What is the difference between a note payable and an account payable?
> Ricardo Construction began operations on December 1. In setting up its accounting procedures, the company decided to debit expense accounts when it prepays its expenses and to credit revenue accounts when customers pay for services in advance. Prepare jo
> Use the following information to compute profit margin for each separate company a through e. Net Income Net Sales a. $ 4,361 $ 44,500 b. 97,706 398,800 c. 111,281 257,000 d. $65,646 $1,458,800 e. 80,132 435,500 Which of the five companies is t
> Prepare general journal entries to record the transactions below for Spade Company by using the following accounts: Cash; Accounts Receivable; Office Supplies; Office Equipment; Accounts Payable; K. Spade, Capital; K. Spade, Withdrawals; Fees Earned; and
> Prepare general journal entries for the following transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $6,500 cash and $33,500 of photography equipment in the company. 2 The company paid $2,100 cash for an insu
> Groro Co. bills a client $62,000 for services provided and agrees to accept the following three items in full payment: (1) $10,000 cash, (2) computer equipment worth $80,000, and (3) to assume responsibility for a $28,000 note payable related to the c
> Use the information in Exercise 2-16 (if completed, use the solution to Exercise 2-17) to prepare an August 31 balance sheet for Help Today. Data from Exercise 2-16 Solution from Exercise 2-17: HELP TODAY Statement of Owner’s Equity
> You are to interview a local business owner. (This can be a friend or relative.) Opening lines of communication with members of the business community can provide personal benefits of business networking. If you do not know the owner, you should call ahe
> Assume the following T-accounts reflect Belle Co.’s general ledger and that seven transactions a through g are posted to them. Provide a short description of each transaction. Include the amounts in your descriptions. Cash Automobi
> Examine the following transactions and identify those that create revenues for Valdez Services, a company owned by Brina Valdez. Prepare general journal entries to record those revenue transactions and explain why the other transactions did not create re
> a. Calculate the debt ratio and the return on assets using the year-end information for each of the following six separate companies ($ thousands). b. Of the six companies, which business relies most heavily on creditor financing? c. Of the six compani
> After recording the transactions of Exercise 2-9 in T-accounts and calculating the balance of each account, prepare a trial balance. Use May 31, 2015, as its report date. T-Accounts from Exercise 2-9: Cash Accounts Payable (a) 100,750 (b) 1,
> You are told the column totals in a trial balance are not equal. After careful analysis, you discover only one error. Specifically, a correctly journalized credit purchase of an automobile for $18,950 is posted from the journal to the ledger with an $18,
> Posting errors are identified in the following table. In column (1), enter the amount of the difference between the two trial balance columns (debit and credit) due to the error. In column (2), identify the trial balance column (debit or credit) with the
> Compute the missing amount for each of the following separate companies a through d. B D E (b) 0 $ O $ ? (c) (d) O $ (a) 1 2 Equity, December 31, 2014 3 Owner investments during the year 4 Owner withdrawals during the year 5 Net income (loss) for th
> Use the information in Exercise 1-15 to prepare an October 31 statement of cash flows for Ernst Consulting. Also assume the following: a. The owner’s initial investment consists of $38,000 cash and $46,000 in land. b. The companyâ
> Use the information in Exercise 2-16 to prepare an August statement of owner’s equity for Help Today; begin with C. Camry, Capital, July 31 of $0. (The owner invested $102,000 cash in the company on August 1.) Data from Exercise 2-16
> Carmen Camry operates a consulting firm called Help Today, which began operations on August 1. On August 31, the company’s records show the following accounts and amounts for the month of August. Use this information to prepare an Augus
> Refer to this chapter’s opening feature about Apple. Assume that the owners decide to open a new company with an innovative mobile app devoted to microblogging for accountants and those learning accounting. This new company will be called AccountApp. Re
> A sole proprietorship had the following assets and liabilities at the beginning and end of this year. Determine the net income earned or net loss incurred by the business during the year for each of the following separate cases: a. Owner made no invest
> Use information from the T-accounts in Exercise 2-13 to prepare general journal entries for each of the seven transactions a through g. T-accounts from Exercise 2-13: Cash Automobiles (a) 6,000 (b) 4,800 (a) 12,000 (e) 4,500 (c) 900 (f) 1,600 Accou
> Ming Chen began a professional practice on June 1 and plans to prepare financial statements at the end of each month. During June, Ming Chen (the owner) completed these transactions: a. Owner invested $60,000 cash in the company along with equipment that
> Provide an example of a transaction that creates the described effects for the separate cases a through g. a. Decreases an asset and decreases equity. b. Increases an asset and increases a liability. c. Decreases a liability and increases a liability.
