Question: Requirements 1. Journalize the following

> Ripley Shirt Company sells on credit and manages its own receivables. Average experience for the past three years has been the following: Jack Rivers, the owner, is considering whether to accept bankcards (VISA, MasterCard). Rivers expects total sales

> The president of The Parkview Company has recently become concerned that the bookkeeper has embezzled cash from the company. She asks you, confidentially, to look over the bank reconciliation that the bookkeeper has prepared to see if you

> Megan Williams, the chief financial officer, is responsible for Dollar Depot’s cash budget for 2017. The budget will help Williams determine if long-term borrowing is needed to end the year with a cash balance of $175,000

> Julie Brown, the owner of Julie’s Party Sandwiches, has delegated management of the business to Stacie Wood, a friend. Brown drops by to meet customers and check up on cash receipts, but Wood buys the merchandise and handles cash payments. Business has b

> During 2016, Vanguard, Inc., changed to the LIFO method of accounting for inventory. Suppose that during 2015, Vanguard changes back to the FIFO method and the following year Vanguard switches back to LIFO again. Requirements 1. What would you think o

> Rockville Loan Company is in the consumer loan business. Rockville borrows from banks and loans out the money at higher interest rates. Rockville’s bank requires Rockville to submit quarterly financial statements to keep its line of credit. Rockville’s ma

> Community Bank has a loan receivable from IMS Chocolates. IMS is six months late in making payments to the bank, and Jan French, a Community Bank vice president, is assisting IMS to restructure its debt. French learns that IMS is depending on landing a

> Barry Galvin is executive vice president of Community Bank. Active in community affairs, Galvin serves on the board of directors of The Salvation Army. The Salvation Army is expanding rapidly and is considering relocating. At a recent meeting, The Salvat

> Sunrise Bank recently appointed the accounting firm of Smith, Godfroy, and Hannaford as the bank’s auditor. Sunrise quickly became one of Smith, Godfroy, and Hannaford’s largest clients. Subject to banking regulations, Sunrise must provide for any expecte

> The net income of Dusek Photography Company decreased sharply during 2016. Patty Dusek, owner of the company, anticipates the need for a bank loan in 2017. Late in 2016, Dusek instructed Tim Loftus, the accountant and a personal friend of yours, to recor

> Green Horizons Energy Co. is in its third year of operations, and the company has grown. To expand the business, Green Horizons borrowed $15 million from Bank of Ravenna. As a condition for making this loan, the bank required that Green Horizons maintain

> Scruffy Murphy is the president and principal stockholder of Scruffy’s Bar & Grill, Inc. To expand, the business is applying for a $350,000 bank loan. To get the loan, Murphy is considering two options for beefing up the owners’ equity of the business: O

> You are studying frantically for an accounting exam tomorrow. You are having difficulty in this course, and the grade you make on this exam can make the difference between receiving a final grade of B or C. If you receive a C, it will lower your grade poi

> The inventory costing method a company chooses can affect the financial statements and thus the decisions of the people who use those statements. Requirements 1. Company A uses the LIFO inventory method and discloses its use of the LIFO method in notes

> Jubilee Corporation is nearing the end of its first year of operations. Jubilee made inventory purchases of $745,000 during the year, as follows: Sales for the year are 5,000 units for $1,200,000 of revenue. Expenses other than cost of g

> Suppose you work in the loan department of Second National Bank. Brian Evert, owner of Evert Beauty Solutions, has come to you seeking a loan for $500,000 to expand operations. Evert proposes to use accounts receivable as collateral for the loan and has

> A fire during 2016 destroyed most of the accounting records of Sinclair Entertainment, Inc. The only accounting data for 2016 that Sinclair can come up with are the following balances at December 31, 2016. The general manager also knows th

> This case is based on an actual situation experienced by one of the authors. Gilead Construction, headquartered in Topeka, Kansas, built a motel in Kansas City. The construction foreman, Slim Pickins, hired the workers for the project. Pickins had his wo

