Question: Santana Rey of Business Solutions is evaluating

> Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products. Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. May

> Baine Company purchased Vera Company at a price of $500,000. The fair value of the net assets purchased equals $420,000. Compute the amount of goodwill that Baine records at the purchase date.

> For each transaction of Sealy Co., (a) determine whether or not Sealy owns the goods during transit. (b) If Sealy is responsible for transportation costs, record the entry for shipping costs assuming they are paid in cash and the perpetual inventory syst

> Prepare journal entries to record the following transactions of Recycled Fashion retail store. Recycled Fashion uses a perpetual inventory system and the gross method. Mar. 3 Purchased $1,150 of merchandise from GreenWorld Company with credit terms of 2∕

> Review financial news sources such as Yahoo! Finance (finance.yahoo.com) and Google Finance (google.com/finance). Identify a company that has recently purchased 50% or more of another company’s outstanding shares and will report consolidated financial st

> Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method. Apr. 2 purchased $4,600 of merchandise from Lyon Company with credit terms of 2∕15, n∕60, invoice dated A

> Refer to the information in QS 5-11 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Round per unit costs and inventory amounts to cents.)

> The operating cycle of a merchandiser with credit sales includes the following five activities. Starting with merchandise acquisition, identify the chronological order of these five activities. a. Prepare merchandise for sale. b. Collect cash from custom

> Refer to the information in QS 5-11 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method.

> Fill in the blanks in the following separate income statements a through e.

> Try to find at least one store that does not use bar coding. If a store does not use bar coding, ask the store’s manager or clerk whether he or she knows which type of inventory method the store employs. Create a table that shows columns for the name of

> Determine whether each of the following accounting duties mainly involves financial accounting, managerial accounting, or tax accounting. 1. Internal auditing. 2. External auditing. 3. Cost accounting. 4. Budgeting. 5. Enforcing tax laws. 6. Planning tra

> Journ Co. purchased short-term investments in available-for-sale debt securities at a cost of $50,000 cash on November 25. At December 31, these securities had a fair value of $47,000. This is the first and only time the company has purchased such securi

> Access the Yahoo! (renamed as Altaba, ticker: AABA) 10-K report for the year ended December 31, 2016, filed on March 1, 2017, at SEC.gov. Required 1. What amount of goodwill is reported on Yahoo!’s balance sheet? What percentage of total assets does its

> Refer to QS 4­8 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the net method and a perpetual inventory system.

> Moya Co. establishes a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in January (the last month of the company’s fiscal year). Jan. 3 A company check for $150 is written and made payable

> Review the chapter’s opening feature highlighting Jeff Bezos and Whole Foods. Assume that the business consistently maintains an inventory level of $30,000, meaning that its average and ending inventory levels are the same. Also assume its annual cost of

> Refer to QS 4­5 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the net method and a perpetual inventory system.

> Each team member has the responsibility to become an expert on an inventory method. This expertise will be used to facilitate teammates’ understanding of the concepts relevant to that method. 1. Each learning team member should select a

> ProBuilder reports merchandise sales of $50,000 and cost of merchandise sales of $20,000 in its first year of operations ending June 30. It makes fiscal­year­end adjusting entries for estimated future returns and allowances equal to 2% of sales, or $1,00

> Access the September 29, 2018, 10-K report for Apple, Inc. (ticker: AAPL), filed on November 5, 2018, from the EDGAR filings at SEC.gov. Required 1. What products are manufactured by Apple? 2. What inventory method does Apple use? Hint: See Note 1 to its

> ProBuilder has the following June 30 fiscal­year­end unadjusted balances: Allowance for Sales Discounts, $0; and Accounts Receivable, $10,000. Of the $10,000 of receivables, $2,000 are within a 3% discount period, meaning that it expects buyers to take $

> You are a financial adviser with a client in the wholesale produce business that just completed its first year of operations. Due to weather conditions, the cost of acquiring produce to resell has escalated during the latter part of this period. Your cli

> Use the following information (in random order) from a merchandising company and from a service company. Hint: Not all information may be necessary for the solutions. a. For the merchandiser only, compute (1) goods available for sale, (2) cost of goods s

> Refer to the information in QS 5-5 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Round per unit costs and inventory amounts to cents.)

