The Inventory account for Kelly’s Florist, Inc., had a balance of $27,300 at the end of its fscal year. A physical count taken at year-end revealed that the value of inventory on hand amounted to $26,950. Requirements 1. Journalize the adjustment for inventory shrinkage. 2. What could cause the inventory balance according to the physical count to be different from the ledger balance?
> The account balances for Tesla Electrical Supply, Inc., for the year ended August 31, 2016, are presented next in random order: Requirements 1. Prepare Tesla Electrical Supply, Inc.’s single-step income statement. 2. Would you recommend the use of th
> Sentry Alarm, Inc., began the year with $19,000 of common stock and $22,600 of retained earnings. On June 5, investors bought $12,000 of additional stock in the business. On September 22, the business purchased land valued at $65,000. The income statemen
> Willis Construction, Inc., completed the following transactions during June 2016, its frst month of operations: Requirements 1. Open, or set up, T-accounts in the ledger for the following accounts: Cash, Accounts Receivable, Supplies, Equipment, Furn
> The following are the balances of the assets, liabilities, and equity of Fitness Fanatics at March 31, 2016: Requirements 1. What type of business organization is Fitness Fanatics? 2. Prepare the balance sheet of the business at March 31, 2016. 3. Wh
> Consider the following incomplete table of a merchandiser’s profit data: Requirement 1. Complete the table by computing the missing amounts.
> The accountant for Stanley Siding, Inc., posted adjusting entries (a) through (e) to the accounts at May 31, 2016. Selected balance sheet accounts and all the revenues and expenses of the entity follow in T-account form. Requirements 1. Explain the p
> Chad Simpson started a mobile DJ business named Sounds on Wheels, Inc., on April 1, 2016. In the month of April, prior to providing services to customers,Analyzing and Recording Business Transactions 85 the business incurred six transactions which have b
> This problem is the first problem in a sequence that begins an accounting cycle. The cycle iscontinued in Chapter 2 and completed in Chapter 3. Adam Mazella recently left his job to open his own gym equipment repair business. Adamtook all of the money he
> You’re sitting in your CPA office late on a Friday afternoon when you get an e-mail from a client. You know that she has been working on setting up a new accounting system in her office for a new business that she just started. You figured this would eve
> Joe Reese is the accountant for Lawn BoyzLawnservice, Inc. During the month, numerous payments were made for wages for which he was properly debiting the Wage Expense account and crediting Cash. Joe became concerned that if he kept debiting the Wage Expe
> What type of transaction would result in the recording of a prepaid asset? What do you think will happen to that prepaid asset eventually?
> This problem continues with the business of Fitness Equipment Doctor, Inc., begun in the continuing problem in Chapter 1. Here you will account for Fitness Equipment Doctor, Inc.’s transactions using formal accounting practices. The trial balance for Fit
> Jack Sanders owns and operates Jack’s Java Coffee Shop. He proposes to account for the shop’s assets at their current market value in order to have current amounts on the balance sheet. Which accounting concept or principle does Jack violate? a. Busines
> The majority of Generally Accepted Accounting Principles (GAAP) are created by the a. Institute of Management Accountants (IMA). b. Securities and Exchange Commission (SEC). c. American Institute of Certified Public Accountants (AICPA). d. Financial Acco
> Blackstone, Inc., was in the final phase of completing a land development project it started earlier in the year. Blackstone, Inc., had acquired 50 acres of raw land for $400,000 and then spent an additional $1,700,000 in land development costs to create
> Which inventory costing method assigns the newest, most recent costs incurred during the period to ending inventory? a. Last-in, first-out (LIFO) b. Specific-unit cost c. Average cost d. First-in, first-out (FIFO)
> How are the financial statements of a manufacturer different from those of a merchandiser with respect to inventory?
> Would you describe accounting as primarily a technical discipline or primarily an ethicaldiscipline? Why?
> Cole’s Furniture uses the perpetual inventory method. At the end of the year, Cole’s Furniture’s Inventory account had a ledger balance of $163,000. A physical inventory count revealed that the actual inventory on hand totaled $161,800. Journalize the tr
> The two main inventory accounting systems are the a. perpetual and periodic. b. cash and accrual. c. returns and allowances. d. purchase and sale.
> Dolly Harding owns and operates Dolly Jo’s Café. Dolly has requested a credit application from LRM, Inc., a major food supplier from which she hopes to begin purchasing inventory. LRM, Inc., has requested that Dolly submit a full set of financial stateme
> What are some reasons why a merchandiser might prefer to use a perpetual inventory system over a periodic inventory system?
