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 Accounts Receivable balance at the beginning of the month?
> Food Lion, Inc., operates a chain of retail supermarkets principally in the southeastern United States. The supermarket business is highly competitive, and it is characterized by low profit margins. Food Lion competes with national, regional, and local s
> Following your retirement as senior vice president of finance for a large company, you joined the board of Cayman Grand Cruises, Inc. You serve on the compensation committee and help set the bonuses paid to the company’s top five execut
> John Brincat was the president and chief executive of Mercury Finance, an auto lender pecializing in high credit-risk customers. The company’s 1995 proxy statement contained the following description of Brincat’s pay package. Mr. Brincat is eligible for
> In late 2002, Frisby Technologies received a default notice from two of its creditors notifying the company that it was in default of the tangible net worth covenant in its loan agreements. Although the company had a period of time to cure the default, i
> Foot Locker, Inc., reported an $18 million loss on sales of $1,283 million for the quarter ended August 4, 2007. The quarterly financial filing (10-Q) also contained this warning for investors and creditors. Required: 1. What is a minimum fixed charge c
> Kleymenova Consulting, Inc., enters into a contract to provide consulting services. In each of the following independent scenarios, determine whether revenue should be recognized at a point in time or over time. 1. The consulting services are the provisi
> Explain the potential conflict of interest that arises when doctors own the hospitals in which they work.
> A feature of top executive pays at Krispy Kreme Doughnuts, Inc., is its compensation recovery policy. The policy allows Krispy Kreme to take back annual or long-term incentive compensation paid to executive officers and certain other management team memb
> Whole Foods Market’s Compensation Committee determines a portion of executive bonuses qualitatively. For the quantitative portion, the Committee selects from 13 performance metrics. For the fiscal year 2014, the Compensation Committee selected the follow
> Alliant Energy just received regulatory approval for its 2017 electricity rate. The company has been authorized to charge customers $0.10 per kilowatt-hour (kwh), a rate lower than other utilities in the state charge. Details of the rate calculation foll
> A brief description of Krispy Kreme’s annual cash bonus plan for top executives follows. The disclosure further indicates that eligible recipients would receive 70%, 100%, or 140% of the portion of the target bonus for performance attri
> As discussed in the chapter, abnormal earnings (AE) are where Xt is the firm’s net income, re is the cost of equity capital, and BVt−1 is the book value of equity at t − 1. Following are Xt, BVt&aci
> Exhibit 6.5 describes the key financial ratios Standard & Poor’s analysts use to assess credit risk and assign credit ratings to industrial companies. The same financial ratios for three firms follow. Required: 1. What credit rati
> As discussed in the chapter, abnormal earnings (AE) are equity at time t − 1. Solve the following problems: 1. If Xt is $5,000, re = 15%, and BVt−1 is $50,000, what is AEt? 2. If Xt is $25,000, re = 18%, and BVt&acir
> Sonic Solutions develops digital media products, services, and technologies for consumers and content development professionals. In June 2010, a team of analysts at J.P. Morgan issued a research report that valued Sonic’s stock at $13 p
> Tail O’ the Dog operates a chain of seven gourmet hot dog stands in southern California. The firm’s first stand, built in 1948, was shaped like (what else?) a giant hot dog, in a giant hot dog bun, and with mustard, of course. Over the years, this humble
> Glick Corporation offers a 10% volume discount to customers who purchase more than 10,000 units of its yoga mats in a calendar year. The volume discount applies to all units purchased in the year, not just the units above 10,000. Once a customer exceeds
> Tack, Inc., reported a Retained earnings balance of $150,000 at December 31, 2016. In June 2017, Tack’s internal audit staff discovered two errors that were made in preparing the 2016 financial statements that are considered material: a. Merchandise cos
> 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
> 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 as a cash equivalent (CE), a short-term investment (STI), or a long-term investment (LTI). 1. A 120-day certificate of deposit. 2. Three hundred shares of MG common stock. The company plans on selling the stock in six
> 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