> Teams are to select an industry, and each team member is to select a different company in that industry. Each team member is to acquire the financial statements (Form 10-K) of the company selected— see the company’s website or the SEC’s EDGAR database (S

> Following are five separate cases involving internal control issues. a. Tywin Company keeps very poor records of its equipment. Instead, the company asserts its employees are honest and would never steal from the company. b. Marker Theater has a computer

> Classify the following activities as part of the Identifying, Recording, or Communicating aspects of accounting. 1. Analyzing and interpreting reports. 2. Presenting financial information. 3. Keeping a log of service costs. 4. Measuring the costs of a pr

> Refer to QS 4­8 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the gross method and a periodic inventory system.

> Golf Challenge Corp. is a retail sports store carrying golf apparel and equipment. The store is at the end of its second year of operation and is struggling. A major problem is that its cost of inventory has continually increased in the past two years. I

> Refer to QS 4­5 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the gross method and a periodic inventory system.

> Refer to Samsung’s financial statements in Appendix A. What percent of its current assets is inventory as of December 31, 2018 and 2017?

> The following information on current assets and current liabilities is for Belkin Company. (a) Compute Belkin’s acid test ratio. (b) If its competitor, Logit, has an acid test ratio of 1.2, which company is better able to pay for curren

> Refer to Samsung’s financial statements in Appendix A. Compute its cost of goods available for sale for the year ended December 31, 2018.

> Clear Water Co. reports the following balance sheet accounts as of December 31. Prepare a classified balance sheet.

> Refer to Apple’s financial statements in Appendix A and compute its cost of goods available for sale for the year ended September 29, 2018.

> Save-the-Earth Co. reports the following income statement accounts for the year ended December 31. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrat

> Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,028 and No. 5893 for $494. Check No. 5893 was still outstanding as of September 30. The following in

> Flo Choi owns a small business and manages its accounting. Her company just finished a year in which a large amount of borrowed funds was invested in a new building addition as well as in equipment and fixture additions. Choi’s banker requires her to sub

> Refer to Apple’s financial statements in Appendix A. On September 29, 2018, what percent of current assets is represented by inventory?

> In a recent year’s financial statements, Home Depot reported the following results. (a) Compute Home Depot’s return on assets. (b) Is Home Depot’s return on assets better than the 11% return of Lowe&

> Using the year­end information from QS 4­15, prepare the gross profit section of a multiple step income statement.

> Key figures for Samsung follow. Required 1. For the most recent two years, compute Samsung’s (a) inventory turnover and (b) days’ sales in inventory. 2. Is the change in Samsung’s inventory turnover f

> Vitamix reports the following information for its year ended December 31: cash sales of $60,000; sales on credit of $90,000; general and administrative expenses of $17,000; sales returns of $11,000; cost of goods sold of $80,000; sales discounts of $2,00

> Comparative figures for Apple and Google follow. Required 1. Compute inventory turnover for each company for the most recent two years shown. 2. Compute days’ sales in inventory for each company for the three years shown. 3. Did the cur

> Compute the missing amounts in the separate (partial) income statements A, B, and C.

> Use Apple’s financial statements in Appendix A to answer the following. Required 1. What amount of inventories did Apple report as a current asset (a) on September 29, 2018? (b) On September 30, 2017? 2. Inventories make up what percent of total assets (

> Indicate whether each statement describes a multiple step income statement or a single step income statement. 1. Commonly reports detailed computations of net sales and other costs and expenses. 2. Statement limited to two main categories (revenues and e

> The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31. a. On July 31, the company’s Cash account has a $27,497 debit balance, but its July bank statement shows a $27,2

> Refer to Samsung’s December 31, 2018, balance sheet in Appendix A. What long-term assets discussed in this chapter is reported by the company?

> Refer to QS 4­11 and prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage from QS 4­11.

> Otingo Equipment Co. wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Otingo’s gross profit rate averages 35%. The following information for the first

> Return on assets for Deutsche Auto for each of the last three years follows. Over the three-year period shown, did the company’s return on assets improve or worsen?

> Match each phrase with its definition. A. Sales discount B. Credit period C. Discount period D. FOB destination E. FOB shipping point F. Gross profit H. Purchases discount G. Merchandise inventory 1. Goods a company owns and expects to sell to its custom

> Refer to the information in QS 5-5 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method. (Round per unit costs and inventory amounts to cents.)

