Klaben Motors, Inc., was formed on January 1, 2016. The following transactions occurred during 2016: On January 1, 2016, Klaben issued its common stock for $510,000. Early in January, Klaben made the following cash payments: a. $220,000 for equipment b. $243,000 for inventory (nine cars at $27,000 each) c. $25,000 for 2016 rent on a store building In February, Klaben purchased three cars for inventory on account. Cost of this inventory was $117,000 ($39,000 each). Before year-end, Klaben paid $70,200 of this debt. The company uses the first-in, first-out (FIFO) method to account for inventory. During 2016, Klaben sold 11 autos for a total of $649,000. Before year-end, it had collected 80% of this amount. The business employs two people. The combined annual payroll is $151,000, of which Klaben owes $1,000 at year-end. At the end of the year, Klaben paid income tax of $22,000. Late in 2016, Klaben declared and paid cash dividends of $11,000. For equipment, Klaben uses the straight-line depreciation method, over five years, with zero residual value. Requirements 1. Prepare Klaben Motors, Inc.’s, income statement for the year ended December 31, 2016. Use the single-step format, with all revenues listed together and all expenses together. 2. Prepare Klaben’s balance sheet at December 31, 2016. 3. Prepare Klaben’s statement of cash flows for the year ended December 31, 2016. Format cash flows from operating activities by using the indirect method.
> In January, gross earnings in Lugo Company totaled $80,000. All earnings are subject to 7.65% FICA taxes, 5.4% state unemployment taxes, and 0.8% federal unemployment taxes. Prepare the entry to record January payroll tax expense.
> Data for Beth Corbin are presented in BE11.7. Prepare the journal entries to record (a) Beth’s pay for the period and (b) the payment of Beth’s wages. Use January 15 for the end of the pay period and the payment date.
> Beth Corbin’s regular hourly wage rate is $16, and she receives an hourly rate of $24 for work in excess of 40 hours. During a January pay period, Beth works 45 hours. Beth’s federal income tax withholding is $95, she has no voluntary deductions, and the
> On December 1, Bruney Company introduces a new product that includes a one-year warranty on parts. In December, 1,000 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $90 per unit. Pre
> Yahoo! Inc.’s recent financial statements contain the following selected data (in thousands). Compute (a) working capital and (b) current ratio. Current assets $ 4,594,772 Current liabilities $1,717,728 2,417,394 Total assets 14,9
> Derby University sells 4,000 season basketball tickets at $210 each for its 12 game home schedule. Give the entry to record (a) the sale of the season tickets and (b) the revenue recognized by playing the first home game.
> Coghlan Auto Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $16,380. All sales are subject to a 5% sales tax. Compute sales taxes payable, and make the entry to record sales taxes payable and sales
> Cody Company sells three different categories of tools (small, medium, and large). The cost and net realizable value of its inventory of tools are as follows. Determine the value of the company’s inventory under the lower-of-cost-or-n
> Peralta Company borrows $60,000 on July 1 from the bank by signing a $60,000, 10%, one-year note payable. a. Prepare the journal entry to record the proceeds of the note. b. Prepare the journal entry to record accrued interest at December 31, assuming ad
> At Ward Company, employees are entitled to one day’s vacation for each month worked. In January, 70 employees worked the full month. Record the vacation pay liability for January, assuming the average daily pay for each employee is $120.
> Swenson Company has the following payroll procedures. a. Supervisor approves overtime work. b. The human resources department prepares hiring authorization forms for new hires. c. A second payroll department employee verifies payroll calculations. d. The
> Jamison Company has the following obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) acco
> Prepare journal entries to record the following. a. Sound Tracker Company retires its delivery equipment, which cost $41,000. Accumulated depreciation is also $41,000 on this delivery equipment. No salvage value is received. b. Assume the same informat
> On January 1, 2020, the Morgantown Company ledger shows Equipment $32,000 and Accumulated Depreciation—Equipment $9,000. The depreciation resulted from using the straight-line method with a useful life of 10 years and salvage value of $2,000. On this dat
> Rosco Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven 150,000 miles. Taxi no. 10 cost $39,500 and is expected to have a salvage value of $500. Taxi no. 10 is driven 30,000 miles
> Depreciation information for Corales Company is given in BE10.4. Assuming the declining-balance depreciation rate is double the straight-line rate, compute annual depreciation for the first and second years under the declining-balance method. Data From
> Chisenhall Company purchased land and a building on January 1, 2020. Management’s best estimate of the value of the land was $100,000 and of the building $200,000. However, management told the accounting department to record the land at $220,000 and the
> Corales Company acquires a delivery truck at a cost of $38,000. The truck is expected to have a salvage value of $6,000 at the end of its 4-year useful life. Compute annual depreciation expense for the first and second years using the straight-line metho
> a. Jovad Company ships merchandise to Martin 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) Jovad’s December 31 inventory, and (2) Martin’s December 3
> Flaherty Company had the following two transactions related to its delivery truck. 1. Paid $45 for an oil change. 2. Paid $400 to install special gear unit, which increases the operating efficiency of the truck. Prepare Flaherty’s journal entries to reco
> Rich Castillo Company incurs the following expenditures in purchasing a truck: cash price $30,000, accident insurance $2,000, sales taxes $2,100, motor vehicle license $100, and painting and lettering $400. What is the cost of the truck?
