Barry Galvin is executive vice president of Community Bank. Active in community affairs, Galvin serves on the board of directors of The Salvation Army. The Salvation Army is expanding rapidly and is considering relocating. At a recent meeting, The Salvation Army decided to buy 250 acres of land on the edge of town. The owner of the property is Olga Nadar, a major depositor in Community Bank. Nadar is completing a bitter divorce, and Galvin knows that Nadar is eager to sell her property. In view of Nadar’s difficult situation, Galvin believes Nadar would accept a low offer for the land. Realtors have appraised the property at $3.6 million. Requirements For each of the following situations, answer the following questions: 1. What is the ethical issue in this situation? 2. What are the alternatives? 3. Who are the stakeholders? What are the possible consequences to each? Analyze from the following standpoints: a. economic, b. legal, and c. ethical. 4. Place yourself in the role of the decision maker. What would you do? How would you justify your decision?
> This exercise should be used with Exercise 1-36B. Requirements 1. Prepare the income statement of David Austin Realty Company for the year ended January 31, 2016. 2. What amount of dividends did David Austin Realty Company declare during the year end
> Amounts of the assets and liabilities of David Austin Realty Company, as of January 31, 2016, are as follows. Also included are revenue, expense, and selected stockholders’ equity figures for the year ended on that date (
> At December 31, 2016, Robinson Products has cash of $18,000, receivables of $20,000, and inventory of $82,000. The company’s equipment totals $183,000. Robinson owes accounts payable of $29,000 and long-term notes payable of $171,000. Common stock is $29
> Assume Flurrish, Inc., is expanding into India. The company must decide where to locate and how to finance the expansion. Identify the financial statement where these decision makers can find the following information about Flurrish, Inc. In some cases, mor
> Cranberry, Inc.’s, comparative balance sheet at January 31, 2017, and 2016, reports the following (in millions): Requirements Three situations about Cranberry’s issuance of stock and declaration and payment of divid
> Blackwell Services, Inc., has current assets of $240 million; property, plant, and equipment of $350 million; and other assets totaling $170 million. Current liabilities are $150 million, and long-term liabilities total $360 million. Requirements 1. U
> Compute the missing amount in the accounting equation for each company (amounts in billions): Which company appears to have the strongest financial position? Explain your reasoning. Assets Liabilities Stockholders' Equity Corner Groc
> During 2016, McFall Company earned revenues of $140 million. McFall incurred, during that same year, salary expense of $31 million, rent expense of $16 million, and utilities expense of $22 million. McFall declared and paid dividends of $12 million durin
> This exercise should be used in conjunction with Exercises 1-26A through 1-28A. The owner of Carson Coffee Roasters Corp. seeks your advice as to whether he should cease operations or continue the business. Complete the report, giving him your opinion of
> Refer to the data in Exercises 1-26A and 1-27A. Requirement 1. Prepare the statement of cash flows of Carson Coffee Roasters Corp., for the month ended August 31, 2017. Using Exhibit 1-11 as a model, show with arrows the relationships among the income
> Refer to the data in Exercise 1-26A. Requirement 1. Prepare the balance sheet of Carson Coffee Roasters Corp., for August 31, 2017. From Exercise 1-26A: Assume the Carson Coffee Roasters Corp. ended the month of August 2017 with these data: Pa
> Assume the Carson Coffee Roasters Corp. ended the month of August 2017 with these data: Requirement 1. Prepare the income statement and the statement of retained earnings of Carson Coffee Roasters Corp., for the month ended August 31, 2017. Paymen
> This exercise should be used with Exercise 1-24A. Refer to the data of Ellen Samuel Realty Company in Exercise 1-24A. Requirements 1. Prepare the income statement of Ellen Samuel Realty Company for the year ended May 31, 2016. 2. What amount of divid
> Amounts of the assets and liabilities of Ellen Samuel Realty Company, as of May 31, 2016, are given as follows. Also included are revenue, expense, and selected stockholders’ equity figures for the year ended on that date
> At December 31, 2016, Womack Products has cash of $23,000, receivables of $15,000, and inventory of $77,000. The company’s equipment totals $184,000. Womack owes accounts payable of $24,000 and long-term notes payable of $165,000. Common stock is $32,500
> Assume Malcolm Tech, Inc., is expanding into China. The company must decide where to locate and how to finance the expansion. Identify the financial statement where these decision makers can find the following information about Malcolm Tech, Inc. In some ca
> Franklin Company’s comparative balance sheet at January 31, 2017, and 2016, reports the following (in millions): Requirements Three situations about Franklin Company’s issuance of stock and declaration and payment o
> Hooper, Inc., has current assets of $200 million; property, plant, and equipment of $350 million; and other assets totaling $160 million. Current liabilities are $170 million and long-term liabilities total $320 million. Requirements 1. Use these data
> Compute the missing amount in the accounting equation for each company (amounts in billions): Which company appears to have the strongest financial position? Explain your reasoning. Assets Liabilities Stockholders' Equity Presto Dryc
> The following selected events were experienced by either Knox Eldercare Services, Inc., a corporation, or Steve Knox, the major stockholder. State whether each event 1. increased, 2. decreased, or 3. had no effect on the total assets of the business.
