At the beginning of April, Bernadette Grechus launched a custom computer solutions company called Softworks. The company had the following transactions during April. a. Bernadette Grechus invested $65,000 cash, office equipment with a value of $5,750, and $30,000 of computer equipment in the company. b. The company purchased land worth $22,000 for an office by paying $5,000 cash and signing a longterm note payable for $17,000. c. The company purchased a portable building with $34,500 cash and moved it onto the land acquired in b. d. The company paid $5,000 cash for the premium on a two-year insurance policy. e. The company provided services to a client and immediately collected $4,600 cash. f. The company purchased $4,500 of additional computer equipment by paying $800 cash and signing a long-term note payable for $3,700. g. The company completed $4,250 of services for a client. This amount is to be received within 30 days. h. The company purchased $950 of additional office equipment on credit. i. The company completed client services for $10,200 on credit. j. The company received a bill for rent of a computer testing device that was used on a recently completed job. The $580 rent cost must be paid within 30 days. k. The company collected $5,100 cash in partial payment from the client described in transaction i. l. The company paid $1,800 cash for wages to an assistant. m. The company paid $950 cash to settle the payable created in transaction h. n. The company paid $608 cash for minor maintenance of the company’s computer equipment. o. B. Grechus withdrew $6,230 cash from the company for personal use. p. The company paid $1,800 cash for wages to an assistant. q. The company paid $750 cash for advertisements on the web during April. Required 1. Prepare general journal entries to record these transactions (use account titles listed in part 2). 2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Prepaid Insurance (108); Office Equipment (163); Computer Equipment (164); Building (170); Land (172); Accounts Payable (201); Notes Payable (250); B. Grechus, Capital (301); B. Grechus, Withdrawals (302); Fees Earned (402); Wages Expense (601); Computer Rental Expense (602); Advertising Expense (603); and Repairs Expense (604). Post the journal entries from part 1 to the accounts and enter the balance after each posting. 3. Prepare a trial balance as of the end of April.
> What is the difference between a note payable and an account payable?
> Refer to this chapter’s opening feature about Apple. Assume that the owners, sometime during their first five years of business, desire to expand their computer product services to meet people’s demands regarding technical support. They eventually decide
> What are the steps in recording closing entries?
> Identify the two main categories of accounting principles.
> Define (a) assets, (b) liabilities, (c) equity, and (d) net assets.
> Describe the three basic forms of business organization and their key attributes.
> Why is the revenue recognition principle needed? What does it demand?
> What work do tax accounting professionals perform in addition to preparing tax returns?
> Identify four kinds of external users and describe how they use accounting information.
> Technology is increasingly used to process accounting data. Why then must we study and understand accounting?
> Explain why investing (assets) and financing (liabilities and equity) totals are always equal.
> Describe the three major business activities in organizations.
> Craig Thorne works in a public accounting firm and hopes to eventually be a partner. The management of Allnet Company invites Thorne to prepare a bid to audit Allnet’s financial statements. In discussing the audit fee, Allnet’s management suggests a fee
> Define return and risk. Discuss the trade-off between them.
> The following six-column table for Solutions Co. includes the unadjusted trial balance as of December 31, 2015. Required 1. Complete the six-column table by entering adjustments that reflect the following information: a. As of December 31, 2015, employ
> The following six-column table for Hawkeye Ranges includes the unadjusted trial balance as of December 31, 2015. Required 1. Complete the six-column table by entering adjustments that reflect the following information. a. As of December 31, 2015, emplo
> Santo Company’s adjusted trial balance on December 31, 2015, follows. Required 1. Prepare an income statement and a statement of owner’s equity for the year 2015, and a classified balance sheet at December 31, 2015.
> Define and explain return on assets.
