Pyle Nurseries used the allowance method to record the following transactions, adjusting entries, and closing entries during the year ended December 31, 20--: Feb. 9 Received 60% of the $4,000 balance owed by Wiley’s Waterworks, a bankrupt business, and wrote off the remainder as uncollectible. May 28 Reinstated the account of Amanda Akin, which had been written off in the preceding year, and received $2,100 cash in full settlement. Aug. 16 Wrote off the $5,700 balance owed by JoJo Xu as uncollectible. Oct. 5 Reinstated the account of Tomi Kennedy which had been written off in the preceding year, and received $3,100 cash in full settlement. Dec. 28 Wrote off the following accounts as uncollectible, in compound entry form: Jacobs & Wilson, $10,900; Specialty Landscapes, $15,360; Kiana Hoyer, $13,170. 31 Based on an aging analysis of the $965,000 of accounts receivable, it was estimated that $50,800 will be uncollectible. Made the adjusting entry. 31 Made the entry to close the appropriate account to Income Summary. Selected accounts and beginning balances on January 1, 20--, are as follows: 122.1 Allowance for Doubtful Accounts $43,000 credit 313 Income Summary –– 532 Bad Debt Expense –– REQUIRED 1. Open the three selected general ledger accounts. 2. Enter the transactions and the adjusting and closing entries in a general journal (page 6). After each entry, post to the appropriate selected accounts. 3. Determine the net realizable value as of December 31.
> Kris Kraft Stores had the following stock transactions during the year: (a) Issued 8,000 shares of no-par common stock with a stated value of $5 per share for $40,000 cash. (b) Issued 6,000 shares of no-par common stock with a stated value of $5 per shar
> Trace the flow of accounting information through the accounting system.
> Hernandez Company had the following stock transactions during its first 5 years of operations: (a) Issued 25,000 shares of $1 par common stock for $25,000 cash. (b) Issued 20,000 shares of $1 par common stock for $22,000 cash. (c) Issued 2,000 shares of
> After closing its books on December 31, Pro Parts’ stockholders’ equity accounts had the following balances: Common stock subscriptions receivable ………...………...………... $ 5,000 Common stock, $5 par, 12,000 shares ………...………...………...... 60,000 Preferred sto
> Smith & Cline had the following stock transactions during the year: (a) Issued 5,000 shares of common stock with a $5 par value in exchange for real estate (land) with a fair market value of $27,500. (b) Issued 7,500 shares of common stock with a $5 par
> The following independent stock transactions occurred during January 20-- for various corporations: (a) Issued 6,000 shares of $10 par common stock for $60,000 cash. (b) Issued 4,000 shares of $10 par common stock for $52,000 cash. (c) Issued 5,000 share
> Situation 1: Nguyen Company has the following stock outstanding: The amount available for dividends this year is $57,000. Prepare the dividend allocation between the preferred and common shares in total and per share. Situation 2: Bell Company has th
> Mitchell Parts Co. had the following plant asset transactions during the year: 1. Assets discarded or sold: Jan. 1 Motor #12, which had a cost of $2,800 and accumulated depreciation of $2,800, was discarded. 8 Motor #8, which had a cost of $4,400 and acc
> After closing its books on December 31, 20—, Jackson Corporation’s stockholders’ equity accounts had the following balances: REQUIRED Prepare the stockholders’ equity section of the
> B&B Electric decided to incorporate and has incurred the following costs of organizing: Incorporation fees $ ………... 400 Attorneys’ fees ………... 4,800 Promotion expenses ………... 5,700 Prepare the entry for the payment of these organization costs for cash o
> After several years of operations, the partnership of Baldwin, Cowan, and Stewart is to be liquidated. After making closing entries on June 30, 20--, the following accounts remain open: The noncash assets are sold for $250,000. Profits and losses are sha
> The Kelly and Kelly Wrecking Company, a partnership, operates a general demolition business. Ownership of the company is divided among the partners, Mike Kelly, Kim Kelly, Larry Dennis, and Jim Wheeles. Profits and losses are shared equally. The books ar
> Explain the five steps required when posting the journal to the ledger.
