What three types of objectives are the focus of internal control?
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. What is the amount of Acc
> Assume you were recently hired by Caffe D’Amore, the company that formulated the world’s first flavored instant cappuccino and now manufactures several lines of flavored cappuccino mixes. Given the companyâ€
> Problem Solved Company has been operating for five years as a software consulting firm. During this period, it has experienced rapid growth in Sales Revenue and in Accounts Receivable. To solve its growing receivables problem, the company hired you as it
> E-Tech Initiatives Limited plans to issue $500,000, 10-year, 4 percent bonds. Interest is payable annually on December 31. All of the bonds will be issued on January 1, 2019. Show how the bonds would be reported on the January 2, 2019, balance sheet if t
> This case is available online in the Connect eBook. By completing this case, you will learn what “earnings management” and “smoothing earnings” mean, and you will see how it occurs when estimates of uncollectible accounts are unethically biased.
> You work for a company named MCI and you have been assigned the job of adjusting the company’s Allowance for Doubtful Accounts balance. You obtained the following aged listing of customer account balances for December. Bad debt loss ra
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of Lowe’s in Appendix B at the end of this book. 1. Does the company report Accounts Receivable or an Allowance for Doubtful Accounts on its balance sheet? Explain why it does or does not. 2. Based on your observation
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) 1. Where does the company disclose the a
> This case is available online in the Connect eBook. By completing this case, you will learn to use a spreadsheet to compute the amount of write-down to record after applying LCM/NRV to inventory.
> This case is available online in the Connect eBook. By completing this case, you will learn how the choice of inventory method can influence a manager’s ability to meet profit expectations. To minimize income taxes, inventory is valued
> What is the distinction between service and merchandising companies? What is the distinction between merchandising and manufacturing companies? What is the distinction between retail and wholesale merchandising companies?
> This case is available online in the Connect eBook. By completing this case, you will learn how the choice of inventory method can influence a manager’s ability to meet profit expectations.
> This case is based on an inventory fraud at Phar-Mor and is available online in the Connect eBook. By completing this case, you will learn to identify clues of inventory misreporting.
> On February 6, 2017, the NYSE bond directory quoted a bond price of 130.03 for Ford Motor Company’s 7.45 percent bonds maturing on July 16, 2031. Were the bonds listed at a discount or premium? Does this mean the market interest rate for comparable bonds
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016,
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) 1. How much inventory does the company h
> Assume that you have been hired by Big Sky Corporation as a summer intern. The company is in the process of preparing its annual financial statements. To help in the process, you are asked to prepare an income statement for internal reporting purposes an
> Merchandise Mavens Corporation sells goods throughout North America. One of its product lines has recently reported the following information to you at head office. Based on this information, you have become concerned that the company is experiencing dif
> Assume you work as an accountant in the merchandising division of a large public company that makes and sells athletic clothing. To encourage the merchandising division to earn as much profit on each individual sale as possible, the division manager’s pa
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016,
> What are five common internal control principles?
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. What amount of Net Sales
> Barton Chocolates used a promissory note to borrow $1,000,000 on July 1, 2018, at an annual interest rate of 6 percent. The note is to be repaid in yearly installments of $200,000, plus accrued interest, on June 30 of every year until the note is paid in
> This case is available online in the Connect eBook. By completing this case, you will learn to quantify cash embezzlement, identify missing cash controls, and recommend control
> When some people think about inventory theft, they imagine a shoplifter running out of a store with goods stuffed inside a jacket or bag. But that’s not what the managers thought at the Famous Footwear store on Chicago’
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, Refer to the financial statements of The Home Depot in Appendix A and Lo
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. How much does The Home De
> Complete this case involving Escalade, Inc., available online at the Connect eBook. By completing this case, you will learn to use a spreadsheet to link account balances on an adjusted trial balance to produce aggregated amounts reported in an income sta
> Complete this case, available online at the Connect eBook. By completing this case, you will learn to identify misstatements and make adjustments to correct the financial statements.
> Assume you work as an assistant accountant in the head office of a DVD movie kiosk business, similar to Outerwall’s Redbox machines. With the popularity of online movie rental operations, your company has struggled to meet its earnings targets for the ye
> On December 12, 2002, the SEC filed a lawsuit against four executives of Safety-Kleen Corp., one of the country’s leading providers of industrial waste collection and disposal services. The primary issue was that the executives had directed others in the
> What are the five components of an internal control system?