> The adjusted trial balance of Karise Repairs on December 31, 2015, follows. Required 1. Prepare an income statement and a statement of owner’s equity for the year 2015, and a classified balance sheet at December 31, 2015. There are no
> The adjusted trial balance for Anara Co. as of December 31, 2015, follows. P. Anara invested $40,000 cash in the business during year 2015 (the December 31, 2014, credit balance of the P. Anara, Capital account was $52,800). Anara Company is required t
> The adjusted trial balance for Tybalt Construction as of December 31, 2015, follows. O. Tybalt invested $5,000 cash in the business during year 2015 (the December 31, 2014, credit balance of the O. Tybalt, Capital account was $121,400). Tybalt Construc
> In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank. A. Current assets B. Long-term investments C. Plant assets D. In
> In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank. A. Current assets B. Long-term investments C. Plant assets D. In
> The following unadjusted trial balance is for Power Demolition Company as of the end of its April 30, 2015, fiscal year. The April 30, 2014, credit balance of the owner’s capital account was $46,900, and the owner invested $40,000 cash
> The following unadjusted trial balance is for Ace Construction Co. as of the end of its 2015 fiscal year. The June 30, 2014, credit balance of the owner’s capital account was $53,660, and the owner invested $35,000 cash in the company d
> On July 1, 2015, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company’s first month. July 1 Plume invested $30,000 cash and buildings worth $150,000 in the company. 2 Th
> On April 1, 2015, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month. April 1 Nozomi invested $30,000 cash and computer equipment worth $20,000 in the company
> Tremor Co. had the following transactions in the last two months of its fiscal year ended May 31. Apr. 1 Paid $2,450 cash to an accounting firm for future consulting services. 1 Paid $3,600 cash for 12 months of insurance through March 31 of the next ye
> Review this chapter’s opening feature involving Adrien Edwards and his TheNakedHippie business. 1. Explain how a classified balance sheet can help Adrien know what bills are due when, and whether he has the resources to pay those bills. 2. Why is it impo
> Gomez Co. had the following transactions in the last two months of its year ended December 31. Nov. 1 Paid $1,800 cash for future newspaper advertising. 1 Paid $2,460 cash for 12 months of insurance through October 31 of the next year. 30 Received $3,60
> The adjusted trial balance for Speedy Courier as of December 31, 2015, follows. Required 1. Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31, 2015, (b) the statement of ownerâ&
> The adjusted trial balance for Chiara Company as of December 31, 2015, follows. Required 1. Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31, 2015; (b) the statement of
> A six-column table for Yan Consulting Company follows. The first two columns contain the unadjusted trial balance for the company as of December 31, 2015, and the last two columns contain the adjusted trial balance as of the same date. Required Analysi
> A six-column table for JKL Company follows. The first two columns contain the unadjusted trial balance for the company as of July 31, 2015. The last two columns contain the adjusted trial balance as of the same date. Required Analysis Component 1. Analy
> Following is the unadjusted trial balance for Alonzo Institute as of December 31, 2015, which initially records prepaid expenses and unearned revenues in balance sheet accounts. The Institute provides one-on-one training to individuals who pay tuition di
> Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2015, fo
> Natsu Co. follows the practice of recording prepaid expenses and unearned revenues in balance sheet accounts. The company’s annual accounting period ends on October 31, 2015. The following information concerns the adjusting entries that
> Arnez Co. follows the practice of recording prepaid expenses and unearned revenues in balance sheet accounts. The company’s annual accounting period ends on December 31, 2015. The following information concerns the adjusting entries to
> For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.) A. To record payment of a prepaid expense. B. To record this periodâ€&#
> The unadjusted trial balance and information for the accounting adjustments of Noseworthy Investigators follow. Each team member involved in this project is to assume one of the four responsibilities listed. After completing each of these responsibilitie
> For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.) A. To record receipt of unearned revenue. B. To record this periodâ€
> Roshaun Gould started a web consulting firm called Gould Solutions. He began operations and completed seven transactions in April that resulted in the following accounts, which all have normal balances. Required 1. Prepare a trial balance for this busin
> Yi Min started an engineering firm called Min Engineering. He began operations and completed seven transactions in May, which included his initial investment of $18,000 cash. After those seven transactions, the ledger included the following accounts with
> The accounting records of Tama Co. show the following assets and liabilities as of December 31, 2014 and 2015. Late in December 2015, the business purchased a small office building and land for $300,000. It paid $50,000 cash toward the purchase and a $
> The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2014 and 2015. Late in December 2015, the business purchased a small office building and land for $140,000. It paid $100,000 cash toward the purch
> Nuncio Consulting completed the following transactions during June. a. Armand Nuncio, the owner, invested $35,000 cash along with office equipment valued at $11,000 in the new company. b. The company purchased land valued at $7,500 and a building valued
> Business transactions completed by Hannah Venedict during the month of September are as follows. a. Venedict invested $60,000 cash along with office equipment valued at $25,000 in a new sole proprietorship named HV Consulting. b. The company purchased la
> Zucker Management Services opens for business and completes these transactions in November. Nov. 1 Matt Zucker, the owner, invested $30,000 cash along with $15,000 of office equipment in the company. 2 The company prepaid $4,500 cash for six months’ ren
> Denzel Brooks opens a web consulting business called Venture Consultants and completes the following transactions in March. March 1 Brooks invested $150,000 cash along with $22,000 in office equipment in the company. 2 The company prepaid $6,000 cash fo
> Assume that one of your classmates states that a company’s books should be ongoing and therefore not closed until that business is terminated. Write a half-page memo to this classmate explaining the concept of the closing process by drawing analogies bet
> Aracel Engineering completed the following transactions in the month of June. a. Jenna Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000, and $60,000 of drafting equipment to launch the company. b. The company purchased l
> Humble Management Services opens for business and completes these transactions in September. Sept. 1 Henry Humble, the owner, invests $38,000 cash along with office equipment valued at $15,000 in the company. 2 The company prepaid $9,000 cash for 12 mon
> Karla Tanner opens a web consulting business called Linkworks and completes the following transactions in its first month of operations. April 1 Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company. 2 The company prep
> The December 31, 2015, adjusted trial balance of Business Solutions (reflecting its transactions from October through December of 2015) follows. Required 1. Record and post the necessary closing entries for Business Solutions. 2. Prepare a pos
> Identify in outline format the three major business activities of an organization. For each of these activities, identify at least two specific transactions or events normally undertaken by the business’s owners or its managers.