> The records of Macklin Co. provide the following information for the year ended December 31. Required 1. Use the retail inventory method to estimate the company’s year-end inventory. 2. A year-end physical inventory at retail prices yie

> Shepard Company sold 4,000 units of its product at $100 per unit during the year and incurred operating expenses of $15 per unit in selling the units. It began the year with 840 units in inventory and made successive purchases of its product as follows.

> Seneca Co. began the year with 6,500 units of product in its January 1 inventory costing $35 each. It made four purchases of its product during the year as follows. The company uses a periodic inventory system. On December 31, a physical count reveals th

> Nakashima Gallery had the following petty cash transactions in February of the current year. Nakashima uses the perpetual system to account for merchandise inventory. Feb. 2 Wrote a $400 check to establish a petty cash fund. 5 Purchased paper for the co

> Hallam Company’s year-end financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Year 1 ending inventory is overstated by $18,000 and Year

> A physical inventory of Office Necessities Company taken at December 31 reveals the following. Required 1. Compute the lower of cost or market for the inventory applied separately to each item. 2. If the market amount is less than the recorded cost of th

> Refer to Samsung’s balance sheet in Appendix A. What does it title its plant assets? What is the book value of its plant assets at December 31, 2018?

> Refer to the information in Problem 5-3B and assume the perpetual inventory system is used. Required 1. Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory. 3. Compute th

> Aloha Company uses a periodic inventory system. It entered into the following calendar-year purchases and sales transactions. (For specific identification, the May 9 sale consisted of 80 units from beginning inventory and 100 units from the May 6 purchas

> Refer to the information in Problem 5-1B and assume the perpetual inventory system is used. Required 1. Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory. 3. Compute th

> Preparing a statement of cash flows 1. Cash purchase of equipment 2. Cash dividends to shareholders 3. Cash paid for advertising 4. Cash paid for wages 5. Cash paid on account payable to supplier 6. Cash received from clients 7. Cash paid for rent 8. Cas

> Ming Company uses a periodic inventory system. It entered into the following purchases and sales transactions for April. (For specific identification, the April 9 sale consisted of 8 units from beginning inventory and 27 units from the April 6 purchase;

> Wayward Company wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Wayward’s gross profit rate averages 34%. The following information for the first qua

> Refer to the information in QS 5-5 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the FIFO method. (Round per unit costs and inventory amounts to cents.)

> Identify the fraud triangle risk factor (opportunity, pressure, or rationalization) in each situation. 1. Employees are told to report increased income or be fired. 2. Several salesclerks share the same cash drawer. 3. A worker did not receive a bonus th

> Del Gato Clinic’s Cash account shows an $11,589 debit balance and its bank statement shows $10,555 on deposit at the close of business on June 30. Prepare its bank reconciliation using the following information. a. Outstanding checks as of June 30 total

> Palmona Co. establishes a $200 petty cash fund on January 1. On January 8, the fund shows $38 in cash along with receipts for the following expenditures: postage, $74; transportation-in, $29; delivery expenses, $16; and miscellaneous expenses, $43. Palmo

> EcoMart establishes a $1,050 petty cash fund on May 2. On May 30, the fund shows $326 in cash along with receipts for the following expenditures: transportation-in, $120; postage expenses, $369; and miscellaneous expenses, $240. The petty cashier could n

> COSO lists five components of internal control: control environment, risk assessment, control activities, information and communication, and monitoring. Indicate the COSO component that matches with each of the following internal control activities. a. I

> York Instruments completed the following transactions and events involving its machinery. Year 1 Jan. 1 Paid $107,800 cash plus $6,470 in sales tax for a new machine. The machine is estimated to have a six-year life and a $9,720 salvage value. Dec. 31 Re

> Waupaca Company establishes a $350 petty cash fund on September 9. On September 30, the fund shows $104 in cash along with receipts for the following expenditures: transportation-in, $40; postage expenses, $123; and miscellaneous expenses, $80. The petty

> Determine whether each cash payment procedure is an internal control strength or weakness. 1. A voucher system is used for all payments of liabilities. 2. The owner of a small business has authority to write and sign checks. 3. When the owner is out of t

