Santiago Madrid opened a gym and fitness studio called Perfect Body Fitness and Spa Center at the beginning of November of the current year. It is now the end of December, and Madrid is trying to determine whether he made a profit during his first two months of operations. You offer to help him and ask to see his accounting records. He shows you a shoe box and tells you that every piece of paper pertaining to the business is in that box. As you go through the material in the shoe box, you discover the following: a. A receipt from Clark Properties for $18,000 rent on the exercise studio for November and December. b. Bank deposit slips totaling $15,000 for money collected from customers who attended exercise classes. c. An invoice for $80,000 for exercise equipment. The first payment is not due until December 31. d. A bill for $4,200 from the maintenance service that cleans the studio. Madrid has not yet paid this bill. e. A December 19 parking ticket for $150. Madrid says he was in a hurry that morning to get to the Fitness Center on time and forgot to put money in the parking meter. f. A handwritten list of customers and fees for the classes they have taken. As the customers attend the classes, Madrid writes their names and the amount of each customer’s fee on the list. As customers pay, Madrid crosses their names off the list. Fees not crossed off the list amount to $6,400. g. A credit card receipt for $1,200 for printing flyers advertising the grand opening of the Center. For convenience, Madrid used his personal credit card. h. A credit card receipt for $1,400 for four warm-up suits Madrid bought to wear at the studio. He also put this purchase on his personal credit card. Use the concepts you have learned in this chapter to help Madrid. 1. Prepare an income statement for the first two months of operation of Perfect Body Fitness and Spa Center. 2. How would you evaluate the results of the first two months of operation? 3. What advice would you give Madrid concerning his system of accounting?
> Country Covers has four employees and pays them on an hourly basis. During the week beginning June 24 and ending June 30, these employees worked the hours shown below. Information about hourly rates, marital status, withholding allowances, and cumulative
> Robin Market works for Cycle Industries. Her pay rate is $14.50 per hour and she receives overtime pay at one and one-half times her regular hourly rate for any hours worked beyond 40 in a week. During the pay period that ended December 31, 20X1, Robin w
> The following transactions took place at Fabulous Fashions Outlet during July 20X1. Fabulous Fashions Outlet uses a perpetual inventory system. The firm operates in a state with no sales tax. Record the transactions in a general journal. Use 8 as the pag
> On August 1, 20X1, the accountant for Western Exports downloaded the company’s July 31, 20X1, bank statement from the bank’s website. The balance shown on the bank statement was $28,810. The July 31, 20X1, balance in the Cash account in the general ledge
> During the bank reconciliation process at Fontes & Barone Consultancy on May 2, 20X1, the following two errors were discovered in the firm’s records. 1. The checkbook and the cash payments journal indicated that Check 2206 dated April 17 was issued for $
> On June 1, 20X1, Jenna Davis opened the Leadership Coaching Agency. She plans to use the chart of accounts given below. INSTRUCTIONS 1. Journalize the transactions. Be sure to number the journal pages and write the year at the top of the Date column. Inc
> On August 31, 20X1, the balance in the checkbook and the Cash account of the Sonoma Creek Bed and Breakfast was $13,031. The balance shown on the bank statement on the same date was $13,997. NOTES a. The firm’s records indicate that a $1,600 deposit date
> On May 2, 20X1, PHF Vacations received its April bank statement from First City Bank and Trust. Enclosed with the bank statement, which appears below, was a debit memorandum for $210 that covered an NSF check issued by Doris Fisher, a credit customer. Th
> The Hike and Bike Outlet is a retail store. Transactions involving purchases and cash payments for the firm during June 20X1 are listed below, as are the general ledger accounts used to record these transactions. INSTRUCTIONS 1. Open the general ledger a