> Examine the following transactions and identify those that create expenses for Valdez Services. Prepare general journal entries to record those expense transactions and explain why the other transactions did not create expenses. a. The company paid $12,2
> Zen began a new consulting firm on January 5. The accounting equation showed the following balances after each of the company’s first five transactions. Analyze the accounting equation for each transaction and describe each of the five
> a. At the beginning of the year, Addison Company’s assets are $300,000 and its equity is $100,000. During the year, assets increase $80,000 and liabilities increase $50,000. What is the equity at the end of the year? b. Office Store has assets equal to $
> Use the information in Exercise 2-7 to prepare an August 31 trial balance for Pose-for-Pics. Begin by opening these T-accounts: Cash; Office Supplies; Prepaid Insurance; Photography Equipment; M. Harris, Capital; Photography Fees Earned; and Utilities Ex
> Match each of the numbered descriptions with the principle or assumption it best reflects. Enter the letter for the appropriate principle or assumption in the blank space next to each description. A. General accounting principle B. Cost principle C. Bu
> Use the information in each of the following separate cases to calculate the unknown amount. a. Corentine Co. had $152,000 of accounts payable on September 30 and $132,500 on October 31. Total purchases on account during October were $281,000. Determine
> The expanded accounting equation consists of assets, liabilities, capital, withdrawals, revenues, and expenses. It can be used to reveal insights into changes in a company’s financial position. Required 1. Form learning teams of six (or more) members. E
> Assume the following role and describe a situation in which ethical considerations play an important part in guiding your decisions and actions: a. You are an accounting professional with audit clients that are competitors in business. b. You are an acco
> For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, (2) identify the normal balance of the account, and (3) enter debit (Dr.) or credit (Cr.) to identify the kind of entry that would increase
> Pablo Management has five part-time employees, each of whom earns $250 per day. They are normally paid on Fridays for work completed Monday through Friday of the same week. Assume that December 28, 2015, was a Friday, and that they were paid in full on t
> The Adjusted Trial Balance columns of a 10-column work sheet for Planta Company follow. Complete the work sheet by extending the account balances into the appropriate financial statement columns and by entering the amount of net income for the reporting
> On March 1, 2013, a company paid an $18,000 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table. Balance Sheet Prepaid Insurance Asset Using Insurance Expens
> Review the Samsung balance sheet in Appendix A. Identify three current liabilities and three noncurrent liabilities in its balance sheet. Samsung’s 2013 Balance Sheet from Appendix A: / /
> Review the Apple balance sheet in Appendix A. Identify three accounts on its balance sheet that carry debit balances and three accounts on its balance sheet that carry credit balances. Apple Balance Sheet from Appendix A: Apple Inc. CONSOLIDATED B
> Define (a) assets, (b) liabilities, (c) equity, and (d) net assets.
> Why does the user of an income statement need to know the time period that it covers?
> Distinguish between cash discounts and trade discounts. Is the amount of a trade discount on purchased merchandise recorded in the accounts?
> Refer to Apple’s financial statements in Appendix A for the following questions. Apple’s Financial Statements from Appendix A: Required 1. What amount of total liabilities does it report for each of the fiscal
> What is the difference between the single-step and multiple-step income statement formats?
> Review the balance sheet of Apple in Appendix A. Identify one asset account that requires adjustment before annual financial statements can be prepared. What would be the effect on the income statement if this asset account were not adjusted? (Number n
> Why do companies offer a cash discount?
