Assume you are a business consultant. The owner of a company sends you an e-mail expressing concern that the company is not taking advantage of its discounts offered by vendors. The company currently uses the gross method of recording purchases. The owner is considering a review of all invoices and payments from the previous period. Due to the volume of purchases, however, the owner recognizes that this is time-consuming and costly. The owner seeks your advice about monitoring purchase discounts in the future. Provide a response in memorandum form. Hint: It will help to review the recording of purchase discounts in Appendix 4C.
> Background and Facts, Donald Breeden and Willie Faye Buchanan were married in Marion County, Mississippi. They lived in a home in Sandy Hook. Nationwide Property & Casualty Insurance Company insured the home under a policy bought by Breeden that named hi
> Under the “plain language” of the Bankruptcy Code, at least one class of creditors must accept a Chapter 11 plan for it to be confirmed. Transwest Resort Properties, Inc., and four related companies filed a petition for bankruptcy under Chapter 11. The f
> Jevic Transportation Corporation filed a petition in a federal bankruptcy court for a Chapter 11 reorganization. A group of former Jevic truck drivers, including Casimir Czyzewski, filed a suit and won a judgment against the firm for unpaid wages. This j
> Roger Rand loaned funds to Frank Welte to buy farm equipment. Security agreements were executed for the loans, and under these agreements, Welte could not transfer the equipment without Rand’s consent. Rand perfected his security interest in the collater
> Dustin Mosely financed the purchase of two cars with a loan from Show-Me Credit Union (SMCU). When Mosely stopped making payments on the loan, SMCU notified him that it intended to repossess the cars and dispose of them at a “private or public” sale. Aft
> Woodsmill Park Limited Partnership borrowed $6.2 million secured by real property in Chicago, Illinois. Bill and Brian Bruce and Matthew O’Malley signed guaranties to meet Woodsmill’s obligation on the loan. Woodsmill defaulted on the payments. Northbroo
> While working as an executive assistant to David Ducote, Michelle Freytag fraudulently obtained a credit card in Ducote’s name from Whitney National Bank in New Orleans, Louisiana. Freytag told Whitney to pay the credit card balances with funds from Duco
> The law firm of Levy Baldante Finney & Rubenstein, P.C., had a checking account at TD Bank, N.A. The account agreement required notice to the bank of “any problem with a check” within thirty days from when a statement showing the item was mailed. Jack Co
> Roy Supply, Inc., and R. M. R. Drywall, Inc., had checking accounts at Wells Fargo Bank. Both accounts required all checks to carry two signatures—that of Edward Roy and that of Twila June Moore, both of whom were executive officers of both companies. Be
> Via e-mail, John Colglazier, commercial account manager at Don Hinds Ford, Inc., offered to buy twenty Ford Explorers from Beau Townsend Ford Lincoln, Inc., and to pay with a check. Beau Townsend agreed. Colglazier then received an e-mail, purportedly fr
> Padraic Gillespie, a student at the University of North Texas, borrowed $12,500 from Bank One, N.A., under its Education One loan program and signed a note for the amount. A few months later, the Education One “student loans listed on Schedule 2” were so
> Background and Facts, When Sidney Solberg died, 100 mineral acres—that is, the right to all of the minerals under a certain 100 acres—and other real property in his estate were distributed to his widow, Lillian, for her life. The remainder interest (the
> Robert Triffin purchased a dishonored payroll check from Fair Law Financial Services (doing business as United Check Cashing) and filed a complaint against the maker seeking to collect on the check. The check was issued by Extensis Group, LLC, to Maria P
> Thomas Caraccia signed a note and mortgage in favour of Virtual Bank to obtain funds to buy property in Palm Beach Gardens, Florida. Virtual Bank indorsed the note in blank, making it bearer paper, and transferred possession of the note to Bank of Americ
> Incorporated under Venezuelan law, a subsidiary of U.S.-based Helmerich & Payne International Drilling Company supplied oil-drilling rigs to entities that were part of the government of Venezuela. The government fell behind in payment on contracts for th
> Goods exported to a foreign country for repair or alteration can qualify for tariff-free or reduced tariff treatment when they re-enter the United States. But the goods do not qualify for favourable import-duty treatment if, in the foreign country, they
> Bayer Corporation makes and markets One a Day brand vitamin. For seventy-five years, the One A Day brand has assured the public, “take one of our tablets every day and you won’t need any other supplements.” One A Day offers the pills in gummy form, with
> Harold Moore bought a barrelracing horse named Clear Boggy for $100,000 for his daughter. The seller was Betty Roper, who appraises barrel-racing horses. (Barrel racing is a rodeo event in which a horse and rider attempt to complete a cloverleaf pattern
> Samsung Telecommunications America, LLC, makes Galaxy phones. Daniel Norcia bought a Galaxy S4 in a Verizon store in San Francisco, California. A Verizon employee opened the box, unpacked the phone, and helped Norcia transfer his contacts to the new phon
> Kim Baker filed several claims in a Massachusetts state court concerning his purchase of four 1960s-era race cars from Lilo Zicron. The parties, after engaging in mediation, agreed to a settlement. The terms required Zicron to sell three of the vehicles
> Camal Terry signed a “Sales Contract” to buy a 1995 BMW 3 Series from Robin Drive Auto, a car dealership in Delaware. Terry agreed to pay $4,995, and Robin Drive agreed to hold the BMW on layaway for him in contemplation of a sale within twenty-one days.
