The accounting records of Robin Co. showed the following balances at January 1, 2018: Cash……………………………………………………………………………………………..$30,000 Beginning inventory (100 units @ $50, 70 units @ $55)………………………8,850 Common stock……………………………………………………………………………….20,000 Retained earnings………………………………………………………………………….18,850 Transactions for 2018 were as follows: Purchased 100 units @ $54 per unit. Purchased 250 units @ $58 per unit. Sold 220 units @ $80 per unit. Sold 200 units @ $90 per unit. Paid operating expenses of $3,200. Paid income tax expense. The income tax rate is 30%. Required: a. Organize the class into three sections, and divide each section into groups of three to five students. Assign each section one of the cost flow methods, FIFO, LIFO, or weighted average. The company uses the perpetual inventory system. Group Tasks Determine the amount of ending inventory, cost of goods sold, gross margin, and net income after income tax for the cost flow method assigned to your section. Also prepare an income statement using that cost flow assumption. Class Discussion b. Have a representative of each section put its income statement on the board. Discuss the effect that each cost flow method has on assets (ending inventory), net income, and cash flows. Which method is preferred for tax reporting? For financial reporting? What restrictions are placed on the use of LIFO for tax reporting?
> On January 1, 2018, Jana started a small flower merchandising business that she named Jana’s Flowers. The company experienced the following events during the first year of operation: 1. Started the business by issuing common stock for $30,000 cash. 2. Pa
> Yard Professionals Inc. experienced the following events in 2018, its first year of operation: 1. Performed services for $35,000 cash. 2. Purchased $6,000 of supplies on account. 3. A physical count on December 31, 2018, found that there was $1,800 of su
> Pizza Express Inc. began the 2018 accounting period with $2,500 cash, $1,400 of common stock, and $1,100 of retained earnings. Pizza Express was affected by the following accounting events during 2018: 1. Purchased $3,600 of supplies on account. 2. Earne
> In 2018, Lee Inc. billed its customers $62,000 for services performed. The company collected $51,000 of the amount billed. Lee incurred $39,000 of other operating expenses on account. Lee paid $31,000 of the accounts payable. Lee acquired $40,000 cash fr
> Cordell Inc. experienced the following events in 2018, its first year of operation: 1. Received $40,000 cash from the issue of common stock. 2. Performed services on account for $82,000. 3. Paid a $6,000 cash dividend to the stockholders. 4. Collected $7
> Use the Target Corporation’s Form 10-K to answer the following questions related to Target’s 2015 fiscal year (year ended January 30, 2016). Target’s Form 10-K is available on the company’s website or through the SEC’s EDGAR database. Appendix A provides
> Castile Inc. had a beginning balance of $4,000 in its Accounts Receivable account. The ending balance of Accounts Receivable was $4,500. During the period, Castile recognized $68,000 of revenue on account. Castile’s Salaries Payable account has a beginni
> The following events apply to Lewis and Harper, a public accounting firm, for the 2018 accounting period: 1. Performed $70,000 of services for clients on account. 2. Performed $40,000 of services for cash. 3. Incurred $36,000 of other operating expenses
> Milea Inc. experienced the following events in 2018, its first year of operations: 1. Received $20,000 cash from the issue of common stock. 2. Performed services on account for $56,000. 3. Paid the utility expense of $2,500. 4. Collected $48,000 of the a
> Identify whether each of the following items would appear on the income statement (IS), statement of changes in stockholders’ equity (SE), balance sheet (BS), or statement of cash flows (CF). Some items may appear on more than one statement; if so, ident
> The following transactions pertain to the operations of Ewing Company for 2018: 1. Acquired $30,000 cash from the issue of common stock. 2. Provided $65,000 of services on account. 3. Paid $22,000 cash on accounts payable. 4. Performed services for $8,00
> Companies make sacrifices known as expenses to obtain benefits called revenues. The accurate measurement of net income requires that expenses be matched with revenues. In some circumstances, matching a particular expense directly with revenue is difficul
> a. Identify which of the following accounts are temporary (will be closed to Retained Earnings at the end of the year) and which are permanent: (1) Other Operating Expenses (2) Utilities Expense (3) Retained Earnings (4) Salaries Expense (5) Land
> The following information was drawn from the accounting records of Wyckoff Company as of December 31, 2018, before the temporary accounts had been closed. The Cash balance was $3,600, and Notes Payable amounted to $4,000. The company had revenues of $7
> Norell Inc. experienced the following accounting events during its 2018 accounting period: 1. Recognized revenue on account. 2. Issued common stock. 3. Paid cash to purchase supplies. 4. Collected a cash advance for services that will be provided during
> Alonzo Saunders owns a small training services company that is experiencing growing pains. The company has grown rapidly by offering liberal credit terms to its customers. Although his competitors require payment for services within 30 days, Saunders per
> Love Company’s accounting records show an after-closing balance of $42,100 in its Retained Earnings account on December 31, 2018. During the 2018 accounting cycle, Love earned $19,400 of revenue, incurred $9,800 of expense, and paid $500 of dividends. Re
> During 2018, Chung Corporation earned $8,000 of cash revenue and accrued $5,000 of salaries expense. Required: Based on this information alone: a. Prepare the December 31, 2018, balance sheet. b. Determine the amount of net income that Chung would repor
> Identify each of the following events as an accrual, a deferral, or neither: a. Paid cash in advance for a one-year insurance policy. b. Paid cash to settle an account payable. c. Collected accounts receivable. d. Paid cash for current salaries expense.
