Some of the ledger accounts for the Sanderson Hardware Company are numbered and listed below. For each of the October 2021 transactions numbered 1 through 10 below, indicate by account number which accounts should be debited and which should be credited when preparing journal entries. The company uses the perpetual inventory system. (1) Accounts payable (2) Equipment (3) Inventory (4) Accounts receivable (5) Cash (6) Supplies (7) Supplies expense (8) Prepaid rent (9) Sales revenue (10) Retained earnings (11) Notes payable (12) Common stock (13) Deferred sales revenue (14) Rent expense (15) Salaries payable (16) Cost of goods sold (17) Salaries expense (18) Interest expense (19) Dividends 1. Paid a cash dividend. 2. Paid rent for the next three months. 3. Sold goods to customers on account. 4. Purchased inventory on account. 5. Purchased supplies for cash. 6. Issued common stock in exchange for cash. 7. Collected cash from customers for goods sold in 3. 8. Borrowed cash from a bank and signed a note. 9. At the end of October, recorded the amount of supplies that had been used during the month. 10. Received cash for advance payment from customer.
> Refer to the situation described in BE 7–15. If credit sales for the year were $8,200,000 and $7,950,000 was collected from credit customers, what was the beginning-of-year balance in accounts receivable? Data from BE 7-15: A company’s year-end balance
> Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2021. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of $5,000 on each September 30, beginning on September 30, 2024.
> 1. Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-period annuity of $8,000 beginning one year from today, or (3) a six-period annuit
> On September 17, 2021, Ziltech, Inc., entered into an agreement to sell one of its divisions that qualifies as a component of the entity according to generally accepted accounting principles. By December 31, 2021, the company’s fiscal year-end, the divis
> Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been
> Esquire Comic Book Company had income before tax of $1,000,000 in 2021 before considering the following material items: 1. Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting pri
> Chance Company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by generally accepted accounting principles. The farm equipment component had been un
> The following incorrect income statement was prepared by the accountant of the Axel Corporation: Required: Prepare a multiple-step income statement for 2021 applying generally accepted accounting principles. The income tax rate is 25%. Be sure to includ
> The trial balance for Lindor Corporation, a manufacturing company, for the year ended December 31, 2021, included the following accounts: The gain on debt securities is unrealized and classified as other comprehensive income. The trial balance does not i
> Assume the same facts as in E 4–31, but that Shields Company reports under IFRS. For each expenditure, indicate the amount that would be reported in the quarterly income statements for the periods ending March 31, June 30, September 30,
> Shields Company is preparing its interim report for the second quarter ending June 30. The following payments were made during the first two quarters: Required: For each expenditure, indicate the amount that would be reported in the quarterly income stat
> A company’s year-end balance in accounts receivable is $2,000,000. The allowance for uncollectible accounts had a beginning-of-year credit balance of $30,000. An aging of accounts receivable at the end of the year indicates a required allowance of $38,00
> The following is a partial trial balance for General Lighting Corporation as of December 31, 2021: There were 160,000 shares of common stock outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25%. Required:
> Joplin Laminating Corporation reported income before income taxes during the first three quarters, and management’s estimates of the annual effective tax rate at the end of each quarter as shown below: Required: Determine the income tax
> This exercise is based on the Peabody Toys, Inc., data from E 4–27. Required: 1. Determine the following components of the DuPont framework for 2021: a. Profit margin on sales b. Asset turnover c. Equity multiplier d. Return on equity 2
> The following condensed information was reported by Peabody Toys, Inc., for 2021 and 2020: Required: 1. Determine the following ratios for 2021: a. Profit margin on sales b. Return on assets c. Return on equity 2. Determine the amount of dividends paid t
> The 2021 income statement of Anderson Medical Supply Company reported net sales of $8 million, cost of goods sold of $4.8 million, and net income of $800,000. The following table shows the company’s comparative balance sheets for 2021 a
> Refer to the situation described in E 4–20. Required: Prepare the cash flows from operating activities section of Tiger’s 2021 statement of cash flows using the direct method. Assume that all purchases and sales of inv
> Presented below is the 2021 income statement and comparative balance sheet information for Tiger Enterprises. Required: Prepare Tiger’s statement of cash flows, using the indirect method to present cash flows from operating activities.