> The partnership of Robo and Swing, CPAs, reported revenues of $215,000 and expenses of $80,000 on their year-end work sheet. Their capital balances as of January 1, 20--, were $55,000 for I. Robo and $45,000 for B. Swing. No additional investments were m
> On July 1, 20--, Susan Woodworth and Barbara Holly combined their two businesses to form a partnership under the firm name of Woodworth and Holly. The balance sheets of the two sole proprietorships are shown below and on the next page. The balance sheets
> On liquidation of the partnership of J. Hui and K. Cline, as of November 1, 20--, inventory with a book value of $180,000 is sold for $230,000. Given that Hui and Cline share profits and losses equally, prepare the entries for the sale and the allocation
> Jeff Bowman and Kristi Emery, who have ending capital balances of $100,000 and $60,000, respectively, agree to admit two new partners to their business on August 18, 20--. Dan Bridges will buy one fifth of Bowman’s capital interest for $30,000 and one-fo
> Ronica Kluge and Sam Edwards formed a partnership on May 1, 20-1. Kluge contributed $120,000 and Edwards contributed $50,000. During the year, Kluge contributed an additional $30,000. The partnership agreement states that Kluge is to receive $35,000 and
> Danny Spurlock and Tracy Wilson decided to form a partnership on July 1, 20-1. Spurlock invested $100,000 and Wilson invested $25,000. For the fiscal year ended June 30, 20-2, a net income of $80,000 was earned. Determine the amount of net income that Sp
> LOSS After several years of operations, the partnership of Nelson, Pope, and Williams is to be liquidated. After making closing entries on March 31, 20--, the following accounts remain open: The noncash assets are sold for $230,000. Profits and losses ar
> Patty McShane and Betty Lou Blixt agreed on September 1 to go into business as partners. According to the agreement, McShane is to contribute $55,000 cash and Blixt is to contribute $80,000 cash. Provide a separate journal entry for the investment of eac
> Equipment records for Johnson Machine Co. for the year follow. Johnson Machine uses the straight-line method of depreciation. In the case of assets acquired by the fifteenth day of the month, depreciation should be computed for the entire month. In the c
> A machine is purchased January 1 at a cost of $59,000. It is expected to produce 130,000 units and have a salvage value of $3,000 at the end of its useful life. Units produced are as follows: Year 1 10,000 Year 2 8,000 Year 3 12,000 Year 4 16,000 Year 5
> Identify the three types of ownership structures and discuss the advantages and disadvantages of each.
> A machine is purchased January 1 at a cost of $59,000. It is expected to serve for eight years and have a salvage value of $3,000. REQUIRED 1. Prepare a schedule showing depreciation for each year and the book value at the end of each year using the fol
> Prepare the following entries using a general journal: 1. A coal mine was acquired at a cost of $1,500,000 and estimated to contain 6,000,000 tons of ore. During the year, 100,000 tons were mined and sold. Prepare the journal entry for the year’s depleti
> Prepare the entries for the following transactions using a general journal: 1. Discarding an asset. (a) On January 4, shelving units, which had a cost of $6,400 and had accumulated depreciation of $5,900, were discarded. (b) On June 15, a hand cart, whic
> Prepare the entries for the following transactions for Stepanski’s Food Mart using a general journal: 1. Replaced the checkout computer in Checkout Stand A for $3,500 cash. The computer is part of the checkout stand. The replacement is expected to extend
> The truck purchased in Exercise 18-2A is expected to be used for 100,000 miles over its eight-year useful life. Exercise 18-2A: A light truck is purchased on January 1 at a cost of $35,000. It is expected to serve for eight years and have a salvage va
> A light truck is purchased on January 1 at a cost of $35,000. It is expected to serve for eight years and have a salvage value of $5,000. Calculate the depreciation expense for the first and third years of the truck’s life using the following methods: 1.
> On January 1, 20-1, two flight simulators were purchased by a space camp for $77,000 each with a salvage value of $5,000 each and estimated useful lives of eight years. On January 1, 20-2, the hydraulic system for Simulator A was replaced for $6,000 cash
> Consider the following list of expenditures and indicate whether each would be debited to Land, Building, or Equipment as part of the cost to purchase these assets. Place a check mark in the appropriate column.
> At the end of the year, the following interest is payable, but not yet paid. Record the adjusting entry in the general journal. Interest on $5,000, 60-day, 7% note (for 12 days) $11.67 Interest on $2,500, 30-day, 8% note (for 9 days) 5.00 $16.
> Prepare general journal entries for the following transactions: July 15 Borrowed $5,000 cash from the bank, giving a 60-day non-interest-bearing note. The note is discounted 8% by the bank. Sept. 13 paid the $5,000 note, recognizing the discount as inter
> What is a franchise? Name a franchise you have visited.
> Describe four possible types of comparisons that may be made in financial statement analysis.
