Assume M. Crew opened a store in Dallas, starting with cash and common stock of $94,000. Melissa Farino, the store manager, then signed a note payable to purchase land for $88,000 and a building for $123,000. Farino also paid $60,000 for equipment and $8,000 for supplies to use in the business. Suppose the home office of M. Crew requires a weekly report from store managers. Write Farinos memo to the home office to report on her purchases. Include the stores balance sheet as the final part of your memo. Prepare a T-account to compute the balance for Cash.
> Young Software began with cash of $13,000. Young then bought supplies for $1,800 on account. Separately , Young paid $4,000 for a computer. Answer these questions. a. How much in total assets does Young have? b. How much in liabilities does Young owe?
> Suppose you manage a Pizza Sauce restaurant. Identify the missing amount for each situation: Total Assets Total Liabilities Stockholders' Equity $ ? 250,000 190,000 $130,000 70,000 $210,000 a. b. C. 80,000
> During 2010, Northwest Airlines paid salary expense of $38.3 million. At December 31, 2010, Northwest accrued salary expense of $2.8 million. Northwest then paid $1.8 million to its employees on January 3, 2011, the companys next payday after the end of
> Bryson, Inc., collects cash from customers two ways: a. Accrued revenue. Some customers pay Bryson after Bryson has performed service for the customer. During 2010, Bryson made sales of $60,000 on account and later received cash of $45,000 on account fr
> Crow Golf Co. prepaid three years rent ($24,000) on January 1, 2010. At December 31, 2010, Crow prepared a trial balance and then made the necessary adjusting entry at the end of the year. Crow adjusts its accounts once each year on December 31. What amo
> Nelson, Inc.s comparative balance sheet at January 31, 2011, and 2010, reports (in millions): Requirements Three situations about Nelsons issuance of stock and payment of dividends during the year ended January 31, 2011, follow. For each situation, use
> Assume that Old Boardwalk reported the following summarized data at December 31, 2010. Accounts appear in no particular order; dollar amounts are in millions. Prepare the trial balance of Old Boardwalk at December 31, 2010. List the accounts in their pr
> Orman Unlimited performed service for a client who could not pay immediately. Orman expected to collect the $5,200 the following month. A month later, Orman received $2,400 cash from the client. 1. Record the two transactions on the books of Orman Unlim
> Capri Design specializes in imported clothing. During May, Capri completed a series of transactions. For each of the following items, give an example of a transaction that has the described effect on the accounting equation of Capri Design. a. Increase
> Refer to Short Exercise 2-3. Which of the transactions of Hannah Lyle, MD, increased the total assets of the business? For each transaction, identify the asset that was increased. From short exercise 3: Hannah Lyle, MD, opened a medical practice. The bu
> Redberrys trial balance follows. Compute these amounts for the business: 1. Total assets 2. Total liabilities 3. Net income or net loss during December Redberry, Inc. Trial Balance December 31, 2010 Balance Account Title Debit Credit Cash . Accou
> Seventh Investments, Inc., began by issuing common stock for cash of $140,000. The company immediately purchased computer equipment on account for $100,000. 1. Set up the following T-accounts of Seventh Investments, Inc.: Cash, Computer Equipment, Accou
> Brian Horton opened a software consulting firm that immediately paid $8,000 for a computer. Was Hortons computer an expense of the business? If not, explain.
