On May 1 of this year, Ellsworth and Company established a Petty Cash Fund. The following petty cash transactions took place during the month: May 1 Cashed check no. 956 for $150 to establish a Petty Cash Fund, and put the $150 in a locked drawer in the office. 3 Bought postage stamps, $8.80, voucher no. 1 (Miscellaneous Expense). 4 Issued voucher no. 2 for taxi fare, $12 (Miscellaneous Expense). 6 Issued voucher no. 3 for delivery charges on outgoing parts, $15. 9 B. Ellsworth, the owner, withdrew $25 for personal use, voucher no. 4. 13 Paid $8.29 for postage, voucher no. 5 (Miscellaneous Expense). 19 Bought pens for office, $6, voucher no. 6. 23 Paid $3.59 for a box of staples, voucher no. 7. 28 Paid $15 for window cleaning service, voucher no. 8 (Miscellaneous Expense). 29 Paid $2 for pencils for office, voucher no. 9. 31 Issued for cash check no. 1098 for $95.68 to reimburse Petty Cash Fund. Required 1. Journalize the entry establishing the Petty Cash Fund in the general journal. 2. Record the disbursements of petty cash in the petty cash payments record. 3. Journalize the summarizing entry to reimburse the Petty Cash Fund.
> Why is there generally a difference between the balance in the Cash account on the company’s books and the balance on the bank statement?
> Selected columns of Envirocon Company’s payroll register for March are as follows. The employer’s Social Security tax amount has already been calculated as $3,124.34. The employees’ FICA Medicare tax
> The information on earnings and deductions for the pay period ended December 14 from King Company’s payroll records is as follows: For each employee, the Social Security tax is 6.2 percent of the first $118,500, and the employerâ
> Go Systems had the following payroll data for wages for the week ended February 5. The state income tax is assumed to be 20% of the federal income tax. a. Prepare the general journal entry to record the payroll. b. Prepare the general journal entry to
> On January 14, at the end of the second week of the year, the totals of Castle Company’s payroll register showed that its store employees’ wages amounted to $33,482 and that its warehouse wages amounted to $13,560. Withholdings consisted of federal incom
> Signature Company’s partial payroll register for the week ended Practice Exercise 1 January 7 is as follows: Assume that the payroll is subject to an employer’s Social Security tax of 6.2 percent on the first $118,50
> Explain how payroll fraud can be prevented.
> Explain the advantage of establishing a tax calendar.
> Generally, what is the time schedule for payment of workers’ compensation insurance premiums?
> How many copies are made of a Form W-2? Who uses the copies of the W-2 form?
> Explain the deposit requirement for federal unemployment tax.
> What is the purpose of closing entries? What is a consequence of forgetting to make closing entries?
> Describe the journal entry to: a. Record the payroll. b. Record the employer’s payroll tax contributions. c. Pay the payroll. d. Pay the state and federal unemployment taxes. e. Pay the FICA (Social Security and Medicare) and Federal Income Tax withholdi
> An employee who is married and has three children submits a W-4 form to his employer. He checks the box that says “Single” and writes zero in the “Deductions Claimed” box. Is this action ethical, unethical, or illegal? Explain your reasoning.
> Southern Company pays its employees weekly by issuing checks on its regular bank account. The owner thinks it would be too much trouble to have a second checking account. Explain to the owner why having this account might be worth the additional effort.
> Attracting and retaining the best employees is crucial to operating a business. Employees will join a company based on opportunities for advancement, training, company culture, and salary and benefits provided. One business that is often listed in Fortun
> For the week ended September 7, the totals of the payroll register for Benton, Inc., are presented below. The regular and overtime earnings are correct. List six errors that exist. None of the employees have earned more than $118,500, so all earnings are
> Using the income tax withholding table in Figure 3, for each employee of Miller Company, determine the net pay for the week ended January 21. Assume a Social Security tax of 6.2 percent and a Medicare tax of 1.45 percent. All employees have cumulative ea
> Lisa Meilo works for Pacific Company, which pays its employees time-and-a-half for all hours worked in excess of 40 per week. Meilo’s pay rate is $37 per hour. Her wages are subject to federal income tax, a Social Security tax deduction
> Determine the gross pay for each employee listed below. a. Clay Jones is paid time-and-a-half for all hours over 40. He worked 45 hours during the week. His regular pay rate is $25 per hour. b. Mary James worked 48 hours during the week. She is entitled
> Why is it necessary to make general journal entries for the ledger balance side of the bank reconciliation?