> An organization undertakes various activities in pursuit of business success. Identify an organization’s three major business activities, and describe each activity.
> A start-up company often engages in the following activities during its first year of operations. Classify each of the following activities into one of the three major activities of an organization. F. Financing I. Investing O. Operating 1. Providing cli
> A start-up company often engages in the following transactions in its first year of operations. Classify those transactions in one of the three major categories of an organization’s business activities. F. Financing I. Investing O. Operating 1. Owner inv
> All business decisions involve aspects of risk and return. Required Identify both the risk and the return in each of the following activities: 1. Stashing $500 cash under your mattress. 2. Placing a $250 bet on a horse running in the Kentucky Derby. 3.
> All business decisions involve aspects of risk and return. Required Identify both the risk and the return in each of the following activities: 1. Investing $2,000 in a 5% savings account. 2. Placing a $2,500 bet on your favorite sports team. 3. Investin
> On January 20, 2015, Tamira Nelson, the accountant for Picton Enterprises, is feeling pressure to complete the annual financial statements. The company president has said he needs up-to-date financial statements to share with the bank on January 21 at a
> AT&T and Verizon produce and market telecommunications products and are competitors. Key financial figures (in $ millions) for these businesses for a recent year follow. Required 1. Compute return on assets for (a) AT&T and (b) Verizon. 2. Which
> Coca-Cola and PepsiCo both produce and market beverages that are direct competitors. Key financial figures (in $ millions) for these businesses for a recent year follow. Required 1. Compute return on assets for (a) Coca-Cola and (b) PepsiCo. 2. Which c
> Ski-Doo Company manufactures, markets, and sells snowmobile and snowmobile equipment and accessories. The average total assets for Ski-Doo is $3,000,000. In its most recent year, Ski-Doo reported net income of $201,000 on revenues of $1,400,000. Required
> Kyzera manufactures, markets, and sells cellular telephones. The average total assets for Kyzera is $250,000. In its most recent year, Kyzera reported net income of $65,000 on revenues of $475,000. Required 1. What is Kyzera’s return on assets? 2. Does r
> Rivera Roofing Company, owned by Reyna Rivera, began operations in July and completed these transactions during that first month of operations. July 1 Reyna Rivera invested $80,000 cash in the company. 2 The company rented office space and paid $700 cas
> Sanyu Sony started a new business and completed these transactions during December. Dec. 1 Sanyu Sony transferred $65,000 cash from a personal savings account to a checking account in the name of Sony Electric. 2 The company rented office space and paid
> Neva Nadal started a new business, Nadal Computing, and completed the following transactions during its first year of operations. a. Neva Nadal invests $90,000 cash and office equipment valued at $10,000 in the company. b. The company purchased a $150,00
> Lita Lopez started Biz Consulting, a new business, and completed the following transactions during its first year of operations. a. Lita Lopez invests $70,000 cash and office equipment valued at $10,000 in the company. b. The company purchased a $150,000
> Nina Niko launched a new business, Niko’s Maintenance Co., that began operations on June 1. The following transactions were completed by the company during that first month. June 1 Nina Niko invested $130,000 cash in the company. 2 The
> Gabi Gram started The Gram Co., a new business that began operations on May 1. The Gram Co. completed the following transactions during its first month of operations. May 1 G. Gram invested $40,000 cash in the company. 1 The company rented a furnished of
> Key figures for the recent two years of both Apple and Google follow. Required 1. Compute the current ratio for both years for both companies. 2. Which company has the better ability to pay short-term obligations according to the current ratio? 3. Anal
> Following is selected financial information of Kia Company for the year ended December 31, 2015. Required Prepare the 2015 statement of cash flows for Kia Company. Cash used by investing activities $(2,000) 1,200 Net increase in cash .. Cash used by
> The following financial statement information is from five separate companies. Required 1. Answer the following questions about Company V: a. What is the amount of equity on December 31, 2014? b. What is the amount of equity on December 31, 2015? c. Wh
> The following financial statement information is from five separate companies: Required 1. Answer the following questions about Company A: a. What is the amount of equity on December 31, 2014? b. What is the amount of equity on December 31, 2015? c. Wh
> Identify how each of the following separate transactions affects financial statements. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. For the income statement, identify how each transaction
> Identify how each of the following separate transactions affects financial statements. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. For the income statement, identify how each transaction
> What is the purpose of accounting in society?
