On November 30, High Peaks Party Planners had a $34,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts. During December, the store made credit sales of $159,000. December collections on account were $130,000, and write-off s of uncollectible receivables totaled $2,700. Uncollectible-accounts expense is estimated as 1% of revenue. Requirements 1. Journalize sales, collections, write-off s of uncollectibles, and uncollectible-accounts expense by the allowance method during December. Explanations are not required. 2. Show the ending balances in Accounts Receivable, Allowance for Uncollectible Accounts, and Net Accounts Receivable at December 31. How much does the store expect to collect? 3. Show how the store will report accounts receivable and net sales on its December 31 balance sheet and income statement.
> Yummy Foods completed thefollowing selected transactions. 2012 Oct 31 Sold goods to Bob’s Foods, receiving a $36,000, three-month, 6% note. Dec 31 Made an adjusting entry to accrue interest on the Bob’s Foods note. 2013 Jan 31 Collected the Bob’s Foods n
> Assume Adams & Murray, theaccounting firm, advises Pappadeaux Seafood that its financial statements must be changed toconform to GAAP. At December 31, 2012, Pappadeaux’s accounts include the following: Cash................................................
> The September 30,2013, records of Up-To-Date Communications include these accounts: Accounts Receivable.................................... $243,000 Allowance for Doubtful Accounts................... (8,100) During the year, Up-To-Date Communications es
> This problem takes you through the accounting forsales, receivables, and uncollectibles for Quick Mail Corp., the overnight shipper. By selling on credit,the company cannot expect to collect 100% of its accounts receivable. At July 31, 2012, and 2013,res
> Lance Products,Inc., makes all sales on account. Selena Camp, accountant for the company, receives and opensincoming mail. Company procedure requires Camp to separate customer checks from the remittanceslips, which list the amounts that Camp posts as cre
> During the fourth quarter of2012, Spring, Inc., generated excess cash, which the company invested in trading securities as follows: 2012 Nov 16Purchased 1,300 common shares as an investment in trading securities,paying $8 per share. Dec 16 Received cash
> In a bank reconciliation, interest revenue earned on your bank balance is a. Deducted from the book balance. b. Added to the bank balance. c. Added to the book balance. d. Deducted from the bank balance.
> A company sells on credit terms of “2/10, n/30” and has days’ sales in account receivableof 30 days. Its days’ sales in receivables is a. Too low. b. Too high. c. About right. d. Not able to be evaluated from the data given.
> A company with net sales of $1,095,000, beginning net receivables of $90,000, and endingnet receivables of $114,000 has days’ sales in accounts receivable of a. 34 days. b. 37 days. c. 31 days. d. 40 days.
> Which of the following is included in the calculation of the quick (acid-test) ratio? a. Prepaid expenses and cash b. Cash and accounts receivable c. Inventory and short-term investments d. Inventory and prepaid expenses
> Sharon Peel keeps the Accounts Receivable T-account of Ace & Pool, a partnership. What duty will a good internal control system withhold from Peel? Why?
> Write the journal entry on the maturity date (February 1, 2013). On August 1, 2012, Azores, Inc., sold equipment and accepted a six-month, 11%, $30,000 notereceivable. Azores’ year-end is December 31.
> Which of the following accounts will Azores credit in the journal entry at maturity onFebruary 1, 2013, assuming collection in full? a. Interest Receivable b. Interest Payable c. Note Payable d. Cash On August 1, 2012, Azores, Inc., sold equipment and a
> How much interest does Azores, Inc., expect to collect on the maturity date(February 1, 2013)? a. $1,650 b. $1,375 c. $3,300 d. $1,100 On August 1, 2012, Azores, Inc., sold equipment and accepted a six-month, 11%, $30,000 notereceivable. Azores’ year-en
> If Azores, Inc., fails to make an adjusting entry for the accrued interest, a. Net income will be understated and liabilities will be overstated. b. Net income will be understated and assets will be understated. c. Net income will be overstated and asset
> How much interest revenue should Azores accrue on December 31, 2012? a. $1,650 b. $1,375 c. $3,300 d. $1,100 On August 1, 2012, Azores, Inc., sold equipment and accepted a six-month, 11%, $30,000 notereceivable. Azores’ year-end is December 31.
> Refer to Quiz questions 5-50 and 5-51. The following year, Linus Company wrote off$2,000 of old receivables as uncollectible. What is the balance in the Allowance account now? In Quiz questions 5-50 and 5-51 Linus Company uses the percent-of-sales metho
> If a bank reconciliation included a deposit in transit of $790, the entry to record this reconciling item would include a a. Credit to prepaid insurance for $790. b. Debit to cash for $790. c. Credit to cash for $790. d. No entry is required.