> Determine whether each cash receipts procedure is an internal control strength or weakness. 1. If a salesclerk makes an error in recording a cash sale, she can access the register’s electronic record to correct the transaction. 2. All sales transactions,

> Tana Thorne works in a public accounting firm and hopes to eventually be a partner. The management of Allnet Company invites Thorne to prepare a bid to audit Allnet’s financial statements. In discussing the audit fee, Allnet’s management suggests a fee r

> Specter Co. combines cash and cash equivalents on the balance sheet. Using the following information, determine the amount reported on the year-end balance sheet for cash and cash equivalents. $3,000 cash deposit in checking account. $200, 3-year loan t

> Determine whether each policy below is good or bad cash management; then identify the cash management strategy violated or followed for each policy. 1. Bills are paid as soon as they are received. 2. Cash receipts and cash payments are regularly planned

> Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control principle violated or followed for each procedure. 1. The same employee requests, records, and makes payment for purchases of

> Whole Fruits Market took the following actions to improve internal controls. For each of the following actions, identify the internal control principle the company followed. a. The record-keeper is prohibited from having control over cash. b. An insuranc

> Identify the internal control principle that was violated in each of the following separate situations. a. The record-keeper left town after the owner discovered a large sum of money had disappeared. An audit found that the record-keeper had written and

> Using the information in QS 6-12, prepare the adjusting journal entries that Organic Food Co. must record as a result of preparing the bank reconciliation.

> Mercury Delivery Service completed the following transactions involving equipment. Year 1 Jan. 1 Paid $25,860 cash plus $1,810 in sales tax for a new delivery van that was estimated to have a five-year life and a $3,670 salvage value. Van costs are recor

> Champion Contractors completed the following transactions involving equipment. Year 1 Jan. 1 Paid $287,600 cash plus $11,500 in sales tax and $1,500 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life

> A machine costing $257,500 with a four-year life and an estimated $20,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 475,000 units of product during its li

> Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $900,000. The estimated market values of the purchased assets are building, $508,800; land, $297,600; land improvements, $28,800; and four vehicles, $

> On January 2, Bering Co. disposes of a machine costing $44,000 with accumulated depreciation of $24,625. Prepare the entries to record the disposal under each separate situation. 1. The machine is sold for $18,250 cash. 2. The machine is traded in for a

> Gilly Construction trades in an old tractor for a new tractor, receiving a $29,000 trade-in allowance and paying the remaining $83,000 in cash. The old tractor had cost $96,000 and had accumulated depreciation of $52,500. Answer the following questions a

> Troy’s long-term available-for-sale portfolio at the start of this year consists of the following. Troy enters into the following transactions involving its available-for-sale debt securities this year. Jan. 13 Sold one-fourth of the C

> Lok Co. reports net sales of $5,856,480 for Year 2 and $8,679,690 for Year 3. End-of-year balances for total assets are Year 1, $1,686,000; Year 2, $1,800,000; and Year 3, $1,982,000. (a) Compute Lok’s total asset turnover for Year 2 and Year 3. (b) Lok’

> Selected accounts from Gregor Co.’s adjusted trial balance for the year ended December 31 follow. Prepare a classified balance sheet.

> Robinson Company purchased Franklin Company at a price of $2,500,000. The fair market value of the net assets purchased equals $1,800,000. 1. What is the amount of goodwill that Robinson records at the purchase date? 2. Does Robinson amortize goodwill at

> Milano Gallery purchases the copyright on a painting for $418,000 on January 1. The copyright is good for 10 more years, after which the copyright will expire and anyone can make prints. The company plans to sell prints for 11 years. Prepare entries to r

> Equipment has a book value of $16,000 and a fair value of $14,750. The decline in value meets the impairment test. Prepare the entry to record this $1,250 impairment.

> A company pays $760,000 cash to acquire an iron mine on January 1. At that same time, it incurs additional costs of $60,000 cash to access the mine, which is estimated to hold 100,000 tons of iron. The estimated value of the land after the iron is remove

> Montana Mining Co. pays $3,721,000 for an ore deposit containing 1,525,000 tons. The company installs machinery in the mine costing $213,500. Both the ore and machinery will have no salvage value after the ore is completely mined. Montana mines and sells

> Rayya Co. purchases a machine for $105,000 on January 1, 2020. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is sold on July 1, 2024, during its fifth year of service. Prepare en