> Resort Travel borrowed $80,000 on October 1 by signing a note payable to Texas First Bank. The interest expense for each month is $500. The loan agreement requires Resort to pay interest on December 31. 1. Make Resorts adjusting entry to accrue monthly
> As the controller of Eden Consulting, you have hired a new employee, whom you must train. She objects to making an adjusting entry for accrued salaries at the end of the period. She reasons, We will pay the salaries soon. Why not wait until payment to re
> Suppose that on January 1 Georgetown Golf Company paid cash of $80,000 for computers that are expected to remain useful for four years. At the end of four years, the computers values are expected to be zero. 1. Make journal entries to record (a) purchas
> Hombran Doughnuts has current assets of $290 million; property , plant, and equipment of $490 million; and other assets totaling $150 million. Current liabilities are $150 million and long-term liabilities total $310 million. Requirements 1. Use these
> Accounting definitions are precise, and you must understand the vocabulary to properly use accounting. Sharpen your understanding of key terms by answering the following questions: 1. How do the assets and owners equity of Microsoft Corporation differ fr
> After operating for several months, architect Gwen Markum completed the following transactions during the latter part of July: Journalize the transactions of Gwen Markum, Architect. Include an explanation with each journal entry. Borrowed $34,000 fr
> Capeside Corporation began 2010 owing notes payable of $3.9 million. During 2010 Capeside borrowed $2.3 million on notes payable and paid off $2.0 million of notes payable from prior years. Interest expense for the year was $1.8 million, including $0.1 m
> A large auto manufacturer sells large fleets of vehicles to auto rental companies, such as Acme and Harris. Suppose Acme is negotiating with the auto manufacturer to purchase 950 vehicles. Write a short paragraph to explain to the auto manufacturer when
> A Healthy Planet, Inc., needs funds, and Mary Barry , the president, has asked you to consider investing in the business. Answer the following questions about the different ways that Barry might organize the business. Explain each answer. a. What forms
> Good business and accounting practices require the exercise of good judgment. How should ethics be incorporated into making accounting judgments? Why is ethics important?
> St. Pierre Corporation made sales of $960 million during 2010. Of this amount, St. Pierre collected cash for all but $25 million. The companys cost of goods sold was $270 million, and all other expenses for the year totaled $300 million. Also during 2010
> Answer the following questions about prepaid expenses: a. On March 1, Blue & Green Travel prepaid $4,800 for six months rent. Give the adjusting entry to record rent expense at March 31. Include the date of the entry and an explanation. Then post all am
> Use the Vulture Sporting Goods Company data in Short Exercise 3-15 to make the companys closing entries at March 31, 2010. Then set up a T-account for Retained Earnings and post to that account. Compare Retained Earnings ending balance to the amount repo
> Suppose Vulture Sporting Goods Company reported the following data at March 31, 2010, with amounts in thousands: Use these data to prepare Vulture Sporting Goods Companys income statement for the year ended March 31, 2010; statement of retained earnings
> Harry Samson opened a medical practice specializing in surgery . During the first month of operation (March), the business, titled Harry Samson, Professional Corporation (P .C.), experienced the following events: Requirements 1. Analyze the effects of
> Refer to the Vulture Sporting Goods Company data in Short Exercise 3-17. At March 31, 2010, Vulture Sporting Goods Companys current ratio was 1.35 and their debt ratio was 0.62. Compute Vultures (a) current ratio and (b) debt ratio after each of the foll
> Vulture Sporting Goods reported the following data at March 31, 2010, with amounts adapted in thousands: 1. Compute Vultures current ratio. Round to two decimal places. 2. Compute Vultures debt ratio. Round to two decimal places. Do these ratio values
> Accounting has its own vocabulary and basic relationships. Match the accounting terms at left with the corresponding definition or meaning at right. ____ 1. Debit…………………….A. The cost of operating a business; a decrease in ____ 2. Expense st
> Apply your understanding of the relationships among the financial statements to answer these questions. a. How can a business earn large profits but have a small balance of retained earnings? b. Give two reasons why a business can have a steady stream
> Suppose you are analyzing the financial statements of Murphy Radiology , Inc. Identify each item with its appropriate financial statement, using the following abbreviations: Income statement (IS), Statement of retained earnings (SRE), Balance sheet (BS),
> Jerome Smith, Certified Public Accountant, operates as a professional corporation (P .C.). The business completed these transactions during the first part of March, 2010: Requirements 1. Journalize the transactions. Explanations are not required. 2. P
> Refer to Exercise 2-36 of Chapter 2. Start from the trial balance and the posted T-accounts that Jerome Smith, Certified Public Accountant, Professional Corporation (P .C.), prepared for his accounting practice at March 18. A professional corporation is
> Net income appears on which financial statement(s)? a. Income statement b. Statement of retained earnings c. Balance sheet d. Both a and b
> Advanced Instruments had retained earnings of $155,000 at December 31, 2009. Net income for 2010 totaled $100,000, and dividends for 2010 were $25,000. How much retained earnings should Advanced report at December 31, 2010? a. $255,000 b. $180,000 c. $2
> Robbin Company had the following on the dates indicated: Robbin had no stock transactions in 2010 and, thus, the change in stockholders equity for 2010 was due to net income and dividends. If dividends were $55,000, how much was Robbins net income for 2
> The following selected events were experienced by either Solution Seekers, Inc., a corporation, or Paul Flynn, the major stockholder. State whether each event (1) increased, (2) decreased, or (3) had no effect on the total assets of the business. Identif
> The stockholders equity of Diakovsky Company at the beginning and end of 2010 totaled $15,000 and $20,000, respectively . Assets at the beginning of 2010 were $27,000. If the liabilities of Diakovsky Company increased by $9,000 in 2010, how much were tot
> Cash paid to purchase a building appears on the statement of cash flows among the a. Stockholders equity . b. Investing activities. c. Financing activities. d. Operating activities.