> Assume that the employees in Exercise 7–7 are paid from the company’s regular bank account (check numbers 981 and 982). Prepare the entry to record and pay the payroll in general journal form, dated September 30. In E
> Ellie Harrod, owner of Harrod’s Dry Cleaners, makes bank deposits in the night depository at the close of each business day. The following information for the last four days of July is available. Required In general journal form, reco
> Indicate whether the following items in a bank reconciliation should be (1) Added to the Cash account balance, (2) Deducted from the Cash account balance, (3) Added to the bank statement balance, or (4) Deducted from the bank statement balance. a. NSF ch
> Precision Labs has two employees. The following information was taken from its individual earnings records for the month of September. Determine the missing amounts assuming that the Social Security tax is 6.2 percent, the Medicare tax is 1.45 percent, a
> What is the purpose of endorsing a check?
> On January 21, the column totals of the payroll register for Great Products Company showed that its sales employees had earned $14,960, its truck driver employees had earned $10,692, and its office employees had earned $8,670. Social Security taxes were
> Why does a bank keep a signature card on file for customers’ accounts?
> For tax purposes, assume that the maximum taxable earnings are $118,500 for Social Security and $7,000 for the unemployment tax and that all earnings are taxable for Medicare. For the payroll register for the month of November for Shelby, Inc., determine
> What are internal controls designed to do?
> What is the difference between an employee and an independent contractor? List two examples of an independent contractor.
> You work as a cashier for a service business. Some days you are short of cash at the end of the day, and some days you have more cash than the cash register tape says was earned. You are embarrassed when your cash is short and don’t want the owner to kno
> The bookkeeper has completed a work sheet and has journalized and posted the closing entries, but he forgot to journalize and post the adjusting entries from the work sheet. What are the effects of these actions and omissions? How would these actions and
> List the steps in the closing procedure in the correct order.
> As the new bookkeeper for a small business, you find that several people access the Petty Cash Fund, usually without anyone leaving a written explanation of what the money was used for. The amount of cash does not match the recorded amount of the fund. E
> The post-closing trial balance submitted to you by the bookkeeper of Tafoya Consulting Company is shown below. Assume that the debit total ($41,048) is correct. a. Analyze the work and prepare a response to what you have reviewed. b. Journalize the closi
> BDO USA, LLP and Grant Thornton, LLP are full-service consulting and forensic accounting firms. These firms offer services ranging from determining contract damages to overseeing fraud examination. Their forensic accountants are experts at finding even t
> Your uncle owns a small sole proprietorship. He does his own bookkeeping, although he didn’t finish the chapter on closing entries before he opened his business. He mentions to you that closing entries look like they take a long time. He wonders why he s
> Jim’s Fitness Center deposits all receipts in the bank each evening and makes all payments by check. On April 30, its ledger balance of cash is $1,515.10. The bank statement balance of cash as of April 30 is $1,920.42. Use the following information to re
> Rather than going directly to college, some students take time off to travel abroad, learn new skills, or volunteer. This period is known as a “gap year.” Real Gap Experience provides hundreds of gap year traveling opportunities in over 45 countries arou
> Roberta Felino, owner of Roberta’s Beauty Salon, makes bank deposits in the night depository at the close of each business day. The following information for the first four days of April is available. Required In general journal form,
> Identify whether the following accounts would be included on a post-closing trial balance. Post-Closing Trial Balance Account Title Yes No 0. Example: Cash X a. Service Revenue b. Prepaid Insurance c. Supplies d. Accounts Payable e. D. Hughes, Drawi
> On March 1 of this year, Stowe Company established a Petty Cash Fund, and the following petty cash transactions took place during the month: Mar. 1 Cashed check no. 314 for $100 to establish a Petty Cash Fund, and put the $100 in a locked drawer in the o
> After all revenue and expenses have been closed at the end of the fiscal period ended December 31, Income Summary has a debit of $45,550 and a credit of $36,520. On the same date, D. Mau, Drawing has a debit balance of $12,000 and D. Mau, Capital had a b
> The Ledger Balance of Cash section of the bank reconciliation for Virtual Net Company for August 31 follows. Journalize the entries required to bring the general ledger up to date as of August of this year.
