Prior to recording the following, Elite Electronics, Inc., had a credit balance of $2,000 in its Allowance for Doubtful Accounts. Required: Prepare journal entries for each transaction. a. On August 31, a customer balance for $300 from a prior year was determined to be uncollectible and was written off. b. On December 15, the customer balance for $300 written off on August 31 was collected in full.
> List the two types of adjustments and give an example of an adjustment affecting revenues and expenses for each type.
> The 2016 annual report for General Mills disclosed that 1 billion shares of common stock have been authorized. At the end of 2015, 755 million shares had been issued and the number of shares in treasury stock was 156 million. During 2016, the only common
> Grocery Corporation received $300,328 for 11 percent bonds issued on January 1, 2018, at a market interest rate of 8 percent. The bonds had a total face value of $250,000, stated that interest would be paid each December 31, and stated that they mature i
> On January 1, Innovative Solutions, Inc., issued $200,000 in bonds at face value. The bonds have a stated interest rate of 6 percent. The bonds mature in 10 years and pay interest once per year on December 31. Required: 1. Prepare the journal entry to
> On January 1, Applied Technologies Corporation (ATC) issued $500,000 in bonds that mature in 10 years. The bonds have a stated interest rate of 10 percent. When the bonds were issued, the market interest rate was 10 percent. The bonds pay interest once p
> The Tennis Times (TTT) is a publisher of magazines. Its accounting policy for subscriptions follows: Assume TTT (a) collected $420 million in 2018 for magazines that will be distributed later in 2018 and 2019, (b) provided $204 million of services on th
> Bryant Company sells a wide range of inventories, which are initially purchased on account. Occasionally, a short-term note payable is used to obtain cash for current use. The following transactions were selected from those occurring during the year: a.
> Assume an employee of Rocco Rock Company earns $1,000 of gross wages during the current pay period and is required to remit to the government $100 for income tax and $50 for FICA. Consider the following two procedures for paying the employee: Required:
> Mc Loyd Company completed the salaries and wages payroll for March. The payroll provided the following details: Required: 1. Considering both employee and employer payroll taxes, use the preceding information to calculate the total labor cost for the c
> As part of a major renovation at the beginning of the year, Atiase Pharmaceuticals, Inc., sold shelving units (recorded as Equipment) that were 10 years old for $800 cash. The shelves originally cost $6,400 and had been depreciated on a straight-line bas
> Use the information in E10-1 to complete the following requirements. Required: 1. Give the journal entry to record the note on November 1, 2018. 2. Give any adjusting entry required on December 31, 2018. 3. Give the journal entry to record payment o
> The following amortization schedule indicates the interest and principal to be repaid on an installment note established January 1, 2018, for a company with a March 31 year-end. Required: 1. Assuming the company makes the required annual payments on De
> Explain the relationships between adjustments and the following Chapter 3 concepts: (a) the time period assumption, (b) the revenue recognition principle, and (c) the expense recognition principle.
> Refer to the information in E10-14 and assume Seton Corporation accounts for the bond using the simplified effective-interest method shown in Chapter Supplement 10C. Required: 1. Prepare the journal entry to record the bond issuance. 2. Prepare the j
> Refer to the information in E10-14 and assume Seton Corporation uses the effective-interest method to amortize the bond discount. Required: 1. Prepare the journal entry to record the bond issuance. 2. Prepare the journal entry to record the first int
> On January 1, when the market interest rate was 9 percent, Seton Corporation completed a $200,000, 8 percent bond issue for $187,163. The bonds pay interest each December 31 and mature in 10 years. Seton amortizes the bond discount using the straight-lin
> Refer to the information in E10-9 and assume Grocery Corporation accounts for the bond using the shortcut approach shown in Chapter Supplement 10C. Required: 1. Prepare the journal entry to record the bond issuance. 2. Prepare the journal entry to re
> Refer to the information in E10-9 and assume Grocery Corporation uses the effective-interest method to amortize the bond premium. Required: 1. Prepare the journal entry to record the bond issuance. 2. Prepare the journal entry to record the first int
> Refer to the information in E10-9 and assume Grocery Corporation uses the straight-line method to amortize the bond premium. Required: 1. Prepare the journal entry to record the bond issuance. 2. Prepare the journal entry to record the first interest
> At May 31, 2016, FedEx Corporation reported the following amounts (in millions) in its financial statements: Required: 1. Compute the debt-to-assets ratio and times interest earned ratio (to two decimal places) for 2016 and 2015. 2. Use your answers t
> For each of the following long-lived assets, indicate its nature and related cost allocation concept. Use the abbreviations shown on the right:
> Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. For example, Mattel builds up its inventory to meet the needs of retailers selling to Christmas shoppers. A large portion
> FedEx Corporation is the world’s leading express-distribution company. In addition to its 643 aircraft, the company has more than 57,000 ground vehicles that pick up and deliver packages. Assume that FedEx sold a delivery truck for $16,
> On January 1, the records of Tasty Treats Corporation (TTC) showed the following regarding production equipment Required: Based on the data given, compute the estimated useful life of the equipment.
