Question: Fredo Industries had the following transactions. 1.

> Mr. Etemadi has prepared the following list of statements about service companies and merchandisers. 1. Measuring net income for a merchandiser is conceptually the same as for a service company. 2. For a merchandiser, sales less operating expenses is cal

> The following are the major balance sheet classifications. Current assets (CA) Current liabilities (CL) Long-term investments (LTI) Long-term liabilities (LTL) Property, plant, and equipment (PPE) Stockholders’ equity (SE) Intangible assets (IA) In

> The adjusted trial balance for Martell Bowling Alley at December 31, 2019, contains the following accounts. Instructions (a) Prepare a classified balance sheet; assume that $22,000 of the note payable will be paid in 2020. (b) Comment on the liquidity o

> Keenan Company has an inexperienced accountant. During the first 2 weeks on the job, the accountant made the following errors in journalizing transactions. All entries were posted as made. 1. A payment on account of $840 to a creditor was debited to Acco

> Andrew Clark Company discovered the following errors made in January 2019. 1. A payment of Salaries and Wages Expense of $700 was debited to Equipment and credited to Cash, both for $700. 2. A collection of $1,000 from a client on account was debited to

> Selected accounts for Heather’s Salon are presented below. All June 30 postings are from closing entries. Instructions (a) Prepare the closing entries that were made. (b) Post the closing entries to Income Summary. Salaries and Wag

> Janis Engle has prepared the following list of statements about the accounting cycle. 1. “Journalize the transactions” is the first step in the accounting cycle. 2. Reversing entries are a required step in the accounting cycle. 3. Correcting entries do n

> The adjusted trial balance for Plevin Company is presented in E4-8. Reference Data E4-8: Instructions (a) Prepare an income statement and a retained earnings statement for the year. (b) Prepare a classified balance sheet at July 31. PLEVIN COMPANY

> Plevin Company ended its fiscal year on July 31, 2019. The company’s adjusted trial, balance as of the end of its fiscal year is shown below. Instructions (a) Prepare the closing entries using page J15. (b) Post to the Retained Earnings

> Kay Magill Company had the following adjusted trial balance. Instructions (a) Prepare closing entries at June 30, 2019. (b) Prepare a post-closing trial balance. KAY MAGILL COMPANY Adjusted Trial Balance For the Month Ended June 30, 2019 Adjusted T

> As the company accountant, the management of Nickle Company asks you to explain (a) the concept of reasonable assurance in internal control and (b) the importance of the human factor in internal control.

> Selected worksheet data for Elsayed Company are presented below. Instructions (a) Fill in the missing amounts. (b) Prepare the adjusting entries that were made. Adjusted Account Titles Trial Balance Trial Balance Dr. Cr. Dr. Cr. Accounts Receivable

> The adjustments columns of the worksheet for Misra Company are shown below. Instructions (a) Prepare the adjusting entries. (b) Assuming the adjusted trial balance amount for each account is normal, indicate the financial statement column to which each b

> Worksheet data for DeSousa Company are presented in E4-2. Instructions (a) Journalize the closing entries at April 30. (b) Post the closing entries to Income Summary and Retained Earnings. (Use T-accounts.) (c) Prepare a post-closing trial balance at Ap

> Worksheet data for DeSousa Company are presented in E4-2. Instructions Prepare an income statement, a retained earnings statement, and a classified balance sheet.

> The adjusted trial balance columns of the worksheet for DeSousa Company are as follows. Instructions Complete the worksheet. DESOUSA COMPANY Worksheet (partial) For the Month Ended April 30, 2019 Adjusted Trial Income Balance Statement Balance Sheet

> The trial balance columns of the worksheet for Nanduri Company at June 30, 2019, are as follows. Other data: 1. A physical count reveals $500 of supplies on hand. 2. $100 of the unearned revenue is still unearned at month-end. 3. Accrued salaries are $21

> The following data are taken from the comparative balance sheets of Cascade Billiards Club, which prepares its financial statements using the accrual basis of accounting. Members are billed based upon their use of the club’s facilitie

