Some companies employ technologies that allow them to do a so-called “virtual close.” This enables them to close their books nearly instantaneously any time during the year. What advantages does a “virtual close” provide?
> An item must possess two characteristics to be classified as inventory. What are these two characteristics?
> As a new auditor for the CPA firm of Blacke and Whyte, you have been assigned to review the internal controls over mail cash receipts of Simon Company. Your review reveals that checks are promptly endorsed “For Deposit Only,” but no list of the checks is
> Shown below are the T-accounts relating to equipment that was purchased for cash by a company on the first day of the current year. The equipment was depreciated on a straight-line basis with an estimated useful life of 10 years and a salvage value of $1
> JCPenney Company accepts both its own credit cards and national credit cards. What are the advantages of accepting both types of cards?
> Hummer Company purchased a delivery truck. The total cash payment was $30,020, including the following items. Negotiated purchase price $24,000 Installation of special shelving 1,100 Painting and lettering 900 Motor vehicle licen
> As its year-end approaches, it appears that Mendez Corporation’s net income will increase 10% this year. The president of Mendez Corporation, nervous that thestockholders might expect the company to sustain this 10% growth rate in net income in future ye
> How do documentation procedures contribute to good internal control?
> This information relates to the Cash account in the ledger of Howard Company. Balance September 1—$16,400; Cash deposited—$64,000 Balance September 30—$17,600; Checks written—$62,800
> Alternative Distributor Corp., a distributor of groceries and related products, is headquartered in Medford, Massachusetts. During a recent audit, Alternative Distributor Corp. was advised that existing internal controls necessary for the company to deve
> Here are selected 2017 transactions of Akron Corporation. Jan. 1 Retired a piece of machinery that was purchased on January 1, 2007. The machine cost $62,000 and had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purcha
> Antone Company sells office equipment on July 31, 2017, for $21,000 cash. The office equipment originally cost $72,000 and as of January 1, 2017, had accumulated depreciation of $42,000. Depreciation for the first 7 months of 2017 is $4,600. Prepare the
> Tawnya Dobbs, the vice president of sales for Tropical Pools and Spas, wants the company’s credit department to be less restrictive in granting credit. “How can we sell anything when you guys won’t approve anybody?” she asks. Discuss the pros and cons of
> LaTour Inc. is based in France and prepares its financial statements (in euros) in accordance with IFRS. In 2017, it reported cost of goods sold of €578 million and average inventory of €154 million. Briefly discuss how analysis of LaTour’s inventory tur
> Milton Company closes its books on its July 31 year-end. The company does not make entries to accrue for interest except at its year-end. On June 30, the Notes Receivable account balance is $23,800. Notes Receivable include the following. During July, t
> Chien Corporation is a recently formed business selling the “World’s Best Doormat.” The corporation is selling doormats faster than Chien can make them. It has been selling the product on a credit basis, telling customers to “pay when they can.” Oddly, e
> Rianna.com uses the allowance method of accounting for bad debts. The company produced the following aging of the accounts receivable at year-end. Instructions (a) Calculate the total estimated bad debts based on the above information. (b) Prepare the y
> A Bastille Corporation prepares monthly cash budgets. Here are relevant data from operating budgets for 2017. All sales and purchases are on account. Budgeted collections and disbursement data are given below. All other expenses are paid in the month in
> The following information pertains to Lance Company. 1. Cash balance per bank, July 31, $7,328. 2. July bank service charge not recorded by the depositor $38. 3. Cash balance per books, July 31, $7,364. 4. Deposits in transit, July 31, $2,700. 5. $2,016
> The website www.cpa2biz.com has an article dated February 4, 2010, by Mary Schaeffer entitled “Emerging Issues: Demise of Paper Checks.” Instructions Go to the website and do a search on the article title. Read the article and answer the following questi
> Nona Hat Shop received a shipment of hats for which it paid the wholesaler $2,940. The price of the hats was $3,000, but Nona was given a $60 cash discount and required to pay freight charges of $75. What amount should Nona include in inventory? Why?