> What is an accrued revenue? Give an example.
> Why are the debit and credit entries in the Adjustments columns of the work sheet identified with letters?
> What accounts are affected by closing entries? What accounts are not affected?
> Explain whether an error has occurred if a post-closing trial balance includes a Depreciation Expense account.
> What is the purpose of the Income Summary account?
> Discuss the steps in processing business transactions.
> Refer to this chapter’s opening feature about Apple. Assume that the owners, sometime during their first five years of business, desire to expand their computer product services to meet people’s demands regarding technical support. They eventually decide
> What are the steps in recording closing entries?
> Identify the two main categories of accounting principles.
> Define (a) assets, (b) liabilities, (c) equity, and (d) net assets.
> Describe the three basic forms of business organization and their key attributes.
> Why is the revenue recognition principle needed? What does it demand?
> What work do tax accounting professionals perform in addition to preparing tax returns?
> Identify four kinds of external users and describe how they use accounting information.
> Technology is increasingly used to process accounting data. Why then must we study and understand accounting?
> Explain why investing (assets) and financing (liabilities and equity) totals are always equal.
> Describe the three major business activities in organizations.
> Craig Thorne works in a public accounting firm and hopes to eventually be a partner. The management of Allnet Company invites Thorne to prepare a bid to audit Allnet’s financial statements. In discussing the audit fee, Allnet’s management suggests a fee
> Define return and risk. Discuss the trade-off between them.
> The following six-column table for Solutions Co. includes the unadjusted trial balance as of December 31, 2015. Required 1. Complete the six-column table by entering adjustments that reflect the following information: a. As of December 31, 2015, employ
> The following six-column table for Hawkeye Ranges includes the unadjusted trial balance as of December 31, 2015. Required 1. Complete the six-column table by entering adjustments that reflect the following information. a. As of December 31, 2015, emplo
> Santo Company’s adjusted trial balance on December 31, 2015, follows. Required 1. Prepare an income statement and a statement of owner’s equity for the year 2015, and a classified balance sheet at December 31, 2015.
> Define and explain return on assets.
> The adjusted trial balance of Karise Repairs on December 31, 2015, follows. Required 1. Prepare an income statement and a statement of owner’s equity for the year 2015, and a classified balance sheet at December 31, 2015. There are no
> The adjusted trial balance for Anara Co. as of December 31, 2015, follows. P. Anara invested $40,000 cash in the business during year 2015 (the December 31, 2014, credit balance of the P. Anara, Capital account was $52,800). Anara Company is required t
> The adjusted trial balance for Tybalt Construction as of December 31, 2015, follows. O. Tybalt invested $5,000 cash in the business during year 2015 (the December 31, 2014, credit balance of the O. Tybalt, Capital account was $121,400). Tybalt Construc
> In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank. A. Current assets B. Long-term investments C. Plant assets D. In
> In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank. A. Current assets B. Long-term investments C. Plant assets D. In
> The following unadjusted trial balance is for Power Demolition Company as of the end of its April 30, 2015, fiscal year. The April 30, 2014, credit balance of the owner’s capital account was $46,900, and the owner invested $40,000 cash
> The following unadjusted trial balance is for Ace Construction Co. as of the end of its 2015 fiscal year. The June 30, 2014, credit balance of the owner’s capital account was $53,660, and the owner invested $35,000 cash in the company d
> On July 1, 2015, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company’s first month. July 1 Plume invested $30,000 cash and buildings worth $150,000 in the company. 2 Th
> On April 1, 2015, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month. April 1 Nozomi invested $30,000 cash and computer equipment worth $20,000 in the company
> Tremor Co. had the following transactions in the last two months of its fiscal year ended May 31. Apr. 1 Paid $2,450 cash to an accounting firm for future consulting services. 1 Paid $3,600 cash for 12 months of insurance through March 31 of the next ye
> Review this chapter’s opening feature involving Adrien Edwards and his TheNakedHippie business. 1. Explain how a classified balance sheet can help Adrien know what bills are due when, and whether he has the resources to pay those bills. 2. Why is it impo
