Question: Jones Shoe shop experienced the following events

> The following information pertains to Kee Cabinet Company’s sales on account and accounts receivable: After several collection attempts, Kee Cabinet Company wrote off $3,100 of accounts that could not be collected. Kee estimates that

> During the first year of operation, Year 1, Home Renovation recognized $261,000 of service revenue on account. At the end of Year 1, the accounts receivable balance was $46,300. Even though this is his first year in business, the owner believes he will c

> The following transactions apply to Sports Consulting for Year 1, the first year of operation: 1. Issued $5,000 of common stock for cash. 2. Recognized $70,000 of service revenue earned on account. 3. Collected $62,000 from accounts receivable. 4. Adjust

> Three different companies each purchased a machine on January 1, Year 1, for $64,000. Each machine was expected to last five years or 200,000 hours. Salvage value was estimated to be $6,000. All three machines were operated for 50,000 hours in Year 1, 55

> Bostick Co. acquired the assets of Belk Co. for $1,200,000 in Year 1. The estimated fair market value of the assets at the acquisition date was $1,000,000. Goodwill of $200,000 was recorded at acquisition. In Year 2, because of negative publicity, one-ha

> TRS Company experienced the following events: 1. Purchased merchandise inventory for cash. 2. Sold merchandise inventory on account. Label the revenue recognition 2a and the expense recognition 2b. 3. Returned merchandise purchased on account. 4. Purchas

> Doug’s Diner acquired a fast food restaurant for $1,500,000. The fair market values of the assets acquired were as follows. No liabilities were assumed. Required: a. Calculate the amount of goodwill acquired. b. Prepare the journal en

> Metals Exploration Corporation engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities: Jan. 1, Year 1 Purchased a coal mine estimated to contain 300,000 to

> Delta Manufacturing paid $62,000 to purchase a computerized assembly machine on January 1, Year 1. The machine had an estimated life of eight years and a $2,000 salvage value. Delta’s financial condition as of January 1, Year 4, is show

> Tringle Inc. recorded the following transactions over the life of a piece of equipment purchased in Year 1: Jan. 1, Year 1 Purchased the equipment for $38,000 cash. The equipment is estimated to have a five-year life and $3,000 salvage value and was to b

> Floyd Company made several purchases of long-term assets in Year 1. The details of each purchase are presented here. New Office Equipment 1. List price: $50,000; terms: 1/10 n/30; paid within the discount period. 2. Transportation-in: $1,200. 3. Install

> Todd Service Company purchased a copier on January 1, Year 1, for $25,000 and paid an additional $500 for delivery charges. The copier was estimated to have a life of four years or 1,000,000 copies. Salvage value was estimated at $1,500. The copier produ

> Friendly Corporation purchased a delivery van for $28,500 in Year 1. The firm’s financial condition immediately prior to the purchase is shown in the following horizontal statements model: The van was expected to have a useful life of

> Scott Company began operations when it acquired $40,000 cash from the issue of common stock on January 1, Year 1. The cash acquired was immediately used to purchase equipment for $40,000 that had a $4,000 salvage value and an expected useful life of four

> National Laundry Services purchased a new steam press on January 1 for $42,000. It is expected to have a five-year useful life and a $4,000 salvage value. National expects to use the steam press more extensively in the early years of its life. Required:

> The following trial balance was prepared for Village Cycle Sales and Service on December 31, Year 1, after the closing entries were posted: Village Cycle had the following transactions in Year 2: 1. Purchased merchandise on account for $260,000. 2. Sol

> Which of the following would be debited to the Inventory account for a merchandising business using the perpetual inventory system? Required: a. Transportation-in. b. Allowance received for damaged inventory. c. Purchase of inventory. d. Purchase of off

> Identify each of the following independent transactions as an asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also explain how each event affects assets, liabilities, stockholders’ equity, net income, an

> Diamond Supply Company had the following transactions in Year 1: 1. Acquired $50,000 cash from the issue of common stock. 2. Purchased $120,000 of merchandise for cash in Year 1. 3. Sold merchandise that cost $95,000 for $180,000 during the year under th

> The following information comes from the accounts of Legoria Company: Required: a. There were $160,000 in sales on account during the accounting period. Writeoffs of uncollectible accounts were $1,200. What was the amount of cash collected from account

