Match the term with its definition by placing the corresponding letter in the space provided: ______ 1. A contra-account, related to accounts receivable, that holds the estimated amount of uncollectible receivables ______ 2. A method of accounting for uncollectible receivables in which the company waits until a specific customer’s account receivable is uncollectible before recording bad debt expense ______ 3. A method of recording receivable losses on the basis of estimates instead of waiting to see which customers the company will not collect from ______ 4. The party to a credit transaction who sells goods or a service and obtains a receivable ______ 5. A way to estimate uncollectible accounts by analyzing individual accounts receivable according to the length of time they have been receivable ______ 6. The party to a credit transaction who makes a purchase and has a payable ______ 7. Cost to the seller of credit sales; arises from the failure to collect from credit customers ______ 8. A method of estimating uncollectible receivables that calculates bad debt expense based on net credit sales a. Creditor b. Debtor c. Receivables d. Bad Debt Expense e. Allowance method f. Allowance for Uncollectible Accounts g. Percent of sales method h. Aging method i. Direct write-off method
> On July 14, 2018, Salem Food Wholesale, Inc., sold $2,700 of inventory (cost is $1,050) on account to one of its customers. The terms were 2/10, n/30, FOB destination. On July 16, Salem Food Wholesale, Inc., paid freight charges of $115 related to the de
> The Knotty Splinter had sales during the month of June that totaled $5,300. Based on experience, company management expects 8 percent of the sales amount will be refunded to customers in the form of sales returns and allowances. The cost to The Knotty Sp
> Journalize the following transactions for Inland Empire Supply, Inc., that occurred during the month of March. Assume the “net” method is used.
> In this exercise, we will continue the accounting for Sensations Salon, Inc. Assume that on September 30, 2018, Sensations Salon, Inc., borrowed $6,500 from State Bank, signing a nine-month, 71∕2 percent note. The fiscal year end is December 31. Require
> On October 15, 2018, Chandler’s Department Store purchased $3,900 of inventory on account from one of its suppliers. The terms were 2/15, n/45, FOB shipping point. On October 17, Chandler’s Department Store paid freight charges of $140 related to the del
> The Inventory account for Kelly’s Florist, Inc., had a balance of $27,300 at the end of its fiscal year. A physical count taken at year end revealed that the value of inventory on hand amounted to $26,950. Requirements 1. Journalize the adjustment for i
> The following is the adjusted trial balance of Health Services, Inc., for December 31, 2018 Requirement 1. Journalize the closing entries at December 31.
> The following post-closing trial balance was prepared for Speedy Prints, Inc., but some balances were entered in the wrong column. Prepare a corrected post-closing trial balance. Assume all accounts have normal balances and the amounts are correct.
> From the following accounts of Done Right Auto Detail, Inc., prepare the business’s statement of retained earnings for the year ended March 31, 2018.
> Prepare McGinty Electrical’s closing entries using the following selected accounts at June 30, 2018 2. What is McGinty Electrical’s ending Retained Earnings balance at June 30, 2018?
> The adjusted trial balance for Sweet Home Catering, Inc., is presented below. Prepare the income statement and statement of retained earnings for Sweet Home Catering, Inc., for the month ended March 31, 2018. Also, prepare the balance sheet at March 31,
> The adjusted trial balances of Anderson Plating Services, Inc., at December 31, 2018, and December 31, 2019, include these amounts: Analysis of the accounts at December 31, 2019, reveals these transactions for the past 12 months: Purchase of supplies
> Certified Security, Inc., began the year with $35,000 of common stock and $32,400 of retained earnings. On May 5, investors bought $8,000 of additional stock in the business. On August 22, the business purchased land valued at $23,000. The income stateme
> The accountant for Castile Construction, Inc., posted adjusting entries (a) through (e) to the accounts at August 31, 2018. Selected balance sheet accounts and all the revenues and expenses of the entity follow in T-account form. Requirements 1. Explai
> This exercise continues our accounting for Sensations Salon, Inc., from previous chapters. In this exercise, we will account for the annual depreciation expense for Sensations Salon, Inc. In the Continuing Exercise in Chapter 2, we learned that Sensation
> The accounting records of Shamrock, Inc. include the following unadjusted balances at June 30: Accounts Receivable, $1,300; Supplies, $825; Prepaid Insurance, $1,600; Accumulated Depreciation, Equipment, $1,500; Salaries Payable, $0; Unearned Service Rev
> The adjusting entries for the following adjustments were omitted at period-end: a. Prepaid rent expired, $1,250 b. Depreciation, $1,100 c. Employee salaries owed for Monday through Wednesday of a five-day workweek, $4,250 d. Supplies used during the peri
> Calculate the missing amounts for each of the Prepaid Insurance situations. For situation A, journalize the adjusting entry. Consider each situation separately.