> For each of the following cases, state whether the statement is true for LIFO or for FIFO. Assume that prices are rising. (a) Results in a higher quality of earnings ratio. (b) Results in higher phantom profits. (c) Results in higher net income. (d) Resu
> On December 1, Premium Electronics has three DVD players left in stock. All are identical, all are priced to sell at $85. One of the three DVD players left in stock, with serial #1012, was purchased on June 1 at a cost of $52. Another, with serial #1045,
> The July 15, 2010, edition of CFO.com contains an article by Marie Leone entitled “Sucking the LIFO out of Inventory.” Instructions Read the article, which can be found at www.cfo.com/printable/article.cfm/14508745, and answer the following questions. (a
> Owen Wise, Inc. reported the following in its 2017 and 2016 income statements. Determine the company’s gross profit rate and profit margin for both years. Discuss the cause for changes in the ratios. 2017 2016 Net sales $150,000 90,
> Three years ago, Karen Suez and her brother-in-law Reece Jones opened Gigasales Department Store. For the first 2 years, business was good, but the following condensed income statement results for 2017 were disappointing. Karen believes the problem lies
> Condensed balance sheet and income statement data for Danke Corporation are presented as follows. Instructions Compute these values and ratios for 2016 and 2017. (a) Earnings per share. (b) Working capital. (c) Current ratio. (d) Debt to assets ratio. (e
> (a) Geena Lowe believes that the analysis of financial statements is directed at two characteristics of a company: liquidity and profitability. Is Geena correct? Explain. (b) Are short-term creditors, long-term creditors, and stockholders primarily inter
> These items are taken from the financial statements of Longhorn Co. at December 31, 2017. Buildings……………………………………….……$105,800 Accounts receivable…………………………………12,600 Prepaid insurance………………………………..……3,200 Cash……………………………………………………..…11,840 Equipment…………………
> How are bad debts accounted for under the direct write-off method? What are the disadvantages of this method?
> Discuss how the Sarbanes-Oxley Act has increased the importance of internal control to top managers of a company.
> Explain the difference between the “nature-of-expense” and “function-of-expense” classifications.
> Identify the two parts of stockholders’ equity in a corporation and indicate the purpose of each.
> Breton Inc. needs to upgrade its diagnostic equipment. At the time of purchase, Breton had expected the equipment to last 8 years. Unfortunately, it was obsolete after only 4 years. Nolan Rush, CFO of Breton Inc., is considering leasing new equipment rat
> Purpose: To learn about the functions of the Securities and Exchange Commission (SEC). Address: www.sec.gov/about/whatwedo.shtml, or go to www.wiley.com/college/kimmelInstructions Use the information in this site to answer the following questions. (a) W
> Rusthe Inc. uses a periodic inventory system. Its records show the following for the month of May, in which 74 units were sold. Instructions Calculate the ending inventory at May 31 using the (a) FIFO, (b) LIFO, and (c) average cost methods. (For averag
> 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
> A review of the ledger of Lewis Company at December 31, 2017, produces these data pertaining to the preparation of annual adjusting entries. 1. Prepaid Insurance $15,200. The company has separate insurance policies on its buildings and its motor vehicles
> Transactions that affect earnings do not necessarily affect cash. Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. (a) Purchased $100 of supp
> What is the basic form of a worksheet?
> Emilio and René Santos own Club Fandango. From its inception, Club Fandango has sold merchandise on either a cash or credit basis, but no credit cards have been accepted. During the past several months, the Santos have begun to question thei
> (a) Bonita Company ships merchandise to Myan Corporation on December 30. The merchandise reaches the buyer on January 5. Indicate the terms of sale that will result in the goods being included in (1) Bonita’s December 31 inventory and (2) Myan’s December
> What is the purpose of a worksheet?
> Give examples of how companies manage earnings.
> Explain the terms earnings management and quality of earnings.
> Identify, in the sequence in which they are prepared, the three trial balances that are required in the accounting cycle.
> Indicate, in the sequence in which they are made, the three required steps in the accounting cycle that involve journalizing.
> Which of these accounts would not appear in the post- closing trial balance? Interest Payable, Equipment, Depreciation Expense, Dividends, Unearned Service Revenue, Accumulated Depreciation— Equipment, and Service Revenue.
> What items are disclosed on a post-closing trial balance. What is its purpose?
> Describe the nature of the Income Summary account, and identify the types of summary data that may be posted to this account.
> Compute interest and find the maturity date for the following notes. Date of Interest Note Principal Rate (%) Terms (a) June 10 (b) July 14 (c) April 27 $80,000 $50,000 $12,000 60 days 90 days 75 days 6% 7% 8%
> Identify the account(s) debited and credited in each of the four closing entries, assuming the company has net income for the year.
> Ross Music Inc. reported the following selected information at March 31.2017 Total current assets………………………….……………. $262,787 Total assets……………………………………………….……439,832 Total current liabilities………………………………….…293,625 Total liabilities…………………………………………………. 376
> What is the relationship, if any, between the amount shown in the adjusted trial balance column for an account and that account’s ledger balance?
