Question: Net sales, net income, and total assets

> Madison Corporation acquired a machine for $27,000 and has recorded depreciation for two years using the straight-line method over a five-year life and $8,000 residual value. At the start of the third year of use, Madison revised the estimated useful lif

> At the beginning of last year, Bratworth Corporation purchased a piece of heavy equipment for $99,000. The equipment has a life of five years or 100,000 hours. The estimated residual value is $9,000. Bratworth used the equipment for 21,000 hours last yea

> Text World, Inc., reported sales revenue of $450,000, net income of $54,000, and average total assets of $360,000. Text World’s return on assets is a. 12.0%. b. 1.25%. c. 15.0%. d. 80.0%.

> Harlem, Inc., was reviewing its assets for impairment at the end of the current year. Information about one of its assets is as follows: Harlem should report an impairment loss for the current year of a. $275,000. b. $25,000. c. $0. d. $250,000

> Suppose Speedy Delivery pays $62 million to buy Lone Star Overnight. The fair value of Lone Star’s assets is $80 million, and the fair value of its liabilities is $24 million. How much goodwill did Speedy Delivery purchase in its acquisition of Lone Star

> A company purchased mineral assets holding approximately 240,000 tons of ore for $960,000. The estimated residual value of the assets is zero. During the first year, 40,000 tons are extracted and sold. What is the amount of depletion for the first year?

> Taylor Company purchased a machine for $9,800 on January 1, 2016. The machine has been depreciated using the straight-line method assuming it has a five-year life with a $1,400 residual value. Taylor sold the machine on January 1, 2018, for $7,600 What g

> Taylor Company purchased a machine for $9,800 on January 1, 2016. The machine has been depreciated using the straight-line method assuming it has a five-year life with a $1,400 residual value. Taylor sold the machine on January 1, 2018, for $7,600 What i

> Suppose you buy land for $2,800,000 and spend $1,100,000 to develop the property. You then divide the land into lots as follows: How much did each Hilltop lot cost you? a. $176,800 b. $83,200 c. $510,000 d. $36,667

> An error understated Power Corporation’s December 31, 2018, ending inventory by $54,000. What effect will this error have on total assets and net income for 2018? Assets Net income a. Understate b. Understate No effect c. No effect Overstate d. No effect

> Supply the missing amounts for each of the following companies: Requirement: 1. Prepare the income statement for Altieri Company for the year ended December 31, 2018. Use the cost-of-goods-sold model to compute cost of goods sold. Altieriâ€

> Scott Equine Supplies had the following beginning inventory, net purchases, net sales, and gross profit percentage for the first quarter of 2018: By the gross profit method, the ending inventory should be a. $75,200. b. $48,800. c. $105,200. d. $124,000

> Roswell Corporation reported the following data: Roswell’s gross profit percentage is a. 49.2. b. 50.8. c. 56.0. d. 48.2

> A company’s sales are $550,000 and cost of goods sold is $350,000. Beginning and ending inventories are $27,000 and $38,000, respectively. How many times did the company turn its inventory over during this period? a. 10.8 times b. 6.2 times c. 7.4 time

> A capital expenditure a. adds to an asset. b. is expensed immediately. c. is a credit like capital (equity). d. records additional capital.

> An error understated Golden Flash Company’s December 31, 2018, ending inventory by $27,000. What effect will this error have on net income for 2019? a. Understate it b. Have no effect on it c. Overstate it

> Pineview Company ended the month of March with inventory of $26,000. Pineview expects to end April with inventory of $14,000 after selling goods with a cost of $98,000. How much inventory must Pineview purchase during April in order to accomplish these r

> The following data come from the inventory records of Albrecht Company: Based on these facts, the gross profit for Albrecht Company is a. $120,000. b. $223,000. c. $195,000. d. $205,000.

> The income statement for Gilmore Uniforms shows gross profit of $143,000, operating expenses of $130,000, and cost of goods sold of $219,000. What is the amount of net sales revenue? a. $362,000 b. $492,000 c. $273,000 d. $349,000

> A bond with a face amount of $12,000 has a current price quote of 107.15. What is the bond’s price? a. $12,107.15 b. $1,285.80 c. $12,858.00 d. $128,580

> If The Corner Frame Shop uses the LIFO method, cost of goods sold will be a. $21,200. b. $21,240. c. $20,900. d. $22,340.