> Match the accounting term with the corresponding definition. ____ 1. Accumulated depreciation ____ 2. Adjusted trial balance ____ 3. Adjusting entry ____ 4. Book value ____ 5. Contra-account ____ 6. Depreciation ____ 7. Long-term asset a. An account wh
> Adjusting the accounts is the process of a. subtracting expenses from revenues to measure net income. b. recording transactions as they occur during the accounting period. c. updating the accounts at the end of the accounting period. d. zeroing out accou
> Brent Robertson and his banker were reviewing the quarterly income statements for his consulting business, Robertson and Associates, Inc. The banker was impressed with the growth of sales revenue and net income for the second quarter of this year as comp
> What does the matching principle require companies to match?
> For each of the following accounts, place the corresponding letter(s) of its account type in the space provided. Use the most detailed account type appropriate. (A) Asset (L) Liability (SE) Stockholders’ Equity (R) Revenue (E) Expense SE Dividends _____
> The left side of an account is used to record a. debits. b. increases. c. credits. d. debits or credits, depending on the type of account
> ShavonLoreal opened a medical practice titled ShavonLoreal M.D., Inc. During August, the first month of operations, the business experienced the following events: Requirement Analyze the effects of these events on the accounting equation of the medic
> The following transactions occurred during June 2016 for Soulful Art, Inc.: Requirement 1. Journalize the June transactions for Soulful Art, Inc. Omit explanations.
> The accounting records of Vacations Unlimited include the following unadjusted balances at November 30: Accounts Receivable, $1,200; Supplies, $600; Salaries Payable, $0; Unearned Service Revenue, $1,300; Service Revenue, $5,300; Salaries Expense, $1,500
> Clocktower Cleaning, Inc., had the following transactions for the month of March 2016. The following T-accounts have been set up for Clocktower Cleaning, Inc., with theirbeginning balances as of March 1, 2016. Requirements 1. Journalize the transa
> The balance sheet data for Angel’s Countertops, Inc.at August 31, 2016, and September 30, 2016, follow: Requirement The following are three independent assumptions about the business during September. For each assumption, compute the amount of net in
> Journalize the following transactions for Bridgeport Audio, Inc., that occurred during the month of November. Bridgeport Audio’s cost of inventory is 55 percent of the sales price.
> Journalize the adjusting entry needed at October 31, the fiscal year-end, for each of the following independent situations. No other adjusting entries have been made for the year. a. On August 1, $3,600 rent was collected in advance. Cash was debited and
> The transactions for Creative Design, Inc., for the month of January 2016 are posted in the following T-accounts. Requirements 1. Calculate account balances at January 31, 2016. 2. Prepare the trial balance for Creative Design, Inc., at January 31, 2
> Tim’s Tee Shirts started business in 2016 with total assets of $40,000 and total liabilitiesof $26,000. At the end of 2016, Tim’s Tee Shirts total assets were $53,000 and totalliabilities were $16,000. After analyzing the data, answer the following quest
> On July 14, 2016, Salem Food Wholesale, Inc., sold $2,700 of inventory (cost is $1,050) on account to one of its customers. The terms were 2/10, n/30, FOB destination. On July 16, Salem Food Wholesale, Inc., paid freight charges of $115 related to the de
> The adjusting entries for the following adjustments were omitted at period-end: a. Prepaid rent expired, $1,300 b. Depreciation, $1,000 c. Employee salaries owed for Monday through Wednesday of a five-day workweek, $2,200 d. Supplies used during the peri
> Wu & Associates, Inc., completed the following transactions during March 2016, its frst month of operations: Requirement 1. Using the steps outlined in the five-step transaction analysis, journalize the transactions of Wu & Associates, Inc. List tran
> The Poorboy Deli had $95,000 of total assets and $62,000 of total stockholders’ equityat December 31, 2016. At December 31, 2017, The Poorboy Deli had assets totaling$151,000 and stockholders’ equity totaling $105,000. After analyzing the data, answer th
> Journalize the following transactions for Inland Empire Supply, Inc., that occurred during the month of March.
> Journalize the adjusting entries for the following adjustments at March 31, the end of the accounting period, omitting explanations. a. Employee salaries owed for Monday through Thursday of a five-day workweek, $8,000 b. Unearned service revenue now earn
> Using the steps outlined in the five-step transaction analysis, record the following transactions in the general journal for Gulaine Plumbing, Inc. Explanations are not required.
> Assests = Liabilities + Stockholder’s Equity  
> On October 15, 2016, Chandler’s Department Store purchased $3,900 of inventory on account from one of its suppliers. The terms were 2/15, n/45, FOB shipping point. On October 17, Chandler’s Department Store paid freight charges of $140 related to the del
> Calculate the missing amounts for each of the following Prepaid Insurance situations. For situation A, journalize the adjusting entry. Consider each situation separately.
