Question: Classify each of the following items as

> Assume that inventory purchases were recorded correctly and that no correcting entries were made at December 31, 2015, or December 31, 2016. The errors were discovered in 2017, after the 2016 financial statements were issued. Required: 1. Ignoring incom

> Hentzel Landscaping commenced its business on January 1, 2017. 1. During the first year of its operations, Hentzel purchased supplies in the amount of $12,000 (debited to Supplies inventory), and of this amount, $3,000 were unused as of December 31, 201

> Jones Corporation switched from the LIFO method of costing inventories to the FIFO method at the beginning of 2017. The LIFO inventory at the end of 2016 would have been $80,000 higher using FIFO. Reported retained earnings at the end of 2016 were $1,750

> Required: Classify the following costs as period or traceable costs. Depreciation on office building………………. Depreciation on factory Insurance expense for factory building………………. Bonus to factory workers Product liability insurance premium ………………. Salary

> A recent balance sheet for Pittards, PLC, a British company, follows. The company’s principal activities are the design, production, and procurement of technically advanced leather. The Group financial statements consolidate the account

> On September 1, 2017, Revsine Co. approved a plan to dispose of a segment of its business. Revsine expected that the sale would occur on March 31, 2017, at an estimated gain of $375,000. The segment had actual and estimated operating profits (losses) as

> Munnster Corporation’s income statements for the years ended December 31, 2017, and 2016 included the following information before adjustments: 2017 2016 ______________________________________________________________ Operating income $

> Krewatch, Inc., is a vertically integrated manufacturer and retailer of golf clubs and accessories (gloves, shoes, bags, etc.). Krewatch maintains separate financial reporting systems for each of its facilities. The company experienced the following even

> Presented below is a combined single-step income and retained earnings statement for Hardrock Mining Co. for 2017. Statement of Income and Retained Earnings for the Year Ended December 31, 2017 ($ in 000) Net sales ……………….……………….……………….……………….………………. $5,

> The following information is provided for Kelly Plumbing Supply. Cash received from customers during December 2017 ………………. $387,000 Cash paid to suppliers for inventory during December 2017 ……………….131,000 Cash received from customers includes all $139,

> Under Hart Company’s accounting system, all insurance premiums paid are debited to Prepaid insurance. For interim financial reports, Hart makes monthly estimated charges to Insurance expense with credits to Prepaid insurance. Additional information for t

> Joel Hamilton, D.D.S., keeps his accounting records on the cash basis. During 2017, he collected $200,000 in fees from his patients. At December 31, 2016, Dr. Hamilton had accounts receivable of $18,000 and no liability for deferred fee revenue. At Decem

> The time frame in each of these scenarios is after the effective date of the new revenue recognition rules in ASC Topic 606. For each of the following independent situations, determine the point at which a contract exists and is subject to application of

> Information from Jacob Perez Company’s records is available as follows for the year ended December 31, 2017: Net sales …………………………………………………………………$1,600,000 Cost of goods manufactured: Variable …………………………………………………………………$ 800,000 Fixed ………………………………………………………

> Frate Company was formed on January 1, 2017. The following information is available from Frate’s inventory records for Product Ply: A physical inventory on December 31, 2017, shows 1,600 units on hand. Required: Prepare schedules to co

> John Rigas founded Adelphia Communications Corporation with a $300 license in 1952, took the company public in 1986, and built it into the sixth largest cable television operator by acquiring other systems in the 1990s. As the company grew, it also expan

> Acme’s gross profit ratio increased by 20% over the prior year. Net sales and cost of goods sold for the prior year were $120,000 and $90,000, respectively. Cost of goods sold for the current year is $140,000. Required: Determine the amount of Acme’s sa

> Classify each of the following items according to (1) whether it belongs on the income statement (IS) or balance sheet (BS) and (2) whether it is a revenue (R), expense (E), asset (A), liability (L), or stockholders’ equity (SE) item.

