Portage Corporation began 2018 owing notes payable of $4.0 million. During 2018, Portage borrowed $1.9 million on notes payable and paid off $1.7 million of notes payable from prior years. Interest expense for the year was $1.1 million, including $0.2 million of interest payable accrued at December 31, 2018. Show what Portage should report for these facts on the following financial statements: 1. Income statement for 2018 a. Interest expense 2. Balance sheet as of December 31, 2018 a. Notes payable b. Interest payable
> The Cheesecake Factory must implement and enforce an effective internal control system to both comply with financial reporting regulations and protect its assets. Let’s look at a description of a typical day for a server at a Cheesecake Factory restauran
> Assume that Old Center Company reported the following summarized data at September 30, 2018. Accounts appear in no particular order; dollar amounts are in millions. Requirements: 1. Solve for Cash. 2. Prepare the trial balance of Old Center at Septemb
> The trial balance of Addison, Inc., at September 30, 2018, does not balance: The accounting records hold the following errors: a. Recorded a $700 cash revenue transaction by debiting Accounts Receivable. The credit entry was correct. b. Posted a $1,000
> The accounts of Deluxe Patio Service, Inc., follow with their normal balances at April 30, 2018. The accounts are listed in no particular order. Requirements : 1. Prepare the company’s trial balance at April 30, 2018, listing accounts
> The first seven transactions of Frontier Advertising, Inc., have been posted to the company’s accounts: Requirement: 1. Prepare the journal entries that served as the sources for the seven transactions. Include an explanation for each
> Refer to Exercises 2-20A and 2-21A. Requirements: 1. After journalizing the transactions of Exercise 2-20A, post the entries to the ledger, using T-accounts. Key transactions by date. Determine the ending balance in each account. 2. Prepare the trial
> Refer to Exercise 2-20A. Requirement: 1. Record the transactions in the journal of Dr. Helen Samoa, P.C. List the transactions by date and give an explanation for each transaction.
> Dr. Helen Samoa opened a medical practice specializing in physical therapy. During the first month of operation (December), the business, titled Dr. Helen Samoa, Professional Corporation (P.C.), experienced the following events: Requirements: 1. Analyz
> During 2018, Brewster Company earned revenues of $146 million. Brewster incurred, during that same year, salary expense of $28 million, rent expense of $23 million, and utilities expense of $19 million. Brewster declared and paid dividends of $15 million
> This exercise should be used in conjunction with Exercises 1-39B through 1-41B. The owner of Island Coffee Roasters Corporation now seeks your advice as to whether she should cease operations or continue the business. Complete the report giving her your
> Classify the following items as an asset (A), a liability (L), or stockholders’ equity (S) for Target Corporation, a large retailer: a. Land b. Accrued expenses payable c. Supplies d. Equipment e. Notes payable f. Long-term debt g. Retained earnings
> Refer to the data in Exercises 1-39B and 1-40B. Requirement: 1. Prepare the statement of cash flows of Island Coffee Roasters Corporation for the month ended August 31, 2019. Using Exhibit 1-11 as a model, show with arrows the relationships among the i
> Refer to the data in Exercise 1-39B. Requirement: 1. Prepare the balance sheet of Island Coffee Roasters Corporation at August 31, 2019.
> Assume Island Coffee Roasters Corporation ended the month of August 2019 with these data: Requirement: 1. Prepare the income statement and the statement of retained earnings for Island Coffee Roasters Corporation for the month ended August 31, 2019.
