Question: Assume you were recently hired by Caffe
Assume you were recently hired by Caffe D’Amore, the company that formulated the world’s first flavored instant cappuccino and now manufactures several lines of flavored cappuccino mixes. Given the company’s tremendous sales growth, Caffe D’Amore’s receivables also have grown. Your job is to evaluate and improve collections of the company’s receivables. To determine this year’s uncollectible receivables, you jotted down the estimated loss rates on the last page of a recent aged listing of outstanding customer balances (see below).
Required:
1. Enter the above totals in a spreadsheet and then insert formulas to calculate the total estimated uncollectible balance.
2. Prepare the year-end adjusting journal entry to adjust the Allowance for Doubtful Accounts to the balance you calculated above. Assume the allowance account has an unadjusted credit balance of $8,000.
3. Of the customer account balances shown above on the last page of the aged listing, which should be your highest priority for contacting and pursuing collection?
4. Assume Jumpy Jim’s Coffee account is determined to be uncollectible. Prepare the journal entry to write off the entire account balance.
> A person with $14,000 is trying to decide whether to purchase a car now, or to invest the money at 6.5% compounded semiannually and then buy a more expensive car. How much will be available for the purchase of a car at the end of 3 years?
> Assume that the minimum payment on a credit card is the greater of $20 or 2% of the unpaid balance. Find the minimum payment on an unpaid balance of $936.24.
> How long will it take money to double if it is invested at (A) 21% compounded continuously? (B) 33% compounded continuously?
> What is the purchase price of a 26-week T-bill with a maturity value of $1,000 that earns an annual interest rate of 4.903%?
> How long will it take money to double if it is invested at (A) 8% compounded semiannually?
> What annual interest rate is earned by a 33-day T-bill with a maturity value of $1,000 that sells for $996.16?
> Use compound interest formula (1) to find n to the nearest larger integer value A = 2P; i = 0.05; n = ?
> simplify each expression assuming that n is an integer and n ( 2.
> Evaluate the expression. If the answer is not an integer, round to four decimal places. (52 – 47)!
> Assume Down, Inc., was organized on May 1 to compete with Despair, Inc.—a company that sells de-motivational posters and office products. Down, Inc., encountered the following events during its first month of operations. a. Received $60,000 cash from the
> Rawlco Communications operates 15 radio stations. The following events occurred during September. a. Placed an order for office supplies costing $2,000. Supplier intends to deliver later in the month. b. Purchased equipment that cost $30,000; paid $10,
> Match each term with its related definition by entering the appropriate letter in the space provided. There should be only one definition per term (that is, there are more definitions than terms).
> Five individuals organized Miami Music Corporation on January 1. At the end of January 31, the following monthly financial data are available: No dividends were declared or paid during January. Required: 1. Complete the following income statement and
> Review the chapter explanations of the income statement and the balance sheet equations. Apply these equations in each of the following independent cases to compute the two missing amounts for each case. Assume that it is the end of the first full year o
> Home Realty, Incorporated, has been operating for three years and is owned by three investors. J. Doe owns 60 percent of the total outstanding stock of 9,000 shares and is the managing executive in charge. On December 31, the following financial items fo
> Cinemark Holdings, Inc., operates movies and food concession counters throughout the United States. Its income statement for the quarter ended September 30, 2016, reported the following (accounts are listed alphabetically in thousands) Required: 1. Solv
> The following items relate to business transactions involving K·Swiss Inc. a. Coins and currency b. Amounts K·Swiss owes to suppliers of shoes c. Amounts K·Swiss can collect from customers d. Amounts owed to bank for loan to buy building e. Property
> Ken Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $49,000 cash to start the business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2017. On that date, the followin
> Define accrual basis accounting and contrast it with cash basis accounting
> Complete the following table by computing the missing amounts (?) for the following independent cases.
> DSW, Inc., is a designer shoe warehouse, selling luxurious and fashionable shoes. Its balance sheet, at July 30, 2016 (the last Saturday of the month), contained the following (listed alphabetically, amounts in thousands) Prepare the balance sheet as of
> Using the following table and the equations underlying each of the four basic financial statements, show (a) that the balance sheet is in balance, (b) that net income is properly calculated, (c) what caused changes in the retained earnings account, and (
> Three individuals organized Pest Away Corporation on January 1 to provide insect extermination services. The company paid dividends of $10,000 during the year. At the end of the first year of operations, the following income statement was prepared: Requi
> Using the following table and the equations underlying each of the four basic financial statements, show (a) that the balance sheet is in balance, (b) that net income is properly calculated, (c) what caused changes in the retained earnings account, and (
> The Coca-Cola Company is one of the world’s leading manufacturers, marketers, and distributors of nonalcoholic beverage concentrates and syrups, producing more than 500 beverage brands. Mark each item in the following list with a letter to indicate wheth
> Tech Data Corporation is a leading distributor of computer peripherals and network solutions. The following items were taken from its recent cash flow statement. Mark each item in the following list with a letter to indicate whether it is a cash flow fro
> On March 10, 2018, Global Solutions, Inc., purchased 5,000 shares of Superior Technology’s 2,000,000 shares of stock for $50 per share. The following information pertains to the fair value of Superior Technology’s stoc
> On June 30, 2018, MetroMedia, Inc., purchased 10,000 shares of Mitek’s 900,000 outstanding shares of stock for $20 per share. The following information pertains to the fair value of Mitek stock: Required: Prepare the journal entries r
> Felicia Company acquired 21,000 of the 60,000 shares of outstanding common stock of Nueces Corporation as a long-term investment. The annual accounting period for both companies ends December 31. The following transactions occurred during the year: Requ
> Each of the following situations is independent. Required: Compute the missing amounts for (i) through (iv), rounded to the nearest dollar.
