Analyze each transaction in QS 5-11 by indicating its effects on the components of the income statement—specifically, identify the accounts and amounts (including + or −) for each transaction.
> Lopez, Cruz, and Perez are partners and share net income and loss in a 6:4:1 ratio (in ratio form: Lopez, 6⁄11; Cruz, 4⁄11; and Perez, 1⁄11). On December 31, Perez withdraws from the partnership when the equities of the partners are Lopez, $3,000; Cruz,
> Pena LLC has two members, Sophia and Maria, who share net income and loss equally. Total equity of the business is $100,000, which is made up of Sophia, Member Equity, of $60,000, and Maria, Member Equity, of $40,000. During the year, Juan invests $30,00
> Lopez and Gomez are members in an LLC that reports net income of $130,000. An agreement states that Lopez receives a $20,000 salary allowance and Gomez receives a $50,000 salary allowance. Any remaining income or loss is to be shared by Lopez and Gomez i
> Andy and Jin form an LLC. Jin invests $3,000 cash, equipment with a market value of $6,000, and land with a market value of $40,000. Prepare the LLC’s journal entry to record Jin’s investment. Hint: The LLC records Jin’s investment using the “Jin, Member
> Dave Krug contributed $1,000 cash along with inventory and land to a new partnership. The inventory had a market value of $2,000. The land had a market value of $5,000. The partnership also accepted a $3,000 note payable owed by Krug to a creditor. Prepa
> Fee and Karley had a tech business. After two unprofitable years, the business closed. At that point, the liabilities of the business were $100,000 larger than its assets. Under each separate situation, how much money (if any) can creditors take from Cha
> Amy and Lester are partners in operating a store. Without consulting Amy, Lester enters into a contract to purchase $10,000 of merchandise for the store. Amy says she did not authorize the order and that she could have purchased the same merchandise for
> On December 1, Home Store sells a mower (that costs $200) for $500 cash with a one-year warranty that covers parts. Warranty expense is estimated at 8% of sales. On January 24 of the following year, the mower is brought in for repairs covered under the w
> During the month of January, an employer incurred the following payroll taxes: FICA Social Security taxes of $372, FICA Medicare taxes of $87, FUTA taxes of $36, and SUTA taxes of $324. Prepare the journal entry to record the employer’s payroll tax expen
> How could a production cost report be used to determine if a program to reduce water usage is successful?
> During the month of January, an employee earned $4,000 of salary. Withholdings from the employee’s salary consist of FICA Social Security taxes of $248, FICA Medicare taxes of $58, federal income taxes of $426, and medical insurance deductions of $170. P
> Anoka Company reports the following: net sales of $14,800 for Year 2 and $13,990 for Year 1; end-of-year total assets of $19,100 for Year 2 and $17,900 for Year 1. 1. Compute total asset turnover for Year 2. 2. Anika’s competitor has a turnover of 2.0.
> On January 1 of this year, Diaz Boutique pays $105,000 to modernize its store. Improvements include new floors, ceilings, wiring, and wall coverings. These improvements are estimated to yield benefits for 10 years. Diaz leases (does not own) its store an
> On January 1, the Matthews Band pays $65,800 for sound equipment. The band estimates it will use this equipment for four years and after four years it can sell the equipment for $2,000. Matthews Band uses straight-line depreciation but realizes at the st
> Refer to QS 10-7 and record the journal entries for equipment depreciation for the first year under straight line, units-of-production, and double-declining-balance.
> Equipment costing $13,000 with a 10-year useful life and an estimated $3,000 salvage value is acquired and started operating on January 1. The equipment is estimated to produce 2,000 units of product during its life. It produced 160 units in the first ye
> On January 1, the Matthews Band pays $65,800 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for $2,000. During the first year, the b
> On January 1, the Matthews Band pays $65,800 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for $2,000. During the first year, the b
> Diego Co. paid $180,000 cash to acquire a group of items consisting of land appraised at $50,000 and a building appraised at $150,000. Allocate total cost to these two assets and prepare an entry to record the purchase.
> Flynn Co. determines that it cannot collect $7,000 of its accounts receivable from its customer, MDC. Record the journal entry required of Flynn under (a) the direct write-off method and (b) the allowance method.