> Another name for the balance sheet is the a. statement of financial position b. statement of operations. c. statement of profit and loss. d. statement of earnings.
> The financial statement that reports revenues and expenses is called the a. statement of cash flows. b. income statement. c. statement of retained earnings. d. balance sheet.
> Revenues are a. decreases in liabilities resulting from paying off loans. b. increases in paid-in capital resulting from the owners investing in the business. c. increases in retained earnings resulting from selling products or performing services. d
> All of the following are current assets except a. Inventory . b. Sales Revenue. c. Cash. d. Accounts Receivable.
> The amount a company expects to collect from customers appears on the a. statement of cash flows. b. balance sheet in the current assets section. c. income statement in the expenses section. d. balance sheet in the stockholders equity section.
> During March, assets increased by $19,000 and liabilities increased by $6,000. Stockholders equity must have a. increased by $13,000. b. decreased by $13,000. c. increased by $25,000. d. decreased by $25,000.
> Assets are usually reported at their a. historical cost. b. current market value. c. appraised value. d. none of the above (fill in the blank).
> Which type of business organization provides the least amount of protection for bankers and other creditors of the company? a. Partnership b. Proprietorship c. Corporation d. Both a and b
> The primary objective of financial reporting is to provide information a. useful for making investment and credit decisions. b. about the profitability of the enterprise. c. to the federal government. d. on the cash flows of the company .
> Gartex, a new company, completed these transactions. What will Gartexs total assets equal? (1) Stockholders invested $54,000 cash and inventory worth $27,000. (2) Sales on account, $15,000. a. $66,000 b. $69,000 c. $96,000 d. $54,000
> A businesss receipt of a $120,000 building, with a $60,000 mortgage payable, and issuance of $60,000 of common stock will a. increase stockholders equity by $60,000. b. increase assets by $60,000. c. decrease assets by $60,000. d. increase stockholde
> If the credit to record the payment of an account payable is not posted, a. expenses will be understated. b. liabilities will be understated. c. cash will be understated. d. cash will be overstated
> Which of the following transactions will increase an asset and increase stockholders equity? a. Borrowing money from a bank b. Purchasing supplies on account c. Performing a service on account for a customer d. Collecting cash from a customer on an a
> The journal entry to record the receipt of land and a building and issuance of common stock a. debits Land and credits Common Stock. b. debits Land and Building and credits Common Stock. c. debits Land, Building, and Common Stock. d. debits Common St
> What is the effect on total assets and stockholders equity of paying the telephone bill as soon as it is received each month? Total assets…………Stockholders equity a. No effect………………………..No effect b. Decrease……………………….No effect c. No effect………………………..Decr
> Purchasing a building for $110,000 by paying cash of $15,000 and signing a note payable for $95,000 will a. increase both total assets and total liabilities by $95,000. b. increase both total assets and total liabilities by $110,000. c. decrease both
> Pinker Corporation began the year with cash of $30,000 and a computer that cost $25,000. During the year Pinker earned sales revenue of $135,000 and had the following expenses: salaries, $57,000; rent, $11,000; and utilities, $4,000. At year-end Pinkers
> A major purpose of preparing closing entries is to a. zero out the liability accounts. b. close out the Supplies account. c. adjust the asset accounts to their correct current balances. d. update the Retained Earnings account.
