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?Accounting equation Be-The-One is a motivational consulting business. At the end of its accounting period, December 31, 20Y2, Be-The-One has assets of 395,000 and liabilities of 97,000. Using the accounting equation, determine die following amounts: a. Stockholders equity as of December 31, 20Y2. b. Stockholders equity as of December 31, 20Y3, assuming that assets decreased by 65,000 and liabilities increased by 36,000 during 20Y3.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, 20Y6, 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, 20Y6.Statement of stockholders equity Using the income statement for Paradise Travel Service from Basic Exercise 1-4, prepare a statement of stockholders equity for the year ended May 31, 20Y6. Everett McCauley invested an additional 40,000 in the business in exchange for common stock, and 10,000 of dividends were paid during the year. Common stock had a balance of 60,000 and retained earnings had a balance of 300,000 as of June 1. 20Y5.Balance sheet Using the following data for Paradise Travel Service as well as the statement of stockholders equity from Basic Exercise 1-5, prepare a Balance sheet as of May 31. 20Y6: 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, 20Y6, 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, 20Y5, was 50,000. Prepare a statement of cash flows for Paradise Travel Service for the year ended May 31. 20Y6.Ratio of liabilities to stockholders equity The following data were taken from Alvarado Companys balance sheet: Dec. 31. 20Y4 Dec. 31, 20Y3 Total liabilities 4,085,000 2,880,000 Total stockholders equity 4,300,000 3,600,000 a.Compute the ratio of liabilities to stockholders equity for each year. b.Has the creditors risk increased or decreased from December 31, 2013, to December 31, 20Y4?1.1EX 1.2EX 1.3EX 1.4EX 1.5EX 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 Accounting equation Inspirational Inc. is a motivational consulting business. At the end of its accounting period, October 31, 20Y2, Inspirational has assets of 5,250,000 and liabilities of 1,600,000. Using the accounting equation and considering each case independently, determine the following amounts: a. Stockholders equity as of October 31. 20Y2. b. Stockholders equity as of October 31. 20Y3, assuming dial assets increased by KOO.OOO and liabilities increased by 330,000 during 20Y3. c. Stockholders equity as of October 31, 20Y3, assuming dial assets decreased by 600,000 and liabilities increased by 140,000 during 20Y3. d. Stockholders equity as of October 31. 20Y3, assuming that assets increased by 440,000 and liabilities decreased by 90,000 during 20Y3. e. Net income (or net loss) during 20Y3, assuming that as of October 31, 20Y3, assets were 6,140,000, liabilities were 1,950,000, and no additional common stock was issued or dividends paid.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. accounts receivable c. fees earned d. supplies e. supplies expense f. utilities expense Effect of transactions on accounting equation What is the effect of each of the following transactions on the three elements (assets, liabilities, and Mock holders equity) of the accounting equation? a. Invested cash in business in exchange for common stock. b. Paid for business expenses c Paid dividends. 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.Effect of transactions on stockholders equity Indicate whether each of the following types of transactions will either (a) increase stockholders equity or (b) decrease stockholders equity: 1. Issued common stock in exchange for cash. 2. Received cash for services performed for customers. 3. Paid business expenses. 4. Paid dividends.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 is of a specific date, identify those that would appear on the balance sheet: 1. Accounts Payable 2. Cash 3. Common Stock 4. Fees Earned 5. Land 6. Rent Expense 7. Retained Earnings 8. Supplies 9. Supplies Expense 10. Wages Payable Balance sheet items From the following list of selected items taken from the records of Bobcat Appliance Service is of a specific date, identify those that would appear on the balance sheet: 1. Accounts Payable 2. Cash 3. Common Stock 4. Fees Earned 5. Land 6. Rent Expense 7. Retained Earnings 8. Supplies 9. Supplies Expense 10. Wages Payable Income statement items Based on the data presented in Exercise 116, identify those items that would appear on the income statement.Statement of stockholders equity Financial information related to Organic Products Company for the month ended June 30, 20Y9, is as follows: Net income for June 115,000 Dividends paid in June 25,000 Common stock. June 1,20Y9 180,000 Common stock issued in June 50,000 Retained earnings, June 1,20Y9 1,630,000 a.Prepare a statement of stockholders equity for the month ended June 30, 20Y9. b. Why is the statement of stockholders equity prepared before the June 30, 20Y9, balance sheet?Income statement Inuring Services was organized on March 1, 20Y5. A summary of the revenue and expense transactions for March follows: Fees earned 482,000 Wages expense 300,000 Rent expense 41,500 Supplies expense 3,600 Miscellaneous expense 1,900 Prepare an income statement for the month ended March 31.1.20EX Balance sheets, net income Financial information related to Ebony Interior for February and March 20Y3 u as follows: February 28, 20Y3 March 31, 20Y3 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, 20Y3. 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.Statement of cash flows Indicate whether each of the following activities would the reported on the statement of cash flows as (a) an operating activity, (b) an investing activity, or (c) a financing activity: 1. Cash received by issuing common stock. 2. Cash received for fees earned from customers. 3. Cash paid for land and building. 4. Cash paid for dividends.Statement of cash flows A summary of cash flows for Parker Consulting Group for the year ended January 31, 20Y4, follows: Cash receipts: Cash received from customers 1,200,000 Cash received from issuing common stock 90,000 Cash payments: Cash paid for operating expenses 800,000 Cash paid for land 300,000 Cash paid for dividends 36,000 The cash balance is of February 1, 20Y3, was 66,000. Prepare a statement of cash flows for Parker Consulting Group for the year ended January 31.Financial statements We-Sell Realty was organized as a corporation on August 1, 20Y7, by the issuance of common stock of 15,000. We-Sell Realty is owned and operated by Omar Farah, the sole stockholder. The following statements for We-Sell Realty were prepared after its first month of operations: a. Identify the errors contained within the presented financial statements for We-Sell Realty. b. Prepare a corrected set of financial statements for We-Sell Realty.Transactions On April 1 of the current year, .Morgan Jones established a business to manage rental property. She completed the following transactions during April: a. pened a business bank account with a deposit of 60,000 m exchange for common stock. b. Purchased office supplies on account 1.800. c. Received cash from fees earned tor managing rental property, 22,300 d. Paid rent on office and equipment for the month, 7,000. e. Paid creditors on account 1,100 f. Billed customers for fees earned for managing rental property, 3,600. g. Paid automobile expenses for month 750, and miscellaneous expenses, 1,000. h. Paid office salaries. 4,000 I. Determined that the cost of supplies on hand was 250: therefore, the cost of supplies used was 1.550 J. Paid dividends, 5,000. 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 April 4. How much did Aprils transactions increase or decrease stockholders equity?Financial statements The assets and liabilities of Global Travel Agency on December 31, 20Y5. and its revenue and expenses for the year are as follows: Accounts payable 108,000 Accounts receivable 539,000 Cash 200,000 Common stock 575,000 Fees earned 940,000 Land 1,500,000 Miscellaneous expense 19,500 Rent expense 56,000 Supplies 6,000 Supplies expense 12,700 Utilities expense 34,800 Wages expense 415,000 Common stock was 525,000 and retained earnings was 1,250,000 as of January 1. 20Y5. During the year, additional common stock of 50,000 was issued for cash, and dividends of 90,000 were paid. Instructions 1. Prepare an income statement for the year ended December 31. 20Y5. 2. Prepare a statement of stockholders equity for the year ended December 31. 20Y5. 3. Prepare a balance sheet as of December 31, 20Y5. 4. What items appears on both the statement of stockholders equity and the balance sheet?A Financial statements Seth Feye established Reliance Financial Services on July 1, 20Y2. 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 lire month ended July 31, 20Y2. 2. Prepare a statement of stockholders equity for the month ended July 31, 20Y2. 3. Prepare a balance sheet as of July 31, 20Y2. 