Pawtucket Self Storage purchased land, paying $150,000 cash as a down payment and signing a $170,000 note payable for the balance. Pawtucket also had to pay delinquent property tax of $3,000, title insurance costing $4,500, and $7,000 to level the land and remove an unwanted building. The company paid $54,000 to add soil for the foundation and then constructed an office building at a cost of $800,000. It also paid $48,000 for a fence around the property, $19,000 for the company sign near the property entrance, and $10,000 for lighting of the grounds. What is the capitalized cost of each of Pawtucket’s land, land improvements, and building?
> LeVon Fashions specializes in imported clothing. During March, LeVon completed a series of transactions. For each of the following items, give an example of a transaction that has the described effect on the accounting equation of LeVon Fashions. a. Inc
> Carey Anderson opened a software consulting firm that immediately paid $21,000 for a computer system. Was Anderson’s computer system an expense of the business? If not, explain.
> Accounting has its own vocabulary and basic relationships. Match the accounting terms at the left with the corresponding definition or meaning at the right. 1. Debit 2. Еxpense 3. Net income 4. Ledger 5. Posting 6. Normal balance 7. Р
> For each of the following accounts, identify whether that item is an asset, liability, or equity account. a. Accounts payable b. Sales revenue c. Cash d. Bonds payable e. Common stock f. Accounts receivable g. Equipment h. Salaries payable i. In
> Refer to Yellowberry, Inc.’s, trial balance in Short Exercise 2-15. The purpose of this exercise is to help you learn how to correct three common accounting errors. Error 1. Slide. Suppose the trial balance lists Land as $4,800 instead
> Yellowberry, Inc.’s, trial balance follows: Compute these amounts for the business: 1. Total assets 2. Total liabilities 3. Net income or net loss during December A1 D Yellowberry, Inc. Trial Balance December 31, 2016 1 Balance
> Assume that Navy Port Company reported the following summarized data at December 31, 2016. Accounts appear in no particular order; dollar amounts are in millions. Prepare the trial balance of Navy Port Company at December 31, 2016. List the accounts in
> Journalize the following transactions. Include dates and a brief explanation for each journal entry. July 1: Issued common stock for $10,000 July 5: Sold services on account for $5,000 July 9: Purchased office supplies on account for $500 July 10: So
> Borland Consulting performed service for a client who could not pay immediately. Borland expected to collect the $4,900 the following month. A month later, Borland received $2,300 cash from the client. 1. Record the two transactions on the books of Borl
> Consultant Dina Delorme purchased supplies on account for $5,200. Later Delorme paid $1,750 on account. 1. Journalize the two transactions on the books of Dina Delorme, Consultant. Include an explanation for each transaction. 2. Open a T-account for Ac
> After operating for several months, architect Mark Meecham completed the following transactions during the latter part of January: Journalize the transactions of Mark Meecham, Architect. Include an explanation with each journal entry. Borrowed $31,
> For each of the following items, indicate whether or not that item would be considered to be a transaction at Highpoint Lawn Maintenance. a. Highpoint Lawn Maintenance files its articles of incorporation with the state. b. Highpoint Lawn Maintenance acq
> Good business and accounting practices require the exercise of good judgment. How should ethics be incorporated into making accounting judgments? Why is ethics important?