> This exercise should be used with Exercise 1-37B. Requirements: 1. Prepare the income statement of Mary Burke Realty Company for the year ended March 31, 2018. 2. What amount of dividends did Mary Burke Realty Company declare during the year ended Mar
> The following are the assets and liabilities of Mary Burke Realty Company, as of March 31, 2018. Also included are revenue, expense, and selected stockholders’ equity figures for the year ended on that date (amounts in millions): Requi
> At December 31, 2018, Patterson Products has cash of $20,000, receivables of $17,600, and inventory of $78,000. The company’s equipment totals $186,000. Patterson owes accounts payable of $22,000 and long-term notes payable of $173,000. Common stock is $
> Flurry, Inc., is expanding into China. The company must decide where to locate and how to finance the expansion. Identify the financial statement where these decision makers can find the following information about Flurry, Inc. In some cases, more than o
> Pillser, Inc.’s, comparative balance sheet at January 31, 2019, and 2018, reports the following (in millions): Requirements : The following are three situations related to Pillser’s issuance of stock and declaration a
> Fallon Osmond is chairperson of the board of Simple Treats, Inc. Suppose Osmond has just founded Simple Treats, and assume that she considers her home and other personal assets as part of Simple Treats. Answer these questions about the evaluation of Simp
> Hudson Signs, Inc., needs funds, and Alley Hudson, the president, has asked you to consider investing in the business. Answer the following questions about the different ways that Hudson might organize the business. Explain each answer. a. What forms of
> Brandeberry, Inc., has current assets of $240 million; property, plant, and equipment of $390 million; and other assets totaling $130 million. Current liabilities are $100 million, and long-term liabilities total $360 million. Requirements: 1. Use the
> 1. Compute the amount of interest during 2018, 2019, and 2020 for the following note receivable: On May 31, 2018, Wyoming State Bank loaned $240,000 to Lindsey Weston on a two-year, 8% note. 2. Which party has a/an a. note receivable? b. note payable?
> At the end of the current year (before adjusting entries), Autumn Corporation had a balance of $76,000 in Accounts Receivable and a credit balance of $11,000 in Allowance for Uncollectible Accounts. Service revenue (all on credit) for the year totaled $4
> During its first year of operations, Spring Garden, Inc., had sales of $439,000, all on account. Industry experience suggests that Spring Garden’s uncollectibles will amount to 4% of credit sales. At December 31, 2018, accounts receivable total $59,000.
> Perform the following accounting tasks for the receivables of Able and Bowman, a law firm, at December 31, 2018. Requirements: 1. Set up T-accounts for Cash, Accounts Receivable, and Service Revenue. Start with the beginning balances as follows: Cash $2
> Roswell Company purchases inventory from Clear Pool Supplies on June 1. The sales terms on the invoice from Clear Pool Supplies are 3/10, n/30. What does this mean? What is Roswell’s potential savings, if any? How much time does the company have to take
> On April 3, Hamilton Company sold $50,000 of merchandise on account to Ranger Corporation, terms 5/10, n/30, FOB shipping point. Hamilton’s cost of sales for this merchandise was $34,000. The merchandise left Hamilton’s facility on April 4 and arrived at
> In August, Joplin Designs sold $510,000 of merchandise; all sales were in cash. The cost of sales for August was $400,000. Based on past experience, Joplin uses an estimated return rate of 3% of sales. Record the journal entries for the monthly sales, co
> Maple Woodworking accepts credit cards at its store. Maple’s credit card processor charges a fee of 2% of the total amount of any credit sale. Assume that Ralph Stone purchases $9,000 of custom furniture and pays with a VISA card. Make the entry that Map
> Northern Products reported the following amounts in its 2019 financial statements. The 2018 amounts are given for comparison. Requirements : 1. Compute Northern’s quick (acid-test) ratio at the end of 2019. Round to two decimal places.
> Car title lenders are considered to be predatory lenders, since they charge high rates of interest to those individuals who can least afford it. Various laws in recent years have attempted to curb the high interest rates and these practices. Car title le
> Compute the missing amount in the accounting equation for each company (amounts in billions): Which company appears to have the strongest financial position? Explain your reasoning.
> 1. If you know the assets and the 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 stockholders’ equity. How would your answer change if you w
> On August 31, 2018, Betsy Totten borrowed $1,000 from Iowa State Bank. Totten signed a note payable, promising to pay the bank principal plus interest on August 31, 2019. The interest rate on the note is 6%. The accounting year of Iowa State Bank ends on
> On December 23, 2018, Silverman Sports Manufacturing sells a truckload of merchandise to the Baseball World store in Cincinnati, Ohio. The terms of the sale are FOB destination. The truck runs into bad weather on the way to Cincinnati and doesn’t arrive
> James Cooper sells memberships to the Atlanta Symphony Association. The Association’s procedure requires that Cooper prepare and give each customer a receipt for each membership sold. The receipt forms are prenumbered. Cooper is having personal financial
> Company requires that all documents supporting a check (purchase order, invoice, and receiving report) be canceled by punching a hole through the packet. Why is this practice required? What might happen if it were not?