4. (Optional) Prepare a statement of cash flows for the month ending July 31, 20Y2.Transactions, financial statements On August 1, 20Y9, 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, 51,800. 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: 2. Prepare an income statement for August, a statement of stockholders equity for August, and a balance sheet as of August 31.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, 20Y4, are as follows: Cash, 145,000. 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 DLite 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 clearing expense for A4y (to be paid on August 10) 29,500. i. Paid the blowing 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, 20Y4. 2. State the assets, liabilities, and stockholders equity as of July I 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 statement of stockholders equity 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: Chapter 1 Introduction to Accounting and Business 47 Instructions By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (r).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 assets and liabilities of Wilderness Travel Service on April 30, 20Y7, and its revenue and expenses for the year are as follows: Accounts payable 75,000 Accounts receivable 210,000 Cash 156,000 Common stock 35,000 fees earned 875,000 Miscellaneous expense 15,000 Rent expense 75,000 Supplies 9,000 Supplies expense 12,000 Taxes expense 10,000 Utilities expense 38,000 Wages expense 525,000 Common stock was 25,000 and retained earnings was 155,000 as of May 1, 20Y6. During the year, additional common stock of 10,000 was issued for cash, and dividends of 40,000 were paid. Instructions 1. Prepare an income statement for the year ended April 30, 20Y7. 2. Prepare a statement of stockholders equity for the year ended April 30, 20Y7. 3. Prepare a balance sheet as of April 30, 20Y7. 4. What item appears on both the income statement and statement of stockholders equity?Financial statements Jose Loder established Bronco Consulting on August 1, 20Y1. 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, 20Y1. 2. Prepare a statement of stockholders' equity for the month ended August 31, 20Y1. 3. Prepare a balance sheet as of August 31, 20Y1. 4.(Optional) Prepare a statement of cash flows for the month ending August 31, 20Y1.Transactions; financial statements On April 1, 20Y8, Maria Adams established Custom Realty. Maria completed the following transactions during the month of April: a.Opened a business bonk account with a deposit of 24,000 in exchange for common stock. b.Paid rent on office and equipment for the month, 3,600. c.Paid automobile expenses for month, 1,350, and miscellaneous expenses, 600. d.Purchased supplies on account 1,200. e.Earned sales commissions, receiving cash, 19,800. f.Paid creditor on account, 750. g.Paid office salaries 2,500. h.Paid dividends, 3,500. i.Determined that the cost of supplies on hand was 300; therefore the cost of supplies used was 900. 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 April, a statement of stockholders equity for April, and a balance sheet as of April 30.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 stock of the business on November 1, 20Y3, are as follows: Cash, 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. Beverly Zahn invested additional cash in exchange for common stock with a deposit of 21.000 in the business bank account. 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 clearing 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 11,800, 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. State 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 statement of stockholders equity for November, and a balance sheet as of November 30. 4. (Optional) Prepare a statement of cash flows for November.Missing amounts from financial statements The financial statements at the end of Atlas Realtys first month of operations follow: Instructions By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (r).1CP 1.1MAD Analyze The Home Depot for three years The Home Depot, Inc. (HD), 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): a. Compute the ratio of liabilities to stockholdersequity for all three years. Round to two decimal places. b. What conclusions regarding the margin of protection to creditors can you draw from the trend in this ratio for the three years?Analyze Lowes for three years Lowes Companies, Inc. (LOW), a major competitor to The Home Depot, Inc. (HD) in the home improvement retail business, operates over 1,800 stores. Lowes recently reported the following end-of-year balance sheet data (in millions): a. Compute the ratio of liabilities to stockholders equity for all three years. Round to two decimal places. b. What conclusions regarding the margin of protection to creditors can you draw from the trend in this ratio for the three years?Compare The Home Depot and Lowes Using your answers for The Home Depot, Inc. (HD) in MAD 1-2 and Lowes Companies, Inc. (LOW) in MAD 1-3, compare and interpret Home Depots ratio of liabilities to stockholders equity to that of Lowes.Compare Papa Johns and Yum! Brands The following total liabilities and stockholders equity information (in millions) is provided for Papa Johns International, Inc. (PZZA) and Yum! Brands, Inc. (YUM) at the end of a recent year: Papa Johns Yum! Brands Total assets 495 8,075 Total liabilities 444 7,164 Total stockholders equity 51 911 Yum! Brands is a much larger company titan is Papa Johns; however, both companies compete internationally in the fast food business. Papa Johns is primarily in the carry-out and delivery pizza business, while Yum! Brands is in the quick-service restaurant business with its Pizza Hut. Taco Bell, and KFC brands. a. Compute the ratio of liabilities to stockholders equity for each company. Round to one decimal place. b. What conclusions regarding the margin of protection to creditors can you draw for these two companies? c. Which company is more risky to creditors?1.1TIF 1.2TIF 1.4TIF Net income On January 1, 20Y5, Dr. Marcie Cousins established Health-Wise Medical, a medical practice organized as a corporation. The following conservation occurred the following August between Dr. Cousins and a former medical school classmate. Dr. Avi Abu, at an American Medical Association convention in Seattle: Dr. Abu: Marcie, good to see you again. Why didnt you call when you were in Miami? We could have had dinner together. Dr. Cousins. Actually, I never made it to Miami this year. My husband and kids went up to our Vail condo twice, but I got stuck in Jacksonville. I opened a new consulting practice this January and havent had any time for myself since. Dr Abu: I heard about it...Health...something...right? Dr. Cousins: Yes, Health-Wise Medical. My husband chose the name. Dr. Abu. Ive thought about doing something like that. Are you nuking any money? I mean, is it worth your time? Dr. Cousins: You wouldnt believe it. I started by opening a bank account with 25,000, and my July bank statement has a balance of 80,000. Not bad for six months all pure profit. Dr Abu: Maybe Ill try it in Miami! Lets have breakfast together tomorrow and you can fill me in on the details. Comment on Dr. Cousins statement that the difference between the opening bank balance (25,000) and the July statement balance (80,000) is pure profit.1.6TIF 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 Journal entry for asset purchase Prepare a journal entry for the purchase of office supplies on November 2 for 1,600, paying 500 cash and the remainder on account.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.Horizontal analysis Two income statements for Paragon Company follow: Paragon Company Income Statements For the Years Ended December 31 20Y7 20Y6 Fees earned 1,416,000 1,200,000 Expenses (1,044,000) (900.000) Net income 372,000 300,000 Prepare a horizontal analysis of Paragon Company's income statements.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 1, indicate whether the proper answer is a debit or a credit.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 Innovative 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 October 20Y2 in a two-column journal. Journal entry explanations may be omitted. Oct 1.Paid rent for the month, 2,500. 4.Paid advertising expense, 1.000. 5.Paid cash for supplies, 1.800. 6.Purchased office equipment on account 11.500. 12. Received cash from customers on account 7,500. 20.Paid creditor on account 2.700. 27.Paid cash for miscellaneous expenses, 700. 30.Paid telephone bill for the month, 475. 31.Fees earned and billed to customers for the month, 42.400. 31.Paid electricity bill for the month, 900. 