> (a) What information do accrual-basis financial statements provide that cash-basis statements do not? (b) What information do cash-basis financial statements provide that accrual-basis statements do not?
> The adjusted trial balance for Ryan Company is given in E4-21. (given below) Instructions Prepare the closing entries for the temporary accounts at August 31. RYAN COMPANY Trial Balance August 31, 2017 Before After Adjustment Dr. Adjustment Dr. Cr.
> Why is it possible to prepare financial statements directly from an adjusted trial balance?
> The adjusted trial balance for Ryan Company is given below. Instructions Prepare the income and retained earnings statements for the year and the classified balance sheet at August 31. RYAN COMPANY Trial Balance August 31, 2017 Before After Adjustme
> Review the transactions listed in E3-3 for Persimmon Corp. Classify each transaction as either an operating activity, investing activity, or financing activity, or if no cash is exchanged, as a noncash event. Data from E3-3: 1. Issued shares of common st
> Two students are discussing the use of a trial balance. They wonder whether the following errors, each considered separately, would prevent the trial balance from balancing. What would you tell them? (a) The bookkeeper debited Cash for $600 and credited
> Which balance sheet account provides evidence that Apple records sales on an accrual basis rather than a cash basis? Explain.
> You are provided with the following information taken from Moynahan Inc.’s March 31, 2017, balance sheet. Cash $ 11,000 Accounts receivable 20,000 Inventory 36,000 Property, plant, and equipment, net of deprecia
> The trial balances shown below are before and after adjustment for Ryan Company at the end of its fiscal year. Instructions Prepare the adjusting entries that were made. RYAN COMPANY Trial Balance August 31, 2017 Before After Adjustment Dr. Adjustme
> Review the transactions listed in E3-1 for Thyme Advertising Company. Classify each transaction as an operating activity, investing activity, or financing activity, or if no cash is exchanged, as a noncash event. Data fromE3-1 given below: 1. Issued comm
> The following are financial statements of Ohara Company. Additional information: The net cash provided by operating activities for 2017 was $190,800. The cash used for capital expenditures was $92,000. The cash used for dividends was $31,000. The weight
> Brad Tyler is confused about how accounting information flows through the accounting system. He believes information flows in this order: (a) Debits and credits are posted to the ledger. (b) Accounting transaction occurs. (c) Information is entered in th
> “An adjusting entry may affect more than one balance sheet or income statement account.” Do you agree? Why or why not?
> The accounts in the ledger of Rapid Delivery Service contain the following balances on July 31, 2017. Accounts Receivable………………………………$13,400 Prepaid Insurance………………………………….$ 2,200 Accounts Payable………………………………………8,400 Service Revenue……………………………………….15,50
> One-half of the adjusting entry is given below. Indicate the account title for the other half of the entry. (a) Salaries and Wages Expense is debited. (b) Depreciation Expense is debited. (c) Interest Payable is credited. (d) Supplies is credited. (e) Ac
> What is a trial balance and what are its purposes?
> Selected year-end account balances from the adjusted trial balance as of December 31, 2017, for Tippy Corporation is provided below. Instructions (a) Prepare closing entries (b) Determine the post-closing balance in Retained Earnings. Debit Credit Ac
> The bookkeeper for Birmingham Corporation made these errors in journalizing and posting. 1. A credit posting of $400 to Accounts Receivable was omitted. 2. A debit posting of $750 for Prepaid Insurance was debited to Insurance Expense. 3. A collection on
> The Public Company Accounting Oversight Board (PCAOB) was created as a result of the Sarbanes-Oxley Act. It has oversight and enforcement responsibilities over accounting firms in the United States. Address: http://www.pcaobus.org/, or go to www.wiley.co
> For each of the following items before adjustment, indicate the type of adjusting entry—prepaid expense, unearned revenue, accrued revenue, and accrued expense—that is needed to correct the misstatement. If an item could result in more than one type of a
> (a) What is a ledger? (b) Why is a chart of accounts important?
> A partial adjusted trial balance for Ramon Company is given below in E4-15. Instructions Prepare the closing entries at January 31, 2017. RAMON COMPANY Adjusted Trial Balance January 31, 2017 Debit Credit $ 700 1,560 Supplies Prepaid Insurance Salari
> The financial statements of Louis Vuitton are presented in Appendix F. Instructions for accessing and using the company’s complete annual report, including the notes to its financial statements, are also provided in Appendix F. Instructions Identify five
> This information relates to Rice Co. 1. On April 5, purchased merchandise from Jax Company for $28,000, terms 2/10, n/30. 2. On April 6, paid freight costs of $700 on merchandise purchased from Jax. 3. On April 7, purchased equipment on account for $30,0
> Beyers Corporation provides security services. Selected transactions for Beyers are presented below. Oct. 1 Issued common stock in exchange for $66,000 cash from investors. 2 Hired part-time security consultant. Salary will be $2,000 per month. First day
> On January 9, a company pays $6,200 for salaries, of which $1,100 was reported as Salaries and Wages Payable on December 31. Give the entry to record the payment.