> The adjusted trial balance for Frinzi Company is given in E3-17. Data from E3-17: Instructions Prepare the income and retained earnings statements for the year and the balance sheet at August 31. FRINZI COMPANY Trial Balance August 31, 2019 Before A

> The trial balances before and after adjustment for Frinzi Company at the end of its fiscal year is presented below. Instructions Prepare the adjusting entries that were made. FRINZI COMPANY Trial Balance August 31, 2019 Before After Adjustment Adjus

> Greenock Limited has the following information available for accruals for the year ended December 31, 2019. The company adjusts its accounts annually. 1. The December utility bill for $425 was unrecorded on December 31. Greenock paid the bill on January

> (a) Explain the control principle of independent internal verification. (b) What practices are important in applying this principle?

> Action Quest Games Inc. adjusts its accounts annually. The following information is available for the year ended December 31, 2019. 1. Purchased a 1-year insurance policy on June 1 for $1,800 cash. 2. Paid $6,500 on August 31 for 5 months’ rent in advanc

> On December 31, 2019, Waters Company prepared an income statement and balance sheet, but failed to take into account three adjusting entries. The balance sheet showed total assets $150,000, total liabilities $70,000, and stockholders’ e

> The ledger of Armour Lake Lumber Supply on July 31, 2019, includes the selected accounts below before adjusting entries have been prepared. An analysis of the company’s accounts shows the following. 1. The notes payable pays interest a

> Selected accounts of Koffman Company are as follows. Instructions After analyzing the accounts, journalize (a) the July transactions and (b) the adjusting entries that were made on July 31. (Hint: July transactions were for cash.) Supplies Expens

> A partial adjusted trial balance of Gehring Company at January 31, 2019, shows the following. Instructions Answer the following questions, assuming the year begins January 1. (a) If the amount in Supplies Expense is the January 31 adjusting entry and $1,

> The trial balance for Pioneer Advertising Inc. is shown in Illustration 3-3 (page 101). Instead of the adjusting entries shown in the text at October 31, assume the following adjustment data. 1. Supplies on hand at October 31 total $500. 2. Expired insur

> Robin Shalit, D.D.S., opened a dental practice on January 1, 2019. During the first month of operations, the following transactions occurred. 1. Performed services for patients who had dental plan insurance. At January 31, $875 of such services were perf

> The ledger of Perez Rental Agency on March 31 of the current year includes the selected accounts, shown below, before quarterly adjusting entries have been prepared. An analysis of the accounts shows the following. 1. The equipment depreciates $400 per

> Lei Company accumulates the following adjustment data at December 31. 1. Services performed but unbilled total $1,000. 2. Supplies of $300 have been used. 3. Utility expenses of $225 are unpaid. 4. Services performed of $260 collected in advance. 5. Sala

> Verne Cova Company has the following balances in selected accounts on December 31, 2019. Accounts Receivable……………………………………$ –0– Accumulated Depreciation—Equipment………….–0– Equipment…………………………………………………. 7,000 Interest Payable…………………………………………….–0– Notes Pay

> (a) Rochelle Company ships merchandise to Jay Company on December 30. The merchandise reaches the buyer on January 6. Indicate the terms of sale that will result in the goods being included in (1) Rochelle’s December 31 inventory, and (2) Jay’s December

> (a) Who are internal users of accounting data? (b) How does accounting provide relevant data to these users?

> Hart Corporation encounters the following situations: 1. Hart collects $1,300 from a customer in 2019 for services to be performed in 2020. 2. Hart incurs utility expense which is not yet paid in cash or recorded. 3. Hart’s employees worked 3 days in 201

> On numerous occasions, proposals have surfaced to put the federal government on the accrual basis of accounting. This is no small issue. If this basis were used, it would mean that billions in unrecorded liabilities would have to be booked, and the feder

> Ian Muse has prepared the following list of statements about the time period assumption. 1. Adjusting entries would not be necessary if a company’s life were not divided into artificial time periods. 2. The IRS requires companies to fi le annual tax retu

> Beyers Corporation provides security services. Selected transactions for Beyers are presented below. Oct. 1 Issued common stock in exchange for $66,000 cash from investors. 2 Hired part-time security consultant. Salary will be $2,000 per month. First day