> The following is a partial trial balance for the Green Star Corporation as of December 31, 2021: There were 100,000 shares of common stock outstanding throughout 2021. Required: 1. Prepare a single-step income statement for 2021, including EPS disclosure
> The statement of cash flows for the year ended December 31, 2021, for Bronco Metals is presented below. Required: Prepare the statement of cash flows assuming that Bronco prepares its financial statements according to International Financial Reporting St
> Chew Corporation prepares its statement of cash flows using the indirect method of reporting operating activities. Net income for the 2021 fiscal year was $1,250,000. Depreciation expense of $140,000 was included with operating expenses in the income sta
> Refer to the situation described in BE 7–13. Answer the two questions assuming the company estimates that future bad debts will equal 10% of the year-end balance in accounts receivable. Data from BE 7-13: The following information relates to a company’s
> Cemptex Corporation prepares its statement of cash flows using the indirect method to report operating activities. Net income for the 2021 fiscal year was $624,000. Depreciation and amortization expense of $87,000 was included with operating expenses in
> The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. 1. Issued 30,000 shares of common stock in exchange for $300,000 in cash. 2. Purchased equipment at a cost of $40,0
> The accounting records of Hampton Company provided the data below ($ in thousands). Required: Prepare a reconciliation of net income to net cash flows from operating activities.
> Refer to the situation described in E 4–13. Required: Prepare the statement of cash flows assuming that Bluebonnet prepares its financial statements according to International Financial Reporting Standards. Where IFRS allows flexibility
> The following summary transactions occurred during 2021 for Bluebonnet Bakers: The balance of cash and cash equivalents at the beginning of 2021 was $17,000. Required: Prepare a statement of cash flows for 2021 for Bluebonnet Bakers. Use the direct metho
> The statement of cash flows classifies all cash inflows and outflows into one of the three categories shown below and lettered from a through c. In addition, certain transactions that do not involve cash are reported in the statement as noncash investing
> The Massoud Consulting Group reported net income of $1,354,000 for its fiscal year ended December 31, 2021. In addition, during the year the company experienced a positive foreign currency translation adjustment of $240,000 and an unrealized loss on debt
> The Esposito Import Company had 1 million shares of common stock outstanding during 2021. Its income statement reported the following items: income from continuing operations, $5 million; loss from discontinued operations, $1.6 million. All of these amou
> Pandora Corporation operates several factories in the Midwest that manufacture consumer electronics. The December 31, 2021, year-end trial balance contained the following income statement items: Required: Calculate the company’s operati
> The following is the balance sheet of Korver Supply Company at December 31, 2020 (prior year). Transactions during 2021 (current year) were as follows: 1. Sales to customers on account $800,000 2. Cash collected from customers 780,000 3. Purchase of merc
> Crell Computers categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due = $60,000; estimated uncollectible = 5%. 2. Accounts 1–30 days past due = $15,000; estim
> Cone Corporation is in the process of preparing its December 31, 2021, balance sheet. There are some questions as to the proper classification of the following items: a. $50,000 in cash restricted in a savings account to pay bonds payable. The bonds matu
> The following balance sheet for the Los Gatos Corporation was prepared by a recently hired accountant. In reviewing the statement you notice several errors. Additional Information: 1. Cash includes a $20,000 restricted amount to be used for repayment of
> Presented next are the ending balances of accounts for the Kansas Instruments Corporation at December 31, 2021. Additional Information: 1. The notes receivable, along with any accrued interest, are due on November 22, 2022. 2. The notes payable are due i
> The following are the ending balances of accounts at December 31, 2021, for the Valley Pump Corporation. Additional Information: 1. The $120,000 balance in the land account consists of $100,000 for the cost of land where the plant and office buildings ar
> The following is a December 31, 2021, post-closing trial balance for the Jackson Corporation. Required: Prepare a classified balance sheet for Jackson Corporation at December 31, 2021, by properly classifying each of the accounts.