> Environmental Concerns, Inc., has poor internal control. Recently, Oscar Benz, the manager, has suspected the bookkeeper of stealing. Details of the business’s cash position at September 30 follow. a. The Cash account shows a balance o

> Rachel Gambol has owned and operated Gambol Advertising, Inc., since it began 10 years ago. Recently, Gambol mentioned that she would consider selling the company for the right price. Assume that you are interested in buying this business. You obtain it

> On October 1, 2016, Hilda Petrochuck opened Hilda’s Coffee Shop, Inc. Petrochuck is now at a crossroads. The October financial statements paint a glowing picture of the business, and Petrochuck has asked you whether she should expand th

> The unadjusted trial balance of Rock City Services, Inc., at January 31, 2017, does not balance. The list of accounts and their balances is given below. The trial balance needs to be prepared and adjusted before the financial statements at January 31, 20

> Will Gardner opened an Italian restaurant. Business has been good, and Gardner is considering expanding the restaurant. Gardner, who knows little accounting, produced the following financial statements for Little Italy, Inc., at December 3

> A friend named Jay Barlow has asked what effect certain transactions will have on his company. Time is short, so you cannot apply the detailed procedures of journalizing and posting. Instead, you must analyze the transactions without the use of a journal

> A year out of college, you have $10,000 to invest. A friend has started Flowers Unlimited, Inc., and he asks you to invest in his company. You obtain the company’s financial statements, which are summarized at the end of

> Two businesses, Queens Service Corp. and Insley Sales Co., have sought business loans from you. To decide whether to make the loans, you have requested their balance sheets. Requirement 1. Using only these balance sheets, to which entity would you be

> Business is going well for Park ’N Fly, the company that operates remote parking lots near major airports. The board of directors of this family-owned company believes that Park ’N Fly could earn an additional $1.5 million income before interest and taxe

> In 2002, Enron Corporation filed for Chapter 11 bankruptcy protection, shocking the business community: How could a company this large and this successful go bankrupt? This case explores the causes and the effects of Enronâ€&#15

> Cathy Talbert is the general manager of Barham Company, which provides data-management services for physicians in the Columbus, Ohio, area. Barham Company is having a rough year. Net income trails projections for the year by almost $75,000. This shortfal

> Infografix Corporation’s consolidated sales for 2016 were $26.6 billion, and expenses totaled $24.8 billion. Infografix operates worldwide and conducts 37% of its business outside the United States. During

> The following questions are unrelated except that they all apply to plant assets and intangible assets: 1. The manager of Wired Connections Inc. regularly buys plant assets and debits the cost to Repairs and Maintenance Expense. Why would he do that, si

> Suppose you are considering investing in two businesses, La Petite France Bakery and Burgers Ahoy. The two companies are virtually identical, and both began operations at the beginning of the current year. During the year, each company purchased inventor

> When is a lease a capital idea? Laurie Gocker, Inc., entered into a lease arrangement with Nathan Morgan Leasing Corporation for an industrial machine. Morgan’s primary business is leasing. The cash purchase price of the machine is $1,000,000. Its econom

> Microsoft Corporation is the defendant in numerous lawsuits claiming unfair trade practices. Microsoft has strong incentives not to disclose these contingent liabilities. However, GAAP requires that companies report their contingent liabilities. Requir

> Media One owns 18% of the voting stock of Web Talk, Inc. The remainder of the Web Talk stock is held by numerous investors with small holdings. Austin Cohen, president of Media One and a member of Web Talk’s board of directors, heavily influences Web Ta

> Dellroy National Bank purchased land and a building for the lump sum of $6 million. To get the maximum tax deduction, the bank’s managers allocated 80% of the purchase price to the building and only 20% to the land. A more realistic allocation would have

> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AICP

> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AICP

> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AICP

> For each of the situations listed, identify which of three principles (integrity, objectivity, and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AIC

> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AICP

> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct is violated. Assume all persons listed in the situations are members of the AICPA. (N

> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct is violated. Assume all persons listed in the situations are members of the AICPA. (N

> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all persons listed in the situations are members of the AICP

> For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct is violated. Assume all persons listed in the situations are members of the AICPA. (N

> The accounting records of Brillhart Foods, Inc., include the following items at December 31, 2016: Requirements 1. Show how each relevant item would be reported on the Brillhart Foods, Inc., classified balance sheet, including headings and totals for

> Summit Medical Goods is embarking on a massive expansion. Assume the plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company’s existing locations, offering more items of inventory and with

> On December 31, 2016, Zenith Corp. issues 7%, 10-year convertible bonds payable with a maturity value of $2,000,000. The semiannual interest dates are June 30 and December 31. The market interest rate is 9%. Zenith Corp. amortizes bond discount by the ef

> The notes to the Friendship Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Friendship Ltd. amortizes bond discount by the effective-interest method and pays all inter

> On February 28, 2016, Marlin Corp. issues 8%, 10-year bonds payable with a face value of $900,000. The bonds pay interest on February 28 and August 31. Marlin Corp. amortizes bond discount by the straight-line method. Requirements 1. If the market int

> The board of directors of Laptops Plus authorizes the issue of $9,000,000 of 7%, 15-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May 31, 2016, at par. Requirements 1. Journalize the following tra

> The following transactions of Signature Music Company occurred during 2016 and 2017: Requirement 1. Record the transactions in Signature Music Company’s journal. Explanations are not required. 2016 Purchased a piano (inventory) fo

> Sea Spray Marine experienced these events during the current year. a. December revenue totaled $130,000; and, in addition, Sea Spray collected sales tax of 5%. The tax amount will be sent to the state of Rhode Island early in January. b. On August 31,

> The accounting records of Brownfield Foods, Inc., include the following items at December 31, 2016: Requirements 1. Show how each relevant item would be reported on the Brownfield Foods, Inc., classified balance sheet, including heading

> Mountainside Medical Goods is embarking on a massive expansion. Assume plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company’s existing locations, offering more items of inventory and wi

> On December 31, 2016, Rugaboo Corp. issues 6%, 10-year convertible bonds payable with a maturity value of $4,000,000. The semiannual interest dates are June 30 and December 31. The market interest rate is 8%. Rugaboo Corp. amortizes bond discount by the

> The notes to the Mann Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Mann Ltd. amortizes bond discount by the effective-interest method and pays all interest amounts

> Requirements 1. Journalize the following transactions of Lamore Communications, Inc.: 2. At December 31, 2016, after all year-end adjustments, determine the carrying amount of Lamore Communications bonds payable, net. 3. For the six months ended July

> On February 28, 2016, Mackerel Corp. issues 6%, 20-year bonds payable with a face value of $1,800,000. The bonds pay interest on February 28 and August 31. Mackerel Corp. amortizes bond discount by the straight-line method. Requirements 1. If the mark

> The board of directors of Circuits Plus authorizes the issue of $9,000,000 of 8%, 25-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May 31, 2016, at par. Requirements 1. Journalize the following t

> The following transactions of Smooth Notes Music Company occurred during 2016 and 2017: Requirement 1. Record the transactions in Smooth Notes’ journal. Explanations are not required. 2016 Purchased a piano (inventory) for $50,00

> Salt Air Marine experienced these events during the current year. a. December revenue totaled $110,000; and, in addition, Salt Air collected sales tax of 5%. The tax amount will be sent to the state of North Carolina early in January. b. On August 31,

> Assume that Lundgren Corporation has a subsidiary company based in Japan. Requirements 1. Translate into dollars the foreign-currency balance sheet of the Japanese subsidiary of Lundgren. When Lundgren acquired this subsidiary, the Japanese yen was wo

> Annual cash inflows from two competing investment opportunities are given. Each investment opportunity will require the same initial investment. Requirement 1. Assuming an 8% interest rate, which investment opportunity would you choose?