> Awesome Sounds is a wholesale business that sells musical instruments. Transactions involving sales and cash receipts for the firm during April 20X1 follow, along with the general ledger accounts used to record these transactions. INSTRUCTIONS 1. Open th
> The cash payments of The Aristocrats Jewels, a retail business, for June and the general ledger accounts used to record these transactions appear below. INSTRUCTIONS 1. Open the general ledger accounts and enter the balances as of June 1. 2. Record all p
> Car Geek is a retail store that sells car care products over the Internet. The firm’s cash receipts for February and the general ledger accounts used to record these transactions are shown below. INSTRUCTIONS 1. Open the general ledger
> Office Plus is a retail business that sells office equipment, furniture, and supplies. Its credit purchases and purchases returns and allowances for September are shown below. The general ledger accounts and the creditors’ accounts in t
> The Old English Garden Shop is a retail store that sells garden equipment, furniture, and supplies. Its credit purchases and purchases returns and allowances for July are listed below. The general ledger accounts used to record these transactions are als
> This problem is a continuation of Problem 8.1A. INSTRUCTIONS 1. Set up an accounts payable subsidiary ledger for Lens Queen. Open an account for each of the creditors listed below and enter the balances as of June 1, 20X1. Arrange the accounts payable le
> Lens Queen is a retail store that sells cameras and photography supplies. The firm’s credit purchases and purchases returns and allowances transactions for June 20X1 appear below, along with the general ledger accounts used to record th
> French Taylor is a new staff accountant for Fashion House Beauty Supply. He has asked you to review the financial statements prepared for April to find and correct any errors. Review the income statement and balance sheet that follow and identify the err
> Bella Floral Designs is a wholesale shop that sells flowers, plants, and plant supplies. The transactions shown below took place during January. All customers have credit terms of n/30. INSTRUCTIONS 1. Record the transactions in the proper journal. Use 7
> Elegant Dining sells china, glassware, and other gift items that are subject to an 8 percent sales tax. The shop uses a general journal and a sales journal similar to those illustrated in this chapter. All customers have payment terms of n/30. INSTRUCTIO
> Towncenter Furniture specializes in modern living room and dining room furniture. Merchandise sales are subject to an 8 percent sales tax. The firm’s credit sales and sales returns and allowances for February 20X1 are reflected below, a
> Great Lakes Appliances is a retail store that sells household appliances. Merchandise sales are subject to an 8 percent sales tax. The firm’s credit sales for July are listed below, along with the general ledger accounts used to record
> A partially completed worksheet for At Home Pet Care Service, a firm that grooms pets at the owner’s home, follows. INSTRUCTIONS 1. Record balances as of December 31 in the ledger accounts. 2. Prepare the worksheet. 3. Journalize (use 3
> On December 31, after adjustments, Ponthieu Company’s ledger contains the following account balances: INSTRUCTIONS 1. Record the balances in the ledger accounts as of December 31. 2. Journalize the closing entries in the general journal
> A completed worksheet for The Best Group is shown below. INSTRUCTIONS 1. Record balances as of December 31, 20X1, in the ledger accounts. 2. Journalize (use 3 as the page number) and post the adjusting entries. Use account number 131 for Prepaid Advertis
> Research Associates, owned by Alex Raman, is retained by large companies to test consumer reaction to new products. On January 31, 20X1, the firm’s worksheet showed the following adjustments data: (a) supplies used, $2,340; (b) expired
> Shayla Green owns Creative Designs. The trial balance of the firm for January 31, 20X1, the first month of operations, is shown below. INSTRUCTIONS 1. Complete the worksheet for the month. 2. Prepare an income statement, statement of ownerâ€&#
> The completed worksheet for Chavarria Corporation as of December 31, 20X1, after the company had completed the first month of operation, appears below. INSTRUCTIONS 1. Prepare an income statement. 2. Prepare a statement of owner’s equity. The owner made