> The following are the typical classifications used in a balance sheet: a. Current assets b. Investments c. Property, plant, and equipment d. Intangible assets e. Other assets f. Current liabilities g. Long-term liabilities h. Paid-in capital i. Retained
> Refer to E 3–21. Required: How might your answers differ if Canton Corporation prepares its segment disclosure according to International Financial Reporting Standards? Data from E3-21: The Canton Corporation operates in four distinct
> The Canton Corporation operates in four distinct business segments. The segments, along with 2021 information on revenues, assets, and net income, are listed below ($ in thousands): Required: 1. For which segments must Canton report supplementary informa
> Best Buy Co, Inc., is a leading retailer specializing in consumer electronics. A condensed income statement and balance sheet for the fiscal year ended January 28, 2017, are shown next. Liquidity and solvency ratios for the industry are as follows: Requi
> The 2021 balance sheet for Hallbrook Industries, Inc., is shown below. The company’s 2021 income statement reported the following amounts ($ in thousands): Required: Determine the following ratios for 2021: 1. Current ratio 2. Acid-tes
> At the end of the year, Syer Associates had a debit balance in its allowance for uncollectible accounts of $12,000 before adjustment. The balance in Syer’s gross accounts receivable is $600,000. Syer’s management estimates that 10% of its accounts receiv
> Hallergan Company produces car and truck batteries that it sells primarily to auto manufacturers. Dorothy Hawkins, the company’s controller, is preparing the financial statements for the year ended December 31, 2021. Hawkins asks for your advice concerni
> The following December 31, 2021, fiscal year-end account balance information is available for the Stonebridge Corporation: The only asset not listed is short-term investments. The only liabilities not listed are $30,000 notes payable due in two years and
> Prepare the necessary adjusting entries at December 31, 2021, for the Microchip Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. 1. On October 1, 2021,
> Prepare the necessary adjusting entries at December 31, 2021, for the Falwell Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. 1. A three-year fire ins
> Listed below are several terms and phrases associated with the accounting processing cycle. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. List A: 1. Source documents 2. Transaction analysi
> The following transactions occurred during the month of June 2021 for the Stridewell Corporation. The company owns and operates a retail shoe store. 1. Issued 100,000 shares of common stock in exchange for $500,000 cash. 2. Purchased office equipment at
> Post the journal entries prepared in E 2–2 to T-accounts. Assume that the opening balances in each of the accounts is zero. Prepare a trial balance from the ending account balances. Data from E 2-2: Prepare journal entries to record each of the transact
> The accounting system of K and M Manufacturing consists of a general journal (GJ), a cash receipts journal (CR), a cash disbursements journal (CD), a sales journal (SJ), and a purchases journal (PJ). For each of the following, indicate which journal shou
> Prepare journal entries to record each of the transactions listed in E 2–1. Data from E 2-1: The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. 1. Issued 30,000 shar
> At the end of the year, Breyer Associates had a credit balance in its allowance for uncollectible accounts of $12,000 before adjustment. The balance in Breyer’s gross accounts receivable is $600,000. Breyer’s management estimates that 10% of its accounts
> The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2021, trial balances contained the following account information: The following information also is known: a. The December income statemen
> The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. 1. Issued 30,000 shares of common stock in exchange for $300,000 in cash. 2. Purchased equipment at a cost of $40,0
> The December 31, 2021, unadjusted trial balance for the Wolkstein Drug Company is presented below. December 31 is the company’s year-end reporting date. The following year-end adjusting entries are required: a. Depreciation expense for
> Haskins and Jones, Attorneys-at-Law, maintains its books on a cash basis. During 2021, the law firm collected $545,000 for services rendered to its clients and paid out $412,000 in expenses. You are able to determine the following information about accou
> Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $100,000 from a local bank, and the bank requires S&J to provide annual financial statements prepared on an accrual basis. Du
> During the course of your examination of the financial statements of the Hales Corporation for the year ended December 31, 2021, you discover the following: a. An insurance policy covering three years was purchased on January 1, 2021, for $6,000. The ent
> The following transactions occurred during 2021 for the Beehive Honey Corporation: Feb. 1: Borrowed $12,000 from a bank and signed a note. Principal and interest at 10% will be paid on January 31, 2022. Apr. 1: Paid $3,600 to an insurance company for a t
> Determine the response that best completes the following statements or questions. 1. The primary objective of financial reporting is to provide information a. About a firm’s management team. b. Useful to capital providers. c. Concerning the changes in fi
> Presented below is income statement information of the Schefter Corporation for the year ended December 31, 2021. Required: Prepare the necessary closing entries at December 31, 2021.