> General Mills needs a steady supply of ingredients for processing. What are some risks the company faces regarding its ingredients?
> Use the following information to prepare the current assets section of Lima Company’s classified balance sheet as of December 31.
> Using the information in QS 8-12, prepare any necessary journal entries that Organic Food Co. must record as a result of preparing the bank reconciliation.
> Nolan Company’s Cash account shows a $22,352 debit balance and its bank statement shows $21,332 on deposit at the close of business on June 30. Prepare a bank reconciliation using the following information. a. Outstanding checks as of June 30 total $3,71
> Choose from the following list of terms and phrases to best complete the following statements. a. Cash b. Cash equivalents c. outstanding check d. Liquidity e. Cash over and short f. Voucher system 1. Th
> The following T-accounts show postings of selected transactions. Indicate the journal used in recording each of these postings a through e.
> Following are (1) two transactions involving a customer as reported in the accounts receivable subsidiary ledger and (2) two transactions involving a supplier as reported in the accounts payable subsidiary ledger. Identify the journal in which each of th
> Greenleaf Company uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. Prepare a cash payments journal like the one in Exhibit 7.11. Journalize the following transactions that should be recorded in t
> Refer to QS 7-8 and for each of the transactions identify the journal in which it would be recorded. Assume the company uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal.
> Li Company uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. Prepare a cash receipts journal like the one in Exhibit 7.7. Journalize the following transactions that should be recorded in the cash
> Caesar Company uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. Prepare a sales journal like the one in Exhibit 7.5. Journalize the following transactions that should be recorded in the sales jou
> How does a process manufacturer compute the cost of a completed unit?
> Wilcox Electronics uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. Identify the journal in which each transaction should be recorded. a. Sold merchandise on credit. e. Sold merchandise for cash.
> For each account, indicate whether it appears in the general ledger or the subsidiary ledger.
> Wentz Co. made it a priority to negotiate better credit terms with its suppliers so it could defer payments longer. (a) Use the following information for Wentz Co. to compute days’ payable outstanding for Year 1 and Year 2. (b) Does Wen
> Wharton Company posts individual sales to the accounts receivable subsidiary ledger immediately. At the end of each month, Wharton posts the end-of-month totals to the general ledger 1. Open an accounts receivable subsidiary ledger with a T-account for e
> Identify each item 1 through 10 with the system component A through E that it is best associated with. A. Source documents D. Information storage B. Input devices E. Output devices C. Information processors 1. Computer keyboard 2. Printer 3. Monitor 4. B
> Refer to the information in QS 6-11 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on specific identification. Of the units sold, eight are from the December 7 purchase and
> Refer to QS 5-10 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the gross method and a periodic inventory system.
> Refer to QS 5-5 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the gross method and a periodic inventory system.
> Chosen Company’s inventory balance at the beginning of the year was $6,000. During the year, the company had Purchases of $30,000 and Purchases Returns and Allowances of $2,000. The company’s inventory balance at the end of the year is $4,000. Compute co
> Clear Water Co. reports the following balance sheet accounts as of December 31. Prepare a classified balance sheet.
> List the four steps in accounting for production activity in a reporting period (for process operations).
> Using the year-end information from QS 5-18, prepare the gross profit section of a multiple-step income statement.
> Nix ‘It Company’s ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances. Nix ‘It uses the perpetual inventory system. Prepare the companyâ
> Telco Company’s ledger on July 31, its fiscal year-end, shows merchandise inventory of $37,800 before accounting for any shrinkage. A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is
> Prepare journal entries to record each of the following sales transactions of TFC Merchandising. TFC uses a perpetual inventory system and the gross method. May 1 Sold merchandise for $600, with credit terms n∕60. The cost of the merchandise is $400. 9 T
> Refer to QS 5-10 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the net method and a perpetual inventory system.
> Refer to QS 5-5 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the net method and a perpetual inventory system.
> J. Clancy owns Clancy Consulting. On December 31 of the prior year, the J. Clancy, Capital account balance was $20,000. During the current year, Clancy invests an additional $15,000 in assets but withdrew $11,000 cash. Clancy Consulting reports net incom
> Use the following selected accounts and amounts with normal balances from Builder Co.’s adjusted trial balance to prepare its income statement for the year ended December 31. Hint: Not all accounts need to be used.