> Assume Robertson, Inc., paid $289,000 to acquire all the common stock of Dinette Corporation and Dinette owes Robertson $197,000 on a note payable. Immediately after the purchase on September 30, 2016, the two companies’ balance sheets

> This problem demonstrates the dramatic effect that consolidation accounting can have on a company’s ratios. Randall Motor Company (Randall) owns 100% of Randall Motor Credit Corporation (RMCC), its financing subsidiary. R

> The beginning balance sheet of Landeau Corporation included the following: Landeau Corporation completed the following investment transactions during the year: At year-end, the fair values of Landeau Corporation’s investments are as

> Utah Exchange Company completed the following long-term investment transactions during 2016: At year-end, the fair value of the Amsterdam stock is $30,900. The fair value of the Exeter stock is $652,000. Requirements 1. For which investment is fair

> Insurance companies and pension plans hold large quantities of bond investments. Variety Insurance Corp. purchased $3,900,000 of 4% bonds of Sherman, Inc., for 114 on January 1, 2016. These bonds pay interest on January 1 and July 1 each year. They matur

> Assume that Mason Corporation has a subsidiary company based in Japan. Requirements 1. Translate into dollars the foreign-currency balance sheet of the Japanese subsidiary of Mason. When Mason acquired this subsidiary, the Japanese yen was worth $0.00

> Annual cash inflows from two competing investment opportunities are given. Each investment opportunity will require the same initial investment. Requirement 1. Assuming a 14% interest rate, which investment opportunity would you choose?

> Assume Ronny, Inc., paid $362,000 to acquire all the common stock of Bircher Corporation and Bircher owes Ronny $194,000 on a note payable. Immediately after the purchase on September 30, 2016, the two companies’ balance sheets appear a

> This problem demonstrates the dramatic effect that consolidation accounting can have on a company’s ratios. Spindler Motor Company (Spindler) owns 100% of Spindler Motor Credit Corporation (SMCC), its financing subsidiary

> The beginning balance sheet of Robideau Corporation included the following: Robideau Corporation completed the following investment transactions during the year: At year-end, the fair values of Robideau Corporation’s investments are

> Delaware Exchange Company completed the following long-term investment transactions during 2016: At year-end, the fair value of the Columbus stock is $30,100. The fair value of the Nashua stock is $658,000. Requirements 1. For which investment is fa

> Insurance companies and pension plans hold large quantities of bond investments. Bolton Insurance Corp. purchased $2,800,000 of 9% bonds of Souza, Inc., for 112 on January 1, 2016. These bonds pay interest on January 1 and July 1 each year. They mature o

> Morgan Corporation reported the following related to property and equipment (all in millions): From the balance sheets: From the investing activities section of the 2016 cash flow statement: Cash used to purchase property and equipmentâ€&brv

> Bargain Hut Corporation operates general merchandise and food discount stores in the United States. The company reported the following information for the three years ending February 28, 2015: Requirements 1. Compute net profit margin ratio for Barga

> At the end of 2015, Standard Power had total assets of $17.5 billion and total liabilities of $9.6 billion. Included among the assets were property, plant, and equipment with a cost of $4.7 billion and accumulated depreciation of $2.9 billion. Standard P

> Northeastern Energy Company’s balance sheet includes the asset Iron Ore Rights. Northeastern Energy paid $2.9 million cash for the right to work a mine that contained an estimated 225,000 tons of ore. The company paid $68,000 to remove unwanted buildings

> Hometown Sales, Inc., sells electronics and appliances. The excerpts that follow are adapted from Hometown Sales’ financial statements for 2016 and 2015: Requirements 1. How much was Hometown Sales’s cost of plant