> Nutty Productions Inc. generated service revenue of $30,000 and income from operations of $10,000. The company estimates that, had it extended credit, it would have instead generated $60,000 of service revenue, but it would have incurred $25,000 of addit
> When accounting was developed in the 14th and 15th centuries, some businesses had very short lives. For instance, a business might have been created for a ship to sail from Europe to North America and return with furs and other goods. After the goods wer
> If you deposited $10,000 in a savings account that earns 10 percent, how much would you have at the end of 10 years? Use a convenient format to display your computations and round to the nearest dollar.
> Your company plans to issue bonds later in the upcoming year. But with the economic uncertainty and varied interest rates, it is not clear how much money the company will receive when the bonds are issued. The company is committed to issuing 2,000 bonds,
> You have the chance to purchase an oil well. Your best estimate is that the oil well’s net royalty income will average $25,000 per year for five years. There will be no residual value at that time. Assume that the cash inflow occurs at each year-end and
> On January 1, you plan to take a trip around the world upon graduation four years from now. Your grandmother wants to deposit sufficient funds for this trip in an investment account for you. On the basis of a budget, you estimate that the trip currently
> Use Excel to answer MC-1. Round to the nearest dollar. MC-1: Use present value tables to compute the present value of $500,000 to be paid in 10 years, with an interest rate of 8 percent. Round to the nearest dollar.
> You plan to retire in 20 years. Use the time value of money tables to calculate whether it is better for you to save $25,000 a year for the last 10 years before retirement or $15,000 for each of the 20 years. Assume you are able to earn 10 percent intere
> As a result of a slowdown in operations, Mercantile Stores is offering to employees who have been terminated a severance package of $100,000 cash, another $100,000 to be paid in one year, and an annuity of $30,000 to be paid each year for 20 years. Use p
> Use present value tables to compute the present value of $500,000 to be paid in 10 years, with an interest rate of 8 percent. Round to the nearest dollar
> Use present value tables to compute the present value of $500,000 to be paid in 10 years, with an interest rate of 8 percent. Round to the nearest dollar
> Complete the requirements for M7-7Â assuming weighted average cost is used in a periodic inventory system Data from M7-7: Given the following information, calculate cost of goods available for sale and ending inventory, then sales, cost of
> Academy Driving School reported the following amounts in its financial statements: Calculate EPS and ROE for Year 2. Another driving school in the same city reported a higher net income ($45,000), yet its EPS and ROE ratios were lower than those for the
> Refer to M11-11. Assume the preferred stock is noncumulative. What amount will go to preferred stockholders? How much of the cash dividends will be available for common stockholders? Data from M11-11: Colliers, Inc., has 100,000 shares of cumulative pr
> What are three limitations of the income statement that often lead to misconceptions?
> Colliers, Inc., has 100,000 shares of cumulative preferred stock outstanding. The preferred stock pays dividends in the amount of $2 per share, but because of cash flow problems, the company did not pay any dividends last year. The board of directors pla
> Complete the requirements of M11-9 assuming that the company announced a 2-for-1 stock split. Data from M11-9: Sturdy Stone Tools, Inc., announced a 100 percent stock dividend. Determine the impact (increase, decrease, no change) of this dividend on th
> Indicate whether each of the following relates to equity (E) or debt (D) financing and whether it makes that form of financing more, or less, favorable.
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. What is the amount of Acc
> Problem Solved Company has been operating for five years as a software consulting firm. During this period, it has experienced rapid growth in Sales Revenue and in Accounts Receivable. To solve its growing receivables problem, the company hired you as it
> E-Tech Initiatives Limited plans to issue $500,000, 10-year, 4 percent bonds. Interest is payable annually on December 31. All of the bonds will be issued on January 1, 2019. Show how the bonds would be reported on the January 2, 2019, balance sheet if t
> This case is available online in the Connect eBook. By completing this case, you will learn what “earnings management” and “smoothing earnings” mean, and you will see how it occurs when estimates of uncollectible accounts are unethically biased.
> You work for a company named MCI and you have been assigned the job of adjusting the company’s Allowance for Doubtful Accounts balance. You obtained the following aged listing of customer account balances for December. Bad debt loss ra
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of Lowe’s in Appendix B at the end of this book. 1. Does the company report Accounts Receivable or an Allowance for Doubtful Accounts on its balance sheet? Explain why it does or does not. 2. Based on your observation
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) 1. Where does the company disclose the a
> This case is available online in the Connect eBook. By completing this case, you will learn to use a spreadsheet to compute the amount of write-down to record after applying LCM/NRV to inventory.