31.Paid dividends, 1.500.Journalizing and posting On February 11, 20Y9, Quick Fix Company purchased 2,250 of supplies on account. In Quick Fixs chart of accounts, the supplies account is No. 15, and the accounts payable account is No. 21. a. Journalize the February 11, 20Y9, transaction on page 73 of Quick Fix Companys two-column journal. Include an explanation of the entry. b. Prepare a four-column account for Supplies. Enter a debit Ira lance of 400 as of February 1, 20Y9. Place a check mark () in the Posting Reference column. c. Prepare a four-column account for Accounts Payable. Enter a credit balance of 18,300 as of February 1, 20Y9. Place a check mark () in the Posting Reference column. d. Post the February 11, 20Y9, transaction to the accounts. c. Do the rules of debit and credit apply to all companies?Transactions and T accounts The following selected transactions were completed during July of the current year. 1. Billed customers for fees earned, 112,700. 2. Purchased supplies on account 4,500. 3. Received cash from customers on account 88,220. 4. Paid creditors on account, 3.100. 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 July 31 shows a credit balance for Accounts Receivable. Does this credit balance mean an error has occurred?Cash account balance During the month, Bavarian Auto Co. received 1,245,000 in cash and paid out 974,200 in cash. a. Does this information indicate that Bavarian Auto Co. had net income of 270,800 during the month? Explain. b. If the balance of the cash account is 421,000 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 Rocky Mountain Tours Co. is a travel agency. The nine transactions recorded by Rocky Mountain Tours during June 20Y2, 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:Journal entries Based upon the T accounts in Exercise 213, 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 213, (a) prepare an unadjusted trial balance, listing die 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 Seaside Furniture Company as of August 20Y5 are listed in alphabetical order as follows. All accounts have normal balances. The balance of the cash account has been intentionally omitted. Accounts Payable 118,600 Accounts Receivable660,500 Cash? Common Stock150,000 Dividends36,000 Fees Earned4,330.000 Insurance Expense18,000 Land1,850,000 Miscellaneous Expense30,200 Notes Payable 75,000 Prepaid Insurance21,600 Rent Expense390,000 Retained Earnings1,814,400 Supplies11,200 Supplies Expense23,700 Unearned Rent12,000 Utilities Expense82,000 Wages Expense2,950,000 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, 20Y8 Debit Balances Credit Balances Cash 42,900 Accounts Receivable 123,500 Prepaid Insurance 27,000 Equipment 300,000 Accounts Payable 52,000 4,800 Salaries Payable 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.Entries to correct errors The following errors took place in journalizing and posting transactions: A. Cash of 8,800 received on account was recorded as a debit to Fees Earned and a credit to Cash. B. A 1,760 purchase of supplies for cash was recorded as a debit to Supplies Expense and a credit to Accounts Payable. Journalize the entries to correct the errors. Omit explanations.Entries into T accounts and trial balance Marjorie Knaus, an architect, organized Knaus Architects on January 1, 20Y4. 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.S00, 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, 1300. Instructions 1. Record these transactions directly in tile 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, Kent Expense, Automobile Expense, Miscellaneous Expense. To the left of the aim Hint 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, 20Y4. 4. Determine the net income or net loss for January.Journal entries and trial balance On October 1, 20Y6, 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, Kent 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, 20Y6. 4. Determine the following: a. Amount of total revenue recorded in die 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 1.20Y9, Lexi Martin established an interior decorating business, Heritage Designs During the month. Lexi completed the following transactions related to the business: Nov. 1.Lexi transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 50,000. 1.Paid rent for period of November 1 to end of month, 4,000. 6.Purchased office equipment on account 15.000. 8.Purchased a truck for 38,500 paying 55,000 cash and giving a note payable for the remainder. 10.Purchased supplies for cash, 1.7S0. 12.Received cash for job completed, 11.500. 15.Paid annual premiums on property and casualty insurance, 2,400. 23.Recorded jobs completed on account and sent invoices to customers, 22,300. 24.Received an invoice for truck expenses, to be paid in November, 1,250. Enter the following transactions on Page 2 of the tow-column journal: 29.Paid utilities expense, 4,500 29.Paid miscellaneous expenses, 1,000. 30.Received cash from customers on account 9,000. 30.Paid wages of employees, 6,800. 30.Paid creditor a portion of the amount owed for equipment purchased on November 6, 3,000. 30.Paid dividends, 2,500. Instructions 1. Journalize each transaction in a two-column journal beginning on Page I. 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 he omitted. 11Cash 12Accounts Receivable 13Supplies 14Prepaid Insurance 16 Equipment 18Truck 21Notes Payable 22Accounts Payable 31Common Stock 33Dividends 41Fees Earned 51Wages Expense 53Rent Expense 54Utilities Expense 55Truck Expense 59Miscellaneous Expense 2. Post lite 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 Heritage Designs as of November 30. 20Y9. 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, 20Y3, follows: The following business transactions were completed by Elite Realty during April 20Y3: 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, 4,300. 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, 20Y3, 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. 20Y3. 5. Assume that the April 30 transaction for salaries and commissions should have been 19,100. (a) NX by did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this emir a transposition or slide?Corrected trial balance The Lexington Group has the following unadjusted trial balance as of May 31. 20Y6: The Lexington Group Unadjusted Trial Balance May 31. 20Y6 Debit Balances Credit Balances Cash 20,350 Accounts Receivable 37,000 Supplies 1,100 Prepaid Insurance 200 Equipment Notes Payable 171,175 36,000 Accounts Payable 26,000 Common Stock 50,000 Retained Earnings Dividends 15,000 94,150 Fees Earned Wages Expense 270,000 429,850 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 16300 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, 20Y6. 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, 20Y2. 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,S00, 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 Strait, 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 die 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 30. 20Y2. 4. Determine the net income or net loss for April.Journal entries and trial balance On August 1, 20Y7, 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, 1300, 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 lx 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, 20Y7. 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, 20Y4, Jay Pryor established an interior decorating business. Pioneer Designs. During the month, Jay completed the following transactions related to the business: Oct1. 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. 14.1 SO. 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 I. 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. 11Cash 12Accounts Receivable 13Supplies 14Prepaid Insurance 16 Equipment 18Truck 21Notes Payable 22Accounts Payable 31Common Stock 33Dividends 41Fees Earned 51Wages Expense 53Rent Expense 54Utilities Expense 55Truck Expense 59Miscellaneous 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, 20Y4. 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, 20Y8, follows: The following I hi sine vs transactions were completed by Valley Realty during August 20Y8: 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 Ally; 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 item section, and place a check mark (O 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. 20Y8. 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. 20Y5: Tech Support Services Unadjusted Trial Balance January 31. 20Y5 Debit Balances Credit Balances Cash 25,550 Accounts Receivable 44,050 Supplies 6,660 Prepaid Insurance 3,600 Equipment Notes Payable 162,000 75,000 Accounts Payable 13,200 Common Stock 18,000 Retained Earnings Dividends 33,000 83,850 Fees Earned Wages Expense 306,000 34,000 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 12350 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 policy 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, 20Y5. 