> Brenda Jo Smith is an architect who operates her own business. The accounts and transactions for the business follow. INSTRUCTIONS (1) Analyze the transactions for January 20X1. Record each in the appropriate T accounts. Identify each entry in the T acco
> The adjusted trial balance of Campus Book Store and Supply Company as of November 30, 20X1, after the firm’s first month of operations, appears below. Appropriate adjustments have been made for the following items: a. Supplies used duri
> The trial balance of Ortiz Company as of January 31, 20X1, after the company completed the first month of operations, is shown in the partial worksheet below. INSTRUCTIONS Complete the worksheet by making the following adjustments: supplies on hand at th
> Four transactions for Airline Maintenance and Repair Shop that took place in November 20X1 appear below, along with the general ledger accounts used by the company. INSTRUCTIONS Record the transactions in the general journal and post them to the appropri
> The following journal entries were prepared by an employee of International Marketing Company who does not have an adequate knowledge of accounting. INSTRUCTIONS Examine the journal entries carefully to locate the errors. Prepare journal entries to corre
> On October 1, 20X1, Helen Kennedy opened an advertising agency. She plans to use the chart of accounts listed below. INSTRUCTIONS 1. Journalize the transactions. Number the journal page 1, write the year at the top of the Date column, and include a descr
> The transactions that follow took place at the Cedar Hill Recreation and Sports Arena during September 20X1. This firm has indoor courts where customers can play tennis for a fee. It also rents equipment and offers tennis lessons. INSTRUCTIONS Record eac
> The following accounts and transactions are for Vincent Sutton, Landscape Consultant. INSTRUCTIONS Analyze the transactions. Record each in the appropriate T accounts. Identify each entry in the T accounts by writing the letter of the transaction next to
> The following occurred during June at Brown Financial Planning. INSTRUCTIONS Analyze each transaction. Use T accounts to record these transactions and be sure to put the name of the account on the top of each account. Record the effects of the transactio
> Since graduating from college five years ago, you have worked for a national chain of men’s clothing stores. You have held several positions within the company and are currently manager of a local branch store. Over the past three years
> Home Suppliers, Inc. sells a variety of consumer products. Its comparative income statement and balance sheet for the years 2022 and 2021 are presented on the following pages. The Retained Earnings balance on January 1, 2021, was $188,442. Also, Preferre
> At the beginning of the summer, Humphrey Nelson was looking for a way to earn money to pay for his college tuition in the fall. He decided to start a lawn service business in his neighborhood. To get the business started, Humphrey used $6,000 from his sa
> The chart of accounts and account balances of The Purple Company on January 1, 2022, are shown below. The company does not use reversing entries. Round all computations to the nearest whole dollar. 1. Open the general ledger accounts and enter the balanc
> The Fashion Rack is a retail merchandising business that sells brand-name clothing at discount prices. The firm is owned and managed by Teresa Lojay, who started the business on April 1, 20X1. This project will give you an opportunity to put your knowled
> This project will give you an opportunity to apply your knowledge of accounting principles and procedures by handling all the accounting work of Eli’s Consulting Services for the month of January 2020. Assume that you are the chief acco
> On December 1, Karl Zant opened a speech and hearing clinic. During December, his firm had the following transactions involving revenue and expenses. Did the firm earn a net income or incur a net loss for the period? What was the amount? Paid $6,200 for
> At the beginning of September, Helen Rojas started Rojas Wealth Management Consulting, a firm that offers financial planning and advice about investing and managing money. On September 30, the accounting records of the business showed the following infor
> The following equation shows the effects of a number of transactions that took place at Cantu Auto Repair Company during the month of July. Describe each transaction.