> American Chip Corporation’s reporting year-end is December 31. The following is a partial adjusted trial balance as of December 31, 2021. Required: Prepare the necessary closing entries at December 31, 2021.
> Assume the same facts as in BE 6–8 but that customers pay 20% less for the extended warranty if they buy it at the same time they buy a Tornado. How many performance obligations exist in the implied contract for the purchase of a vacuum cleaner? Data fr
> The following is a December 31, 2021, post-closing trial balance for Culver City Lighting, Inc. Prepare a classified balance sheet for the company.
> The December 31, 2021, adjusted trial balance for the Blueboy Cheese Corporation is presented below. Required: 1. Prepare an income statement for the year ended December 31, 2021, and a classified balance sheet as of December 31, 2021. 2. Prepare the nec
> The Mazzanti Wholesale Food Company’s fiscal year-end is June 30. The company issues quarterly financial statements requiring the company to prepare adjusting entries at the end of each quarter. Assuming all quarterly adjusting entries were properly reco
> The Eldorado Corporation’s controller prepares adjusting entries only at the end of the reporting year. The following adjusting entries were prepared on December 31, 2021: Additional information: 1. The company borrowed $120,000 on Marc
> On January 1, 2021, JPS Industries borrowed $300,000 from Austin Bank by issuing a three-year, floating rate note based on LIBOR, with interest payable semi-annually on June 30 and December of each year. JPS entered into a three-year interest rate swap a
> Cleveland Company is a U.S. firm with a U.S. dollar functional currency that manufactures copper-related products. It forecasts that it will sell 5,000 feet of copper tubing to one of its largest customers at a price of ¥50,000,000. Although t
> Arlington Steel Company is a producer of raw steel and steel-related products. On January 3, 2022, Arlington enters into a firm commitment to purchase 10,000 tons of iron ore pellets from a supplier to satisfy spring production demands. The purchase is t
> On January 1, 2021, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. LLB entered into a two-year interest rate swap agreement on January 1, 2021, and designated the swap as a fair value he
> On January 1, 2021, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. LLB entered into a two-year interest rate swap agreement on January 1, 2021, and designated the swap as a fair value he
> LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. LLB entered into a two-year interest rate swap agreement on January 1, 2021, and designated the swap as a fair value hedge. Its intent was
> Refer to the data provided in E 21–27 for Red, Inc. Required: Prepare the statement of cash flows (direct method) for Red, Inc. Use the T-account method to assist in your analysis. Data from E 21-27: Comparative balance sheets for 2021
> Assume the same facts as in BE 6–5 but that Tulane Tires reports under IFRS. How much revenue should Tulane recognize under IFRS? Data from BE 6-5: Tulane Tires wrote a contract for a $100,000 sale of tires to the new Garden District Tour Company. Tulan
> Refer to the data provided in E 21–27 for Red, Inc. Required: Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities. Data from E 21-27: Comparative balance sheets for 2021 and 2020,
> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine the specific eight-digit Codification citation (XXX-XX-XX-X) for accounting for each of the following items: 1. Disclosure of interest and income tax paid if
> The statement of cash flows (as well as the balance sheet) includes within cash the notion of cash equivalents. The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Requir
> Mayer Corporation has a defined benefit pension plan. Mayer’s policy is to fund the plan annually, cash payments being made at the end of each year. Data relating to the pension plan for 2021 are as follows: Required: Recreate the journ
> Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting records of Red, Inc., are provided below. Additional information from the accounting records: a. During 2021, $230 million of equ
> Refer to the data provided in E 21–25 for Clear Transmissions Company. Required: Prepare the cash flows from operating activities section of the statement of cash flows for Clear Transmissions Company using the indirect method. Data fr
> Portions of the financial statements for Clear Transmissions Company are provided on the next page. Required: Prepare the cash flows from operating activities section of the statement of cash flows for Clear Transmissions Company using the direct method.
