Skip to main content

Bartleby Sitemap - Textbook Solutions

All Textbook Solutions for Corporate Financial Accounting

Name some users of accounting information.2DQ 3DQ Josh Reilly is the owner of Dispatch Delivery Service. Recently Josh paid interest of 4,500 on a personal loan of 75,000 that he used to begin the business. Should Dispatch Delivery Service record the interest payment? Explain.5. On July 12, Reliable Repair Service extended an offer of 150,000 for land that had been priced for sale at 185,000. On September 3, Reliable Repair accepted the sellers counteroffer of 167,500. Describe how Reliable Repair Service should record the land.6DQ Describe the difference between an account receivable and an account payable.8DQ 9DQ The financial statements are interrelated. (A) What item of financial or operating data appears on both the income statement and the retained earnings statement? (B) What item appears on both the balance sheet and the retained earnings statement? (C) What item appears on both the balance sheet and the statement of cash flows?Cost principle On June 25, Ritts Roofing extended an offer of 250,000 for land that had been priced for sale at 300,000. On July 9, Ritts accepted the sellers counteroffer of 275,000. On October 1, the land was assessed at a value of 280,000 for property tax purposes. On December 22, Ritts was offered 305,000 for the land by a national retail chain. At what value should the land be recorded in Ritts Roofing's records?1.2BE Transactions Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery during May: 1. Received cash in exchange for common stock, 18,000. 2. Paid advertising expense, 4,850. 3. Purchased supplies on account, 2,100. 4. Billed customers for delivery services on account, 14,700. 5. Received cash from customers on account. 8,200. Indicate the effect of each transaction on the following accounting equation elements: Assets, Liabilities, Common Stock, Dividends, Revenue, and Expense. To illustrate, the answer to (1) follows: (1) Asset (Cash) increases by 18,000: Common Stock increases by 18,000.Income statement The revenues and expenses of Paradise Travel Service for the year ended May 31, 2018, follow: Fees earned 900,000 Office expense 300,000 Miscellaneous expense 15,000 Wages expense 450,000 Prepare an income statement for the year ended May 31, 2018.1.5BE Balance sheet Using the following data for Paradise Travel Service as well as the retained earnings statement shown in Basic Exercise 1-5, prepare a balance sheet as of May 31, 2018: Accounts payable 18,000 Accounts receivable 38,000 Cash 52,000 Common stock 100,000 Land 450,000 Supplies 3,000 Statement of cash flows A summary of cash flows for Paradise Travel Service for the year ended May 31, 2018, follows: Cash receipts: Cash received from customers 880,000 Cash received from issuing common stock 40,000 Cash payments: Cash paid for operating expenses 758,000 Cash paid for land 150,000 Cash paid as dividends 10,000 The cash balance as of June 1, 2017, was 50,000. Prepare a statement of cash flows for Paradise Travel Service for the year ended May 31, 2018.1.1EX 1.2EX 1.3EX 1.4EX Accounting equation The total assets and total liabilities (in millions) of Dollar Tree Inc. and Target Corporation follow: Dollar Tree Target Assets 2,772 44,553 Liabilities 1,601 28,322 Determine the stockholders equity of each company.Accounting equation Determine the missing amount for each of the following: Assets = Liabilities + Stockholders Equity A. X = 550,000 + 1,345,000 B. 776,500 = X + 588,800 C. 14,750,000 = 4,455,000 + X 1.7EX Asset, liability, and stockholders equity items Indicate whether each of the following is identified with (1) an asset, (2) a liability, or (3) stockholders equity: A. accounts payable B. cash C. fees earned D. land E. supplies F. wages expense Effect of transactions on accounting equation What is the effect of each of the following transactions on the three elements (assets, liabilities, and stockholders equity) of the accounting equation? A. Invested cash in business. B. Paid for utilities used in the business. C. Purchased supplies for cash. D. Purchased supplies on account. E. Received cash for services performed.Effect of transactions on accounting equation A. A vacant lot acquired for 115,000 is sold for 298,000 in cash. What is the effect of the sale on the total amount of the sellers (1) assets, (2) liabilities, and (3) stockholders equity? B. Assume that the seller owes 80,000 on a loan for the land. After receiving the 298,000 cash in (A), the seller pays the 80,000 owed. What is the effect of the payment on the total amount of the sellers (1) assets, (2) liabilities, and (3) stockholders equity? C. Is it true that a transaction always affects at least two elements (Assets, Liabilities, or Stockholders Equity) of the accounting equation? Explain.1.11EX Transactions The following selected transactions were completed by Cota Delivery Service during July: 1. Received cash in exchange for common stock, 35,000. 2. Purchased supplies for cash, 1,100. 3. Paid rent for October, 4,500. 4. Paid advertising expense, 900. 5. Received cash for providing delivery services, 33,000. 6. Billed customers for delivery services on account, 58,000. 7. Paid creditors on account, 2,900. 8. Received cash from customers on account, 27,500. 9. Determined that the cost of supplies on hand was 300 and 8,600 of supplies had been used during the month. 10. Paid cash dividends, 2,500. Indicate the effect of each transaction on the accounting equation by listing the numbers identifying the transactions, (1) through (10), in a column, and inserting at the right of each number the appropriate letter from the following list: A. Increase in an asset, decrease in another asset. B. Increase in an asset, increase in a liability. C. Increase in an asset, increase in stockholders equity. D. Decrease in an asset, decrease in a liability. E. Decrease in an asset, decrease in stockholders equity Nature of transactions Teri West operates her own catering service. Summary financial data for July are presented in equation form as follows. Each line designated by a number indicates the effect of a transaction on the equation. Each increase and decrease in stockholders equity, except transaction (5), affects net income. A. Describe each transaction. B. What is the amount of the net increase in cash during the month? C. What is the amount of the net increase in stockholders equity during the month? D. What is the amount of the net income for the month? E. How much of the net income for the month was retained in the business?Net income and dividends The income statement for the month of February indicates a net income of 17,500. During the same period, 25,500 in cash dividends were paid. Would it be correct to say that the business incurred a net loss of 8,000 during the month? Discuss.Net income and stockholders equity for four businesses Four different corporations, Amber, Blue, Coral, and Daffodil, show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of stockholders equity, are summarized as follows: Total Assets Total Liabilities Beginning of the year 1,220,000 990,000 End of the year 1,730,000 1,150,000 On the basis of the preceding data and the following additional information for the year, determine the net income (or loss) of each company for the year. (Hint: First, determine the amount of increase or decrease in stockholders equity during the year.) Amber.No additional common stock was issued and no dividends were paid. Blue:No additional common stock was issued, but dividends of 60,000 were paid. Coral:Additional common stock of 140,000 was issued, but no dividends were paid. Daffodil:Additional common stock of 140,000 was issued and dividends of 60,000 were paid Balance sheet items From the following list of selected items taken from the records of Bobcat Appliance Service as of a specific date, identify those that would appear on the balance sheet: 1. Accounts Receivable 2. Cash 3. Common Stock 4. Fees Earned 5. Land 6. Supplies 7. Supplies Expense 8. Utilities Expense 9. Wages Expense 10. Wages Payable Income statement items From the following list of selected items taken from the records of Bobcat Appliance Service as of a specific date, identify those that would appear on the balance sheet: 1. Accounts Receivable 2. Cash 3. Common Stock 4. Fees Earned 5. Land 6. Supplies 7. Supplies Expense 8. Utilities Expense 9. Wages Expense 10. Wages Payable Based on the data presented in Exercise 1-16, identify those items that would appear on the income statement.1.18EX 1.19EX 1.20EX Balance sheets, net income Financial information related to Ebony Interiors for February and March 2018 is as follows: February 28, 2018 March 31, 2018 Cash 320,000 380,000 Accounts receivable 800,000 960,000 Supplies 30,000 35,000 Accounts payable 310,000 400,000 Common stock 200,000 200,000 Retained earnings ? ? A. Prepare balance sheets for Ebony Interiors as of February 28 and March 31, 2018. B. Determine the amount of net income for March, assuming that no additional common stock was issued and no dividends were paid during the month. C. Determine the amount of net income for March, assuming that no additional common stock was issued, but dividends of 50,000 were paid during the month.Financial statements Each of the following items is shown in the financial statements of Exxon Mobil Corporation: 1. Accounts payable 2. Cash equivalents 3. Crude oil inventory 4. Equipment 5. Exploration expenses 6. Income taxes payable 7. Investments 8. Long-term debt 9. Marketable securities 10. Notes and loans payable 11. Notes receivable 12. Operating expenses 13. Prepaid taxes 14. Sales 15. Selling expenses A. Identify the financial statement (balance sheet or income statement) in which each item would appear. B. Can an item appear on more than one financial statement? C. Is the accounting equation relevant for Exxon Mobil Corporation? Explain.1.23EX 1.24EX Financial statements We-Sell Realty, organized as a corporation on August 1, 2018, is owned and operated by Omar Farah, the sole stockholder. How many errors can you find in the following statements for We-Sell Realty, prepared after its first month of operations? We-Sell Realty Income Statement August 31, 2018 Sales commissions 140,000 Expenses: Office salaries expense 87,000 Rent expense 18,000 Automobile expense 7,500 Miscellaneous expense 2,200 Supplies expense 1,150 Total expenses 115,850 Net income 25,000 Omar Farah Retained Earnings Statement August 31, 2017 Retained earnings, August 1,2018 0 Dividends (10,000) (10,000) Issued additional common stock August 1,2018 15,000 5,000 Net income 25,000 Retained earnings, August 31, 2018 30,000 Balance Sheet For the Month Ended August 31, 2018 Cash Assets 8,900 Accounts payable 22,350 Total assets 31,250 Liabilities Accounts receivable 38,600 Supplies 4,000 Stockholders Equity Retained earnings 30,000 Total liabilities and stockholders equity 72,600 Transactions On September 1 of the current year, Joy Tucker established a business to manage rental property. She completed the following transactions during September: A. Opened a business bank account with a deposit of 36,000 in exchange for common stock. B. Purchased office supplies on account, 1,800. C. Received cash from fees earned for managing rental property, 6,750. D. Paid rent on office and equipment for the month, 5,000. E. Paid creditors on account, 1,375. F. Billed customers for fees earned for managing rental property, 9,500. G. Paid automobile expenses for month, 840, and miscellaneous expenses, 960. H. Paid office salaries, 3,600. I. Determined that the cost of supplies on hand was 350; therefore, the cost of supplies used was 1,450. J. Paid dividends, 3,000. Instructions 1.Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2.Briefly explain why issuing common stock and revenues increased stockholders equity, while dividends and expenses decreased stockholders equity. 3.Determine the net income for September. 4.How much did September's transactions increase or decrease retained earnings?Financial statements The amounts of the assets and liabilities of Journey Travel Agency at December 31, 2018, the end of the year, and its revenue and expenses for the year follow. The retained earnings were 1,341,000 on January 1, 2018, the beginning of the year. During the year, dividends of 75,000 were paid. Accounts payable 69,500 Miscellaneous expense 14,500 Accounts receivable 236,500 Rent expense 22,500 Cash 190,500 Supplies 7,000 Common stock 450,000 Supplies expense 11,300 Fees earned 383,500 Utilities expense 16,700 Land 1,500,000 Wages expense 170,000 Instructions 1. Prepare an income statement for the year ended December 31, 2018. 2. Prepare a retained earnings statement for the year ended December 31, 2018. 3. Prepare a balance sheet as of December 31, 2018. 4. What item appears on both the retained earnings statement and the balance sheet?Financial statements Seth Feye established Reliance Financial Services on July 1, 2018. Reliance Financial Services offers financial planning advice to its clients. The effect of each transaction and the balances after each transaction for July follow: Instructions 1. Prepare an income statement for the month ended July 31, 2018. 2. Prepare a retained earnings statement for the month ended July 31, 2018. 3. Prepare a balance sheet as of July 31, 2018. 4. (Optional) Prepare a statement of cash flows for the month ending July 31, 2018.Transactions; financial statements On August 1, 2018, Brooke Kline established Western Realty. Brooke completed the following transactions during the month of August: A. Opened a business bank account with a deposit of 35,000 in exchange for common stock. B. Purchased supplies on account, 2,750. C. Paid creditor on account, 1,800. D. Earned sales commissions, receiving cash, 52,800. E. Paid rent on office and equipment for the month, 4,500. F. Paid dividends, 3,000. G. Paid automobile expenses for month, 1,100, and miscellaneous expenses, 1,200. H. Paid office salaries, 5,250. I. Determined that the cost of supplies on hand was 1,750; therefore, the cost of supplies used was 1,000. Instructions 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:Transactions; financial statements DLite Dry Cleaners is owned and operated by Joel Palk. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company at wholesale rates. The assets, liabilities, and common stock of the business on July 1, 2018, are as follows: Cash, 45,000; Accounts Receivable, 93,000; Supplies, 7,000; Land, 75,000; Accounts Payable, 40,000; Common Stock, 60,000. Business transactions during July are summarized as follows: A. Joel Palk invested additional cash in exchange for common stock with a deposit of 35,000 in the business bank account. B. Paid 50,000 for the purchase of land adjacent to land currently owned by D'Lite Dry Cleaners as a future building site. C. Received cash from customers for dry cleaning revenue, 32,125. D. Paid rent for the month, 6,000. E. Purchased supplies on account, 2,500. F. Paid creditors on account, 22,800. G. Charged customers for dry cleaning revenue on account, 84,750. H. Received monthly invoice for dry cleaning expense for July (to be paid on August 10), 29,500. I. Paid the following: wages expense, 7,500; truck expense, 2,500; utilities expense, 1,300; miscellaneous expense, 2,700. J. Received cash from customers on account 88,000. K. Determined that the cost of supplies on hand was 5,900; therefore, the cost of supplies used during the month was 3,600. L. Paid dividends, 12,000. Instructions 1.Determine the amount of retained earnings as of July 1, 2018. 2.State the assets, liabilities, and stockholders equity as of July 1 in equation form similar to that shown in this chapter. In tabular form below the equation, indicate increases and decreases resulting from each transaction and the new balances after each transaction. 3.Prepare an income statement for July, a retained earnings statement for July, and a balance sheet as of July 31. 4.(Optional) Prepare a statement of cash flows for July.Missing amounts from financial statements The financial statements at the end of Wolverine Realtys first month of operations are as follows Wolverine Realty Income Statement For the Month Ended April 30, 2018 Fees earned A Expenses: Wages expense 300,000 Rent expense 100 Supplies expense B Utilities expense 20,000 Miscellaneous expense .. 