> Prepare general journal entries for the following transactions: May 1 Purchased $5,000 worth of equipment from a supplier on account. June 1 Issued a $5,000, 30-day, 6% note in payment of the account payable. July 1 Paid $500 cash plus interest to the su
> At the end of the year, the following interest is earned, but not yet received. Record the adjusting entry in a general journal. Interest on $4,000, 90-day, 7% note (for 15 days) Interest on $7,000, 60-day, 6% note (for 18 days) $11.67
> Prepare general journal entries for the following transactions: Apr. 6 Received a 120-day, 6% note in payment for accounts receivable balance of $3,000. 26 Discounted the note at a rate of 7%. May 3 Received a 30-day, 7% note in payment for accounts rece
> Prepare general journal entries for the following transactions: Jan. 16 Received a 30-day, 6% note in payment for merchandise sale of $20,000. Feb. 15 Received $100 (interest) on the old (January 16) note; the old note is renewed for 30 days at 7%. Mar.
> Determine the due date for the following notes. (Assume there are 28 days in February.) Date of Note Term of Note Due Date August 12 September 1 90 days 60 January 3 March 18 120 88 June 11 May 17 200 38
> Using 360 days as the denominator, calculate interest for the following notes using the formula I = P × R × T. Principal Rate Time Interest $5,000 6.00% 30 days 1,000 7,50 60 4,500 8.00 120 950 6.80 95 1,250 7.25 102 2,900 7
> Milo Radio Shop had the following notes payable transactions: Apr. 1 Borrowed $5,000 from Builder’s Bank, signing a 90-day, 8% note. 5 Gave a $2,000, 60-day, 7% note to Breaker Parts Co. for purchase of merchandise. 10 Paid $500 cash and gave a $1,500, 3
> The following is a list of outstanding notes receivable as of December 31, 20--: REQUIRED 1. Compute the accrued interest at the end of the year. 2. Prepare the adjusting entry in the general journal. Principal $1,000 Maker Date of Note Interest Ter
> Marienau Suppliers had the following transactions: Mar. 1 Sold merchandise on account to G. Perez $5,000. 20 G. Perez gave a $5,000, 90-day, 6% note to extend time for payment. 30 G. Perez’s note is discounted at Commerce Bank at a discount rate of 8%. A
> J. K. Pratt Co. had the following transactions: 20-1 July 20 received a $750, 30-day, 5% note from J. Akita in payment for sale of merchandise. Aug. 19 J. Akita paid note issued July 20 plus interest. 25 Sold merchandise on account to L. Beene, $1,100. S
> Identify the six major steps of the accounting process and explain each step.
> Calculate total time in days for the following notes. (Assume there are 28 days in February.) Date of Note Due Date Time in Days May 4 August 17 July 5 December 11 July 17 October 1 September 5 February 5 May 16 March 24 January 6 March 18
> At the completion of the current fiscal year ending December 31, the balance of Accounts Receivable for Yang’s Gift Shop was $30,000. Credit sales for the year were $355,200. REQUIRED Make the necessary adjusting entry in general journal form under each
> Como’s Music Store uses the direct write-off method in accounting for uncollectible accounts. Record the following transactions in general journal form: 20-1 May 8 wrote off $1,745 owed by Vickie Lawrence, who has no assets. July 15 Wrote off $1,300 owed
> Maria Rivera, owner of Rivera Pharmacy, uses the direct write-off method in accounting for uncollectible accounts. Record the following transactions in general journal form: July 20 Wrote off $2,325 owed by Joe Balouka, who has no assets. Oct. 15 Wrote o
> At the end of the current year, the accounts receivable account of Glenn’s Nursery Supplies has a debit balance of $390,000. Credit sales are $2,800,000. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated
> Julia Alvarez, owner of Alvarez Rentals, uses the allowance method in accounting for uncollectible accounts. Record the following transactions in general journal form: July 7 wrote off $5,350 owed by Randy Dalzell, who has no assets. Aug. 12 wrote off $2
> Brito’s Hundai Sales and Service estimates the amount of uncollectible accounts using the percentage of receivables method. Based on aging the accounts, it is estimated that $4,500 will not be collected. Record the end-of-period adjusting entry on Decemb
> Rossin’s Racers has total credit sales for the year of $280,000 and estimates that 3% of its credit sales will be uncollectible. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated bad debt expense. Assume
> The trial balance after one month of operation for Mason’s Delivery Service as of September 30, 20--, is shown below. Data to complete the adjustments are as follows: (a) Supplies inventory as of September 30, $90. (b) Insurance expired
> Name and define the six major elements of the accounting equation.
