Rosenquist Company has the following internal control procedures over cash receipts. Identify the internal control principle that is applicable to each procedure. (a) All over-the-counter receipts are entered in cash registers. (b) All cashiers are bonded. (c) Daily cash counts are made by cashier department supervisors. (d) The duties of receiving cash, recording cash, and custody of cash are assigned to different individuals. (e) Only cashiers may operate cash registers.
> There are many situations in business where it is difficult to determine the proper period in which to record revenue. Suppose that after graduation with a degree in finance, you take a job as a manager at a consumer electronics store called Impact Elect
> Jacquie Boynton was just hired as the assistant treasurer of Key West Stores. The company is a specialty chain store with nine retail stores concentrated in one metropolitan area. Among other things, the payment of all invoices is centralized in one of t
> The following situation is in chronological order. 1. Connor decides to buy a surfboard. 2. He calls Surfing USA Co. to inquire about its surfboards. 3. Two days later, he requests Surfing USA Co. to make a surfboard. 4. Three days later, Surfing USA Co.
> Three years ago, Dana Mann and her brother-in-law Eric Boldt opened Family Department Store. For the first two years, business was good, but the following condensed income results for 2018 were disappointing. Dana believes the problem lies in the relat
> Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. (Use Wal-Mart’s January 31, 2016, financial statements for comparative purposes.) Instructions for accessing a
> PepsiCo’s financial statements are presented in Appendix B. Financial statements of The Coca- Cola Company are presented in Appendix C. Instructions for accessing and using the complete annual reports of PepsiCo and Coca-Cola, including the notes to the
> The financial statements of Apple Inc. are presented in Appendix A at the end of this textbook. Instructions for accessing and using the company’s complete annual report, including the notes to the financial statements, are also provided in Appendix A.
> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ascLogin. cfm to log in and prepare responses to the following. Instructions (a) Access the glossary (“Master Glossary”) at the FASB Codifi cation website to answer the f
> In a period of rising prices, the inventory reported in Gumby Company’s balance sheet is close to the current cost of the inventory, whereas Pokey Company’s inventory is considerably below its current cost. Identify the inventory cost flow method being u
> Companies prepare balance sheets in order to know their financial position at a specific point in time. This enables them to make a comparison to their position at previous points in time, and gives them a basis for planning for the future. In order to e
> As the controller of Take No Prisoners Perfume Company, you discover a misstatement that overstated net income in the prior year’s financial statements. The misleading financial statements appear in the company’s annual report which was issued to banks a
> The accounting cycle is important in understanding the accounting process. Instructions Write a memo to your instructor that lists the steps of the accounting cycle in the order they should be completed. End with a paragraph that explains the optional s
> White gloves Janitorial Service was started 2 years ago by Lynn Sanders. Because business has been exceptionally good, Lynn decided on July 1, 2019, to expand operations by acquiring an additional truck and hiring two more assistants. To finance the expa
> Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Instructions for accessing and using the complete annual reports of Amazon and Wal-Mart, including the notes t
> PepsiCo’s financial statements are presented in Appendix B. Financial statements of The Coca-Cola Company are presented in Appendix C. Instructions for accessing and using the complete annual reports of PepsiCo and Coca-Cola, including the notes to the f
> The financial statements of Apple Inc. are presented in Appendix A at the end of this textbook. Instructions for accessing and using the company’s complete annual report, including the notes to the financial statements, are also provided in Appendix A.
> If your school has a subscription to the FASB Codification, go to http://aaahq.org/asclogin. cfm to log in and prepare responses to the following. Instructions Access the glossary (“Master Glossary”) to answer the following. (a) What is the definition o
> Many companies have potential pollution or environmental-disposal problems—not only for electronic gadgets, but also for the lead paint or asbestos they sold. How do we fit these issues into the accounting equation? Are these costs and related liabilitie
> Companies must report or disclose in their financial statements information about all liabilities, including potential liabilities related to environmental cleanup. There are many situations in which you will be asked to provide personal financial inform
> (a) What is the term used to describe the owners’ equity section of a corporation? (b) Identify the two owners’ equity accounts in a corporation and indicate the purpose of each.