> Refer to the data provided in E 21–23 for Myriad Products Company. Required: Prepare the cash flows from the operating activities section of the statement of cash flows for Myriad Products Company using the indirect method. Data from E
> Portions of the financial statements for Myriad Products are provided below. Required: Prepare the cash flows from operating activities section of the statement of cash flows for Myriad Products Company using the direct method.
> The income statement and a schedule reconciling cash flows from operating activities to net income are provided below ($ in thousands) for Peach Computers. Required: 1. Calculate each of the following amounts for Peach Computers: a. Cash received from cu
> GoodBuy sells gift cards redeemable for GoodBuy products either in store or online. During 2021, GoodBuy sold $1,000,000 of gift cards, and $840,000 of the gift cards were redeemed for products. As of December 31, 2021, $30,000 of the remaining gift card
> The income statement and the cash flows from the operating activities section of the statement of cash flows are provided below for Syntric Company. The merchandise inventory account balance neither increased nor decreased during the reporting period. Sy
> The following schedule relates the income statement with cash flows from operating activities, derived by both the direct and indirect methods, in the format illustrated by Illustration 21–11 in the chapter. The amounts for income state
> The statement of retained earnings of Gary Larson Publishers is presented below. Required: For the transactions that affected Larson’s retained earnings, reconstruct the journal entries that can be used to determine cash flows to be rep
> On January 1, 2021, Beilich Enterprises bought 20% of the outstanding common stock of Wolfe Construction Company for $600 million cash. Wolfe’s net income for the year ended December 31, 2021, was $300 million. During 2021, Wolfe declar
> Wilson Foods Corporation leased a commercial food processor on September 30, 2021. The five-year finance lease agreement calls for Wilson to make quarterly lease payments of $195,774, payable each September 30, December 31, March 31, June 30, with the fi
> In preparation for developing its statement of cash flows for the year ended December 31, 2021, Millennium Solutions, Inc. collected the following information: Required: 1. In Millennium’s statement of cash flows, what were net cash inf
> In preparation for developing its statement of cash flows for the year ended December 31, 2021, Rapid Pac, Inc., collected the following information: Required: 1. In Rapid Pac’s statement of cash flows, what were net cash inflows (or ou
> National Food Services, Inc., borrowed $4 million from its local bank on January 1, 2021, and issued a 4-year installment note to be paid in four equal payments at the end of each year. The payments include interest at the rate of 10%. Installment paymen
> Most Solutions, Inc., issued 10% bonds, dated January 1, with a face amount of $640 million on January 1, 2021. The bonds mature in 2031 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest expense is recorded at the effec
> Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income in 2021 was correctly stated as $90 million. If the com
> On May 1, 2021,Varga Tech Services signed a $6,000 consulting contract with Shaffer Holdings. The contract requires Varga to provide computer technology support services whenever requested over the period from May 1, 2021, to April 30, 2022, with Shaffer