25,000 Total expenses 475,000 Net income 275,000 Wolverine Realty Retained Earnings Statement For the Month Ended April 30,2018 Retained earnings, April 1,2018 c Net income D Dividends (125,000) Change in retained earnings E Retained earnings, April 30, 2018 F Wolverine Realty Balance Sheet April 30, 2018 Assets Cash 462,500 Supplies 12,500 Land 150,000 Total assets G Liabilities Accounts payable 100,000 Stockholders' Equity Common stock 375,000 Retained earnings H Total stockholders' equity I Total liabilities and stockholders' equity, J Wolverine Realty Statement of Cash Flows For the Month Ended April 30/ 2018 Cash flows from operating activities: Cash received from customers K Cash payments for expenses and payments to creditors (387,500) Net cash flows from operating activities L Cash flows used for investing activities: Cash payments for acquisition of land M Cash flows from financing activities: Cash received from issuing common stock N Cash dividends 0 Net cash flows from financing activities P Net increase (decrease) in cash and April 30,2018, cash balance Q Instructions By analyzing the interrelationships among the four financial statements, determine the proper amounts for A through Q.Transactions Amy Austin established an insurance agency on March 1 of the current year and completed the following transactions during March: A. Opened a business bank account with a deposit of 50,000 in exchange for common stock. B. Purchased supplies on account, 4,000. C. Paid creditors on account, 2,300. D. Received cash from fees earned on insurance commissions, 13,800. E. Paid rent on office and equipment for the month, 5,000. F. Paid automobile expenses for month, 1,150, and miscellaneous expenses, 300. G. Paid office salaries, 2,500. H. Determined that the cost of supplies on hand was 2,700; therefore, the cost of supplies used was 1,300. I. Billed insurance companies for sales commissions earned, 12,500. J. Paid dividends, 3,900. Instructions 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2. Briefly explain why issuing common stock and revenues increased stockholders' equity, while dividends and expenses decreased stockholders equity. 3. Determine the net income for March. 4. How much did Marchs transactions increase or decrease retained earnings?Financial statements The amounts of the assets and liabilities of Wilderness Travel Service at April 50, 2018, the end of the year, and its revenue and expenses for the year follow. The retained earnings were 145,000 at May I, 2017, the beginning of the year, and dividends of 40,000 were paid during the year. Accounts payable 25,000 Rent expense 75,000 Accounts receivable 210,000 Supplies 9,000 Cash 146,000 Supplies expense 12,000 Common stock 35,000 Taxes expense 10,000 Fees earned 875,000 Utilities expense 38,000 Miscellaneous expense 15,000 Wages expense 525,000 Instructions 1. Prepare an income statement for the year ended April 30, 2018. 2. Prepare a retained earnings statement for the year ended April 30, 2018. 3. Prepare a balance sheet as of April 30, 2018 4. What item appears on both the income statement and retained earnings statement?Financial statements Jose Loder established Bronco Consulting on August 1, 2018. The effect of each transaction and the balances after each transaction for August follow: Instructions 1. Prepare an income statement for the month ended August 31, 2018. 2. Prepare a retained earnings statement for the month ended August 31, 2018. 3. Prepare a balance sheet as of August 31, 2018. 4. (Optional) Prepare a statement of cash flows for the month ending August 31, 2018.1.4BPR Transactions; financial statements Bevs Dry Cleaners is owned and operated by Beverly Zahn. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company at wholesale rates. The assets, liabilities, and common Mock of the business on November 1, 2018, are as follows: Ca.sh, 39,000. Accounts Receivable, 80,000; Supplies, 11,000; Land, 50,000; Accounts Payable, 31,500; Common Stock, 50,000. Business transactions during November are summarized as follows: A. A Beverly Zahn invested additional cash in exchange for common stock with a deposit of 21,000 in the business bank account. B. B Purchased land adjacent to land currently owned by Bevs Dry Cleaners to use in the future as a parking lot, paying cash of 35,000. C. Paid rent for the month, 4,000. D. Charged customers for dry cleaning revenue on account 72,000. E. Paid creditors on account 20,000. F. Purchased supplies on account, 8,000. G. Received cash from customers for dry cleaning revenue, 38,000. H. Received cash from customers on account. 77,000. I. Received monthly invoice for dry cleaning expense for November (to be paid on December 10), 29,450. J. Paid the following: wages expense, 24,000; truck expense, 2,100; utilities expense, 1,800; miscellaneous expense, 1,300. K. Determined that the cost of supplies on hand was 11300; therefore, the cost of supplies used during the month was 7,200. L. Paid dividends, 5,000 Instructions 1. Determine the amount of retained earnings as of November 1. 2. Slate the assets, liabilities, and stockholders equity as of November 1 in equation form similar to that shown in this chapter. In tabular form below the equation, indicate increases and decreases resulting from each transaction and the new balances after each transaction. 3. Prepare an income statement for November, a retained earnings statement for November, and a balance sheet as of November 30. 4. (Optional) Prepare a statement of cash flows for November.Missing amount from financial statements The financial statements at the end of Atlas Realtys first month of operations follow: Atlas Realty Income Statement For the Month Ended May 31,2018 Fees earned 400,000 Expenses: Wages expense A Rent expense 48,000 Supplies expense 17,600 Utilities expense 14,400 Miscellaneous expense 4,800 Total expenses 288,000 Net income B Atlas Realty Retained Earnings Statement For the Month Ended May 31, 2018 Retained earnings, May 1,2018 c Net income D Dividends (E) Change in retained earnings F Retained earnings, May 31, 2018 G Atlas Realty Balance Sheet May 31, 2018 Cash Assets 123,200 Supplies 12,800 Land H Total assets 1 Liabilities Accounts payable 48,000 Stockholders' Equity Common stock J Retained earnings K Total stockholders' equity L Total liabilities and stockholders equity M Atlas Realty Statement of Cash Flows For the Month Ended May 31,2018 Cash flows from operating activities: Cash received from customers N Cash payments for expenses and payments to creditors (252,800) Net cash flows from operating activities O Cash flows from investing activities: Cash payments for acquisition of land (120,000) Cash flows from financing activities: Cash received from issuing common stock 160,000 Cash dividends (64,000) Net cash flows from financing activities P Net increase (decrease) in cash and May 31, 2018, cash balance Q Instructions By analyzing the interrelationships among the four financial statements, determine the proper amounts for A through Q.Peyton Smith enjoys listening to all types of music and owns countless CDs. Over the years, Peyton has gained a local reputation for knowledge of music from classical to rap and the ability to put together sets of recordings that appeal to all ages. During the last several months, Peyton served as a guest disc jockey on a local radio station. In addition, Peyton has entertained at several friends parties as the host deejay. On June 1, 2018, Peyton established a corporation known as PS Music. Using an extensive collection of music MP3 files, Peyton will serve as a disc jockey on a fee basis for weddings, college parties, and other events. During June, Peyton entered into the following transactions: June 1 Deposited 4,000 in a checking account in the name of PS Music in exchange for common stock. 2. Received 3,500 from a local radio station for serving as the guest disc jockey for June. 2. Agreed to share office space with a local real estate agency, Pinnacle Realty. PS Music will pay one-fourth of the rent. In addition, PS Music agreed to pay a portion of the wages of the receptionist and to pay one- fourth of the utilities. Paid 800 for the rent of the office. 4. Purchased supplies from City Office Supply Co. for 350. Agreed to pay 100 within 10 days and the remainder by July 5, 2018. 6. Paid 500 to a local radio station to advertise the services of PS Music twice daily for two weeks. 8. Paid 675 to a local electronics store for renting digital recording equipment. 12. Paid 350 (music expense) to Cool Music for the use of its current music demos to make various music sets. 13. Paid City Office Supply Co. 100 on account. 16. Received 300 from a dentist for providing two music sets for the dentist to play for her patients. 22. Served as disc jockey for a wedding party. The father of the bride agreed to pay 1,000 in July. 25. Received 500 for serving as the discjockey for a cancer charity ball hosted by the local hospital. 29. Paid 240 (music expense) to Galaxy Music for the use of its library of musicdemos. 30. Received 900 for serving as PS discjockey for a local club's monthly dance. 30. Paid Pinnacle Realty 400 for PS Music's share of the receptionist s wages for June. 30. Paid Pinnacle Realty 300 for PS Music's share of the utilities for June. 30. Determined that the cost of supplies on hand is 170. Therefore, the cost of supplies used during the month was 180. 30. Paid for miscellaneous expenses, 415. 30. Paid 1,000 royalties (music expense) to National Music Clearing for use of various artists music during the month. 30. Paid dividends, 500. Instructions 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2. Prepare an income statement for PS Music for the month ended June 30, 2018. 3. Prepare a retained earnings statement for PS Music for the month ended June 30, 2018. 4. Prepare a balance sheet for PS Music as of June 30, 2018.1.1ADM Home Depot: Ratio of liabilities to stockholders' equity The Home Depot, Inc., is the worlds largest home improvement retailer and one of the largest retailers in the United States based on sales volume. Home Depot operates over 2,200 stores that sell a wide assortment of building, home improvement, and lawn and garden items. Home Depot recently reported the following end-of-year balance sheet data (in millions): Year 3 Year 2 Year 1 Total assets 40,518 41,804 40,518 Total stockholders equity 12,522 17,777 17,898 A. Determine the total liabilities at the end of Years 1, 2, and 3. B. Compute the ratio of liabilities to stockholders equity for all three years. (Round to two decimal places.) C. What conclusions regarding the margin of protection to creditors can you draw from the trend in this ratio for the three years?Lowes: Ratio of liabilities to stockholders equity Lowes Companies, Inc., a major competitor to The Home Depot in the home improvement retail business, operates over 1,800 stores. Lowe's recently reported the following end-of-year balance sheet data (in millions): Year 3 Year 2 Year 1 Total assets 32,732 32,666 33,559 Total liabilities 20,879 18,809 17,026 A. Determine the total stockholders equity at the end of Years 1, 2, and 3. B. Compute the ratio of liabilities to stockholders equity for all three years. (Round to two decimal places.) C. What conclusions regarding the margin of protection to creditors can you draw from the trend in this ratio for the three years? D. Using the balance sheet data for Home Depot in ADM-2, how does Lowes ratio of liabilities to stockholders equity compare to that of Home Depot?1.4ADM 1.1TIF 1.3TIF What is the difference between an account and a ledger?2DQ 3DQ eCatalog Services Company performed services in October for a specific customer, for a fee of 7,890. Payment was received the following November. (A) Was the revenue earned in October or November? (B) What accounts should be debited and credited in (1) October and (2) November?If the two totals of a trial balance are equal, does it mean that there are no errors in the accounting records? Explain.Assume that a trial balance is prepared with an account balance of 8,900 listed as 9,800 and an account balance of 1,000 listed as 100. Identify the transposition and the slide.Assume that when a purchase of supplies of 2,650 for cash was recorded, both the debit and the credit were journalized and posted as 2,560. (A) Would this error cause the trial balance to be out of balance? (B) Would the trial balance be out of balance if the 2,650 entry had been journalized correctly but the credit to Cash had been posted as 2,560?Assume that Muscular Consulting erroneously recorded die payment of 7,500 of dividends as a debit to Salary Expense. (A) How would this error affect the equality of the trial balance? (B) How would this error affect the income statement, retained earnings statement, and balance sheet?Assume that Sunshine Realty Co. borrowed 300,000 from Columbia First Bank and Trust. In recording the transaction, Sunshine erroneously recorded the receipt as a debit to Cash, 300,000, and a credit to Fees Earned, 300,000. (A) How would this error affect the equality of the trial balance? (B) How would this error affect the income statement, retained earnings statement, and balance sheet?Checking accounts are one of the most common forms of deposits for banks. Assume that Surety Storage has a checking account at Ada Savings Bank. What type of account (asset, liability, stockholders equity, revenue, expense, dividends) does the account balance of 11,375 represent from the viewpoint of (A) Surety Storage and (B) Ada Savings Bank?Rules of debit and credit and normal balances State for each account whether it is likely to have (A) debit entries only, (B) credit entries only, or (C) both debit and credit entries. Also, indicate its normal balance. 1. Accounts Payable 2. Cash 3. Dividends 4. Miscellaneous Expense 5. Insurance Expense 6. Fees Earned 2.2BE Journal entry for fees earned Prepare a journal entry on August 13 for cash received for services rendered, 9,000.Journal entry for dividends Prepare a journal entry on June 30 for dividends of 11,500.Missing amount from an account On August 1, the supplies account balance was 1,025. During August, supplies of 3,110 were purchased, and 1,324 of supplies were on hand as of August 31. Determine supplies expense for August.Trial balance errors For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. A. The payment of cash for the purchase of office equipment of 12,900 was debited to Land for 12,900 and credited to Cash for 12,900. B. The payment of 1,840 on account was debited to Accounts Payable for 184 and credited to Cash for 1,840. C. The receipt of cash on account of 3,800 was recorded as a debit to Cash for 8,300 and a credit to Accounts Receivable for 3,800.Correcting entries The following errors took place in journalizing and posting transactions: A. The receipt of 8,400 for services rendered was recorded as a debit to Accounts Receivable and a credit to Fees Earned. B. The purchase of supplies of 2,500 on account was recorded as a debit to Office Equipment and a credit to Supplies. Journalize the entries to correct the errors. Omit explanations.2.1EX Chart of accounts Innerscape Interiors is owned and operated by Jackie Vargo, an interior decorator. In the ledger of Innerscape Interiors, the first digit of the account number indicates its major account classification (1assets, 2liabilities, 3stockholders equity, 4revenues, 5expenses). The second digit of the account number indicates the specific account within each of the preceding major account classifications. Match each account number with its most likely account in the list that follows. The account numbers are 11, 12, 13 21, 31, 32, 33, 41, 51, 52, and 53. Accounts Payable Accounts Receivable Cash Common Stock Dividends Fees Earned Land Miscellaneous Expense Retained Earnings Supplies Expense Wages Expense Chart of accounts LeadCo School is a newly organized business that teaches people how to inspire and influence others. The list of accounts to be opened in the general ledger is as follows: Accounts Payable Accounts Receivable Cash Common Stock Dividends Equipment Fees Earned Miscellaneous Expense Prepaid Insurance Rent Expense Retained Earnings Supplies Supplies Expense Unearned Rent Wages Expense List the accounts in the order in which they should appear in the ledger of LeadCo School and assign account numbers. Each account number is to have two digits: the first digit is to indicate the major classification (1 for assets, etc.), and the second digit is to identify the specific account within each major classification (11 for Cash, etc.).Rules of debit and credit The following table summarizes the rules of debit and credit. For each of the items A through L, indicate whether the proper answer is a debit or a credit. Increase Decrease Normal Balance Balance sheet accounts: Asset A B Debit Liability C Debit D Stockholders equity: Common Stock Credit E F Retained Earnings G H Credit Dividends Debit Credit 1 Income statement accounts: Revenue J K Credit Expense L Credit Debit Normal entries for accounts During the month, Gates Labs Co. has a substantial number of transactions affecting each of the following accounts. State for each account whether it is likely to have (A) debit entries only, (B) credit entries only, or (C) both debit and credit entries. 1. Accounts Payable 2. Accounts Receivable 3. Cash 4. Fees Earned 5. Insurance Expense 6. Dividends 7. Utilities Expense Normal balances of accounts Identify each of the following accounts of Liken Services Co. as asset, liability, stockholders equity, revenue, or expense, and state in each case whether the normal balance is a debit or a credit: a. Accounts Payable b. Accounts Receivable c. Cash d. Common Stock e. Dividends f. Fees Earned g. Land h. Rent Expense i. Supplies j. Utilities Expense Transactions Zenith Consulting Co. has the following accounts in its ledger: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, Retained Earnings, Dividends, Fees Earned, Rent Expense, Advertising Expense, Utilities Expense, Miscellaneous Expense. Journalize the following selected transactions for March 2018 in a two-column journal. Journal entry explanations may be omitted. Mar. 1. Paid rent for the month, 4,000. 