> The accounts in the ledger of Time Is Money Delivery Service contain the following balances on July 31, 2019. Accounts Receivable $10,642 Prepaid Insurance $ 1,968 Accounts Payable 8,396 Maintenance and Repairs Expense 961 Cash ? Service Reve

> The bookkeeper for Brooks Equipment Repair made a number of errors in journalizing and posting, as described below. 1. A credit posting of $450 to Accounts Receivable was omitted. 2. A debit posting of $750 for Prepaid Insurance was debited to Insurance

> Selected transactions for Alvarado Company during its fi rst month in business are presented below. Sept. 1 Stockholders invested $10,000 cash in the business in exchange for common stock. 5 Purchased equipment for $12,000 paying $4,000 in cash and the b

> Presented below is the ledger for Higgs Co. Instructions (a) Reproduce the journal entries for the transactions that occurred on October 1, 10, and 20, and provide explanations for each. (b) Determine the October 31 balance for each of the accounts abo

> The T-accounts below summarize the ledger of Santana Landscaping Company at the end of its first month of operations. Instructions (a) Prepare the complete general journal (including explanations) from which the postings to Cash were made. (b) Prepare

> Selected transactions from the journal of Kati Tillman, investment broker, are presented below. Instructions (a) Post the transactions to T-accounts. (b) Prepare a trial balance at August 31, 2019. Date Account Titles and Explanation Ref. Debit Cre

> Both the gross profit method and the retail inventory method are based on averages. For each method, indicate the average used, how it is determined, and how it is applied.

> Meghan Selzer has prepared the following list of statements about the general ledger. 1. The general ledger contains all the asset and liability accounts, but no stockholders’ equity accounts. 2. The general ledger is sometimes referred to as simply the

> On April 1, Adventures Travel Agency, Inc. began operations. The following transactions were completed during the month. 1. Stockholders invested $24,000 in the business in exchange for common stock. 2. Obtained a bank loan for $7,000 by issuing a note p

> Selected transactions for Sophie’s Dog Care are as follows during the month of March. March 1 Paid monthly rent of $1,200. 3 Performed services for $140 on account. 5 Performed services for cash of $75. 8 Purchased equipment for $600. The company paid c

> Leppard Enterprises had the following selected transactions. 1. Kim Leppard invested $5,000 cash in the business in exchange for common stock. 2. Paid office rent of $950. 3. Performed consulting services and billed a client $4,700. 4. Declared and paid

> Transaction data for Lexington Real Estate Agency are presented in E2-4. Reference Data E2-4: Oct. 1 Diane Lexington begins business as a real estate agent with a cash investment of $20,000 in exchange for common stock. 2 Hires an administrative as

> Presented below is information related to Lexington Real Estate Agency. Oct. 1 Diane Lexington begins business as a real estate agent with a cash investment of $20,000 in exchange for common stock. 2 Hires an administrative assistant. 3 Purchases of

> Data for L. Takemoto, interior decorating, are presented in E2-2. Reference Data E2-2: Jan. 2 Stockholders invested $15,000 cash in the business in exchange for common stock. 3 Purchased used car for $8,200 cash for use in the business. 9 Purchased s

> Selected transactions for L. Takemoto, an interior decorating firm, in its first month of business, are shown below. Jan. 2 Stockholders invested $15,000 cash in the business in exchange for common stock. 3 Purchased used car for $8,200 cash for use in

> Faith Dillon has prepared the following list of statements about accounts. 1. An account is an accounting record of either a specific asset or a specific liability. 2. An account shows only increases, not decreases, in the item it relates to. 3. Some ite

> What is the economic entity assumption? Give an example of its violation.

