Question: Return to the situation in Short Exercise

> As the controller of Emblem Consulting, you have hired a new employee, whom you must train. She objects to making an adjusting entry for accrued salaries at the end of the period. She reasons, “We will pay the salaries soon. Why not wait until payment to

> Assume a Whitewater outlet store began May 2012 with 48 units of inventory that cost $18 each. The sale price of these units was $73. During May, the store completed these inventory transactions: Requirements 1. Determine the store’s

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

> On October 1, 2012, Lou Marks opened Eagle Restaurant, Inc. Marks is now at a crossroads. The October financial statements paint a glowing picture of the business, and Marks has asked you whether he should expand the business. To expand the business, Mar

> Refer to Exercise 2-36 of Chapter 2. Start from the trial balance and the posted T-accounts that Steve Ruiz, Certified Public Accountant, Professional Corporation (P.C.), prepared for his accounting practice at January 18. A professional corporation is n

> Bart Morris Company reported these ratios at December 31, 2012 (dollar amounts in millions): Current ratio = $60 / $50 = 1.20 Debt ratio = $70 / $90 = 0.78 Bart Morris Company completed these transactions during 2013: a. Purchased equipment on account,

> Duneside Corporation began 2012 owing notes payable of $4.1 million. During 2012 Duneside borrowed $1.7 million on notes payable and paid off $1.6 million of notes payable from prior years. Interest expense for the year was $0.8 million, including $0.3 m

> Fun Toys prepares budgets to help manage the company. Fun Toys is budgeting for the fiscal year ended January 31, 2012. During the preceding year ended January 31, 2011, sales totaled $9,600 million and cost of goods sold was $6,700 million. At January 3

> The adjusted trial balances of Verne Corporation at March 31, 2012, and March 31, 2011, include these amounts (in millions): Verne completed these transactions during the year ended March 31, 2012. Collections from customers ...........................

> Refer to Exercise 3-44B. In Exercise 3-44B The unadjusted trial balance and income statement amounts from the December 31 adjusted trial balance of Durkin Production Company follow. Requirements 1. Use the data in the partial worksheet to prepare Durk

> The unadjusted trial balance and income statement amounts from the December 31 adjusted trial balance of Durkin Production Company follow. Requirement Journalize the adjusting and closing entries of Durkin Production Company at December 31. There was o

> Use the Sparrow Sporting Goods Company data in Short Exercise 3-15 to make the company’s closing entries at March 31, 2012. Then set up a T-account for Retained Earnings and post to that account. Compare Retained Earningsâ€&#

> Prepare the closing entries from the following selected accounts from the records of North Pole Corporation at December 31, 2012: How much net income did North Pole earn during 2012? Prepare a T-account for Retained Earnings to show the December 31, 20

> Terra, the British wireless phone service provider, collects cash in advance from customers. All amounts are in millions of pounds sterling (£), the British monetary unit. Assume Terra collected £380 in advance during 2012 and at year end still owed cust

> The adjusted trial balances of King Corporation at March 31, 2012, and March 31, 2011, include these amounts (in millions): King completed these transactions during the year ended March 31, 2012. Collections from customers .............................

> The notes are part of the financial statements. They give details that would clutter the statements. This case will help you learn to use a company’s inventory notes. Refer to Amazon.com, Inc.’s consolidated financial statements and related notes in Appe

> The adjusted trial balance of Honeybee Hams, Inc., follows. Requirement Prepare Honeybee Hams, Inc.’s income statement and statement of retained earnings for the year ended December 31, 2012, and its balance sheet on that date. Draw t

> The accounting records of Belmont Publishing Company include the following unadjusted balances at August 31: Accounts Receivable, $1,400; Supplies, $300; Salary Payable, $0; Unearned Service Revenue, $1,000; Service Revenue, $4,600; Salary Expense, $2,40

> Forrest Company faced the following situations. Journalize the adjusting entry needed at December 31, 2012, for each situation. Consider each fact separately. a. The business has interest expense of $9,000 that it must pay early in January 2013. b. Inter

> The adjusted trial balance of Honeyglazed Hams, Inc., follows. Requirement Prepare Honeyglazed Hams, Inc.’s income statement and statement of retained earnings for the year ended December 31, 2012, and its balance sheet on that date.

