Question: At the beginning of the year (January

> On August 31, 2021, the general ledger of The Dean Acting Academy shows a balance for cash of $7,944. Cash receipts yet to be deposited into the checking account total $3,338, and checks written by the academy but not yet processed by the bank total $1,4

> Below are several statements about occupational fraud. 1. For most large companies, occupational fraud is minimal and internal control procedures are unnecessary. 2. Managers have a variety of reasons for manipulating the numbers in financial statements,

> Refer to the information in E3–8. Required: For each of the adjustments in E3–8, indicate by how much net income in the income statement is higher or lower if the adjustment is not recorded.

> Consider the following transactions for Huskies Insurance Company: 1. Equipment costing $42,000 is purchased at the beginning of the year for cash. Depreciation on the equipment is $7,000 per year. 2. On June 30, the company lends its chief financial off

> Golden Eagle Company prepares monthly financial statements for its bank. The November 30 adjusted trial balance includes the following account information: The following information is known for the month of December: 1. Purchases of supplies during Dece

> Listed below are all the steps in the accounting cycle. Required: List the steps in proper order.

> During the course of your examination of the financial statements of Trojan Corporation for the year ended December 31, 2021, you come across several items needing further consideration. Currently, net income is $100,000. 1. An insurance policy covering

> Refer to the situation discussed in E3–2. Required: For each situation, determine the date for which the company recognizes the expense using cash-basis accounting.

> Refer to the situations discussed in E3–1. Required: For each situation, determine the date for which the company recognizes revenue using cash- basis accounting.

> On January 1, 2021, the general ledger of Dynamite Fireworks includes the following account balances: During January 2021, the following transactions occur: January 2 Purchase rental space for one year in advance, $6,000 ($500/month). January 9 Purchase

> Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. Calculate American Eagle’s return on assets, profit margin, a

> On January 1, 2021, Red Flash Photography had the following balances: Cash, $12,000; Supplies, $8,000; Land, $60,000; Deferred Revenue, $5,000; Common Stock $50,000; and Retained Earnings, $25,000. During 2021, the company had the following transactions:

> Consider the following situations: 1. American Airlines operates a flight from Dallas to Los Angeles on August 16. The pilots’ salaries associated with the flight are paid on September 2. 2. Eddie Bauer pays cash on January 6 to purchase sunglasses from

> Refer to the adjusted trial balance in E3–16. Required: 1. Record the necessary closing entries at December 31, 2021. 2. Prepare a post-closing trial balance.

> Laker Incorporated’s fiscal year-end is December 31, 2021. The following is an adjusted trial balance as of December 31. Required: 1. Prepare the necessary closing entries. 2. Calculate the ending balance of Retained Earnings. 3. Prepar

> Seminoles Corporation’s fiscal year-end is December 31, 2021. The following is a partial adjusted trial balance as of December 31. Required: 1. Prepare the necessary closing entries. 2. Calculate the ending balance of Retained Earnings.

> The December 31, 2021, adjusted trial balance for Fightin’ Blue Hens Corporation is presented below. Required: 1. Prepare an income statement for the year ended December 31, 2021. 2. Prepare a statement of stockholdersâ€&#153

> Below are the restated amounts of net income and retained earnings for Volunteers Inc. and Raiders Inc. for the period 2012–2021. Volunteers began operations in 2013, while Raiders began several years earlier. Required: Calculate the ba

> The December 31, 2021, unadjusted trial balance for Demon Deacons Corporation is presented below. At year-end, the following additional information is available: 1. The balance of Prepaid Rent, $7,200, represents payment on October 31, 2021, for rent fro

> Below are transactions for Hurricane Company during 2021. 1. On October 1, 2021, Hurricane lends $9,000 to another company. The other company signs a note indicating principal and 12% interest will be paid to Hurricane on September 30, 2022. 2. On Novemb

> Below are transactions for Wolverine Company during 2021. 1. On December 1, 2021, Wolverine receives $4,000 cash from a company that is renting office space from Wolverine. The payment, representing rent for December and January, is credited to Deferred

> Financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. The summary of significant accounting policies is located in note A to the financial statements. Locate the section on property and equipment. What depreciat

> Refer to the information in E3–10. Required: For each of the adjustments recorded in E3–10, indicate by how much the assets, liabilities, and stockholders’ equity in the December 31, 2021, balance sheet is higher or lower if the adjustment is not recorde

> Consider the following situations for Shocker: 1. On November 28, 2021, Shocker receives a $4,500 payment from a customer for services to be rendered evenly over the next three months. Deferred Revenue is credited. 2. On December 1, 2021, the company pay

> 1. American Airlines collects cash on June 12 from the sale of a ticket to a customer. The flight occurs on August 16. 2. A customer purchases sunglasses from Eddie Bauer on January 27 on account. Eddie Bauer receives payment from the customer on Februar

> Below are recorded transactions of Yellow Jacket Corporation for August. Required: Provide an explanation for each transaction.