> Each account has a normal balance. For the following list of accounts, indicate whether the normal balance of each is a debit or a credit. Account Nomal Balance 1. Cash 2. Prepaid Insurance 3. Retained Earnings 4. Bonds Payable 5. Investments 6. Cap

> Choose from the following list of account titles the one that most accurately fits the description of that account or is an example of that account. An account title may be used more than once or not at all. Cash Accounts Receivable Notes Receivabl

> Indicate the appropriate classification of each of the following as a current asset (CA), noncurrent asset (NCA), current liability (CL), or long-term liability (LTL). 1. Inventory 2. Accounts payable 3. Cash 4. Patents 5. Notes payable, due in six

> Havre Company would like to buy a building and equipment to produce a new product line. Information about Havre is more useful to some people involved in the project than to others. Required: Complete the following chart by identifying the information l

> Regal Entertainment Group operates the largest chain of movie theaters in the U.S. Classify each of the following items found on the company’s balance sheet included in the Form 10-K for the fiscal year ended December 31, 2015 as a curr

> Billings Inc. would like to buy a franchise to provide a specialized service. Information about Billings is more useful to some people involved in the project than to others. Required: Complete the following chart by identifying the information listed o

> Following are Butler Realty Corporation’s accounts, identified by number. The company has been in the real estate business for ten years and prepares financial statements monthly. Following the list of accounts is a series of transactio

> A list of accounts, with an identifying number for each, is provided. Following the list of accounts is a series of transactions entered into by a company during its first year of operations. Required: For each transaction, indicate the account or accou

> Following are the accounts of Dominique Inc., an interior decorator. The company has been in the decorating business for ten years and prepares quarterly financial statements. Following the list of accounts is a series of transactions entered into by Dom

> A list of accounts, with an identifying number for each, is provided. Following the list of accounts is a series of transactions entered into by a company during its first year of operations. Required: For each transaction, indicate the account or accou

> Using Y for yes and N for no, indicate whether each of the following items should be included in cash and cash equivalents on the balance sheet. If an item should not be included in cash and cash equivalents, indicate where it should appear on the balanc

> From the following list, identify each item as operating (O), investing (I), financing (F), or not separately reported on the statement of cash flows (N). Assume that the indirect method is used to determine the cash flows from operating activities. Purc

> Refer to the transactions recorded directly in T accounts for We-Go Delivery Service in Exercise 3-13. Assume that all of the transactions took place during December. Prepare a trial balance at December 31. Exercise 3-13: Record each of the following t

> During the month, services performed for customers on account amounted to $7,500 and collections from customers in payment of their accounts totaled $6,000. At the end of the month, the Accounts Receivable account had a balance of $2,500. What was the Ac

> Jessie’s Accounting Services was organized on June 1. The company received a contribution of $1,000 from each of the two principal owners. During the month, Jessie’s Accounting Services provided services for cash of $1,400 and services on account for $45

> For each of the following independent cases, fill in the blank with the appropriate dollar amount. Assets Liabilities Owners' Equity Case 1 $125,000 $ 75,000 Case 2 400,000 100,000 Case 3 320,000 95,000

> Assume that a company is preparing a bank reconciliation for the month of June. It reconciles the bank balance and the book balance to the correct balance. For each of the following items, indicate whether the item is an addition to the bank balance (A-B

> Bedford Corp. began the year with $15,000 in cash and another $8,500 in cash equivalents. During the year, operations generated $140,000 in cash. Net cash used in investing activities during the year was $210,000, and the company raised a net amount of $

> For the following situations, indicate whether each involves a deferred expense (DE), a deferred revenue (DR), an accrued liability (AL), or an accrued asset (AA). Example: DE Office supplies purchased in advance of their use 1. Wages earned by emp

> Three methods of matching costs with revenue were described in the chapter: (a) directly match a specific form of revenue with a cost incurred in generating that revenue, (b) indirectly match a cost with the periods during which it will provide benefits

> The steps in the accounting cycle are listed in random order. Fill in the blank next to each step to indicate its order in the cycle. The first step in the cycle is filled in as an example. Order ………………………………………………………………………………… Procedure ________ ………………

> Determine whether recording each of the following adjustments will increase (I), decrease (D), or have no effect (NE) on each of the three elements of the accounting equation. Assets = Liabilities + Stock. Equity Example: Wages earned during the per

> For each of the following independent situations, determine whether the effect of ignoring the required adjustment will result in an understatement (U), will result in an overstatement (O), or will have no effect (NE) on net income for the period. E

> Randy’s Rentals reported the following on its year-end balance sheets: Randy’s rents space to a number of tenants, all of whom pay their monthly rent on the 10th of the following month. Randy’s repo

> Following are a list of source documents and a list of transactions. Indicate by letter next to each transaction the source document that would serve as evidence for the recording of the transaction. Source Documents a. Purchase invoice b. Sales invoice

> Dexter Department Stores reported the following on its year-end balance sheets: During 2017, gift cards redeemed at the stores amounted to $33,750. Required: How much did Dexter receive during 2017 from the sale of gift cards? Explain your answer.