2. Does the fact that tire unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.Continuing Problem 4.Total of Debit column: 40,750 The transactions completed by PS Music during June 20Y5 were described .it the end of Chapter 1. The following transactions were completed during July, the second month of businesss operations: July 1. Peyton Smith made an additional investment k PS Music in exchange for common stock by depositing 5,000 in PS Mu wet 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 musk 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 Musk, Peyton signed a contract with a local radio station. KXMD, to provide guest spots for the next three months. The contract requires PS Musk 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 2SO 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 Pane 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 Musk for use of its current musk demos in making various musk 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 4.20YS. 27.Paid electric Ml 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 S00 with the remainder due on August 9. 20Y5. 31.Received 3,000 for serving as a disc jockey for a party. 31.Paid 1.400 royalties (musk expense) to National Musk 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, 20Y5 (all normal balances), are as follows: 11 Cash 3,920 12 Accounts Receivable 1,000 14 Supplies 170 15 Prepaid Insurance 17 Office Equipment 21 Accounts Payable 250 23 Unearned Revenue 31 Common Stock 4.000 33 Dividends 500 41 Fees Earned 6,200 50 Wages Expense 400 51 Office Rent Expense 800 52 Equipment Rent Expense 67S 53 Utilities Expense 300 54 Music Expense 1.590 55 Advertising Expense 500 56 Supplies Expense 180 59 Miscellaneous Expense 415 Instructions 1. Enter the July 1, 20Y5, 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, 20Y5.Analyze Amazon.com Amazon.com, Inc. (AMZN) is the largest Internet retailer in the United States. Amazons income statements for two recent years follow: Amazon.com, Inc. Income Statements For the Years Ended December 31 (in millions) Year 2 Year 1 Revenues: Product sales 94,665 79,268 Service sales 41,322 27,738 Total revenues 135,987 107.006 Operating expenses: Cost of sales (88,265) 5 (71,651) Fulfillment (17,619) (13,410) Marketing (7,233) (5,254) Technology and content (16,085) (12,540) General and administrative (2,432) (1,747) Other operating expense (income), net (167) (171) Total operating expenses (131.801) (104,773) Operating income 4,186 2,233 a. Prepare a horizontal analysis of the income statements. Round percentages to one decimal place. b. Interpret the results of the horizontal analysis.2.2MAD Analyze Vera Bradley. Inc. Vera Bradley, Inc. (VRA) is a leading designer, producer, and retailer of fashion handbags, accessories, and travel items for women. Income statements for two recent years for Vera Bradley are as follows: Vera Bradley, Inc Income Statements For the Years Ended January 31 (in millions) Year 2 Year 1 Revenue 502.6 509.0 Expenses: Cost of merchandise sold (221.4) (240.0) Selling, general, admin, expenses (236.8) (208.7) Other expenses (16.8) (21.9) Total expenses (475.0) (470.6) Operating income 27.6 38.4 a. Prepare a horizontal analysis of the two income statements. b. Assume you are a stockholder of Vera Bradley. Would you be inclined to view Vera Bradleys change in operating income favorably or unfavorably?Analyze Target The following data (in millions) arc taken from the financial statements of Target Corporation (TGT), the owner of Target stores: Year 2 Year 1 Revenue 73,785 72,618 Operating expenses (68,875) (68,083) Operating income 4,910 4,535 a. For Target, determine the amount of change in millions and the percent of change rounded to one decimal place from Year 1 to Year 2 for: 1. Revenue 2. Operating expenses 3. Operating income b. What conclusions can you draw from your analysts of the revenue and total operating expenses?2.5MAD 2.6MAD 2.1TIF 2.4TIF Record transactions The following discussion took place between Tony Cork, the office manager of Hallmark Data Company, and a new accountant, Cassie Miles: Cassie: I've been thinking about our method of recording entries. It seems inefficient. Tony: In what way? Cassie: Wellcorrect me if I'm wrongit seems like we have unnecessary steps in the process. We could easily develop a trial balance by posting our transactions directly into the ledger and bypassing the journal altogether. In this way, we could combine the recording and posting process into one step and save ourselves a lot of time. What do you think? Tony: We need to have a talk. What should Tony say to Cassie?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, 20Y2, Herbal Co. received 18,900 for the rent of land for 12 months, Journalize the adjusting entry required for unearned rent on December 31, 20Y2.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.Vertical analysis Two income statements for Cornea Company follow: Cornea Company Income Statements For the Years Ended December 31 20Y9 20Y8 Fees earned 1,640,000 1,300,000 Expenses (869,200) (715,000) Net income 770,800 585,000 a. Prepare a vertical analysis of Cornea Companys income statements. b. Does the vertical analysis indicate a favorable or an unfavorable trend?3.1EX 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 of omitting adjusting entry The adjusting entry for accrued wages was omitted at July 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 July 31. Also indicate whether the items in error will be overstated or understated.Adjusting entries for accrued salaries Paradise Realty Co. pays weekly salaries of 25,500 on Friday for a five-day workweek ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends (a) on Monday and (b) on Thursday.Determining wages paid The wages payable and wages expense accounts at August 31, after adjusting entries have been posted at the end of the first month of operations, are shown in the following T accounts: Determine the amount of wages paid during the month.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.Effect of omitting adjusting entry When preparing the financial statements for the month ended January 31, accrued salaries owed to employees for January 30 and 31 were overlooked. The accrued salaries were included in the first salary payment in February. Indicate which items will be erroneously stated, because of failure to correct the initial error, on (a) the income statement for the month of February and (b) the balance sheet as of February 28.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.Effect of omitting adjusting entry At the end of October, the first month of the business year, the usual adjusting entry transferring rent earned to a revenue account from the unearned rent account was omitted. Indicate which items will be incorrectly stated, because of the error, on (a) the income statement for October and (b) the balance sheet as of October 31. Also indicate whether the items in error will be overstated or understated.Adjusting entry for supplies The balance in the supplies account, before adjustment at the end of the year, is 9,000. Journalize the adjusting entry required if the amount of supplies on hand at the end of the year is 1,575.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 Effects of errors on financial statements For a recent period, the balance sheet for Costco Wholesale Corporation (COST) reported accrued expenses of 3.498 million. For the same period, Costco reported income before income taxes of 3,619 million. Assume that the adjusting entry for 3.498 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 (CPB) includes accrued expenses of 604 million. The income before taxes for Campbell for the year was 849 million. a. Assume the adjusting entry for 604 million of accrued expenses was not recorded at the end of the year. By how much would income before taxes have been misstated? b. What is the percentage of the misstatement in (a) to the reported income of 849 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, 20Y2, follow: American Leaf Company Trial Balances October 31, 20Y2 Unadjusted Adjusted Debit Balances Credit Balances Debit Balances Credit Balances Cash 16 16 Accounts Receivable 38 44 Supplies 12 10 Prepaid Insurance 20 8 Land 26 26 Equipment Accumulated DepreciationEquipment 40 8 40 12 Accounts Payable 26 26 Wages Payable 0 2 Common Stock 20 20 Retained Earnings Dividends 8 72 8 72 Fees Earned Wages Expense 24 74 26 80 Rent Expense 8 8 Insurance Expense 0 12 Utilities Expense 4 4 Depreciation Expense 0 4 Supplies Expense 0 2 Miscellaneous Expense 4 4 200 200 212 212 Journalize the five entries that adjusted the accounts at October 31, 20Y2. None of the accounts were affected by more than one adjusting entry.Corrected trial balance totals, 369,000 Adjusting entries from trial balances The accountant for Evas Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance and the amounts of the adjustments are correct. Identify the errors in the accountants adjusting entries, assuming that none of the accounts were affected by more than one adjusting entry.