> Journalize these accounting transactions. (a) Stockholders invested $12,000 in the business in exchange for common stock. (b) Insurance of $800 is paid for the year. (c) Supplies of $1,800 are purchased on account. (d) Cash of $7,500 is received for serv
> Greenock Limited has the following information available for accruals for the year ended December 31, 2017. The company adjusts its accounts annually. 1. The December utility bill for $425 was unrecorded on December 31. Greenock paid the bill on January
> Here is the ledger for Kriscoe Co. Instructions (a) Reproduce the journal entries for only the transactions that occurred on October 1, 10, and 20, and provide explanations for each. (b) Prepare a trial balance at October 31, 2017. (Hint: Compute ending
> Farley Bains, an auditor with Nolls CPAs, is performing a review of Ryder Company’s Inventory account. Ryder did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-
> A company makes an accrued revenue adjusting entry for $780 and an accrued expense adjusting entry for $510. How much was net income understated or overstated prior to these entries? Explain.
> (a) Should accounting 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?
> Action Quest Games Inc. adjusts its accounts annually. The following information is available for the year ended December 31, 2017. 1. Purchased a 1-year insurance policy on June 1 for $1,800 cash. 2. Paid $6,500 on August 31 for 5 months’ rent in advanc
> Selected transactions from the journal of Baylee Inc. during its first month of operations are presented here. Instructions (a) Post the transactions to T-accounts. (b) Prepare a trial balance at August 31, 2017. Date Account Titles Debit Credit Cash
> (a) When entering a transaction in the journal, should the debit or credit be written first? (b) Which should be indented, the debit or the credit?
> Suppose the following information was reported by Gap, Inc. (a) Determine the overall percentage decrease in Gap’s total assets from 2013 to 2017. What was the average decrease per year? (b) Comment on the change in Gapâ€
> A company fails to recognize an expense incurred but not paid. Indicate which of the following types of accounts is debited and which is credited in the adjusting entry: (a) asset, (b) liability, (c) revenue, or (d) expense.
> On December 31, 2017, Waters Company prepared an income statement and balance sheet, but failed to take into account three adjusting entries. The balance sheet showed total assets $150,000, total liabilities $70,000, and stockholders’ e
> The required steps in the accounting cycle are listed in random order below. List the steps in proper sequence. (a) Prepare a post-closing trial balance (b) Prepare an adjusted trial balance. (c) Analyze business transactions. (d) Prepare a trial balance
> What are the basic steps in the recording process?
> Suppose the following items are taken from the 2017 balance sheet of Yahoo! Inc. (All dollars are in millions.) Goodwill………………………………………………..$3,927 Common stock………………………………………..6,283 Equipment……………………………………………….1,737 Accounts payable………………………………………..152 P
> The financial statements of Louis Vuitton are presented in Appendix F. Instructions for accessing and using the company’s complete annual report, including the notes to its financial statements, are also provided in Appendix F. Instructions Use the compa
> Whistler Corp. performed services for a customer but has not received payment, nor has it recorded any entry related to the work. Which of the following types of accounts are involved in the adjusting entry: (a) asset, (b) liability, (c) revenue, or (d)
> The T-accounts below summarize the ledger of Salvador’s Gardening Company, Inc. at the end of the first month of operations. Instructions (a) Prepare the journal entries (including explanations) that resulted in the amounts posted to t
> This is a partial adjusted trial balance of Ramon Company. Instructions Answer these questions, assuming the year begins January 1. (a) If the amount in Supplies Expense is the January 31 adjusting entry and $300 of supplies was purchased in January, wha
> The income statement for the Bonita Pines Golf Club Inc. for the month ended July 31 shows Service Revenue $16,000, Salaries and Wages Expense $8,400, Maintenance and Repairs Expense $2,500, and Income Tax Expense $1,000. The statement of retained earnin
> What are the normal balances for the following ac- counts of Apple? (a) Accounts Receivable, (b) Accounts Payable, (c) Sales, and (d) Selling, General, and Administrative Expenses.