> Listed below are a number of the important users of accounting information. Following the list are descriptions of a major need of each of these various users. Fill in each blank with the one user group that is most likely to have the need described. Co

> Refer to all of the facts in Exercise 5-18. Exercise 5-18: Masthead Company’s comparative balance sheets included inventory of $180,400 at December 31, 2016, and $241,200 at December 31, 2017. Masthead’s comparative balance sheets also included account

> Write the letter of the method that is most applicable to each statement. a. Specific identification b. Average cost c. First-in, first-out (FIFO) d. Last-in, first-out (LIFO) 1. Is the most realistic ending inventory 2. Results in cost of goods sol

> From the following list, identify whether the change in the account balance during the year is added to (A) or deducted from (D) net income when the indirect method is used to determine cash flows from operating activities. Increase in accounts paya

> From the following list, identify whether the change in the account balance during the year would be added to or deducted from net income when the indirect method is used to determine cash flows from operating activities: Increase in accounts receivable

> Classify each of the following items according to the section on the statement of cash flows in which it should appear: operating (O), investing (I), or financing (F): Item Section Example: Cash paid for insurance 1. Cash paid for land 2. Cash recei

> Match each of the organizations listed below with the statement that most adequately describes the role of the group. Securities and Exchange Commission International Accounting Standards Board Financial Accounting Standards Board American Institute of C

> The following basic accounting principles and assumptions were discussed in the chapter: Economic entity Monetary unit Cost principle Going concern Time period Fill in each of the blanks with the accounting principle or assumption that is relevant to the

> Ace Corporation has been in business for many years. Retained earnings on January 1, 2017, is $235,800. The following information is available for the first two months of 2017: Required: Prepare a statement of retained earnings for the month ended Febr

> Systematic Enterprises invested its excess cash in the following instruments during December 2017: Certificate of deposit, due January 31, 2020 ……………………………………. $ 75,000 Certificate of deposit, due March 30, 2018 ………………………………………. 150,000 Commercial paper

> Fill in the blank with the qualitative characteristic for each of the following descriptions. 1. The information to include in reports should take into account whether an omission or misstatement could influence a user's decision 2. Information tha

> Following is a partial list of account balances for two different merchandising companies. The amounts in the accounts represent the balances at the end of the year before any adjustments are made or the books are closed. Required: 1. Identify which in

> During the first month of operations, ABC Company incurred the following costs in ordering and receiving merchandise for resale. No inventory was sold. List price, $100, 200 units purchased Volume discount, 10% off list price Paid freight costs, $56 Insu

> Masthead Company’s comparative balance sheets included inventory of $180,400 at December 31, 2016, and $241,200 at December 31, 2017. Masthead’s comparative balance sheets also included accounts payable of $85,400 at December 31, 2016, and $78,400 at Dec

> It takes Bradley Retailers 90 days on average to sell its inventory. The company began the year with $17,000 in inventory. Sales and cost of goods sold for the year amounted to $95,000 and $60,000, respectively. Required: Assuming 360 days in a year, de

> The following amounts are available from the 2015 financial statements in the Form 10-K for Nordstrom, Inc., the fashion retailer. (All amounts are in millions of dollars and January 30, 2016, is the end of the company’s 2015 fiscal year.) Cost of sales

> For each of the following transactions, indicate which company should include the inventory on its December 31, 2017, balance sheet: 1. Michelson Supplies Inc. shipped merchandise to PJ Sales on December 28, 2017, terms FOB destination. The merchandise

> For each of the following independent situations, fill in the blanks to indicate the effect of the error on each of the various financial statement items. Indicate an understatement (U), an overstatement (O), or no effect (NE). Assume that each of the co