> Huron Garden Supplies uses a perpetual inventory system. The company has these account Balances at October 31, 2018, prior to making the year-end adjustments: A year ago, the net realizable value of ending inventory was $12,800, which exceeded the cost

> If The Corner Frame Shop uses the FIFO method, the cost of the ending inventory will be a. $21,200. b. $20,900. c. $21,240. d. $27,840

> Swisher Company sold inventory with a selling price of $5,000 to customers for cash. It also collected sales taxes of $250. The journal entry to record this information includes a a. credit to Sales Tax Expense $250. b. credit to Sales Revenue $5,250. c.

> Connors Company paid $700 cash to make a repair on equipment it sold under a one-year warranty in the prior year. The entry to record the payment will debit a. Accrued Warranty Payable and credit Cash. b. Operating Expense and credit Cash. c. Warranty Ex

> What was Lakeside’s gross profit for January? a. $7,500 b. $ – 0 – c. $1,900 d. $5,600

> Lakeside Software began January with $3,900 of merchandise inventory. During January, Lakeside made the following entries for its inventory transactions: How much was Lakeside’s inventory at the end of January? a. $4,300 b. $9,900 c. $

> Which of the following statements is false? a. A contingent liability should be disclosed in the notes to the financial statements if there is a reasonable possibility that a loss (or expense) will occur. b. All contingent liabilities should be reported

> Blue Jay, Inc., manufactures and sells computer monitors with a three-year warranty. Warranty costs are expected to average 7% of sales during the warranty period. The following table shows the sales and actual warranty payments during the first two year

> Lexter Corporation borrows cash by signing a $90,000, 8%, eight-month note on December 1 with its local bank. The total cash paid for interest (only) at the maturity of the note by Lexter will be a. $600. b. $3,600. c. $4,800. d. $7,200.

> Gravel Corporation borrowed $250,000 from a bank on January 1, 2019, by signing a 10%, six-month note. The journal entry made by Gravel on January 1, 2019, will debit a. Interest Expense for $25,000 and credit Interest Payable for $25,000. b. Cash for $2

> A company reports purchases of $388,000, a beginning accounts payable balance of $27,000, and an ending accounts payable balance of $48,000. All purchases were on account. The company’s accounts payable turnover would be closest to: a. 7.26 b. 8.33 c. 10

> Suppose a Target store in Chicago, Illinois, ended November 2018 with 500,000 units of merchandise that cost $8.00 each. Suppose the store then sold 110,000 units for $960,000 during December. Further, assume the store made two large purchases during Dec

> On November 1, 2018, Sigma Inc. invests in $1,000,000 of 5%, 10-year bonds issued by Microsoft Corporation, intending to hold the bonds until their maturity. The bonds pay interest each January 1 and July 1. What account related to the bonds will be on S

> Consolidation accounting a. eliminates all liabilities. b. reports the receivables and payables of the parent company only. c. combines the accounts of the parent company and its subsidiary companies. d. all of the above

> Jackson Bank lends Jabbour Clothing Company $125,000 on September 1. Jabbour signs a $125,000, 6%, six-month note. The journal entry made by Jabbour on December 31, its fiscal year-end, is a. debit Interest Payable and credit Interest Expense for $2,500.

> Reliable Networks owns the following long-term equity investments (it does not have significant influence over any of its investments) Reliable’s income statement for the year should report a. investments of $68,800. b. an unrealized

> Reliable Networks owns the following long-term equity investments (it does not have significant influence over any of its investments) Reliable’s balance sheet at year-end should report a. investments of $100,000. b. an unrealized loss

> Refer to the Continental data in E-Q-32. On December 31, Continental’s balance sheet should report a. dividend revenue of $37,000. b. investment in equity securities of $554,000. c. investment in equity securities of $550,000. d. an unrealized gain o

> Continental Bank, a nationwide banking company, owns many types of investments. Continental paid $550,000 for equity securities on December 5. Continental owns less than 10% of the stock of the companies in which it invests. Two weeks later, Continental