> The statement of cash flows classifies each transaction as an operating activity, an investing activity, or a financing activity. Operating activities are the types of activities the company performs to generate profits. Investing activities include the

> This information is for Paulo Company for the year ended December 31, 2019. Cash received from revenues from customers………$600,000 Cash received for issuance of common stock…………..280,000 Cash paid for new equipment…………………………………..115,000 Cash dividends pa

> Wyco Park, a public camping ground near the Four Corners National Recreation Area, has compiled the following financial information as of December 31, 2019. Revenues during 2019—camping fees $140,000 Notes payable $ 60,000 Revenues during 2019—ge

> The following information relates to La Greca Co. for the year 2019. Retained earnings, January 1, 2019 $48,000 Advertising expense $ 1,800 Dividends during 2019 5,000 Rent expense 10,400 Service revenue 62,500 Utilities exp

> Two items are omitted from each of the following summaries of balance sheet and income statement data for two corporations for the year 2019, Plunkett Co. and Herring Enterprises. Instructions Determine the missing amounts. Plunkett Herring Enterpr

> Toth Company had the following assets and liabilities on the dates indicated. Toth began business on January 1, 2018, with an investment of $100,000 from stockholders. Instructions From an analysis of the change in stockholders’ equi

> An analysis of transactions for Foley & Co. was presented in E1–8. Assume that August is the company’s first month of business. Reference Figure E1-8: Instructions Prepare an income statement and a retained earn

> An analysis of the transactions made by Foley & Co., a certified public accounting firm, for the month of August is shown below. Each increase and decrease in stockholders’ equity is explained. Instructions (a) Describe each trans

> Keystone Computer Timeshare Company entered into the following transactions during May 2019. 1. Purchased computers for $20,000 from Data Equipment on account. 2. Paid $3,000 cash for May rent on storage space. 3. Received $15,000 cash from customers for

> Selected transactions for Verdent Lawn Care Company are as follows. 1. Sold common stock for cash to start business. 2. Paid monthly rent. 3. Purchased equipment on account. 4. Billed customers for services performed. 5. Paid dividends. 6. Received cash

> “When perpetual inventory records are kept, the results under the FIFO and LIFO methods are the same as they would be in a periodic inventory system.” Do you agree? Explain.

> Bailey Cleaners has the following balance sheet items. Accounts payable………………Accounts receivable Cash…………………………………………Notes payable Equipment……………Salaries and wages payable Supplies…………………………………..Common stock Instructions Classify each item as an asset,

> The following situations involve accounting principles and assumptions. 1. Tina Company owns buildings that are worth substantially more than they originally cost. In an effort to provide more relevant information, Tina reports the buildings at fair valu

> Sam Cresco, president of Cresco Company, has instructed Sharon Gross, the head of the accounting department for Cresco Company, to report the company’s land in the company’s accounting reports at its fair value of $170,000 instead of its cost of $100,000

> (a) The following are users of financial statements. ______ Customers ______ Securities and Exchange Commission ______ Internal Revenue Service ______ Store manager ______ Labor unions ______ Suppliers ______ Marketing manager ______ Vice preside

> Callison Company performs the following accounting tasks during the year. ______ Analyzing and interpreting information. ______ Classifying economic events. ______ Explaining uses, meaning, and limitations of data. ______ Keeping a systematic chronologic

> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ascLogin. cfm to log in and prepare responses to the following. (a) How is cash defined in the Codification? (b) How are cash equivalents defined in the Codification? (c)

> You are the assistant controller in charge of general ledger accounting at Linbarger Bottling Company. Your company has a large loan from an insurance company. The loan agreement requires that the company’s cash account balance be maintained at $200,000

> As a new auditor for the CPA firm of Eaton, Quayle, and Hale, you have been assigned to review the internal controls over mail cash receipts of Pritchard Company. Your review reveals the following. Checks are promptly endorsed “For Deposit Only,” but no

> The board of trustees of a local church is concerned about the internal accounting controls for the offering collections made at weekly services. The trustees ask you to serve on a three-person audit team with the internal auditor of a local college and

> All organizations should have systems of internal control. Universities are no exception. This site discusses the basics of internal control in a university setting. Address: www.bc.edu/offices/audit/controls Steps: Go to the site shown above. Instructi

> Josh Kuchin is studying for the next accounting midterm examination. What should Josh know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of “net realizable value” in the lower-of-cost-or-net realizable value

> Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Instructions for accessing and using the complete annual reports of Amazon and Wal-Mart, including the notes t

> PepsiCo’s financial statements are presented in Appendix B. Financial statements of The Coca- Cola Company are presented in Appendix C. Instructions for accessing and using the complete annual reports of PepsiCo and Coca-Cola, including the notes to the

> The financial statements of Apple Inc. are presented in Appendix A at the end of this textbook. Instructions for accessing and using the company’s complete annual report, including the notes to the financial statements, are also provided in Appendix A.