> Medalist Golf, Inc., a high-end golf course builder, was working on a new golf course project in Missouri. Chris Williams, doing business as Cane Creek Sod, submitted a bid with Medalist to provide Meyer Zoysia grass sod for the project. Williams and Med
> Perez v. Stern Nebraska Supreme Court, 279 Neb. 187, 777 N.W.2d 545 (2010). In the Language of the Court GERRARD, J. [Justice] [Reyna] Guido is the mother of two minor children. [Domingo] Martinez, the children’s father, died after he was run over by a c
> Dr. John Braun conceived a cutting-edge device to treat adolescent scoliosis, a severe deformity of the spine. As consideration for the assignment of his intellectual property in the invention, Medtronic Sofamor Danek, Inc., a medical device manufacturer
> Dr. John Holm signed a two-year employment agreement with Gateway Anesthesia Associates, PLLC. During negotiations for the agreement, Gateway’s president, Dr. Jon Nottingham, told Holm that on completion of the contract he would become a partner in the f
> Lisa Goldstein reserved space for a marriage ceremony in a building owned by Orensanz Events, LLC, in New York City. The rental agreement provided that on cancellation of the event “for any reason beyond Owner’s control,” the client’s sole remedy was ano
> Melissa Gallegos bought a used 1996 Saturn automobile for $2,155 from Raul Quintero, doing business as JR’s Motors. Their written contract focused primarily on the transfer of physical possession of the vehicle and did not mention who would pay the taxes
> Shannon Bakke contracted with Magi-Touch Carpet One Floor & Home, Inc., to install a shower door in a bathroom in Bakke’s home. Magi-Touch arranged to have the work done by VA Solutions, LLC, an independent contractor. The shower door imploded, damaging
> State Farm Insurance Company issued a policy to David Stulberger to insure a Nissan Rogue for collision damage. The policy provided, “No assignment . . . is binding upon us unless approved by us.” When the Nissan was involved in an accident, State Farm a
> Chance Innis did business as Roadrunner Hotshot, renting equipment to oil companies in North Dakota. Innis’s sister, Cammie Wold, operated the business. At a restaurant in Williston, Innis and Wold met with Louis Tornabeni, who orally agreed to provide I
> The Statute of Frauds. Michael Brannon filed a suit in an Ohio state court against Derrick and Nancy Edman, claiming breach of an alleged oral contract for the sale of certain real property in Akron. Brannon asserted that he had moved onto the property a
> Intoxication. After Kira had had several drinks one night, she sold Charlotte a diamond necklace worth thousands of dollars for one hundred dollars. The next day, Kira offered one hundred dollars to Charlotte for the return of the necklace. Charlotte ref
> Scott Caldwell worked for UniFirst Corporation under an employment agreement with an arbitration clause. The agreement provided that either party could avoid arbitration by seeking an injunction—but only the employer could obtain this relief without show
> McWane, Inc. v. Federal Trade Commission United States Court of Appeals, Eleventh Circuit, 783 F.3d 814 (2015). In the Language of the Court MARCUS, Circuit Judge: Pipe fittings join together pipes and help direct the flow of pressurized water in pipelin
> McCullough v. Allstate Property and Casualty Insurance Co. Alabama Court of Civil Appeals, 256 So.3d 103 (2018). Background and Facts; Allstate Property and Casualty Insurance Company issued a policy to Jerry McCullough, insuring his pickup truck. McCull
> Visit the Association of Certified Fraud Examiners website and open the “2016 Report to the Nations” (s3-us-west-2.amazonaws.com/acfepublic/2016-report-to-the-nations.pdf ). Read the two- page Executive Summary and fill in the following blanks. The media
> At December 31, Hovak Co.’s Allowance for Doubtful Accounts has an unadjusted debit balance of $3,400. Hovak prepares a schedule of its December 31 accounts receivable by age. Required 1. Compute the required balance of the Allowance fo
> Samsung is a leading global manufacturer that competes with Apple and Google. Key financial figures for Samsung follow. *Figures prepared in accordance with International Financial Reporting Standards as adopted by the Republic of Korea. Required 1. Wha
> Apple’s statement of cash flows in Appendix A describes changes in cash and cash equivalents for the year ended September 29, 2018. What total amount is provided (used) by investing activities? What amount is provided (used) by financing activities?