> Gomez Co. had the following transactions in the last two months of its year ended December 31. Nov. 1 Paid $1,800 cash for future newspaper advertising. 1 Paid $2,460 cash for 12 months of insurance through October 31 of the next year. 30 Received $3,60
> The adjusted trial balance for Speedy Courier as of December 31, 2015, follows. Required 1. Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31, 2015, (b) the statement of ownerâ&
> The adjusted trial balance for Chiara Company as of December 31, 2015, follows. Required 1. Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31, 2015; (b) the statement of
> A six-column table for Yan Consulting Company follows. The first two columns contain the unadjusted trial balance for the company as of December 31, 2015, and the last two columns contain the adjusted trial balance as of the same date. Required Analysi
> A six-column table for JKL Company follows. The first two columns contain the unadjusted trial balance for the company as of July 31, 2015. The last two columns contain the adjusted trial balance as of the same date. Required Analysis Component 1. Analy
> Following is the unadjusted trial balance for Alonzo Institute as of December 31, 2015, which initially records prepaid expenses and unearned revenues in balance sheet accounts. The Institute provides one-on-one training to individuals who pay tuition di
> Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2015, fo
> Natsu Co. follows the practice of recording prepaid expenses and unearned revenues in balance sheet accounts. The company’s annual accounting period ends on October 31, 2015. The following information concerns the adjusting entries that
> Arnez Co. follows the practice of recording prepaid expenses and unearned revenues in balance sheet accounts. The company’s annual accounting period ends on December 31, 2015. The following information concerns the adjusting entries to
> For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.) A. To record payment of a prepaid expense. B. To record this periodâ€&#
> The unadjusted trial balance and information for the accounting adjustments of Noseworthy Investigators follow. Each team member involved in this project is to assume one of the four responsibilities listed. After completing each of these responsibilitie
> For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.) A. To record receipt of unearned revenue. B. To record this periodâ€
> Roshaun Gould started a web consulting firm called Gould Solutions. He began operations and completed seven transactions in April that resulted in the following accounts, which all have normal balances. Required 1. Prepare a trial balance for this busin
> Yi Min started an engineering firm called Min Engineering. He began operations and completed seven transactions in May, which included his initial investment of $18,000 cash. After those seven transactions, the ledger included the following accounts with
> The accounting records of Tama Co. show the following assets and liabilities as of December 31, 2014 and 2015. Late in December 2015, the business purchased a small office building and land for $300,000. It paid $50,000 cash toward the purchase and a $
> The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2014 and 2015. Late in December 2015, the business purchased a small office building and land for $140,000. It paid $100,000 cash toward the purch
> Nuncio Consulting completed the following transactions during June. a. Armand Nuncio, the owner, invested $35,000 cash along with office equipment valued at $11,000 in the new company. b. The company purchased land valued at $7,500 and a building valued
> Business transactions completed by Hannah Venedict during the month of September are as follows. a. Venedict invested $60,000 cash along with office equipment valued at $25,000 in a new sole proprietorship named HV Consulting. b. The company purchased la
> Zucker Management Services opens for business and completes these transactions in November. Nov. 1 Matt Zucker, the owner, invested $30,000 cash along with $15,000 of office equipment in the company. 2 The company prepaid $4,500 cash for six months’ ren
> Denzel Brooks opens a web consulting business called Venture Consultants and completes the following transactions in March. March 1 Brooks invested $150,000 cash along with $22,000 in office equipment in the company. 2 The company prepaid $6,000 cash fo
> At the beginning of April, Bernadette Grechus launched a custom computer solutions company called Softworks. The company had the following transactions during April. a. Bernadette Grechus invested $65,000 cash, office equipment with a value of $5,750, an
> Assume that one of your classmates states that a company’s books should be ongoing and therefore not closed until that business is terminated. Write a half-page memo to this classmate explaining the concept of the closing process by drawing analogies bet
> Aracel Engineering completed the following transactions in the month of June. a. Jenna Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000, and $60,000 of drafting equipment to launch the company. b. The company purchased l
