Determine whether each cash receipts procedure is an internal control strength or weakness. 1. If a salesclerk makes an error in recording a cash sale, she can access the register’s electronic record to correct the transaction. 2. All sales transactions, even those for less than $1, are recorded on a cash register. 3. Two employees are tasked with opening mail that contains cash receipts. 4. One of the two employees tasked with opening mail is also the recordkeeper for the business. 5. The supervisor has access to both cash and the accounting records. 6. Receipts are given to customers only for sales that are above $20.
> Golf Challenge Corp. is a retail sports store carrying golf apparel and equipment. The store is at the end of its second year of operation and is struggling. A major problem is that its cost of inventory has continually increased in the past two years. I
> Refer to QS 45 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the gross method and a periodic inventory system.
> Refer to Samsung’s financial statements in Appendix A. What percent of its current assets is inventory as of December 31, 2018 and 2017?
> The following information on current assets and current liabilities is for Belkin Company. (a) Compute Belkin’s acid test ratio. (b) If its competitor, Logit, has an acid test ratio of 1.2, which company is better able to pay for curren
> Refer to Samsung’s financial statements in Appendix A. Compute its cost of goods available for sale for the year ended December 31, 2018.
> Clear Water Co. reports the following balance sheet accounts as of December 31. Prepare a classified balance sheet.
> Refer to Apple’s financial statements in Appendix A and compute its cost of goods available for sale for the year ended September 29, 2018.
> Save-the-Earth Co. reports the following income statement accounts for the year ended December 31. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrat
> Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,028 and No. 5893 for $494. Check No. 5893 was still outstanding as of September 30. The following in
> Flo Choi owns a small business and manages its accounting. Her company just finished a year in which a large amount of borrowed funds was invested in a new building addition as well as in equipment and fixture additions. Choi’s banker requires her to sub
> Refer to Apple’s financial statements in Appendix A. On September 29, 2018, what percent of current assets is represented by inventory?
> In a recent year’s financial statements, Home Depot reported the following results. (a) Compute Home Depot’s return on assets. (b) Is Home Depot’s return on assets better than the 11% return of Lowe&
> Using the yearend information from QS 415, prepare the gross profit section of a multiple step income statement.
> Key figures for Samsung follow. Required 1. For the most recent two years, compute Samsung’s (a) inventory turnover and (b) days’ sales in inventory. 2. Is the change in Samsung’s inventory turnover f
> Vitamix reports the following information for its year ended December 31: cash sales of $60,000; sales on credit of $90,000; general and administrative expenses of $17,000; sales returns of $11,000; cost of goods sold of $80,000; sales discounts of $2,00
> Comparative figures for Apple and Google follow. Required 1. Compute inventory turnover for each company for the most recent two years shown. 2. Compute days’ sales in inventory for each company for the three years shown. 3. Did the cur
> Compute the missing amounts in the separate (partial) income statements A, B, and C.
> Use Apple’s financial statements in Appendix A to answer the following. Required 1. What amount of inventories did Apple report as a current asset (a) on September 29, 2018? (b) On September 30, 2017? 2. Inventories make up what percent of total assets (
> Indicate whether each statement describes a multiple step income statement or a single step income statement. 1. Commonly reports detailed computations of net sales and other costs and expenses. 2. Statement limited to two main categories (revenues and e
> The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31. a. On July 31, the company’s Cash account has a $27,497 debit balance, but its July bank statement shows a $27,2
> Santana Rey of Business Solutions is evaluating her inventory to determine whether it must be adjusted based on lower of cost or market rules. Business Solutions has three different types of software in its inventory, and the following information is ava
> Refer to Samsung’s December 31, 2018, balance sheet in Appendix A. What long-term assets discussed in this chapter is reported by the company?
> Refer to QS 411 and prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage from QS 411.
> Otingo Equipment Co. wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Otingo’s gross profit rate averages 35%. The following information for the first
> Return on assets for Deutsche Auto for each of the last three years follows. Over the three-year period shown, did the company’s return on assets improve or worsen?
> Match each phrase with its definition. A. Sales discount B. Credit period C. Discount period D. FOB destination E. FOB shipping point F. Gross profit H. Purchases discount G. Merchandise inventory 1. Goods a company owns and expects to sell to its custom
> Refer to the information in QS 5-5 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method. (Round per unit costs and inventory amounts to cents.)