> The owner of a local business complains that the adjustments process consumes a lot of time and delays reporting month-end financial results. How would you convince her of the importance of this process?
> Sonic Corporation purchased and installed electronic payment equipment at its drive-in restaurants in San Marcos, TX, at a cost of $27,000. The equipment has an estimated residual value of $1,500. The equipment is expected to process 255,000 payments ove
> Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $22,000. The estimated useful life was five years and the residual value was $2,000. Assume that the estimated productive life of the machine is 10,000 units. Expect
> Refer to the information in E9-4. Required: 1. Give the adjusting journal entry that would have been made at the end of 2017 for depreciation on the manufacturing equipment. 2. Starting at the beginning of 2018, what is the remaining estimated life?
> Wiater Company operates a small manufacturing facility. On January 1, 2018, an asset account for the company showed the following balances: During the first week of January 2018, the following expenditures were incurred for repairs and maintenance The
> O’Connor Company ordered a machine on January 1 at a purchase price of $40,000. On the date of delivery, January 2, the company paid $10,000 on the machine and signed a long-term note payable for the balance. On January 3, it paid $350
> Bridge City Consulting bought a building and the land on which it is located for $182,000 cash. The land is estimated to represent 70 percent of the purchase price. The company paid $22,000 for building renovations before it was ready for use. Required
> Using the information in M8-7 and M8-8, prepare the journal entry to record the end-of-period adjustment for bad debts under the (a) percentage of credit sales method and (b) aging of accounts receivable method. Which of these methods is required by GAAP
> E9-4refer Data from E9-4 Wiater Company operates a small manufacturing facility. On January 1, 2018, an asset account for the company showed the following balances: During the first week of January 2018, the following expenditures were incurred for re
> Texas Oil Company (TOC) paid $3,000,000 for an oil reserve estimated to hold 50,000 barrels of oil. Oil production is expected to be 10,000 barrels in year 1, 30,000 barrels in year 2, and 10,000 barrels in year 3. TOC expects to begin selling barrels fr
> Torge Company bought a machine for $65,000 cash. The estimated useful life was five years and the estimated residual value was $5,000. Assume that the estimated useful life in productive units is 150,000. Units actually produced were 40,000 in year 1 and
> The following data were included in a recent Apple Inc. annual report (in millions): Required: 1. Compute Apple’s fixed asset turnover ratio for 2014, 2015, and 2016. Round your answer to one decimal place. 2. During 2016, Microsoft
> What is a post-closing trial balance? Is it a useful part of the accounting cycle? Explain.
> Iconix Brand Group owns and markets various brands and trademarks, including Joe Boxer, London Fog, Ocean Pacific, Ecko Unltd., Umbro, Ed Hardy, Lee Cooper, Buffalo, and Peanuts. The company’s financial statements for the year ended Dec
> Bluestone Company had three intangible assets at the end of the current year: a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $9,300. When purchased, the patent had an estimated life of 15 years. b. A trademark was regis
> Refer to the data in E9-10. Assume each company spent $319,800 at the beginning of the current year for additional Developed Technology. Because of its proprietary nature, the technology is estimated to have no residual value at the end of its estimated
> Amazon, Alphabet, and TripAdvisor rely on various intangible assets to operate their businesses. These companies amortize the cost of these assets using the straight-line method over the following average estimated useful lives (in years), as reported in
> The following is a list of account titles and amounts (in millions) reported at December 27, 2015, by Hasbro, Inc., a leading manufacturer of games, toys, and interactive entertainment software for children and families: Required: 1. Prepare the asset
> Assume that Simple Co. had credit sales of $250,000 and cost of goods sold of $150,000 for the period. Simple uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $3,000. Before the end-of-peri
> Fraud Investigators Inc. operates a fraud detection service. Required: 1. Prepare journal entries for each transaction below. a. On March 31, 10 customers were billed for detection services totaling $25,000. b. On October 31, a customer balance of $
> Innovative Tech Inc. (ITI) has been using the percentage of credit sales method to estimate bad debts. During November, ITI sold services on account for $100,000 and estimated that ½ of 1 percent of those sales would be uncollectible. Required: 1. Pr
> Brown Cow Dairy uses the aging approach to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) 1–30 days old, $12,000; (2) 31–90 days old, $5,000; and (3) more than 90 days old, $3,
> Young and Old Corporation (YOC) uses two aging categories to estimate uncollectible accounts. Accounts less than 60 days are considered young and have a 5% uncollectible rate. Accounts more than 60 days are considered old and have a 40% uncollectible rat
> For each transaction listed in E8-4, indicate the amount and direction (+ or −) of effects on the financial statement accounts and on the overall accounting equation. Data from E8-4: Prior to recording the following, Elite Electronics
> Why are the income statement accounts closed but the balance sheet accounts are not?