> VanderMeer Inc. reported the following information for the month of February: Inventory, February 1 …………….………………………. 65 units @ $20 Purchases: February 7 ……………………………….……………………. 50 units @ $22 February 18 …………………………………………………… 60 units @ $23 February 27

> The president of SOS Inc. is concerned that the net income at year-end will not reach the expected figure. When the sales manager receives a large order on the last day of the fiscal year, the president tells the accountant to record the sale but to igno

> Put an X in the appropriate column next to the inventory item to indicate its most likely classification on the books of a company that manufactures furniture and then sells it in retail company stores. Classification Raw Work in Finished Goods Merc

> Refer to the financial information for Chipotle and Panera Bread reproduced at the back of the book for the information needed to answer the following questions. Chipotle reproduced: Panera Bread: Required: 1. Locate the note in each companyâ&

> Polk Corp. purchased new store fixtures for $55,000 on January 31, 2015. Polk depreciates assets using the straight-line method and estimated a salvage value for the machine of $5,000. On its December 31, 2017, balance sheet, Polk reported the following:

> On July 1, 2017, Dexter Corp. buys a computer system for $260,000 in cash. Assume that the computer is expected to have a four-year life and an estimated salvage value of $20,000 at the end of that time. Required: 1. Identify and analyze the transaction

> Somerville Corp. purchases office supplies once a month and prepares monthly financial statements. The asset account Office Supplies on Hand has a balance of $1,450 on May 1. Purchases of supplies during May amount to $1,100. Supplies on hand at May 31 a

> On April 1, 2017, Briggs Corp. purchases a 24-month property insurance policy for $72,000. The policy is effective immediately. Assume that Briggs prepares adjustments only once a year, on December 31. Required: 1. Compute the monthly cost of the insura

> Hudson Corp. has extra space in its warehouse and agrees to rent it out to Stillwater Company at the rate of $2,000 per month. The space was made available to Stillwater beginning on September 1. Under the terms of the agreement, Stillwater pays the mont

> On June 1, 2017, MicroTel Enterprises lends $60,000 to MaxiDriver Inc. The loan will be repaid in 60 days with interest at 10%. Required: 1. Identify and analyze the transaction on MicroTel’s books on June 1, 2017. 2. Identify and analyze the adjustment

> Lexington Builders owns property in Kaneland County. Lexington’s 2016 property taxes amounted to $50,000. Kaneland County will send out the 2017 property tax bills to property owners during April 2018. Taxes must be paid by June 1, 2018. Assume that Lexi

> Glendive takes out a 12%, 90-day, $100,000 loan with Second State Bank on March 1, 2017. Assume that Glendive prepares adjustments only four times a year: on March 31, June 30, September 30, and December 31. Required: 1. Identify and analyze the transac

> On July 1, 2017, Rogers Corp. took out a 60-day, $100,000 loan at the bank. On July 31, 2017, Rogers made the following adjustment: Required: 1. What is the interest rate on the loan? Explain your answer. 2. Identify and analyze the transaction on Roge

> Billings Company takes out a 12%, 90-day, $100,000 loan with First National Bank on March 1, 2017. Required: 1. Identify and analyze the transaction to take out the loan on March 1, 2017. 2. Identify and analyze the adjustments for the months of March a

> Carnival Corporation is the largest cruise company in the world. The following item appears in the current liabilities section of it’s balance sheet included in the Form 10-K for the year ended November 30, 2015: Customer deposits …………………………………………………………

> Denton Corporation employs 50 workers in its plant. Each employee is paid $10 per hour and works seven hours per day, Monday through Friday. Employees are paid every Friday. The last payday was Friday, September 19. Required: 1. Compute the dollar amoun

> The highway department contracted with a private company to collect tolls and maintain facilities on a turnpike. Users of the turnpike can pay cash as they approach the toll booth, or they can purchase a pass. The pass is equipped with an electronic sens

> Rock N Roll produces an outdoor concert festival that runs from June 28, 2017, through July 1, 2017. Concertgoers pay $80 for a four-day pass to the festival, and all 10,000 tickets are sold out by the May 1, 2017, deadline to buy tickets. Assume that Ro

