Question: Scrappers Supplies tracks the number of units
Scrappers Supplies tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31. 
Required: 1. Compute the cost of goods available for sale, cost of ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: a. Last-in, first-out. b. Weighted average cost. c. First-in, first-out. d. Specific identification, assuming that the April 1 sale was selected one-fifth from the beginning inventory and four-fifths from the purchase of March 2. Assume that the sale of August 1 was selected from the purchase of June 30. 2. Of the four methods, which will result in the highest gross profit? Which will result in the lowest income taxes?
> The financial statements for Armstrong and Blair companies are summarized here: The companies are in the same line of business and are direct competitors in a large metropolitan area. Both have been in business approximately 10 years and each has had st
> Kohl’s Corporation is a national retail department store. The company’s total revenues for the twelve months ended October 31, 2016, were $19 billion. Macy’s is a larger department store company with
> A condensed income statement for Electronic Arts and a partially completed vertical analysis follow. Required: 1. Complete the vertical analysis by computing each line item (a)–(d) as a percentage of net revenues. Round to
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> Use Tables C.1 to C.4 to complete the following schedule:
> Electronic Arts is a video game company that competes with Activision Blizzard. A condensed balance sheet for Electronic Arts and a partially completed vertical analysis are presented below Required: 1. Complete the vertical analysis by computing each
> Prepare journal entries to record these transactions: (a) Morrell Corporation disposed of two computers at the end of their useful lives. The computers had cost $4,800 and their Accumulated Depreciation was $4,800. No residual value was received. (b) Ass
> Use the data given in CP13-1 for Golden Corporation. Required: 1. Compute the gross profit percentage for the current and previous years. Round the percentages to one decimal place. Are the current year results better, or worse, than those for the pre
> Golden Corporation declared and paid $3,000 of cash dividends during the current year ended December 31. Its financial statements also reported the following summarized data: Required: 1. Complete the two final columns shown beside each item in Golden
> Assume the same facts as CP12-4, except for additional data item (a) and the income statement. Instead of item (a) from CP12-4, assume that the company bought new golf clubs for $3,000 cash and sold existing clubs for $1,000 cash. The clubs that were sol
> Refer to CP12-4. Required: Complete requirements 1 and 2 using the direct method. TIP: Remember to exclude depreciation expense when converting to the cash basis. Data from CP12-4: Soft Touch Company was started several years ago by two golf instruct
> Refer to the information in CP12-2. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method. TIP: Convert the cost of goods sold to cash paid to suppliers by adding the increase in inve
> Soft Touch Company was started several years ago by two golf instructors. The company’s comparative balance sheets and income statement are presented below, along with additional information. Additional Data: a. Bought new golf clubs
> Hunter Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: Additional Data: a. Bought eq
> Hamburger Heaven’s income statement for the current year and selected balance sheet data for the current and prior years ended December 31 are presented below. Required: Prepare the cash flows from operating activities section of the
> For each of the following transactions, indicate whether operating (O), investing (I), or financing activities (F) are affected and whether the effect is a cash inflow (+) or outflow (−). Use (NE) if the transaction has no effect on cas
> In what ways does documentation act as a control?
> After recording depreciation for the current year, Media Mania Incorporated decided to discontinue using its printing equipment. The equipment had cost $750,000, accumulated depreciation was $550,000, and its fair value (based on estimated future cash fl
> Indicate whether a company interested in minimizing its income taxes should choose the FIFO or LIFO inventory costing method under each of the following circumstances. _____ a. Declining costs _____ b. Rising costs
> Tower Corp. had the following stock outstanding and Retained Earnings at December 31, 2018: On December 31, 2018, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were decla
> At December 31, the records of Nortech Corporation provided the following selected and incomplete data:
> Activision Blizzard, Inc., reported the following in the notes to its financial statements. Required: 1. Describe the effects that this transaction would have had on the company’s financial statements. Assume that 600 million shares w
> Worldwide Company obtained a charter from the state in January that authorized 200,000 shares of common stock, $10 par value. During the first year, the company earned $38,200, declared no dividends, and the following selected transactions occurred in th
> The Peg Corporation (TPC) issued bonds and received cash in full for the issue price. The bonds were dated and issued on January 1, 2018. The stated interest rate was payable at the end of each year. The bonds mature at the end of four years. The followi
> Complete the requirements of CP10-6, assuming Southwest Corporation uses simplified effectiveinterest amortization shown in Chapter Supplement 10C. Data from CP10-6: Southwest Corporation issued bonds with the following details: The annual accounting
> Complete the requirements of CP10-6, assuming Southwest Corporation uses effective-interest amortization. Data from CP10-6: Southwest Corporation issued bonds with the following details: The annual accounting period ends December 31. The bonds were is
> Southwest Corporation issued bonds with the following details: The annual accounting period ends December 31. The bonds were issued at 104 on January 1, 2018, when the market interest rate was 8 percent. Assume the company uses straight-line amortizatio
> Brunswick Corporation is a multinational company that manufactures and sells marine and recreational products. A prior annual report contained the following information: Required: If Brunswick recorded a liability for $133.2 million (3 × $
> Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: Required: 1. For each of the three independent cases that follow, provide the amounts to be reported on the January 1, 2018, financial statements immedia
> Calculate the amount of depreciation to report during the year ended December 31 for equipment that was purchased at a cost of $43,000 on October 1. The equipment has an estimated residual value of $3,000 and an estimated useful life of five years or 20,
> What are some of the methods for restricting access?