> The records of Macklin Co. provide the following information for the year ended December 31. Required 1. Use the retail inventory method to estimate the company’s year-end inventory. 2. A year-end physical inventory at retail prices yie
> Shepard Company sold 4,000 units of its product at $100 per unit during the year and incurred operating expenses of $15 per unit in selling the units. It began the year with 840 units in inventory and made successive purchases of its product as follows.
> Seneca Co. began the year with 6,500 units of product in its January 1 inventory costing $35 each. It made four purchases of its product during the year as follows. The company uses a periodic inventory system. On December 31, a physical count reveals th
> Nakashima Gallery had the following petty cash transactions in February of the current year. Nakashima uses the perpetual system to account for merchandise inventory. Feb. 2 Wrote a $400 check to establish a petty cash fund. 5 Purchased paper for the co
> Hallam Company’s year-end financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Year 1 ending inventory is overstated by $18,000 and Year
> A physical inventory of Office Necessities Company taken at December 31 reveals the following. Required 1. Compute the lower of cost or market for the inventory applied separately to each item. 2. If the market amount is less than the recorded cost of th
> Refer to Samsung’s balance sheet in Appendix A. What does it title its plant assets? What is the book value of its plant assets at December 31, 2018?
> Refer to the information in Problem 5-3B and assume the perpetual inventory system is used. Required 1. Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory. 3. Compute th
> Aloha Company uses a periodic inventory system. It entered into the following calendar-year purchases and sales transactions. (For specific identification, the May 9 sale consisted of 80 units from beginning inventory and 100 units from the May 6 purchas
> Refer to the information in Problem 5-1B and assume the perpetual inventory system is used. Required 1. Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory. 3. Compute th
> Preparing a statement of cash flows 1. Cash purchase of equipment 2. Cash dividends to shareholders 3. Cash paid for advertising 4. Cash paid for wages 5. Cash paid on account payable to supplier 6. Cash received from clients 7. Cash paid for rent 8. Cas
> Ming Company uses a periodic inventory system. It entered into the following purchases and sales transactions for April. (For specific identification, the April 9 sale consisted of 8 units from beginning inventory and 27 units from the April 6 purchase;
> Wayward Company wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Wayward’s gross profit rate averages 34%. The following information for the first qua
> Refer to the information in QS 5-5 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the FIFO method. (Round per unit costs and inventory amounts to cents.)
> Identify the fraud triangle risk factor (opportunity, pressure, or rationalization) in each situation. 1. Employees are told to report increased income or be fired. 2. Several salesclerks share the same cash drawer. 3. A worker did not receive a bonus th
> Del Gato Clinic’s Cash account shows an $11,589 debit balance and its bank statement shows $10,555 on deposit at the close of business on June 30. Prepare its bank reconciliation using the following information. a. Outstanding checks as of June 30 total
> Palmona Co. establishes a $200 petty cash fund on January 1. On January 8, the fund shows $38 in cash along with receipts for the following expenditures: postage, $74; transportation-in, $29; delivery expenses, $16; and miscellaneous expenses, $43. Palmo
> EcoMart establishes a $1,050 petty cash fund on May 2. On May 30, the fund shows $326 in cash along with receipts for the following expenditures: transportation-in, $120; postage expenses, $369; and miscellaneous expenses, $240. The petty cashier could n
> COSO lists five components of internal control: control environment, risk assessment, control activities, information and communication, and monitoring. Indicate the COSO component that matches with each of the following internal control activities. a. I
> York Instruments completed the following transactions and events involving its machinery. Year 1 Jan. 1 Paid $107,800 cash plus $6,470 in sales tax for a new machine. The machine is estimated to have a six-year life and a $9,720 salvage value. Dec. 31 Re
> Waupaca Company establishes a $350 petty cash fund on September 9. On September 30, the fund shows $104 in cash along with receipts for the following expenditures: transportation-in, $40; postage expenses, $123; and miscellaneous expenses, $80. The petty
> Determine whether each cash payment procedure is an internal control strength or weakness. 1. A voucher system is used for all payments of liabilities. 2. The owner of a small business has authority to write and sign checks. 3. When the owner is out of t
> Tana 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 r
> Specter Co. combines cash and cash equivalents on the balance sheet. Using the following information, determine the amount reported on the year-end balance sheet for cash and cash equivalents. $3,000 cash deposit in checking account. $200, 3-year loan t
> Determine whether each policy below is good or bad cash management; then identify the cash management strategy violated or followed for each policy. 1. Bills are paid as soon as they are received. 2. Cash receipts and cash payments are regularly planned
> Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control principle violated or followed for each procedure. 1. The same employee requests, records, and makes payment for purchases of
> Whole Fruits Market took the following actions to improve internal controls. For each of the following actions, identify the internal control principle the company followed. a. The record-keeper is prohibited from having control over cash. b. An insuranc
> Identify the internal control principle that was violated in each of the following separate situations. a. The record-keeper left town after the owner discovered a large sum of money had disappeared. An audit found that the record-keeper had written and
> Using the information in QS 6-12, prepare the adjusting journal entries that Organic Food Co. must record as a result of preparing the bank reconciliation.