> The beginning balance sheet of Homesby Corporation included the following long-term asset: Homesby completed the following investment transactions during the year: At year-end, the fair values of Homesby’s investments were as follows:

> Oregon Exchange Company completed the following long-term investment transactions during 2018: At year-end, the fair value of the Columbus stock is $30,100. The fair value of the Nashua stock is $658,000. Requirements: 1. For which investment is fair

> During the fourth quarter of 2018, Rainbarrel, Inc. generated excess cash, which the company invested in equity securities as follows: Requirements: 1. Open T-accounts for Cash (including its beginning balance of $23,000), Investment in Equity Securitie

> Paulson’s specializes in sound equipment. Company records indicate the following data for a line of speakers: Requirements: 1. Determine the amounts that Paulson’s should report for cost of goods sold and ending inven

> Selected data from Switzer Furniture, Inc., follows. Industry averages have been gathered for several ratios. Requirements: 1. Perform a trend analysis on Switzer’s sales revenue, inventory, and receivables over the past three years, u

> Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Border Corporation stock or Celebration Company stock and have assembled the following data for the two companies. Selected income statement data

> Comparative financial statement data of Stow Optical Mart follow: Other information: 1. Market price of Stow Optical Mart common stock: $122.91 at December 31, 2018, and $165.75 at December 31, 2017 2. Common shares outstanding: 13,000 during 2018 and 8

> Financial statement data of Highland Engineering include the following items: Requirements: 1. Calculate Highland’s current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places. 2. Calculate the three rati

> Top managers of Ryan Products, Inc., have asked you to compare the company’s profit performance and financial position with the average for the industry. The company’s accountant has given you the businessâ€

> Selected data from Tompkin Furniture, Inc., follows. Requirements: 1. Perform a trend analysis on Tompkin’s sales revenue, inventory, and receivables over the past three years, using 2015 as the base. Is the trend in each of these are

> Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Edge Corporation stock or GoBee Company stock and have assembled the following data for the two companies. Selected income statement data for the

> Comparative financial statement data of Hamden Optical Mart follow: Other information: 1. Market price of Hamden Optical Mart common stock: $48.15 at December 31, 2018, and $39.96 at December 31, 2017 2. Common shares outstanding: 17,000 during 2018 a

> Financial statement data of Greatland Engineering include the following items: Requirements: 1. Calculate Great land’s current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places. 2. Calculate the three r

> Sherwood Company’s inventory records for the most recent year contain the following data Sherwood Company sold a total of 19,800 units during the year. Requirements: 1. Using the average-cost method, compute the cost of goods sold and

> Top managers of Caffrey Products, Inc., have asked you to compare the company’s profit performance and financial position with the average for the industry. The company’s accountant has given you the businessâ&#1

> Net sales, net income, and total assets for Azul Shipping, Inc., for a five-year period follow: Requirements: 1. Calculate trend percentages for each item for 2015 through 2018. Use 2014 as the base year and round to the nearest percent. 2. Calculate t

> The comparative balance sheets of Mary McGuire Design Studio, Inc., at June 30, 2018, and 2017, and transaction data for fiscal 2018, are as follows: Transaction data for the year ended June 30, 2018, follows: a. Net income, $71,000 b. Depreciation expe

> To prepare the statement of cash flows, accountants for Dartmouth Electric Company have summarized 2018 activity in two accounts: Requirements: 1. Prepare the statement of cash flows of Dartmouth Electric for the year ended December 31, 2018, using the

> Ballinger Furniture Gallery, Inc., provided the following data from the company’s records for the year ended August 31, 2019: a. Credit sales, $574,400 b. Loan to another company, $13,000 c. Cash payments to purchase plant assets, $37,600 d. Cost of goo

> Use the Mercedes Supply Corp. data from P11-70B. Requirements: 1. Prepare the company’s 2018 statement of cash flows using the direct method. 2. How can the concepts used in this problem help you evaluate an investment? Data from p11-

> The 2018 and 2017 comparative balance sheets and 2018 income statement of Mercedes Supply Corp. follow: Mercedes Supply had no noncash investing and financing transactions during 2018. During the year, there were no sales of land or equipment, no payme