> Terrapin Company engages in the following external transactions for November. 1. Purchase equipment in exchange for cash of $23,400. 2. Provide services to customers and receive cash of $6,800. 3. Pay the current month’s rent of $1,300. 4. Purchase offic

> Below are several external transactions for Hokies Company. Hokies uses the following accounts: Accounts Payable Equipment Accounts Receivable Cash Supplies Utilities Expense Prepaid Rent Rent Expense Service Revenue Common Stock Notes Payable Re

> Below is a list of common accounts. Required: Indicate whether the normal balance of each account is a debit or a credit.

> At the beginning of April, Owl Corporation has a balance of $13,000 in the Retained Earnings account. During the month of April, Owl had the following external transactions. 1. Issue common stock for cash, $11,000. 2. Provide services to customers on acc

> Boilermaker House Painting Company incurs the following transactions for September. 1. Paint houses in the current month for $15,000 on account. 2. Purchase painting equipment for $16,000 cash. 3. Purchase office supplies on account for $2,500. 4. Pay em

> Green Wave Company plans to own and operate a storage rental facility. For the first month of operations, the company had the following transactions. 1. Issue 10,000 shares of common stock in exchange for $32,000 in cash. 2. Purchase land for $19,000. A

> Financial information for American Eagle is presented in Appendix A at the end of the book. Required: 1. The summary of significant accounting policies is located in note 2 to the financial statements. Locate the section on property and equipment. What d

> Boilermaker House Painting Company incurs the following transactions for September. 1. September 3 Paint houses in the current month for $20,000 on account. 2. September 8 Purchase painting equipment for $21,000 cash. 3. September 12 Purchase office

> Below are the external transactions for Shockers Incorporated. 1. Issue common stock in exchange for cash. 2. Purchase equipment by signing a note payable. 3. Provide services to customers on account. 4. Pay rent for the current month. 5. Pay insurance f

> Green Wave Company plans to own and operate a storage rental facility. For the first month of operations, the company has the following transactions. 1. January 1 Issue 10,000 shares of common stock in exchange for $42,000 in cash. 2. January 5 Purch

> Below is the complete list of accounts of Cobras Incorporated and the related balance at the end of March. All accounts have their normal debit or credit balance. Supplies, $1,000; Buildings, $55,000; Salaries Payable, $500; Common Stock, $35,000; Accoun

> Below is the complete list of accounts of Sooner Company and the related balance at the end of April. All accounts have their normal debit or credit balance. Cash, $3,900; Prepaid Rent, $7,400; Accounts Payable $4,300; Common Stock, $40,000; Service Reve

> Below are T-accounts. The first row in each is the beginning balance, and the numbers in parentheses are transaction numbers. Required: Provide an explanation for each transaction.

> Consider the recorded transactions below. Required: Post each transaction to T-accounts and compute the ending balance of each account. The beginning balance of each account before the transactions is: Cash, $3,400; Accounts Receivable, $4,200; Supplies,

> Consider the following transactions. 1. Receive cash from customers, $15,000. 2. Pay cash for employee salaries, $9,000. 3. Pay cash for rent, $3,000. 4. Receive cash from sale of equipment, $8,000. 5. Pay cash for utilities, $1,000. 6. Receive cash from

> Below are several transactions for Crimson Tide Corporation. A junior accountant, recently employed by the company, proposes to record the following transactions. Required: Assess whether the junior accountant correctly proposes how to record each transa

> Below are several transactions for Scarlet Knight Corporation. A junior accountant, recently employed by the company, proposes to record the following transactions. Required: Assess whether the junior accountant correctly proposes how to record each tran

> Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022, for $12,000. They expect to use the Suburban for five years and then sell the vehicle for $4,500

> Bearcat Construction begins operations in March and has the following transactions. March 1 Issue common stock for $21,000. March 5 Obtain $9,000 loan from the bank by signing a note. March 10 Purchase construction equipment for $25,000 cash. March

> Sun Devil Hair Design has the following transactions during the month of February. February 2 Pay $700 for radio advertising for February. February 7 Purchase beauty supplies of $1,300 on account. February 14 Provide beauty services of $2,900 to custome

> Listed below are several terms and phrases associated with the measurement process for external transactions. Required: Pair each item from List A with the item from List B to which it is most appropriately associated.

> Tiger Trade has the following cash transactions for the period. Required: 1. Calculate the ending balance of cash, assuming the balance of cash at the beginning of the period is $5,000. 2. Prepare a statement of cash flows.

> Wolfpack Construction has the following account balances at the end of the year. Required: Use only the appropriate accounts to prepare a balance sheet.