> During the year ended December 31, 2018, Kelly’s Camera Shop had sales revenue of $170,000, of which $85,000 was on credit. At the start of 2018, Accounts Receivable showed a $10,000 debit balance and the Allowance for Doubtful Accounts showed a $600 cre
> For each transaction listed in E8-1, indicate the amount and direction (+ or −) of effects on the financial statement accounts and on the overall accounting equation.
> Trevorson Electronics is a small company privately owned by Jon Trevorson, an electrician who installs wiring in new homes. Because the company’s financial statements are prepared only for tax purposes, Jon uses the direct write-off method. During 2018,
> Which of the four basic accounting reports indicates that it is appropriate to consider revenues and expenses as subcategories of retained earnings? Explain.
> FedEx Corporation reported the following rounded amounts (in millions): Required: 1. Determine the receivables turnover ratio and days to collect for 2016. Round your answers to one decimal place. 2. Do the measures calculated in requirement 1 represe
> Refer to the information about Sears given in E8-14. Required: Complete the following table indicating the direction of the effect (+ for increase, − for decrease, and NE for no effect) of each transaction during 2016: Data from E8-
> The annual report for Sears Holdings Corporation contained the following information: Assume that accounts receivable write-offs amounted to $1 during 2016 and $9 during 2015 and that Sears did not record any recoveries. Required: Determine the Bad D
> Microsoft Corporation develops, produces, and markets a wide range of computer software including the Windows operating system. Microsoft reported the following information about Net Sales Revenue and Accounts Receivable (all amounts in millions). Accor
> To attract retailers to its shopping center, the Marketplace Mall will lend money to tenants under formal contracts, provided that they use it to renovate their store space. On November 1, 2017, the company loaned $100,000 to a new tenant on a one-year n
> The following transactions took place for Parker’s Grocery Required: Prepare the journal entries Parker’s Grocery would record for the above transactions.
> How do permanent accounts differ from temporary accounts?
> The following transactions took place for Smart Solutions Inc. Required: Prepare the journal entries that Smart Solutions Inc. would record for the above transactions.
> Blackhorse Productions, Inc., used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accounts should be $19,750. The account had an unadjusted credit balance of $10,000 at that time. Required: Prepare journal entries
> Use the following information to complete this exercise: sales, 550 units for $12,500; beginning inventory, 300 units; purchases, 400 units; ending inventory, 150 units; and operating expenses, $4,000. Begin by setting up the following table and then com
> Assume Simple Co. had credit sales of $250,000 and cost of goods sold of $150,000 for the period. Simple uses the percentage of credit sales method and estimates that 1 percent of credit sales would result in uncollectible accounts. Before the end-of-per
> Courtney Company uses a periodic inventory system. The following data were available: beginning inventory, 1,000 units at $35; purchases, 4,000 units at $38; operating expenses (excluding income taxes), $91,500; ending inventory per physical count at Dec
> Scoresby Inc. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information
> Orion Iron Corp. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following informati
> Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each month, as if it uses a periodic inventory system. Assume Oahu Kiki’s records show the
> Spotter Corporation reported the following for June in its periodic inventory records. Required: 1. Calculate the cost of ending inventory and the cost of goods sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost methods. 2. Which of the t
> Refer to the information in E7-2. Required: For each item (a)–(d), prepare the journal entry to correct the balances presently reported. If a journal entry is not required, indicate so Data from E7-2: Seemore Lens Company (SLC) sells contact lenses F
> Seemore Lens Company (SLC) sells contact lenses FOB destination. For the year ended December 31, the company reported Inventory of $70,000 and Cost of Goods Sold of $420,000. a. Included in Inventory (and Accounts Payable) are $10,000 of lenses SLC is ho
> What is the purpose of closing journal entries?