> If your school has a subscription to the FASB Codifi cation, go to http://aaahq.org/ascLogin. cfm to log in and prepare responses to the following. Instructions (a) The primary basis for accounting for inventories is cost. How is cost defined in the Cod

> Some of the largest business frauds ever perpetrated have involved the misstatement of inventory. Two classics were at Leslie Fay and McKesson Corporation. Instructions There is considerable information regarding inventory frauds available on the Intern

> R. J. Graziano Wholesale Corp. uses the LIFO method of inventory costing. In the current year, profit at R. J. Graziano is running unusually high. The corporate tax rate is also high this year, but it is scheduled to decline significantly next year. In a

> You are the controller of Small Toys Inc. Marta Johns, the president, recently mentioned to you that she found an error in the 2018 financial statements which she believes has corrected itself. She determined, in discussions with the Purchasing Departmen

> On April 10, 2019, fi re damaged the office and warehouse of Corvet Company. Most of the accounting records were destroyed, but the following account balances were determined as of March 31, 2019: Inventory (January 1, 2019), $80,000; Sales Revenue (Janu

> Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Instructions for accessing and using the complete annual reports of Amazon and Wal-Mart, including the notes t

> PepsiCo’s financial statements are presented in Appendix B. Financial statements of The Coca-Cola Company are presented in Appendix C. Instructions for accessing and using the complete annual reports of PepsiCo and Coca-Cola, including the notes to the f

> Davey Company has been using the FIFO cost flow method during a prolonged period of inflation. During the same time period, Davey has been paying out all of its net income as dividends. What adverse effects may result from this policy?

> The notes that accompany a company’s financial statements provide informative details that would clutter the amounts and descriptions presented in the statements. Refer to the financial statements of Apple Inc. in Appendix A as well as its annual report.

> If your school has a subscription to the FASB Codifi cation, go to http://aaahq.org/ascLogin.cfm to log in and prepare responses to the following. Instructions (a) Access the glossary (“Master Glossary”) to answer the following: (1) What is the definiti

> There are many situations in business where it is difficult to determine the proper period in which to record revenue. Suppose that after graduation with a degree in finance, you take a job as a manager at a consumer electronics store called Impact Elect

> Jacquie Boynton was just hired as the assistant treasurer of Key West Stores. The company is a specialty chain store with nine retail stores concentrated in one metropolitan area. Among other things, the payment of all invoices is centralized in one of t

> The following situation is in chronological order. 1. Connor decides to buy a surfboard. 2. He calls Surfing USA Co. to inquire about its surfboards. 3. Two days later, he requests Surfing USA Co. to make a surfboard. 4. Three days later, Surfing USA Co.

> Three years ago, Dana Mann and her brother-in-law Eric Boldt opened Family Department Store. For the first two years, business was good, but the following condensed income results for 2018 were disappointing. Dana believes the problem lies in the relat

> Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. (Use Wal-Mart’s January 31, 2016, financial statements for comparative purposes.) Instructions for accessing a

> PepsiCo’s financial statements are presented in Appendix B. Financial statements of The Coca- Cola Company are presented in Appendix C. Instructions for accessing and using the complete annual reports of PepsiCo and Coca-Cola, including the notes to the

> The financial statements of Apple Inc. are presented in Appendix A at the end of this textbook. Instructions for accessing and using the company’s complete annual report, including the notes to the financial statements, are also provided in Appendix A.

> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ascLogin. cfm to log in and prepare responses to the following. Instructions (a) Access the glossary (“Master Glossary”) at the FASB Codifi cation website to answer the f

> In a period of rising prices, the inventory reported in Gumby Company’s balance sheet is close to the current cost of the inventory, whereas Pokey Company’s inventory is considerably below its current cost. Identify the inventory cost flow method being u

> Companies prepare balance sheets in order to know their financial position at a specific point in time. This enables them to make a comparison to their position at previous points in time, and gives them a basis for planning for the future. In order to e