> The following transactions apply to Cheng Co. for Year 1, its first year of operations: 1. Issued $60,000 of common stock for cash. 2. Provided $94,000 of services on account. 3. Collected $84,500 cash from accounts receivable. 4. Loaned $10,000 to Swan

> During the first year of operation, Year 1, Direct Service Co. recognized $290,000 of service revenue on account. At the end of Year 1, the accounts receivable balance was $46,000. For this first year in business, the owner believes uncollectible account

> The following transactions apply to Jova Company for Year 1, the first year of operation: 1. Issued $10,000 of common stock for cash. 2. Recognized $210,000 of service revenue earned on account. 3. Collected $162,000 from accounts receivable. 4. Paid $12

> The following trial balance was prepared for Tile, Etc., Inc. on December 31, Year 1, after the closing entries were posted: Tile, Etc. had the following transactions in Year 2: 1. Purchased merchandise on account for $580,000. 2. Sold merchandise that

> Northwest Sales had the following transactions in Year 1: 1. The business was started when it acquired $200,000 cash from the issue of common stock. 2. Northwest purchased $900,000 of merchandise for cash in Year 1. 3. During the year, the company sold m

> The following transactions apply to Hooper Co. for Year 1, its first year of operations: 1. Issued $60,000 of common stock for cash. 2. Provided $90,000 of services on account. 3. Collected $78,000 cash from accounts receivable. 4. Loaned $20,000 to Mosb

> Use the following information to prepare a multistep income statement and a balance sheet for Sherman Equipment Co. for Year 2. $ 69,000 Operating Expenses 100,000 Cash Flow from Investing Activities 24,000 Prepaid Rent 7,800 Land 8,100 Cash Salarle

> Musgrove Basket Company had an $8,500 beginning balance in its Merchandise Inventory account. The following information regarding Musgrove’s purchases and sales of inventory during its Year 1 accounting period was drawn from the company’s accounting reco

> Roth Inc. experienced the following transactions for Year 1, its first year of operations: 1. Issued common stock for $50,000 cash. 2. Purchased $140,000 of merchandise on account. 3. Sold merchandise that cost $110,000 for $250,000 on account. 4. Collec

> The following information is available for Quality Book Sales’ sales on account and accounts receivable: After several collection attempts, Quality Book Sales wrote off $2,850 of accounts that could not be collected. Quality Book Sale

> The following transactions apply to Barclay Co. for Year 1, its first year of operations: 1. Received $50,000 cash from the issue of a short-term note with a 5 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. 2. Receiv

> Ingals Co. issued $10,000 of common stock when the company was started. In addition, Ingals borrowed $20,000 from the local bank on April 1, Year 1. The note had an 8 percent annual interest rate and a one-year term to maturity. Ingals Co. recognized $54

> Ball Company was started in Year 1. The following summarizes transactions that occurred during Year 1: 1. Issued a $40,000 face value discount note to Golden Savings Bank on April 1, Year 1. The note had a 6 percent discount rate and a one-year term to m

> The following accounting information exists for Collie and Spaniel companies: Required: a. Identify the current assets and current liabilities and compute the current ratio for each company. b. Assuming that all assets and liabilities are listed here,

> Use the following information to prepare a multistep income statement and a classified balance sheet for Brown Company for Year 1. (Hint: Some of the items will not appear on either statement, and ending retained earnings must be calculated.) $ 45,0

> The following information is available for the employees of Yui Company for the first week of January Year 1: 1. Sam earns $32 per hour and 1½ times his regular rate for hours over 40 per week. He worked 46 hours the first week in January. Sam’s federal

> Maddox Co. pays salaries monthly on the last day of the month. The following information is available from Maddox Co. for the month ended December 31, Year 1. Assume the Social Security tax rate is 6 percent on the first $110,000 of salaries, while the

> The following selected transactions were taken from the books of Dodson Company for Year 1: 1. On March 1, Year 1, borrowed $60,000 cash from the local bank. The note had a 6 percent interest rate and was due on September 1, Year 1. 2. Cash sales for the

> On March 6, Year 1, Salon Express purchased merchandise from Hair Fashions with a list price of $19,000, terms 2/10, n/45. On March 10, Salon returned merchandise to Hair Fashions for credit. The list price of the returned merchandise was $8,500. Salon p