> Prepare the entry for each of the following transactions, using the (a) cash basis, (b) modified cash basis, and (c) accrual basis of accounting. 1. Purchase supplies on account. 2. Make payment on asset previously purchased. 3. Purchase supplies for
> The partially completed work sheet from the books of Lewis Music Store, a business owned by Hugo Lewis, for the year ended December 31, 20--, is shown on page 554. REQUIRED 1. Analyze the work sheet and determine the adjusted trial balance and the adjus
> Williams & Hendricks Distributors uses the direct write-off method in accounting for uncollectible accounts. 20-1 Feb. 18 Sold merchandise on account to Merry Merchants, $17,500. Mar. 22 Sold merchandise on account to Utter Unicorns, $14,300. June 3 Rece
> An analysis of the accounts receivable of Johnson Company as of December 31, 20--, reveals the following: REQUIRED 1. Prepare an aging schedule as of December 31, 20--, by adding the following column to the three columns shown above: Estimated Amount Unc
> Updike owns a department store that has a $50,000 balance in Accounts Receivable and a $2,500 credit balance in Allowance for Doubtful Accounts. 1. Determine the net realizable value of the accounts receivable. 2. Assume that an account receivable in the
> Use the work sheet and financial statements prepared in Problem 15-8A. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $3,800. REQUIRED Prepare the following financial ratios: (a) Working capital (b) Current ratio (c)
> Paulson’s Pet Store completed the work sheet on page 602 for the year ended December 31, 20--. Owner’s equity as of January 1, 20--, was $21,900. The current portion of Mortgage Payable is $500. REQUIRED 1. Prepare a multiple-step income statement. 2. P
> Prepare entries for (a), (b), and (c) listed below using two methods. First, prepare the entries without making a reversing entry. Second, prepare the entries with the use of a reversing entry. Use T-accounts to assist your analysis. (a) Wages paid durin
> From the work sheet used in Exercise 15-5A, Exercise 15-5A: From the work sheet on page 600, prepare the following: 1. Closing entries for Gimbel’s Gifts and Gadgets in a general journal. 2. A post-closing trial balance. Identify the adjusting entry (
> From the work sheet on page 600, prepare the following: 1. Closing entries for Gimbel’s Gifts and Gadgets in a general journal. 2. A post-closing trial balance.
> Name and describe four areas of specialization for a public accountant.
> Based on the financial statements for Jackson Enterprises (income statement, statement of owner’s equity, and balance sheet) shown on pages 598–599, prepare the following financial ratios. All sales are credit sales. T
> Use the following information to prepare a multiple-step income statement, including the revenue section and the cost of goods sold section, for Sauter Office Supplies for the year ended December 31, 20--. Sales ……………………………………………………………. $156,300 Sales Re
> Based on the information that follows, prepare the cost of goods sold section of a multiple-step income statement. Merchandise Inventory, January 1, 20-- ……………………………………………. $ 37,000 Purchases ……………………………………………………………………………………….. 106,000 Purchases Returns
> The partial work sheet shown below is taken from the books of Stark Street Computers, a business owned by Logan Cowart, for the year ended December 31, 20--. REQUIRED 1. Determine the adjusting entries by analyzing the difference between the adjusted t
> Vicki’s Fabric Store shows the trial balance on page 603 as of December 31, 20-1. At the end of the year, the following adjustments need to be made: (a and b) Merchandise inventory as of December 31, $31,600. (c) Unused supplies on hand
> Based on the information that follows, prepare the revenue section of a multiple-step income statement. Sales ……………………………………………………………………… $150,000 Sales Returns and Allowances ………………………………………. 6,000 Sales Discounts …………………………………………………………… 3,400
> The trial balance for the Venice Beach Kite Shop, a business owned by Molly Young is shown on page 550. Year-end adjustment information is as follows: (a and b) Merchandise inventory costing $35,000 is on hand as of December 31, 20--. (The periodic inven
> On December 31, Anup Enterprises completed a physical count of its inventory. Although the merchandise inventory account shows a balance of $350,000, the physical count comes to $325,000. Prepare the appropriate adjusting entry under the perpetual invent
> Bhushan Building Supplies entered into the following transactions. Prepare journal entries under the perpetual inventory system. June 1 purchased merchandise on account from Brij Builder’s Materials, $500,000. 3 Purchased merchandise for cash, $400,000.
> The following partial work sheet is taken from the books of Kelly’s Kittens, a local pet kennel, for the year ended December 31, 20--. Journalize the adjustments in a general journal. Kelly's Kittens Work Sheet (Partial) For Year En
> Explain when expenses are recorded under the cash basis, modified cash basis, and accrual basis of accounting.