> Assume Designs Unlimited opened a store in Columbus, Ohio, starting with cash and common stock of $98,000. Laura Sprague, the store manager, then signed a note payable to purchase land for $76,000 and a building for $199,000. Sprague also paid $36,000 fo
> Identify the internal control weakness in the following situations. State how the person can hurt the company. a. Julie Sweitzer works as a security guard at SPEEDY parking in Denver. Sweitzer has a master key to the cash box where customers pay for par
> Use the data in E6A-3. Requirements Journalize the following for the periodic system: 1. Total October purchases in one summary entry. All purchases were on credit. 2. Total October sales in a summary entry. Assume that the selling price was $275 per
> Suppose Synthetix Corporation’s inventory records for a particular computer chip indicate the following at October 31: The physical count of inventory at October 31 indicates that five units of inventory are on hand. Requirements Co
> The Organic Soda Company reported the following comparative information at December 31, 2016, and December 31, 2015 (amounts in millions and adapted): Requirements 1. Calculate the following ratios for 2016 and 2015: a. Current ratio b. Debt ratio
> The top management of Parker Marketing Services examines the following company accounting records at August 29, immediately before the end of the year, August 31: 1. Suppose Parker’s management wants to achieve a current ratio of 2.8.
> FedEx Corporation provides a broad portfolio of transportation, e-commerce, and business services. FedEx reported the following information in its 2015 annual report: NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Prop
> Acorn-France is a major telecommunication conglomerate. Assume that early in year one, Acorn-France purchased equipment at a cost of 5 million euros (€5 million). Management expects the equipment to remain in service for four years and the estimated resi
> Yentun, Inc., has a popular line of boogie boards. Yentun reported net income of $62 million for 2016. Depreciation expense for the year totaled $28 million. Yentun, Inc., depreciates plant assets over eight years using the straight-line method and no re
> Rollyson Financial Management believes that the biotechnology industry is a good investment and is considering investing in one of two companies. However, one company, FutureNow, Inc., uses the FIFO method of inventory, and another company, LifeTech, Inc
> A Mart, Inc., declared bankruptcy. Let’s see why. A Mart reported these figures: Requirement 1. Evaluate the trend of A Mart’s results of operations during 2014 through 2016. Consider the trends of sa
> Suppose Uptown Fashions, a specialty retailer, had these records for evening gowns during 2016: Assume that Uptown sold 131 gowns during 2016 and uses the LIFO method to account for inventory. The income tax rate is 35%. Requirements 1. Compute Upt
> For each of the following situations, identify the inventory method that you would use; or, given the use of a particular method, state the strategy that you would follow to accomplish your goal. a. Inventory costs are decreasing, and your company’s boar
> Which option is better: receive $120,000 now or $25,000, $45,000, $35,000, $15,000, and $50,000, respectively, over the next five years? Requirements 1. Assuming an 8% interest rate, which investment opportunity would you choose? 2. If you could earn
> Big-Box Retail Corporation reported stockholders’ equity on its balance sheet at December 31: Requirements 1. Identify the two components that typically make up accumulated other comprehensive income. 2. For each component of accumu
> Suppose PlaySpace owns the following investments at December 31, 2016: a. 100% of the common stock of PlaySpace United Kingdom, which holds assets of £700,000 and owes a total of £400,000. At December 31, 2016, the current exchange rate of the pound (£)
> Frontland Advertising creates, plans, and handles advertising campaigns in a three-state area. Recently, Frontland had to replace an inexperienced office worker in charge of bookkeeping because of some serious mistakes that had been uncovered
> This question concerns the items and the amounts that two entities, Henderson Co. and Goodland Hospital, should report in their financial statements. During November, Goodland provided Henderson with medical exams for Henderson employees and sent a bill f