> The following is the adjusted trial balance of Inland Home Health, Inc., for December 31, 2018. Requirement 1. Journalize the closing entries at December 31, 2018.
> The following post-closing trial balance was prepared for Sepia Studios, Inc., but some balances were entered in the wrong column. Prepare a corrected post-closing trial balance. Assume all accounts have normal balances and the amounts are correct.
> From the following accounts of Classy Restorations, Inc., prepare the business’s statement of retained earnings for the year ended November 30, 2018:
> 1. Prepare Ramirez Electrical, Inc.’s closing entries using the following selected accounts at November 30, 2018: 2. What is Ramirez Electrical, Inc.’s ending Retained Earnings balance at November 30, 2018?
> The adjusted trial balance for Chef on Demand Catering, Inc., is presented below. Prepare the income statement and statement of retained earnings for Chef on Demand Catering, Inc., for the month ended January 31, 2018. Also prepare a balance sheet at Jan
> The adjusted trial balances of Allied Coatings, Inc., at October 31, 2018, and October 31, 2019, include these amounts: Analysis of the accounts at October 31, 2019, reveals these transactions for the past 12 months: Purchase of supplies â€
> Sentry Alarm, Inc., began the year with $19,000 of common stock and $22,600 of retained earnings. On June 5, investors bought $12,000 of additional stock in the business. On September 22, the business purchased land valued at $65,000. The income statemen
> This exercise continues the Sensations Salon, Inc., exercise begun in Chapter 1. Consider the June transactions for Sensations Salon presented in Chapter 4. (Cost data have been removed from the sale transactions.) Refer to the T-accounts for Sensation
> The accountant for Specialty Painting, Inc., posted adjusting entries (a) through (e) to the accounts at May 31, 2018. Selected balance sheet accounts and all the revenues and expenses of the entity follow in T-account form. Requirements 1. Explain the
> The accounting records of Travel Time, Inc., include the following unadjusted balances at November 30: Accounts Receivable, $900; Supplies, $650; Prepaid Insurance, $2,000; Accumulated Depreciation, Equipment, $2,800; Salaries Payable, $0; Unearned Servi
> The adjusting entries for the following adjustments were omitted at period-end: a. Prepaid rent expired, $1,300 b. Depreciation, $1,000 c. Employee salaries owed for Monday through Wednesday of a five-day workweek, $2,200 d. Supplies used during the peri
> Calculate the missing amounts for each of the following Prepaid Insurance situations. For situation A, journalize the adjusting entry. Consider each situation separately.
> James Cyr has trouble keeping his debits and credits equal. During a recent month, James made the following errors: a. James recorded a $750 rent payment by debiting Rent Expense for $75 and crediting Cash for $75. b. In recording a $300 payment on accou
> McGuire Construction, Inc., completed the following transactions during September 2018, its first month of operations: Requirements 1. Open or set up T-accounts in the ledger for the following accounts: Cash, Accounts Receivable, Supplies, Equipment, F
> Julie Denend started a mobile DJ business named Mobile Music, Inc., on November 1, 2018. In the month of November, before providing services to customers, the business incurred six transactions, which have been posted to the accounts as follows: Requir
> White Glove Cleaning, Inc. had the following transactions for the month of September 2018: The following T-accounts have been set up for White Glove Cleaning, Inc., with their beginning balances as of September 1, 2018: Requirements 1. Journalize the
> The transactions for Inspired Design, Inc., for the month of March 2018 are posted in the following T-accounts: Requirements 1. Calculate account balances at March 31, 2018. 2. Prepare the trial balance for Inspired Design, Inc., at March 31, 2018.
> Rudenko & Associates, Inc., completed the following transactions during July 2018, its first month of operations: Requirement 1. Using the steps outlined in the five-step transaction analysis, journalize the transactions of Rudenko & Associates
> Let’s continue our accounting for Sensations Salon, Inc., from Chapter 3. Starting in June, Sensations Salon, Inc., began selling its own brand of shampoo, which it purchases from a wholesaler. During June, Sensations Salon, Inc., compl
> Using the steps outlined in the five-step transaction analysis, record the following transactions in the general journal for Marx Plumbing, Inc. Explanations are not required.