3. Paid advertising expense, 1,350. 5. Paid cash for supplies, 1,800. 6. Purchased office equipment on account 11,500 10. Received cash from customers on account, 8,600. 15. Paid creditor on account, 3,180. 27. Paid cash for miscellaneous expenses, 700. 30. Paid telephone bill for the month, 550. 31. Fees earned and billed to customers for the month, 37,200. 31. Paid electricity bill for the month, 830. 31. Paid dividends, 2,000.Journalizing and posting On October 3, 2018, Regal Company purchased 3,600 of supplies on account. In Regals chart of accounts, the supplies account is No. 15, and the accounts payable account is No. 21. A. Journalize the October 3, 2018, transaction on page 91 of Regal Companys two-column journal. Include an explanation of the entry. B. Prepare a four-column account for Supplies. Enter a debit balance of 770 as of October 1, 2018. Place a check mark () in the Posting Reference column. C. Prepare a four-column account for Accounts Payable. Enter a credit balance of 26,200 as of October 1, 2018. Place a check mark () in the Posting Reference column. D. Post the October 3, 2018, transaction to the accounts. E. Do the rules of debit and credit apply to all companies?Transactions and T accounts The following selected transactions were completed during March of the current year: 1. Billed customers for fees earned, 54,100. 2. Purchased supplies on account, 1,250. 3. Received cash from customers on account, 43,800. 4. Paid creditors on account, 600. A. Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions. Journal entry explanations may be omitted. B. Post the entries prepared in (A) to the following T accounts: Cash, Supplies, Accounts Receivable, Accounts Payable, Fees Earned. To the left of each amount posted in the accounts, place the appropriate number to identify the transaction. C. Assume that the unadjusted trial balance on March 31 shows a credit balance for Accounts Receivable. Does this credit balance mean an error has occurred?Cash account balance During the month, Warwick Co. received 515,000 in cash and paid out 375,000 in cash. A. Does this information indicate that Warwick Co. had net income of 140,000 during the month? Explain. B. If the balance of the cash account is 200,000 at the end of the month, what was the cash balance at the beginning of the month?Account balances A. During February, 186,500 was paid to creditors on account, and purchases on account were 201,400. Assuming the February 28 balance of Accounts Payable was 59,900, determine the account balance on February 1. B. On October 1, the accounts receivable account balance was 115,800. During October, 449,600 was collected from customers on account. Assuming the October 31 balance was 130,770, determine the fees billed to customers on account during October. C. On April 1, the cash account balance was 46,220. During April, cash receipts totaled 248,600 and the April 30 balance was 56,770. Determine the cash payments made during April.Retained earnings account balance As of January 1, Retained Earnings had a credit balance of 314,000. During the year, dividends totaled 10,000, and the business incurred a net loss of 320,000. A. Compute the balance of Retained Earnings as of the end of the year. B. Assuming that there have been no recording errors, will the balance sheet prepared at December 31 balance? Explain.Identifying transactions Napa Tours Co. is a travel agency. The nine transactions recorded by Napa Tours during April 2018, its first month of operations, are indicated in the following T accounts: Indicate for each debit and each credit: (A) whether an asset, liability, stockholders equity, dividend, revenue, or expense account was affected and (B) whether the account was increased (+) or decreased (). Present your answers in the following form, with transaction (1) given as an example: Account Debited Account Credited Transaction Type Effect Type Effect (1) asset + Stockholders equity +Journal entries Based upon the T accounts in Exercise 2-13, prepare the nine journal entries from which the postings were made. Journal entry explanations may be omitted.Trial balance Based upon the data presented in Exercise 2-13, (A) prepare an unadjusted trial balance, listing the accounts in their proper order. (B) Based upon the unadjusted trial balance, determine the net income or net loss.Trial balance The accounts in the ledger of Atlantic Furniture Company as of July 2018 are listed in alphabetical order as follows. All accounts have normal balances. The balance of the cash account has been intentionally omitted. Accounts Payable 92,400 Notes Payable 25,000 Accounts Receivable 483,600 Prepaid Insurance 21,600 Cash ? Rent Expense 140,000 Common Stock 75,000 Retained Earnings 311,600 Dividends 24,000 Supplies 3,975 Fees Earned 2,750,000 Supplies Expense 11,200 Insurance Expense 9,000 Unearned Rent 6,000 Land 50,000 Utilities Expense 49,100 Miscellaneous Expense 10,200 Wages Expense 2,250,000 Prepare an unadjusted trial balance, listing the accounts in their normal order and inserting the missing figure for cash.Effect of errors on trial balance Indicate which of the following errors, each considered individually, would cause the trial balance totals to be unequal: A. A fee of 21,000 earned and due from a client was not debited to Accounts Receivable or credited to a revenue account, because the cash had not been received. B. A receipt of 11,300 from an account receivable was journalized and posted as a debit of 11,300 to Cash and a credit of 11,300 to Fees Earned. C. A payment of 4,950 to a creditor was posted as a debit of 4,950 to Accounts Payable and a debit of 4,950 to Cash. D. A payment of 5,000 for equipment purchased was posted as a debit of 500 to Equipment and a credit of 500 to Cash. E. Payment of cash dividends of 19,000 was journalized and posted as a debit of 1,900 to Salary Expense and a credit of 19,000 to Cash. Indicate which of the preceding errors would require a correcting entry.Total of Credit column: 525,000 Error in triad balance The following preliminary unadjusted trial balance of Ranger Co., a sports ticket agency, does not balance: Ranger Co. Unadjusted Trial Balance August 31, 2018. Debit Balance Credit Balance Cash 77,600 Accounts Receivable 37,750 Prepaid Insurance 12,000 Equipment 19,000 Accounts Payable 29,100 Unearned Rent 10,800 Common Stock 40,000 Retained Earnings 70,000 Dividends 13,000 Service Revenue 385,000 Wages Expense 213,000 Advertising Expense 16,350 Miscellaneous Expense 18,400 273,700 668,300 When the ledger and other records are reviewed, you discover the following: (1) the debits and credits in the cash account total 77,600 and 62,100, respectively; (2) a billing of 9,000 to a Customer on account was not posted to the accounts receivable account; (3) a payment of 1,300 made to a creditor on account was nut posted to the accounts payable account; (4) The balance of the unearned rent account is 5,400; (5) the correct balance of the equipment account is 190,000; and (6) each account has a normal balance. Prepare a corrected unadjusted trial balance.Effect of errors on trial balance The following errors occurred in posting from a two-column journal: 1. A credit of 6,000 to Accounts Payable was not posted. 2. An entry debiting Accounts Receivable and crediting Fees Earned for 5,300 was not posted. 3. A debit of 52,700 to Accounts Payable was posted as a credit. 4. A debit of 480 to Supplies was posted twice. 5. A debit of 3,600 to Cash was posted to Miscellaneous Expense. 6. A credit of 780 to Cash was posted as 870. 7. A debit of 512,620 to Wages Expense was posted as 12,260. Considering each case individually (i.e., assuming that no other errors had occurred), indicate: (A) by yes or no" whether the trial balance would be out of balance; (B) if answer to (A) is yes, the amount by which the trial balance totals would differ; and (C) whether the Debit or Credit column of the trial balance would have the larger total. Answers should be presented in the following form, with error (1) given as an example: (A) (B) (C) Error Out of Balance Difference Larger Total 1. yes 6,000 debit Errors in trial balance Identify the errors in the following trial balance. All accounts have normal balances. Ensemble Co. Unadjusted Trial Balance For the Year Ending December 31,2018 Debit Balances Credit Balances Cash 42,900 Accounts Receivable 123,500 Prepaid Insurance 27,000 Equipment 300,000 Accounts Payable 52,000 Salaries Payable 4,800 Common Stock 40,000 Retained Earnings 137,200 Dividends 5,000 Service Revenue 1,216,000 Salary Expense 660,000 Advertising Expense 275,000 Miscellaneous Expense 16,600 1,801,500 1,801,500 Entries to correct errors The following errors took place in journalizing and posting transactions: A. Insurance of 18,000 paid for the current year was recorded as a debit to Insurance Expense and a credit to Prepaid Insurance. B. Dividends of 10,000 were recorded as a debit to Wages Expense and a credit to Cash. Journalize the entries to correct the errors. Omit explanations.2.22EX Entries into T accounts and trial balance Marjorie Knaus, an architect, organized Knaus Architects on January 1, 2018. During the month, Knaus Architects completed the following transactions: A. Issued common stock to Marjorie Knaus in exchange for 30,000. B. Paid January rent for office and workroom, 2,500. C. Purchased used automobile for 28,500, paying 6,000 cash and giving a note payable for the remainder. D. Purchased office and computer equipment on account, 8,000. E. Paid cash for supplies, 2,100. F. Paid cash for annual insurance policies, 3,600. G. Received cash from client for plans delivered, 9,000. H. Paid cash for miscellaneous expenses, 2,600. I. Paid cash to creditors on account, 4,000. J. Paid installment due on note payable, 1,875. K. Received invoice for blueprint service, due in February, 5,500. L. Recorded fees earned on plans delivered, payment to be received in February, 31,400. M. Paid salary of assistants, 6,000. N. Paid gas, oil, and repairs on automobile for January, 1,300. Instructions 1. Record these transactions directly in the following T accounts, without journalizing: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Automobiles, Equipment, Notes Payable, Accounts Payable, Common Stock, Professional Fees, Salary' Expense, Blueprint Expense, Rent Expense, Automobile Expense, Miscellaneous Expense. To the left of the amount entered in the accounts, place the appropriate letter to identify the transaction. 2. Determine account balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance. 3. Prepare an unadjusted trial balance for Knaus Architects as of January 31, 2018. 4. Determine the net income or net loss for January.Journal entries and trial balance On October 1, 2018, Jay Crowley established Affordable Realty, which completed the following transactions during the month: A. Jay Crowley transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 40,000. B. Paid rent on office and equipment for the month, 4,800. C. Purchased supplies on account, 2,150. D. Paid creditor on account, 1,100. E. Earned sales commissions, receiving cash, 18,750. F. Paid automobile expenses (including rental charge) for month, 1,580, and miscellaneous expenses, 800. G. Paid office salaries, 3,500. H. Determined that the cost of supplies used was 1,300. I. Paid dividends, 1,500. Instructions 1. Journalize entries for transactions (A) through (I), using the following account titles: Cash, Supplies, Accounts Payable, Common Stock, Dividends, Sales Commissions, Rent Expense, Office Salaries Expense, Automobile Expense, Supplies Expense, Miscellaneous Expense. Explanations may be omitted. 2. Prepare T accounts, using the account titles in (1). Post the journal entries to these accounts, placing the appropriate letter to the left of each amount to identify the transactions. Determine the account balances after all posting is complete. Accounts containing only a single entry do not need a balance. 3. Prepare an unadjusted trial balance as of October 31, 2018. 4. Determine the following: A. Amount of total revenue recorded in the ledger. B. Amount of total expenses recorded in the ledger. C. Amount of net income for October. 5. Determine the increase or decrease in retained earnings for October.Journal entries and trial balance On November 1, 2018, Kris Lehman established an interior decorating business. Modem Designs. During the month, Kris completed the following transactions related to die business: Nov. 1. Kris transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 36,000. 1. Paid rent for period of November 1 to end of month, 4,000. 6. Purchased office equipment on account, 16,000. 8. Purchased a truck for 43,000 paying 4,300 cash and giving a note payable for the remainder. 10. Purchased supplies for cash, 1,860. 12. Received cash for job completed, 8,000. 15. Paid annual premiums on property and casualty insurance, 2,400. 23. Recorded jobs completed on account and sent invoices to customers, 15,500 24. Received an invoice for truck expenses, to be paid in November. 1,250 Enter the following transactions on Page 2 of the two-column journal: 29. . Paid utilities expense. 3,660. 29. Paid miscellaneous expenses, 1,700. 30. Received cash from customers on account, 10,500. 30. Paid wages of employees, 4,750. 30. Paid creditor a portion of the amount owed for equipment purchased on November 6. 4,000. 30. Paid dividends, 1,600. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be omitted. 11 Cash 31 Common Stock 12 Accounts Receivable 33 Dividends 13 Supplies 41 Fees Earned 14 Prepaid Insurance 51 Wages Expense 16 Equipment 53 Rent Expense 18 Truck 54 Utilities Expense 21 Notes Payable 55 Truck Expense 22 Accounts Payable 59 Miscellaneous Ex 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Modern Designs as of November 30, 2018. 4. Determine the excess of revenues over expenses for November. 5. Can you think of any reason why the amount determined in (4) might not be the net income for November?Journal entries and trial balance Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2018, follows: The following business transactions were completed by Elite Realty during April 2018: Apr 1. Paid rent on office for month, 6,500. 2. Purchased office supplies on account, 2,300. 5. Paid insurance premiums, 6,000. 10. Received cash from clients on account, 52,300. 15. Purchased land for a future building site for 200,000, paying 30,000 in cash and giving a note payable for the remainder. 17. Paid creditors on account, 6,450. 20. Returned a portion of the office supplies purchased on April 2, receiving full credit for their cost, 325. 23. Paid advertising expense, 4300. Enter the following transactions on Page 19 of the two-column journal: 27. Discovered an error in computing a commission; received cash from the salesperson for the overpayment, 2,500. 28. Paid automobile expense (including rental charges for an automobile), 1,500. 29. Paid miscellaneous expenses, 1,400. 30 Recorded revenue earned and billed to clients during the month, 57,000. 30. Paid salaries and commissions for the month, 11,900. 30. Paid dividends, 4,000. 30. Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of 10,000. Instructions 1. Record the April 1, 2018, balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for April in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of April 30, 2018. 5. Assume that the April 30 transaction for salaries and commissions should have been 19,100. (A) Why did the unadjusted trial balance in (4) balance? (B) Journalize the correcting entry. (C) Is this error a transposition or slide?Corrected trial balance The Lexington Group has the following unadjusted trial balance as of May 31, 2018: The Lexington Group Unadjusted Trial Balance May 31, 2018 Debit Balances Credit Balances Cash 20,350 Accounts Receivable 37,000 Supplies 1,100 Prepaid Insurance 200 Equipment 171,175 Notes Payable 36,000 Accounts Payable 26,000 Common Stock 50,000 Retained Earnings 94,150 Dividends 15,000 Fees Earned 429,850 Wages Expense 270,000 Rent Expense 63,000 Advertising Expense 25,200 Miscellaneous Expense 5,100 608,125 636,000 The debit and credit totals are not equal as a result of the following errors: A. The cash entered on the trial balance was overstated by 7,000. B. A cash receipt of 8,200 was posted as a debit to Cash of 2,800. C. A debit of 16,500 to Accounts Receivable was not posted. D. A return of 125 of defective supplies was erroneously posted as a 1,250 credit to Supplies. E. An insurance policy acquired at a cost of 3,600 was posted as a credit to Prepaid Insurance. F. The balance of Notes Payable was understated by 9,000. G. A credit of 10,000 in Accounts Payable was overlooked when determining the balance of the account. H. A debit of 5,000 for dividends was posted as a credit to Retained Earnings. I. The balance of 60,300 in Rent Expense was entered as 63,000 in the trial balance. J. Gas, Electricity, and Water Expense, with a balance of 16,350, was omitted from the trial balance. Instructions 1. Prepare a corrected unadjusted trial balance as of May 31, 2018. 