> The trial balance of 4AC, Inc., at October 31, 2016, does not balance. Requirements 1. Prepare a trial balance for the ledger accounts of 4AC, Inc., as of October 31, 2016. 2. Determine the out-of-balance amount. The error lies in the Accounts Receiv
> The manager of Sadie Industries Furniture needs to compute the following amounts: a. Total cash paid during December. b. Cash collections from credit customers during December. Analyze Accounts Receivable. c. Cash paid on a note payable during Decembe
> The balance sheet of Libra, Inc., a world leader in the design and sale of telescopic equipment, reported the following information on its balance sheets for 2016 and 2015 (figures are in thousands): In 2016, Libra recorded $13,200 (gros
> Suppose Carat, Inc., reported net receivables of $2,584 million and $2,265 million at January 31, 2017, and 2016, respectively, after subtracting allowances of $68 million and $65 million at these respective dates. Carat earned total revenue of $46,667 m
> Ripley Shirt Company sells on credit and manages its own receivables. Average experience for the past three years has been the following: Jack Rivers, the owner, is considering whether to accept bankcards (VISA, MasterCard). Rivers expects total sales
> The president of The Parkview Company has recently become concerned that the bookkeeper has embezzled cash from the company. She asks you, confidentially, to look over the bank reconciliation that the bookkeeper has prepared to see if you
> Megan Williams, the chief financial officer, is responsible for Dollar Depot’s cash budget for 2017. The budget will help Williams determine if long-term borrowing is needed to end the year with a cash balance of $175,000
> Julie Brown, the owner of Julie’s Party Sandwiches, has delegated management of the business to Stacie Wood, a friend. Brown drops by to meet customers and check up on cash receipts, but Wood buys the merchandise and handles cash payments. Business has b
> During 2016, Vanguard, Inc., changed to the LIFO method of accounting for inventory. Suppose that during 2015, Vanguard changes back to the FIFO method and the following year Vanguard switches back to LIFO again. Requirements 1. What would you think o
> Rockville Loan Company is in the consumer loan business. Rockville borrows from banks and loans out the money at higher interest rates. Rockville’s bank requires Rockville to submit quarterly financial statements to keep its line of credit. Rockville’s ma
> Community Bank has a loan receivable from IMS Chocolates. IMS is six months late in making payments to the bank, and Jan French, a Community Bank vice president, is assisting IMS to restructure its debt. French learns that IMS is depending on landing a
> Sunrise Bank recently appointed the accounting firm of Smith, Godfroy, and Hannaford as the bank’s auditor. Sunrise quickly became one of Smith, Godfroy, and Hannaford’s largest clients. Subject to banking regulations, Sunrise must provide for any expecte
> The net income of Dusek Photography Company decreased sharply during 2016. Patty Dusek, owner of the company, anticipates the need for a bank loan in 2017. Late in 2016, Dusek instructed Tim Loftus, the accountant and a personal friend of yours, to recor
> Green Horizons Energy Co. is in its third year of operations, and the company has grown. To expand the business, Green Horizons borrowed $15 million from Bank of Ravenna. As a condition for making this loan, the bank required that Green Horizons maintain
> Scruffy Murphy is the president and principal stockholder of Scruffy’s Bar & Grill, Inc. To expand, the business is applying for a $350,000 bank loan. To get the loan, Murphy is considering two options for beefing up the owners’ equity of the business: O
> You are studying frantically for an accounting exam tomorrow. You are having difficulty in this course, and the grade you make on this exam can make the difference between receiving a final grade of B or C. If you receive a C, it will lower your grade poi
> The inventory costing method a company chooses can affect the financial statements and thus the decisions of the people who use those statements. Requirements 1. Company A uses the LIFO inventory method and discloses its use of the LIFO method in notes
> Jubilee Corporation is nearing the end of its first year of operations. Jubilee made inventory purchases of $745,000 during the year, as follows: Sales for the year are 5,000 units for $1,200,000 of revenue. Expenses other than cost of g
> Suppose you work in the loan department of Second National Bank. Brian Evert, owner of Evert Beauty Solutions, has come to you seeking a loan for $500,000 to expand operations. Evert proposes to use accounts receivable as collateral for the loan and has