> Advanced Auto, Inc., made six journal entries during the month of May: Requirement 1. For each transaction shown, determine the accounts affected, the type of account, whether the account increases or decreases, and whether it would be recorded in the
> A client notified you that she just closed a deal to purchase an existing business. It’s a pretty hefty purchase. As part of the purchase of the business, she receives the land, the building, all the equipment, and the entire merchandis
> Imagine you are Bill Conan, the owner of Conan Consultants. It’s the end of the month, and cash flow has been a little slow, as it usually is during this time of the accounting period. It just seems to be a little slower than usual this month. You know t
> You own a business, like the Millers of the Bold City Brewery. Your business is called BCS Consultants, Inc. However, your business does not brew beverages; rather, you help individuals start new businesses. It’s late on a Friday aftern
> Think about operating a business like the Millers did when they created the Bold City Brewery. Your business is called BCS Consultants, Inc. You just received your year-end financial statements from your CPA and you notice one very disturbing item. The n
> Like the Millers of the Bold City Brewery, you own a business. Your business has been doing pretty well since you first opened the doors five years ago. For the past six months or so, you’ve been thinking about expanding the business. Some property avail
> You’re the owner of a business, like the Millers of the Bold City Brewery. You’ve made an appointment to take your year-end financial statements to the bank. You know that your banker is usually concerned about two things: your net income and the amount
> You own a business. You are like the Millers of the Bold City Brewery. You’re pretty excited about your business’s cash balance at the end of the month, because you had planned to take a large bonus. With that bonus you were going to make a down payment
> Jill Conway has trouble keeping her debits and credits equal. During a recent month, Jill made the following errors: a. Jill recorded an $800 rent payment by debiting Rent Expense for $80 and crediting Cash for $80. b. In recording a $250 payment on acco
> Think about owning a business like the Bold City Brewery. It’s the end of the year, and your warehouse manager just finished taking a physical count of the inventory on hand. Because you use the perpetual inventory method with a relatively sophisticated
> You are the owner of a business, like the Millers of the Bold City Brewery. The end of the year is approaching. You’re going to meet with your CPA next week to do some end-of-the-year tax planning. In preparation for that meeting, you review last month’s
> Prepare the current assets section of the balance sheet as of May 31, 2018, for Spices and More, Inc., using the following information: Accounts Receivable .............................................................................................. $5
> Make the necessary journal entries arising from Greenacres Auto Center’s bank reconciliation, presented next. Date each entry May 31 and include an explanation with each entry.
> Suppose A-1 Sports purchases $83,000 of sportswear on account from Outdoor Wear, Inc., on December 1, 2018. Credit terms are 2/10, n/45. A-1 Sports pays Outdoor Wear, Inc., on December 8, 2018. 1. Journalize the transactions for A-1 Sports on December 1,
> Match the accounting term with the corresponding definition. ____ 1. Accumulated depreciation ____ 2. Adjusted trial balance ____ 3. Adjusting entry ____ 4. Book value ____ 5. Contra-account ____ 6. Depreciation ____ 7. Long-term asset a. An account whos
> Match the accounting term with the corresponding definition. ____ 1. Accrual accounting ____ 2. Matching principle ____ 3. Revenue recognition principle ____ 4. Fiscal year a. Any consecutive 12-month period b. Records the impact of a business event as i
> Allison Supply, Inc., is planning to issue long-term bonds payable to fund a major expansion. For each of the following questions, identify whether the bond price involves a discount, a premium, or par value. a. The stated interest rate on the bonds is 6
> Determine whether the following bonds payable will be issued at par, at a premium, or at a discount: a. The market interest rate is 5 percent. Wilson Corp. issues bonds payable with a stated rate of 61∕2 percent. b. Apex, Inc., issued 61∕2 percent bonds
> Willis Construction, Inc., completed the following transactions during June 2018, its first month of operations: Requirements 1. Open, or set up, T-accounts in the ledger for the following accounts: Cash, Accounts Receivable, Supplies, Equipment, Furn
> McCormack Co. purchased a building and issued a $360,000, 6 percent mortgage note on January 1, 2018. Payments of $13,008 are made semiannually on June 30 and December 31 each year. Record the journal entries for (a) issuance of the note on January 1, 20
> Ling Company issued a $280,000, 4 percent mortgage note on January 1, 2018, to purchase a building. Payments of $8,055 are made semiannually. Complete the following amortization schedule (partial) for Ling Company. Round to the nearest dollar.