> The comparative balance sheets of Shaw Movie Theater Company at June 30, 2018 and 2017, reported the following: Shaw’s transactions during the year ended June 30, 2018, included the following: Requirements: 1. Prepare Shaw Movie Theat

> Fortune Software Corp. has assembled the following data for the years ending December 31, 2018 and 2017: Requirement: 1. Prepare Fortune’s statement of cash flows using the indirect method to report operating activities. Include a sch

> Use the Vintage Motors data from P11-66B. Requirements: 1. Prepare Vintage’s income statement for the year ended December 31, 2018. Use the singlestep format, with all revenues listed together and all expenses together. 2. Prepare Vintage’s balance shee

> Use the data for Spear Corporation in illustrate Spear’s income tax advantage from using LIFO over FIFO. Sales revenue is $10,080, operating expenses are $800, and the income tax rate is 25%. How much in taxes would Spear Corporation save by using the LI

> Vintage Motors, Inc., was formed on January 1, 2018. The following transactions occurred during 2018:On January 1, 2018, Vintage issued its common stock for $430,000. Early in January, Vintage made the following cash payments: a. $160,000 for equipment b

> The comparative balance sheets of American-Davis Design Studio, Inc., at June 30, 2018, and 2017, and transaction data for fiscal 2018, are as follows: Transaction data for the year ended June 30, 2018, follows: a. Net income, $60,500 b. Depreciation ex

> To prepare the statement of cash flows, accountants for Ronklin Electric Company have summarized 2018 activity in two accounts: Ronklin Electric’s 2018 income statement and balance sheet data follow: Requirements: 1. Prepare the state

> Rourke Furniture Gallery, Inc., provided the following data from the company’s records for the year ended March 31, 2019: a. Credit sales, $583,800 b. Loan to another company, $10,000 c. Cash payments to purchase plant assets, $89,300 d. Cost of goods so

> Use the Queen Supply Corp. data from P11-61A. Requirements: 1. Prepare the company’s 2018 statement of cash flows using the direct method. 2. How can the concepts used in this problem help you evaluate an investment? Data from p11-61A

> The 2018 and 2017 comparative balance sheets and 2018 income statement of Queen Supply Corp. follow: Queen Supply had no noncash investing and financing transactions during 2018. During the year, there were no sales of land or equipment, no payment of

> The comparative balance sheets of Bedford Movie Theater Company at November 30, 2018, and 2017, reported the following: Bedford’s transactions during the year ended November 30, 2018, included: Requirements: 1. Prepare Bedford Movie T

> Smither Software Corp. has assembled the following data for the years ending December 31, 2018 and 2017. Requirement: 1. Prepare Smither’s statement of cash flows using the indirect method to report operating activities. Include a sc

> Use the Coleman Motors data from P11-57A. Requirements: 1. Prepare Coleman’s income statement for the year ended December 31, 2018. Use the single-step format, with all revenues listed together and all expenses together. 2. Prepare Coleman’s balance she

> Coleman Motors, Inc., was formed on January 1, 2018. The following transactions occurred during 2018On January 1, 2018, Coleman issued its common stock for $350,000. Early in January, Coleman made the following cash payments: a. $140,000 for equipment b.

> Use the data for Spear Corporation in E6-30B to answer the following. Requirements 1. Compute cost of goods sold and ending inventory using each of the following methods: a. Specific identification, with seven $160 units and four $170 units still on hand

> Patterson Specialties, Inc., reported the following statement of stockholders’ equity for the year ended October 31, 2018: Requirements: Answer these questions about Patterson’s stockholders’ equity

> Medical Goods is embarking on a massive expansion. Assume the plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company’s existing locations, offering more items of inventory and with more e

> The following accounts and related balances of Cardinal Designers, Inc., as of December 31, 2018, are arranged in no particular order: Requirements: 1. Prepare Cardinal’s classified balance sheet in the account format at December 31, 2

> Assume Dotty Cakes, Inc., completed the following transactions during 2018, the company’s 10th year of operations: Requirements: 1. Analyze each transaction in terms of its effect on the accounting equation of Dotty Cakes. 2. What impa