> A fire during 2016 destroyed most of the accounting records of Sinclair Entertainment, Inc. The only accounting data for 2016 that Sinclair can come up with are the following balances at December 31, 2016. The general manager also knows th
> This case is based on an actual situation experienced by one of the authors. Gilead Construction, headquartered in Topeka, Kansas, built a motel in Kansas City. The construction foreman, Slim Pickins, hired the workers for the project. Pickins had his wo
> Environmental Concerns, Inc., has poor internal control. Recently, Oscar Benz, the manager, has suspected the bookkeeper of stealing. Details of the business’s cash position at September 30 follow. a. The Cash account shows a balance o
> Rachel Gambol has owned and operated Gambol Advertising, Inc., since it began 10 years ago. Recently, Gambol mentioned that she would consider selling the company for the right price. Assume that you are interested in buying this business. You obtain it
> On October 1, 2016, Hilda Petrochuck opened Hilda’s Coffee Shop, Inc. Petrochuck is now at a crossroads. The October financial statements paint a glowing picture of the business, and Petrochuck has asked you whether she should expand th
> The unadjusted trial balance of Rock City Services, Inc., at January 31, 2017, does not balance. The list of accounts and their balances is given below. The trial balance needs to be prepared and adjusted before the financial statements at January 31, 20
> Will Gardner opened an Italian restaurant. Business has been good, and Gardner is considering expanding the restaurant. Gardner, who knows little accounting, produced the following financial statements for Little Italy, Inc., at December 3
> A friend named Jay Barlow has asked what effect certain transactions will have on his company. Time is short, so you cannot apply the detailed procedures of journalizing and posting. Instead, you must analyze the transactions without the use of a journal
> A year out of college, you have $10,000 to invest. A friend has started Flowers Unlimited, Inc., and he asks you to invest in his company. You obtain the company’s financial statements, which are summarized at the end of
> Two businesses, Queens Service Corp. and Insley Sales Co., have sought business loans from you. To decide whether to make the loans, you have requested their balance sheets. Requirement 1. Using only these balance sheets, to which entity would you be
> Business is going well for Park ’N Fly, the company that operates remote parking lots near major airports. The board of directors of this family-owned company believes that Park ’N Fly could earn an additional $1.5 million income before interest and taxe
> In 2002, Enron Corporation filed for Chapter 11 bankruptcy protection, shocking the business community: How could a company this large and this successful go bankrupt? This case explores the causes and the effects of Enronâ€
> Cathy Talbert is the general manager of Barham Company, which provides data-management services for physicians in the Columbus, Ohio, area. Barham Company is having a rough year. Net income trails projections for the year by almost $75,000. This shortfal
> Infografix Corporation’s consolidated sales for 2016 were $26.6 billion, and expenses totaled $24.8 billion. Infografix operates worldwide and conducts 37% of its business outside the United States. During
> The following questions are unrelated except that they all apply to plant assets and intangible assets: 1. The manager of Wired Connections Inc. regularly buys plant assets and debits the cost to Repairs and Maintenance Expense. Why would he do that, si
> Suppose you are considering investing in two businesses, La Petite France Bakery and Burgers Ahoy. The two companies are virtually identical, and both began operations at the beginning of the current year. During the year, each company purchased inventor
> When is a lease a capital idea? Laurie Gocker, Inc., entered into a lease arrangement with Nathan Morgan Leasing Corporation for an industrial machine. Morgan’s primary business is leasing. The cash purchase price of the machine is $1,000,000. Its econom
> Microsoft Corporation is the defendant in numerous lawsuits claiming unfair trade practices. Microsoft has strong incentives not to disclose these contingent liabilities. However, GAAP requires that companies report their contingent liabilities. Requir