> Donna Franks, an accountant for Southern Technologies Corporation, discovers that her supervisor, Elise Silverton, made several errors last year. Overall, the errors overstated the company’s net income by 40%. It is not clear whether the errors were deli
> You can use a term more than once or not at all. a. When a company has recorded a deposit but the bank has not yet processed it, this item is a/an. b. occurs when management prepares misleading financial statements. c. A/An is an optional attachment to
> Constance Hermaine manages Springfield Manufacturing. Hermaine fears that a trusted employee has been stealing from the company. This employee receives cash from clients and also prepares the monthly bank reconciliation. To check up on the employee, Herm
> After preparing Reese Corp.’s bank reconciliation in Short Exercise 4-10, make the company’s journal entries for transactions that arise from the bank reconciliation. Date each transaction October 31, 2018, and include an explanation with each entry.
> The Cash account of Reese Corporation had a balance of $3,540 at October 31, 2018. Included were outstanding checks totaling $1,800 and an October 31 deposit of $300 that did not appear on the bank statement. The bank statement, which came from Turnstone
> Trent Restaurant borrowed $110,000 on October 1 by signing a note payable to Hometown Bank. The interest expense for each month is $825. The loan agreement requires Trent to pay interest on January 2 for October, November, and December. 1. Make Trent’s
> During 2018, Edwin Company earned revenues of $150 million. Edwin incurred, during that same year, salary expense of $34 million, rent expense of $23 million, and utilities expense of $16 million. Edwin declared and paid dividends of $16 million during t
> Suppose that on January 1 Sunbeam Travel Company paid cash of $50,000 for equipment that is expected to remain useful for four years. At the end of four years, the equipment’s value is expected to be zero. 1. Make journal entries to record (a) the purch
> a. On March 1, Meadow Tree Service prepaid $7,200 for six months’ rent. Give the adjusting entry to record rent expense at Marcha 31. Include the date of the entry and an explanation. Then post all amounts to the two accounts involved, and show their bal
> During 2018, Peoria Airlines paid salary expense of $40.8 million. At December 31, 2018, Peoria accrued salary expense of $2.3 million. Peoria then paid $2.6 million to its employees on January 3, 2019, the company’s next payday after the end of the 2018
> Identify the accounting concept or principle that gives the most direction on how to account for each of the following situations: a. A utility bill is received on December 27 and will be paid next year. When should the company record utility expense?
> The adjusted trial balance of Amana Corporation at December 31 shows that sales revenue for the year was $513,000 and other revenue was $37,000. Cost of goods sold for that same period was $256,000, while other expenses totaled $185,000. The corporation
> Robin Sporting Goods reported the following data at July 31, 2018, with amounts in thousands: 1. Calculate Robin’s net working capital. 2. Calculate Robin’s current ratio. Round to two decimal places. 3. Calculate Ro
> Use the Robin Sporting Goods Company data in Short Exercise 3-14 to make the company’s closing entries at July 31, 2018. Then set up a T-account for Retained Earnings and post to that account. Compare Retained Earnings’ ending balance to the amount repor
> Suppose Robin Sporting Goods Company reported the following data at July 31, 2018, with amounts in thousands: Use these data to prepare Robin Sporting Goods Company’s single-step income statement for the year ended July 31, 2018; state
> Dexter, Inc., collects cash from customers in advance and from other customers after the sale. Journalize the following transactions for Dexter: a. Accrued revenue. Some customers pay Dexter after Dexter has performed the service for the customer. Durin
> This exercise should be used in conjunction with Exercises 1-27A through 1-29A. The owner of Giada Coffee Roasters Corp. seeks your advice as to whether he should cease operations or continue the business. Complete the report, giving him your opinion of
> Due to the terms of its lease, Hawke Services, Inc., pays the rent for its new office space in one annual payment of $26,800 on August 1, 2018. The lease covers the period of August 1, 2018, through July 31, 2019. Hawke Services has a year-end of Decembe
> Write a paragraph to explain why unearned revenues are liabilities instead of revenues. In your explanation, use the following actual example: The New York Times, a national newspaper, collects cash from subscribers in advance and later provides news con
> Return to the situation in Short Exercise 3-9. Here you are accounting for the same transactions on the books of Hometown Bank, which lent the money to Trent Restaurant. 1. Make Hometown Bank’s adjusting entry to accrue monthly interest revenue at Octob
> Southeast Corporation made sales of $950 million during 2018. Of this amount, Southeast collected cash for $876 million. The company’s cost of goods sold was $260 million, and all other expenses for the year totaled $275 million. Also during 2018, Southe
> After operating for several months, architect Donovan Freeman completed the following transactions during the latter part of July: Journalize the transactions of Donovan Freeman, Architect. Include an explanation with each journal entry.