> Phatboy Motorcycles, Inc., a motorcycle manufacturer, included the following note in its annual report: Requirements 1. Why are product liability losses considered contingent liabilities? 2. How can a contingent liability become a real liability for Ph
> On April 30, 2018, Dawson Co. borrowed $6,000 on a one-year, 9 percent note payable. What amounts would Dawson Co. report for the note payable and the related interest payable on its balance sheet at July 31, 2018, and on its income statement for the yea
> Wildflower Magazine, Inc., includes the following selected accounts in its general ledger at December 31, 2018: Requirement 1. Prepare the liabilities section of Wildflower Magazine’s balance sheet at December 31, 2018, to show how th
> Identify the section of the balance sheet in which the following accounts would be located: Current Assets (CA), Long-Term Assets (LTA), Current Liabilities (CL), or Long- Term Liabilities (LTL). _______ 1. Bonds Payable (due in 4 years) _______ 2. Inter
> Allied Corp. issued at par 8 percent, five-year bonds payable with a maturity value of $50,000 on May 1, 2018. Assume the fiscal year ends December 31. Journalize the following transactions and include an explanation for each entry. Round calculations to
> Allied Corp. issued 8 percent, five-year bonds payable at a price of $52,420 on January 1, 2018; the bonds have a maturity value of $50,000. Journalize the following transactions for Allied Corp. Include an explanation for each entry. a. Issuance of the
> Allied Corp. issued 8 percent, five-year bonds payable at a price of $48,200 on January 1, 2018; these bonds have a maturity value of $50,000. Journalize the following transactions for Allied Corp. Include an explanation for each entry. a. Issuance of th
> Wilson Corp. issued 6.5 percent, 10-year bonds payable with a maturity value of $30,000 on January 1, 2018. Journalize the following transactions and include an explanation for each entry. The market rate of interest equaled the stated rate at the date o
> Chad Simpson started a mobile DJ business named Sounds on Wheels, Inc., on April 1, 2018. In the month of April, before providing services to customers, the business incurred six transactions, which have been posted to the accounts as follows: Requirem
> On August 31, 2018, Freemont Co. purchased $18,000 of inventory with a one-year, 8 percent note payable. Journalize the following for the company: 1. Accrual of interest expense on December 31, 2018 2. Payment of the note plus interest on August 31, 2019
> On March 31, 2018, Titan Trucking purchased a used Kenworth truck at a cost of $52,000. Titan Trucking expects to drive the truck for five years and to have a residual value of $10,000. Compute Titan Trucking’s depreciation expense on the truck for year
> Refer to the data for S8-7. Compute second-year depreciation expense on the truck using the following methods: a. Straight-line b. Units of production c. Double-declining balance S8-7: On January 1, Titan Trucking purchased a used Kenworth truck at a co
> Bargain Oil, a small Texas oil company, holds huge reserves of oil. Assume that at the end of 2018, Bargain Oil’s cost of oil reserves totaled approximately $14.4 million, representing 1.2 million barrels of oil reserves in the ground. Requirements 1. C
> When one media company buys another, goodwill is often the most costly asset acquired. TXL Publishing paid $925,000 to acquire the Thrifty Nickel, a weekly advertising paper. At the time of the acquisition, the Thrifty Nickel’s balance sheet reported tot
> Top Flight Airways purchased a baggage-handling truck for $64,000. Suppose Top Flight Airways sold the truck on December 31, 2018, for $42,000 cash, after using the truck for three full years and accumulating depreciation of $27,000. Make the journal ent
> Record the following petty cash transactions of Apex, Inc., in the journal. Explanations are not required.
> Record the following petty cash transactions of Wilson Supply in the journal. Explanations are not required.