> This case is available online in the Connect eBook. By completing this case, you will learn how the choice of inventory method can influence a manager’s ability to meet profit expectations. To minimize income taxes, inventory is valued
> What is the distinction between service and merchandising companies? What is the distinction between merchandising and manufacturing companies? What is the distinction between retail and wholesale merchandising companies?
> This case is available online in the Connect eBook. By completing this case, you will learn how the choice of inventory method can influence a manager’s ability to meet profit expectations.
> This case is based on an inventory fraud at Phar-Mor and is available online in the Connect eBook. By completing this case, you will learn to identify clues of inventory misreporting.
> On February 6, 2017, the NYSE bond directory quoted a bond price of 130.03 for Ford Motor Company’s 7.45 percent bonds maturing on July 16, 2031. Were the bonds listed at a discount or premium? Does this mean the market interest rate for comparable bonds
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016,
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) 1. How much inventory does the company h
> Assume that you have been hired by Big Sky Corporation as a summer intern. The company is in the process of preparing its annual financial statements. To help in the process, you are asked to prepare an income statement for internal reporting purposes an
> Merchandise Mavens Corporation sells goods throughout North America. One of its product lines has recently reported the following information to you at head office. Based on this information, you have become concerned that the company is experiencing dif
> Assume you work as an accountant in the merchandising division of a large public company that makes and sells athletic clothing. To encourage the merchandising division to earn as much profit on each individual sale as possible, the division manager’s pa
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016,
> What are five common internal control principles?
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. What amount of Net Sales
> Barton Chocolates used a promissory note to borrow $1,000,000 on July 1, 2018, at an annual interest rate of 6 percent. The note is to be repaid in yearly installments of $200,000, plus accrued interest, on June 30 of every year until the note is paid in
> This case is available online in the Connect eBook. By completing this case, you will learn to quantify cash embezzlement, identify missing cash controls, and recommend control
> When some people think about inventory theft, they imagine a shoplifter running out of a store with goods stuffed inside a jacket or bag. But that’s not what the managers thought at the Famous Footwear store on Chicago’
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, Refer to the financial statements of The Home Depot in Appendix A and Lo
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. How much does The Home De
> Complete this case involving Escalade, Inc., available online at the Connect eBook. By completing this case, you will learn to use a spreadsheet to link account balances on an adjusted trial balance to produce aggregated amounts reported in an income sta
> Complete this case, available online at the Connect eBook. By completing this case, you will learn to identify misstatements and make adjustments to correct the financial statements.
> Assume you work as an assistant accountant in the head office of a DVD movie kiosk business, similar to Outerwall’s Redbox machines. With the popularity of online movie rental operations, your company has struggled to meet its earnings targets for the ye
> On December 12, 2002, the SEC filed a lawsuit against four executives of Safety-Kleen Corp., one of the country’s leading providers of industrial waste collection and disposal services. The primary issue was that the executives had directed others in the
> What are the five components of an internal control system?
> Greener Pastures Corporation borrowed $1,000,000 on November 1, 2018. The note carried a 9 percent interest rate with the principal and interest payable on June 1, 2019. Show the accounting equation effects and prepare the journal entries for (a) the not
> Complete the requirements for M7-7Â assuming a periodic LIFO inventory system is used. Data from M7-7: Given the following information, calculate cost of goods available for sale and ending inventory, then sales, cost of goods sold, and gros
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016,
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. How much did The Home Depo
> Complete this case, available online in the Connect eBook. By completing this case, you will learn to use a spreadsheet to capture transactions and use cell linking to prepare an end-of-period trial balance.
> Complete this case, available online in the Connect eBook. By completing this case, you will learn to identify changes in spreadsheet values and infer the underlying transactions responsible for those changes.
> Mike Lynch is the manager of an upstate New York regional office for an insurance company. As the regional manager, his pay package includes a base salary, commissions, and a bonus, when the region sells new policies in excess of its quota. Mike has been
> Read the following excerpt from a complaint filed by the Securities and Exchange Commission against WorldCom(posedonline at http://www.sec.gov/litigation/complaints/comp17829.htm). 1. When a company incurs a cost, its accountants have to decide whether
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. How much did The Home Depo
> On December 1, 2018, your company borrowed $15,000, a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 2019, $2,000; 2020, $3,000; 2021, $4,000; and 2022, $6,000. Show how t
> What three types of objectives are the focus of internal control?
> Complete this case involving Elizabeth Arden, available online in the Connect eBook. By completing this case, you will learn to use a spreadsheet to capture the accounting equation effects of basic transactions.
> Complete this case, available online in the Connect eBook, which involves identifying flaws in a company’s balance sheet.
> You work as an accountant for a small land development company that desperately needs additional financing to continue in business. The president of your company is meeting with the manager of a local bank at the end of the month to try to obtain this fi