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 Trident Repairs Service, an electronics repair store, prepared the following unadjusted Trial balance at the end of its first year of operations: Trident Repairs Service Unadjusted Trial Balance November 30. 20Y3 Debit Credit Balances Balances Cash 10,350 Accounts Receivable 67,500 Supplies 16,200 Equipment 116,100 Accounts Payable 25,750 Unearned Fees 18,000 Common Stock 50,000 Retained Earnings 111,500 Dividends 13,500 Fees Earned 294,750 Wages Expense 124,500 Rent Expense 92,000 Utilities Expense 51,750 Miscellaneous Expense 8,100 500,000 500,000 For preparing the adjusting entries, the following data were assembled: Fees earned but unbilled on November 30 were 7,000. Supplies on hand on November 30 were 1,300. Depreciation of equipment was estimated to be 7,200 for the year. The balance in unearned fees represented the November 1 receipt in advance for services to be provided, During November, 13,500 of the services were provided. Unpaid wages accrued on November 30 were 4,800. Instructions 1. Journalize the adjusting entries necessary on November 30, 20Y3. 2. Determine the revenues, expenses, and net income of Trident Repairs Service before the adjusting entries. 3. Determine the revenues, expense, and net income of Trident 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 Staid. On June 30, 20Y6, the end of the current year, the accountant for Good Note prepared the following trial balances: Instructions Journalize tire seven entries that adjusted the accounts at June 30. None of the accounts were affected by more than one adjusting entry.Adjusting entries and adjusted trial balances Sears Editing Company is a small editorial services company owned and operated by Deloris Sears. On January 31, 20Y1, the end of the current year, Sears Editing Companys accounting cleric prepared the following unadjusted trial balance: Sears Editing Company Unadjusted Trial Balance January 11, 20Y1 Debit Credit Balances 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 adjustment are as follows: Unexpired insurance at January 31, 2,400. Supplies on hand at January 31, 250. Depreciation of building for the year, 6,600. Depreciation of equipment for the year, 3,500, Rent unearned at January 31, 2,750. Accrued salaries and wages at January 31, 1,800. Fees earned but unbilled on January 31, 15,000. 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 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, 20Y5 Debit Balances Credit Balances Cash Accounts Receivable Supplies Equipment Accounts Payable Unearned Fees Common Stock Retained Earnings Dividends Fees Earned Wages Expense 11,400 72,600 7,200 112,000 10,000 157,800 12.200 19,200 20.000 117.800 305.800 Rent Expense Utilities Expense Miscellaneous Expense 55,000 42,000 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 w ages accrued on April 30 w ere 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. 20Y5. 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, 20Y6, the accountant for The Signage Company prepared the trial balances shown at the top of the following page. Instructions Journalize the 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, it owned and operated by Joni Reece. Reece Financial Services accounting clerk prepared the following unadjusted trial balance at July 31, 20Y9: The data needed to determine year-end adjustment 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 tile 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.Continuing Problem 3. Total of Debit column: 42,340 The unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as follows 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.3.1MAD Analyze Pandora Media Pandora Media, Inc. (P) provides Internet music platform services in North America. Pandoras income statements through operating income for two recent years are as follows (in thousands): Pandora Media. Inc. Income Statements For the Years Ended January 31 (in thousands) Year 2 Year 1 Revenues: Advertising 1,072,490 933,305 Subscription 225,786 220,571 Ticketing service 86,550 10,167 Total revenues 1,384,826 1,164,043 Expenses: Cost of revenues (894,922) (697,341) Sales and marketing (491,4SS) (175,572) (141,636) (1,703,585) (398,169) (153,943) General and administrative Product development (84,581) (1334,034) Total expenses Operating income (loss) (318,759) (169,991) a. Prepare a vertical analysis of the two income statements. b. Interpret the vertical analysis.Analyze World Wrestling Entertainment World Wrestling Entertainment, Inc. (WWE) is a sports media and entertainment company primarily focused on professional wrestling. WWEs income statements through operating income for two recent years are as follows (in thousands): World Wrestling Entertainment. Inc. Income Statements For the Years Ended December 31 (in thousands) Year 2 Year 1 Revenues 729,216 658,768 Expenses: Cost of revenues (430,032) (379,316) Selling, general, and administrative expenses (219,132) (192,773) Depreciation and other expenses (24,411) (29,885) Total expenses (673,575) (619,974) Operating income (loss) 55.641 38,794 7,125 is related to expenses of abandoning a media protect in Year 1. a. Prepare a vertical analysis of the income statements for both years. b. Interpret the vertical analysis.3.4MAD 3.5MAD Analyze and Compare ATT and Verizon Communications The following income statement data for ATT Inc. (T) and Verizon Communications Inc. (VZ) were taken front their recent annual reports (in millions): ATT Verizon Revenue 163,786 125,980 Colt of services (expense) (76,884) (5I,424) Selling, general and administrative expenses (36,347) (31.S69) Depreciation and other expenses (26,208) (15,928) Operating income 24,347 27,059 a.Prepare a vertical analysis of the income statement for ATT. Round to one decimal place. b.Prepare a vertical analysis of the income statement for Verizon. Round to one decimal place. c.Based on Requirements (a) and (b), how does ATT compare to Verizon?3.1TIF Loan application Daryl Kirby opened Squid Realty Co. on January 1, 20Y3. At the end of the first year, the business needed additional capital. On behalf of Squid Realty Co., Daryl applied to Ocean National Bank for a loan of 375,000. Based on Squid Realty Co.s financial statements, which had been prepared on a cash basis, the Ocean National Bank loan officer rejected the loan as too risky. After receiving the rejection notice, Daryl instructed his accountant to prepare the financial statements on an accrual basis. These statements included 65,000 in accounts receivable and 25,000 in accounts payable. Daryl then instructed his accountant to record an additional 30,000 of accounts receivable for commissions on property for which a contract had been signed on December 28, 20Y3. The title to the property is to transfer on January 5. 20Y4, when an attorney formally records the transfer of the property to the buyer. Daryl then applied for a 375,000 loan from Free Spirit Bank, using the revised financial statements. On this application, Daryl indicated that he had not previously been rejected for credit. Discuss the ethical and professional conduct of Daryl Kirby in applying for the loan from Free Spirit Bank.3.4TIF 3.5TIF 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 Which step of the accounting cycle is optional?10DQ 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 Statement of stockholders equity Scott Lockhart owns and operates AAA Delivery Services. On January 1, 20Y7, Common Stock had a balance of 140,000, and Retained Earnings had a balance of 815,500. During the year, no additional common stock was issued, and 10,000 of dividends were paid. For the year ended December 31, 20Y7, AAA Delivery reported a net income of 67,250. Prepare a statement of stockholders equity for the year ended December 31, 20Y7.Classified balance sheet The following accounts appear in an adjusted trial balance of San Jose Consulting. Indicate whether each account would be reported in the (a) Current assets; (b) Property, plant, and equipment; (c) Current liabilities; (d) Long-term liabilities; or (e) Stockholders equity section of the December 31, 20Y8, balance sheet of San Jose Consulting. 1.Building 2.Common Stock 3.Notes Payable (due in five years) 4.Prepaid Rent 5.Salaries Payable 6.Supplies 7.Taxes Payable 8.Unearned Service Fees Closing entries After the accounts have been adjusted at November 30, the end of the fiscal year, the following balances were taken from the ledger of Diamond Landscaping Co.: Retained Earnings 2,550,000 Dividends 25,000 Fees Earned 1,150,000 Wages Expense 613,750 Rent Expense 120,000 Supplies Expense 9,150 Miscellaneous Expense 11,000 Journalize the two entries required to dose the accounts.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.Working capital and current ratio Current assets and current liabilities for HQ Properties Company follow: 20Y2 20Y1 Current assets 2,175,000 1,900,000 Current liabilities 1,500,000 1.250,000 a. Determine the working capital and current ratio for 20Y2 and 20YI. b. Does the change in the current ratio from 20Y1 to 20Y2 indicate a favorable or an unfavorable change?