> Riverside Company completed the following two transactions. The annual accounting period ends December 31. a. On December 31, calculated the payroll, which indicates gross earnings for wages ($130,000), payroll deductions for income tax ($13,000), payro
> Using data from CP10-1, complete the following requirements. Required: 1. Prepare journal entries for each of the transactions through December 20. 2. Prepare any adjusting entries required on December 31. 3. Show how all of the liabilities arising
> Hondor Corporation issued bonds and received cash in full for the issue price. The bonds were dated and issued on January 1, 2018. The stated interest rate was payable at the end of each year. The bonds mature at the end of four years. The following sch
> EZ Curb Company completed the following transactions. The annual accounting period ends December 31. Required: 1. For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects (+ for increase, −
> Palmer Cook Music Productions manages and operates two bands. The company entered into the following transactions during a recent year. Required: 1. Analyze the accounting equation effects and record journal entries for each of the transactions. TIP: G
> During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: The machines were disposed of in the following ways: a. Machine A: Sold on January 2 for $20,000 ca
> At the beginning of the year, Young Company bought three used machines from Vince, Inc. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts. B
> Mattel, Inc., and Hasbro are two of the largest and most successful toymakers in the world, in terms of the products they sell and their receivables management practices. To evaluate their ability to collect on credit sales, consider the following inform
> Execusmart Consultants has provided business consulting services for several years. The company has been using the percentage of credit sales method to estimate bad debts but switched at the end of the first quarter this year to the aging of accounts rec
> A machine that cost $400,000 has an estimated residual value of $40,000 and an estimated useful life of four years. The company uses double-declining-balance depreciation. Calculate its book value at the end of year 3. Round to the nearest dollar.
> Jung & Newbicalm Advertising (JNA) recently hired a new creative director, Howard Rachell, for its Madison Avenue office in New York. To persuade Howard to move from San Francisco, JNA agreed to advance him $100,000 on April 30, 2018, on a one-year, 10 p
> Why should responsibilities for certain duties, like cash handling and cash recording, be separated? What types of responsibilities should be separated?
> Callaway Golf Company sells on account to golf pro shops and general sporting goods retailers. In its financial statements for the year ended December 31, 2015, Callaway reported the following balances and changes in the Allowance for Doubtful Accounts (
> Red Hat, Inc., is a software development company that recently reported the following amounts (in thousands) in its unadjusted trial balance as of February 29, 2016. Required: 1. Assume Red Hat uses ¼ of 1 percent of revenue to estimate i
> Partial income statements for Murphy & Murphy (M & M) reported the following summarized amounts: After these amounts were reported, M & M’s accountant determined the inventory at the end of Quarter 2 was understated by $3,0
> Using the information in CP7-1, calculate the Cost of Goods Sold and Ending Inventory for Scrappers Supplies assuming it applies the LIFO cost method perpetually at the time of each sale. Compare these amounts to the periodic LIFO calculations in require
> GameStop Corp. is the world’s largest multichannel video game retailer. The company reported the following amounts (in millions) in its annual financial statements at the end of January. Required: 1. Determine the inventory turnover r
> Smart Company prepared its annual financial statements dated December 31. The company reported its inventory using the FIFO inventory costing method and failed to evaluate its net realizable value at December 31. The preliminary income statement follows:
> Frigid Supplies reported beginning inventory of 200 units, for a total cost of $2,000. The company had the following transactions during the month: Required: 1. Prepare the journal entries that would be recorded using a periodic inventory system. 2. P
> A machine that cost $400,000 has an estimated residual value of $40,000 and an estimated useful life of 20,000 machine hours. The company uses units-of-production depreciation and ran the machine 3,000 hours in year 1, 8,000 hours in year 2, and 6,000 ho
> Psymon Company, Inc., sells construction equipment. The annual fiscal period ends on December 31. The following adjusted trial balance was created from the general ledger accounts on December 31: Required: 1. Prepare a multistep income statement that w
> Great American Oilchange (GAO) sells a combined oil change service and parts package for $30. A customer who supplies the parts (oil and filter) is charged $20 for only the service, whereas a customer who buys only the oil and filter (for do-it-yourself
> Why is it a good idea to assign each task to only one employee?
> Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $152,070). $275,000 b. Received merchandis
> Use the information in CP6-1 to complete the following requirements. Required: 1. For each of the events (a) through (c), indicate the amount and direction of the effect (+ for increase, − for decrease, and NE for no effect) on Amalga
> The transactions listed below are typical of those involving Amalgamated Textiles and American Fashions. Amalgamated is a wholesale merchandiser and American Fashions is a retail merchandiser. Assume all sales of merchandise from Amalgamated to American
> Superior Cabinets maintains a petty cash fund for minor business expenditures. The petty cash custodian, Mo Smith, describes the events that occurred during the last two months: a. I established the fund by cashing a Superior Cabinets check for $300 mad
> The August bank statement and cash T-account for Martha Company follow: No deposits were in transit and no checks were outstanding at the end of July. Required: 1. Identify and list the deposits in transit at the end of August. TIP: Put a check mark
> The April 30 bank statement for KMaxx Company and the April ledger account for cash are summarized here: No outstanding checks and no deposits in transit were noted in March. However, there are deposits in transit and checks outstanding at the end of Ap
> The following procedures are used by Richardson Light Works. a. When customers pay cash for lighting products, the cash is placed in a cash register and a receipt is issued to the customer. b. At the end of each day, the cash is counted by the cashier
> A machine that cost $400,000 has an estimated residual value of $40,000 and an estimated useful life of four years. The company uses straight-line depreciation. Calculate its book value at the end of year 3.
> Golf Academy, Inc., provides private golf lessons. Its unadjusted trial balance at December 31, 2018, follows, along with information about selected accounts. Required: 1. Calculate the (preliminary) unadjusted net income for the year ended December 31
> Indicate the effects (account, amount, and direction) of each adjusting journal entry. Use + for increase, − for decrease, and NE for no effect. Provide an appropriate account name for any revenue and expense effects. TIP: The first tr
> Jordan Company’s annual accounting year ends on December 31. It is now December 31, 2018, and all of the 2018 entries have been made except for the following: a. The company owes interest of $700 on a bank loan. The interest will be paid when the loan i
> What are three categories of employee fraud? Which is most common? Which is associated with the largest losses?
> The following is a list of accounts and amounts reported for Rollcom, Inc., for the fiscal year ended September 30, 2018. The accounts have normal debit or credit balances Required: 1. Prepare an adjusted trial balance at September 30, 2018. Is the Reta
> Lakewood Tennis Club (LTC) operates an indoor tennis facility. The company charges a $150 annual membership fee plus a member rental rate of $20 per court per hour. LTC’s fiscal year-end is August 31. LTC’s revenue recognition policy is described in its
> Barbara Jones opened Barb’s Book Business on February 1. You have been hired to maintain the company’s financial records. The following transactions occurred in February, the first month of operations. a. Received shareholders’ cash contributions on Feb
> Ryan Olson organized a new company, MeToo, Inc. The company provides networking management services on social network sites. You have been hired to record the following transactions. a. May 1: Issued 1,000 shares of common stock to investors for $30 per
> The following list includes a series of accounts for B-ball Corporation, which has been operating for three years. These accounts are listed alphabetically and numbered for identification. Following the accounts is a series of transactions. For each tran
> Performance Plastics Company (PPC) has been operating for three years. The beginning account balances are During the year, the company had the following summarized activities: a. Purchased equipment that cost $21,000; paid $5,000 cash and signed a two-
> For each of the following items, enter the correct letter to show whether the expenditure should be capitalized (C) or expensed (E)
> Athletic Performance Company (APC) was incorporated as a private company. The company’s accounts included the following at July 1: During the month of July, the company had the following activities: a. Issued 2,000 shares of common st
> Ag Bio Tech (ABT) was organized on January 1 by four friends. Each organizer invested $10,000 in the company and, in turn, was issued 8,000 shares of common stock. To date, they are the only stockholders. During the first month (January), the company had
> 1. Did Fitbit rely more on creditors or stockholders for its financing at October 1, 2016? What is your information source? 2. Was the stockholders’ equity at October 1, 2016, comprised more of contributions made by stockholders direct
> Fitbit, Inc., reported the following information for the nine-month period ended October 1, 2016. Items are listed alphabetically and are in thousands of dollars. Required: Prepare the four basic financial statements for the nine months ended October 1
> Using the information in question 8, determine the amounts and accounts that will be reported on the January31 balance sheet and the income statement for the month ended January 31.