2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.Entries into T accounts and trial balance Ken Jones, an architect, organized Jones Architects on April 1, 2018. During the month, Jones Architects completed the following transactions: A. Transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 18,000. B. Purchased used automobile for 19,500, paying 2,500 cash and giving a note payable for the remainder. C. Paid April rent for office and workroom, 3,150. D. Paid cash for supplies, 1,450. E. Purchased office and computer equipment on account 6,500. F. Paid cash for annual insurance policies on automobile and equipment, 2,400. G. Received cash from a client for plans delivered, 12,000. H. Paid cash to creditors on account, 1,800. I. Paid cash for miscellaneous expenses, 375. J. Received invoice for blueprint service, due in May, 2,500. K. Recorded fees earned on plans delivered, payment to be received in May. 15,650. L. Paid salary of assistant. 2,800. M. Paid cash for miscellaneous expenses. 200. N. Paid installment due on note payable, 300. O. Paid gas, oil, and repairs on automobile for April, 550. Instructions 1. Record these transactions directly in the following T accounts, without journalizing: Cash. Accounts Receivable, Supplies. Prepaid Insurance, Automobiles, Equipment, Notes Payable, Accounts Payable, Common Stock, Professional Fees, Rent Expense, Salary Expense, Blueprint Expense, Automobile Expense, Miscellaneous Expense. To the left of each amount entered in the accounts, place the appropriate letter to identify the transaction. 2. Determine account balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance. 3. Prepare an unadjusted trial balance for Jones Architects as of April 50, 2018. 4. Determine the net income or net loss for April.Journal entries and trial balance On August 1, 2018, Rafael Masey established Planet Realty, which completed the following transactions during the month: A. Rafael Masey transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 17,500. B. Purchased supplies on account, 2,300. C. Earned sales commissions, receiving cash, 13,300. D. Paid rent on office and equipment for the month, 3,000. E. Paid creditor on account, 1,150. F. Paid dividends, 1,800. G. Paid automobile expenses (including rental charge) for month, 1,500, and miscellaneous expenses, 400. H. Paid office salaries, 2,800. I. Determined that the cost of supplies used was 1,050. Instructions 1. Journalize entries for transactions (A) through (I), using the following account titles: Cash, Supplies, Accounts Payable, Common Stock, Dividends. Sales Commissions, Rent Expense, Office Salaries Expense, Automobile Expense, Supplies Expense, Miscellaneous Expense. Journal entry explanations may be omitted. 2. Prepare T accounts, using the account titles in (1). Post the journal entries to these accounts, placing the appropriate letter to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete. Accounts containing only a single entry do not need a balance. 3. Prepare an unadjusted trial balance as of August 31, 2018. 4. Determine the following: A. Amount of total revenue recorded in the ledger. B. Amount of total expenses recorded in the ledger. C. Amount of net income for August. 5. Determine the increase or decrease in retained earnings for August.Journal entries and trial balance On October 1, 2018, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business: Oct. 1. Jay transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 18,000. 4. Paid rent for period of October 4 to end of month, 3,000. 10. Purchased a used truck for 23,750, paying 3,750 cash and giving a note payable for the remainder. 13. Purchased equipment on account, 10,500. 14. Purchased supplies for cash, 2,100. Oct. 15. Paid annual premiums on property and casualty insurance, 3,600. 15. Received cash for job completed, 8,950. Enter the following transactions on Page 2 of the two-column journal: 21. Paid creditor a portion of the amount owed for equipment purchased on October 13, 2,000. 24. Recorded jobs completed on account and sent invoices to customers, 14,150. 26. Received an invoice for truck expenses, to be paid in November, 700. 27. Paid utilities expense, 2,240. 27. Paid miscellaneous expenses, 1,100. 29. Received cash from customers on account, 7,600. 30. Paid wages of employees, 4,800. 31. Paid dividends, 3,500. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to lie debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. 11 Cash 31 Common Stock 12 Accounts Receivable 33 Dividends 13 Supplies 41 Fees Earned 14 Prepaid Insurance 51 Wages Expense 16 Equipment 53 Rent Expense 18 Truck 54 Utilities Expense 21 Notes Payable 55 Truck Expense 22 Accounts Payable 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Pioneer Designs as of October 31, 2018. 4. Determine the excess of revenues over expenses for October. 5. Can you think of any reason why the amount determined in (4) might not be the net income for October?Journal entries and trial balance Valley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 2018, follows: The following business transactions were completed by Valley Realty during August 2018: Aug. 1. Purchased office supplies on account, 3,150. 2. Paid rent on office for month, 7,200. 3. Received cash from clients on account, 83,900. 5. Paid insurance premiums, 12,000. 9. Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, 400. 17. Paid advertising expense, 8,000. 23. Paid creditors on account, 13,750. Enter the following transactions on Page 19 of the two-column journal: 29. Paid miscellaneous expenses, 1,700. 30. Paid automobile expense (including rental charges for an automobile), 2,500. 31. Discovered an error in computing a commission during July; received cash from the salesperson for the overpayment, 2,000. 31. Paid salaries and commissions for the month, 53,000. 31. Recorded revenue earned and billed to clients during the month, 183,500. 31. Purchased land for a future building site for 75,000, paying 7,500 in cash and giving a note payable for the remainder. 31. Paid dividends, 1,000. 31. Rented land purchased on August 31 to a local university for use as a parking lot during football season (September, October, and November); received advance payment of 5,000. Instructions 1. Record the August 1 balance of each account in the appropriate balance column of a four- column account, write Balance in the item section, and place a check mark (0 in the Posting Reference column. 2. Journalize the transactions for August in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of August 31, 2018. 5. Assume that the August 31 transaction for dividends should have been 10,000. (A) Why did the unadjusted trial balance in (4) balance? (B) Journalize the correcting entry. (C) Is this error a transposition or slide?Corrected trial balance Tech Support Services has the following unadjusted trial balance as of January 31, 2018: Tech Support Services Unadjusted Trial Balance January 31, 2018 Debit Balances Credit Balances Cash 25,550 Accounts Receivable 44,050 Supplies 6,660 Prepaid Insurance 3,600 Equipment 162,000 Notes Payable 75,000 Accounts Payable 13,200 Common Stock 18,000 Retained Earnings 83,850 Dividends 33,000 Fees Earned 534,000 Wages Expense 306,000 Rent Expense 62,550 Advertising Expense 23,850 Gas, Electricity, and Water Expense 17,000 684,260 724,050 The debit and credit totals are not equal as a result of the following errors: A. The cash entered on the trial balance was overstated by 8,000. B. A cash receipt of 4,100 was posted as a debit to Cash of 1,400. C. A debit of 12,350 to Accounts Receivable was not posted. D. A return of 235 of defective supplies was erroneously posted as a 325 credit to Supplies. E. An insurance poky acquired at a cost of 3,000 was posted as a credit to Prepaid Insurance. F. The balance of Notes Payable was overstated by 21,000. G. A credit of 3,450 in Accounts Payable was overlooked when the balance of the account was determined. H. A debit of 6,000 for dividends was posted as a debit to Retained Earnings. I. The balance of 28,350 in Advertising Expense was entered as 23,850 in the trial balance. J. Miscellaneous Expense, with a balance of 4,600, was omitted from the trial balance. Instructions 1. Prepare a corrected unadjusted trial balance as of January 31, 2018. 2. Does the fact that the unadjusted (trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.The transactions completed by PS Music during June 2018 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the businesss operations: July 1. Peyton Smith made an additional investment in PS Musk in exchange for common stock by depositing 5,000 in PS Music s checking account. 1. Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music store. Paid rent for July, 1,750. 1. Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2. Received 1,000 on account. 3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of 3,600. Any additional hours beyond 80 will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3. Paid 250 on account. 4. Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5. Purchased office equipment on account from Office Mart, 7,500. 8. Paid for a newspaper advertisement, 200. 11. Received 1,000 for serving as a disc jockey for a party. 13. Paid 700 to a local audio electronics store for rental of digital recording equipment. 14. Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on lage 2 of the two-column journal: 16. Received 2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, 850. 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22. Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23. Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2018. 27. Paid electric bill, 915. 28. Paid wages of 1,200 to receptionist and part-time assistant. 29. Paid miscellaneous expenses, 540. 30. Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2018. 31. Received 3,000 for serving as a disc jockey for a party. July 31. Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists music during July. 31. Paid dividends, 1,250. PS Musics chart of accounts and the balance of accounts as of July 1, 2018 (all normal balances), are as follows: 11 Cash 3,920 41 Fees Earned 6,200 12 Accounts Receivable 1,000 50 Wages Expense 400 14 Supplies 170 51 Office Rent Expense 800 15 Prepaid Insurance 52 Equipment Rent Expense 675 17 Office Equipment 53 Utilities Expense 300 21 Accounts Payable 250 54 Music Expense 1,590 23 Unearned Revenue 55 Advertising Expense 500 31 Common Stock 4,000 56 Supplies Expense 180 33 Dividends 500 59 Miscellaneous Expense 415 Instructions 1. Enter the July 1, 2018, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column, and place a check mark () in the Posting Reference column. {Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2. Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3. Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance as of July 31, 2018.Continuing Company AnalysisAmazon: Horizontal analysis Amazon.com, Inc. is the largest Internet retailer in the United States. Amazon's income statements through income from operations for two recent years follow: Amazon.com, Inc Operating Income Statements For the Years Ended December 31 (in millions) Year 2 Year 1 Product sales 70,080 60,903 Service sales 18,908 13,549 Total sales 88,988 574,452 Cost of sales 62,752 54,181 Fulfillment 10,766 8,585 Marketing 4,332 3,133 Technology and content 9,275 6,565 General and administrative 1,552 1,129 Other operating expense (income), net 133 114 Total operating expenses 88,810 73,707 Income from operations 178 745 A. Prepare a horizontal analysis of the operating income statements. (Round percentages to one decimal place.) B. Interpret the results of the horizontal analysis.Chipotle: Horizontal analysis Chipotle Mexican Grill, Inc. is a quick-service restaurant providing a focused menu of burritos, tacos, and salads. Chipotles balance sheets for the end of two recent years are as follows: Chipotle Mexican Grill, Inc Balance Sheets December 31 (in thousands) Year 2 Year 1 Assets Current assets Cash 419,465 323,203 Accounts receivable, net 34,839 24,016 Inventory 15,332 13,044 Other current assets 70,251 51,073 Investments 338,592 254,971 Total current assets 878,479 666307 Property, plant, and equipment 1,106,984 963,238 Long-term Investments 496,106 313,863 Other assets 64,716 65372 Total assets 2,546,285 2,009,280 Liabilities and Stockholders Equity Current liabilities Accounts payable 69,613 59,022 Other current liabilities 176,097 140,206 Total current liabilities 245,710 199,228 Long-term liabilities 288,206 271,764 Total liabilities 533,916 470,992 Stockholders' Equity Common stock 354 352 Additional paid-in capital 1,038,932 919,840 Retained earnings 1,722,271 1,276,897 Treasury stock (748,759) (660,421) Other adjustments (429) 1,620 Total stockholders equity 2,012,369 1,538,288 Total liabilities and stockholders equity 2,546,285 2,009,280 A. Prepare a horizontal analysis of the two balance sheets. (Round percentages to one decimal place.) B. Interpret the horizontal analysis with respect to the change in total assets, total liabilities, and total stockholders equity. (Treasury stock will be discussed in a later chapter and may be omitted from your analysis.)2.3ADM 2.4ADM 2.1TIF How are revenues and expenses reported on the income statement under (A) the cash basis of accounting and (B) the accrual basis of accounting?Is the matching concept related to (A) the cash basis of accounting or (B) the accrual basis of accounting?Why are adjusting entries needed at the end of an accounting period?What is the difference between adjusting entries and correcting entries?Identify the four different categories of adjusting entries frequently required at the end of an accounting period.If the effect of the debit portion of an adjusting entry is to increase the balance of an asset account, which of the following statements describes the effect of the credit portion of the entry? A. Increases the balance of a revenue account. B. Increases the balance of an expense account. C. Increases the balance of a liability account.If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following statements describes the effect of the debit portion of the entry? a. Increases the balance of a revenue account. b. Increases the balance of an expense account. c. Increases the balance of an asset account.8DQ 9DQ (A) Explain the purpose of the two accounts: Depreciation Expense and Accumulated Depreciation. (B) What is the normal balance of each account? (C) Is it customary for the balances of the two accounts to be equal in amount (D) In what financial statements, if any, will each account appear?Account requiring adjustment Indicate with a Yes or No whether or not each of the following account normally requires an adjusting entry: A. Building B. Cash C. Wages Expense D. Miscellaneous Expense E. Common Stock F. Prepaid Insurance Type of adjustment Classify the following items as (1) prepaid expense, (2) unearned revenue, (3) accrued revenue, or (4) accrued expense: A. Cash received for use of land next month B. Fees earned but not received C. Rent expense owed but not yet paid D. Supplies on hand Adjustment for accrued revenues At the end of the current year, 17,555 of fees have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees.Adjustment for accrued expense Prospect Realty Co. pays weekly salaries of 27,600 on Monday for a six-day workweek ending the preceding Saturday. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Friday.Adjustment for unearned revenue On June 1, 2018, Herbal Co. received 18,900 for the rent of land for 12 months. Journalize the adjusting entry required for unearned rent on December 31, 2018.Adjustment for prepaid expense The prepaid insurance account had a beginning balance of 11,500 and was debited, fur 18,000 of premiums paid during the year. Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is 13,000.Adjustment for depreciation The estimated amount of depreciation on equipment for the current year is 7,700. Journalize the adjusting entry to record the depreciation.Effect of omitting adjustments For the year ending April 30, Urology Medical Services Co. mistakenly omitted adjusting entries for (1) 1,400 of supplies that were used, (2) unearned revenue of 6,600 that was earned, and (3) insurance of 9,000 that expired. Indicate the combined effect of the errors on (A) revenues, (B) expenses, and (C) net income for the year ended April 30.Effect of errors on adjusted trial balance For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. A. The adjustment for accrued wages of 5,200 was journalized as a debit to Wages Expense for 5,200 and a credit to Accounts Payable for 5,200. B. The entry for 1,125 of supplies used during the period was journalized as a debit to Supplies Expense of 1,125 and a credit to Supplies of 1,152.Classifying types of adjustments Classify the following items as (A) prepaid expense, (B) unearned revenue, (C) accrued revenue, or (D) accrued expense: 1. A two- year premium paid on a fire insurance policy. 2. Fees earned but not yet received. 3. Fees earned but not yet earned. 4. Salary owed but not yet paid. 5. Subscriptions received in advance by a magazine publisher. 