> Western Corporation made sales of $850 million during 2012. Of this amount, Western collected cash for all but $27 million. The company’s cost of goods sold was $290 million, and all other expenses for the year totaled $325 million. Also during 2012, Wes

> Paradise, Inc., experienced four situations for its supplies. Compute the amounts that have been left blank for each situation. For situations 1 and 2, journalize the needed transaction. Consider each situation separately. Situation 3 4 Beginning su

> An accountant made the following adjustments at December 31, the end of the accounting period: a. Prepaid insurance, beginning, $300. Payments for insurance during the period, $900. Prepaid insurance, ending, $500. b. Interest revenue accrued, $1,300. c.

> Supply the missing amounts for each of the following companies: Requirement Prepare the income statement for Gerald Company for the year ended December 31, 2012. Use the cost-of-goods-sold model to compute cost of goods sold. Gerald’s

> Tilton & Taft, a partnership, had these inventory data: Tilton & Taft need to know the company’s gross profit percentage and rate of inventory turnover for 2012 under 1. FIFO. 2. LIFO. Which method produces a higher gross prof

> During 2012, Gibson Network, Inc., which designs network servers, earned revenues of $780 million. Expenses totaled $530 million. Gibson collected all but $25 million of the revenues and paid $560 million on its expenses. Gibson’s top managers are evalua

> During 2012, Valley Sales, Inc., earned revenues of $500,000 on account. Valley collected $510,000 from customers during the year. Expenses totaled $450,000, and the related cash payments were $410,000. Show what Valley would report on its 2012 income st

> During 2012, Orion Corporation made sales of $4,400 (assume all on account) and collected cash of $4,600 from customers. Operating expenses totaled $1,300, all paid in cash. At year end, 2012, Orion customers owed the company $700. Orion owed creditors $

> Johnston Company reported these ratios at December 31, 2012 (dollar amounts in millions): Current ratio = $50 / $40 = 1.25 Debt ratio = $40 / $70 = 0.57 Johnston Company completed these transactions during 2013: a. Purchased equipment on account, $5 b.

> Macrovision.com uses the LIFO method to account for inventory. Macrovision is having an unusually good year, with net income well above expectations. The company’s inventory costs are rising rapidly. What can Macrovision do immediately before the end of

> Refer to the data in Exercise E6-35B. Compute all ratio values to answer the following questions: â–¶ Which company has the highest, and which company has the lowest, gross profit percentage? â–¶ Which company has the high

> Jonah’s Copy Center uses laser printers. Assume Jonah started the year with 100 containers of ink (average cost of $9.50 each, FIFO cost of $8.40 each, LIFO cost of $8.10 each). During the year, Jonah purchased 700 containers of ink at $9.90 and sold 600

> Flexon Technologies began the year with inventory of $580. During the year, Flexon purchased inventory costing $1,190 and sold goods for $2,900, with all transactions on account. Flexon ended the year with inventory of $650. Journalize all the necessary

> Dove Golf Co. prepaid three years’ rent ($18,000) on January 1, 2012. At December 31, 2012, Dove prepared a trial balance and then made the necessary adjusting entry at the end of the year. Dove adjusts its accounts once each year—on December 31. What am

> Write a paragraph to explain why unearned revenues are liabilities instead of revenues. In your explanation, use the following actual example: The World Star, a national newspaper, collects cash from subscribers in advance and later delivers newspapers t

> Cheap Travel borrowed $60,000 on October 1 by signing a note payable to Community Bank. The interest expense for each month is $250. The loan agreement requires Cheap to pay interest on December 31. 1. Make Cheap’s adjusting entry to accrue monthly inter

> During 2012, Transit Airlines paid salary expense of $42.4 million. At December 31, 2012, Transit accrued salary expense of $2.2 million. Transit then paid $2.2 million to its employees on January 3, 2013, the company’s next payday after the end of the 2

> Suppose that on January 1 Foreton Golf Company paid cash of $50,000 for computers that are expected to remain useful for five years. At the end of five years, the computers’ values are expected to be zero. 1. Make journal entries to record (a) Purchase o

> Answer the following questions about prepaid expenses: a. On October 1, Up & Down Travel prepaid $3,000 for six months’ rent. Give the adjusting entry to record rent expense at October 31. Include the date of the entry and an explanation. Then post all a

> Identify the accounting concept or principle that gives the most direction on how to account for each of the following situations: a. Salary expense of $38,000 is accrued at the end of the period to measure income properly. b. March has been a particular

> Erie Garden Supplies uses a perpetual inventory system. Erie Garden Supplies has these account balances at August 31, 2012, prior to making the year-end adjustments: A year ago, the replacement cost of ending inventory was $11,500, which exceeded the c

> Write a short paragraph to explain in your own words the concept of depreciation as used in accounting.