> Merkle Company deposits all receipts in the bank each evening and makes all payments by check. On November 30, its ledger balance of cash is $3,219.72. The bank statement balance of cash as of November 30, is $3,490.72. You are given the following inform
> The Income Statement columns of the work sheet of Dunn Company for the fiscal year ended June 30 follow. During the year, K. Dunn withdrew $4,000. Journalize the closing entries.
> The Quilt Shop deposits all receipts in the bank each evening and makes all payments by check. On July 31, its ledger balance of cash is $2,830.15. The bank statement balance of cash as of July 31 is $3,215.20. Use the following information to reconcile
> As of December 31, the end of the current year, the ledger of Harris Company contained the following account balances after adjustment. All accounts have normal balances. Journalize the closing entries. Cash $ 8,440 C. Harris, Drawing $1,498 Equipme
> The ledger accounts after adjusting entries for Cruz Services are presented below. a. Journalize the following closing entries and number as steps 1 through 4. b. What is the new balance of A. Cruz, Capital after closing? Show your calculations. Own
> Arthur’s Men’s Shop deposits all receipts in the bank each evening and makes all payments by check. On November 30, its ledger balance of cash is $2,375.05. The bank statement balance of cash as of November 30 is $2,784.77. Use the following information
> Classify the following accounts as real (permanent) or nominal (temporary) and indicate with an X whether the account is closed. Also indicate the financial statement in which each account will appear. The Building account is given as an example. Cl
> a. Describe the entries that have been posted to the following accounts after the Change Fund was established. b. How will the balance of Cash Short and Over be reported on the income statement? Change Fund Sales Cash 150 Mar. 4 1,472 Mar. 4 1,475
> Prepare a statement of owner’s equity for The Lindal Clinic for the year ended December 31. P. Lindal’s capital amount on January 1 was $124,000, and there was an additional investment of $7,000 on May 12 and withdrawals of $31,500 for the year. Net inco
> Number in order the following steps in the accounting cycle: a. Prepare a trial balance. b. Post journal entries to the accounts in the ledger. c. Journalize and post the adjusting entries from the data on the work sheet. d. Analyze source documents and
> At the end of the day, the cash register tape lists $881.40 as total income from services. Cash on hand consists of $18.25 in coins, $433.60 in currency, $100.00 in traveler’s checks, and $427.00 in customers’ checks. The amount of the Change Fund is $10
> Indicate with an X whether each of the following would appear on the income statement, statement of owner’s equity, or balance sheet. An item may appear on more than one statement. The first item is provided as an example. Balance
> Place a check mark in the column that indicates the location of each item that would be found on a bank reconciliation. Assume that the checks written by the company are written correctly. Subtract Subtract Add to Ledger from Ledger Balance of Add t
> When would revenue and expenses be recorded if a business used the cash basis of accounting? If a business used the accrual basis of accounting?
> a. What does a debit balance in Cash Short and Over mean? b. Where does a debit balance in Cash Short and Over appear in the financial statements? c. What does a credit balance in Cash Short and Over mean? d. Where does a credit balance in Cash Short and
> Marty is an accountant. Sometimes printouts of financial statements contain errors, making the financial statements unusable. Marty doesn’t like to waste anything, so he takes the unusable financial statements to his son’s day care center to use for draw
> You are an owner/bookkeeper in a country whose economy has been nearly destroyed. Goods are scarce. In fact, you have no goods to sell at the start of each day. You go out early each morning to purchase goods and haul them back to sell. At the end of the
> What two measures are used to determine whether a firm has sufficient capital to operate and whether the firm has the ability to pay its debts?
> What are the rules for recognizing whether an adjusting entry should be reversed?
> What are the basic classifications found on an income statement for a merchandising business as compared to a service business?
> What is the order for listing accounts in the Current Assets section of the balance sheet?
> For the university football program’s Unearned Season Tickets account, list the debits and credits for each amount posted to the account and briefly describe each transaction. ACCOUNT Unearned Season Tickets ACCOUNT NO. 214 Balance
> Write the third closing entry to transfer the net income or net loss to the P. Hernandez, Capital account, assuming the following: a. A net income of $3,842 during the first quarter (Jan.–Mar.) b. A net loss of $1,781 during the second quarter (Apr.–Jun.