> On January 2, 2016, Smythe Co. paid $255,000 for a computer system. In addition to the basic purchase price, the company paid a setup fee of $1,500, sales tax of $6,600, and $31,900 for a special platform on which to place the computer. Smythe’s manageme

> Tucker, Inc., has the following plant asset accounts: Land, Buildings, and Equipment, with a separate accumulated depreciation account for each of these except Land. Tucker completed the following transactions: Requirement 1. Record the transactions

> Donatello Lake Resort reported the following on its balance sheet at December 31, 2016: In early July 2017, the resort expanded operations and purchased additional equipment for cash at a cost of $109,000. The company depreciates buildings by the strai

> Assume Royale House, Inc., opened an office in Urbana, Illinois. Royale House incurred the following costs in acquiring land, making land improvements, and constructing and furnishing the new sales building: Assume Royale House depreciates buildings ov

> Cook Corporation reported the following related to property and equipment (all in millions): From the balance sheets: From the investing activities section of the 2016 cash flow statement: Cash used to purchase property and equipmentâ€&brvba

> Shopper’s World operates general merchandise and food discount stores in the United States. The company reported the following information for the three years ending December 31, 2015: Requirements 1. Compute net profit margin ratio

> At the end of 2015, Chesapeake Energy had total assets of $17.2 billion and total liabilities of $9.8 billion. Included among the assets were property, plant, and equipment with a cost of $4.7 billion and accumulated depreciation of $2.8 billion. Chesape

> Southwestern Energy Company’s balance sheet includes the asset Iron Ore Rights. Southwestern Energy paid $2.2 million cash for the right to work a mine that contained an estimated 190,000 tons of ore. The company paid $61,000 to remove unwanted buildings

> Sweet Stores, Inc., sells electronics and appliances. The excerpts that follow are adapted from Sweet Stores’ financial statements for 2016 and 2015. Requirements 1. How much was Sweet Stores’ cost of plant assets

> On January 3, 2016, Wayne Co. paid $280,000 for a computer system. In addition to the basic purchase price, the company paid a setup fee of $1,900, sales tax of $7,000, and $28,600 for a special platform on which to place the computer. Wayne’s management

> Carr, Inc., has the following plant asset accounts: Land, Buildings, and Equipment, with a separate accumulated depreciation account for each of these except Land. Carr completed the following transactions: Requirement 1. Record the transactions in Ca

> Romano Lake Resort reported the following on its balance sheet at December 31, 2016: In early July 2017, the resort expanded operations and purchased additional equipment for cash at a cost of $105,000. The company depreciates buildings by the straight

> Assume Bowler Supply, Inc., opened an office in Dublin, Ohio. Bowler Supply incurred the following costs in acquiring land, making land improvements, and constructing and furnishing the new sales building: Assume Bowler Supply depreciates buildings ove

> The accounting records of Columbia Home Store show these data (in millions). The shareholders are very happy with Columbia’s steady increase in net income. Auditors discovered that the ending inventory for 2014 was understated by $6 m

> Maroney’s Convenience Stores’ income statement for the year ended December 31, 2015, and its balance sheet as of December 31, 2015, reported the following: The business is organized as a proprietorship, so it pays

> Assume Thompson Company, a camera store, lost some inventory in a fire on July 15. To file an insurance claim, Thompson Company must estimate its July 15 inventory by the gross profit method. Assume that for t

> Frosted Donut, Inc., and Coffee Bean Corporation are both specialty food chains. The two companies reported these figures, in millions: Requirements 1. Compute the gross profit percentage and the rate of inventory turnover for Frosted

> Mahtomedi Trade Mart has recently had lackluster sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has forced Mahtomedi’s suppliers to lower the prices that Mahtomedi will pay when it

> The records of Buzz Aviation include the following accounts for inventory of aviation parts at July 31 of the current year: Requirements 1. Prepare a partial income statement through gross profit under the average, FIFO, and LIFO methods. Round averag