> The following are six transactions for Aaron’s Auto Repair, Inc., during the month of February: Requirement 1. Complete the following table. For each transaction shown, determine the accounts affected, the type of account, whether the account increas
> The analysis of Cunnington, Inc.’s first eight transactions follows. The business only soldstock once and paid no dividends. 1. Label each of the transactions in the preceding analysis with the correspondingletter of the description that best fits it
> Suppose you started up your own landscaping business. A customer paid you $120 in advance to mow his or her lawn while he or she was on vacation. You also performed landscaping services for a local business, but the business hasn’t paid you the $390 fee
> Accounting has its own vocabulary and basic relationships. Match the accounting termsat the left with the corresponding phrase at the right. 1. Posting 2. Normal balance 3. Payable 4. Journal 5. Receivable 6. Chart of accounts 7. Debit 8. Trial ba
> Presented here are nine transactions and the analysis used to account for them. Evaluateeach of the suggested accounting treatments, and indicate whether it is true or false. 1. Received cash of $41,000 from the stockholders, who bought stock in the bus
> Use the data from S4-11 to calculate the gross profit percentage and the net income percentage for The Skate Shed, Inc., for 2016. Information S4-11: The accounting records for The Skate Shed, Inc., reflected the following amounts at the end of January 2
> After closing its accounts at July 31, 2016, Anderson Realty, Inc., had the following account balances: Prepare Anderson Realty’s post-closing trial balance at July 31, 2016. List accounts in proper order.
> To the left of each account listed on the trial balance, indicate the financial statement that will include the account: income statement (IS), statement of retained earnings (RE), or balance sheet (BS).
> According to the Real World Accounting Video, _________ are important reports businessmanagers use in managing their business. a. balance sheets b. income statements c. both balance sheets and income statements
> According to the Real World Accounting Video, ABC Wines has a supply chain composed of its __________. a. landlords b. importers and distributors c. customers d. employees
> Use the data from S4-11 to prepare the classifed balance sheet for The Skate Shed, Inc., at January 31, 2016. Use the report format. Information S4-11: The accounting records for The Skate Shed, Inc., reflected the following amounts at the end of January
> According to the Real World Accounting Video, vendors generally sell merchandise expecting to be paid in _________________ days. a. 0 b. 30 c. 90 d. 180
> For the following series of journal entries, indicate whether each is an adjusting entry (ADJ) or a closing entry (CL).
> According to the Real World Accounting Video, GAAP is the term used for _______________. a. Government Accredited Accounting Positions b. Generally Accepted Accounting Principles c. General and Accounting Procedures
> The accounting records for Audio Masters, Corp., contain the following amounts on April 30, 2016. The accounts appear in no particular order. Prepare the trial balance for Audio Masters at April 30, 2016. List the accounts in proper order.
> According to the Real World Accounting Video, ________ is a profitability measure thatshows how much net income is earned on every dollar of sales. a. sales ratio b. expense ratio c. asset financing ratio d. profit margin ratio
> Action Powersports, Inc., a corporation, sells and services personal watercraft. Thebusiness experienced the following events. State whether each event (a) increased,(b) decreased, or (c) had no effect on the total assets of the business, and identify th
> According to the Real World Accounting Video, the objective of business is to createvalue. True or False?
> According to the Real World Accounting Video, a __________ is a profitability measure computed as net income/net sales. a. gross profit margin ratio b. profit margin ratio c. net income ratio d. net sales ratio
> The accounting records for The Skate Shed, Inc., reflected the following amounts at the end of January 2016:
> According to the Real World Accounting Video, the cost of merchandise inventory that the business has sold to customers is called _________________. a. inventory shrinkage b. cost of business c. cost of goods sold d. cost of inventory
> The following selected accounts and balances appear on the adjusted trial balance for Waverly, Inc., on July 31, 2016: 1. What is the net income or net loss? 2. What is the change in Retained Earnings? 3. Journalize the closing entries required.
> According to the Real World Accounting Video, the excess of sales revenue over cost of goods sold is called _______________. a. the sales margin or net sales b. the gross margin or gross profit c. net income or earnings after taxes
> After operating for a month, Rosa Anderson’s dental practice completed the following transactions during September: Using the steps outlined in the five-step transaction analysis, record the transactions in the journal.
> According to the Real World Accounting Video, businesses take risks to earn a profit. Trueor false?