> Technology World had the following revenue and expenses during the month ended July 31. Did the firm earn a net income or incur a net loss for the period? What was the amount? Fees for computer repairs $93,600 Advertising expense 16,200 Salaries expense
> The Business Center had the transactions listed below during the month of June. Show how each transaction would be recorded in the accounting equation. Compute the totals at the end of the month. The headings to be used in the equation follow. TRANSACTIO
> The following financial data are for the dental practice of Dr. Jose Ortiz when he began operations in July. Determine the amounts that would appear in Dr. Ortiz’s balance sheet. 1. Owes $42,000 to the Sanderson Equipment Company. 2. Has cash balance of
> Indicate the impact of each of the transactions below on the fundamental accounting equation (Assets = Liabilities + Owner’s Equity) by placing an “I” to indicate an increase and a “
> The fundamental accounting equations for several businesses follow. Supply the missing amounts.
> Just before Henderson Laboratories opened for business, Eugene Henderson, the owner, had the following assets and liabilities. Determine the totals that would appear in the firm’s fundamental accounting equation (Assets = Liabilities + Owner’s Equity). C
> Harbor Corporation is manufacturing a part that is used in its finished product. The costs for each unit of the part follow: Direct materials $ 34 Direct labor 35 Manufacturing overhead: Variable costs $25 Fixed costs 8 33 Total cost $102 The fixed overh
> Harbor Corporation is manufacturing a part that is used in its finished product. The costs for each unit of the part follow: Direct materials $ 34 Direct labor 35 Manufacturing overhead: Variable costs $25 Fixed costs 8 33 Total cost $102 The fixed overh
> Santa Clara Microelectronics is considering the purchase of a new factory machine at a cost of $195,000. The machine would perform a function that is now being performed by hand. The new machine would have a life of 10 years, would produce 16,500 units a
> The standard cost sheet for the leading product made by Queen Corporation shows the following data: Direct materials $ 52 Direct labor (3 hours at $23/hour) 69 Manufacturing overhead: Variable costs (3 hours at $23/hour) 69 Fixed costs (3 hours at $20/ho
> Wisconsin Manufacturing has an opportunity to export 2,500 units of its product to a foreign country. The current selling price is $176, but the special order will be sold at a unit price of $110. This special order will not affect its current sales, all
> Memphis Company is considering replacing its existing wrapping system with new equipment. The existing system has a book value of $125,000 and a remaining useful life of two years. The new wrapping system would cost $300,000 and have a useful life of fiv
> Starmont Manufacturing Co. divided all of its costs and expenses into fixed and variable components. Data for the company’s first year of operations follows. Ignore income taxes. Beginning inventory of finished goods –0– Units produced (no work in proces
> Starmont Manufacturing Co. divided all of its costs and expenses into fixed and variable components. Data for the company’s first year of operations follows. Ignore income taxes. Beginning inventory of finished goods –0– Units produced (no work in proces
> The following account balances are for Ping Chung, Certified Public Accountant, as of April 30, 20X1. Cash $120,000 Accounts Receivable 48,000 Maintenance Expense 18,400 Advertising Expense 15,560 Fees Earned 107,200 Ping Chung, Capital, April 1 ? Salari
> The standard cost card for a unit of Product AX at the Cleaning Chemicals Corp. shows the following standard cost information: Materials: 2 gallons at $12 per gallon $ 24 Labor: 5 hours at $20 per hour 100 Overhead: 80% of direct labor 80 Total $204 Duri
> The standard cost card for a unit of Product AX at the Cleaning Chemicals Corp. shows the following standard cost information: Materials: 2 gallons at $12 per gallon $ 24 Labor: 5 hours at $20 per hour 100 Overhead: 80% of direct labor 80 Total $204 Duri
> The standard cost card for a unit of Product AX at the Cleaning Chemicals Corp. shows the following standard cost information: Materials: 2 gallons at $12 per gallon $ 24 Labor: 5 hours at $20 per hour 100 Overhead: 80% of direct labor 80 Total $204 Duri
> The standard cost card for a unit of Product AX at the Cleaning Chemicals Corp. shows the following standard cost information: Materials: 2 gallons at $12 per gallon $ 24 Labor: 5 hours at $20 per hour 100 Overhead: 80% of direct labor 80 Total $204 Duri
> The standard cost card for a unit of Product AX at the Cleaning Chemicals Corp. shows the following standard cost information: Materials: 2 gallons at $12 per gallon $ 24 Labor: 5 hours at $20 per hour 100 Overhead: 80% of direct labor 80 Total $204 Duri