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 Demo Consulting is a consulting firm owned and operated by Jesse Flatt The following end-of-period spreadsheet was prepared for the year ended August 31, 20Y9: Based on the preceding spreadsheet, prepare an income statement, statement of stockholders equity, and balance sheet for Demo Consulting. During the year ended August 31, 20Y9, 15,000 of additional common stock was issued.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, 20Y3: Based on the preceding spreadsheet, prepare an income statement, statement of stockholders equity, and balance sheet for Triton Consulting. During the year ended April 30, 20Y3, common stock of 5,000 was issued.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. 20Y1: 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, 20Y7, the end of the fiscal year: Prepare an income statement.Income statement FedEx Corporation (FDX) had the following revenue and expense account balances (in millions) for a recent year ending May 31: a. Prepare an income statement. b. Compare your income statement with the income statement that is available at FedExs website (http://investors.fedex.com). Under Annual Report, select Download PDF. What similarities and differences do you see?Statement of stockholders equity 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, 20Y2, are as follows: Prepare a statement of stockholders equity for the year.Statement of stockholders equity; net loss Selected accounts from the ledger of Restoration Arts for the fiscal year ended April 30, 20Y5, are as follows: Prepare a statement of stockholders equity 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 50, 20Y7, the end of the fiscal year, the balances of selected accounts from the ledger of Dynamic Weight Loss are as follows: Prepare a classified balance sheet that includes the correct balance for Cash.Balance sheet The following balance sheet was prepared by Labyrinth Services Co. for its year ended August: 20Y3. a. List the errors in the preceding balance sheet. b. Prepare a corrected balance sheet.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 with net income Automation Services Co. offers its services to companies desiring to use technology to improve their operations. After the accounts have been adjusted at December 31, the end of the fiscal year, the following balances were taken from the ledger of Automation Services: Fees Earned 614,500 Dividends 45,000 Rent Expense 140,000 Retained Earnings 3,250,000 Supplies Expense 18,200 Wages Expense 320,000 Miscellaneous Expense 8,700 Journalize the closing entries.Closing entries with net loss Summit Services Co. offers its services to individuals desiring to improve their personal images. After the accounts have been adjusted at May 31, the end of the fiscal year, the following balances were taken from the ledger of Summit Services: Journalize the closing entries required to close tile 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, 20YO Debit Balances Credit Balances Cash 41,100 Accounts Receivable Supplies 317.400 5,000 Equipment Accumulated DepreciationEquipment 73.300 162,750 Accounts Payable Salaries Payable 82.500 5,500 Unearned Rent 12,000 Common Stock 65,000 Retained Earnings 287,950 879,2 50 173,250 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.Appendix 1 Adjustment data on an end-of-period spreadsheet Alert Security Services Co. offers security services to business clients. The trial balance for Alert Security Services has been prepared on die following end-of-period spreadsheet for the year ended October 31, 20Y3 The data for sear-end adjustments are as follows: a. Fees earned, but not yet billed, 13. b. Supplies on hand, 4. c. Insurance premiums expired, 10. d. Depreciation expense, 3. e. Wages accrued, but not paid, 1. Enter the adjustment data, and place the balances in the Adjusted Trial Balance columns.4.22EX Appendix 1 Financial statements from an end-of-period spreadsheet Based on the data in Exercise 4-22, prepare an income statement, statement of stockholders equity, and balance sheet for Alert Security Services Co. During the year ended October 31, 20Y3, common stock of 10 was issued.Appendix 1 Adjusting entries from an end-of-period spreadsheet Based on the data in Exercise 4-21, prepare the adjusting entries for Alert Security Services Co.Appendix 1 Closing entries from an end-of-period spreadsheet Based on the data in Exercise 4-22, prepare the closing entries for Alert Security Services Co.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 8.Net income 33,425 Beacons Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Beacons Company prepared the following end-of-period spreadsheet at December 31, 20Y5, the end of the fiscal year: Instructions 1. Prepare an income statement for the year ended December 31, 20Y5. 2. Prepare a statement of Stockholders equity for the year ended December 31, 20Y5. During the year, common stock of 25,000 was issued. 3. Prepare a balance sheet as of December 31, 20Y5. 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, 20Y8, the end of the fiscal year, the accountant for Foxy Investigative Services prepared an end-of-period spreadsheet, a part of which follows: A F G 1 Foxy Investigative Service 2 End-of-Period Spreadsheet 3 For the Year Ended November 30, 20Y8 4 Adjusted Trial Balance 5 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 DepreciatonBuilding 184,100 1414 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 statement of stockholders equity, and a balance sheet. 2. Journalize the entries that were required to close the accounts at November 30, 20Y8. No additional common stock was issued during the year ended November 30, 20Y8. 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?accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of Epicenter Laundry at June 30, 20Y6, the end of the fiscal year, follows: The data needed to determine year-end adjustments are as follows: (a)Laundry supplies on hand at June 30 are 8,600. (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, and Insurance Expense. 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 statement of stockholders' equity, and a balance sheet. During the year ended June 30. 20Y6, additional common stock of 7,500 was issued. 6. Journalize and post the closing entries. Identify the closing entries by Clos. 7. Prepare a post-closing trial balance.Net Income: 51,150 Ledger accounts, adjusting entries, financial statements, and closing entries; optional spreadsheet The unadjusted trial balance of Lakota Freight Co. at March 31, 20Y4, the end of the year, follows: The data needed to determine year-end adjustments are as follows (a) Supplies on hand at March 31 arc 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 spreadsheet and complete the spreadsheet Add the account 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 clean of accounts should lie 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 statement of stockholders equity, and a balance sheet. During the year ended March 31, 20Y4, additional common stink of 6,000 was issued 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.Net income: 43,475 Complete accounting cycle For the past several years, Jeff Horton has operated a part-time consulting buciness from his home. As of July 1, 20Y2, Jeff decided to move to rented quarters and to operate the business, which was to be known at Rosebud Consulting, on a full-time basis. Rosebud 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 three moneths rent on a lease rental contract, 4,800. 2.Paid the premium on property and insurance policies, 4,500. 4.Received cash from clients at an advance payment for services to be provided and recorded it as unearned fen. 5,500 5.Purchased additional office equipment on account from Smith Office Supply Co, 6,500 6.Received cash from clients on accounts 15,300. 10.Paid cash for a newspaper advertisement, 400 12.Paid Smith Offer Supply Co. for part of the debt incurred on July 5, 5,200 12.Recorded services provided or account for the period Apri 112, 13,300 14.Paid receptionist for two weeks salary, 1,750 Record the following transcations on Page 2 of the journal 17.Recorded cash from cash clients for fees earned during the period Apri 117, 9,450 18.Paid cash for supplies, 600. 20.Recorded cash from clients for account for the period July 1320, 6,650 24.Recorded cash from cash clients for feet earned for the period July 1724, 4,000. 26.Received cash from clients on account 12,000. 27.Paid receiptionist for two weeks salary, 1,750 29.Paid telephone bill for July, 325. 