> For each account, identify whether it is included or excluded from a post-closing trial balance. a. Accounts Receivable c. Cash e. Income Tax Expense b. Salaries Expense d. Land f. Salaries Payable
> Do process costing systems use multiple Factory Overhead accounts?
> Ace Company reports revenues of $40,000 and expenses of $31,000. The owner made no additional investments during the period but withdrew $5,000 cash from the business. After closing entries are recorded, determine the amount of the increase or decrease i
> Using Sierra Company’s adjusted trial balance from QS 4-16, prepare its December 31 closing entries.
> Set up T-accounts for the following accounts and amounts with normal balances as of December 31: K. Carver, Capital $18,000; K. Carver, Withdrawals $2,000; Services Revenue $33,000; Salaries Expense $25,000; Rent Expense $3,000; and Income Summary $0. (1
> The ledger of Mai Company includes the following accounts with normal balances as of December 31: D. Mai, Capital $9,000; D. Mai, Withdrawals $800; Services Revenue $13,000; Wages Expense $8,400; and Rent Expense $1,600. Prepare its December 31 closing e
> The ledger of Claudel Company includes the following unadjusted normal balances: Prepaid Rent $1,000, Services Revenue $55,600, and Wages Expense $5,000. Adjustments are required for (a) prepaid rent expired $200; (b) accrued services revenue $900; and (
> Gerald Company made an adjusting entry at its December 31 year-end for $800 of wages earned by employees but not yet paid. Gerald uses reversing entries. Prepare the reversing entry Gerald must record on January 1.
> Compute Chavez Company’s current ratio using the following information.
> Use the information in the adjusted trial balance reported in QS 4-16 to prepare Sierra Company’s classified balance sheet as of December 31.
> Use the following adjusted trial balance of Sierra Company to prepare its (1) income statement and (2) statement of owner’s equity for the year ended December 31. The L. Sierra, Capital account balance was $10,500 on December 31 of the
> Use the following selected accounts and amounts with normal balances from Juan Co. to prepare its classified balance sheet at December 31.
> Explain how labor costs flow through a company’s process cost system.
> Determine the financial statement column (Income Statement column or the Balance Sheet & Statement of Owner’s Equity column) where a normal account balance is extended. a. Equipment b. Owner, Withdrawals c. Prepaid Rent d. Depreciation Expense e. Accoun
> For each separate case below, follow the three-step process for adjusting the accrued revenue account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Reco
> a. Alonzo Co. receives $3,000 cash in advance for six months of recycling services on September 1 and records it by debiting Cash and crediting Unearned Revenue for $3,000. Alonzo provides recycling services monthly as promised. Prepare the December 31 y
> a. Tao Co. receives $10,000 cash in advance for four months of evenly planned legal services beginning on October 1. Tao records it by debiting Cash and crediting Unearned Revenue both for $10,000. It is now December 31, and Tao has provided legal servic
> a. Braga Company purchases $20,000 of equipment on January 1. The equipment is expected to last five years and be worth $2,000 at the end of that time. Prepare the entry to record one year’s depreciation expense of $3,600 for the equipment as of December
> For each separate case below, follow the three-step process for adjusting the Accumulated Depreciation account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Ste
> a. On July 1, Lopez Company paid $1,200 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31. Prepare the year-end adjusting entry to reflect expiration of the insurance as of Dec
> At the end of its annual accounting period, the company must make three adjusting entries. For each of these adjusting entries, indicate the account to be debited and the account to be credited. a. Accrue salaries expense. b. Adjust the Unearned Revenue
> Classify the following adjusting entries as involving prepaid expenses, unearned revenues, accrued expenses, or accrued revenues. a. To record revenue earned that was previously received as cash in advance. b. To record wages expense incurred but not yet
> Cal Consulting follows the practice that prepayments are debited to expense when paid, and unearned revenues are credited to revenue when cash is received. Given this company’s accounting practices, which one of the following applies to the preparation o
> Use Apple’s financial statements in Appendix A to answer the following. 1. Compute Apple’s profit margin for fiscal years ended (a) September 28, 2019, and (b) September 29, 2018. 2. is the change in Apple’s profit margin favorable or unfavorable? 3. In
> Gomez Company reported net income of $48,025 and net sales of $425,000 for the current year. (a) Compute Gomez’s profit margin. (b) Assuming Cruz (a competitor) has a profit margin of 15%, which company is generating more profit on each dollar of sales
> The adjusted trial balance for Happy Company follows. Use the adjusted trial balance to prepare the December 31 year-end (a) income statement, (b) statement of owner’s equity, and (c) balance sheet. The E. Happy, Capital account bala
> Choose from the following list of terms and phrases to best complete the statements below. a. Fiscal year c. Accrual basis accounting e. Cash basis accounting b. Timeliness d. Annual financial statements f. Time period assumption 1. Presumes that an orga
> For each transaction, (1) analyze the transaction using the accounting equation, (2) record the transaction in journal entry form, and (3) post the entry using T-accounts to represent ledger accounts. Use the following partial chart of accounts—account n
> Determine the ending balance of each of the following T-accounts.