> Refer to question 5-50. The balance of Allowance for Doubtful Accounts, after adjustment,will be a. $5,000. b. $2,000. c. $1,000. d. $1,500. In question 5-50 Linus Company uses the percent-of-sales method to estimate uncollectibles. Net creditsales for
> Linus Company uses the percent-of-sales method to estimate uncollectibles. Net creditsales for the current year amount to $100,000, and management estimates 2% will be uncollectible.Allowance for doubtful accounts prior to adjustment has a credit balance
> Refer to Question 5-48. The net receivables on the balance sheet is ____________. In Question 5-48 Maverson Company uses the aging method to adjust the allowance for uncollectibleaccounts at the end of the period. At December 31, 2012, the balance of ac
> Maverson Company uses the aging method to adjust the allowance for uncollectibleaccounts at the end of the period. At December 31, 2012, the balance of accounts receivable is$220,000, and the allowance for uncollectible accounts has a credit balance of $
> Siegal Investments purchased Demer shares as a trading security on December 16 for $109,000. 1. Suppose the Demer shares decreased in value to $100,000 at December 31. Make the Siegal journal entry to adjust the Short-Term Investment account to market va
> Under the allowance method for uncollectible receivables, the entry to record uncollectible-accountexpense has what effect on the financial statements? a. Decreases owners’ equity and increases liabilities b. Decreases net income and decreases assets c.
> Refer to the All America Bank data in Quiz question 5-45. At December 31, All AmericaBank’s balance sheet should report a. Short-term investment of $655,000. b. Unrealized gain of $5,000. c. Short-term investment of $650,000. d. Dividend revenue of $45,0
> All America Bank, the nationwide banking company, owns many types of investments.Assume that All America Bank paid $650,000 for trading securities on December 5. Two weekslater, All America Bank received a $45,000 cash dividend. At December 31, these tra
> Unique Co., Inc., the electronics and appliance chain, reported these figures in millions of dollars: Requirements 1. Compute Unique’s days’ sales in receivables or days’ sales outstanding (DSO) dur
> Seminole, Inc., reported the following items at December 31, 2012, and 2011: Requirements 1. Compute Seminole’s (a) Quick (acid-test) ratio and (b) Days’ sales in average receivables for 2012. Evaluate each ratio val
> If a bookkeeper mistakenly recorded a $72 deposit as $27, the error would be shown on the bank reconciliation as a a. $45 deduction from the book balance. b. $27 deduction from the book balance. c. $27 addition to the book balance. d. $45 addition to the
> Assume Thrifty-One Credit Union completed these transactions: 2012 Sep 1 Loaned $75,000 to Lily Heart on a one-year, 11% note. Dec 31 Accrued interest revenue on the Heart note. 2013 Sep 1 Collected the maturity value of the note from Heart (principal pl
> Record the following note receivable transactions in the journal of Coral Realty. How much interest revenue did Coral earn this year? Use a 365-day year for interest computations, and round interest amounts to the nearest dollar. Assume that Coral Realty
> Assume Beech Tree Foods, Inc., experienced the following revenue and accounts receivable write-offs: Suppose Beech Tree estimates that 4% of revenues will become uncollectible. Requirement Journalize service revenue (all on account), bad-debt expense,
> At December 31, 2012, before any year-end adjustments, the Accounts Receivable balance of TM Manufacturing is $130,000. The Allowance for Doubtful Accounts has a $8,000 credit balance. TM Manufacturing prepares the following aging schedule for Accounts R
> Refer to Exercise 5-37B. In Exercise 5-37B On September 30, Premier Party Planners had a $28,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts. During October, the store made credit sales of $163,000.
> Newfield Corp. holds a portfolio of trading securities. Suppose that on October 15, Newfield paid $85,000 for an investment in Turok shares to add to its portfolio. At December 31, the market value of Turok shares is $96,000. For this situation, show eve
> On September 30, Premier Party Planners had a $28,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts. During October, the store made credit sales of $163,000. October collections on account were $127,00
> At December 31, 2012, Get Away Travel has an Accounts Receivable balance of $89,000. Allowance for Doubtful Accounts has a credit balance of $810 before the year-end adjustment. Service Revenue for 2012 was $700,000. Get Away Travel estimates that Doubtf
> Drake Designs reported the following transactions in November: Nov 8 Sold merchandise on account to Jennifer Grant, $500, terms 2/10, n/30. 15 Sold merchandise on account to Art Glass, $1,200, terms 2/10, n/30. 16 Art Glass returned $500 of the merchandi
> Southern Corporation reports short-term investments on its balance sheet. Suppose a division of Southern completed the following short-term investment transactions during 2012: 2012 Dec 12 Purchased 700 shares of Trad, Inc., stock for $24,500. Southern p
> In a bank reconciliation, an EFT cash payment is a. Added to the bank balance. b. Deducted from the book balance. c. Added to the book balance. d. Deducted from the bank balance.