> Lanos Medical, Inc., ended 2009 with cash of $25,000. During 2010, Lanos earned net income of $95,000 and had adjustments to reconcile net income to net cash provided by operations totaling $20,000 (this is a negative amount). Lanos paid $35,000 to purch
> Which of the following accounts would not be included in the closing entries? a. Depreciation Expense b. Accumulated Depreciation c. Retained Earnings d. Service Revenue
> For 2010, Matthews Company had revenues in excess of expenses. Which statement describes Matthews closing entries at the end of 2010? a. Revenues will be credited, expenses will be debited, and retained earnings will be credited. b. Revenues will be de
> Unadjusted net income equals $7,500. Calculate what net income will be after the following adjustments: 1. Salaries payable to employees, $660 2. Interest due on note payable at the bank, $100 3. Unearned revenue that has been earned, $950 4. Supplie
> Selected data for the Blossom Company follow: Based on these facts, what are Blossoms current ratio and debt ratio? Current ratio Debt ratio a. 1.633 to 1 0.742 to 1 b. 0.694 to 1 6.815 to 1 c. 1.183 to 1
> What effect does the adjusting entry in question 3-57 have on Bambis net income for February? a. Increase by $200 b. Decrease by $200 c. Increase by $400 d. Decrease by $400
> Assume the same facts as in question 3-56. Bambis adjusting entry at the end of February should include a debit to Rent Expense in the amount of a. $200. b. $1,000. c. $400. d. $0.
> On January 1 of the current year, Bambi Company paid $1,200 rent to cover six months (January June). Bambi recorded this transaction as follows: Bambi adjusts the accounts at the end of each month. Based on these facts, the adjusting entry at the end of
> In which month should revenue be recorded? a. In the month that cash is collected from the customer b. In the month that goods are shipped to the customer c. In the month that goods are ordered by the customer d. In the month that the invoice is mail
> At December 31, 2010, Tommer Products has cash of $12,000, receivables of $5,000, and inventory of $42,000. The companys equipment totals $82,000. Tommer owes accounts payable of $17,000, and long-term notes payable of $78,000. Common stock is $14,800. P
> Frank Dunn began a music business in January 2010. Dunn prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Dunn Companys only activities during January through April: If Dunn Company uses the c
> Frank Dunn began a music business in January 2010. Dunn prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Dunn Companys only activities during January through April: In which month should Dunn
> Frank Dunn began a music business in January 2010. Dunn prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Dunn Companys only activities during January through April: In which month should Dunn
> The Unearned Revenue account of Super Incorporated began 2010 with a normal balance of $2,000 and ended 2010 with a normal balance of $17,000. During 2010, the Unearned Revenue account was credited for $26,000 that Super will earn later. Based on these f
> On April 1, 2010, Rural Insurance Company sold a one-year insurance policy covering the year ended April 1, 2011. Rural collected the full $2,700 on April 1, 2010. Rural made the following journal entry to record the receipt of cash in advance: Nine mon
> An adjusting entry recorded April salary expense that will be paid in May. Which statement best describes the effect of this adjusting entry on the companys accounting equation? a. Assets are decreased, liabilities are increased, and stockholders equity
> The manager of News Maker, Inc., prepared the company’s balance sheet while the accountant was ill. The balance sheet contains numerous errors. In particular, the manager knew that the balance sheet should balance, so he plugged in the
> Compute the missing amount (?) for each company amounts in millions. Which company has the Highest net income? Highest percent of net income to revenues? Diamond Corp. Lally Co. Bryant Inc. Beginning Assets. Liabilities . Common stock.. Retained ea
> Assume that the A division of Perez Corporation experienced the following transactions during the year ended December 31, 2011: a. Suppose division A supplied copy products for a customer for the discounted price of $263,000. Under normal conditions the
> Summarized versions of Cora Corporations financial statements are given for two recent years. // Requirement 1. Determine the missing amounts denoted by the letters.