> Sherman Co. began operations in Year 1. During its first two years, the company completed several trans- actions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows. Year 1 a. Sold $685,
> a. Accounting b. Identifying c. Recording d. Communicating e. Governmental f. Artificial intelligence h. Recordkeeping (bookkeeping) g. Language of business 1. ______helps accountants by performing repetitive tasks such as entering invoice data. 2.
> Review the opening feature of this chapter that highlights Jean Liu and Didi Chuxing (or DiDi). The company plans to open a kiosk in the Ferry Building in San Francisco to sell shirts, hats, and other merchandise. Other retail outlets and expansion plans
> Determine whether each procedure described below is an internal control strength or weakness. 1. The same employee is in charge of recordkeeping and depositing cash receipts. 2. All large payments are made by electronic funds transfer (EFT). 3. Cash rece
> Selected accounts from Fair Trader Co.’s adjusted trial balance for the year ended December 31 follow. Prepare its income statement.
> Organize the class into teams. Each team must prepare a list of 10 internal controls a consumer could observe in a typical retail department store. When called upon, the team’s spokesperson must be prepared to share controls identified by the team that h
> Refer to Google’s balance sheet in Appendix A. Does it use the direct write-off method or allowance method in accounting for its accounts receivable? What is the realizable value of its receivables balance as of December 31, 2018?
> Net Zero Products, a wholesaler of sustainable raw materials, prepares the following aging of receivables analysis. (1) Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method. (2) Prepare the adjusting e
> The following transactions are from Ohlm Company. Year 1 Dec. 16 Accepted a $10,800, 60-day, 8% note in granting Danny Todd a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Todd note. Y
> Barga Co.’s net sales for Year 1 and Year 2 are $730,000 and $1,095,000, respectively. Its year-end balances of accounts receivable follow: Year 1, $65,000; and Year 2, $123,000. a. Compute its days’ sales uncollected at the end of each year. b. Did days
> Refer to the information in QS 5-11 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method.
> Wright Company’s Cash account shows a $27,500 debit balance and its bank statement shows $25,800 on deposit at the close of business on May 31. Prepare its bank reconciliation using the following information. a. The May 31 bank statement lists $100 in ba
> Refer to the information in QS 5-11 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the FIFO method.
> Refer to the information in QS 5-11 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on specific identification. Of the units sold, eight are from the December 7 purchase and
> A car dealer acquires a used car for $14,000, with terms FOB shipping point. Compute total inventory costs assigned to the used car if additional costs include $250 for transportation-in. $150 for advertising. $300 for shipping insurance. $1,250 for sa
> Nagy Company makes a lump-sum purchase of several assets on January 1 at a total cash price of $1,800,000. The estimated market values of the purchased assets are building, $890,000; land, $427,200; land improvements, $249,200; and five trucks, $213,600.
> Key figures for Samsung follow. 1. Compute Samsung’s accounts receivable turnover for the current year. 2. In the current year, does Samsung’s accounts receivable turnover underperform or outperform the industry (assum
> For a through g, indicate whether its amount (1) affects the bank or book side of a bank reconciliation, (2) is an addition or a subtraction in a bank reconciliation, and (3) requires an adjusting journal entry.