6. Supplies on hand. 7. Taxes owed but payable in the following period. 8. Utilities owed but not yet paid.Classifying adjusting entries The following accounts were taken from the unadjusted trial balance of Murray Co., a congressional lobbying firm. Indicate whether or not each account would normally require an adjusting entry. If the account normally requires an adjusting entry, use the following notation to indicate the type of adjustment: AEAccrued Expense ARAccrued Revenue PEPrepaid Expense URUnearned Revenue To illustrate, the answer for the first account follows: Account Answer Accounts Receivable Normally requires adjustment (AR). Building Cash Common Stock Interest Receivable Land Prepaid Rent Salaries Payable Supplies Unearned Fees Wages Expense Adjusting entry for accrued fees At the end of the current year, 59,500 of fees have been earned but have not been billed to clients. A. Journalize the adjusting entry to record the accrued fees. B. If the cash basis rather than the accrual basis had been used, would an adjusting entry have been necessary? Explain.Effect on omitting adjusting entry The adjusting entry for accrued fees was omitted at October 31, the end of the current year. Indicate which items will be in error, because of the omission, on (A) the income statement for the current year and (B) the balance sheet as of October 31. Also indicate whether the items in error will be overstated or understated.3.5EX 3.6EX Effect of omitting adjusting entry Accrued salaries owed to employees for October 30 and 31 are not considered in preparing the financial statements for the year ended October 31. Indicate which items will be erroneously stated, because of the emir, on (a) the income statement for the year and (b) the balance shed as of October 31. Also indicate whether the items in error will be overstated or understated.3.8EX Adjusting entries for unearned fees The balance in the unearned fees account, before adjustment at the end of the year, is 18,000. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is 3,600.3.10EX Adjusting entry for supplies The balance in the supplies account, before adjustment at the end of the year, is 4,850. Journalize the adjusting entry required if the amount of supplies on hand at the end of the year is 880.Determining supplies purchased The supplies and supplies expense accounts at December 31, after adjusting entries have been posted at the end of the first year of operations, are shown in the following T accounts: Supplies Supplies Expense Bal. 2,550 Bal. 7,120 Determine the amount of supplies purchased during the year.Effect of omitting adjusting entry At March 31, the end of the first month of operations, the usual adjusting entry transferring prepaid insurance expired to an expense account is omitted. Which items will be incorrectly stated, because of the error, on (A) the income statement for March and (B) the balance sheet as of March 31? Also indicate whether the items in error will be overstated or understated.Adjusting entries for prepaid insurance The balance in the prepaid insurance account, before adjustment at the end of the year, is 27,000. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (A) the amount of insurance expired during the year is 20,250; (B) the amount of unexpired insurance applicable to future periods is 6,750.Adjusting entries for prepaid insurance The prepaid insurance account had a balance of 3,000 at the beginning of the year. The account was debited for 32,500 for premiums on policies purchased during the year. journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (A) the amount of unexpired insurance applicable to future periods is 4,800; (B) the amount of insurance expired during the year is 30,700.Adjusting entries for unearned and accrued fees The balance in the unearned fees account, before adjustment at the end of the year, is 97,770. Of these fees, 39,750 have been earned. In addition, 24,650 of fees have been earned but have not been billed. Journalize the adjusting entries (A) to adjust the unearned fees account and (B) to record the accrued fees.3.17EX Adjustment for depreciation The estimated amount of depreciation on equipment for the current year is 8,200. Journalize the adjusting entry to record the depreciation.Determining fixed assets book value The balance in the equipment account is 3,150,000, and the balance in the accumulated depreciationequipment account is 2,075,000. A. What is the book value of the equipment? B. Does the balance in the accumulated depreciation account mean that the equipments loss of value is 2,075,000 Explain.3.20EX Effect s of errors on financial statements For a recent period, the balance sheet for Costco Wholesale Corporation reported accrued expenses of 3,446 million. For the same period, Costco reported income before income taxes of 3,197 million. Assume that the adjusting entry for 3,446 million of accrued expenses was not recorded at the end of the current period. What would have been the income (loss) before income taxes?Effects of errors on financial statements For a recent year, the balance sheet for The Campbell Soup Company includes accrued expenses of 553 million. The income before taxes for Campbell for the year was 1,073 million. A. Assume the adjusting entry for 553 million of accrued expenses was not recorded a t the end of the year. By how n1uch would income before taxes have been misstated? B. What is the percentage of the misstatement in (A) to the reported income of l,073 million? (Round to one decimal place.)Effects of errors on financial statements The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (A) unearned revenue earned during the year (34,900) and (B) accrued wages (12,770). Indicate the effect of each error, considered individually, on the income statement for t he current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect the item.Effects of errors on financial statements If the net income for the current year had been 196,400 in Exercise 3-23, what would have been the correct net income if the proper adjusting entries had been made?3.25EX Adjusting entries from trial balances The unadjusted and adjusted trial balances for American Leaf Company on October 31, 2018, follow: American Leaf Company Trial Balances October 31 ,2018 Journalize the five entries that adjusted the accounts at October 31, 2018. None of the accounts were affected by more than one adjusting entry.3.27EX Adjusting entries On March 31, the following data were accumulated to assist die accountant in preparing the adjusting entries for Potomac Realty: The supplies account balance on March 31 is 5,620. The supplies on hand on March 31 are 1,290. The unearned rent account balance on March 31 is 5,000 representing the receipt of an advance payment on March 1 of four months rent from tenants. Wages accrued but not paid at March 31 are 2,290. Fees accrued but unbilled at March 31 are 16,825. Depreciation of office equipment is 4,600. Instructions 1. Journalize the adjusting entries required at March 31. 2. Briefly explain the difference between adjusting entries and entries that would be made to correct errors.3.2APR Adjusting entries Reliable Repairs Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations: Reliable Repairs Service Unadjusted Trial Balance April 30,2018 Debit Balances Credit Balances Cash 10,350 Accounts Receivable 67,500 Supplies 16,200 Equipment 116,100 Accounts Payable 15,750 Unearned Fees 18,000 Common Stock 10,000 Retained Earnings 111,500 Dividends 13,500 Fees Earned 294,750 Wages Expense 94,500 Rent Expense 72,000 Utilities Expense 51,750 Miscellaneous Expense 8,100 450,000 450,000 For preparing the adjusting entries, the following data were assembled: Fees earned but unbilled on April 30 were 9,850. Supplies on hand on April 30 were 4,660. Depreciation of equipment was estimated to be 6,470 for the year. The balance in unearned fees represented the April 1 receipt in advance for services to be provided. During April, 15,000 of the services were provided. Unpaid wages accrued on April 30 were 5,200. Instructions 1. Journalize the adjusting entries necessary on April 30, 2018. 2. Determine the revenues, expenses, and net income of Reliable Repairs Service before the adjusting entries. 3. Determine the revenues, expense, and net income of Reliable Repairs Service after the adjusting entries. 4. Determine the effect of the adjusting entries on Retained Earnings.Adjusting entries Good Note Company specializes in the repair of music equipment and is owned and operated by Robin Stahl. On November 30, 2018, the end of the current year, the accountant for Good Note prepared the following trial balances: Instructions Journalize the seven entries that adjusted the accounts at November 30. None of the accounts were affected by more than one adjusting entry.Adjusting entries and adjusted trial balances Rowland Company is a small editorial services company owned and operated by Marlene Rowland. On August 31, 2018, the end of the current year, Rowland Companys accounting clerk prepared the following unadjusted trial balance: Rowland Company Unadjusted Trial Balance August 31,2018 Debit Balances Credit Balances Cash 7,500 Accounts Receivable 38,400 Prepaid Insurance 7,200 Supplies 1,980 Land 112,500 Building 150,250 Accumulated DepreciationBuilding 87,550 Equipment 135,300 Accumulated DepreciationEquipment 97,950 Accounts Payable 12,150 Unearned Rent 6,750 Common Stock 75,000 Retained Earnings 146,000 Dividends 15,000 Fees Earned 324,600 Salaries and Wages Expense 193,370 Utilities Expense 42,375 Advertising Expense 22,800 Repairs Expense 17,250 Miscellaneous Expense 6,075 750,000 750,000 The data needed to determine year-end adjustments are as follows: Unexpired insurance at August 31, 6,000. Supplies on hand at August 31, 480. Depreciation of building for the year, 7,500. Depreciation of equipment for the year, 4,150. Rent unearned at August 31, 1,550. Accrued salaries and wages at August 31, 3,200. Fees earned but unbilled on August 31, 11,330. Instructions 1. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable; Kent Revenue; Insurance Expense; Depreciation ExpenseBuilding; Depreciation ExpenseEquipment; and Supplies Expense. 2. Determine the balances of the accounts affected by the adjusting entries, and prepare an adjusted trial balance.Adjusting entries and errors At the end of April, the first month of operations, the following selected data were taken from the financial statements of Shelby Crawford, an attorney: Net income for April 120,000 Total assets at April 30 750,000 Total liabilities at April 30 300,000 Total stockholders equity at April30 450,000 In preparing the financial statements, adjustments for the following data were overlooked: Supplies used during April, 2,750. Unbilled fees earned at April30, 23,700. Depreciation of equipment for April, 1,800. Accrued wages at April 30, 1,400. Instructions 1. journalize the entries to record the omitted adjustments. 2. Determine the correct amount of net income for April and the total assets, liabilities, and Stockholders equity at April 30. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The adjustment for supplies used is presented as an example.Adjusting entries On May 31, the following data were accumulated to assist the accountant in preparing the adjusting entries for Oceanside Realty: Fees accrued but unbilled at May 31 are 19,750. The supplies account balance on May 31 is 12,300. The supplies on hand at May 31 are 4,150. Wages accrued but not paid at May 31 are 2,700. The unearned rent account balance at May 31 is 9,000, representing the receipt of an advance payment on May 1 of three months rent from tenants. Depreciation of office equipment is 3,200. Instructions 1. Journalize the adjusting entries required at May 51. 2. Briefly explain the difference between adjusting entries and entries that would be made to correct errors.Adjusting entries Selected account balances before adjustment for Intuit Realty at November 30, the end of the current year, follow: Debits Credits Accounts Receivable 75,000 Equipment 250,000 Accumulated DepreciationEquipment 12,000 Prepaid Rent 12,000 Supplies 3,170 Wages Payable Unearned Fees 10,000 Fees Earned 400,000 Wages Expense 140,000 Rent Expense Depreciation Expense Supplies Expense Data needed for year-end adjustments are as follows: Supplies on hand at November 30, 550. Wages accrued but not paid at November 30, 2,000. Depreciation of equipment during year, 1,675. Unearned fees at November 30, 4,000. Rent expired during year, 8,500. Unbilled fees at November 30, 5,380 Instructions 1. Journalize the six adjusting entries required at November 30, based on the data presented. 2. What would be the effect on the income statement if the adjustments for equipment depreciation and unearned fees were omitted at the end of the year? 3. What would be the effect on the balance sheet if the adjustments for equipment depreciation and unearned fees were omitted at the end of the year? 4. What would be the effect on the Net increase or decrease in cash on the statement of cash flows if the adjustments for equipment depreciation and unearned fees were omitted at the end of the year?Adjusting entries Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance at the end of its first year of operations: Crazy Mountain Outfitters Co Unadjusted Trial Balance April 30, 2018 Debit Balances Credit Balances Cash 11,400 Accounts Receivable 72,600 Supplies 7,200 Equipment 112,000 Accounts Payable 12,200 Unearned Fees 19,200 Common Stock 20,000 Retained Earnings 117,800 Dividends 10,000 Fees Earned 305,800 Wages Expense 157,800 Rent Expense 55,000 Utilities Expense 42,000 Miscellaneous Expense 7,000 475,000 475,000 For preparing the adjusting entries, the following data were assembled: Supplies on hand on April 30 were 1,380. Fees earned but unbilled on April 30 were 3,900. Depreciation of equipment was estimated to be 3,000 for the year. Unpaid wages accrued on April 30 were 2,475. The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only 14,140 of the services was provided between April 1 and April 30. Instructions 1. Journalize the adjusting entries necessary on April 30, 2018. 2. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. before the adjusting entries. 3. Determine the revenues, expense, and net income of Crazy Mountain Outfitters Co. after the adjusting entries. 4. Determine the effect of the adjusting entries on Retained Earnings.Adjusting entries The Signage Company specializes in the maintenance and repair of signs, such as billboards. On March 31, 2018, the accountant for The Signage Company prepared the trial balances shown at the top of the following page. Instructions Journalize die seven entries that adjusted the accounts at March 31. None of the accounts were affected by more than one adjusting entry.Adjusting entries and adjusted trial balances Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece. Reece Financial Services accounting clerk prepared the following unadjusted trial balance at July 31, 2018: Reece Financial Services Co Unadjusted Trial Balance July 31,2018 Debit Credit Balances Balances Cash 10,200 Accounts Receivable 34,750 Prepaid Insurance 6,000 Supplies 1,725 50,000 Building 155,750 Accumulated DepreciationBuilding 62,850 Equipment 45,000 Accumulated DepreciationEquipment 17,650 Accounts Payable 3,750 Unearned Rent 3,600 Common Stock 60,000 Retained Earnings 93,550 Dividends 8,000 Fees Earned 158,600 Salaries and Wages Expense 56,850 Utilities Expense 14,100 Advertising Expense 7,500 Repairs Expense 6,100 Miscellaneous Expense 4025 400,000 400,000 The data needed to determine year-end adjustments are as follows: Depreciation of building for the year, 6,400. Depreciation of equipment for the year, 2,800. Accrued salaries and wages at July 31, 900. Unexpired insurance at July 31, 1,500. Fees earned but unbilled on July 31, 10,200. Supplies on hand at July 31, 615. Rent unearned at July 31, 300. Instructions 1. Journalize the adjusting entries using the following additional accounts: .Salaries and Wages Payable; Rent Revenue; Insurance Expense; Depreciation ExpenseBuilding; Depreciation ExpenseEquipment; and Supplies Expense. 2. Determine the balances of the accounts affected by the adjusting entries, and prepare an adjusted trial balance.Adjusting entries and errors At the end of August, the first month of operations, the following selected data were taken from the financial statements of Tucker jacobs, an attorney: Net income for August 112,500 Total assets at August 31 650,000 Total liabilities at August 31 225,000 Total stockholders equity at August 31 425,000 In preparing the financial statements, adjustments for the following data were overlooked: Unbilled fees earned at August 31, 31,900. Depreciation of equipment for August, 7,500. Accrued wages at August 31, 5,200. Supplies used during August, 3,000. Instructions 1. journalize the entries to record the omitted adjustments. 2. Determine the correct amount of net income for August and the total assets, liabilities, and stockholders equity at August 31. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The first adjustment is presented as an example.The unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as follows: PS Music Unadjusted Trial Balance July 31, 2018 The data needed to determine adjustments are as follows: During July, PS Music provided guest disc jockeys for KXMD for a total of 115 hours. For information on the amount of the accrued revenue to be billed to KXMD, see the contract described in the July 3 transaction at the end of Chapter 2. Supplies on hand at July 31, 275. The balance of the prepaid insurance account relates to the July 1 transaction at the end of Chapter 2. Depreciation of the office equipment is 50. The balance of the unearned revenue account relates to the contract between PS Music and KXMD, described in the July 3 transaction at the end of Chapter 2. Accrued wages as of July 31 were 140. Instructions 1. Prepare adjusting journal entries. You will need the following additional accounts: 18 Accumulated DepreciationOffice Equipment 22 Wages Payable 57 Insurance Expense 58 Depreciation Expense 2. Post the adjusting entries, inserting balances in the accounts affected. 3. Prepare an adjusted trial balance.3.1ADM Chipotle: Vertical analysis Chipotle Mexican Grill, Inc. is a quick-service restaurant providing a focused menu of burritos, tacos, and salads. Chipotles balance sheets for the end of two recent years are as follows (in thousands): Chipotle Mexican Grill, Inc Balance Sheets December 31 (in thousands) Year 2 Year 1 Assets Current assets Cash 419,465 323,203 Accounts receivable, net 34,839 24,016 Inventory 15,332 13,044 Other current assets 70,251 51,073 Investments 338592 254971 Total current assets 878,479 666,307 Property, plant, and equipment 1,106,984 963,238 Long-term investments 496,106 313,863 Other assets 64716 65872 Total assets 2,546,285 2,009,280 Liabilities and Stockholders Equity Current liabilities Accounts payable 69,613 59,022 Other current liabilities 176,097 140,206 Total current liabilities 245,710 199,228 Long-term liabilities 288,206 271,764 Total liabilities 533,916 470,992 Stockholders Equity Common stock 354 352 Additional paid-in capital 1,038,932 919,840 Retained earnings 1,722,271 1,276,897 Treasury stock (748,759) (660,421) Other adjustments (429) 1,620 Total stockholders equity 2,012,369 1,538,288 Total liabilities and stockholders equity 2,546,285 2,009,280 A. Prepare a vertical analysis of the two balance sheets. (Round percentages to one decimal place.) B. Interpret the vertical analysis with respect to the change in the percent of asset, liability, and stockholders equity components to total assets. (Treasury stock will be discussed in a later chapter and may be omitted from your analysis.)3.3ADM 3.4ADM 3.1TIF 3.3TIF 1DQ Describe the nature of the assets that compose the following sections of a balance sheet: (A) current assets, (B) property, plant, and equipment.3DQ 4DQ Why are closing entries required at the end of an accounting period?6DQ What is the purpose of the post-closing trial balance?8DQ What is the natural business year?Recent fiscal years for several well-known companies are as follows: Company Fiscal Year Ending J. C. Penney Company, Inc. January 27 L Brands, Inc. January 27 Sears Holdings Corporation January 27 Target Corporation January 27 The Home Depot, Inc. January 28 Tiffany Co. January 30 What general characteristic shared by these companies explains why they do not have fiscal years ending December 31?Flow of accounts into financial statements The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, retained earnings statement, or balance sheet. 1. Accumulated DepreciationBuilding 2. Cash 3. Fees Earned 4. Insurance Expense 5. Prepaid Rent 6. Supplies 7. Dividends 8. Wages Expense Retained earnings statement Blake Knudson owns and operates Grab Bag Delivery Services. On January 1, 2018, Retained Earnings had a balance of 918,000. During the year, no additional common stock was issued, and 15,000 of dividends were paid. For the year ended December 31, 2018, Grab Bag Delivery reported a net loss of 43,500. Prepare a retained earnings statement for the year ended December 31, 2018.Classified balance sheet The following accounts appear in an adjusted trial balance of Kangaroo Consulting. Indicate whether each account would be reported in the (A) current asset; (B) property, plant, and equipment; (C) current liability; (D) long-term liability; or (E) stockholders equity section of the December 31, 2018, balance sheet of Kangaroo Consulting. 1. Accounts Payable 2. Accounts Receivable 3. Accumulated DepreciationBuilding 4. Cash 5. Common Stock 6. Note Payable (due in ten years) 7. Supplies 8. Wages Payable 4.4BE Accounting cycle From the following list of steps in the accounting cycle, identify what two steps are missing: A. Transactions are analyzed and recorded in the journal. B. Transactions are posted to the ledger. C. An unadjusted trial balance is prepared. D. An optional end-of-period spreadsheet is prepared. E. Adjusting entries are journalized and posted to the ledger. F. An adjusted trial balance is prepared. G. Financial statements are prepared. H. A post-closing trial balance is prepared.Flow of accounts into financial statements The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, retained earnings statement, or balance sheet. 1. Accounts Payable 2. Accounts Receivable 3. Cash 4. Dividends 5. Fees Earned 6. Supplies 7. Unearned Rent 8. Utilities Expense 9. Wages Expense 10. Wages Payable Classifying accounts Balances for each of the following accounts appear in an adjusted trial balance. Identify each as (A) asset, (B) liability, (C) revenue, or (D) expense. 1. Accounts Receivable 2. Equipment 3. Fees Earned 4. Insurance Expense 5. Prepaid Advertising 6. Prepaid Rent 7. Rent Revenue 8. Salary Expense 9. Salary Payable 10. Supplies 11. Supplies Expense 12. Unearned Rent Financial statements from the end-of-period spreadsheet Taser Consulting is a consulting firm owned and operated by Annamarie Phipps. The following end-of-period spreadsheet was prepared for the year ended October 31, 2018: Based on the preceding spreadsheet, prepare an income statement, retained earnings statement, and balance sheet for Taser Consulting.Financial statements from the end-of-period spreadsheet Triton Consulting is a consulting firm owned and operated by Jayson Neese. The following end-of-period spreadsheet was prepared for the year ended April 30, 2018: Based on the preceding spreadsheet, prepare an income statement, retained earnings statement, and balance sheet for Triton Consulting.Income statement The following account balances were taken from the adjusted trial balance for Urgent Messenger Service, a delivery service Firm, for the fiscal year ended November 30, 2018: Depreciation Expense 10,650 Fees Earned 724,500 Insurance Expense 5,000 Miscellaneous Expense 6,650 Rent Expense 75,000 Salaries Expense 393,100 Supplies Expense 5,150 Utilities Expense 41,200 Prepare an income statement.Income statement; net loss The following revenue and expense account balances were taken from the ledger of Acorn Health Services Co. after the accounts had been adjusted on January 31, 2018, the end of the fiscal year: Depreciation Expense 10,000 Insurance Expense 9,000 Miscellaneous Expense 8,150 Rent Expense 60,000 Service Revenue 634,900 Supplies Expense 4,100 Utilities Expense 44,700 Wages Expense 548,200 Prepare an income statement.Income statement FedEx Corporation had the following revenue and expense account balances (in millions) for a recent year ending May 31: Depreciation Expense 2,587 Fuel Expense 4,557 Maintenance and Repairs Expense 1,862 Other Expense (Income) Net 6,084 Provision for Income Taxes 1,192 Purchased Transportation 8,011 Rentals and Landing Fees 2,622 Revenues 45,567 Salaries and Employee Benefits 16,555 A. Prepare an income statement. B. Compare your income statement with the income statement that is available at FedExs Web site (http://investors.feclex.com). Under Annual Report, select Download PDF. What similarities and differences do you see?Retained earnings statement Climate Control Systems Co. offers its services to residents in the Spokane area. Selected accounts from the ledger of Climate Control Systems for the fiscal year ended December 31, 2018, are as follows: Retained Earnings Dec. 31 160,000 Jan. 1 (2018) Dec. 31 4,150,800 700,000 Dividends Mar. 31 June 30 Sept. 30 Dec. 31 40,000 40,000 40,000 40,000 Dec. 31 160,000 Income Summary Dec. 31 4,530,000 Dec. 31 5,230,000 31 700,000 Prepare a retained earnings statement for the year.Retained earnings statement; net loss Selected accounts from the ledger of Restoration Arts for the fiscal year ended April 30, 2018, are as follows: Retained Earnings Apr. 30 31,200 May 1 (2017) 475,500 30 5,000 Dividends Sept. 30 1,250 Apr. 30 5,000 Dec. 31 1,250 March 31 1,250 June 30 1,250 income Summary Apr. 30 197,000 Apr. 30 165,800 30 31,200 Prepare a retained earnings statement for the year.Classifying assets Identify each of the following as (A) a current asset or (B) property, plant, and equipment: 1. Accounts Receivable 2. Building 3. Cash 4. Equipment 5. Prepaid Insurance 6. Supplies Balance sheet classification At the balance sheet date, a business owes a mortgage note payable of 375,000, the terms of which provide for monthly payments of 1,250. Explain how the liability should be classified on the balance sheet.Balance sheet Dynamic Weight Loss Co. offers personal weight reduction consulting services to individuals. After all the accounts have been closed on June 30, 2018, the end of the fiscal year, the balances of selected accounts from the ledger of Dynamic Weight Loss are as follows: Accounts Payable 51,200 Accounts Receivable 187,500 Accumulated Depreciation- Equipment 186,000 Cash ? Common Stock 100,000 Equipment 325,900 Land 375,000 Prepaid Insurance 8,400 Prepaid Rent 6,000 Retained Earnings 620,300 Salaries Payable 7,500 Supplies 11,200 Unearned Fees 21,000 Prepare a classified balance sheet that includes the correct balance for Cash.4.13EX Identifying accounts to be closed From the list that follows, identify the accounts that should be closed to Income Summary at the end of the fiscal year: A. Accounts Payable B. Accumulated Depreciation-Equipment C. Depreciation Expense-Equipment D. Equipment E. Common Stock F. Dividends G. Fees Earned H. Land I. Supplies J. Supplies Expense K. Wages Expense L. Wages Payable Closing entries Prior to its closing, Income Summary had total debits of 1,190,500 and total credits of 1,476,300. Briefly explain the purpose served by the income summary account and the nature of the entries that resulted in the 1,190,500 and the 1,476,300.Closing entries with net income After all revenue and expense accounts have been closed at the end of t he fiscal year, Income Summary has a debit of 2,450,000 and a credit of 3,000,000. At the same date, Retained Earnings has a credit balance of 8,222,600 and Dividends has a balance of 125,000. (A) Journalize the entries required to complete the closing of the accounts. (B) Determine the amount of Retained. Earnings at me end of the period.Closing entries with net loss Rainbow Services Co. offers its services to individuals desiring to improve their personal images. After the accounts have been adjusted at August 31, the end of the fiscal year, the following balances were taken from the ledger of Rainbow Services: Retained Earnings 2,650,000 Dividends 10,000 Fees Earned 1,050,000 Wages Expense 886,000 Rent Expense 185,000 Supplies Expense 26,200 Miscellaneous Expense 28,600 Journalize the four entries required to close the accounts.Identifying permanent accounts Which of the following accounts will usually appear in the post-closing trial balance? A. Accounts Payable B. Accumulated Depreciation C. Cash D. Common Stock E. Dividends F. Depreciation Expense G. Fees Earned H. Office Equipment I. Salaries Expense J. Salaries Payable K. Supplies Post-closing trial balance An accountant prepared the following post-closing trial balance: Security Services Co. Post-Closing Trial Balance July 31, 2018 Debit Balances Credit Balances Cash.............................................................. 41,100 Accounts Receivable............................................... 317,400 Supplies.......................................................... 5,000 Equipment........................................................ 162,750 Accumulated DepreciationEquipment............................. 73,300 Accounts Payable.................................................. 82,500 Salaries Payable................................................... 5,500 Unearned Rent.................................................... 12,000 Common Stock.................................................... 65,000 Retained Earnings................................................. 287,950 879,250 173,250 Prepare a corrected post-closing trial balance. Assume that all accounts have normal balances and that the amounts shown are correct.Steps in the accounting cycle Rearrange the following steps in the accounting cycle in proper sequence: A. A post-closing trial balance is prepared. B. Adjustment data are asssembled and analyzed. C. Adjusting entries are journalized and posted to the ledger. D. An adjusted trial balance is prepared. E. An optional end-of-period spreadsheet is prepared. F. An unadjusted trial balance is prepared. G. Closing entries are journalized and posted to the ledger. H. Financial statements are prepared. I. Transactions are analyzed and recorded in the journal. J. Transactions are posted to the ledger.Appendix 1 Completing an end-of-period spreadsheet List (A) through (J) in the order they would be performed in preparing and completing an end-of-period spreadsheet. A. Add the Debit and Credit columns of the Unadjusted Trial Balance columns of the spreadsheet to verify that the totals are equal. B. Add the Debit and Credit columns of the Balance Sheet and Income Statement columns of the spreadsheet to verify that the totals are equal. C. Add or deduct adjusting entry data to trial balance amounts, and extend amounts to the Adjusted Trial Balance columns. D. Add the Debit and Credit columns of the Adjustments columns of the spreadsheet to verify that the totals are equal. E. Add the Debit and Credit columns of the Balance Sheet and Income Statement columns of the spreadsheet to determine the amount of net income or net loss for the period. F. Add the Debit and Credit columns of the Adjusted Trial Balance columns of the spreadsheet to verify that the totals are equal. G. Enter the adjusting entries into the spreadsheet, based on the adjustment data. H. Enter the amount of net income or net loss for the period in the proper Income Statement column and Balance Sheet column. I. Enter the unadjusted account balances from the general ledger into the Unadjusted Trial Balance columns of the spreadsheet. J. Extend the adjusted trial balance amounts to the Income Statement columns and the Balance Sheet columns.4.22EX Appendix 1 Completing an end-of-period spreadsheet Alert Security Services Co. offers security services to business clients. Complete the following end-of-period spreadsheet for Alert Security Services Co.: Alert Security Services Co. End-of-Period Spreadsheet For the Year Ended October 31,2018 Account Title Adjusted Trial Balance Income Statement Balance Sheet Dr. Cr. Dr. Cr. Dr. Cr. Cash 12 Accounts Receivable 103 Supplies 4 Prepaid Insurance 2 Land 190 Equipment 50 Accum. Depr.Equipment 7 Accounts Payable 36 Wages Payable 1 Common Stock 50 Retained Earnings 210 Dividends 8 Fees Earned 213 Wages Expense 111 Rent Expense 12 Insurance Expense 10 Utilities Expense 6 Supplies Expense 4 Depreciation ExpenseEquip. 3 Miscellaneous Expense 2 Net income (loss) 517 517 4.24EX 4.25EX 4.26EX Appendix 2 Reversing entry The following adjusting entry for accrued wages was recorded on December 31: Dec. 31 Wages Expense 5,500 Wages Payable 5,500 A. Journalize the reversing entry that would be made on January 1 of the next period. B. Assume that the first paid period of the following year ends on January 6 and that wages of 61,375 were paid. Journalize the entry to record the payment of the January 6 wages. C. Journalize the entry to record the payment of the January 6 wages assuming that a reversing entry was not made on January 1. D. What is wages expense for the period January 1-6?Appendix 2 Adjusting and reversing entries On the basis of the following data, (A) journalize the adjusting entries at December 31, the end of the current fiscal year, and (B) journalize the reversing entries on January 1, the first day of the following year: 1. Sales salaries are uniformly 11,750 for a five-day workweek, ending on Friday. The last payday of the year was Friday, December 26. 2. Accrued fees earned but not recorded at December 31, 51,300.Appendix 2 Adjusting and reversing entries On the basis of the following data, (A) journalize the adjusting entries at June 30, the end of the current fiscal year, and (B) journalize the reversing entries on July 1, the first day of the following year: 1. Wages are uniformly 66,000 for a five-day workweek, ending on Friday. The last payday of the year was Thursday, June 27. 