> Greener Pastures Corporation borrowed $1,000,000 on November 1, 2018. The note carried a 9 percent interest rate with the principal and interest payable on June 1, 2019. Show the accounting equation effects and prepare the journal entries for (a) the not
> Complete the requirements for M7-7Â assuming a periodic LIFO inventory system is used. Data from M7-7: Given the following information, calculate cost of goods available for sale and ending inventory, then sales, cost of goods sold, and gros
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016,
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. How much did The Home Depo
> Complete this case, available online in the Connect eBook. By completing this case, you will learn to use a spreadsheet to capture transactions and use cell linking to prepare an end-of-period trial balance.
> Complete this case, available online in the Connect eBook. By completing this case, you will learn to identify changes in spreadsheet values and infer the underlying transactions responsible for those changes.
> Mike Lynch is the manager of an upstate New York regional office for an insurance company. As the regional manager, his pay package includes a base salary, commissions, and a bonus, when the region sells new policies in excess of its quota. Mike has been
> Read the following excerpt from a complaint filed by the Securities and Exchange Commission against WorldCom(posedonline at http://www.sec.gov/litigation/complaints/comp17829.htm). 1. When a company incurs a cost, its accountants have to decide whether
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. How much did The Home Depo
> On December 1, 2018, your company borrowed $15,000, a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 2019, $2,000; 2020, $3,000; 2021, $4,000; and 2022, $6,000. Show how t
> Complete this case involving Elizabeth Arden, available online in the Connect eBook. By completing this case, you will learn to use a spreadsheet to capture the accounting equation effects of basic transactions.
> Complete this case, available online in the Connect eBook, which involves identifying flaws in a company’s balance sheet.
> You work as an accountant for a small land development company that desperately needs additional financing to continue in business. The president of your company is meeting with the manager of a local bank at the end of the month to try to obtain this fi
> In the world of financial fraud, a “Ponzi scheme” is famous. Here is the story behind how the scam got its name. Charles Ponzi started the Security Exchange Company on December 26, 1919. He thought he had discovered a way to purchase American stamps in a
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B. (Note: Fiscal 2106 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016, to February 3, 2017. See
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation of its fiscal periods.) Required: 1. What
> Complete this case involving Electronic Arts, which your instructor may access from and make available to you online in the Connect eBook. By completing this case, you will learn to use a spreadsheet to prepare a balance sheet and income statement. Detai
> On September 30, Ashley and Jason started arguing about who is better off. Jason said he was better off because he owned a video game console that he bought last year for $250. He figures that, if needed, he could sell it to a friend for $180. Ashley arg
> Refer to M10-3. Prepare the journal entry or entries that Lightning would use to record the payroll. Include both employee and employer taxes. Data from M10-3: Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll
> Assume you are the president of APEC Aerospace Corporation. At the end of the first year of operations (December 31), the following financial data for the company are available: Required: 1. Prepare an income statement for the year ended December 31. 2
> What aspect(s) of the Sarbanes-Oxley Act might allow honest employees to prevail?
> The following table shows three cases, each with one missing element. Required: Use the bond calculator at www.fncalculator.com to determine the missing element for each case. Assume simple annual compounding and round to the nearest dollar or whole pe
> Marshall Corporation purchased equipment and in exchange signed a three-year promissory note. The note requires Marshall to make equal annual payments of $20,000 at the end of each of the next three years. Marshall has other promissory notes that charge
> Southtown Corporation purchased equipment and in exchange signed a two-year promissory note. The note requires Southtown to make a single payment of $100,000 in two years. Southtown has other promissory notes that charge interest at the annual rate of 6
> After incurring a serious injury caused by a manufacturing defect, your friend has sued the manufacturer for damages. Your friend received three offers from the manufacturer to settle the lawsuit: (1) receive an immediate cash payment of $100,000, (2) re
> You have the opportunity to invest $10,000 in one of two companies from a single industry. The only information you have is shown here. The word high refers to the top third of the industry; average is the middle third; low is the bottom third. Required
> The financial statements for Thor and Gunnar companies are summarized here: These two companies are in the same business and state but different cities. Each company has been in operation for about 10 years. Both companies received an unqualified audit
> Mattel and Hasbro are the two biggest makers of games and toys in the world. Mattel sells over $5.6 billion of products each year while annual sales of Hasbro products exceed $5 billion. Compare the two companies as a potential investment based on the fo
> A condensed income statement for Southwest Airlines and a partially completed vertical analysis follow. Required: 1. Complete the vertical analysis by computing each line item (a)–(f) as a percentage of sales revenues. Round to the ne
> Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll records for the November 1–14 pay period show that employees earned wages totaling $50,000 but that employee income taxes totaling $7,000 and FICA taxes totaling
> A condensed balance sheet for Southwest Airlines and a partially completed vertical analysis are presented below. Required: 1. Complete the vertical analysis by computing each line item (a)–(c) as a percentage of total assets. Round t
> Use the data given in PB13-1 for Tiger Audio. Required: 1. Compute the gross profit percentage in the current and previous years. Are the current year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the
> What aspect(s) of the Sarbanes-Oxley Act might reduce opportunities for fraud?