> From the following partial work sheet, indicate the dollar amount of beginning and ending merchandise inventory: ADIUSTMENES ADSED RALSLANE KOMESTATMINT MTOUNT E DET DEST DEST DET 1 Merchandise Inventory (b) 60 0 0 0 00 (a) 55 0 0 0 00| 60 0 0 0 60 0
> The following partial work sheet is taken from Kevin’s Gift Shop for the year ended December 31, 20--. The ending merchandise inventory is $50,000. 1. Complete the Adjustments columns for the merchandise inventory. 2. Extend the merchan
> Set up T accounts for Cash, Unearned Ticket Revenue, and Ticket Revenue. Post the following two transactions to the appropriate accounts, indicating each transaction by letter: (a) Sold 1,200 season tickets at $400 each, receiving cash of $480,000. (b) A
> Prepare the cost of goods sold section for Adams Gift Shop. The following amounts are known: Beginning merchandise inventory ………………………………………... $27,000 Ending merchandise inventory ………………………………….…………... 22,000 Purchases …………………………………………………………………………… 78,
> The trial balance for Cascade Bicycle Shop, a business owned by David Lamond, is shown below. Year-end adjustment information is as follows: (a and b) Merchandise inventory costing $22,000 is on hand as of December 31, 20--. (The periodic inventory syste
> Matt Henry owns a business called Henry’s Sporting Goods. His beginning inventory as of January 1, 20--, was $45,000, and his ending inventory as of December 31, 20--, was $57,000. Set up T accounts for Merchandise Inventory and Income Summary and perfor
> The following information is provided by Raynette’s Pharmacy for the last quarter of its fiscal year ending on March 31, 20--: REQUIRED 1. Estimate the ending inventory as of March 31 using the retail inventory method. 2. Estimate the
> A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20--. Fortunately, the accounting records were not destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through A
> Douglas Company’s beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: REQUIRED 1. Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 un
> Swing Company’s beginning inventory and purchases during the fiscal year ended September 30, 20-2, were as follows: REQUIRED Calculate the total amount to be assigned to cost of goods sold for the fiscal year ended September 30, 20-2,
> Explain when revenues are recorded under the cash basis, modified cash basis, and accrual basis of accounting.
> Stalberg Company’s beginning inventory and pur chases during the fiscal year ended December 31, 20--, were as follows: There are 10 units of inventory on hand on December 31. 1. Calculate the total amount to be assigned to the ending
> Sandy Chen owns a small specialty store, named Chen’s Chattel, whose year-end is June 30. Determine the total amount that should be included in Chen’s Chattel’s year-end inventory. A physical inventory taken on June 30 reveals the following: Cost of merc
> Joan Ziemba owns a small variety store. The following transactions took place during March of the current year. Journalize the transactions in a general journal using the perpetual inventory method. Mar. 3 Purchased merchandise on account from City Galle
> Paul Nasipak owns a business called Diamond Distributors. The following transactions took place during January of the current year. Journalize the transactions in a general journal using the periodic inventory method. Jan. 5 Purchased merchandise on acco
> Flint owns a small retail business called Flint’s Fantasy. The cash account has a balance of $20,000 on July 1. The following transactions occurred during July: July 1 Issued Check No. 414 in payment of July rent, $1,500. 1 Purchased merchandise on accou
> Sam Santiago operates a retail variety store. The books include a cash payments journal and an accounts payable ledger. All cash payments (except petty cash) are entered in the cash payments journal. Selected account balances on May 1 are as follows: T
> The purchases journal of Kevin’s Kettle, a small retail business, is as follows: REQUIRED 1. Post the total of the purchases journal to the appropriate general ledger accounts. Use account numbers as shown in the chapter. 2. Post the
> Assume that in year 1, the ending merchandise inventory is overstated by $50,000. If this is the only error in years 1 and 2, indicate which items will be understated, overstated, or correctly stated for years 1 and 2. Year 1 Year 2 Ending merchandis
> J. B. Speck, owner of Speck’s Galleria, made the following purchases of merchandise on account during the month of September: Sept. 3 Purchase Invoice No. 415, $2,650, from Smith Distributors. 8 Purchase Invoice No. 132, $3,830, from Michaels Wholesaler.
> Owens Distributors is a retail business. The following sales, returns, and cash receipts occurred during March 20--. There is an 8% sales tax. Beginning general ledger account balances were Cash, $9,741; and Accounts Receivable, $1,058.25. Beginning cust