> Wilson’s Auto Repair ended 2017 with Accounts Receivable of $85,000 and a credit balance of $11,000 in Allowance for Uncollectible Accounts. During 2018, Wilson’s Auto Repair had the following activity: a. Service revenue earned on account, $545,000 b. C
> During its first year of operations, World Wide Travel earned revenue of $620,000 on account. Industry experience suggests that World Wide Travel’s uncollectible accounts will amount to 3 percent of revenues. On December 31, 2018, accounts receivable tot
> Clocktower Cleaning, Inc., had the following transactions for the month of March 2018: The following T-accounts have been set up for Clocktower Cleaning, Inc., with their beginning balances as of March 1, 2018: Requirements 1. Journalize the transact
> The T-account for Cash and the bank statement of Sinclair Food Services for the month of October 2018 follow: Prepare Sinclair Food Services’ bank reconciliation at October 31.
> Calculate accounts receivable turnover for the following two companies:
> Calculate the quick assets and the quick ratio for each of the following companies:
> For each of the following notes receivable, compute the amount of interest revenue earned during 2018. Use a 360-day year, and round to the nearest dollar.
> Umbrella.com had the following balances on December 31, 2018, before the year-end adjustments: The aging of receivables yields these data: Journalize Umbrella’s entry to adjust the allowance account to its correct balance on Decembe
> Bright Smile Dental Group started 2018 with Accounts Receivable of $134,000 and a credit balance of $9,000 in Allowance for Uncollectible Accounts. The following information relates to Bright Smile Dental’s 2018 operations: a. Credit sales, $322,000 b. C
> Assume Bob’s Boards has the following LIFO perpetual inventory record for skateboards for the month of March: At March 31, the accountant for Bob’s Boards determines that the current replacement cost of the ending in
> Match the terms with the definitions. ____ 1. A company must perform strictly proper accounting only for items significant to the business’s financial statements. ____ 2. Reporting the least favorable figures in the financial statements. ____ 3. A busine
> Swanson, Incorporated’s sales for the year ended March 31, 2018, were $1,275,000, and cost of goods sold amounted to $728,000. Beginning inventory was $55,000, and ending inventory was $68,000. Compute Swanson, Incorporated’s rate of inventory turnover f
> Inland Industrial Supply’s income statement data for the year ended December 31, 2018, follow. Assume the ending inventory was accidentally overstated by $3,200 in 2018. How would the inventory error affect Inland Industrial Supply&ac
> The transactions for Zane’s Creations, Inc., for the month of January 2018 are posted in the following T-accounts: Requirements 1. Calculate account balances at January 31, 2018. 2. Prepare the trial balance for Zane’
> Inland Industrial Supply’s income statement data for the year ended October 31, 2018, follow. Assume the ending inventory was accidentally overstated by $2,800. What are the correct amounts for cost of goods sold and gross profit?
> Suppose Paul’s Hardware sells merchandise on account, terms 1/10, n/45, for $920 (the cost of the inventory is $550) on March 17, 2018. Paul’s Hardware later received $290 of goods (cost, $175) as sales returns on March 21, 2018. The customer paid the ba
> Suppose Peter’s Hardware sells merchandise on account, terms 2/10, n/30, for $640 (the cost of the inventory is $360) on March 17, 2018. Peter’s Hardware later received $185 of goods (cost, $110) as sales returns on March 21, 2018. The customer paid the
> Use the data from S4-11 to calculate the gross profit percentage and the net income percentage for 2018 for The Skate Shed, Inc. S4-11: The accounting records for The Skate Shed, Inc., reflected the following amounts at the end of January 2018: Prepar
> Use the data from S4-11 to prepare the classified balance sheet for The Skate Shed, Inc., at January 31, 2018. Use the report format. S4-11: The accounting records for The Skate Shed, Inc., reflected the following amounts at the end of January 2018: P
> The accounting records for The Skate Shed, Inc., reflected the following amounts at the end of January 2018: Prepare The Skate Shed’s multistep income statement for the fiscal year ended January 31, 2018.
> Selected account balances for Maria’s Mocha at the end of the month are listed below in random order: Identify or compute the following amounts for Maria’s Mocha: a. Total current assets b. Total current liabilities
> After closing its accounts at July 31, 2018, Anderson Realty, Inc., had the following account balances: Prepare Anderson Realty’s post-closing trial balance at July 31, 2018. List the accounts in proper order.
> For the following series of journal entries, indicate whether each is an adjusting entry (ADJ) or a closing entry (CL).
> The following selected accounts and balances appear on the adjusted trial balance for Waverly, Inc., on July 31, 2018: 1. What is the net income or net loss? 2. What is the change in Retained Earnings? 3. Journalize the closing entries required.