> Wolfe & Wolfe collected $9,000 from a customer on April 1 and agreed to provide legal services during the next three months. Wolfe & Wolfe expects to provide an equal amount of services each month. Required: 1. Identify and analyze the transaction for t

> Horse Country Living publishes a monthly magazine for which a 12-month subscription costs $30. All subscriptions require payment of the full $30 in advance. On August 1, the balance in the Subscriptions Received in Advance account was $40,500. During the

> The following list of accounts was taken from the general ledger of Spencer Corporation on December 31. The bookkeeper thought it would be helpful if the accounts were arranged in alphabetical order. Each account contains the balance that is normal for t

> The new bookkeeper for Darby Corporation is getting ready to mail the daily cash receipts to the bank for deposit. Because his previous job was at a bank, he is aware that the bank ‘‘credits’â&#

> Each account has a normal balance. Classify each of the following items found on Vail Resorts’ 2015 financial statements included in the Form 10-K for the year ended July 31, 2015, according to (1) whether it is a revenue (R), expense (

> On December 31, 2017, Baxter Company reported $8,000 in prepaid insurance on its balance sheet. The insurer requires Baxter to pay the annual premium of $24,000 in advance. Required: 1. How much will Baxter recognize each month in insurance expense? 2.

> On September 1, Northhampton Industries signed a six-month lease for office space, which is effective September 1. Northhampton agreed to prepay the rent and mailed a check for $12,000 to the landlord on September 1. Assume that Northhampton prepares adj

> Refer to Panera Bread’s statement of cash flows for the year ended December 29, 2015, as reproduced at the end of the book. Panera Bread’s statement of cash flows: Required: 1. What amount did the company spend on a

> Prepare a table to summarize the following transactions as they affect the accounting equation. Use the format in Exhibit 3-1. Exhibit 3-1: 1. Services provided on account of $1,530 2. Purchases of supplies on account for $1,365 3. Services provided f

> Following are a number of users of accounting information and examples of questions they need answered before making decisions. Fill in each blank to indicate whether the user is most likely to find the answer by looking at the income statement (IS), the

> Gaynor Corporation’s partial income statement is as follows: Sales …………………………………………………………………………………………. $1,200,000 Cost of sales …………………………………………………………………………………… 450,000 Selling expenses ……………………………………………………………………………… 60,800 General and administrative ex

> Some headings and/or items are used on either the single- or multiple-step income statement. Some are used on both. Identify each of the following items as single-step (S), multiple-step (M), both formats (B), or not used on either income statement (N).

> Potential stockholders and lenders are interested in a company’s financial statements. Identify the statement—balance sheet (BS), income statement (IS), or retained earnings statement (RE)—on which ea

> Refer to Chipotle’s balance sheet reproduced in the chapter. Chipotle’s Balance Sheet: Balance sheets for Chipotle at the end of two recent years are shown in Exhibit 1-7. For comparative purposes, the company reports

> For each of the following cases, fill in the blank with the appropriate dollar amount. Sara's Coffee Shop Amy's Deli Jane's Bagels $ 35,000 $ $ 78,000 Net sales Cost of goods sold 45,000 Gross profit 7,000 18,000 Selling expenses 3,000 9,000 General

> Operating expenses are subdivided between selling expenses and general and administrative expenses when a multiple-step income statement is prepared. Identify each of the following items as a selling expense (S) or general and administrative expense (G&a

> Baldwin Corp. reported the following current accounts at the end of two recent years: Required: 1. Compute Baldwin’s current ratio at the end of each of the two years. 2. How has Baldwin’s liquidity changed at the en

> Two Wheeler Cycle Shop buys all of its bikes from one manufacturer, Baxter Bikes. On average, bikes are on hand for 45 days before Two Wheeler sells them. The company sells some bikes for cash but also extends credit to its customers for 30 days. Requir

> Refer to the income statements for Chipotle and Panera Bread reproduced at the back of the book. Chipotle reproduced: Panera Bread: Required: 1. Which is the largest expense for each company in the most recent year? What is its dollar amount? Explai

> Most financial reports contain the following list of basic elements. For each element, identify the person(s) who prepared the element and describe the information a user would expect to find in each element. Some information is verifiable; other informa