> The standard cost card for a unit of Product AX at the Cleaning Chemicals Corp. shows the following standard cost information: Materials: 2 gallons at $12 per gallon $ 24 Labor: 5 hours at $20 per hour 100 Overhead: 80% of direct labor 80 Total $204 Duri
> In preparing the standard cost for each unit of QS500, the company’s only product, the accountant for Total Earth Solvents Corporation has developed the following data for the year 20X1: Total budgeted production, 23,000 units Raw material: Two units of
> In Woodinville Power Corporation’s factory, fixed indirect labor costs are $6,300 per month. Variable indirect labor costs are $1.40 per direct labor hour. The budget for the month of May 20X1 calls for employment of 16,500 direct labor hours. Compute th
> The standard cost card for a unit of Product AX at the Cleaning Chemicals Corp. shows the following standard cost information: Materials: 2 gallons at $12 per gallon $ 24 Labor: 5 hours at $20 per hour 100 Overhead: 80% of direct labor 80 Total $204 Duri
> The standard cost card for a unit of Product AX at the Cleaning Chemicals Corp. shows the following standard cost information: Materials: 2 gallons at $12 per gallon $ 24 Labor: 5 hours at $20 per hour 100 Overhead: 80% of direct labor 80 Total $204 Duri
> James Howard owns Howard Auto Sales. He periodically borrows money from Bay City State Bank and Trust. He permits some customers to sign short-term notes for their purchases. He usually discounts these notes at the bank. Following are selected transactio
> Alpha Company’s records show the following data for the four quarters of 20X1: Compute the fixed and variable elements of utilities cost, using the high-low point method.
> At SanAn Corporation, production is started in the fab department. The work is then transferred to the finishing department, where goods are completed and then transferred to the finished goods storeroom. Data about the company’s costs during September 2
> At SanAn Corporation, production is started in the fab department. The work is then transferred to the finishing department, where goods are completed and then transferred to the finished goods storeroom. Data about the company’s costs during September 2
> At SanAn Corporation, production is started in the fab department. The work is then transferred to the finishing department, where goods are completed and then transferred to the finished goods storeroom. Data about the company’s costs during September 2
> The cutting department is the first department of BrakeParts Co. On April 1, 20X1, the beginning inventory in this department consisted of 700 units. Costs for the beginning work in process were as follows: Materials (100% complete) $7,000 Labor (60% com
> The cutting department is the first department of BrakeParts Co. On April 1, 20X1, the beginning inventory in this department consisted of 700 units. Costs for the beginning work in process were as follows: Materials (100% complete) $7,000 Labor (60% com
> On April 1, 20X1, the assembly department of Ros Inc. had no beginning work in process. During the month, production was started on 10,000 units. The total cost of materials was $60,000. All materials were placed in production at the start of the manufac
> Information about production in the fabricating department of the AGAM Company for March 20X1 follows: Beginning inventory –0– Transferred in from prior department 20,000 units Transferred out to next department 16,000 units Ending inventory, work in pro
> Information about production in the fabricating department of the AGAM Company for March 20X1 follows: Beginning inventory –0– Transferred in from prior department 20,000 units Transferred out to next department 16,000 units Ending inventory, work in pro
> Information about production in the fabricating department of the AGAM Company for March 20X1 follows: Beginning inventory –0– Transferred in from prior department 20,000 units Transferred out to next department 16,000 units Ending inventory, work in pro
> Contemporary Furniture, a wholesale distributor of modern casual furniture, frequently accepts promissory notes from its customers at the time of sale. Because Contemporary Furniture regularly needs cash to meet its own obligations, it frequently discoun
> 1. Why should management be concerned about paying its invoices on a timely basis? 2. Why is it important for a firm to maintain a satisfactory credit rating? 3. Suppose you are the new controller of a small but growing company and you find that the firm
> For the year 20X1, WolfT Inc. had actual overhead costs of $90,000, and its applied overhead was $85,000: 1. Did the firm have overapplied or underapplied overhead for the year? 2. What was the amount of overapplied or underapplied overhead?