> Assume the same information as BE10.15, except that the fair value of the old delivery equipment is $33,000. Prepare the entry to record the exchange.
> Olathe Company exchanges old delivery equipment for new delivery equipment. The book value of the old delivery equipment is $31,000 (cost $61,000 less accumulated depreciation $30,000). Its fair value is $24,000, and cash of $5,000 is paid. Prepare the e
> In a recent annual report, Target reported beginning total assets of $44.1 billion, ending total assets of $44.5 billion, and net sales of $63.4 billion. Compute Target’s asset turnover.
> Information related to plant assets, natural resources, and intangibles at the end of 2020 for Dent Company is as follows: buildings $1,100,000, accumulated depreciation—buildings $600,000, goodwill $410,000, coal mine $500,000, and accumulated depletion
> Campanez Company purchases a patent for $140,000 on January 2, 2020. Its estimated useful life is 10 years. a. Prepare the journal entry to record amortization expense for the first year. b. Show how this patent is reported on the balance sheet at the en
> Franceour Mining Co. purchased for $7 million a mine that is estimated to have 35 million tons of ore and no salvage value. In the first year, 5 million tons of ore are extracted. a. Prepare the journal entry to record depletion for the first year. b. Sh
> Gunkelson Company sells equipment on September 30, 2020, for $18,000 cash. The equipment originally cost $72,000 and as of January 1, 2020, had accumulated depreciation of $42,000. Depreciation for the first 9 months of 2020 is $5,250. Prepare the journa
> The following expenditures were incurred by McCoy Company in purchasing land: cash price $50,000, accrued taxes $3,000, attorneys’ fees $2,500, real estate broker’s commission $2,000, and clearing and grading $3,500. What is the cost of the land?
> In January, the payroll supervisor determines that gross earnings for Carlyle Company are $120,000. All earnings are subject to 7.65% FICA taxes, 5.4% state unemployment taxes, and 0.8% federal unemployment taxes. Record the employer’s payroll taxes.
> Compute interest and find the maturity date for the following notes. Date of Note Principal Interest Rate (%) Terms 6% 60 days 90 days 75 days a. June 10 $80,000 July 14 April 27 7% 8% b. $64,000 с. $12,000
> Presented below are two independent transactions. a. Tony’s Restaurant accepted a Visa card in payment of a $175 lunch bill. The bank charges a 4% fee. What entry should Tony’s make? b. Larkin Company sold its accounts receivable of $60,000. What entry s
> Kingston Co. uses the percentage-of-receivables basis to record bad debt expense. It estimates that 1% of accounts receivable will become uncollectible. Accounts receivable are $420,000 at the end of the year, and the allowance for doubtful accounts has
> Assume the same information as BE9.4. On March 4, 2021, Carpenter Co. receives payment of $6,200 in full from Megan Gray. Prepare the journal entries to record this transaction. Information from BE 9.4: At the end of 2020, Carpenter Co. has accounts rec
> At the end of 2020, Carpenter Co. has accounts receivable of $700,000 and an allowance for doubtful accounts of $54,000. On January 24, 2021, the company learns that its receivable from Megan Gray is not collectible, and management authorizes a write-off
> Financial Statement During its fi rst year of operations, Gavin Company had credit sales of $3,000,000; $600,000 remained uncollected at year-end. The credit manager estimates that $31,000 of these receivables will become uncollectible. a. Prepare the jo
> The financial statements of Minnesota Mining and Manufacturing Company (3M) report net sales of $20.0 billion. Accounts receivable (net) are $2.7 billion at the beginning of the year and $2.8 billion at the end of the year. Compute 3M’s accounts receivab
> On January 10, 2020, Perez Co. sold merchandise on account to Robertsen Co. for $15,600, n/30. On February 9, Robertsen Co. gave Perez Co. a 10% promissory note in settlement of this account. Prepare the journal entry to record the sale and the settlemen
> Presented below are three receivables transactions. Indicate whether these receivables are reported as accounts receivable, notes receivable, or other receivables on a balance sheet. a. Sold merchandise on account for $64,000 to a customer. b. Received a
> Identify the special journal(s) in which the following column headings appear. a. Sales Discounts Dr. d. Sales Revenue Cr. b. Accounts Receivable Cr. e. Inventory Dr. c. Cash Dr.