> Following are partially completed financial statements (income statement, statement of retained earnings, and balance sheet) for Masterton Corporation. Complete the financial statements. All amounts are in millions. A1
> Avalon Legal Services, Inc., ended 2015 with cash of $18,000. During 2016, Avalon earned net income of $105,000 and had adjustments to reconcile net income to net cash provided by operations totaling $10,000 (this is a negative amount). Avalon paid $32,0
> Harmon Corporation ended its fiscal year on September 30, 2016, with cash of $75 million, accounts receivable of $22 million, property and equipment of $28 million, and other long-term assets of $17 million. The company’s liabilities consist of accounts p
> At December 31, 2016, Aloha Enterprises has cash of $50 million, accounts receivable of $19 million, and long-term assets of $39 million. The company owes accounts payable of $13 million and has a long-term note payable of $25 million. Aloha Enterprises
> Roam Corporation began 2016 with retained earnings of $230 million. Revenues during the year were $490 million, and expenses totaled $340 million. Roam declared dividends of $54 million. What was the company’s ending balance of retained earnings? To answ
> O’Conner Services, Inc., began 2016 with total assets of $235 million and ended 2016 with assets of $355 million. During 2016, O’Conner Services earned revenues of $397 million and had expenses of $164 million. O’Conner Services paid dividends of $29 mil
> For each of the following questions, indicate which financial statement would most likely be used to provide the information. Use the following abbreviations: Income statement (I), Statement of retained earnings (R), Balance sheet (B), and Statement of ca
> Apply your understanding of the relationships among the financial statements to answer these questions. a. How can a business earn large profits but have a small balance of retained earnings? b. Give two reasons why a business can have a steady stream of
> Suppose you are analyzing the financial statements of Bartelle, Inc. Identify each item with its appropriate financial statement, using the following abbreviations: Income statement (I), Statement of retained earnings (R), B
> 1. If you know the assets and the owners’ equity of a business, how can you measure its liabilities? Give the equation. 2. Use the accounting equation to show how to determine the amount of a company’s owners’ equity. How would your answer change if you
> Suppose you manage a Thai restaurant. Identify the missing amount for each situation: Total Assets Total Liabilities Stockholders' Equity $ ? 95,000 420,000 $270,000 70,000 a. $340,000 b. C. 350,000
> Identify the accounting concept, assumption, or principle that best applies to each of the following situations: a. Burger King, the restaurant chain, sold a store location to McDonald’s. How can Burger King determine the sale price of the store—by a pr
> Mason Olson is chairman of the board of Healthy Fast Foods, Inc. Suppose Olson has just founded Healthy Fast Foods, and assume that he treats his home and other personal assets as part of Healthy Fast Foods. Answer these questions about the evaluation of
> Regal Signs, Inc., needs funds, and Megan Regal, the president, has asked you to consider investing in the business. Answer the following questions about the different ways that Regal might organize the business. Explain each answer. a. What forms of or
> 1. Identify the two basic categories of items on an income statement. 2. What do we call the bottom line of the income statement?
> Consider Walmart, a large retailer. Classify the following items as an asset (A), a liability (L), or stockholders’ equity (S) for Walmart: Notes payable Retained earnings a. Accounts receivable g. h. Long-term debt Merchandise inv
> Assume that on January 1, 2016, Shipley Sushi purchased a building, paying $56,000 cash and signing a $101,000 note payable. The restaurant paid another $63,000 to remodel the building. Furniture and fixtures cost $58,000, and dishes and supplies—a curre
> Langley Pizza bought a used Chevrolet delivery van on January 2, 2016, for $18,600. The van was expected to remain in service for four years (57,000 miles). At the end of its useful life, Langley officials estimated that the van’s residual value would be
> During 2016, Liang’s Book Store paid $484,000 for land and built a store in Georgetown. Prior to construction, the city of Georgetown charged Liang’s $1,300 for a building permit, which Liang’s paid. Liang’s also paid $15,300 for architect’s fees. The co
> Assume Blynn Athletic Products, Inc., purchased conveyor-belt machinery. Classify each of the following expenditures as a capital expenditure or an immediate expense related to machinery: a. Major overhaul to extend the machinery’s useful life by four ye
> Boltwood Manufacturing bought three used machines in a $148,000 lump-sum purchase. An independent appraiser valued the machines as shown: What is each machine’s individual cost? Immediately after making this purchase, Boltwood sold ma
> Pierce Self Storage purchased land, paying $145,000 cash as a down payment and signing a $175,000 note payable for the balance. Pierce also had to pay delinquent property tax of $1,000, title insurance costing $2,500, and $4,000 to level the land and rem
> Assume Abbey Corporation completed the following transactions: a. Sold a store building for $650,000. The building had cost Abbey $1,400,000, and at the time of the sale, its accumulated depreciation totaled $750,000. b. Lost a store building in a fire.