> Summer Corporation, the investment banking company, often has extra cash to invest. Suppose Summer buys 700 shares of Musica, Inc., stock at $59 per share. Assume Summer expects to hold the Musica stock for one month and then sell it. The purchase occurs
> Creative Co., Inc., the electronics and appliance chain, reported these figures in millions of dollars: Requirements 1. Compute Creative’s days’ sales in receivables, or days’ sales outstanding (DSO
> Algonquin, Inc., reported the following items at December 31, 2012, and 2011: Requirements 1. Compute Algonquin’s (a) Quick (acid-test) ratio and (b) Days’ sales in average receivables for 2012. Evaluate each ratio v
> Assume Queen City Credit Union completed these transactions: 2012 May 1 Loaned $90,000 to Lois Frank on a one-year, 9% note. Dec 31 Accrued interest revenue on the Frank note. 2013 May 1 Collected the maturity value of the note from Frank (principal plus
> Record the following note receivable transactions in the journal of Arabian Realty. How much interest revenue did Arabian earn this year? Use a 365-day year for interest computations, and round interest amounts to the nearest dollar. Arabian Realty has a
> Assume Oak Leaf Foods, Inc., experienced the following revenue and accounts receivable write-offs: Suppose Oak Leaf estimates that 3% of revenues will become uncollectible. Requirement Journalize service revenue (all on account), bad-debt expense, and
> Answer these questions about investments. 1. What is the amount to report on the balance sheet for a trading security? 2. Why is a trading security always a current asset? Explain.
> At December 31, 2012, before any year-end adjustments, the Accounts Receivable balance of Stenner’s Electronics is $180,000. The Allowance for Doubtful Accounts has an $11,600 credit balance. Stenner’s Electronics prep
> Refer to Exercise 5-25A. In Exercise 5-25A On November 30, High Peaks Party Planners had a $34,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts. During December, the store made credit sales of $159,0
> In a bank reconciliation, a bank collection of a note receivable is a. Deducted from the book balance. b. Deducted from the bank balance. c. Added to the bank balance. d. Added to the book balance.
> At December 31, 2012, Warm Weather Travel has an Accounts Receivable balance of $91,000. Allowance for Doubtful Accounts has a credit balance of $840 before the year-end adjustment. Service Revenue for 2012 was $600,000. Warm Weather estimates that doubt
> Unique Interiors reported the following transactions in July: Jul 2 Sold merchandise on account to Erin Bailey, $800, terms 2/10, n/30. 10 Sold merchandise on account to Alise O’Brien, $1,500, terms 2/10, n/30. 12 Collected payment from Erin Bailey for t
> Norton Corporation reports short-term investments on its balance sheet. Suppose a division of Norton completed the following short-term investment transactions during 2012: 2012 Dec 12 Purchased 900 shares of Armor, Inc., stock for $38,700. Norton plans
> Eastern Corporation, the investment banking company, often has extra cash to invest. Suppose Eastern buys 1,000 shares of Dream, Inc., stock at $57 per share. Assume Eastern expects to hold the Dream stock for one month and then sell it. The purchase occ
> The trial balance of Rectangle 120, Inc., at August 31, 2012,does not balance. Requirements 1. How much out of balance is the trial balance? Determine the out-of-balance amount. Theerror lies in the Accounts Receivable account. Add the out-of-balance a
> Themanager of Eisenhower Furniture needs to compute the following amounts. a. Total cash paid during December. b. Cash collections from customers during December. Analyze Accounts Receivable. c. Cash paid on a note payable during December. Analyze Notes
> During the first month of operations (February 2012), StarrEntertainment Corporation completed the following selected transactions: a. The business received cash of $19,000 and a building valued at $53,000. The corporationissued common stock to the stock
> During the first month of operations, Johnson Plumbing, Inc., completed the following transactions: Mar 2 Johnson received $35,000 cash and issued common stockto the stockholders. 3 Purchased supplies, $200, and equipment, $3,200, on account. 4 Performed
> During December, Blanton Auction Co. completedthe following transactions: Dec 1 Blanton received $25,000 cash and issued common stockto the stockholders. 5 Paid monthly rent, $1,600. 9 Paid $8,500 cash and signed a $36,000 note payable topurchase land fo
> Farmore Medical Service reported the following items (amounts in thousands): Requirements 1. Classify each item as (a) Income statement or balance sheet and as (b) Debit balance or credit balance. 2. How much net income (or net loss) did Farmore report
> In a bank reconciliation, an outstanding check is a. Deducted from the bank balance. b. Deducted from the book balance. c. Added to the bank balance. d. Added to the book balance.