> On October 1, 2018, Stokes Company paid Eastport Rentals $4,800 for a 12-month lease on warehouse space. Required: a. Record the deferral and the related December 31, 2018, adjustment for Stokes Company in the accounting equation. b. Record the deferral
> Hart, Attorney at Law, experienced the following transactions in 2018, the first year of operations: 1. Accepted $36,000 on April 1, 2018, as a retainer for services to be performed evenly over the next 12 months. 2. Performed legal services for cash of
> Lan, an accounting major, and Pat, a marketing major, are watching a Matlock rerun on late-night TV. Of course, there is a murder and the suspect wants to hire Matlock as the defense attorney. Matlock will take the case but requires an advance payment of
> Yard Designs (YD) experienced the following events in 2018, its first year of operation: 1. On October 1, 2018, YD collected $54,000 for consulting services it agreed to provide during the coming year. 2. Adjusted the accounts to reflect the amount of co
> On April 1, 2018, Maine Corporation paid $18,000 cash in advance for a one-year lease on an office building. Assume that Maine records the prepaid rent as an asset and that the books are closed on December 31. Required: a. Show the payment for the one-y
> Life, Inc., experienced the following events in 2018, its first year of operation: 1. Performed counseling services for $36,000 cash. 2. On February 1, 2018, paid $18,000 cash to rent office space for the coming year. 3. Adjusted the accounts to reflect
> A cost can be either an asset or an expense. Required: a. Distinguish between a cost that is an asset and a cost that is an expense. b. List three costs that are assets. c. List three costs that are expenses.
> Paul Smith is opening a plumbing supply store in University City. He plans to sell plumbing parts and materials to both wholesale and retail customers. Since contractors (wholesale customers) prefer to buy parts and materials and pay at the end of the mo
> Holloway Company earned $18,000 of service revenue on account during 2018. The company collected $14,000 cash from accounts receivable during 2018. Required: Based on this information alone, determine the following for Holloway Company. a. The balance o
> Required: a. Name an asset use transaction that will not affect the income statement. b. Name an asset exchange transaction that will affect the statement of cash flows. c. Name an asset source transaction that will not affect the income statement. d. Na
> Indicate whether each of the following transactions is an asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE) transaction. a. Acquired cash from the issue of stock. b. Paid a cash dividend to the stockholders. c. Paid cash on
> Give an example of a transaction that will: a. Increase an asset and increase equity (asset source event). b. Decrease an asset and decrease equity (asset use event). c. Increase an asset and decrease another asset (asset exchange event). d. Decrease a l
> Explain how each of the following events or series of events and the related adjusting entry will affect the amount of net income and the amount of cash flow from operating activities reported on the yearend financial statements. Identify the direction o
> Corrugated Boxes Inc. is a U.S.-based company that develops its financial statements under GAAP. The total amount of the company’s assets shown on its December 31, 2018, balance sheet was approximately $305 million. The president of Corrugated is conside
> The Candle Shop experienced the following events during its first year of operations, 2018: 1. Acquired cash by issuing common stock. 2. Paid a cash dividend to the stockholders. 3. Paid cash for operating expenses. 4. Borrowed cash from a bank. 5. Provi
> Critz Company was started on January 1, 2018. During the month of January, Critz earned $7,500 of revenue and incurred $4,800 of expenses. During the remainder of 2018, Critz earned $86,000 and incurred $51,000 of expenses. Critz closes its books on Dece
> Sammy’s Pizza opened on January 1, 2018. Sammy’s reported the following for cash revenues and cash expenses for the years 2018 to 2020: Required: a. What would Sammy’s Pizza report for net income an
> As of December 31, 2018, Flowers Company had total assets of $130,000, total liabilities of $50,000, and common stock of $70,000. The company’s 2018 income statement contained revenue of $30,000 and expenses of $18,000. The 2018 statement of changes in s
> Using the most current annual reports or the Forms 10-K for Starbucks, the world’s largest coffee houses, and Whirlpool, which manufactures appliances, complete the following requirements. To obtain the Forms 10-K, use either the EDGAR system following t
> The following selected financial information is available for HAS, Inc. Amounts are in millions of dollars. Required: a. Divide the class into groups of four or five students each. Organize the groups into four sections. Assign Task 1 to the first sec