> Kellner Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Kellner’s chemical pesticides. In the coming year, Kellner will have environmentally safe and competitive
> In reviewing the accounts of Gloria Jean Co. at the end of the year, you discover that adjusting entries have not been made. Instructions Write a memo to Gloria Jean Hall, the owner of Gloria Jean Co., that explains the following: the nature and purpos
> Happy Camper Park, Inc. was organized on April 1, 2018, by Barbara Evans. Barbara is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Barbara prepared the following income statement for the quarter that end
> The July 6, 2011, edition of the Wall Street Journal Online includes an article by Michael Rapoport entitled “U.S. Firms Clash Over Accounting Rules.” The article discusses why some U.S. companies favored adoption of International Financial Reporting Sta
> Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Instructions for accessing and using the complete annual reports of Amazon and Wal-Mart, including the notes t
> PepsiCo’s financial statements are presented in Appendix B. Financial statements of The Coca- Cola Company are presented in Appendix C. Instructions for accessing and using the complete annual reports of PepsiCo and Coca-Cola, including the notes to the
> The financial statements of Apple Inc. are presented in Appendix A at the end of this textbook. Instructions for accessing and using the company’s complete annual report, including the notes to the financial statements, are also provided in Appendix A.
> Auditors provide a type of certification of corporate financial statements. Certification is used in many other aspects of business as well. For example, it plays a critical role in the sustainability movement. The February 7, 2012, issue of the New York
> If you haven’t already done so, in the not-too-distant future you will prepare a résumé. In some ways, your résumé is like a company’s annual report. Its purpose is to enable others to evaluate your past, in an effort to predict your future. A résumé is
> Meredith Ward is the assistant chief accountant at Frazier Company, a manufacturer of computer chips and cellular phones. The company presently has total sales of $20 million. It is the end of the first quarter. Meredith is hurriedly trying to prepare a
> Define current assets. What basis is used for arranging individual items within the current assets section?
> Keller’s Maid Company offers home-cleaning service. Two recurring transactions for the company are billing customers for services performed and paying employee salaries. For example, on March 15, bills totaling $6,000 were sent to customers and $2,000 wa
> Dyanna Craig operates Craig Riding Academy. The academy’s primary sources of revenue are riding fees and lesson fees, which are paid on a cash basis. Dyanna also boards horses for owners, who are billed monthly for boarding fees. In a f
> The January 27, 2011, edition of the New York Times contains an article by Richard Sandomir entitled “N.F.L. Finances, as Seen Through Packers’ Records.” The author of the article discusses the fact that the Green Bay Packers are the only NFL team that p
> Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Instructions for accessing and using the complete annual reports of Amazon and Wal-Mart, inc
> PepsiCo’s financial statements are presented in Appendix B. Financial statements of The Coca- Cola Company are presented in Appendix C. Instructions for accessing and using the complete annual reports of PepsiCo and Coca-Cola, including
> The financial statements of Apple Inc. are presented in Appendix A. Instructions for accessing and using the company’s complete annual report, including the notes to the financial statements, are also provided in Appendix A. Apple’s financial statements
> Zhang Company has the following cash balances: Cash in Bank $15,742, Payroll Bank Account $6,000, and Plant Expansion Fund Cash $25,000 to be used two years from now. Explain how each balance should be reported on the balance sheet.
> In the month of November, Fiesta Company Inc. wrote checks in the amount of $9,750. In December, checks in the amount of $11,762 were written. In November, $8,800 of these checks were presented to the bank for payment, and $10,889 in December. What is th
> At August 31, Pratt Company has a cash balance per books of $9,500 and the following additional data from the bank statement: charge for printing Pratt Company checks $35 and interest earned on checking account balance $40. In addition, Pratt Company has
> At July 31, Ramirez Company has the following bank information: cash balance per bank $7,420, outstanding checks $762, deposits in transit $1,620, and a bank service charge $20. Determine the adjusted cash balance per bank at July 31.