> How should each of the following situations be reported in the financial statements? a. It has been determined that one of the company’s products has caused a safety hazard. It is considered probable that liabilities have been incurred and a reasonable e

> The following selected transactions were taken from the books of Ripley Company for Year 1: 1. On February 1, Year 1, borrowed $70,000 cash from the local bank. The note had a 6 percent interest rate and was due on June 1, Year 1. 2. Cash sales for the y

> a. Give an example of a contingent liability that is probable and reasonably estimable. How would this type of liability be shown in the accounting records? b. Give an example of a contingent liability that is reasonably possible or probable but not reas

> The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: 1. Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. 2.

> Malco Enterprises issued $10,000 of common stock when the company was started. In addition, Malco borrowed $36,000 from a local bank on July 1, Year 1. The note had a 6 percent annual interest rate and a one-year term to maturity. Malco Enterprises recog

> Don Terry opened Terry Company, an accounting practice, in Year 1. The following summarizes transactions that occurred during Year 1: 1. Issued a $120,000 face value discount note to First National Bank on July 1, Year 1. The note had an 8 percent discou

> The following accounting information exists for Aspen and Willow companies: Required: a. Identify the current assets and current liabilities and compute the current ratio for each company. b. Assuming that all assets and liabilities are listed here, co

> Rossie Equipment Manufacturing Co. acquired the assets of Alba Inc., a competitor, in Year 1. It recorded goodwill of $70,000 at acquisition. Because of defective machinery Alba had produced prior to the acquisition, it has been determined that all of th

> Use the following information to prepare a multistep income statement and a classified balance sheet for Eller Equipment Co. for Year 1.

> Flannery Company engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities: Jan. 1, Year 1 Purchased for $1,500,000 a silver mine estimated to contain 100,000

> Presented here is selected information from the 2013 fiscal-year 10-K reports of four companies. The four companies, in alphabetical order, are: AT&T, Inc., a company that provides communications and digital entertainment; Deere & Company, a manu

> 000 Tower Company owned a service truck that was purchased at the beginning of Year 1 for $31,000. It had an estimated life of three years and an estimated salvage value of $4,000. Tower Company uses straight-line depreciation. Its financial condition as

> Morris Inc. recorded the following transactions over the life of a piece of equipment purchased in Year 1: Jan. 1, Year 1 Purchased equipment for $90,000 cash. The equipment was estimated to have a five-year life and $5,000 salvage value and was to be de

> The following transactions relate to Academy Towing Service. Assume the transactions for the purchase of the wrecker and any capital improvements occur on January 1 of each year. Year 1 1. Acquired $70,000 cash from the issue of common stock. 2. Purchas

> Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, Year 1: During Year 1, the machine produced 36,000 units, and during Year 2 it produced 38,000 units. Required: Determine the amount of depr

> Sabel Co. purchased assembly equipment for $500,000 on January 1, Year 1. Sabel’s financial condition immediately prior to the purchase is shown in the following horizontal statements model: The equipment is expected to have a useful

> Bensen Company started business by acquiring $60,000 cash from the issue of common stock on January 1, Year 1. The cash acquired was immediately used to purchase equipment for $50,000 that had a $10,000 salvage value and an expected useful life of four y

> Becker Office Service purchased a new computer system in Year 1 for $40,000. It is expected to have a five-year useful life and a $5,000 salvage value. The company expects to use the system more extensively in the early years of its life. Required: a. C

> 700 Three different companies each purchased trucks on January 1, Year 1, for $50,000. Each truck was expected to last four years or 200,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 66,000 miles in Year 1, 42,000 mile

> Trinkle Co., Inc. made several purchases of long-term assets in Year 1. The details of each purchase are presented here. New Office Equipment 1. List price: $60,000; terms: 2/10 n/30; paid within discount period. 2. Transportation-in: $1,500. 3. Install

> The following information is available for the employees of Webber Packing Company for the first week of January Year 1: 1. Kayla earns $28 per hour and 1½ times her regular rate for hours over 40 per week. Kayla worked 52 hours the first week in January

> On April 6, Year 1, Home Furnishings purchased $25,200 of merchandise from Una Imports, terms 2/10 n/45. On April 8, Home returned $2,400 of the merchandise to Una Imports for credit. Home paid cash for the merchandise on April 15, Year 1. Required: a.