> Accounting records for Parkland Pastries, Inc., yield the following data for the year ended December 31, 2012 (amounts in thousands): Inventory, Dec 31, 2011.................................................................................... $ 520 Purcha

> Suppose a Robak store in Denver, Colorado, ended September 2012 with 1,000,000 units of merchandise that cost an average of $7.00 each. Suppose the store then sold 950,000 units for $9,500,000 during October. Further, assume the store made two large purc

> Arnold Financial Management believes that the biotechnology industry is a good investment and is considering investing in one of two companies. However, one company, HeartStart, Inc., uses the FIFO method of inventory, and another company, GeneTech, Inc.

> Accounting records for Total Desserts, Inc., yield the following data for the year ended December 31, 2012 (amounts in thousands): Inventory, Dec 31, 2011..................................................................................... $ 490 Purchase

> Assume a Waverly outlet store began August 2012 with 52 units of inventory that cost $13 each. The sale price of these units was $67. During August, the store completed these inventory transactions: Requirements 1. Determine the storeâ€&#153

> Use the data in Exercise 6A-5B. In Exercise 6A-5B Suppose Synergy Corporation’s inventory records for a particular computer chip indicate the following at December 31: The physical count of inventory at December 31 indicates that sev

> Suppose Synergy Corporation’s inventory records for a particular computer chip indicate the following at December 31: The physical count of inventory at December 31 indicates that seven units of inventory are on hand. Requirements Co

> Use the data for Donovan, Inc., in Exercise 6-29B to illustrate Donovan’s income tax advantage from using LIFO over FIFO. Sales revenue is $9,200, operating expenses are $1,800, and the income tax rate is 40%. How much in taxes would Do

> Use the data for Donovan, Inc., in Exercise 6-29B to answer the following. In Exercise 6-29B Donovan, Inc.’s inventory records for a particular development program show the following at August 31: Requirements 1. Compute cost of good

> Donovan, Inc.’s inventory records for a particular development program show the following at August 31: At August 31, nine of these programs are on hand. Journalize the following for Donovan: 1. Total August purchases in one summary e

> Accounting records for Thames Corporation yield the following data for the year ended March 31, 2012: Inventory, March 31, 2011 ........................................................................ $ 9,000 Purchases of inventory (on account)..........

> Use the data in Exercise 6A-3A. In Exercise 6A-3A Suppose Cambridge Corporation’s inventory records for a particular computer chip indicate the following at October 31: The physical count of inventory at October 31 indicates that sev

> Myrtle Bay Marine Supply reported the following comparative income statements for the years ended June 30, 2012, and 2011: Myrtle Bay’s president and shareholders are thrilled by the company’s boost in sales and net

> Z Mart, Inc., declared bankruptcy. Let’s see why. Z Mart reported these figures: Requirement Evaluate the trend of Z Mart’s results of operations during 2010 through 2012. Consider the trends of sales, gross profit,

> RK Company began September with inventory of $45,300. The business made net purchases of $33,300 and had net sales of $61,600 before a fire destroyed the company’s inventory. For the past several years, RK’s gross profit percentage has been 45%. Estimate

> Super Toys prepares budgets to help manage the company. Super Toys is budgeting for the fiscal year ended January 31, 2012. During the preceding year ended January 31, 2011, sales totaled $9,500 million and cost of goods sold was $6,600 million. At Janua

> Burner & Brett, a partnership, had the following inventory data: Burner & Brett need to know the company’s gross profit percentage and rate of inventory turnover for 2012 under 1. FIFO. 2. LIFO. Which method produces a higher

> Refer to the data in Exercise 6-22A. Compute all ratio values to answer the following questions: â–¶ Which company has the highest, and which company has the lowest, gross profit percentage? â–¶ Which company has the highe