2. Accrued fees earned but not recorded at June 30, 25,000.Appendix 2 Entries posted to wages expense account Portions of the wages expense account of a business follow: Account Wages Expense Account No. 53 Date Item Post. Ref. Dr. Cr. Balance Dr. Cr. 2017 Dec. 26 (1) 125 15,400 800,000 31 (2) 126 9,250 809,250 31 (3) 127 809,250 2018 Jan. 1 (4) 128 9,250 9,250 2 (5) 129 14,800 5,550 A. Indicate the nature of the entry (payment, adjusting, closing, reversing) from which each numbered posting was made. B. Journalize the complete entry from which each numbered posting was made.Appendix 2 Entries posted to wages expense account Portions of the salaries expense account of a business follow: Account Salaries Expense Account No. 62 Date Item Post. Ref. Dr. Cr. Balance Dr. Cr. 2017 Dec. 27 (1) 29 22,000 1,200,000 31 (2) 30 13,200 1,213,200 31 (3) 31 1,213,200 2018 Jan. 1 (4) 32 13,200 13,200 2 (5) 33 24,000 10,800 A. Indicate the nature of the entry (payment, adjusting, closing, reversing) from which each numbered posting was made. B. Journalize the complete entry from which each numbered posting was made.Financial statements and closing entries Lamp Light Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Lamp Light prepared the following end-of-period spreadsheet at December 31, 2018, the end of the fiscal year: Instructions 1. Prepare an income statement for the year ended December 31. 2. Prepare a retained earnings statement for the year ended December 31. 3. Prepare a balance sheet as of December 31. 4. Based upon the end-of-period spreadsheet, journalize the closing entries. 5. Prepare a post-closing trial balance.Financial statements and closing entries Foxy Investigative Services is an investigative services firm that is owned and operated by Shirley Vickers. On November 30, 2018, the end of the fiscal year, the accountant for Foxy Investigative Services pre pared an end-of-period spreadsheet, a part of which follows: A F G 1 Foxy Investigative Services 2 End-of-Period Spreadsheet 3 For the Year Ended November 30, 2018 4 Adjusted Trial Balance 6 Account Title Dr. Cr. 7 8 Cash 27,500 9 Accounts Receivable 71,800 10 Supplies 3,550 11 Prepaid Insurance 750 12 Building 330,500 13 Accumulated DepreciationBuilding I // 184,100 14 Accounts Payable 16,100 15 Salaries Payable 6,600 16 Unearned Rent 1,500 17 Common Stock 40,000 18 Retained Earnings 70,300 19 Dividends 30,000 20 Service Fees 675,500 21 Rent Revenue 9,000 22 Salaries Expense 435,000 23 Rent Expense 55,000 24 Supplies Expense 11,850 25 Depreciation Expense Building 10,000 26 Utilities Expense 8,800 27 Repairs Expense 4,250 28 Insurance Expense 3,000 29 Miscellaneous Expense 11,100 30 1,003,100 1,003,100 Instructions 1. Prepare an income statement, a retained earnings statement, and a balance sheet. 2. Journalize the entries that were required to close the accounts at November 30. 3. If Retained Earnings had instead decreased 46,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss?T accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of Epicenter Laundry at June 30, 2018, the end of the fiscal year, follows: Epicenter Laundry Unadjusted Trial Balance June 30, 2018 Debit Balances Credit Balances Cash............................................................. 11,000 Laundry Supplies................................................. 21,500 Prepaid Insurance................................................. 9,600 Laundry Equipment............................................... 232,600 Accumulated Depreciation........................................ 125,400 Accounts Payable................................................. 11,800 Common Stock................................................... 40,000 Retained Earnings................................................ 65,600 Dividends....................................................... 10,000 Laundry Revenue................................................. 232,200 Wages Expense................................................... 125,200 Rent Expense..................................................... 40,000 Utilities Expense.................................................. 19,700 Miscellaneous Expense............................................ 5,400 475,000 475,000 The data needed to determine year-end adjustments are as follows: (A) Laundry supplies on hand at June 30 are 3,600. (B) Insurance premiums expired during the year are 5,700. (C) Depreciation of laundry equipment during the year is 6,500. (D) Wages accrued but not paid at June 30 are 1,100. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as June 30 Bal. In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, Insurance Expense, and Income Summary. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed. 3. Journalize and post the adjusting entries. Identify the adjustments by Adj. and the new balances as Adj. Bal. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a retained earnings statement, and a balance sheet. 6. Journalize and post the closing entries. Identify the closing entries by Clos. 7. Prepare a post-closing trial balance.Ledger accounts, adjusting entries, financial statements, and closing entries; optional spreadsheet The unadjusted trial balance of Lakota Freight Co. at March 31, 2018, the end of the year, follows: Lakota Freight Co. Unadjusted Trial Balance March 31, 2018 Account No. Debit Balances Credit Balances Cash................................................ 11 12,000 Supplies............................................ 13 30,000 Prepaid Insurance.................................... 14 3,600 Equipment.......................................... 16 110,000 Accumulated DepreciationEquipment............... 17 25,000 Trucks............................................... 18 60,000 Accumulated DepreciationTrucks................... 19 15,000 Accounts Payable.................................... 21 4,000 Common Stock...................................... 31 26,000 Retained Earnings................................... 32 70,000 Dividends........................................... 33 15,000 Service Revenue..................................... 41 160,000 Wages Expense...................................... 51 45,000 Rent Expense........................................ 53 10,600 Truck Expense....................................... 54 9,000 Miscellaneous Expense............................... 59 4,800 300,000 300,000 The data needed to determine year-end adjustments are as follows: (A) Supplies on hand at March 31 are 7,500. (B) Insurance premiums expired during year are 1,800. (C) Depreciation of equipment during year is 8,350. (D) Depreciation of trucks during year is 6,200. (E) Wages accrued but not paid at March 31 are 600. Instructions 1. For each account listed in the trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark () in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spread sheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Lakota Freight Co.s chart of accounts should be used: Wages Payable, 22; Supplies Expense, 52; Depreciation ExpenseEquipment, 55; Depreciation ExpenseTrucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a retained earnings statement, and a balance sheet. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. (Income Summary is account #34 in the chart of accounts.) Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.Complete accounting cycle For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 2018, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July: July 1. The following assets were received from Steffy Lopez in exchange for common stock: cash, 13,500; accounts receivable, 20,800; supplies, 3,200; and office equipment, 7,500. There were no liabilities received. 1. Paid two months rent on a lease rental contract, 4,800. 2. Paid the premiums on property and casualty insurance policies, 4,500. 4. Received cash from clients as an advance payment for services to be provided, and recorded it as unearned fees, 5,500. 5. Purchased additional office equipment on account from Office Station Co., 6,500. 6. Received cash from clients on account, 15,300. 10. Paid cash for a newspaper advertisement, 400. 12. Paid Office Station Co. for part of the debt incurred on July 5, 5,200. 12. Recorded services provided on account for the period July 1-12, 13,300. 14. Paid receptionist for two weeks salary, 1,750. Record the following transactions on Page 2 of the journal: 17. Recorded cash from cash clients for fees earned during the period July 117, 9,450. 18. Paid cash for supplies, 600. 20. Recorded services provided on account for the period July 1320, 6,650. 24. Recorded cash from cash clients for fees earned for the period July 1724, 4,000. 26. Received cash from clients on account, 12,000. 27. Paid receptionist for two weeks salary, 1,750. 29. Paid telephone bill for July, 325. 31. Paid electricity bill for July, 675. 31. Recorded cash from cash clients for fees earned for the period July 2531, 5,200. 31. Recorded services provided on account for the remainder of July, 3,000. 31. Paid dividends, 12,500. Instructions 1. journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in t he journal at this time.) 11 Cash 12 Accounts Receivable 14 Supplies 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 19 Accumulated Depreciation 21 Accounts Payable 22 Salaries Payable 23 Unearned Fees 31 Common Stock 32 Retained Earnings 33 Dividends 41 Fees Earned 51 Salary Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense 55 Insurance Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (A) Insurance expired during July is 375. (B) Supplies on hand on July 31 are 1,525. (C) Depreciation of office equipment for July is 750. (D) Accrued receptionist salary on July 31 is 175. (E) Rent expired during July is 2,400. (F) Unearned fees on July 31 are 2,750. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a retained earnings statement, and a balance sheet. 9. Prepare and post the closing entries. (Income Summary is account #34 in the chart of accounts.) Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.Financial statements and closing entries Last Chance Company offers legal consulting advice to prison inmates. Last Chance pre pared the end-of-period spreadsheet that follows at June 30, 2018, the end of the fiscal year. Instructions 1. Prepare an income statement for the year ended June 30. 2. Prepare a retained earnings statement for the year ended June 30. 3. Prepare a balance sheet as of June 30. 4. On the basis of the end-of-period spreadsheet, journalize the closing entries. 5. Prepare a post-closing trial balance.Financial statements and closing entries The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 2018, the end of the fiscal year, the accountant for The Gorman Group prepared an end-of-period spreadsheet, part of which follows: Instructions 1. Prepare an income statement, a retained earnings statement, and a balance sheet. 2. Journalize the entries that were required to close the accounts at October 31. 3. If the balance of Retained Earnings had instead increased 115,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss?4.3BPR Ledger accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of Recessive Interiors at January 31, 2018, the end of the year, follows: Recessive Interiors Unadjusted Trial Balance January 31, 2018 Account No. Debit Balances Credit Balances Cash..................................................... 11 13,100 Supplies................................................. 13 8,000 Prepaid Insurance......................................... 14 7,500 Equipment............................................... 16 113,000 Accumulated DepreciationEquipment.................... 17 12,000 Trucks.................................................... 18 90,000 Accumulated DepreciationTrucks........................ 19 27,100 Accounts Payable......................................... 21 4,500 Common Stock........................................... 31 30,000 Retained Earnings........................................ 32 96,400 Dividends................................................ 33 3,000 Service Revenue.......................................... 41 155,000 Wages Expense........................................... 51 72,000 Rent Expense............................................. 52 7,600 Truck Expense............................................ 53 5,350 Miscellaneous Expense.................................... 59 5,450 325,000 325,000 The data needed to determine year-end adjustments are as follows: (A) Supplies on hand at January 31 are 2,850. (B) Insurance premiums expired during the year are 3,1 SO. (C) Depreciation of equipment during the year is 5,250. (D) Depreciation of trucks during the year is 4,000. (E) Wages accrued but not paid at January 31 are 900. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in the appropriate Ba lance column of a four-column account and place a check mark () in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Recessive Interiors chart of accounts should be used: Wages Payable, 22; Depreciation ExpenseEquipment, 54; Supplies Expense, 55; Depreciation ExpenseTrucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a retained earnings statement, and a balance sheet. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. (Income Summary is account #34 in the chart of accounts.) Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.Complete accounting cycle For the past several years, Jeff Horton has operated a part-time consulting business from his home. As of April 1, 2018, Jeff decided to move to rented quarters and to operate the business, which was to be known as Rosebud Consulting, on a full-time basis. Rosebud entered into the following transactions during April: Apr. 1. The following assets were received from Jeff Horton in exchange for common stock: cash, 20,000; accounts receivable, 14,700; supplies, 3,300; and office equipment, 12,000. There were no liabilities received. 1. Paid three months' rent on a lease rental contract, 6,000. 2. Paid the premiums on property and casualty insurance policies, 4,200. 4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 9,400. 5. Purchased additional office equipment on account from Smith Office Supply Co., 8,000. 6. Received cash from clients on account, 11,700. 10. Paid cash for a newspaper advertisement, 350. 12. Paid Smith Office Supply Co. for part of the debt incurred on April 5, 6,400. 12. Recorded services provided on account for the period April1-12, 21,900. 14. Paid receptionist for two weeks salary, 1,650. Record the following transactions on Page 2 of the journal: 17. Recorded cash from cash clients for fees earned during the period Apri11-16, 6,600. 18. Paid cash for supplies, 725. 20. Recorded services provided on account for the period April13-20, 16,800. 24. Recorded cash from cash clients for fees earned for the period April 17-24, 4,450. 26. Received cash from clients on account, 26,500. 27. Paid receptionist for two weeks salary, 1,650. 29. Paid telephone bill for April, 540. 30. Paid electricity bill for April, 760. 30. Recorded cash from cash clients for fees earned for the period April 25-30, 5,160. 30. Recorded services provided on account for the remainder of April, 2,590. 30. Paid dividends, 18,000. Instructions 1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 11 Cash 12 Accounts Receivable 14 Supplies 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 19 Accumulated Depreciation 21 Accounts Payable 22 Salaries Payable 23 Unearned Fees 31 Common Stock 32 Retained Earnings 33 Dividends 41 Fees Earned 51 Salary Expense 52 Supplies Expense 53 Rent Expense 54 Depreciation Expense 55 Insurance Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of April, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (A) Insurance expired during April is 350. (B) Supplies on hand on April 30 are 1,225. (C) Depreciation of office equipment for April is 400. (D) Accrued receptionist salary on April 30 is 275. (E) Rent expired during April is 2,000. (F) Unearned fees on April 30 are 2,350. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a retained earnings statement, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. (Income Summary is account #34 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.The unadjusted trial balance of PS Music as of July 31, 2018, along with the adjustment data for the two months ended July 31, 2018, are shown in Chapter 3. Based upon the adjustment data, the following adjusted trial balance was prepared: PS Music Adjusted Trial Balance July 31, 2018 Account No. Debit Balances Credit Balances Cash................................................. 11 9,945 Accounts Receivable................................... 12 4,150 Supplies.............................................. 14 275 Prepaid Insurance..................................... 15 2,475 Office Equipment..................................... 17 7,500 Accumulated DepreciationOffice Equipment.......... 18 50 Accounts Payable..................................... 21 8,350 Wages Payable........................................ 22 140 Unearned Revenue.................................... 23 3,600 Common Stock....................................... 31 9,000 Dividends............................................ 33 1,750 Fees Earned........................................... 41 21,200 Music Expense........................................ 54 3,610 Wages Expense....................................... 