> Assume that a college receives $84,000 for one semester’s dormitory rent in advance and an entry is made debiting Cash and crediting Unearned Rent. At the end of the year, $68,000 of the rent has been earned. What adjusting entry would be made?
> A merchandising company shows $8,842 in the Supplies account on the preadjusted trial balance. After taking inventory of the actual supplies, the company still owns $3,638. a. How much was used or expired? b. Write the adjusting entry.
> Why is it necessary to adjust the Merchandise Inventory account under a periodic inventory system?
> On a work sheet, where will the amount of the ending merchandise inventory be recorded?
> Using the perpetual inventory system, what account is debited when a business finds that its physical count of inventory is greater than the recorded amount?
> On the Income Summary line of a work sheet, $126,220 appears in the Income Statement Debit column and $123,300 appears in the Income Statement Credit column. Which figure represents the beginning inventory?
> What is a physical inventory? What does the word periodic mean in the term periodic inventory?
> What is the purpose of Form 940? How often is it prepared, and what is the due date?
> What is the purpose of Form 941? How often is it prepared, and what are the due dates?
> What taxes are employers accounting for that increase the debit to Payroll Tax Expense?
> a. Why would a business use a Petty Cash Fund? b. Describe the entry needed to establish a $50 Petty Cash Fund and an entry to reimburse the fund.
> What information is needed to use the wage-bracket withholding table? Where is the table found?
> Describe how a special payroll bank account is useful in paying the wages and salaries of employees.
> What are interim financial statements? Why would a business want to prepare them?
> Considering the following events, determine which month the revenue or expenses would be recorded using the accounting method specified. a. Gerber Company uses the cash basis of accounting. Gerber prepays cash in May for insurance that only covers the fo
> Explain the difference between gross earnings and net earnings for a payroll period.
> List three required deductions and four voluntary deductions from an employee’s total earnings.
> What is the purpose of the Income Summary account? How does it relate to the revenue and expense accounts?
> You are preparing a post-closing trial balance for the company where you work, but it doesn’t balance. You are tired, and besides, you don’t think the company pays you for this much hassle and extra time. You decide to increase the balance of an asset ac
> What is the purpose of the payroll register?
> What information is included in an employee’s individual earnings record?
> What is the purpose of the post-closing trial balance? What is the difference between a trial balance and a post-closing trial balance?
> Why must employers maintain employees’ individual earnings records?
> The financial statements for Cole Company follow. Required Using the statements of Cole Company, prepare a statement of cash flows for the year ended December 31, 2018. Cole Company Income Statement For Year Ended December 31, 2018 Net Sales $540,
> The financial statements for Zhang Company follow. Assume that the withdrawals were in the form of cash. Required Prepare a statement of cash flows for the year ended December 31, 2018. Zhang Company Income Statement For Year Ended December 31, 20
> The financial statements for Romeo and Company follow. Assume that the additional investment and the withdrawals were in the form of cash. Required Prepare a statement of cash flows for the year ended December 31, 2018. Romeo and Company Income St
> Mahoney Company has the following financial statements for 2017 and 2018. Assume that the purchase of equipment and the withdrawals were in the form of cash. Required Prepare a statement of cash flows for the year ended December 31, 2018. Mahoney
> What if the freight charges on a new desk for the owner were journalized and posted to the Freight In account? Would this affect the Cost of Goods Sold section? If so, how?
> A music store sells new instruments. The store also sells used instruments for people who are willing to give the store part of the sales price. The sales of used instruments, called commissions, amount to about one-fourth of total sales. On the firm’s c
> Costco is the largest chain of membership warehouse clubs in the world, based on sales volume, and it is the fifth largest general retailer in the United States. Costco focuses on selling products at low prices, often at a very high volume. These goods a
> The following accounts appear in the ledger of Sheldon Company on January 31, the end of this fiscal year. Cash ………………………………………………………………………… $ 16,400 Accounts Receivable …………………………………………………….. 15,100 Merchandise Inventory ……………………………………………….. 55,500 Stor
> The following partial work sheet covers the affairs of Ketcher and Company for the year ended June 30. Required 1. Journalize the six adjusting entries. 2. Journalize the closing entries. 3. Journalize the reversing entry as of July 1, for the salaries