> Supply the missing income statement amounts for each of the following companies (amounts adapted, in millions): Requirement Prepare the income statement for Baker Company for the year ended December 31, 2012. Use the cost-of-goods-sold model to compute

> Princeton Garden Supplies uses a perpetual inventory system. Princeton Garden Supplies has these account balances at October 31, 2012, prior to making the year-end adjustments: A year ago, the replacement cost of ending inventory was $13,500, which exc

> Suppose a Corse store in Kansas City, Missouri, ended May 2012 with 700,000 units of merchandise that cost an average of $6 each. Suppose the store then sold 650,000 units for $8,450,000 during June. Further, assume the store made two large purchases dur

> MusicWorld.net specializes in sound equipment. Because each inventory item is expensive, MusicWorld uses a perpetual inventory system. Company records indicate the following data for a line of speakers: Requirements 1. Determine the amounts that MusicW

> Use the data for Ontario, Inc., in Exercise 6-16A to illustrate Ontario, Inc.’s income tax advantage from using LIFO over FIFO. Sales revenue is $9,000, operating expenses are $1,400, and the income tax rate is 28%. How much in taxes wo

> Refer to the RadioShack Corporation consolidated financial statements in Appendix B at the end of this book. Show amounts in millions and round to the nearest $1 million. 1. Three important pieces of inventory information are (a) The cost of inventory on

> Suppose In Style Fashions, a specialty retailer, had these records for ladies’ evening gowns during 2012. Beginning inventory (44 @ $975)....................... $ 42,900 Purchase in February (19 @ $1,050) ...................... 19,950 Purchase in June (5

> Use the data for Ontario, Inc., in Exercise 6-16A to answer the following: In Exercise 6-16 Ontario, Inc.’s inventory records for a particular development program show the following at January 31: Requirements 1. Compute cost of good

> Ontario, Inc.’s inventory records for a particular development program show the following at January 31: At January 31, eight of these programs are on hand. Journalize the following for Ontario, Inc: 1. Total January purchases in one

> Accounting records for Dundas Corporation yield the following data for the year ended June 30, 2012: Inventory, June 30, 2011................................................................................. $10,000 Purchases of inventory (on account)....

> Determine whether each of the following actions in buying, selling, and accounting for inventories is ethical or unethical. Give your reason for each answer. 1. In applying the lower-of-cost-or-market rule to inventories, Tundra Financial Industries reco

> CWD, Inc., reported these figures for its fiscal year (amounts in millions): Net sales............................... $ 2,500 Cost of goods sold.................... 1,160 Ending inventory....................... 480 Suppose CWD later learns that ending i

> Federal Technology began the year with inventory of $315,000 and purchased $1,820,000 of goods during the year. Sales for the year are $3,920,000, and Federal’s gross profit percentage is 60% of sales. Compute Federal’s estimated cost of ending inventory

> Cola Company made sales of $35,376 million during 2012. Cost of goods sold for the year totaled $15,437 million. At the end of 2011, Cola’s inventory stood at $1,672 million, and Cola ended 2012 with inventory of $1,908 million. Compute Cola’s gross prof

> Healthy Hearts Consulting had the following selected transactions in December: Dec 1 Prepaid insurance for December through April, $3,500. 4 Purchased office furniture for cash, $900. 5 Performed services and received cash, $500. 8 Paid advertising expen

> Cherokee Corporation earned revenues of $37 million during 2012 and ended the year with net income of $7 million. During 2012, Cherokee collected cash of $20 million from customers and paid cash for all of its expenses plus an additional $5 million on ac

> This problem demonstrates the effects of transactions on the current ratio and the debt ratio of Harrington Company. Harrington’s condensed and adapted balance sheet at December 31, 2012, follows. _________________________________(In millions) Total cur

> Refer back to Problem 3-71A. In Problem 3-71A The accounts of Mountain Lodge Service, Inc., at March 31, 2012, are listed in alphabetical order. Requirements 1. Use the Mountain Lodge data in Problem 3-71A to prepare the company’s cl

> The accounts of Mountain Lodge Service, Inc., at March 31, 2012, are listed in alphabetical order. Requirements 1. All adjustments have been journalized and posted, but the closing entries have not yet been made. Journalize Mountain Lodgeâ€&