> As of January 1, 2018, Room Designs, Inc. had a balance of $9,900 in Cash, $3,500 in Common Stock, and $6,400 in Retained Earnings. These were the only accounts with balances in the ledger on January 1, 2018. Further analysis of the companyâ€&
> On January 1, 2018, the following information was drawn from the accounting records of Carter Company: cash of $800; land of $3,500; notes payable of $600; and common stock of $1,000. Required: a. Determine the amount of retained earnings as of January
> Riley Company paid $60,000 cash to purchase land from Smally Company in 2018. Smally originally paid $60,000 for the land. Required: a. Was this event an asset source, use, or exchange transaction for Riley Company? b. Was this event an asset source, us
> Dakota Company experienced the following events during 2018: 1. Acquired $30,000 cash from the issue of common stock. 2. Paid $12,000 cash to purchase land. 3. Borrowed $10,000 cash. 4. Provided services for $20,000 cash. 5. Paid $1,000 cash for utilitie
> All-Star Automotive Company experienced the following accounting events during 2018: 1. Performed services for $25,000 cash. 2. Purchased land for $6,000 cash. 3. Hired an accountant to keep the books. 4. Received $50,000 cash form the issue of common st
> On January 1, 2018, Moore, a fast-food company, had a balance in its Cash account of $45,800. During the 2018 accounting period, the company had (1) net cash inflow from operating activities of $24,800, (2) net cash outflow for investing activities of $1
> Clark Bell started a personal financial planning business when he accepted $36,000 cash as advance payment for managing the financial assets of a large estate. Bell agreed to manage the estate for a oneyear period beginning June 1, 2018. Required: a. Sh
> Mijka Company was started on January 1, 2018. During 2018, the company experienced the following three accounting events: (1) earned cash revenues of $28,600, (2) paid cash expenses of $13,200, and (3) paid a $1,500 cash dividend to its stockholders. The
> The December 31, 2018, balance sheet for Deen Company showed total stockholders’ equity of $156,000. Total stockholders’ equity increased by $65,000 between December 31, 2018, and December 31, 2019. During 2019, Deen Company acquired $20,000 cash from t
> Nevada Companies experienced the following events during its first year of operations: 1. Acquired $1,000 cash from the issue of common stock. 2. Paid $24 cash for utilities expense. 3. Paid a $1,500 cash dividend to the stockholders. 4. Provided boardin
> Assume that Harris Company acquires $3,600 cash from creditors and $4,200 cash from investors. Required: a. Explain the primary differences between investors and creditors. b. If Harris has net income of $2,000 and then liquidates, what amount of cash w
> The following account balances were drawn from the financial records of Kent Company (KC) as of January 1, 2018: Assets, $35,000; Liabilities, $6,000; Common Stock, $12,000; and Retained Earnings, $17,000. KC has agreed to pay the creditors $400 of inter
> The financial condition of White Co. Inc. is expressed in the following accounting equation: Required: a. Are dividends paid to creditors or investors? Explain why. b. How much cash is in the Retained Earnings account? c. Determine the maximum dividend
> Jones Enterprises was started when it acquired $6,000 cash from creditors and $10,000 from owners. The company immediately purchased land that cost $12,000. Required: a. Record the events under an accounting equation. b. After all events have been recor
> The following account titles were drawn from the general ledger of Holt Food Supplies, Incorporated (HFSI): Computers, Operating Expenses, Rent Revenue, Building, Cash, Notes Payable, Land, Utilities Payable, Utilities Expense, Trucks, Gasoline Expense,
> As of December 31, 2018, Moss Company had total cash of $195,000, notes payable of $90,500, and common stock of $84,500. During 2019, Moss earned $42,000 of cash revenue, paid $24,000 for cash expenses, and paid a $3,000 cash dividend to the stockholders
> At the beginning of 2018, Better Corp.’s accounting records had the following general ledger accounts and balances: Better Corp. completed the following transactions during 2018: 1. Purchased land for $5,000 cash. 2. Acquired $25,000
> Olive Enterprises experienced the following events during 2018: 1. Acquired cash from the issue of common stock. 2. Paid cash to reduce the principal on a bank note. 3. Sold land for cash at an amount equal to its cost. 4. Provided services to clients fo
> a. Match the terms (identified as a through g) with the definitions and phrases (marked 1 through 7). For example the term “a. Assets” matches with definition 7. Economic resources that will be used by a business to pr
> Karen White helped organize a charity fund to help cover the medical expenses of a friend of hers who was seriously injured in a bicycle accident. The fund was named Vicky Hill Recovery Fund (VHRF). Karen contributed $1,000 of her own money to the fund.