> Tiger Audio declared and paid a cash dividend of $5,525 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Required: 1. Complete the two final columns shown beside each ite
> Refer to PB12-4. Required: Complete requirements 1 and 2 using the direct method. Dive In Company was started several years ago by two diving instructors. The company’s comparative balance sheets and income statement, as well as add
> Refer to the information in PB12-2. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method. The income statement and selected balance sheet information for Calendars Incorporated for
> Dive In Company was started several years ago by two diving instructors. The company’s comparative balance sheets and income statement, as well as additional information, are presented below. Additional Data: a. Rent is paid in advanc
> Audio City, Inc., is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below: Additional Data: a.
> The income statement and selected balance sheet information for Calendars Incorporated for the year ended December 31 are presented below Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indire
> For each of the following transactions, indicate whether operating (O), investing (I), or financing activities (F) are affected and whether the effect is a cash inflow (+) or outflow (−). Use (NE) if the transaction has no effect on cas
> For each of the following situations, indicate whether it represents an accounting error and explain why it is or is not an error. Also state whether a trial balance would indicate that an error exists for each situation. a. Cash received from a custome
> Two music companies reported the following in their financial statements: Required: 1. Compute the 2018 ROE for each company (express ROE as a percentage rounded to one decimal place). Which company appears to generate greater returns on stockholders&a
> Carlos Company had the following stock outstanding and Retained Earnings at December 31, 2018: On December 31, 2018, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were de
> At December 31, the records of Seacrest Enterprises provided the following selected and incomplete data: Required: 1. Complete the following: Shares issued . Shares outstanding . 2. The balance in Additional Paid-In Capital would be $ . 3. Earnings p
> What aspect(s) of the Sarbanes-Oxley Act might counteract the incentive to commit fraud?
> Yougi Corp. is an animation studio that issued the following recent press release: Required: 1. Prepare any journal entries that Yougi Corp. should make on the four dates mentioned in the press release. 2. What two requirements would the board of dire
> Whyville Corporation obtained its charter from the state in January that authorized 500,000 shares of common stock, $1 par value. During the first year, the company earned $58,000, declared no dividends, and the following selected transactions occurred i
> Zarina Corp. signed a new installment note on January 1, 2018, and deposited the proceeds of $15,000 in its bank account. The note has a two-year term, compounds 4 percent interest annually, and requires an annual installment payment on December 31. Zari
> Assume the same facts as PB10-6, but now assume that Methodical uses the simplified effectiveinterest bond amortization method, as shown in Chapter Supplement 10C. Required: 1. Prepare a bond amortization schedule. 2. Give the journal entry to record
> Refer to PB10-6. Assume Methodical uses the effective-interest bond amortization method. Required: 1. Prepare a bond amortization schedule. 2. Give the journal entry to record the bond issue. 3. Give the journal entries to record the interest payments
> On January 1, 2018, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 5 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 4
> Refer to M10-20. Welton Corp. established the note on the first day of its fiscal year and will fully repay the note by the end of year 3 on its December 31 fiscal year-end. Prepare Welton Corp.’s journal entries on (a) January 1, Year 1; (b) December 31
> AMC Entertainment, Inc., owns and operates movie theaters worldwide. Assume the company issued 4 percent bonds at their $53,000,000 face value and then used all of these cash proceeds to retire bonds with a stated interest rate of 6 percent. At that time
> Marshalls Corporation completed a $500,000, 7 percent bond issue on January 1, 2018. The bonds pay interest each December 31 and mature 10 years from January 1, 2018. Required: For each of the three independent cases that follow, provide the amounts t
> Sandler Company completed the following two transactions. The annual accounting period ends December 31. a. On December 31, calculated the payroll, which indicates gross earnings for wages ($260,000), payroll deductions for income tax ($28,000), payroll
> Using data from PB10-1, complete the following requirements. Required: 1. Prepare journal entries for each of the transactions through August 1. 2. Prepare any adjusting entries required on December 31. 3. Show how all of the liabilities arising fr
> Why would managers misrepresent the financial results of their companies?
> Tiger Company completed the following transactions. The annual accounting period ends December 31 Required: 1. For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects (+ for increase, − for
> The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining-balance depreciation for buildings, and straight-line am
> Rudy’s Restaurant Company (RRC) entered into the following transactions during a recent year. Required: 1. Analyze the accounting equation effects and record journal entries for each of the transactions. 2. For the tangible and intan