> Using information from Exercise 7-9, determine the impact of the December 31, February 1, and June 5 transactions on the accounting equation. For each transaction, indicate whether there would be an increase, decrease, or no effect, for Assets, Liabiliti
> 1. Brooks Agency set up a petty cash fund for $150. At the end of the current period, the fund contained $28 and had the following receipts: entertainment, $70; postage, $30; and printing, $22. Prepare journal entries to record (a) establishment of the f
> Harriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr. Gwen Conrad, who is in private practice. Dr. Conrad is knowledgeable about office management practices and has segregated the cash receipt duties as follows. Knox opens the m
> Record the journal entry for Sales and for Cash Over and Short for each of the following separate situations. a. The cash register’s record shows $420 of cash sales, but the count of cash in the register is $430. b. The cash register’s record shows $980
> Classify each of the following items as assets, liabilities, or equity. 1. Land 2. Common stock 3. Equipment 4. Accounts payable 5. Accounts receivable 6. Supplies
> Identify each of the following statements as either true or false. a. A guideline for safeguarding cash is that all cash receipts be deposited monthly or yearly. b. A voucher system of control is a control system exclusively for cash receipts. c. A guide
> Vail Company recorded the following transactions during November. 1. Open a general ledger having T-accounts for Accounts Receivable, Sales, and Sales Returns and Allowances. Also open an accounts receivable subsidiary ledger having a T-account for each
> Levine Company uses the perpetual inventory system. Prepare journal entries to record the following credit card transactions of Levine Company. Apr. 8 Sold merchandise for $8,400 (that had cost $6,000) and accepted the customer’s Suntrust Bank Card. Sunt
> Selected ledger account balances for Business Solutions follow. Required 1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2021. Compute amounts for the year ended December 31, 2021, for Depreciation
> Assume that Echoing Green makes an investment in Sustain Inc., a sustainability consulting firm. The company purchases 200 shares of Sustain stock for $15,500 cash. Sustain has 500 shares of common stock outstanding, and Echoing Green will be able to sig
> Refer to Google’s financial statements in GOOGLE become especially critical? 3. Why should responsibility for related transactions be divided among different departments or individuals? 4. Why should the person who keeps the records of an asset Appendi
> Visit an area of your college that serves the student community with either products or services. Some examples are food services, libraries, and bookstores. Identify and describe between four and eight internal controls being implemented.
> Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows. Year 1 a. Sold $
> Comparative figures for Apple and Google follow. Required 1. Compute the accounts receivable turnover for the two most recent years for (a) Apple and (b) Google. 2. Which company more quickly collects its accounts receivable in the current year?
> While reviewing the March 31, 2021, balance sheet of Business Solutions, Santana Rey notes that the business has built a large cash balance of $68,057. Its most recent bank money market statement shows that the funds are earning an annualized return of 0
> Organic Food Co.’s Cash account shows a $5,500 debit balance and its bank statement shows $5,160 on deposit at the close of business on August 31. Prepare a bank reconciliation using the following information. a. August 31 cash receipts of $1,240 were pl
> On December 31, Jarden Co.’s Allowance for Doubtful Accounts has an unadjusted credit balance of $14,500. Jarden prepares a schedule of its December 31 accounts receivable by age. Required 1. Compute the required balance of the Allowanc
> Indicate which statements are true and which are false. 1. Separation of recordkeeping for assets from the custody over assets helps reduce fraud. 2. The primary objective of internal control procedures is to safeguard the business against theft from gov
> Prepare journal entries to record the following transactions of Namco. April 1 Accepted a $5,000, 90-day, 4% note from Travis in granting a time extension on his past-due account receivable. June 30 Travis dishonored his note.
> On April 1 of Year 1, Respawn accepted a $10,000, 12-month, 8% note from a customer in granting a time extension on his past-due account receivable. Respawn’s year-end is December 31. Compute interest revenue recorded by Respawn in Year 1 and Year 2.
