 for personal use, Ck. No. 6988. Required 1. Record the transactions in the general journal for January. If you are using Working Papers, start with page 1 in the journal. Assume the periodic inventory method is used. The chart of accounts is as follows: 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily the general journal entries to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Prepare a trial balance. 6. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?The following transactions were completed by Yang Restaurant Equipment during January, the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Yang Restaurant Equipment does not track cash sales by customer. Jan. 2Issued Ck. No. 6981 to Tri-County Management Company for monthly rent, 850. 2L. Yang, the owner, invested an additional 4,500 in the business. 4Bought merchandise on account from Valentine and Company, invoice no. A694, 2,830; terms 2/10, n/30; dated January 2. 4Received check from Velez Appliance for 980 in payment of invoice for 1,000 less discount. 4Sold merchandise on account to L. Parrish, invoice no. 6483, 755. 6Received check from Peck, Inc., 637, in payment of 650 invoice less discount. 7Issued Ck. No. 6982, 588, to Frost and Son, in payment of invoice no. C127 for 600 less discount. 7Bought supplies on account from Dudley Office Supply, invoice no. 190B, 93.54; terms net 30 days. 7Sold merchandise on account to Ewing and Charles, invoice no. 6484, 1,115. 9Issued credit memo no. 43 to L. Parrish, 47, for merchandise returned. 11Cash sales for January 1 through January 10, 4,454.87. 11Issued Ck. No. 6983, 2,773.40, to Valentine and Company, in payment of 2,830 invoice less discount. 14Sold merchandise on account to Velez Appliance, invoice no. 6485, 2,100. 14Received check from L. Parrish, 693.84, in payment of 755 invoice, less return of 47 and less discount. Jan. 19Bought merchandise on account from Crawford Products, invoice no. 7281, 3,700; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to invoice, 142 (total 3,842). 21Issued Ck. No. 6984, 245, to A. Bautista for miscellaneous expenses not recorded previously. 21Cash sales for January 11 through January 20, 3,689. 23Received credit memo no. 163, 87, from Crawford Products for merchandise returned. 29Sold merchandise on account to Bradford Supply, invoice no. 6486, 1,697.20. 29Issued Ck. No. 6985 to Western Freight, 64, for freight charges on merchandise purchased January 4. 31Cash sales for January 21 through January 31, 3,862. 31Issued Ck. No. 6986, 65, to M. Pineda for miscellaneous expenses not recorded previously. 31Recorded payroll entry from the payroll register: total salaries, 5,899.95; employees federal income tax withheld, 795; FICA Social Security tax withheld, 365.80, FICA Medicare tax withheld, 85.50. 31Recorded the payroll taxes: FICA Social Security tax, 365.80; FICA Medicare tax, 85.50; state unemployment tax, 318.60; federal unemployment tax, 35.40. 31Issued Ck. No. 6987, 4,653.65, for salaries for the month. 31L. Yang, the owner, withdrew 1,000 for personal use, Ck. No. 6988. Required 1. Record the transactions for January using a sales journal, page 91; a purchases journal, page 74; a cash receipts journal, page 56; a cash payments journal, page 63; and a general journal, page 119. Assume the periodic inventory method is used. 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily those entries involving the Other Accounts columns and the general journal to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Add the columns of the special journals and prove the equality of the debit and credit totals. 6. Post the appropriate totals of the special journals to the general ledger. 7. Prepare a trial balance. 8. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?
- What accounting method (cash or accrual) would you recommend for the following businesses? a. A gift shop with average annual gross receipts of 900,000. b. An accounting partnership with average annual gross receipts of 12 million. c. A drywall subcontractor who works on residences and has annual gross receipts of 3 million. d. An incorporated insurance agency with average annual gross receipts of 28 million. e. A sole proprietor operating a retail clothing store with average annual gross receipts of 12 million. f. A sole proprietor operating a widget manufacturing plant with average annual gross receipts of 27 million.Nido Co. has a standing agreement with a supplier for purchasing car parts. The terms of the agreement are 3/15, n/30 from the invoice date of September 1. The company makes a purchase on September 1 for $5,000 and pays the amount due on September 13. What amount does Nido Co. pay in cash on September 13? A. $5,000 B. $4,850 C. $150 D. $4,250Krespy Corp. has a cash balance of $7,500 before the following transactions occur: A. received customer payments of $965 B. supplies purchased on account $435 C. services worth $850 performed, 25% is paid in cash the rest will be billed D. corporation pays $275 for an ad in the newspaper E. bill is received for electricity used $235. F. dividends of $2,500 are distributed What is the balance in cash after these transactions are journalized and posted?