> Jones RealEstate Co. experienced the following events during the organizing phase and its first month ofoperations. Some of the events were personal for the stockholders and did not affect the business.Others were transactions of the business. Nov 4 Evan
> Show the impact of business transactions on the accounting equation; analyze the impact of business transactions on accounts) The following amounts summarize the financial position of Davis Resources on May 31, 2012: During June, 2012, the business com
> The trial balance of FamousSpecialties, Inc., follows: Rachel Sill, your best friend, is considering making an investment in Famous Specialties, Inc.Rachel seeks your advice in interpreting the company’s information. Specifically, she
> During the first month of operations (October 2012), SelfMusic Services Corporation completed the following selected transactions: a. The business received cash of $25,000 and a building valued at $51,000. The corporationissued common stock to the stockh
> During the first month of operations, Cloutier Heating and Air Conditioning, Inc., completed the followingtransactions: Mar 2 Cloutier received $37,000 cash and issued common stockto the stockholders. 3 Purchased supplies, $300, and equipment, $3,000, on
> During December, Desimone Auction Co.completed the following transactions: Dec 1 Desimone received $23,000 cash and issued common stockto the stockholders. 5 Paid monthly rent, $1,900. 9 Paid $7,000 cash and signed a $28,000 note payable topurchase land
> Carlson RealEstate Co. experienced the following events during the organizing phase and its first month ofoperations. Some of the events were personal for the stockholders and did not affect the business.Others were transactions of the business. Nov 4 Co
> The following amountssummarize the financial position of Martin Resources, Inc., on May 31, 2012: During June 2012, Martin Resources completed these transactions: a. The business received cash of $9,000 and issued common stock. b. Performed services fo
> The trial balance of DormanSpecialties, Inc., follows. Abby Ricardo, your best friend, is considering investing in Dorman Specialties, Inc. Abby seeksyour advice in interpreting this information. Specifically, she asks how to use this trial balance toc
> Bigtex, a new company, completed these transactions. What will Bigtex’s total assetsequal? 1. Stockholders invested $45,000 cash and inventory worth $22,000. 2. Sales on account, $11,000. a. $56,000 b. $59,000 c. $45,000 d. $78,000
> Use the information from the journal entries of Chocolate Passion, Inc., to answer the following questions: Requirements 1. Start with Accounts Receivable’s beginning balance ($35,000), and then post to the Accounts Receivable T-accou
> Use the data from Exercise 4-32B to make the journal entries that Neal should record on January 31 to update his Cash account. Include an explanation for each entry. In Exercise 4-32B Evan Neal operates a roller skating center. He has just received the
> Use the data from Exercise 4-21A to make the journal entries that White should record on November 30 to update his Cash account. Include an explanation for each entry. In Exercise 4-21A Frank White operates a roller skating center. He has just received
> During its first year of operations, Chocolate Passion, Inc., had sales of $361,000, all on account. Industry experience suggests that Chocolate Passion’s uncollectibles will amount to 2% of credit sales. At December 31, 2012, accounts receivable total $
> Frank White operates a roller skating center. He has just received the monthly bank statement at November 30 from Citizen National Bank, and the statement shows an ending balance of $570. Listed on the statement are an EFT rent collection of $335, a serv
> D. J. Harris’ checkbook lists the following: The January bank statement shows Requirement Prepare Harris’ bank reconciliation at January 31. Date Check No. Item Check Deposit Balance 1/1 $ 530 4 622 Moe's Cafe
> The following items appear on a bank reconciliation: 1. __ Service charge 2. __ Book error: We debited Cash for $100. The correct debit was $1,000. 3. __ NSF check 4. __ Bank collection of a note receivable on our behalf 5. __ Deposits in transit 6. __ B
> Billy Flack served as executive director of Downtown Columbia, an organization created to revitalize Columbia, South Carolina. Over the course of 11 years, Flack embezzled $444,000. How did Flack do it? By depositing subscriber cash receipts in his own b
> The following situations describe two cash payment situations and two cash receipt situations. In each pair, one set of internal controls is better than the other. Evaluate the internal controls in each situation as strong or weak, and give the reason fo
> Identify the internal control weakness in the following situations. State how the person can hurt the company. a. John Munson works as a security guard at VALID parking in Denver. Munson has a master key to the cash box where customers pay for parking. E
> Grace Rocker, an accountant for Dill Limited, discovers that her supervisor, Bob Doon, made several errors last year. Overall, the errors overstated the company’s net income by 20%. It is not clear whether the errors were deliberate or accidental. What s
> Cooper Apple Growers (CAG) is a major food cooperative. Suppose CAG begins 2011 with cash of $8 million. CAG estimates cash receipts during 2011 will total $103 million. Planned payments will total $86 million. To meet daily cash needs next year, CAG mus
> Briefly explain how a cash budget works and what it accomplishes with its last few lines of data.