> On July 23 of the current year, Dakota Mining Co. pays $4,715,000 for land estimated to contain 5,125,000 tons of recoverable ore. It installs and pays for machinery costing $410,000 on July 25. The company removes and sells 480,000 tons of ore during it
> Analyze each of the following transactions by showing the effects on the accounting equation— specifically, identify the accounts and amounts (including + or −) for each transaction. a. The company provides $20,000 of services on credit. b. The company e
> Access the July 28, 2016, 10-K filing (for year-end June 30, 2016) of Microsoft (ticker: MSFT) at SEC.gov. Review its note 4, “Investments.” Required 1. How does the “cost-basis” total amount for its investments as of June 30, 2016, compare to the prior
> On January 1, Manning Co. purchases and installs a new machine costing $324,000 with a five-year life and an estimated $30,000 salvage value. Management estimates the machine will produce 1,470,000 units of product during its life. Actual production of u
> On December 1, Daw Co. accepts a $10,000, 45-day, 6% note from a customer. (1) Prepare the year-end adjusting entry to record accrued interest revenue on December 31. (2) Prepare the entry required on the note’s maturity date assuming it is honored.
> Samsung’s statement of cash flows in Appendix A reports the change in cash and equivalents for the year ended December 31, 2018. Identify the cash generated (or used) by operating activities, by investing activities, and by financing activities.
> Determine the maturity date and compute interest for each note.
> Many commercials include comments similar to the following: “We accept VISA” or “We do not accept American Express.” Conduct your own research by contacting at least five companies via interviews, phone calls, or the Internet to determine the reason(s) c
> Nichole Mustard and Credit Karma are introduced in the chapter’s opening feature. Assume that they are considering two options. Plan A. The company would begin selling access to a premium version of its website. The new online customers would use their
> In addition, its unadjusted trial balance includes the following items. At December 31, Hawke Company reports the following results for its calendar year. Required 1. Prepare the adjusting entry to record bad debts under each separate assumption. a. Bad
> Onslow Co. purchased a used machine for $178,000 cash on January 2. On January 3, Onslow paid $2,840 to wire electricity to the machine. Onslow paid an additional $1,160 on January 4 to secure the machine for operation. The machine will be used for six y
> Each member of a team is to participate in estimating uncollectibles using the aging schedule and percents shown in Problem 7-3A. The division of labor is up to the team. Your goal is to accurately complete this task as soon as possible. After estimating
> On January 1, ProTech Co. pays a lump-sum amount of $1,550,000 for land, Building A, Building B, and Land Improvements B. Building A has no value and will be demolished. Building B will be an office and is appraised at $482,800, with a useful life of 15
> At December 31, Ingleton Company reports the following results for the year. In addition, its unadjusted trial balance includes the following items. Required 1. Prepare the adjusting entry to record bad debts under each separate assumption. a. Bad debts
> Use Apple’s financial statements in Appendix A to answer the following. 1. What is the amount of Apple’s accounts receivable as of September 29, 2018? 2. Compute Apple’s accounts receivable turnover as of September 29, 2018. 3. Apple’s most liquid assets
> Access eBay’s January 30, 2019, filing of its 10-K report for the year ended December 31, 2018, at SEC.gov. Required 1. What is the amount of eBay’s net accounts receivable at December 31, 2018, and at December 31, 2017? 2. “Financial Statement Schedule
> At year-end December 31, Chan Company estimates its bad debts as 1% of its annual credit sales of $487,500. Chan records its bad debts expense for that estimate. On the following February 1, Chan decides that the $580 account of P. Park is uncollectible
> As the accountant for Pure-Air Distributing, you attend a sales managers’ meeting devoted to a discussion of credit policies. At the meeting, you report that bad debts expense is estimated to be $59,000 and accounts receivable at year-end amount to $1,75
> Anton Blair is the manager of a medium-size company. A few years ago, Blair persuaded the owner to base a part of his compensation on the net income the company earns each year. Each December he estimates year-end financial figures in anticipation of the
> Refer to Samsung’s December 31, 2018, Samsung report its accounts receivable, titled as “Trade receivables,” as a current or noncurrent asset?
> Refer to Samsung’s financial statements in Appendix A. What is the amount of Samsung’s accounts receivable, titled as “Trade receivables,” on its December 31, 2018, balance sheet?
> Refer to Samsung’s balance sheet in Appendix A. How does its cash (titled “Cash and cash equivalents”) compare with its other current assets (in both amount and percent) as of December 31, 2018? Compare and assess its cash at December 31, 2018, with its
> The following data are for Rocky Company. (a) Compute Rocky’s accounts receivable turnover. (b) If its competitor, Dixon, has an accounts receivable turnover of 7.5, which company appears to be doing a better job of managing its recei