> The adjusted trial balance of Simpson Corporation at March 31, 2012, follows. Requirements 1. Prepare Simpson Corporation’s 2012 income statement, statement of retained earnings, and balance sheet. List expenses (except for income tax

> Valley Apartments, Inc.’s unadjusted and adjusted trial balances at April 30, 2012, follow. Requirements 1. Make the adjusting entries that account for the differences between the two trial balances. 2. Compute Valleyâ€&#15

> Consider the unadjusted trial balance of Lady, Inc., at July 31, 2012, and the related month-end adjustment data. Adjustment data at July 31, 2012: a. Accrued service revenue at July 31, $1,700. b. Prepaid rent expired during the month. The unadjusted

> This exercise tests your understanding of the four inventory methods. List the name of the inventory method that best fits the description. Assume that the cost of inventory is rising. 1. ________ Generally associated with saving income taxes 2. ________

> Journalize the adjusting entry needed on December 31, end of the current accounting period, for each of the following independent cases affecting Green Corp. Include an explanation for each entry. a. Details of Prepaid Insurance are shown in the account:

> Masters Consulting had the following selected transactions in July: Jul 1 Prepaid insurance for July through November, $2,000. 4 Purchased office furniture for cash, $1,000. 5 Performed services and received cash, $800. 8 Paid advertising expense, $700.

> By the Bay Marine Supply reported the following comparative income statements for the years ended June 30, 2012, and 2011: By the Bay’s president and shareholders are thrilled by the company’s boost in sales and net

> Cova Corporation earned revenues of $40 million during 2013 and ended the year with net income of $6 million. During 2013, Cova collected $25 million from customers and paid cash for all of its expenses plus an additional $3 million for amounts payable a

> Salary Payable at the beginning of the month totals $20,000. During the month salaries of $122,000 were accrued as expense. If ending Salary Payable is $6,000, what amount of cash did the company pay for salaries during the month? a. $130,000 b. $142,000

> Muffin Mania, Inc., and La Crème Coffee 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 Muffin Man

> Great White 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 Great White’s suppliers to lower the prices that Great White will pay wh

> The records of Lindbergh Aviation include the following accounts for inventory of aviation fuel 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 ave

> Army-Navy Surplus began March with 75 tents that cost $16 each. During the month, Army-Navy Surplus made the following purchases at cost: Mar 3 ………………… 95 tents @ $18 = $1,710 17 ………..…………… 165 tents @ $20 = 3,300 23 ………..…………….. 36 tents @ $21 = $ 756

> Assume a Gold Medal Sports outlet store began August 2012 with 44 pairs of running shoes that cost the store $33 each. The sale price of these shoes was $61. During August, the store completed these inventory transactions: Requirements 1. The preceding

> Tolbert Trumpet Company is nearing the end of its worst year ever. With two weeks until year-end, it appears that net income for the year will have decreased by 30% from last year. Jim Tolbert, the president and principal stockholder, is distressed with

> Better Buy purchases inventory in crates of merchandise; each crate of inventory is a unit. The fiscal year of Better Buy ends each January 31. Assume you are dealing with a single Better Buy store in San Diego, California. The San Diego store began 2012

> Bridget Krumb, Inc., purchased inventory costing $125,000 and sold 80% of the goods for $190,000. All purchases and sales were on account. Krumb later collected 25% of the accounts receivable. 1. Journalize these transactions for Krumb, which uses the pe

> Journalize the following assumed transactions for Th e Soda Pop Company. Show amounts in billions. a. Cash purchases of inventory, $4.5 billion b. Sales on account, $18.9 billion c. Cost of goods sold (perpetual inventory system), $3.9 billion d. Collect

> Putnam Company began April with inventory of $46,100. The business made net purchases of $31,500 and had net sales of $64,600 before a fire destroyed the company’s inventory. For the past several years, Putnam’s gross profit percentage has been 40%. Esti

> Matt Trozo formed a lawn service company as a summer job. To start the business on May 1, he deposited $2,500 in a new bank account in the name of Trozzo Lawn Service, Inc. consisting of a $1,500 loan from his father and $1,000 of his own money. The corp

> Refer to the consolidated financial statements of RadioShack Corporation in Appendix B. During 2010, the company had numerous accruals and deferrals. As a new member of RadioShack’s accounting staff , it is your job to explain the effects of accruals and