> Ford’s Catering began with cash of $8,000. Ford then bought supplies for $2,500 on account. Separately, Ford paid $7,200 for equipment. Answer these questions. a. How much in total assets does Ford have? b. How much in liabilities does Ford owe?
> Complete the following chart to show the impact on the accounting equation from each transaction.
> Dazzle Fashion is a clothing retailer. During August, the company completed a series of transactions. For each of the following items, give an example of a transaction that has the described effect on Dazzle’s accounting equation. a. Increase one asset
> Dan Crater opened a software consulting firm that immediately paid $28,000 for a computer system. Was Crater’s computer system an expense of the business? If not, explain.
> For each of the following accounts, identify whether that item is an asset, liability, or equity account. a. Bonds payable b. Equipment c. Accounts payable d. Salaries payable e. Common stock f. Retained earnings g. Cash h. Accounts receivable i
> Refer to the data in Exercises 1-27A and 1-28A. Requirement : 1. Prepare the statement of cash flows of Giada Coffee Roasters Corp., for the month ended August 31, 2019. Using Exhibit 1-11 as a model, show with arrows the relationships among the income
> Accounting has its own vocabulary and basic relationships. Match the accounting terms at the left with the corresponding definition or meaning at the right
> Refer to Purpleberry, Inc.’s, trial balance in Short Exercise 2-14. 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 $4,500 instead of $45,000. Recal
> Purpleberry, Inc.’s, trial balance follows: Calculate these amounts for the business: 1. Total assets 2. Total liabilities 3. Net income or net loss during December
> Assume that Harbor Marine Company reported the following summarized data at December 31, 2018. Accounts appear in no particular order; dollar amounts are in millions. Prepare the trial balance of Harbor Marine Company at December 31, 2018. List the acco
> Journalize the following transactions. Include dates and a brief explanation for each journal entry. July 1: Issued common stock for $13,000 July 5: Performed services on account for $8,000 July 9: Purchased office supplies on account for $600 July 1
> Match the following definitions with one of the terms listed here. Asset Expenses Managerial accounting Balance sheet Financial accounting Net income Bookkeeping Historical cost principle Partnership Corporation Income statement Proprietorship Equity Inv
> For each of the following items, indicate whether that item would be considered to be a transaction at Gerbig Pet Grooming Corporation. a. A customer, Layne Gracen, gives Gerbig a check for $620 to prepay for her dog’s grooming appointments for the upco
> Following are partially completed financial statements (income statement, statement of retained earnings, and balance sheet) for Shaker Corporation. Complete the financial statements. All amounts are in millions.
> Python Legal Services, Inc., ended 2017 with cash of $16,000. During 2018, Python earned net income of $115,000 and had adjustments to reconcile net income to net cash provided by operations totaling $9,000 (this is a negative amount). Python paid $20,00
> Sullivan Corporation ended its fiscal year on September 30, 2018, with cash of $78 million, accounts receivable of $27 million, property and equipment of $27 million, and other long-term assets of $21 million. The company’s liabilities consist of account
> Refer to the data in Exercise 1-27A. Requirement: 1. Prepare the balance sheet of Giada Coffee Roasters Corp., for August 31, 2019.