> In January, gross earnings in Burrell Company were $80,000. All earnings are subject to 7.65% FICA taxes. Federal income tax withheld was $14,000, and state income tax withheld was $1,600. (a) Calculate net pay for January, and (b) record the payroll.
> The key to successful business operations is effective inventory management.” Do you agree? Explain.
> The comparative balance sheets of Sally Fagan Design Studio, Inc., at June 30, 2016, and 2015, and transaction data for fiscal 2016, are as follows: Transaction data for the year ended June 30, 2016, follows: a. Net income, $70,600 b.
> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct is violated. Assume all persons listed in the situations are members of the AICPA. (N
> Driscoll Furniture Gallery, Inc., provided the following data from the company’s records for the year ended December 31, 2016: a. Credit sales, $600,000 b. Loan to another company, $9,900 c. Cash payments to purchase plant assets, $59,200 d. Cost of
> Use the Lombardi Supply Corp. data from P12-71B. Requirements 1. Prepare the 2016 statement of cash flows by using the direct method. 2. How will what you learned in this problem help you evaluate an investment? From P12-71B The 2016 and 2015 compar
> The comparative balance sheets of Canton Movie Theater Company at June 30, 2016, and 2015, reported the following: Canton Movie Theater’s transactions during the year ended June 30, 2016, included: Requirements 1. Prepare Canton Mo
> Carlson Software Corp. has assembled the following data for the years ending December 31, 2016 and 2015. Requirement 1. Prepare Carlson Software Corp.’s statement of cash flows using the indirect method to report operating activitie
> Use the Klaben Motors, Inc., data from P12-58A. Requirements 1. Prepare Klaben’s income statement for the year ended December 31, 2016. Use the singlestep format, with all revenues listed together and all expenses together. 2. Prepare Klaben’s balance
> Top managers of Bryan Products, Inc., have asked for your help in comparing the company’s profit performance and financial position with the average for the industry. The accountant has given you the compan
> Net sales, net income, and total assets for Abacus Shipping, Inc., for a five-year period follow: Requirements 1. Compute trend percentages for each item for 2013 through 2016. Use 2012 as the base year and round to the nearest percent.
> You are evaluating two companies as possible investments. The two companies, which are similar in size, are commuter airlines that fly passengers up and down the East Coast. All other available information has been analyzed, and your inves
> Prepare a horizontal analysis of the comparative income statements of Mitchell Music Co. Round percentage changes to the nearest one-tenth percent (three decimal places). A1 Mitchell Music Co. Comparative Income Statements Years Ended December 31, 2
> What were the dollar amount of change and the percentage of each change in Blueberry Lane Lodge’s net working capital during 2016 and 2015? Is this trend favorable or unfavorable? 2016 2015 2014 Total current assets. $424,950 $259,
> Two companies with different economic-value-added (EVA®) profiles are Emerson Company, Inc., and Farmers Bank Limited. Adapted versions of the two companies’ financial statements are presented he
> Evaluate the common stock of Monroe Falls Distributing Company as an investment. Specifically, use the three common stock ratios to determine whether the common stock increased or decreased in attractiveness during the past year. (The numb
> For 2016 and 2015, compute return on sales (ROS), asset turnover (AT), return on assets (ROA), leverage (L), return on common stockholders’ equity (ROE), gross profit percentage (GP), operating income percentage (OI), and
> DuBois Furniture Company has requested that you determine whether the company’s ability to pay its current liabilities and long-term debts improved or deteriorated during 2016. To answer this question, compute the following ratios for 2
> The financial statements of Adventure News, Inc., include the following items: Requirements 1. Using Exhibit 13-8 as a model, compute the following ratios for 2016 and 2015: a. Current ratio b. Quick (acid-test) ratio c. Inventory tu
> Identify any weaknesses revealed by the statement of cash flows of Beckwith Orchards, Inc. A1 Beckwith Orchards, Inc. Statement of Cash Flows For the Current Year 1 2 Operating activities: Net income Add (subtract) adjustments to reco
> Prepare a comparative common-size income statement for Connor Music Co., using the 2016 and 2015 data of E13-16A and rounding to four decimal places. From E13-16A A1 Connor Music Co. Comparative Income Statements Years Ended December 31, 2016 and 2