> Media One owns 18% of the voting stock of Web Talk, Inc. The remainder of the Web Talk stock is held by numerous investors with small holdings. Austin Cohen, president of Media One and a member of Web Talk’s board of directors, heavily influences Web Ta
> Dellroy National Bank purchased land and a building for the lump sum of $6 million. To get the maximum tax deduction, the bank’s managers allocated 80% of the purchase price to the building and only 20% to the land. A more realistic allocation would have
> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AICP
> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AICP
> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AICP
> For each of the situations listed, identify which of three principles (integrity, objectivity, and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AIC
> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AICP
> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct is violated. Assume all persons listed in the situations are members of the AICPA. (N
> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct is violated. Assume all persons listed in the situations are members of the AICPA. (N
> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AICP
> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct is violated. Assume all persons listed in the situations are members of the AICPA. (N
> The accounting records of Brillhart Foods, Inc., include the following items at December 31, 2016: Requirements 1. Show how each relevant item would be reported on the Brillhart Foods, Inc., classified balance sheet, including headings and totals for
> Summit Medical Goods is embarking on a massive expansion. Assume the plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company’s existing locations, offering more items of inventory and with
> On December 31, 2016, Zenith Corp. issues 7%, 10-year convertible bonds payable with a maturity value of $2,000,000. The semiannual interest dates are June 30 and December 31. The market interest rate is 9%. Zenith Corp. amortizes bond discount by the ef
> The notes to the Friendship Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Friendship Ltd. amortizes bond discount by the effective-interest method and pays all inter
> Requirements 1. Journalize the following transactions of Lamothe Communications, Inc.: 2. At December 31, 2016, after all year-end adjustments, determine the carrying amount of Lamothe Communications bonds payable, net. 3. For the six months ended Ju
> On February 28, 2016, Marlin Corp. issues 8%, 10-year bonds payable with a face value of $900,000. The bonds pay interest on February 28 and August 31. Marlin Corp. amortizes bond discount by the straight-line method. Requirements 1. If the market int
> The board of directors of Laptops Plus authorizes the issue of $9,000,000 of 7%, 15-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May 31, 2016, at par. Requirements 1. Journalize the following tra
> The following transactions of Signature Music Company occurred during 2016 and 2017: Requirement 1. Record the transactions in Signature Music Company’s journal. Explanations are not required. 2016 Purchased a piano (inventory) fo
> Sea Spray Marine experienced these events during the current year. a. December revenue totaled $130,000; and, in addition, Sea Spray collected sales tax of 5%. The tax amount will be sent to the state of Rhode Island early in January. b. On August 31,
> The accounting records of Brownfield Foods, Inc., include the following items at December 31, 2016: Requirements 1. Show how each relevant item would be reported on the Brownfield Foods, Inc., classified balance sheet, including heading
> Mountainside Medical Goods is embarking on a massive expansion. Assume plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company’s existing locations, offering more items of inventory and wi
> On December 31, 2016, Rugaboo Corp. issues 6%, 10-year convertible bonds payable with a maturity value of $4,000,000. The semiannual interest dates are June 30 and December 31. The market interest rate is 8%. Rugaboo Corp. amortizes bond discount by the
> The notes to the Mann Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Mann Ltd. amortizes bond discount by the effective-interest method and pays all interest amounts
> Requirements 1. Journalize the following transactions of Lamore Communications, Inc.: 2. At December 31, 2016, after all year-end adjustments, determine the carrying amount of Lamore Communications bonds payable, net. 3. For the six months ended July