> During 20X1, Truck Manufacturing Company began and completed Job 1203. Costs entered on the job cost sheet for this job were $50,000 for materials and $10,000 for direct labor: 1. Assuming that overhead is applied at 65 percent of direct labor costs, com
> CHAR Co.’s direct labor costs were $100,000 for May 20X1. Assuming that the company applies overhead at the rate of 65 percent of direct labor costs, give the general journal entry for May summarizing the overhead applied for the month.
> IAM Co. estimates the following manufacturing overhead costs for 20X1: Estimated direct labor hours 60,000 hours Estimated direct labor costs $900,000 Estimated overhead costs $270,000 What is the overhead application rate based on direct labor costs?
> A payroll summary prepared at ELI Manufacturing Company showed the following figures for January 20X1: Direct labor costs incurred $50,000.00 Indirect labor costs incurred 14,000.00 Social security tax withheld 3,968.00 Medicare tax withheld 928.00 Incom
> During July 20X1, White Co. purchased and issued the following materials and supplies. Use July 31 as the date for all entries: Purchases Materials $100,000 Manufacturing supplies 6,000 Issues from Storeroom Direct materials $60,000 Manufacturing supplie
> During July 20X1, White Co. purchased and issued the following materials and supplies. Use July 31 as the date for all entries: Purchases Materials $100,000 Manufacturing supplies 6,000 Issues from Storeroom Direct materials $60,000 Manufacturing supplie
> During July 20X1, White Co. purchased and issued the following materials and supplies. Use July 31 as the date for all entries: Purchases Materials $100,000 Manufacturing supplies 6,000 Issues from Storeroom Direct materials $60,000 Manufacturing supplie
> The records of HHI Inc. for 20X1 show that it completed goods costing $160,000 and that it sold goods costing $209,000 for the year. Give the entries in general journal form on December 31, 20X1, to record the cost of goods completed and the cost of good
> During July 20X1, White Co. purchased and issued the following materials and supplies. Use July 31 as the date for all entries: Purchases Materials $100,000 Manufacturing supplies 6,000 Issues from Storeroom Direct materials $60,000 Manufacturing supplie
> Brecha Hogan is president of Hogan Company, a manufacturer of toys for children. For the past 10 years, the company has sold its product to both wholesale and retail dealers of toys in the northeastern United States. Over the years, the company has come
> Which of the following account balances would not be extended to the Cost of Goods Manufactured section of the worksheet? 1. Insurance on finished goods 2. Payroll taxes on outside sales salaries 3. Salary of factory shift supervisor 4. Insurance on raw
> Which of the following items would be included in the Manufacturing Overhead section of the statement of cost of goods manufactured? 1. Direct labor 2. Raw materials used 3. Indirect materials and supplies 4. Repairs to factory building 5. Depreciation o
> Which of the following items would not be included in the Manufacturing Overhead section of the statement of cost of goods manufactured? 1. Payroll taxes on wages of plant security guards 2. Insurance costs for factory 3. Freight-in charges on purchases
> Which of the following items would appear on the statement of cost of goods manufactured? 1. Work in process inventory 2. Finished goods inventory 3. Raw materials inventory
> Which of the following items would not appear on the statement of cost of goods manufactured? 1. Advertising expense 2. Depreciation of factory equipment 3. Direct labor
> Cat Company’s total manufacturing cost for the year was $1,500,000. Its manufacturing overhead was $300,000, and its cost of raw materials used was $900,000. What was its direct labor cost for the year?