> At December 31, accrued salaries payable totaled $3,500. On January 10, total salaries of $8,000 are paid. (a) Assume that reversing entries are made at January 1. Give the January 10 entry, and indicate the Salaries and Wages Expense account balance af
> Using the data in BE7-11, indicate (a) the items that will result in an adjustment to the depositor’s records and (b) why the other items do not require adjustment. Reference Data BE 7-11: The following reconciling items are applicable to the bank rec
> The following reconciling items are applicable to the bank reconciliation for Ellington Company. Indicate how each item should be shown on a bank reconciliation. (a) Outstanding checks. (b) Bank debit memorandum for service charge. (c) Bank credit memora
> Lance Bachman is uncertain about the control features of a bank account. Explain the control benefits of (a) a check and (b) a bank statement.
> On March 20, Dody’s petty cash fund of $100 is replenished when the fund contains $9 in cash and receipts for postage $52, freight-out $26, and travel expense $10. Prepare the journal entry to record the replenishment of the petty cash fund.
> Pennington Company has the following internal control procedures over cash disbursements. Identify the internal control principle that is applicable to each procedure. (a) Company checks are prenumbered. (b) The bank statement is reconciled monthly by an
> While examining cash receipts information, the accounting department determined the following information: opening cash balance $160, cash on hand $1,125.74, and cash sales per register tape $980.83. Prepare the required journal entry based upon the cash
> The cash register tape for Bluestem Industries reported sales of $6,871.50. Record the journal entry that would be necessary for each of the following situations. (a) Sales per cash register tape exceeds cash on hand by $50.75. (b) Cash on hand exceeds c
> The internal control procedures in Valentine Company result in the following provisions. Identify the principles of internal control that are being followed in each case. (a) Employees who have physical custody of assets do not have access to the account
> Jessica Mahan is the new owner of Penny Parking. She has heard about internal control but is not clear about its importance for her business. Explain to Jessica the four purposes of internal control and give her one application of each purpose for Penny
> What is a trial balance and what are its purposes?
> Identify and describe the steps in the accounting process.
> Shelly Eckert has prepared the following list of statements about internal control. (a) One of the objectives of internal control is to safeguard assets from employee theft, robbery, and unauthorized use. (b) One of the objectives of internal control is
> Match each situation with the fraud triangle factor—opportunity, financial pressure, or rationalization—that best describes it. (a) An employee’s monthly credit card payments are nearly 75% of his or her monthly earnings. (b) An employee earns minimum wa
> Gregory Department Store uses a perpetual inventory system. Data for product E2-D2 include the following purchases. On June 1, Gregory sold 26 units, and on August 27, 40 more units. Prepare the perpetual inventory schedule for the above transactions u
> At December 31, 2019, the following information was available for A. Kamble Company: ending inventory $40,000, beginning inventory $60,000, cost of goods sold $270,000, and sales revenue $380,000. Calculate inventory turnover and days in inventory for A.
> Central Appliance Center accumulates the following cost and net realizable value data at December 31. Compute the lower-of-cost-or-net realizable value for the company’s total inventory. Inventory Cost Net Realizable Categories Da
> Pettit Company reports net income of $90,000 in 2019. However, ending inventory was understated $7,000. What is the correct net income for 2019? What effect, if any, will this error have on total assets as reported in the balance sheet at December 31, 20
> In its first month of operation, Hoffman Company purchased 100 units of inventory for $6, then 200 units for $7, and finally 140 units for $8. At the end of the month, 180 units remained. Compute the amount of phantom profit that would result if the comp
> The management of Svetlana Corp. is considering the effects of inventory-costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing, which method will: (a) Provide the high
> Data for Bethke Company are presented in BE6-3. Compute the cost of the ending inventory under the average-cost method, assuming there are 360 units on hand. (Round average cost per unit to nearest cent.)