> Electronics Service Co. pays salaries monthly on the last day of the month. The following information is available from Electronics for the month ended December 31, Year 1: Assume the Social Security tax rate is 6 percent on the first $110,000 of salar

> Tull Bros. uses the allowance method to account for uncollectible accounts expense. Tull experienced the following four events in Year 1: 1. Recognized $68,000 of revenue on account. 2. Collected $62,000 cash from accounts receivable. 3. Determined that

> Reliable Auto Service was started on January 1, Year 1. The company experienced the following events during its first two years of operation: Events Affecting Year 1: 1. Provided $45,000 of repair services on account. 2. Collected $32,000 cash from acco

> The following account balances come from the records of Stone Company: During the accounting period, Stone recorded $21,000 of service revenue on account. The company also wrote off a $180 account receivable. Required: a. Determine the amount of cash

> Sandy’s Accounting Service began operation on January 1, Year 1. The company experienced the following events for its first year of operations: Events Affecting Year 1: 1. Provided $96,000 of accounting services on account. 2. Collected $80,000 cash fro

> Hardin Services Co. experienced the following events in Year 1: 1. Provided services on account. 2. Collected cash for accounts receivable. 3. Attempted to collect an account and, when unsuccessful, wrote off the amount to uncollectible accounts expense.

> Wilkins Enterprises has two hourly employees: Marcia and Clark. Both employees earn overtime at the rate of 1½ times the hourly rate for hours worked in excess of 40 per week. Assume the Social Security tax rate is 6 percent on the first $1

> The following transactions apply to Farmer’s Equipment Sales Corp. for Year 1: 1. The business was started when Farmer’s received $60,000 from the issue of common stock. 2. Purchased $160,000 of merchandise on account.

> The Malon Appliance Co. provides a 120-day parts-and labor warranty on all merchandise it sells. Malon estimates the warranty expense for the current period to be $2,450. During this period, a customer returned a product that cost $1,950 to repair. Requ

> To support himself while attending school, Steve Owens sold computers to other students. During the year, Steve purchased computers for $150,000 and sold them for $280,000 cash. He provided his customers with a one-year warranty against defects in parts

> Milo Clothing experienced the following events during Year 1, its first year of operation: 1. Acquired $30,000 cash from the issue of common stock. 2. Purchased inventory for $15,000 cash. 3. Sold inventory costing $9,000 for $20,000 cash. 4. Paid $1,500

> The following legal situations apply to Zier Corp. for Year 1: 1. A customer slipped and fell on a slick floor while shopping in the retail store. The customer has filed a $5 million lawsuit against the company. Zier’s attorney knows that the company wil

> The following selected transactions apply to Fast Stop for November and December Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month. 1. Ca

> The Tiger Book Store sells books and other supplies to students in a state where the sales tax rate is 7 percent. The Tiger Book Store engaged in the following transactions for Year 1. Sales tax of 7 percent is collected on all sales. 1. Book sales, not

> Danny Bell started Bell Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $3,000 of cash revenue for performing services. 2. Borrowed $4,800 cash from the bank. 3. Adjusted the accoun

> Bricca Co. issued a $60,000 face value discount note to First Bank on June 1, Year 1. The note had a 6 percent discount rate and a one year term to maturity. Required: Prepare general journal entries for the following transactions: a. The issuance of th

> Jim Hanks borrowed money by issuing two notes on January 1, Year 1. The financing transactions are described next. 1. Borrowed funds by issuing a $60,000 face value discount note to State Bank. The note had an 8 percent discount rate, a one-year term to

> Mark Miller started a moving company on January 1, Year 1. On March 1, Year 1, Miller borrowed cash from a local bank by issuing a one-year $80,000 face value note with annual interest based on a 12 percent discount. During Year 1, Miller provided servic

> The following information was drawn from the balance sheets of the Augusta and Reno companies: Required: a. Compute the current ratio for each company. b. Which company has the greater likelihood of being able to pay its bills? c. Assume that both comp

> Use the following information to prepare a classified balance sheet for Latimer Co. at the end of Year 1: $36,200 12,400 29,650 50,000 45,500 38,300 36,400 36,250 3,600 Accounts receivable Accounts payable Cash Common stock Long-term notes payable M