> Refer to Redberrys trial balance in Short Exercise 2-10. The purpose of this exercise is to help you learn how to correct three common accounting errors. Error 1. Slide. Suppose the trial balance lists Land as $5,200 instead of $52,000. Recompute column
> The following data come from the financial statements of The Water Sport Company for the year ended May 31, 2011 (in millions): Requirements 1. Prepare a cash flows statement for the year ended May 31, 2011. Not all items given appear on the cash flows
> Sandy Healey is a realtor. She organized the business as a corporation on April 16, 2011. The business received $95,000 cash from Healey and issued common stock. Consider the following facts as of April 30, 2011: a. Healey has $16,000 in her personal ban
> The manager of Headlines, Inc., prepared the company’s balance sheet while the accountant was ill. The balance sheet contains numerous errors. In particular, the manager knew that the balance sheet should balance, so he plugged in the s
> Compute the missing amount (?) for each company amounts in millions. At the end of the year, which company has the Highest net income? Highest percent of net income to revenues? Sapphire Corp. Lance Co. Branch Inc. Beginning Assets.. Liabilities .
> Assume that the A division of Smith Corporation experienced the following transactions during the year ended December 31, 2011: a. Suppose division A supplied copy products for a customer for the discounted price of $252,000. Under normal conditions the
> The following amounts summarize the financial position of Rodriguez Resources on May 31, 2010: During June, 2010, the business completed these transactions: a. Rodriguez Resources received cash of $8,600 and issued common stock. b. Performed services
> The trial balance of Advantage Specialties, Inc., follows: Rebecca Smith, your best friend, is considering making an investment in Advantage Specialties, Inc. Rebecca seeks your advice in interpreting the companys information. Specifically , she asks ho
> During the first month of operations, Simmons Heating and Air Conditioning, Inc., completed the following transactions: Requirements 1. Record each transaction in the journal. Key each transaction by date. Explanations are not required. 2. Post the tr
> During December, Smith Auction Co. completed the following transactions: Smiths business uses the following accounts: Cash, Accounts Receivable, Supplies, Land, Accounts Payable, Notes Payable, Common Stock, Dividends, Service Revenue, Salary Expense, A
> Demers Real Estate Co. experienced the following events during the organizing phase and its first month of operations. Some of the events were personal for the stockholders and did not affect the business. Others were transactions of the business. Requi
> Two businesses, Blue Skies Corp., and Open Road, Inc., have sought business loans from you. To decide whether to make the loans, you have requested their balance sheets. Requirement 1. Using only these balance sheets, to which entity would you be more
> Refer to equations (15.19) and (15.20). Assume that σu = σx, so that the population variation in the error term is the same as it is in x. Suppose that the instrumental variable, z, is slightly correlated with u: Corr(z, u) = .1. Su
> Suppose that, for a given state in the United States, you wish to use annual time series data to estimate the effect of the state-level minimum wage on the employment of those 18 to 25 years old (EMP). A simple model is where MINt is the minimum wage, in
> Consider the simple regression model and let z be a binary instrumental variable for x. Use (15.10) to show that the IV estimator y = Bo + Bix + u
> Suppose that you wish to estimate the effect of class attendance on student performance. A basic model is where the variables are defined as in Chapter 6. (i) Let dist be the distance from the students’ living quarters to the lecture ha
> Consider a simple time series model where the explanatory variable has classical measurement error: where Y = Bo + Bixi + u, [15.58] X, = x; + e,
> In a recent article, Evans and Schwab (1995) studied the effects of attending a Catholic high school on the probability of attending college. For concreteness, let college be a binary variable equal to unity if a student attends college, and zero otherwi
> Consider a simple model to estimate the effect of personal computer (PC) ownership on college grade point average for graduating seniors at a large public university: where PC is a binary variable indicating PC ownership. (i) Why might PC ownership be co
> The data in CENSUS2000 is a random sample of individuals from the United States. Here we are Interested in estimating a simple regression model relating the log of weekly income, lweekinc, to schooling, educ. There are 29,501 observations. Associated wit
> Using the “cluster” option in the econometrics package Stata® 11, the fully robust standard errors for the pooled OLS estimates in Table 14.2—that is, robust to serial correlation and heteroskedasticity in the composite errors, {vit: t = 1, ….., ,T}—are