> Gunny Stores, Inc., one of the nation’s largest grocery retailers, reported the following information (adapted) in its comparative financial statements for the fiscal year ended January 31, 2015: Requirements 1. Compute net profit ma
> Assume Caltron Co. paid $19 million to purchase Burton Industries. Assume further that Burton Industries had the following summarized data at the time of the Caltron Co. acquisition (amounts in millions): Burton Industries’ current as
> 1. Maynard Printers incurred external costs of $800,000 for a patent for a new laser printer. Although the patent gives legal protection for 20 years, it is expected to provide Maynard Printers with a competitive advantage for only eight years. Assuming
> Goldstein Mines paid $424,000 for the right to extract ore from a 200,000-ton mineral deposit. In addition to the purchase price, Goldstein Mines also paid a $100 filing fee, a $1,900 license fee to the state of Colorado, and $50,000 for a geologic surve
> Covenant Truck Company is a large trucking company that operates throughout the United States. Covenant Truck Company uses the units-of-production (UOP) method to depreciate its trucks. The company trades in trucks often to keep driver morale high and to
> Assume that on January 2, 2016, Sonoma-Maine Furniture purchased fixtures for $8,200 cash, expecting the fixtures to remain in service for five years. Sonoma-Maine has depreciated the fixtures on a double-declining-balance basis, with $1,200 estimated re
> On January 1, 2015, Alpha Manufacturing purchased a machine for $920,000. The company expects the machine to remain useful for eight years and to have a residual value of $70,000. Alpha Manufacturing uses the straight-line method to depreciate its machin
> Assume McGregor Consultants purchased a building for $445,000 and depreciated it on a straight-line basis over 40 years. The estimated residual value was $90,000. After using the building for 20 years, McGregor realized that the building will remain use
> Assume that on January 1, 2016, Merriman Steakhouse restaurant purchased a building, paying $55,000 cash and signing a $108,000 note payable. The restaurant paid another $66,000 to remodel the building. Furniture and fixtures cost $58,000, and dishes an
> Piccadilly Pizza bought a used Toyota delivery van on January 2, 2016, for $19,200. The van was expected to remain in service for four years (71,200 miles). At the end of its useful life, Piccadilly officials estimated that the van’s residual value would
> During 2016, Chun’s Book Store paid $485,000 for land and built a store in Cleveland. Prior to construction, the city of Cleveland charged Chun’s $1,400 for a building permit, which Chun’s paid. Chun’s also paid $15,320 for architect’s fees. The construc
> Assume Akro Products, Inc., purchased conveyor-belt machinery. Classify each of the following expenditures as a capital expenditure or an immediate expense related to machinery: a. Major overhaul to extend the machinery’s useful life by five years b. P
> Eastwood Manufacturing bought three used machines in a $209,000 lump-sum purchase. An independent appraiser valued the machines as shown: What is each machine’s individual cost? Immediately after making this purchase, Eastwood sold ma
> Blue Sky Marine Supply reported the following comparative income statements for the years ended April 30, 2016, and 2015: Blue Sky’s president and shareholders are thrilled by the company’s boost in sales and net inc
> Ontario Farm Products began March with inventory of $49,300. The business made net purchases of $61,000 and had net sales of $82,000 before a fire destroyed the company’s inventory. For the past several years, Ontario’s gross profit percentage has been 40%
> FunToys prepares budgets to help manage the company. FunToys is budgeting for the fiscal year ended January 31, 2016. During the preceding year ended January 31, 2015, sales totaled $9,900 million and cost of goods sold was $6,900 million. At January 31,
> Thurston & Talty, a partnership, had the following inventory data: Thurston & Talty need to know the company’s gross profit percentage and rate of inventory turnover for 2016 under 1. FIFO. 2. LIFO. Which met
> Refer to the data in E6-39B. Compute all ratio values to answer the following questions: ■Which company has the highest and which company has the lowest gross profit percentage? ■Which company has th
> Supply the missing amounts for each of the following companies: Requirement 1. Prepare the income statement for Baker Company for the year ended December 31, 2016. Use the cost-of-goods-sold model to compute cost of goods sold. Baker’
> Erie Garden Supplies uses a perpetual inventory system. Erie Garden Supplies has these account balances at August 31, 2016, prior to making the year-end adjustments: A year ago, the current replacement cost of ending inventory was $12,600, which exceed
> Suppose a Sam’s Club store in Champaign, Illinois, ended January 2016 with 800,000 units of merchandise that cost $5.00 each. Suppose the store then sold 100,000 units for $510,000 during February. Further, assume the store made two lar