> Refer to CP1-1. Required: 1. Was the company profitable? Which financial statement provides the information to answer this question? 2. Did the company’s dividends exceed its net income? Which financial statement provides the informa
> Assume you are the president of Nuclear Company. At the end of the first year of operations (December 31), the following financial data for the company are available: Required: 1. Prepare an income statement for the year ended December 31. TIP: Begin b
> Bart Company had outstanding 30,000 shares of common stock, par value $10 per share. On January 1, 2018, Homer Company purchased some of these shares at $25 per share. At the end of 2018, Bart Company reported the following: net income, $50,000, and cash
> On each December 31, you plan to transfer $2,000 from your checking account into an investment account. The investment account will earn 4 percent annual interest, which will be added to the account balance at each year-end. The first deposit will be mad
> On January 1, Alan King decided to transfer an amount from his checking account into an investment account that later will provide $80,000 to send his son to college (four years from now). The investment account will earn 8 percent, which will be added t
> What is the difference between Accounts Receivable and Revenue?
> On January 1, you deposited $6,000 in an investment account. The account will earn 10 percent annual compound interest, which will be added to the fund balance at the end of each year. Required: (round to the nearest dollar): 1. What will be the bala
> Procter & Gamble (P&G) manufactures and markets many products you use every day. In 2016, sales for the company were $65,300 (all amounts in millions). The annual report did not report the amount of credit sales, so we will assume tha
> Cintas Corporation is the largest uniform supplier in North America. Selected information from its annual report follows. For the 2016 fiscal year, the company reported sales revenue of $4.9 billion and Cost of Goods Sold of $2.1 billion. Required: Ass
> Double West Suppliers (DWS) reported sales for the year of $300,000, all on credit. The average gross profit percentage was 40 percent on sales. Account balances follow: Required: 1. Compute the turnover ratios for accounts receivable and inventory (ro
> Match each ratio or percentage with its formula by entering the appropriate letter for each numbreed item
> On December 31, a company makes a $9,000 payment for renting a warehouse in January, February, and March of the following year. Show the accounting equation effects of the transaction on December 31, as well as the adjustments required on January 31, Feb
> Use the information in E13-3 to complete the following requirement. Required: Compute the times interest earned ratios for 2016 and 2015. In your opinion, does Computer Tycoon generate sufficient net income (before taxes and interest) to cover the cos
> Use the information in E13-3 to complete the following requirements. Required: 1. Compute the gross profit percentage for each year (rounded to one decimal place). Assuming that the change from 2015 to 2016 is the beginning of a sustained trend, is Co
> According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2016. Let’s see whether these changes are reflected in the
> Use the information for Chevron Corporation in E13-1 to complete the following requirements. Required: 1. Compute the gross profit percentage for each year (rounded to one decimal place). Assuming that the change from 2014 to 2015 is the beginning of
> American Golf Corporation operates golf courses throughout the country. For each of the following items, enter the correct letter to show whether the cost should be capitalized (C) or expensed (E).
> Company A uses the FIFO method to cost inventory and Company B uses the LIFO method. The two companies are exactly alike except for the difference in inventory costing methods. Costs of inventory items for both companies have been falling steadily in rec
> A company has current assets that total $500,000, has a current ratio of 2.00, and uses the perpetual inventory method. Assume that the following transactions are then completed: (1) sold $12,000 in merchandise on short-term credit for $15,000, (2) decla
> Good Sports, Inc., is a private full-line sporting goods retailer. Assume one of the Good Sports stores reported current assets of $88,000 and its current ratio was 1.75, and then completed the following transactions: (1) paid $6,000 on accounts payable,
> In its most recent annual report, Sunrise Enterprises reported current assets of $1,090,000 and current liabilities of $602,000. Required: Determine for each of the following transactions whether the current ratio, and each of its two components, for
> Dollar General Corporation operates general merchandise stores that feature quality merchandise at low prices to meet the needs of middle-, low-, and fixed-income families in southern, eastern, and mid we stern states. For the year ended January 29, 201