> The stockholders’ equity of Akron Uniforms as of December 31, 2016 and 2015, follows: Requirements 1. What is the par value of the common stock? 2. How many shares of common stock were outstanding at the end of 2016? 3. As of Decem
> Suppose you manage Outward Bound, Inc., a Vermont sporting goods store that lost money during the past year. To turn the business around, you must analyze the company and industry data for the current year to learn what is wrong. The companyâ€
> Fandom, Inc., ended 2016 with 9 million shares of $1 par common stock issued and outstanding. Beginning additional paid-in capital was $9 million, and retained earnings totaled $36 million. In April 2017, Fandom issued 4 million shares of common stock a
> Atlantic Corporation reported the following stockholders’ equity data (all dollars in millions except par value per share): Atlantic earned net income of $2,940 during 2016. For each account except Retained Earnings, one transaction e
> Use the Dolson Networking Solutions data in E10-86 to show how the company reported cash flows from financing activities during 2016. From E10-86 Dolson Networking Solutions began operations on January 1, 2016, and immediately issued its stock, receiving
> Dolson Networking Solutions began operations on January 1, 2016, and immediately issued its stock, receiving cash. Dolson’s balance sheet at December 31, 2016, reported the following stockholders’ equity: Common stock,
> The income statement and additional data of One Stop, Inc., follow: Additional data: a. Collections from customers are $15,000 more than sales. b. Payments to suppliers are $2,300 more than the sum of cost of goods sold plus advertising expense. c.
> Selected accounts of Rosemont Golf Company show the following: Requirement 1. For each account, identify the item or items that should appear on a statement of cash flows prepared by the direct method. State where to report the item Salary Payable
> The accounting records of Stanley Pharmaceuticals, Inc., reveal the following: Requirement 1. Prepare cash flows from operating activities using the direct method. Also evaluate Stanley’s operating cash flow. Give the reason for your
> Compute the following items for the statement of cash flows: a. Beginning and ending Plant Assets, Net, are $120,000 and $112,000, respectively. Depreciation for the period was $16,000, and purchases of new plant assets were $26,000. Plant assets were so
> Consider three independent cases for the cash flows of Loader Company. For each case, identify from the statement of cash flows how Loader Company generated the cash to acquire new plant assets. Rank the three cases from the
> The income statement and additional data of Norman Travel Products, Inc., follow: Additional data: a. Acquisition of plant assets was $150,000. Of this amount, $99,000 was paid in cash and $51,000 by signing a note payable. b. Proceeds from sale of l
> Assume that you are a financial analyst. You are trying to compare the financial statements of Caterpillar, Inc., with those of CNH Global, an international company that uses international financial reporting standards (IFRS). Caterpillar, Inc., uses the
> The accounting records of The Dakota Trading Post Company include these accounts: Requirement 1. Prepare the company’s net cash provided by (used for) operating activities section of the statement of cash flows for the month of Octob
> The December 31, 2015, balance sheet and the 2016 statement of cash flows for Northtown, Inc., follow: Requirement 1. Prepare the December 31, 2016, balance sheet for Northtown, Inc. A1 Northtown, Inc. Balance Sheet December 31, 20
> Crown Specialties reported the following at December 31, 2016 (in thousands): Requirement 1. Determine the following items for Crown Specialties during 2016: a. Gain or loss on the sale of property and equipment b. Amount of long-term debt issued fo
> Top Notch, Inc., reported the following in its financial statements for the year ended May 31, 2016 (in thousands): Requirement 1. Determine the following cash receipts and payments for Top Notch, Inc., during 2016 (enter all amounts in
> Compute the following items for the statement of cash flows: a. Beginning and ending Accounts Receivable are $47,000 and $53,000, respectively. Credit sales for the period total $141,000. How much are cash collections from customers? b. Cost of Goods So
> The income statement and additional data of Value World, Inc., follow: Additional data: a. Collections from customers are $12,000 less than sales. b. Payments to suppliers are $2,300 less than the sum of cost of goods sold plus advertising expense. c