> Dallas Corporation prepared the following two income statements: During the third quarter, the company’s internal auditors discovered that the ending inventory for the first quarter should have been $4,400. The ending inventory for the
> Refer to the information in E7-6. Assume Orion Iron applies its inventory costing method perpetually at the time of each sale. Calculate the cost of ending inventory and the cost of goods sold using the FIFO and LIFO methods. Data from E7-6: Orion Iron
> Using the following categories, indicate the effects of the following transactions. Use + for increase and − for decrease and indicate the accounts affected and the amounts. Assets = Liabilities + Stockholders’ Equity a. During the period, customer balan
> Refer to the information in E7-5. Assume Oahu Kiki applies its inventory costing method perpetually at the time of each sale. The company sold 240 units between January 16 and 23. Calculate the cost of ending inventory and the cost of goods sold using th
> Simple Plan Enterprises uses a periodic inventory system. Its records showed the following: Required: 1. Compute the number and cost of goods available for sale, the cost of ending inventory, and the cost of goods sold under FIFO and LIFO. 2. Compute
> Polaris Industries Inc. is the biggest snowmobile manufacturer in the world. It reported the following amounts in its financial statements (in millions): Required: 1. Calculate to one decimal place the inventory turnover ratio and average days to sell
> Sandals Company is preparing the annual financial statements dated December 31. Ending inventory is presently recorded at its total cost of $5,465. Information about its inventory it Required: 1. Compute the LCM/NRV write-down per unit and in total for
> Peterson Furniture Designs is preparing the annual financial statements dated December 31. Ending inventory information about the five major items stocked for regular sale follows: Required: 1. Complete the table column “Write-Down pe
> TrackR, Inc., (TI) has developed a coin-sized tracking tag that attaches to key rings, wallets, and other items and can be prompted to emit a signal using a smartphone app. TI sells these tags, as well as water-resistant cases for the tags, with terms FO
> Second Chance Clothing (SCC) sells vintage apparel, which it obtains on consignment and through purchase. The following events occurred close to SCC’s October 31 year-end. Required: Indicate (Yes or No) whether SCC should include each
> PCM, Inc., is a direct marketer of computer hardware, software, peripherals, and electronics. In a recent annual report, the company reported that its revenue is “recognized upon receipt of the product by the customer.” Required: 1. Indicate whether P
> What is the equation for each of the following statements: (a) income statement, (b) balance sheet, and (c) statement of retained earnings?
> During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows: Required: Assume that Ace uses a perpetual inventory system and that the company had no inventory on hand at the beginning of the month
> Prepare journal entries for each transaction listed. a. At the end of June, bad debt expense is estimated to be $14,000. b. In July, customer balances are written off in the amount of $7,000.
> For each of the following, indicate whether it would be reported on the balance sheet (B/S), reported on the income statement (I/S), or not shown in the company’s financial statements (Not).
> During the months of January and February, Axe Corporation purchased goods from three suppliers. The sequence of events was as follows: Required: Assume that Axe uses a perpetual inventory system, the company had no inventory on hand at the beginning o
> Supply the missing dollar amounts for each of the following independent cases:
> Supply the missing dollar amounts for each of the following independent cases:
> In fiscal 2015, Macy’s reported cost of goods sold (before shrinkage) of $16.5 billion, ending inventory for 2015 of $5.5 billion, and ending inventory for the previous year (2014) of $5.4 billion. Required: If the cost of inventory purchases was $16.9
> Calculate the missing information for each of the following independent cases:
> Kangaroo Jim Company reported beginning inventory of 100 units at a per unit cost of $25. It had the following purchase and sales transactions during the year: Required: Record each transaction, assuming that Kangaroo Jim Company uses (a) a perpetual i
> Using the information in E6-12, prepare journal entries to record the transactions, assuming Bear’s Retail Store records discounts using the net method in a perpetual inventory system. Forfeited discounts are recorded as Other Revenue.
> Using the information in E6-12, prepare journal entries to record the transactions, assuming Bear’s Retail Store records discounts using the gross method in a perpetual inventory system. Data from E6-12: The following transactions wer
> Using the information in E6-11, prepare journal entries to record the transactions, assuming Evergreen Company records discounts using the net method in a perpetual inventory system. Forfeited discounts are recorded as Other Revenue. Data from E6-11: T
> What is the equation for each of the following statements: (a) income statement, (b) balance sheet, and (c) statement of retained earnings?
> Let’s go a bit further with the example from M8-3. Assume that on February 2, 2018, Extreme Fitness received a payment of $500 from one of the customers whose balance had been written off. Prepare the journal entries to record this transaction.
> If you deposited $10,000 in a savings account that earns 10 percent, how much would you have at the end of 10 years? Use a convenient format to display your computations and round to the nearest dollar.
> Using the information in E6-11, prepare journal entries to record the transactions, assuming Evergreen Company records discounts using the gross method in a perpetual inventory system. Data from E6-11: The following transactions were selected from the