> MusicMagic.net specializes in sound equipment. Because each inventory item is expensive, MusicMagic uses a perpetual inventory system. Company records indicate the following data for a line of speakers: Requirements 1. Determine the amounts that Music
> Calder Company’s inventory records for the most recent year contain the following data: Calder Company sold a total of 38,000 units during the year. Requirements 1. Using the average-cost method, compute the cost of goods sold and e
> Use the data for Arrow Corporation in E6-32B to illustrate Arrow’s income tax advantage from using LIFO over FIFO. Sales revenue is $8,000, operating expenses are $1,400, and the income tax rate is 30%. How much in taxes would Arrow Cor
> Use the data for Arrow Corporation in E6-32B to answer the following. Requirements 1. Compute cost of goods sold and ending inventory using each of the following methods: a. Specific unit cost, with seven $165 units and four $175 units s
> Arrow Corporation’s inventory records for a particular development program show the following at March 31: At March 31, 11 of these units are on hand. Journalize the following for Arrow Corporation under the perpetual system: 1. Tota
> Accounting records for Dundas Corporation yield the following data for the year ended June 30, 2016: Requirements 1. Journalize Dundas’ inventory transactions for the year under the perpetual system. 2. Report ending inventory, sale
> By the Bay Marine Supply reported the following comparative income statements for the years ended November 30, 2016, and 2015: By the Bay’s president and shareholders are thrilled by the company’s boost in sales and
> Yoder Farm Supply, Inc., began January with inventory of $45,300. The business made net purchases of $37,200 and had net sales of $77,100 before a fire destroyed the company’s inventory. For the past several years, Yoder Farm Supply’s gross profit percenta
> Toyland prepares budgets to help manage the company. Toyland is budgeting for the fiscal year ended January 31, 2016. During the preceding year ended January 31, 2015, sales totaled $9,600 million and cost of goods sold was $6,800 million. At January 31,
> Burner & Brett, a partnership, had the following inventory data: Burner & Brett need to know the company’s gross profit percentage and rate of inventory turnover for 2016 under 1. FIFO. 2. LIFO. Which method produces a highe
> Refer to the data in E6-25A. Compute all ratio values to answer the following questions: ■Which company has the highest and which company has the lowest gross profit percentage? ■Which company has th
> Supply the missing income statement amounts for each of the following companies: Requirement 1. Prepare the income statement for Arnold Company for the year ended December 31, 2016. Use the cost-of-goods-sold model to compute cost of goods sold. Arnol
> Gordon Garden Supplies uses a perpetual inventory system. Gordon Garden Supplies has these account balances at January 31, 2016, prior to making the year-end adjustments: A year ago, the current replacement cost of ending inventory was $12,000, which e
> Suppose a Costco store in Gainesville, Missouri, ended May 2016 with 1,000,000 units of merchandise that cost $8 each. Suppose the store then sold 100,000 units for $850,000 during June. Further, assume the store made two large purchases during June as f
> MusicPlace specializes in sound equipment. Because each inventory item is expensive, MusicPlace uses a perpetual inventory system. Company records indicate the following data for a line of speakers: Requirements 1. Determine the amounts that MusicPlac
> Spicer Company’s inventory records for the most recent year contain the following data: Spicer Company sold a total of 19,100 units during the year. Requirements 1. Using the average-cost method, compute the cost of goods sold and
> Use the data for Cranwell Company in E6-18A to illustrate Cranwell’s income tax advantage from using LIFO over FIFO. Sales revenue is $7,700, operating expenses are $1,400, and the income tax rate is 25%. How much in taxes would Cranwel
> Use the data for Cranwell Company in E6-18A to answer the following. Requirements 1. Compute cost of goods sold and ending inventory, using each of the following methods: a. Specific unit cost, with five $150 units and &
> Cranwell Company’s inventory records for a particular development program show the following at May 31: At May 31, 10 of these units are on hand. Journalize the following for Cranwell Company under the perpetual system: 1. Total May
> Accounting records for Ontario Corporation yield the following data for the year ended June 30, 2016 (assume sales returns are non-existent): Requirements 1. Journalize Ontario’s inventory transactions for the year under the perpetua
> Iverson Co., Inc., an electronics and appliance chain, reported these figures in millions of dollars: Requirements 1. Compute Iverson’s days’ sales in receivables or days’ sales outst
> Saybrooke, Inc., reported the following items at December 31, 2016, and 2015: Requirements 1. Compute Saybrooke’s a. quick (acid-test) ratio and b. days’ sales outstanding for 2016. Evaluate each ratio value as s