> Mercury Delivery Service completed the following transactions involving equipment. Year 1 Jan. 1 Paid $25,860 cash plus $1,810 in sales tax for a new delivery van that was estimated to have a five-year life and a $3,670 salvage value. Van costs are recor
> Champion Contractors completed the following transactions involving equipment. Year 1 Jan. 1 Paid $287,600 cash plus $11,500 in sales tax and $1,500 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life
> A machine costing $257,500 with a four-year life and an estimated $20,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 475,000 units of product during its li
> Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $900,000. The estimated market values of the purchased assets are building, $508,800; land, $297,600; land improvements, $28,800; and four vehicles, $
> On January 2, Bering Co. disposes of a machine costing $44,000 with accumulated depreciation of $24,625. Prepare the entries to record the disposal under each separate situation. 1. The machine is sold for $18,250 cash. 2. The machine is traded in for a
> Gilly Construction trades in an old tractor for a new tractor, receiving a $29,000 trade-in allowance and paying the remaining $83,000 in cash. The old tractor had cost $96,000 and had accumulated depreciation of $52,500. Answer the following questions a
> Troy’s long-term available-for-sale portfolio at the start of this year consists of the following. Troy enters into the following transactions involving its available-for-sale debt securities this year. Jan. 13 Sold one-fourth of the C
> Lok Co. reports net sales of $5,856,480 for Year 2 and $8,679,690 for Year 3. End-of-year balances for total assets are Year 1, $1,686,000; Year 2, $1,800,000; and Year 3, $1,982,000. (a) Compute Lok’s total asset turnover for Year 2 and Year 3. (b) Lok’
> Selected accounts from Gregor Co.’s adjusted trial balance for the year ended December 31 follow. Prepare a classified balance sheet.
> Robinson Company purchased Franklin Company at a price of $2,500,000. The fair market value of the net assets purchased equals $1,800,000. 1. What is the amount of goodwill that Robinson records at the purchase date? 2. Does Robinson amortize goodwill at
> Milano Gallery purchases the copyright on a painting for $418,000 on January 1. The copyright is good for 10 more years, after which the copyright will expire and anyone can make prints. The company plans to sell prints for 11 years. Prepare entries to r
> Equipment has a book value of $16,000 and a fair value of $14,750. The decline in value meets the impairment test. Prepare the entry to record this $1,250 impairment.
> A company pays $760,000 cash to acquire an iron mine on January 1. At that same time, it incurs additional costs of $60,000 cash to access the mine, which is estimated to hold 100,000 tons of iron. The estimated value of the land after the iron is remove
> Montana Mining Co. pays $3,721,000 for an ore deposit containing 1,525,000 tons. The company installs machinery in the mine costing $213,500. Both the ore and machinery will have no salvage value after the ore is completely mined. Montana mines and sells
> Rayya Co. purchases a machine for $105,000 on January 1, 2020. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is sold on July 1, 2024, during its fifth year of service. Prepare en
> Diaz Company owns a machine that cost $250,000 and has accumulated depreciation of $182,000. Prepare the entry to record the disposal of the machine on January 1 in each separate situation. 1. The machine needed extensive repairs and was not worth repair
> Analyze each of the following transactions by showing its effects on the accounting equation— specifically, identify the accounts and amounts (including + or −) for each transaction. Jan. 1 Purchased equipment for $25,000 cash. Estimated useful life is s
> Paris Inc. began operations in Year 1. Following is a series of transactions and events involving its long- term debt investments in available-for-sale securities. Year 1 Mar. 10 Purchased Apple bonds for $30,600. Apr.7 Purchased Ford notes for $56,250.