> In its first month of operations, Bethke Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $7, and (3) 200 units at $8. Assuming there are 360 units on hand, compute the cost of the ending inv
> “A company’s net income appears directly on the income statement and the retained earnings statement, and it is included indirectly in the company’s balance sheet.” Do you agree? Explain.
> Stallman Company took a physical inventory on December 31 and determined that goods costing $200,000 were on hand. Not included in the physical count were $25,000 of goods purchased from Pelzer Corporation, FOB shipping point, and $22,000 of goods sold t
> Farley Company identifies the following items for possible inclusion in the taking of a physical inventory. Indicate whether each item should be included or excluded from the inventory taking. (a) Goods shipped on consignment by Farley to another company
> Presented below is the format of the worksheet using the perpetual inventory system presented in Appendix 5A. Indicate where the following items will appear on the worksheet: (a) Cash, (b) Inventory, (c) Sales revenue, and (d) Cost of goods sold. Exampl
> Explain where each of the following items would appear on (1) a multiple step income statement, and on (2) a single-step income statement: (a) gain on sale of equipment, (b) interest expense, (c) casualty loss from vandalism, and (d) cost of goods sold.
> At year-end, the perpetual inventory records of Litwin Company showed merchandise inventory of $98,000. The company determined, however, that its actual inventory on hand was $95,700. Record the necessary adjusting entry.
> Presented below are the components in determining cost of goods sold. Determine the missing amounts. Cost of Goods Beginning Inventory Ending Inventory Cost of Purchases Available for Sale Goods Sold (a) $80,000 (b) $50,000 (c) $100,000 ? ? $120,000
> The steps in the accounting cycle are listed in random order below. List the steps in proper sequence, assuming no worksheet is prepared, by placing numbers 1–9 in the blank spaces. (a) ________ Prepare a trial balance. (b) ________ Journalize the trans
> Using the data in BE4-3, identify the accounts that would be included in a post-closing trial balance. Reference Data BE4-3: The following selected accounts appear in the adjusted trial balance columns of the worksheet for Goulet Company: Accumulated De
> The income statement for Weeping Willow Golf Club for the month ending July 31 shows Service Revenue $16,400, Salaries and Wages Expense $8,200, Maintenance and Repairs Expense $2,500, and Net Income $5,700. Prepare the entries to close the revenue and e
> Using the data in BE4-4, enter the balances in T-accounts, post the closing entries, and underline and balance the accounts.
> In February 2019, Rachel Paige invested an additional $10,000 in Drumlin Company. Drumlin’s accountant, Liz Cooke, recorded this receipt as an increase in cash and revenues. Is this treatment appropriate? Why or why not?
> The following selected accounts appear in the adjusted trial balance columns of the worksheet for Goulet Company: Accumulated Depreciation—Equipment, Depreciation Expense, Common Stock, Dividends, Service Revenue, Supplies, and Accounts Payable. Indicate
> The steps in using a worksheet are presented in random order below. List the steps in the proper order by placing numbers 1–5 in the blank spaces. (a) _____ Prepare a trial balance on the worksheet. (b) _____ Enter adjusted balances. (c) _____ Extend adj
> Select the response that completes the following statement correctly. The full disclosure principle dictates that: (a) financial statements should disclose all assets at their cost. (b) financial statements should disclose only those events that can be m
> Here are some qualitative characteristics of useful accounting information: 1. Predictive value 3. Verifiable 2. Neutral 4. Timely Match each qualitative characteristic to one of the following statements. ________ (a) Accounting information should hel
> Given the characteristics of useful accounting information, complete each of the following statements. (a) For information to be _____, it should have predictive value, confirmatory value, and be material. (b) _____ is the quality of information that giv
> The accompanying chart shows the qualitative characteristics of useful accounting information. Fill in the blanks. Fundamental Qualities Enhancing Qualities Usefulness Relevance (f) (a) (g) (b) (h) (c) Understandability Faithful Representation (d) Ne
> The trial balance of Yewlett Company includes the following balance sheet accounts, which may require adjustment. For each account that requires adjustment, indicate (a) the type of adjusting entry (prepaid expense, unearned revenue, accrued revenue, or
> Moteki Company accumulates the following adjustment data at December 31. Indicate (a) the type of adjustment (prepaid expense, accrued revenue, and so on), and (b) the status of accounts before adjustment (for example, “assets understated and revenues
> The ledger of Jung Company includes the following accounts. Explain why each account may require adjustment. (a) Prepaid Insurance. (b) Depreciation Expense. (c) Unearned Service Revenue. (d) Interest Payable.