> The following transactions apply to Ritter Co. for Year 1: 1. Received $40,000 cash from the issue of common stock. 2. Purchased inventory on account for $128,000. 3. Sold inventory for $200,000 cash that had cost $110,000. Sales tax was collected at the

> During Year 1, Hardy Merchandising Company purchased $40,000 of inventory on account. Hardy sold inventory on account that cost $24,500 for $38,000. Cash payments on accounts payable were $22,000. There was $26,000 cash collected from accounts receivable

> The two employees at Oswald Co. receive various fringe benefits. Oswald Co. provides vacation at the rate of $500 per day, and each employee earns one day of vacation per month worked. In addition, Oswald Co. pays a total amount of $780 per month in medi

> Culver Co. employed Jen Sing in Year 1. Jen earned $5,200 per month and worked the entire year. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings, and the Medicare tax rate is 1.5 percent. Jen’s federal income tax withhol

> Easy Stop has two employees in Year 1. Catherine earns $4,500 per month and Jordan, the manager, earns $11,000 per month. Neither is paid extra if they work overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings, and

> Union Corporation borrowed $60,000 from the bank on November 1, Year 1. The note had a 6 percent annual rate of interest and matured on April 30, Year 2. Interest and principal were paid in cash on the maturity date. Required: a. What amount of cash did

> At the beginning of Year 1, Hill Manufacturing purchased a new computerized drill press for $75,000. It is expected to have a five-year life and a $15,000 salvage value. Required: a. Compute the depreciation for each of the five years, assuming that the

> Hinds Company started operations by acquiring $120,000 cash from the issue of common stock. On January 1, Year 1, the company purchased equipment that cost $110,000 cash. The equipment had an expected useful life of five years and an estimated salvage va

> The following events apply to The Soda Shop for the Year 1 fiscal year: 1. The company started when it acquired $20,000 cash from the issue of common stock. 2. Purchased a new ice cream machine that cost $20,000 cash. 3. Earned $36,000 in cash revenue. 4

> Usrey Company purchased a restaurant building, land, and equipment for $600,000 cash. The appraised value of the assets was as follows: Required: a. Compute the amount to be recorded on the books for each of the assets. b. Show the purchase in a horizo

> Florida Company purchased a building and the land on which the building is situated for a total cost of $800,000 cash. The land was appraised at $300,000 and the building at $700,000. Required: a. What is the accounting term for this type of acquisition

> Oregon Logging Co. purchased an electronic saw to cut various types and sizes of logs. The saw had a list price of $160,000. The seller agreed to allow a 5 percent discount because Oregon paid cash. Delivery terms were FOB shipping point. Freight cost am

> Dan Watson started a small merchandising business in Year 1. The business experienced the following events during its first year of operation. Assume that Watson uses the perpetual inventory system. 1. Acquired $30,000 cash from the issue of common stock

> Identify each of the following long-term operational assets as either tangible (T) or intangible (I). a. Retail store building b. Shelving for inventory c. Trademark d. Gas well e. Drilling rig f. FCC license for TV station g. 18-wheel truck h. Timber i.

> Which of the following items should be classified as long-term operational assets? a. Cash b. Buildings c. Production machinery d. Accounts receivable e. Prepaid rent f. Franchise g. Inventory h. Patent i. Tract of timber j. Land k. Computer l. Goodwill

> Efficient Shredding Service has just completed a minor repair on a shredding machine. The repair cost was $1,900, and the book value prior to the repair was $6,000. In addition, the company spent $12,000 to replace the roof on a building. The new roof ex

> On January 1, Year 1, Mead Machining Co. purchased a compressor and related installation equipment for $72,500. The equipment had a three-year estimated life with a $12,500 salvage value. Straightline depreciation was used. At the beginning of Year 3, Me

> On January 1, Year 1, Heflin Enterprises purchased a parcel of land for $20,000 cash. At the time of purchase, the company planned to use the land for future expansion. In Year 2, Heflin Enterprises changed its plans and sold the land. Required: a. Assu

> A plant asset with a cost of $50,000 and accumulated depreciation of $41,000 is sold for $10,000. Required: a. What is the book value of the asset at the time of sale? b. What is the amount of gain or loss on the disposal? c. How would the sale affect n