> Below are the account balances for Cowboy Law Firm at the end of December. Required: Use only the appropriate accounts to prepare an income statement.

> Cougar’s Accounting Services provides low-cost tax advice and preparation to those with financial need. At the end of the current period, the company reports the following amounts: Assets = $19,000; Liabilities = $15,000; Revenues = $28,000; Expenses = $

> Eagle Corp. operates magnetic resonance imaging (MRI) clinics throughout the Northeast. At the end of the current period, the company reports the following amounts: Assets = $50,000; Liabilities = $27,000; Dividends = $3,000; Revenues = $14,000; Expenses

> The transactions in this problem are identical to those in E1–2, but now with a focus on Wildcat. Required: 1. For each transaction, indicate whether Wildcat would report the related account in the balance sheet or income statement. 2.

> Eddie’s Galleria sells billiard tables. The company has the following purchases and sales for 2021. Eddie is worried about the company’s financial performance. He has noticed an increase in the purchase cost of billiar

> Below are the four underlying assumptions of generally accepted accounting principles. Required: Match each business assumption with its description.

> Falcon Incorporated has the following transactions with Wildcat Corporation. Required: 1. For each transaction, indicate whether Falcon would report the related account in the balance sheet or income statement. 2. For accounts in the balance sheet, indic

> The qualitative characteristics outlined in the FASB’s conceptual framework include: Consider the following independent situations. 1. In deciding whether to invest in Southwest Airlines or American Airlines, investors evaluate the comp

> Below are concepts associated with the role of the auditor in financial reporting. Required: Match each concept with its description.

> Below are approximate amounts related to cash flow information reported by five companies in previous years. 1. KraftHeinz reports operating cash flows of $3.6 billion, investing cash flows of $0.6 billion, and financing cash flows of −$4.2 billion. What

> Below are approximate amounts related to balance sheet information reported by five companies in previous years. 1. ExxonMobil reports total assets of $228 billion and total liabilities of $107 billion. What is the amount of stockholders’ equity? 2. Citi

> Below are approximate amounts related to retained earnings reported by five companies in previous years. 1. Coca-Cola reports an increase in retained earnings of $3.2 billion and net income of $6.9 billion. What is the amount of dividends? 2. PepsiCo rep

> During its first five years of operations, Red Raider Consulting reports net income and pays dividends as follows. Required: Calculate the balance of retained earnings at the end of each year. Note that retained earnings will always equal $0 at the begin

> Each of the following independent situations represents amounts shown on the four basic financial statements. 1. Revenues = $27,000; Expenses = $18,000; Net income = . 2. Increase in stockholders’ equity = $17,000; Issuance of common stock = $11,000; Net

> Squirrel Tree Services reports the following amounts on December 31, 2021. In addition, the company reported the following cash flows. Required: 1. Prepare a balance sheet. 2. Prepare a statement of cash flows.

> You have just been hired as a consultant to Gilbert Industries, a newly formed company. The company president, Mindy Grayson, is seeking your advice as to the appropriate inventory method Gilbert should use to value its inventory and cost of goods sold.

> At the beginning of 2021, Artichoke Academy reported a balance in common stock ofv$150,000 and a balance in retained earnings of $50,000. During the year, the company issued additional shares of stock for $40,000, earned net income of $30,000, and paid d

> On December 31, 2021, Fighting Okra Cooking Services reports the following revenues and expenses. In addition, the balance of common stock at the beginning of the year was $200,000, and the balance of retained earnings was $32,000. During the year, the c

> The following provides a list of transactions and a list of business activities. Required: Match the transaction with the business activity by indicating the letter that corresponds to the appropriate business activity.

> As a long-term investment, Fair Company purchased 20% of Midlin Company’s 300,000 shares for $360,000 at the beginning of the reporting year of both companies. During the year, Midlin earned net income of $135,000 and distributed cash dividends of $0.25

> On January 1, Marcum’s Landscape purchased 10,000 shares (35%) of the common stock of Atlantic Irrigation for $600,000. Below are amounts reported by both companies for the year. Required: For Marcum’s Landscape, recor

> On January 1, Lifestyle Pools purchased 25% of Marshall Fence’s common stock for $700,000 cash. By the end of the year, Marshall Fence reported net income of $160,000 and paid dividends of $60,000 to all shareholders. Required: For Lifestyle Pools, recor

> Refer to the transactions in ED–4, but now assume the 1,000 shares are sold on February 1, 2022, for $80 per share. Required: 1. Record each of these transactions in 2021, including an adjustment on December 31 for the investment’s fair value, if appropr

> Gator Shoes, Inc., manufactures a line of stylish waterproof footwear. The following transactions relate to investments in common stock during 2021. March 1 Purchases 3,000 shares (10%) of Power Drive Corporation’s common stock for $62 per share. July 1