31Paid electricity bill for July, 675 31Recorded cash from 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 transcation 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 number in the journal at this time.) 11Cash 12Accounts Receivable 14Supplies 15Prepaid Rent 16Prepaid insurance 18Offer Equipment 19Accumulated Depreciation 21Accounts Payable 22Salaries Payable 23Unearned Fees 31Common Stock 32Retained Earnings 33Dividends 41fees Earned 51Salary Expense 52Supplies Expense 53Rent Expense 54Depreciation Expense 55Insurance Expense 59Miscellaneous 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 30 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 30 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 statement of stockholders' equity, and a balance sheet. 9Prepare and post the closing entries. 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 prepared the end-of-period spreadsheet that follows at June 30, 20Y3, the end of the fiscal year. Instructions 1. Prepare an income statement for the year ended June 30, 20Y3. 2. Prepare a statement of stockholders equity for the year ended June 30, 20Y3. During the year ended June 30, 20Y3, additional common stock of 20,000 was issued. 3. Prepare a balance sheet as of June 30, 20Y3. 4. On the basis of the end-of-period spreadsheet, journalize the closing entries. 5. Prepare a post-dosing trial balance.Financial statements and closing entries The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. A% of October 31, 20Y9, 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 statement of stockholders' equity, and a balance sheet. During the year, no additional common stock was issued. 2. Journalize the entries that were required to dose the accounts at October 31. 3. If the balance of Retained Earnings had instead increased 113,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss?Income: 27,350 accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of La Mesa Laundry at August 31, 20Y5, the end of the fiscal year, follows: The data needed to determine ear-end adjustments are as follows: (a) Wages accrued but not paid at August 31 are 2,200. (b) Depreciation of equipment during the year it 8,150 (c) Laundry supplies on hand at August 31 are 2,000. (d) Insurance premiums expired during the year are 5,300. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as Aug. 51 Bal. In addition, add T accounts for Wages Payable. Depreciation Expense, Laundry Supplies Expense, and Insurance Expense. 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 statement of stockholders equity, and a balance sheet. During the year ended August 51, 20Y5, common stock of 3,000 was issued. 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 end-of-period spreadsheet The unadjusted trill balance of Recessive Interior, at January 31, 20Y2, the end of the year, follows: The data needed to determine year-end adjustments are as follows: (a) Supplies on hand at January 31 are 2,850 (b) Insurance premium expired during the year are 3,150. (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 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 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 if 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 statement of stockholders equity, and a balance sheet. During the year ended January 31, 20Y2, additional common stock of 7,500 was issued. 6. Journalize and post the dining entries. Record the closing entries on Page 27 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.Net income: 53,77S Complete accounting cycle For the past several years, Jeff Horton has operated a part-time consulting buciness from his home. As of April I. 20Y6, Jeff decided to move to rented quarters and to operate the business, which was to be known at 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 moneths rent on a lease rental contract, 6,000. 2.Paid the premium on property and insurance policies, 4,200. 4.Received cash from clients at an advance payment for services to be provided and recorded 4 at unearned fen. 9,400 5.Purchased additional office equipment on account from Smith Office Supply Co, 8,000 6.Received cash from clients on accounts 11,700. 10.Paid cash for a newspaper advertisement, 350 12.Paid Smith Offer Supply Co. for part of the debt incurred on April 5, 6,400 12.Recorded services provided or account for the period Apri 112, 21,900 14.Paid receptionist for two weeks salary, 1,650 Record the following transcations on Page 2 of the journal 17.Recorded cash from cash clients for fees earned during the period Apri 116, 6,600 18.Paid cash for supplies, 725. 20.Recorded cash from clients for account for the period April 1320, 16,800 24.Recorded cash from cash clients for feet earned for the period April 1724, 4,450. 26.Received cash from clients on account 26,500. 27.Paid receiptionist for two weeks salary, 1,650 29.Paid telephone bill for April, 760. 30Paid electricity bill for April, 760 Instructions 1.Journalize each transcation 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 number in the journal at this time.) 11Cash 12Accounts Receivable 14Supplies 15Prepaid Rent 16Prepaid insurance 18Offer Equipment 19Accumulated Depreciation 21Accounts Payable 22Salaries Payable 23Unearned Fees 31Common Stock 32Retained Earnings 33Dividends 41fees Earned 51Salary Expense 52Supplies Expense 53Rent Expense 54Depreciation Expense 55Insurance Expense 59Miscellaneous 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 statement of stockholders' equity, and a balance sheet. 9Prepare and post the closing entries. 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 10.Prepare a post-closing trial balance.Comprehensive Problem 1 8 Net income. 31,425 Kelly Pitney began her consulting business. Kelly Consulting, on April 1, 20Y8. 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 tree 4,500 5.Received cash from clients on account 2,450. 9.Paid cash for a newspaper advertisement 225. 13.Raid Office Station Co for part of the debt incurred on April , 640. 15.Recorded services provided on account for the period May 1-15, 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 116, 8,360. Record the following transactions on Page 6 of the Journal 20.Purchased support on account 735. 21.Recorded services provided on account for the period May 1620. 4,820 25.Recorded cash from cash clients for fees earned for the period May 1723, 7,900 27.Received cash from clients on account 9,520. 28.Paid part-time receptionist for two weeks salary. 7S0. 30.Raid telephone bill for May. 260 31.Paid electricity bill for May, 810. 31.Recorded cash from cash clients tor lees earned for the period May 2031. 3,300. 31.Recorded services provided on account for the remainder of May, 2,650. 31.Paid dividends 10,500 Instructions 1.The chart of accounts foe Kelly Consulting is shown us Exhibit 9. and the post-closing trial balance as of April 30, 20Y8, 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. 20Y8. and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting cm Page 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. 5.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 II 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 1600. (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 statement of stockholders equity, and a balance sheet. 9.Prepare and post the closing entries. Record the closing entries on Page 8 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.Working Capital and Current Ratio Analyze and compare Amazon.com to Best Buy Amazon.com, Inc. (AMZN) is the largest Internet retailer in the United States. Best Buy, Inc. (BBY) 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 45,781 9,886 Current liabilities 43,816 6,925 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?Analyze and compare Zynga, Electronic Arts, and Take-Two Data (in millions) from recent financial statements of Zynga Inc. (ZNGA), Electronic Arts Inc. (EA), and Take-Two Interactive Software, Inc. (TTWO) are as follows: a. Compute the working capital for Year 2 and Year 1 for each company. b. Which company has the largest working capital? c. Compute the current ratio for Year 2 and Year 1 for each company. Round to one decimal place. d. For Year 2, rank the companies from most liquid to least liquid based upon the current ratio.Analyze and compare Foot Locker and The Finish Line The Foot Locker, Inc. (FL) and The Finish Line, Inc. (FINL) arc two retail athletic footwear chains. The current assets and current liabilities from recent balance sheets for both companies are as follows (in millions): a. Compute the working capital for Year 2 and Year 1 for each company. b. Compute the current ratio for Year 2 and Year 1 for each company. Round to one decimal place. c. If you were a supplier to these two companies, in which company would you feel most confident about receiving payment? d. For each company, did liquidity improve or decline between the two years?Analyze Under Armour The following year-end data were taken from recent balance sheets, of Under Armour, Inc. (UA) (in millions): December 31 Year 2 Year 1 Current assets 1,965.2 1,498.8 Current liabilities 685.8 478.8 a. Compute the working capital and die current ratio as of December 31, Year 2 and Year 1. Round to