> Martinez Company owns a building that appears on its prior year-end balance sheet at its original $572,000 cost less $429,000 accumulated depreciation. The building is depreciated on a straight-line basis assuming a 20-year life and no salvage value. Dur
> Oki Company pays $264,000 for equipment expected to last four years and have a $29,000 salvage value. Prepare journal entries to record the following costs related to the equipment. 1. Paid $22,000 cash for a new component that increased the equipment’s
> Apex Fitness Club uses straight-line depreciation for a machine costing $23,860, with an estimated four- year life and a $2,400 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful l
> On April 1, Cyclone Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000. Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the d
> On April 1, Cyclone Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000. Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the s
> On October 1, Organic Farming purchases wind turbines for $140,000. The wind turbines are expected to last six years, have a salvage value of $20,000, and be depreciated using the straight-line method. 1. Compute depreciation expense for the last three m
> Tory Enterprises pays $238,400 for equipment that will last five years and have a $43,600 salvage value. By using the equipment in its operations for five years, the company expects to earn $88,500 annually, after deducting all expenses except depreciati
> Tory Enterprises pays $238,400 for equipment that will last five years and have a $43,600 salvage value. By using the equipment in its operations for five years, the company expects to earn $88,500 annually, after deducting all expenses except depreciati
> NewTech purchases computer equipment for $154,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $25,000. Prepare a table showing depreciation and book value for each of the four years assuming doubl
> NewTech purchases computer equipment for $154,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $25,000. Prepare a table showing depreciation and book value for each of the four years assuming strai
> Ancore Company had no trading debt securities prior to this year. It had the following transactions this year involving trading debt securities. July. 28 Purchased Target bonds for $30,000. Aug. 17 Purchased Kroger bonds for $105,000. 26Purchased Ford
> Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500. The machine’s useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its secon
> Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500. The machine’s useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its secon
> Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500. The machine’s useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its secon
> Rodriguez Company pays $395,380 for real estate with land, land improvements, and a building. Land is appraised at $157,040; land improvements are appraised at $58,890; and the building is appraised at $176,670. Allocate the total cost among the three as
> Cala Manufacturing purchases land for $390,000 as part of its plans to build a new plant. The company pays $33,500 to tear down an old building on the lot and $47,000 to fill and level the lot. It also pays construction costs of $1,452,200 for the new bu
> Rizio Co. purchases a machine for $12,500, terms 2∕10, n∕60, FOB shipping point. Rizio paid within the discount period and took the $250 discount. Transportation costs of $360 were paid by Rizio. The machine required mounting and power connections costin
> A building is acquired on January 1 at a cost of $830,000 with an estimated useful life of eight years and salvage value of $75,000. Compute depreciation expense for the first three years using the double- declining-balance method.
> Park Company reports interest expense of $145,000 and income before interest expense and income taxes of $1,885,000. (1) Compute its times interest earned. (2) Park’s competitor’s times interest earned is 4.0. Is Park in a better or worse position than i
> Selected accounts from Russel Co.’s adjusted trial balance for the year ended December 31 follow. Prepare the liabilities section of its classified balance sheet.
> Huprey Co. is the defendant in the following legal claims. For each of the following separate claims, indicate whether Huprey should (a) record a liability, (b) disclose in notes, or (c) have no disclosure. 1. Huprey can reasonably estimate that a pendin
> Refer to the transactions in Problem C-5A. Assume that although Selk owns 20% of Kildaire’s outstanding stock, circumstances indicate that it does not have a significant influence over the investee. Required Prepare journal entries to record the precedin
> Riverrun Co. provides medical care and insurance benefits to its retirees. In the current year, Riverrun agrees to pay $5,500 for medical insurance and contribute an additional $9,000 to a retirement program. Record the entry for these accrued (but unpai
> Check the Social Security Administration website (SSA.gov) to locate the Social Security office near you. Visit the office to request personal earnings and estimate form. Fill out the form and mail according to the instructions. You will receive a statem
> Review the chapter’s opening feature about Beto Perez and Zumba. Assume the company is considering expanding to Europe and that the current abbreviated income statement appears as follows. Assume also that the company currently has no i
> Assume that your team is in business and you must borrow $6,000 cash for short-term needs. You have been shopping banks for a loan, and you have the following two options. A. Sign a $6,000, 90-day, 10% interest-bearing note dated June 1. B. Sign a $6,000