50 2,940 Office Rent Expense................................... 51 2,550 Advertising Expense................................... 55 1,500 Equipment Rent Expense.............................. 52 1,375 Utilities Expense...................................... 53 1,215 Supplies Expense...................................... 56 925 Insurance Expense.................................... 57 225 Depreciation Expense................................. 58 50 Miscellaneous Expense................................ 59 1,855 42,340 42,340 Instructions 1. (Optional) Using the data from Chapter 3, prepare an end-of-period spreadsheet. 2. Prepare an income statement, a retained earnings statement, and a balance sheet. 3. Journalize and post the closing entries. The retained earnings account is #33 and the income summary account is #34 in the ledger of PS Music. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 4. Prepare a post-dosing trial balance.Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2018. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 4,500. 5. Received cash from clients on account, 2,450. 9. Paid cash for a newspaper advertisement, 225. 13. Paid Office Station Co. for part of the debt incurred on April 5, 640. 15. Recorded services provided on account for the period May 115, 9,180. 16. Paid part-time receptionist for two weeks salary including the amount owed on April 30, 750. 17. Recorded cash from cash clients for fees earned during the period May 1-16, 8,360. Record the following transactions on Page 6 of the journal: 20. Purchased supplies on account, 735. 21. Recorded services provided on account for the period May 16-20,4,820. 25. Recorded cash from cash clients for fees earned for the period May 17- 23, 7,900. 27. Received cash from clients on account, 9,520. 28. Paid part-time receptionist for two weeks salary, 750. 30. Paid telephone bill for May, 260. 31. Paid electricity bill for May, 810. 31. Recorded cash from cash clients for fees earned for the period May 26-31, 3,300. 31. Recorded services provided on account for the remainder of May, 2,650. 31. Paid dividends, 10,500. Instructions 1. The cl1art of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 2018, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2018, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (A) Insurance expired during May is 275. (B) Supplies on hand on May 31 are 715. (C) Depreciation of office equipment for May is 330. (D) Accrued receptionist salary on May 31 is 325. (E) Rent expired during May is 1,600. (F) Unearned fees on May 31 are 3,210. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a retained earnings statement, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of d1e journal. (Income Summary is account #34 in d1e chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.Continuing Company Analysis- Amazon: Working capital and current ratio Amazon.com, Inc. is the largest Internet retailer in the United States. Best Buy, Inc. is a leading retailer of technology and media products in the United States. Amazon and Best Buy compete in similar markets; however, Best Buy sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. The current assets and current liabilities from recent balance sheets for both companies are provided as follows (in millions): Amazon Best Buy Current assets 31,327 10,485 Current liabilities 28,089 7,436 A. Compute the working capital for each company. B. Which company has the largest working capital? C. Is working capital a good measure of relative liquidity in comparing the two companies? Explain. D. Compute the current ratio for both companies. (Round to one decimal place.) E. Which company has the larger relative liquidity based on the current ratio?Under Armour: Current ratio The following year-end data were taken from recent balance sheets of Under Armour, Inc. (in millions): December 31 Year 2 Year 1 Current assets 1,129 903 Current liabilities 427 252 A. Compute the working capital and the current ratio as of December 31, Year 2 and Year 1. (Round to one decimal place.) B. What conclusions concerning the company's ability to meet its short-term obligations can you draw from part (A)?4.3ADM Google and Microsoft: Current ratio Google, Inc. and Microsoft Corporation design and distribute consumer and enterprise software, including overlaps in search, business productivity, and mobile operating systems. Googles primary source of revenue is from advertising, while Microsofts is from software subscription and support fees. The following year-end data (in millions) were taken from recent balance sheets for both companies: Microsoft Google Year 2 Year 1 Year 2 Year 1 Current assets 114,246 101,466 72,886 80,685 Current liabilities 45,625 37,417 15,908 16,805 A. Compute the working capital for each company for both years. B. Which company has the larger working capital at the end of Year 2? C. Is working capital a good measure of relative liquidity in comparing the two companies? Explain. D. Compute the current ratio for both companies. (Round to one decimal place.) E. Which company has the larger relative liquidity based on the current ratio? F. Based on your analysis, comment on the short-term debt-paying ability of these two companies.4.1TIF Communication Your friend, Daniel Nat, recently began work as the lead accountant for the Asheville Company. Dan prepared the following balance sheet for December 31, 2018: Asheville Company Balance Sheet For the Year Ended December 31,2018 Assets Land 100,000 Accounts payable 10,000 Accounts receivable 12,500 Cash 10,000 Common stock 11 5,000 Total assets 247,500 Liabilities Equipment 125,000 Retained earnings 120,000 Wages payable 2,500 Total liabilities 247,500 White a brief memo to Daniel explaining the errors in the Asheville Company balance sheet and the correct presentation for the balance sheet.1DQ 2DQ The credit period during which the buyer of merchandise is allowed to pay usually begins with what date?What is the meaning of (A) 1/15, n/60; (B) n/30; (c) n/eom?5DQ 6DQ Who is responsible for freight when the terms of sale are (A) FOB shipping point, (B) FOB destination?Name three accounts that would normally appear in the chart of accounts of a merchandising business but would not appear in the chart of accounts of a service business.Audio Outfitter Inc., which uses a perpetual inventory system, experienced a normal inventory shrinkage of 13,675. What accounts would be debited and credited to record the adjustment for the inventory shrinkage at the end of the accounting period?Assume that Audio Outfitter Inc. in Discussion Question 9 experienced an abnormal inventory shrinkage of 98,600. Audio Outfitter has decided to record the abnormal inventory shrinkage so that it would be separately disclosed on the income statement. What account would be debited for the abnormal inventory shrinkage?Gross profit During the current year, merchandise is sold for 18,300 cash and 295,700 on account. The cost of the goods sold is 188,000. What is the amount of the gross profit?Purchases transactions Hoffman Company purchased merchandise on account from a supplier for 65,000, terms 1/10, n/30. Hoffman returned 7,500 of the merchandise and received full credit. A. If Hoffman Company pays the invoice within the discount period, what is the amount of cash required for the payment? B. What account is debited by Hoffman Company to record the rerurn?5.3BE 5.4BE 5.5BE 5.6BE Determining gross profit During the current year, merchandise is sold for 11,750,000. The cost of the Roods sold is 7,050,000. A. What is the amount of the gross profit? B. Compute the gross profit percentage (gross profit divided by sales). C. Will the income statement always report a net income? Explain.5.2EX 5.3EX Purchase-related transactions A retailer is considering the purchase of 250 units of a specific item from either of two suppliers. Their offers are as follows: Supplier One: 400 a unit, total of 100,000, 1/10, n/30, no charge for freight. Supplier Two: 399 a unit, total of 99,750, 2/10, n/30, plus freight of 975. Which of the two offers, Supplier One or Supplier Two, yields the lower price?Purchase-related transactions The debits and credits from four related transactions, A through D, are presented in the following T accounts. Describe each transaction. Cash Accounts Payable B 300 C 3,920 A 20,580 A D 16,660 D 16,660 B Inventory 20,580 C 3,920 300 5.6EX Purchase-related transactions Journalize entries for the following related transactions of Lilly Heating Air Company: A. Purchased 36,000 of merchandise from Schell Co. on account, terms 1/10, n/30. B. Paid the amount owed on the invoice within the discount period. C. Discovered that 9,000 of the merchandise purchased in (A) was defective and returned items, receiving credit. D. Purchased 5,000 of merchandise from Schell Co. on account, terms n/30. E. Received a refund from Schell Co. for return in (C) less the purchase in (D).5.8EX Customer refund Senger Company sold merchandise of 15,500, terms 2/10, n/30, to Burris Inc. on April 23. Burris paid Senger for the merchandise on May 2. On May 12, Senger paid Burris 650 for costs incurred by Burris to repair defective merchandise. (A) Journalize the entry by Senger Company to record the customer refund to Burris Inc. (B) Assume that instead of paying Burris cash, Senger issued a credit memo to Burris to be used against Burriss outstanding account receivable balance. journalize the entry by Senger Company to record the issuance of the credit memo.5.10EX Sales-related transactions After the amount due on a sale of 28,000, terms 2/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment for a cash refund. The cost of the merchandise returned is 16,800. (A) What is the amount of the refund owed to the customer? (B) Journalize the entries made by the seller to record the return and the refund.5.12EX 5.13EX Determining amounts to be paid on invoices Determine the amount to be paid in full settlement of each of the following invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period:5.15EX Purchase-related transactions Based on the data presented in Exercise 5-15, journalize Balboa Co.s entries for (A) the purchase, (B) the return of the merchandise for credit, and (C) the payment of the invoice.5.17EX 5.18EX 5.19EX Normal balances of merchandise accounts What is the normal balance of the following accounts: (A) Cost of Goods Sold, (B) Customer Refunds Payable, (C) Delivery Expense, (D) Estimated Returns Inventory, (E) Inventory, (F) Sales, (G) Sales Tax Payable.Income statement and accounts for merchandiser For the fiscal year, sales were 46,680,000 and the cost of goods sold was 28,000,000. A. What was the amount of gross profit? B. If total operating expenses were 5,000,000 could you determine net income? C. Is Customer Refunds Payable an asset, liability, or stockholders equity account and what is its normal balance? D. Is Estimated Returns Inventory an asset, liability, or stockholders equity account and what is its normal balance?Income statement for merchandiser The following expenses were incurred by a merchandising business during the year. In which expense section of the income statement should each be reported: (A) selling, (B) administrative, or (C) other? 1. Advertising expense 2. Depreciation expense on store equipment 3. Insurance expense on office equipment 4. Interest expense on notes payable 5. Rent expense on office building 6. Salaries of office personnel 7. Salary of sales manager 8. Sales supplies used Determining amounts for items omitted from income statement One item is omitted in each of the following four lists of income statement data. Determine the amounts of the missing items, identifying them by ietter. Chase Company Jessup Inc. Osterman Company Snyder Co. Sales 735,000 B 8,220,000 D Cost of goods sold A 157,850 C 44,500 Gross profit 110,000 42,150 2,300,000 15,500 Multiple-step income statement On March 31, 2018, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture wholesaler, are as follows: Accounts Receivable 170,000 Accumulated DepreciationBuilding 750,000 Administrative Expenses 435,000 Building 3,500,000 Cash 80,000 Common Stock 300,000 Cost of Goods Sold 5,500,000 Dividends 175,000 Interest Expense 15,000 Inventory 980,000 Notes Payable 250,000 Office Supplies 20,000 Retained Earnings 1,987,000 Salaries Payable 8,000 Sales 8,245,000 Selling Expenses 575,000 ore Supplies 90,000 A. Prepare a multiple-step income statement for the year ended March 31, 2018. B. Compare the major advantages and disadvantages of the multiple-step and single-step forms of income statements.Multiple-step income statement The following income statement for Curbstone Company was prepared for the year ended August 31, 2018: Curbstone Company Income Statement For the Year Ended August 3 1, 2018 A. Identify the errors in the income statement. B. Prepare a corrected income statement.5.26EX Adjusting entry for customer refunds, allowances, and returns Scott Company had sales of 12,350,000 and related cost of goods sold of 7,500,000. Scott provides customers a refund for any returned or damaged merchandise. At the end of the year, Scott estimates that customers will request refunds for 0.8% of sales and estimates that merchandise costing 48,000 will be returned. Journalize the adjusting entries on December 31 to record the expected customer returns.5.28EX Adjusting entry for inventory shrinkage Omega Tire Co.s perpetual inventory records indicate that 3,145,000 of merchandise should be on hand on August 31. The physical inventory indicates that 3,113,500 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Omega Tire Co. for the fiscal year ended August 31.5.30EX Closing entries; net income Based on the data presented in Exercise 5-24, journalize the closing entries.Closing entries On July 31, the close of the fiscal year, the balances of the accounts appearing in the ledger of Serbian Interiors Company, a fumiture wholesaler, are as follows: Accumulated Depr.Building 365,000 Inventory 115,000 Administrative Expenses 440,000 Notes Payable 100,000 Building 810,000 Retained Earnings 455,000 Cash 78,000 Sales 1,437,000 Common Stock 75,000 Sales Tax Payable 4,500 Cost of Goods Sold 775,000 Selling Expenses 160,000 Dividends 15,000 Store Supplies 16,000 Interest Expense 6,000 Store Supplies Expense 21,500 Prepare the July 31 closing entries for Serbian Interiors Company.Rules of debit and credit for periodic inventory accounts Complete the following table by indicating for A through G whether the proper answer is debit or credit: Account Increase Decrease Normal Balance Purchases debit A B Purchases Discounts credit C credit Purchases Returns and Allowances D E F Freight In debit G debit Journal entries using the periodic inventory system The following selected transactions were completed by Air Systems Company during January of the current year. Air Systems uses the periodic inventory system. Jan. 2. Purchased 18,200 of merchandise on account, FOB shipping point, terms 2/15, n/30. 5. Paid freight of 190 on the January 2 purchase. 6. Returned 2,750 of the merchandise purchased on January 2. 13. Sold merchandise on account, 37,300, FOB destination, 1/0, n/30. The cost of goods sold was 22,400. 15. Paid freight of 215 for the merchandise sold on January 13. 17. Paid for the purchase of January 2 less the return and discount. 23. Received payment on account for the sale of January 13 less the discount. Journalize the entries to record the transactions of Air Systems Company.Identify items missing in determining cost of goods sold For (A) through (E), identify the items designated by X and Y. A. Purchases (X + Y) = Net purchases B. Net purchases + X = Cost of inventory purchased C. Inventory (beginning) + Cost of inventory purchased = X D. Inventory available for sale X = Cost of inventory before estimated returns E. Cost of goods sold before estimated returns X = Cost of goods sold Cost of goods sold and related items The following data were extracted from the accounting records of Harkins Company for the year ended April 30, 2018: Estimated returns of current year sales 11,600 Inventory, May 1, 2017 380,000 Inventory, April 30,2018 415,000 Purchases 3,800,000 Purchases returns and allowances 150,000 Purchases discounts 80,000 Sales 5,850,000 Freight in 16,600 A. Prepare the cost of goods sold section of the income statement for the year ended April 30, 2018, using the periodic inventory system. B. Determine the gross profit to be reported on the income statement for the year ended April 30, 2018. C. Would gross profit he different if the perpetual inventory system was used instead of the periodic inventory system?Cost of goods sold Based on the following data, determine the cost of goods sold for November: Estimated returns of November sales 14,500 Inventory, November 1 28,000 Inventory, November 30 31,500 Purchases 475,000 Purchases returns and allowances 15,000 Purchases discounts 9,000 Freight in 7,000 Cost of goods sold Based on the following data, determine the cost of goods sold for July: Estimated returns of July sales 34,900 Inventory, July 1 190,850 Inventory, July 31 160,450 Purchases 1,126,000 Purchases returns and allowances 46,000 Purchases discounts 23,000 Freight in 17,500 5.39EX

Page: [1][2][3]