> Madrid Jewelry Company reported the following summarized balance sheet at December 31, 2018 During 2019, Madrid Jewelry completed these transactions that affected stockholders’ equity: Requirements: 1. Journalize Madrid Jewelryâ

> Superior Outdoor Furniture Company included the following stockholders’ equity on its year-end balance sheet at February 28, 2019: Requirements: 1. Identify the different issues of stock that Superior Outdoor Furniture Company has out

> Doorman Corp. has the following stockholders’ equity information: Doorman’s charter authorizes the company to issue 9,000 shares of 8% preferred stock with par value of $120 and 700,000 shares of no-par common stock. The company issued 1,800 shares of

> The partners who own Crew Kayaks Co. wished to avoid the unlimited personal liability of the partnership form of business, so they incorporated as Crew Kayaks, Inc. The charter from the state of Nevada authorizes the corporation to issue 125,000 shares o

> Ahuja Specialties, Inc., reported the following statement of stockholders’ equity for the year ended October 31, 2018: Requirements: Answer these questions about Ahuja’s stockholders’ equity transact

> Sullivan Medical Goods is embarking on a massive expansion. Assume plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company’s existing locations, offering more items of inventory and with m

> On September 30, 2018, Rittex, Inc., purchased 5% bonds of McPhee Corporation at 97 as a long-term, held-to-maturity investment. The maturity value of the bonds will be $46,000 on September 30, 2023. The bonds pay interest on March 31 and September 30. R

> Haddock Corp. purchased fifteen $1,000 7% bonds of Galvan Corporation when the market rate of interest was 8%. Interest is paid semiannually, and the bonds will mature in nine years. Using the PV function in Excel®, compute the price Haddock paid (the pr

> The following accounts and related balances of Eagle Designers, Inc., as of December 31, 2018, are arranged in no particular order: Requirements: 1. Prepare Eagle’s classified balance sheet in the account format at December 31, 2018.

> Assume Dessert Corner, Inc., completed the following transactions during 2018, the company’s 10th year of operations: Requirements: 1. Analyze each transaction in terms of its effect on the accounting equation of Dessert Corner. 2. Wha

> Jubilee Jewelry Company reported the following summarized balance sheet at December 31, 2018: During 2019, Jubilee Jewelry completed these transactions that affected stockholders’ equity: Requirements: 1. Journalize Jubilee Jewelry&a

> Seasonal Outdoor Furniture Company included the following stockholders’ equity on its year-end balance sheet at March 31, 2019: Requirements: 1. Identify the different issues of stock that Seasonal Outdoor Furniture Company has outsta

> Lima Corp. has the following stockholders’ equity information: Lima’s charter authorizes the company to issue 4,000 shares of 11% preferred stock with par value of $200 and 700,000 shares of no-par common stock. The company issued 1,000 shares of the pre

> The partners who own Jefferson Rafts Co. wished to avoid the unlimited personal liability of the partnership form of business, so they incorporated as Jefferson Rafts, Inc. The charter from the state of Vermont authorizes the corporation to issue 200,000

> The accounting records of Brigham Foods, Inc., include the following items at December 31, 2018: Requirements: 1. Show how each relevant item would be reported on the Brigham Foods classified balance sheet. Include headings and totals for current liabi

> On December 31, 2018, Herndon Corporation issues 6%, 10-year convertible bonds payable with a face value of $1,000,000. The semiannual interest dates are June 30 and December 31. The market interest rate is 7%. Herndon amortizes bond discounts using the

> The notes to the Thorson Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Thorson amortizes bond discounts using the effective-interest method and pays all interest amounts at December 31. Require

> 1. Journalize the following transactions of Laporte Communications, Inc.: 2. At December 31, 2018, after all year-end adjustments have been made, determine the carrying amount of Laporte’s bonds payable, net. 3. For the six months ende

> Conroy Financial paid $530,000 for a 20% investment in the common stock of Maverick, Inc. For the first year, Maverick reported net income of $270,000, and at year-end declared and paid cash dividends of $115,000. On the balance-sheet date, the fair valu

> On February 28, 2018, Dolphin Corp. issued 10%, 20-year bonds payable with a face value of $2,100,000. The bonds pay interest on February 28 and August 31. The company amortizes bond discount using the straight-line method. Requirements: 1. If the marke