> At December 31, 2018, Jackson Corporation has cash of $52 million, accounts receivable of $23 million, and long-term assets of $45 million. The company owes accounts payable of $21 million and has a long-term note payable of $31 million. Jackson has comm
> Journey Corporation began 2018 with retained earnings of $270 million. Revenues during the year were $460 million, and expenses totaled $380 million. Journey declared dividends of $64 million. What was the company’s ending balance of retained earnings? T
> Olivia Matthews, Certified Public Accountant, operates as a professional corporation (P.C.). The business completed these transactions during the first part of May 2018: Requirements : 1. Journalize the transactions for Olivia Matthews, Certified Public
> Start from the trial balance and the posted T-accounts that Olivia Matthews, Certified Public Accountant, Professional Corporation (P.C.), prepared for her accounting practice at May 18, 2018. A professional corporation is not subject to income tax. Late
> Jenna Newbury began a music business in July 2018. Newbury prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Newbury Company’s only activities during July through October: In
> Which of the following assets are not included in “cash equivalents” in a typical balance sheet? a. Foreign government securities b. Certain very low-risk equity securities c. U.S. government securities d. Time deposits e. All of the above might be
> 39. Which statement is false? a. Liabilities are decreased by debits. b. Assets are increased by debits. c. Revenues are increased by credits. D. Dividends are increased by credits.
> Which of the following statements regarding contracts is incorrect? a. Identifying the contract with the customer is the first step of the revenue recognition model. b. A contract must be written to be valid. c. For a business that provides services,
> Fairmont Company has shipped goods to Willowbook Recreation FOB shipping point. Fairmont will recognize sales revenue when: a. the goods leave Fairmont’s shipping dock. b. Fairmont and Willowbrook agree that the revenue should be recognized. c. the cu
> If a bookkeeper mistakenly recorded a $73 deposit as $37, the error would be shown on the bank reconciliation as a a. $36 deduction from the book balance. b. $37 addition to the book balance. c. $36 addition to the book balance. d. $37 deduction from
> Assume the Giada Coffee Roasters Corp. ended the month of August 2019 with these data: Requirement: 1. Prepare the income statement and the statement of retained earnings for Giada Coffee Roasters Corp., for the month ended August 31, 2019.
> A company sells on credit terms of 2/10, n/30 and has days’ sales in accounts receivable of 30.2 days. Its days’ sales outstanding is a. too low. b. too high. c. about right. d. not able to be evaluated from the data given
> A company with net credit sales of $960,000, beginning net receivables of $70,000, and ending net receivables of $90,000 has days’ sales outstanding closest to: a. 37 days. b. 30 days. c. 34 days. d. 41 days.
> Which of the following is included in the calculation of the quick (acid-test) ratio? a. Inventory and short-term investments b. Inventory and prepaid expenses c. Cash and accounts receivable d. Prepaid expenses and cash
> On August 1, 2018, Avonette, Inc., sold equipment and accepted a six-month, 9%, $50,000 note receivable. Avonette’s year-end is December 31. How much interest does Avonette expect to collect on the maturity date (February 1, 2019)? a. $3,050 b. $2,250
> On August 1, 2018, Avonette, Inc., sold equipment and accepted a six-month, 9%, $50,000 note receivable. Avonette’s year-end is December 31. How much interest does Avonette expect to collect on the maturity date (February 1, 2019)? a. $3,050 b. $2,250
> On August 1, 2018, Avonette, Inc., sold equipment and accepted a six-month, 9%, $50,000 note receivable. Avonette’s year-end is December 31. If Avonette fails to make an adjusting entry for the accrued interest on December 31, 2018, a. net income will b
> On August 1, 2018, Avonette, Inc., sold equipment and accepted a six-month, 9%, $50,000 note receivable. Avonette’s year-end is December 31. How much interest revenue should Avonette accrue on December 31, 2018? a. $4,500 b. $2,425 c. $1,875 d. $2,250
> Refer to questions 5-45 and 5-46. The following year, Milford Company wrote off $2,800 of old receivables as uncollectible. What is the balance in the Allowance account now? The net receivables on the balance sheet as of December 31, 2018, are .
> Refer to Q5-45. The balance of Allowance for Uncollectible Accounts, after adjustment, will be a. $5,200. b. $5,800. c. $1,500. d. $2,800.
> Milford Company uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $140,000, and management estimates 2% will be uncollectible. The Allowance for Uncollectible Accounts prior to adjustment has a c
> This exercise should be used with Exercise 1-25A. Requirements: 1. Prepare the income statement of Jill Carlson Realty Company for the year ended January 31, 2018. 2. What amount of dividends did Jill Carlson declare during the year ended January 31,
> Sprague Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. At December 31, 2018, the balance of accounts receivable is $250,000 and the allowance for uncollectible accounts has a credit balance of $