> Answer the following questions about internal control over cash payments: 1. Payment by check carries three controls over cash. What are they? 2. Suppose a purchasing agent receives the goods that he purchases and also approves payment for the goods. How
> As a recent college graduate, you land your first job in the customer collections department of City Publishing. ZekePitt, the manager, asked you to propose a system to ensure that cash received from customers by mail is handled properly. Draft a short m
> All-Star Advertising creates, plans, and handles advertising needs in the Tri-State area.Recently, All-Star had to replace an inexperienced office worker in charge of bookkeeping becauseof some serious mistakes that had been uncovered in the accounting r
> A year out of college, you have $10,000 to invest. A friend has started Grand Prize Unlimited, Inc., and she asks you to invest in her company. You obtain the company’s financial statements, which are summarized at the end of the first
> Two businesses, Blue Skies Corp. and Open Road, Inc., have sought business loansfrom you. To decide whether to make the loans, you have requested their balance sheets. Requirement Using only these balance sheets, to which entity would you be more comfo
> Refer to the data inExercises 1-24A and 1-25A. In Exercises 1-24A and 1-25A Assume the Dogan Copy Center ended the month of July 2012 with these data: Requirement Prepare the statement of cash flows of Dogan Copy Center, Inc., for the month ended July
> This exercise should be used with Exercise 1-21A. Refer to the data of Mary Burke Banking Company in Exercise 1-21A. In Exercise 1-21A Amounts of the assets and liabilities of Mary Burke Banking Company, as of August 31, 2012, are given as follows. Also
> Swit, Inc.’s comparative balance sheet at January 31, 2013, and 2012, reports the following (in millions): Requirements: Three situations about Swit’s issuance of stock and payment of dividends during the year endedJ
> Assume the Dogan Copy Center ended the month of July 2012 with these data: Requirement: Prepare the income statement and the statement of retained earnings of Dogan Copy Center, Inc., for the month ended July 31, 2012. Payments of cash: Acquisition
> Glass, Inc., began 2012 with $83,000 in cash. During 2012, Glass earned net income of $430,000, and adjustments to reconcile net income to net cash provided by operations totaled $75,000, a positive amount. Investing activities used cash of $420,000, and
> Most, Inc.’s comparative balance sheet at January 31, 2013, and 2012, reports the following (in millions): Requirements: Three situations about Most’s issuance of stock and payment of dividends during the year ended
> Coffee Shop Doughnuts has current assets of $280 million; property, plant, and equipment of $430 million; and other assets totaling $170 million. Current liabilities are $170 million and long term liabilities total $300 million. Requirements: 1. Use the
> You are studying frantically for an accounting exam tomorrow. You are having difficulty in this course, and the grade you make on this exam can make the difference between receiving a final grade of B or C. If you receive a C, it will lower your grade po
> Summarized versions of Sanchez Corporation’s financial statements follow for two recent years. Requirement Complete Sanchez Corporation’s financial statements by determining the missing amounts denoted by the letters
> The following data come from the financial statements of The Water Fun Company at the year ended May 31, 2013 (in millions). Requirements 1. Prepare a cash flow statement for the year ended May 31, 2013. Not all the items given appear on the cash flow
> The assets and liabilities of Post Fir as of December 31, 2012, and revenues and expenses for the year ended on that date follow. Beginning retained earnings was $114,000, and dividends totaled $36,000 for the year. Requirements 1. Prepare the income