> Selected journal entries for the Nikolai Company are presented in BE2-7. Post the transactions using the standard form of account. Reference Data BE 2-7: J1 Date Account Titles and Explanation Ref. Debit Credit Мay 5 Accounts Receivable 5,000 Servic
> (a) What is a ledger? (b) What is a chart of accounts and why is it important?
> Bombeck Inc. has the following transactions during August of the current year. Indicate (a) the effect on the accounting equation and (b) the debit-credit analysis illustrated on pages 64–68 of the textbook. Aug. 1 Opens an office as a financial advisor
> Evan Saunders, a fellow student, is unclear about the basic steps in the recording process. Identify and briefly explain the steps in the order in which they occur.
> Transactions for the Sheldon Cooper Company, which provides welding services, for the month of June are presented below. Identify the accounts to be debited and credited for each transaction. June 1 Sheldon Cooper invests $4,000 cash in exchange for
> For each of the following accounts indicate the effects of (a) a debit and (b) a credit on the accounts and (c) the normal balance of the account. 1. Accounts Payable. 4. Accounts Receivable. 2. Advertising Expense. 5. Common Stock. 3. Service Revenue.
> Indicate whether the following items would appear on the income statement (IS), balance sheet (BS), or retained earnings statement (RE). _______ (a) Notes payable _______ (d) Cash _______ (b) Advertising expense _______ (e) Service revenue _______ (c)
> Presented below are three transactions. Mark each transaction as affecting common stock (C), dividends (D), revenue (R), expense (E), or not affecting stockholders’ equity (NSE). _______ (a) Received cash for services performed. _______ (b) Paid cash to
> Classify each of the following items as dividends (D), revenue (R), or expense (E). _______ (a) Advertising expense _______ (e) Dividends _______ (b) Service revenue _______ (f) Rent revenue _______ (c) Insurance expense _______ (g) Utilities exp
> Follow the same format as BE1-6 above. Determine the effect on assets, liabilities, and stockholders’ equity of the following three transactions. (a) Stockholders invested cash in the business for common stock. (b) Paid a cash dividend. (c) Received cash
> Presented below are three business transactions. On a sheet of paper, list the letters (a), (b), and (c) with columns for assets, liabilities, and stockholders’ equity. For each column, indicate whether the transactions increased (+), decreased (−), or h
> Indicate whether each of the following items is an asset (A), liability (L), or part of stockholders’ equity (SE). _______ (a) Accounts receivable _______ (d) Supplies _______ (b) Salaries and wages payable _______ (e) Dividends _______ (c) Equipment
> (a) Should business transaction debits and credits be recorded directly in the ledger accounts? (b) What are the advantages of first recording transactions in the journal and then posting to the ledger?
> Use the accounting equation to answer each of the following questions. (a) The liabilities of Olga Company are $90,000. Common stock account is $150,000; dividends are $40,000; revenues, $450,000; and expenses, $320,000. What is the amount of Olga Compan
> At the beginning of the year, Canon Company had total assets of $870,000 and total liabilities of $500,000. Answer the following questions. (a) If total assets increased $150,000 during the year and total liabilities decreased $80,000, what is the amount
> Dan Fineman, the president of King Company, is pleased. King substantially increased its net income in 2019 while keeping its unit inventory relatively the same. Howard Gross, chief accountant, cautions Dan, however. Gross says that since King changed it