> Mr. T’s Fashions, once a direct competitor to Italian Stallion’s clothing line, has formed a friendship in recent years leading to a small investment (less than 5%) by Mr. T in the common stock of Italian Stallion. Mr. T’s engages in the following transa

> First National Bank buys and sells securities. The company’s fiscal year ends on December 31. The following selected transactions relating to First National’s trading account occurred during the year. December 20 Purchases 300,000 shares in Classic Compu

> Obtain copies of the annual reports of The Coca-Cola Company and PepsiCo for the most recent year. You can find the annual reports at the companies’ websites (www.coca-cola.com and www.pepsico.com) in the investor information section or at the Securities

> Consider the following statements. Required: Indicate whether each statement is true (T) or false (F).

> On January 1, Ralston Corp. issues $800,000 of 8% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Price Investment Company purchases all of the bonds and classifies them as available-for-sale. Required: As

> ED–11 On January 1, Splash City issues $500,000 of 7% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. T. Bone Investment Company (TBIC) purchases all of the bonds in a private placement. Required: Assuming

> On January 1, Dora purchases 175 of the $1,000, 7%, 15-year bonds issued by Splash City, with interest receivable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 8%, Dora will purchase t

> Alpha has made the following investments. Required: Indicate with an “X” which of the companies above would be accounted for using the consolidation method.

> Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options: 1. Pay $35,000 for the car today. 2. Pay $4,000 at the end of each quarter for three years. Required: Assuming Denzel uses a discount

> You would like to start saving for retirement. Assuming you are now 25 years old and you want to retire at age 55, you have 30 years to watch your investment grow. You decide to invest in the stock market, which has earned about 13% per year over the pas

> GMG Studios plans to invest $60,000 at the end of each year for the next three years. There are three investment options available. Required: Determine the accumulated investment amount by the end of the third year for each of the options.

> Lights, Camera, and More sells filmmaking equipment. The company offers three purchase options: (1) pay full cash today, (2) pay one-half down and the remaining one-half plus 10% in one year, or (3) pay nothing down and the full amount plus 15% in one ye

> Arnold and Helene would like to visit Austria in two years to celebrate their 25th wedding anniversary. Currently, the couple has saved $27,000, but they expect the trip to cost $31,000. If they put $27,000 in an account that earns 7% interest, compounde

> Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the years 2012 through 2019. Due primarily to increased competition and price slashing in the industry, 2020’s income statement reported a

> Dusty would like to buy a new car in six years. He currently has $15,000 saved. He’s considering buying a car for around $19,000 but would like to add a Turbo engine to increase the car’s performance. This would increase the price of the car to $23,000.

> Oprah is deciding between investment options. Both investments earn an interest rate of 7%, but interest on the first investment is compounded annually, while interest on the second investment is compounded semiannually. Which investment would you advise

> At the end of 2021, Worthy Co.’s balance for Accounts Receivable is $20,000, while the company’s total assets equal $1,500,000. In addition, the company expects to collect all of its receivables in 2022. In 2022, however, one customer owing $2,000 become

> Spade Agency separates its accounts receivable into three age groups for purposes of estimating the percentage of uncollectible accounts. 1. Accounts not yet due = $25,000; estimated uncollectible = 4%. 2. Accounts 1–60 days past due = $10,000; estimated

> Williamson Distributors separates its accounts receivable into three age groups for purposes of estimating the percentage of uncollectible accounts. 1. Accounts not yet due = $40,000; estimated uncollectible = 5%. 2. Accounts 1–30 days past due = $11,000

> The Giles Agency offers a 12% trade discount when providing advertising services of $1,000 or more to its customers. Audrey’s Antiques decides to purchase advertising services of $3,500 (not including the trade discount), while Michael’s Motors purchases

> Damon Company receives its monthly bank statement, which reports a balance of $2,000. After comparing this to the company’s cash records, Damon’s accountants determine that deposits outstanding total $4,200 and checks outstanding total $4,450. Required:

> Indicate whether the firm should add or subtract each item below from its balance of cash or the bank’s balance of cash in preparing a bank reconciliation. The first answer is provided as an example. If an item is not a reconciling item

> Match each term associated with a bank reconciliation with its description.

> Record the following transactions. 1. Pay employee salaries of $600 by issuing checks. 2. Purchase computer equipment of $1,000 using a credit card. 3. Pay for maintenance of $400 for a company vehicle using a debit card.

> Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. Which company carries a greater inventory balance as a percen

> During the year, the following sales transactions occur. There is a charge of 3% on all credit card transactions and a 1% charge on all debit card transactions. Calculate the amount recorded as cash receipts from these transactions. 1. Total cash sales =

> Determine whether the firm reports each of the following items as part of cash and cash equivalents in the balance sheet.