> Indicate whether a debit or credit decreases the normal balance of each of the following accounts.
> Identify the normal balance (debit or credit) for each of the following accounts.
> A chart of accounts is a list of all ledger accounts and an identification number for each. One example of a chart of accounts is near the end of the book on pages CA and CA-1. Using that chart, identify the following accounts as either an Asset, Liabili
> Classify each of the following accounts as an Asset, Liability, or Equity account.
> Home Demo reports the following: Total liabilities = $38,633 million and Total assets = $42,966 million. (a) Compute Home Demo’s debt ratio. (b) Assuming Lows Hardware (a competitor) has a debt ratio of 60.0%, which company has higher risk from financia
> Refer to Apple’s financial statements in Appendix A for the following questions. Required 1. What amount of total liabilities does Apple report for each of the fiscal years ended (a) September 28, 2019, and (b) September 29, 2018? 2. What amount of tota
> Apple provides customer service and device repair through its Apple Care program. In preparing its monthly master budget, assume Apple’s Apple Care division reports the data below. Required Prepare a direct labor budget for the Apple C
> The debt ratio for Deutsche Auto for each of the last three years follows. Over this three-year period, did the company’s risk from financial leverage increase or decrease?
> Use the information in QS 2-14 to prepare a December 31 balance sheet for Lawson Consulting. Hint: The ending I. Lawson, Capital account balance as of December 31 is $13,000.
> Use the information in QS 2-14 to prepare a December statement of owner’s equity for Lawson Consulting. The I. Lawson, Capital account balance at December 1 was $0. Hint: Net income for December is $4,000 and the owner invested $10,500 cash in the compan
> Use the information in QS 2-14 to prepare a December income statement for Lawson Consulting. The company began operations on December 1.
> Lawson Consulting had the following accounts and amounts on December 31. Prepare a December 31 trial balance.
> Prepare compound journal entries for each transaction. a. The owner, J. Cruz, invests $6,500 cash and $3,500 of equipment in the company. b. The company acquires $2,000 of supplies by paying $500 cash and putting $1,500 on credit (accounts payable).
> Analyze each transaction in QS 2-9 by showing its effects on the accounting equation—specifically, identify the accounts and amounts (including + or −) for each transaction.
> Prepare general journal entries for the following transactions of Green Energy Company. Use the following partial chart of accounts: Cash; Accounts Receivable; Supplies; Accounts Payable; Consulting Revenue; and Utilities Expense. May 1 The Company provi
> A company is considering three alternative investment projects with different net cash flows. The present value of net cash flows is calculated using Excel and the results follow. a. Compute the net present value of each project. b. If the company accept
> Net present values for three alternative investment projects follow. (a) If the company accepts all positive net present value investments, which of these projects will it accept? (b) If the company can choose only one project, which will it choose?
>  Key financial figures for Apple’s two most recent fiscal years follow. Required 1. What is the total amount of assets invested in Apple in the current year? 2. What is Apple’s return on assets for t
> Peng Company is considering buying a machine that will yield income of $1,950 and net cash flow of $14,950 per year for three years. The machine costs $45,000 and has an estimated $6,000 salvage value. Compute the accounting rate of return for this inves
> A company is considering three alternative investment projects. Accounting rate of return computations are calculated using Excel and are shown below. If the company can choose only one project, which will it choose on the basis of accounting rate of ret