> As a manager of a department store, you must deal with a variety of business transactions. Place the letter of each of the following transactions next to the effect it has onthe accounting equation. a. Paid cash to the stockholders as a distribution of e
> Which financial statement would be most useful to answer each of the followingquestions? a. Does the corporation have enough resources to pay its short-term debts? b. What is the corporation’s policy toward “growing the company” versus distributing its w
> From the following list of accounts from the adjusted trial balance, identify each as an asset, liability, stockholders’ equity, revenue, or expense. Use the most detailed account type appropriate. Also, state whether each account is a permanent or a tem
> Which correctly represents the flow of information from one financial statement to another? a. Statement of retained earnings to the balance sheet b. Income statement to the statement of retained earnings c. Both a and b are correct. d. None of the above
> What are the objectives of the closing process? Which kind of accounts get closed? What is the only account affected by the closing process but not closed?
> Rosa Anderson opened a dental practice in Spokane, Washington as a corporation. The following transactions took place in August: Using the steps outlined in the five-step transaction analysis, record the transactions in the journal.
> The entry to record the payment of $1,500 rent expense would be which of thefollowing?
> When it is time to prepare the financial statements, from where do the financial statement numbers come?
> Label each of the items listed with the abbreviation of the financial statement on which it appears. Items may appear on more than one statement. Income Statement (IS) Balance Sheet (BS) Statement of Retained Earnings (RE) ______ 1. Accounts Receivable _
> The income statement reports a. financial position for a specific period. b. results of operations on a specific date. c. financial position on a specific date. d. results of operations for a specific period
> Suppose Rocky Mountain, Inc., lost its entire inventory in a hurricane. Beginning inventory was $49,000, net purchases totaled $530,000, and sales came to $880,000. Rocky Mountain’s normal gross profit percentage is 42 percent. Use the gross profit metho
> If a company is having a harder time selling its products, even at discounted prices compared to last year, would this year’s inventory turnover rate be higher or lower than last year’s rate? What about the gross profit rate?
> Selected account balances for Maria’s Mocha at the end of the month are listed below in random order: Identify or compute the following amounts for Maria’s Mocha: a. Total current assets b. Total current liabilities c. Book value of plant assets d.
> Suppose Acme Electronics, Inc., had sales of $195,000 and sales returns of $15,000. Cost of goods sold was $108,000. What was Acme Electronics’ gross profit percentage (rounded) for this period? a. 37 percent b. 40 percent c. 45 percent d. 34 percent
> What situation might explain why a company’s gross profit percentage went down from 60 percent to 40 percent from one year to the next?
> This exercise is the first exercise in a sequence that begins an accounting cycle. The cycle is continued in Chapter 2 and completed in Chapter 3. Sensations Salon, Inc., was opened by SharmaineCrosswhite in her home and completed the following transacti
> Purpose: To help you understand the importance of cash flows in the operation of a small business. You have just received your year-end financial statements from your CPA and you notice one very disturbing item. The net income from your income statement
> Place the corresponding letter of the definition next to the term. ______ 1. Cost principle ______ 2. Business entity principle ______ 3. Generally Accepted Accounting Principles ______ 4. Reliability principle a. An organization that stands as a separa
> Which type of business organization is owned by its stockholders? a. Proprietorship b. Partnership c. Corporation d. All the above are owned by stockholders.
> Go to the Columbia Sportswear Company Annual Report located in Appendix A and find the Consolidated Balance Sheets on page 663. Now access the 2014 Annual Report for Under Armour, Inc. To do this from the Internet, go to the company’s Web page at http://
> Each chapter will have a financial statement case that will focus on material contained in that chapter. You will be asked questions and will then refer to Appendix A at the end of the book where you will find the annual report for Columbia Sportswear Co
> During April, Bargain Hardware made sales of $42,300 and ended the month with inventories totaling $5,400. Cost of Goods Sold was $21,900. Total operating expenses were $10,800. How much net income did Bargain Hardware earn for the month? a. $4,200 b. $2
> The introduction to this chapter suggests that the chapter will explore the answers to some questions about inventory. Did you get the answers to those questions? Specifically, a. why does inventory need to be counted? b. what would happen if the count w
> You received a letter from one of your good customers complaining about the shipment of your product she just received. Football season is approaching, and the customer had ordered a large shipment of regulation-size footballs. Instead, she received yout
> The end of the year is approaching. You’re going to meet with your CPA next week to do some end-of-the-year tax planning, so in preparation for that meeting, you look at your last month’s income statement. You know that you’ve had a pretty good year, whi
> The following characteristics are related to either periodic inventory or perpetual inventory systems. 1. A physical count of goods on hand at year-end is required. 2. Inventory records are continuously updated. 3. Purchases of inventory are recorded in
> Lisa Hill and her husband Mike were the owners of LM Enterprises, Inc. They applied for a small business loan, and the bank requested the most recent business financial statements. When Lisa compiled the balance sheet, she noticed that the business’s ass
> Which account does a merchandiser use that a service company does not use? a. Cost of goods sold b. Inventory c. Sales revenue d. All of the above