> Use the Target Corporation’s Form 10-K to answer the following questions related to Target’s 2015 fiscal year (year ended January 30, 2016). Target’s Form 10-K is available on the company’s website or through the SEC’s EDGAR database. Appendix A provides
> While public and private accounting overlap, various professional certifications are designed to attest to competency for specific areas of interest. Required: a. Name the most common professional certification held by public accountants. Describe the
> Free economies use open markets to allocate resources. Required: Identify the three participants in a free business market. Write a brief memo explaining how these participants interact to ensure that goods and services are distributed in a manner that
> Identify each of the items shown in the left column of the following table as being an upstream, a midstream, or a downstream cost by placing an X in the one of the columns to the right of the items column. The first item is shown as an example. Ite
> Mustafa Manufacturing Company began operations on January 1. During the year, it started and completed 3,000 units of product. The financial statements are prepared in accordance with GAAP. The company incurred the following costs: 1. Raw materials purch
> Weib Manufacturing experienced the following events during its first accounting period:Â 1. Recognized revenue from cash sale of products. 2. Recognized cost of goods sold from sale referenced in Event 1. 3. Acquired cash by issuing common st
> A review of the accounting records of Baird Manufacturing indicated that the company incurred the following payroll costs during the month of March. Assume the company’s financial statements are prepared in accordance with GAAP. 1. Salary of the company
> Driscoll Industries recognized the annual cost of depreciation on its December 31, 2018, financial statements. Using the following horizontal financial statements model, indicate how this event affected the company’s financial statement
> Finch Corporation recognized accrued compensation cost. Use the following model to show how this event would affect the company’s financial statements under the following two assumptions: (1) the compensation is for office personnel and
> Use the following table to classify each cost as a product cost or an SG&A cost. Also indicate whether the cost would be recorded as an asset or an expense. Assume product cost is defined by generally accepted accounting principles. The first item is
> Indicate whether each of the following costs should be classified as a product cost or as an SG&A cost in accordance with GAAP: a. Direct materials used in a manufacturing company. b. Indirect materials used in a manufacturing company. c. Salaries of emp
> John Riley, a certified public accountant, has worked for the past eight years as a payroll clerk for Southeast Industries, a small furniture manufacturing firm in the Northeast. John recently experienced unfortunate circumstances. His teenage son requir
> In February 2006, former senator Warren Rudman of New Hampshire completed a 17-month investigation of an $11 billion accounting scandal at Fannie Mae (a major enterprise involved in home mortgage financing). The Rudman investigation concluded that Fannie
> The CFO of the Jordan Microscope Corporation intentionally misclassified a downstream transportation expense in the amount of $575,000 as a product cost in an accounting period when the company made 5,000 microscopes and sold 4,000 microscopes. Jordan re
> Gwen Pet Supplies purchases its inventory from a variety of suppliers, some of which require a sixweek lead time before delivering the goods. To ensure that she has a sufficient supply of goods on hand, Ms. Leblanc, the owner, must maintain a large suppl
> Becky Shelton, a teacher at Kemp Middle School, is in charge of ordering the T-shirts to be sold for the school’s annual fund-raising project. The T-shirts are printed with a special Kemp School logo. In some years, the supply of T-shirts has been insuff
> The following information pertains to Flaxman Manufacturing Company for March 2018. Assume actual overhead equaled applied overhead. March 1 Inventory balances Raw m
> Supply the missing information on the following schedule of cost of goods manufactured: FISCHER CORPORATION Schedule of Cost of Goods Manufactured For the Year Ended December 31, 2018 Raw materials Beginning inventory $ 120,000 ? Plus: Purchases Raw
> The following financial statements model shows the effects of recognizing depreciation in two different circumstances. One circumstance represents recognizing depreciation on a machine used in a factory. The other circumstance recognizes depreciation on
> Anne Wood was talking to another accounting student, Don Kirby. Upon discovering that the accounting department offered an upper-level course in cost measurement, Anne remarked to Don, “How difficult can it be? My parents own a toy store. All you have
> During 2017, Rooney Manufacturing Company incurred $8,000,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in 2017. Manufact