> Selected accounts of Downtown Galleries show the following: Requirement 1. For each account, identify the item or items that should appear on a statement of cash flows prepared by the direct method. State where to report the item. Salary Payable B
> The accounting records of Pelham Pharmaceuticals, Inc., reveal the following: Requirement 1. Prepare cash flows from operating activities using the direct method. Also evaluate Pelham’s operating cash flow. Give the reason for your e
> Compute the following items for the statement of cash flows: a. Beginning and ending Plant Assets, Net, are $120,000 and $115,000, respectively. Depreciation for the period was $13,000, and purchases of new plant assets were $15,000. Plant assets were so
> Consider three independent cases for the cash flows of Sharma Merchandising Corp. For each case, identify from the statement of cash flows how Sharma Merchandising Corp. generated the cash to acquire new plant assets. Rank t
> Suppose American Cable and Entertainment, Inc., is having a bad year in 2016, as the company has incurred a $4.9 billion net loss. The loss has pushed most of the return measures into the negative column, and the current ratio dropped below 1.0. The comp
> The income statement and additional data of Nyman Travel Products, Inc., follow: Additional data: a. Acquisition of plant assets was $134,000. Of this amount, $90,000 was paid in cash and $44,000 by signing a note payable. b. Proceeds from sale of la
> The accounting records of the Wisconsin Trading Post Company include these accounts: Requirement 1. Prepare the company’s net cash provided by (used for) operating activities section of the statement of cash flows for the month of Ju
> The accounting records of Midwest Distributors, Inc., reveal the following: Requirement 1. Prepare the cash flows from operating activities by section of the statement of cash flows using the indirect method. Use the format of the operating
> A company uses the indirect method to prepare the statement of cash flows. Indicate whether each of the following transactions affects an operating activity, an investing activity, a financing activity, or a noncash investin
> Bloomfield Investments specializes in low-risk government bonds. Identify each of Bloomfield’s transactions as operating (O), investing (I), financing (F), noncash investing and ï¬&#
> The following data (dollar amounts in millions) are from the financial statements of Valley Corporation: Requirement 1. Complete the following condensed income statement. Report amounts to the nearest million dollars. Average stock
> An incomplete comparative income statement and balance sheet for Emore Corporation follow: Requirement 1. Using the ratios, common-size percentages, and trend percentages given, complete the income statement and balance sheet for Emore for 2016. Addi
> Windy City Fashions, Inc., operates as a retailer of casual apparel. A recent, condensed income statement for Windy City Fashions follows: Requirements Assume that the following transactions were inadvertently omitted at the end of the year. Using the
> The following data (dollar amounts in millions) are taken from the financial statements of Burbick Industries, Inc.: Requirement 1. Complete the following condensed balance sheet. Report amounts to the nearest million dollars. Tota
> Prestige Loan Company’s balance sheet at December 31, 2016, reports the following: During 2016, Prestige Loan earned net income of $6,300,000. Compute Prestige Loan’s earnings per common share (EPS) for 2016. (Round
> Applied Technology, Inc., and Four-Star Catering are asking you to recommend their stock to your clients. Because Applied and Four-Star earn about the same net income and have similar financial positions, your decision depends on their sta
> During 2016, Botto Heights Corp.’s income statement reported income of $420,000 before tax. The company’s income tax return filed with the IRS showed taxable income of $390,000. During 2016, Botto Heights was subject to an income tax rate of 40%. Requir
> Assume that Newman Stores completed the following foreign-currency transactions: Requirements 1. Journalize these transactions for Newman. Focus on the gains and losses caused by changes in foreign-currency rates; round your answers to the nearest who
> During 2016, Rondell, Inc., had sales of $6.96 billion, operating profit of $2.0 billion, and net income of $3.0 billion. EPS was $4.30. On January 3, 2017, one share of Rondell common stock was priced at $54.10 on the New York Stock Exchange. What inves
> The Calloway Book Company’s accounting records include the following for 2016 (in thousands): Requirements 1. Prepare Calloway Book’s single-step income statement for the year ended December 31, 2016, including EPS.