> Indicate the financial statement on which each of the following items appears. Use I for income statement, E for statement of owner’s equity, and B for balance sheet. a. Services Revenue b. Interest Payable c. Accounts Receivable d. Salaries Expense
> Classify each of the following accounts as an asset (A), liability (L), or equity (EQ) account. a. Cash b. Prepaid Rent c. Office Supplies d. Prepaid Insurance e. Office Equipment f. Owner, Capital g. Accounts Payable h. Unearned Rent Revenue i. Ow
> Identify whether a debit or credit yields the indicated change for each of the following accounts. a. To increase Land b. To decrease Cash c. To increase Fees Earned (Revenues) d. To increase Office Expense e. To decrease Unearned Revenue f. To decr
> Identify which accounting principle or assumption best describes each of the following practices: a. In December 2014, Chavez Landscaping received a customer’s order and cash prepayment to install sod at a new house that would not be ready for installati
> Indicate whether a debit or credit decreases the normal balance of each of the following accounts. a. Interest Payable b. Service Revenue c. Salaries Expense d. Accounts Receivable e. Owner, Capital f. Prepaid Insurance g. Buildings h. Interest Re
> Identify each of the following terms/phrases as either an accounting: (a) principle, (b) assumption, or (c) constraint. 1. Materiality 2. Time period 3. Benefit exceeds cost 4. Revenue recognition
> Identify the items from the following list that are likely to serve as source documents. a. Sales ticket b. Trial balance c. Balance sheet d. Telephone bill e. Invoice from supplier f. Company revenue account g. Income statement h. Bank statement i
> The following are common categories on a classified balance sheet. A. Current assets B. Long-term investments C. Plant assets D. Intangible assets E. Current liabilities F. Long-term liabilities For each of the following items, select the letter that ide
> Identify which of the following accounts would be included in a post-closing trial balance. a. Accounts Receivable b. Salaries Expense c. Goodwill d. Land e. Income Tax Expense f. Salaries Payable
> In preparing a work sheet, indicate the financial statement Debit column to which a normal balance in the following accounts should be extended. Use IS for the Income Statement Debit column and BS for the Balance Sheet and Statement of Owner’s Equity Deb
> Cal Consulting initially records prepaid and unearned items in income statement accounts. Given this company’s accounting practices, which of the following applies to the preparation of adjusting entries at the end of its first accounting period? a. Unea
> Identify the following users as either external users (E) or internal users (I). a. Customers b. Suppliers c. Brokers d. Business press e. Managers f. District attorney g. Shareholders h. Lenders i. Controllers j. FBI and IRS k. Consumer group l. Sale
> Answer each of the following questions related to international accounting standards. a. Explain how the closing process is different between accounting under IFRS versus U.S. GAAP. b. What basic principle do U.S. GAAP and IFRS rely upon in recording the
> Answer each of the following questions related to international accounting standards. a. Do financial statements prepared under IFRS normally present assets from least liquid to most liquid or vice versa? b. Do financial statements prepared under IFRS no
> Samsung (Samsung.com) is a leading manufacturer of consumer electronic products. The following selected information is available from Samsung’s financial statements along with that from Apple and Google. Required 1. Compute profit mar
> Match each of the numbered descriptions with the term or phrase it best reflects. Indicate your answer by writing the letter for the term or phrase in the blank provided. A. SASB B. Principles C. Social dimension D. Sustainability E. Conceptual framewo
> Answer each of the following questions related to international accounting standards. a. The International Accounting Standards Board (IASB) issues preferred accounting practices that are referred to as what? b. The FASB and IASB are working on a converg
> List the following steps in preparing a work sheet in their proper order by writing a number from 1 through 5 in the blank space provided. ______ a. Total the statement columns, compute net income (loss), and complete work sheet. ______ b. Extend adjuste
> Classify each of the following items as revenues (R), expenses (EX), or withdrawals (W). 1. Cost of sales (expense) 2. Service revenue 3. Wages expense 4. Owner withdrawal
> Classify the following adjusting entries as involving prepaid expenses (PE), unearned revenues (UR), accrued expenses (AE), or accrued revenues (AR). a. To record revenue earned that was previously received as cash in advance. b. To record wages expense
> Choose from the following list of terms/phrases to best complete the statements below. a. Fiscal year b. Timeliness c. Calendar year d. Accounting period e. Annual financial statements f. Interim financial statements g. Natural business year h. Tim
> Identify the normal balance (debit or credit) for each of the following accounts. a. Fees Earned (Revenues) b. Office Supplies c. Owner, Withdrawals d. Wages Expense e. Accounts Receivable f. Prepaid Rent g. Wages Payable h. Building i. Owner, Capi