one decimal place. b. What conclusions concerning the companys ability to meet its short-term obligations can you draw from part (a)?4.5MAD Analyze and compare Alphabet (Google) and Microsoft Alphabet Inc. (GOOG) and Microsoft Corporation (MSFT) design and distribute consumer and enterprise software, including overlaps in search, business productivity, and mobile operating systems. Alphabets 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: 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 4.3TIF Financial statements The following is an excerpt from a telephone conversation between Ben Simpson, president of Main Street Co., and Tami Lundgren, owner of Reliable Employment Co.: Ben. Tami, you're going to have to do a better job of finding me a new computer programmer That last guy was great at programming, but he didn't have any common sense. Tomi: What do you mean? The guy had a master's degree with straight As. Ben; Yes, well, last month he developed a new financial reporting system He said we could do away with manually preparing an end-of-period spreadsheet and financial statements. The computer would automatically generate our financial statements with a push of a button. Tomi: So what's the big deal? Sounds to me like it would save you time and effort. Ben; Right! The balance sheet showed a minus for supplies' Tomi: Minus supplies? How can that be? Ben. That's what I asked. Tomi: So. What did he say? Ben. Well, after he checked the program, he said that it must be right. The minuses were greater than the pluses... Tomi: Didn't he know that Supplies can't have a credit balanceit must have a debit balance? Ben: He asked me what a debit and credit were. Tomi. I see your point. 1. Comment on (a) the desirability of computerizing Main Street Co.'s financial reporting system, (b) the elimination of the end-of-period spreadsheet in a computerized accounting system, and (c) the computer programmer s lack of accounting knowledge. 2. Explain to the programmer why Supplies could not have a credit balance.4.5TIF 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 95,500 cash and 1,315,000 on account. The cost of the goods sold is 848,500. What is the amount of the gross profit?Purchases transactions Elkhorn Company purchased merchandise on account from Springhill Company for 42,000, terms 2/10, n/30. Elkhorn returned merchandise with an invoice amount of 8,000 and received full credit. a. If Elkhorn Company pays the invoice within the discount period, what is the amount of cash required for the payment? b. What account is debited by Elkhorn Company to record the return?5.3BE 5.4BE Transactions for buyer and seller Shore Co. sold merchandise to Blue Star Co. on account, 112,000, terms FOB shipping point, 2/10. n/30. The cost of the goods sold is 67,200. Shore paid freight of 1,800. Journalize the entries for Shore and Blue Star for the sale, purchase, and payment of amount due.Adjusting entries Halm Flooring Company uses a perpetual inventory system. Journalize the December 31 adjusting entries based upon the following: A. Sales returns of 125,000 and merchandise returns of 80,000 are estimated for the current year's sales. B. The inventory account has a balance of 1,333,150, while physical inventory indicates that 1,309,900 of merchandise is on hand. Assume any shrinkage is a normal amount.Asset turnover ratio Financial statement data for years ended December 31, 20Y3 and 20Y2, for Edison Company follow : 20Y3 20Y2 Sales 1,884,000 1,562,000 Total assets: Beginn of year 770,000 650,000 End of year 800,000 770,000 a. Determine the asset turnover ratio for 20Y3 and 20Y2. b. Is the change in the asset turnover ratio from 20Y2 to 20Y3 favorable or unfavorable?Determining gross profit During the current year, merchandise is sold for 8,100,000. The cost of the goods sold is 4,698,000. 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 operating income? Explain.Determining cost of goods sold For a recent year, Best Buy (BBY) reported sales of 39,528 million. Its gross profit was 9.191 million. What was the amount of Best Buys cost of goods sold?Chart of accounts Monet Paints Co. is a newly organized business with a list of accounts arranged in alphabetical order, as follows: Accounts Payable Inventory Accounts Receivable Land Accumulated DepreciationOffice Equipment Miscellaneous Administrative Expense Accumulated DepreciationStore Equipment Miscellaneous Selling Expense Advertising Expense Notes Payable Cash Office Equipment Common Stock Office Salaries Expense Cost of Goods Sold Office Supplies Customer Refunds Payable Office Supplies Expense Delivery Expense Prepaid Insurance Depreciation ExpenseOffice Equipment Rent Expense Depreciation ExpenseStore Equipment Retained Earnings Dividends Salaries Payable Estimated Returns Inventory Sales Income Summary Sales Salaries Expense Insurance Expense Store Equipment Interest Expense Store Supplies Interest Revenue Store Supplies Expense Construct a chart of accounts, assigning account numbers and arranging the accounts in balance sheet and income statement order, as illustrated in Exhibit 10. Each account number is three digits: the first digit is to indcate the major classification (1 for assets, and so on); the second digit is to indcate the subclassification (11 for current assets, and so on); and the third digit is to identify the specific account (110 for Cash, 112 for Accounts Receivable, 114 for Inventory, 115 for Estimated Returns Inventory, and so on).Purchase-related transactions The Stationery Company purchased merchandise on account from a supplier for 14,500. terms 2/10, n/30. The Stationery Company returned merchandise with an invoice amount of 3,500 and received full credit. a. What is the amount of cash required for the payment? b. Under a perpetual inventory system, what account is credited by The Stationery Company to record the return?Purchase-related transactions A retailer is considering the purcha.se of 1,000 units of a specific item from either of two suppliers. Their offers are as follows: Supplier One: 34.80 a unit, 1/10, n/30, no charge for freight. Supplier Two: 35.00 a unit, 2/10, n/30. plus freight of 200. 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, (1) through (4), are presented in the following T accounts. Assume that the freight terms were FOB shipping point and that the credit terms were 1/10, n/30. a. Describe each transaction. b. Determine the invoice amount of the merchandise that was returned in (3).Purchase-related transactions Stylon Co., a women's clothing store, purchased 48,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Stylon returned merchandise with an invoice amount of 7,500, receiving a credit memo. Journalize Stylons entries to record (a) the purchase, (b) the merchandise return, (c) the payment within the discount period of 10 days, and (d) the payment beyond the discount period of 10 days.5.8EX Sales-related transactions, including the use of credit cards Journalize the entries for the following transactions: A. Sold merchandise for cash, 25,000. The cost of the goods sold was 17,500. B. Sold merchandise on account, 98,000. The cost of the goods sold was 58,800. C. Sold merchandise to customers who used MasterCard and VISA, 475,000. The cost of the goods sold was 280,000. D. Sold merchandise to customers who used American Express, 63,000. The cost of the goods sold was 39,000. E. Received an invoice from National Clearing House Credit Co. for 13,450 representing a service fee paid for processing MasterCard, VISA, and American Express sales.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.Customer return and refund On December 28, 20Y3, Silverman Enterprises sold 18,500 of merchandise to Beasley Co. with terms 2/10, n/30. The cost of the goods sold was 11,200. On December 31, 20Y3, Silverman prepared its adjusting entries, yearly financial statements, and closing entries. On January 3, 20Y4, Silverman Enterprises issued Beasley Co. a credit memo for returned merchandise. The invoice amount of the returned merchandise was 4,000 and the merchandise originally cost Silverman Enterprises 2,350. (a) Journalize the entries by Silverman Enterprises to record the December 28, 20Y3. sale, (b) Journalize the entries by Silverman Enterprises to record the merchandise returned by Beasley Co. on January 3. 20Y4. (c) Journalize the entry to record the receipt of the amount due by Beasley Co. on January 7, 20Y4.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.Sales-related transactions The debits and credits for five related transactions, (1) through (5), are presented in the following T accounts. Assume the credit terms were 2/10, n/30. a. Describe each transaction. b. What was the invoice amount of the merchandise that was returned?5.14EX 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:5.16EX 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.5.18EX 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.

Page: [1][2][3][4]