> Record the following note receivable transactions in the journal of Caribou Golf. How much interest revenue did Caribou earn this year? Use a 365-day year for interest computations, and round interest amounts to the nearest dollar. Caribou Golf has an Oc
> Assume Olson Foods, Inc., experienced the following revenue and accounts receivable write-offs: Suppose Olson estimates that 4% of (gross) revenues will become uncollectible. Assume all revenues are on credit. Requirement 1. Journalize service rev
> At December 31, 2016, before any year-end adjustments, the Accounts Receivable balance of Foley Distribution Service is $320,000. The Allowance for Doubtful Accounts has a $22,200 credit balance. Foley Distribution Service prepares the following aging sc
> On June 30, Maloney Party Planners had a $43,000 balance in Accounts Receivable and a $2,493 credit balance in Allowance for Uncollectible Accounts. During July, Maloney made credit sales of $200,000. July collections on account were $169,000, and write-
> At December 31, 2016, Canning Travel Agency has an Accounts Receivable balance of $89,000. Allowance for Doubtful Accounts has a credit balance of $840 before the year-end adjustment. Service revenue (all on account) for 2016 was $600,000. Canning estima
> Perform the following accounting for the receivables of Laksmana and Li, a CPA firm, at December 31, 2016. Requirements 1. Set up T-accounts and start with the beginning balances for these T-accounts: ■ Accounts Receivable, $303,000 ■ Allowance for U
> Wolford Interiors reported the following transactions in November: Requirements 1. Record the foregoing transactions in the journal of Wolford Interiors. (You do not need to make the cost of sales, estimated refunds, or cost of estimated returns journ
> Northern Corporation, the investment banking company, often has extra cash to invest. Suppose Northern buys 1,000 shares of Twister, Inc., stock at $46 per share. Assume Northern expects to hold the Twister stock for one month and then sell it. The purch
> Stark Co., Inc., an electronics and appliance chain, reported these figures in millions of dollars: Requirements 1. Compute Stark’s days’ sales in receivables or days’ sales outstand
> Marshall, Inc., reported the following items at December 31, 2016, and 2015: Requirements 1. Compute Marshall’s a. quick (acid-test) ratio and b. days’ sales outstanding for 2016. Evaluate each ratio value as stro
> Record the following note receivable transactions in the journal of Celtic Services. How much interest revenue did Celtic earn this year? Use a 365-day year for interest computations, and round interest amounts to the nearest dollar. Celtic Services has
> Assume Birch Foods, Inc., experienced the following revenue and accounts receivable write-offs: Suppose Birch estimates that 4% of (gross) revenues will become uncollectible. Assume all revenues are on credit. Requirement 1. Journalize service revenu
> At December 31, 2016, before any year-end adjustments, the Accounts Receivable balance of Turf Trimmers, Inc., is $350,000. The Allowance for Doubtful Accounts has an $18,700 credit balance. Turf Trimmers prepares the following aging schedule for Account
> On June 30, Paisley Party Planners had a $35,000 balance in Accounts Receivable and a $3,252 credit balance in Allowance for Uncollectible Accounts. During July, Paisley made credit sales of $198,000. July collections on account were $169,000, and write-
> At December 31, 2016, Fako Travel Agency has an Accounts Receivable balance of $96,000. Allowance for Doubtful Accounts has a credit balance of $830 before the year-end adjustment. Service revenue (all on account) for 2016 was $550,000. Fako estimates th
> Perform the following accounting for the receivables of Bronson and Moore, a law firm, at December 31, 2016. Requirements 1. Set up T-accounts and start with the beginning balances for these T-accounts: ■ Accounts Receivable, $97,000 ■ Allowance for
> Chic Interiors reported the following transactions in November: Requirements 1. Record the foregoing transactions in the journal of Chic Interiors. (You do not need to make the cost of sales, estimated refunds, or cost of estimated returns journal ent
> Riverton Corporation, the investment banking company, often has extra cash to invest. Suppose Riverton buys 1,000 shares of Switzer, Inc., stock at $48 per share. Assume Riverton expects to hold the Switzer stock for one month and then sell it. The purch
> Ayers Communications, Inc., is preparing its cash budget for the year ending December 31, 2017. Ayers ended 2016 with cash of $62 million and managers need to keep a cash balance of at least $71 million for operations. Collections from customers are expe
> Greentown Company manufactures a popular brand of footballs. Greentown employs 142 workers and keeps its employment records on time sheets that show how many hours the employee works each week. On Friday the shop foreman collects the time sheets, checks
> Rally Stores use point-of-sale terminals as cash registers. The register shows the amount of each sale, the cash received from the customer, and any change returned to the customer. The machine also produces a customer receipt but keeps no record of tran