> Indicate whether each of the following items is representative of managerial or of financial accounting: a. Information is factual and is characterized by objectivity, reliability, consistency, and accuracy. b. Information is reported continuously and h
> Sarah Johnson was a trusted employee of Evergreen Trust Bank. She was involved in everything. She worked as a teller, she accounted for the cash at the other teller windows, and she recorded many of the transactions in the accounting records. She was so
> Weaver Corporation had the following stock issued and outstanding at January 1, 2018: 1. 150,000 shares of $1 par common stock. 2. 15,000 shares of $100 par, 6 percent, noncumulative preferred stock. On June 10, Weaver Corporation declared the annual cas
> When Crossett Corporation was organized in January 2018, it immediately issued 4,000 shares of $50 par, 6 percent, cumulative preferred stock and 50,000 shares of $20 par common stock. Its earnings history is as follows: 2018, net loss of $35,000; 2019,
> Eastport Inc. was organized on June 5, 2018. It was authorized to issue 300,000 shares of $10 par common stock and 50,000 shares of 5 percent cumulative class A preferred stock. The class A stock had a stated value of $50 per share. The following stock t
> Newly formed S&J Iron Corporation has 50,000 shares of $10 par common stock authorized. On March 1, 2018, S&J Iron issued 6,000 shares of the stock for $16 per share. On May 2, the company issued an additional 10,000 shares for $18 per share. S&a
> The stockholders’ equity section of Creighton Company’s balance sheet is shown as follows. Required: a. Assuming the preferred stock was originally issued for cash, determine the amount of cash that was collected whe
> Astro Corporation was started with the issue of 2,000 shares of $5 par stock for cash on January 1, 2018. The stock was issued at a market price of $12 per share. During 2018, the company earned $31,000 in cash revenues and paid $17,100 for cash expenses
> Faith Busby and Jeremy Beatty started the B&B partnership on January 1, 2018. The business acquired $44,000 cash from Busby and $66,000 from Beatty. During 2018, the partnership earned $42,000 in cash revenues and paid $18,400 for cash expenses. Busby wi
> A sole proprietorship was started on January 1, 2018, when it received $60,000 cash from Marlin Jones, the owner. During 2018, the company earned $35,300 in cash revenues and paid $16,200 in cash expenses. Jones withdrew $1,000 cash from the business dur
> Discount Drugs (one of the three largest drug makers) just reported that its 2018 third quarter profits are essentially the same as the 2017 third quarter profits. In addition to this announcement, the same day, Discount Drugs also announced that the Foo
> On December 30, Billy’s Boat Yard (BBY) had $90,000 of cash, $20,000 of liabilities, $30,000 of common stock, and $40,000 of unrestricted retained earnings. On December 31, BBY appropriated retained earnings in the amount of $18,000 for
> Using the most current Form 10-K available on EDGAR, or the company’s website, answer the following questions about the J. M. Smucker Company. Instructions for using EDGAR are in Appendix A. Note: In some years the financial statements, footnotes, etc.,
> The market value of Yeates Corporation’s common stock had become excessively high. The stock was currently selling for $240 per share. To reduce the market price of the common stock, Yeates declared a 3-for-1 stock split for the 100,000 outstanding share
> Beacon Corporation issued a 5 percent stock dividend on 30,000 shares of its $10 par common stock. At the time of the dividend, the market value of the stock was $15 per share. Required: a. Compute the amount of the stock dividend. b. Show the effects o
> On May 1, 2018, Love Corporation declared a $50,000 cash dividend to be paid on May 31 to shareholders of record on May 15. Required: Record the events occurring on May 1 and May 31 in a horizontal statements model like the following one. In the Cash Fl
> The following information pertains to JAE Corp. at January 1, 2018: Common stock, $10 par, 20,000 shares authorized, 2,000 shares issued and outstanding…………………………………….$20,000 Paidin capital in excess of par, common stock………………………….
> Elroy Corporation repurchased 4,000 shares of its own stock for $30 per share. The stock has a par of $10 per share. A month later Elroy resold 900 shares of the treasury stock for $32 per share. Required: What is the balance of the Treasury Stock accou
> Tom Yuppy, a wealthy investor, paid $20,000 for 1,000 shares of $10 par common stock issued to him by Leuig Corp. A month later, Leuig Corp. issued an additional 2,000 shares of stock to Yuppy for $25 per share. Required: Show the effect of the two stoc
> Mercury Corporation issued 6,000 shares of no-par common stock for $45 per share. Mercury also issued 3,000 shares of $50 par, 5 percent noncumulative preferred stock at $52 per share. Required: Record these events in a horizontal statements model like
