Question: Bonnie Stores has 20 toasters on hand

> Minnick Co. has net sales of $105,000, cost of goods sold of $70,000, and operating expenses of $20,000. What is its gross profit and its gross profit rate?  

> Assume Kader Company has the following reported amounts: Sales revenue $510,000, Sales returns and allowances $15,000, Cost of goods sold $330,000, and Operating expenses $110,000. Compute the following: (a) net sales, (b) gross profit, (c) income f

> Arndt Company provides the following information for the month ended October 31, 2019; sales on credit $280,000, cash sales $100,000, sales discounts $5,000, and sales returns and allowances $11,000. Prepare the sales section of the income statement ba

> Hudson Company has the following account balances: Sales Revenue $195,000, Sales Discounts $2,000, Cost of Goods Sold $117,000, and Inventory $40,000. Prepare the entries to record the closing of these items to Income Summary.  

> From the information in BE5-4, prepare the journal entries to record these transactions on Sensat Company’s books under a perpetual inventory system.  

> Prepare the journal entries to record the following transactions on Kwang Company’s books using a perpetual inventory system. (a) On March 2, Kwang Company sold $900,000 of merchandise on account to Sensat Company, terms 2/10, n/30. The cost of

> Radomir Company buys merchandise on account from Lemke Company. The selling price of the goods is $780, and the cost of the goods is $470. Both companies use perpetual inventory systems. Journalize the transaction on the books of both companies. &nbsp

> Presented below are the components in Gates Company’s income statement. Determine the missing amounts.  

> At October 31, Burgess Company made an accrued expense adjusting entry of $2,100 for salaries. Prepare the reversing entry on November 1, and indicate the balances in Salaries and Wages Payable and Salaries and Wages Expense after posting the reversing

> The following are the major balance sheet classifications: Current assets (CA) Current liabilities (CL) Long-term investments (LTI) Long-term liabilities (LTL) Property, plant, and equipment (PPE) Stockholders’ equity (SE) Intangible assets (

> The balance sheet debit column of the worksheet for Hamidi Company includes the following accounts: Accounts Receivable $12,500, Prepaid Insurance $3,600, Cash $4,100, Supplies $5,200, and Debt Investments (short-term) $6,700. Prepare the current asset

> Prepare the closing entries for the Sales Revenue account, assuming a balance of $200,000 and the Cost of Goods Sold account with a $145,000 balance.  

> At Creighton Company, the following errors were discovered after the transactions had been journalized and posted. Prepare the correcting entries. 1. A collection on account from a customer for $870 was recorded as a debit to Cash $870 and a credit to

> The ledger of Rios Company contains the following balances: Retained Earnings $30,000, Dividends $2,000, Service Revenue $50,000, Salaries and Wages Expense $27,000, and Supplies Expense $7,000. Prepare the closing entries at December 31.  

> The ledger of Clayton Company includes the following unadjusted balances: Prepaid Insurance $3,000, Service Revenue $58,000, and Salaries and Wages Expense $25,000. Adjusting entries are required for (a) expired insurance $1,800; (b) services perform

> Mayes Company records all prepayments in income statement accounts. At April 30, the trial balance shows Supplies Expense $2,800, Service Revenue $9,200, and zero balances in related balance sheet accounts. Prepare the adjusting entries at April 30 ass

> Partial adjusted trial balance data for Parsons Company is presented in BE3-9. The balance in Common Stock is the balance as of January 1. Prepare a retained earnings statement for the year assuming net income is $12,200 for the year and Retained Earning

> The adjusted trial balance of Parsons Company at December 31, 2019, includes the following accounts: Common Stock $15,600, Dividends $7,000, Service Revenue $37,000, Salaries and Wages Expense $16,000, Insurance Expense $2,000, Rent Expense $4,000, Suppl

> The bookkeeper for Bradbury Company asks you to prepare the following accrued adjusting entries at December 31. 1. Interest on notes payable of $400 is accrued. 2. Services performed but not recorded total $1,900. 3. Salaries earned by employees of $900

> Using the data in BE3-5, journalize and post the entry on July 1 and the adjusting entry on December 31 for Kalter Insurance Co. Kalter uses the accounts Unearned Service Revenue and Service Revenue. Data from BE3-5: On July 1, 2019, Dobbs Co. pays $14,

> On July 1, 2019, Dobbs Co. pays $14,400 to Kalter Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Dobbs Co., journalize and post the entry on July 1 and the annual adjusting entry on December 31.

> At the end of its first year, the trial balance of Nygaard Company shows Equipment $30,000 and zero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depreciation for the year is estimated to be $4,000. Prepare the annual adjusting

> A credit sale is made on July 10 for $900, terms 2/10, n/30. On July 12, $100 of goods are returned for credit. Give the journal entry on July 19 to record the receipt of the balance due within the discount period.

> Ritter Advertising Company’s trial balance at December 31 shows Supplies $6,700 and Supplies Expense $0. On December 31, there are $2,500 of supplies on hand. Prepare the adjusting entry at December 31, and using T-accounts, enter the balances in the acc

> An inexperienced bookkeeper prepared the following trial balance. Prepare a correct trial balance, assuming all account balances are normal. ERIKA COMPANY Trial Balance December 31, 2019 Debit Credit Cash $16,800 Prepaid Insurance Accounts Payable U

> From the ledger balances given below, prepare a trial balance for the Favre Company at June 30, 2019. List the accounts in the order shown on page 71 of the textbook. All account balances are normal. Accounts Payable $7,000, Cash $5,200, Common Stock $20

> Selected transactions for the Nikolai Company are presented in journal form below. Post the transactions to T-accounts. Make one T-account for each item and determine each account’s ending balance. J1 Date Account Titles and Explan

> Using the data in BE2-5, journalize the transactions. (You may omit explanations.) Reference Data BE 2-5: Aug. 1 Opens an office as a financial advisor, investing $5,000 in cash in exchange for common stock. 4 Pays insurance in advance for 6 months, $1,

> Using the data in BE2-2, journalize the transactions. (You may omit explanations.) Reference Data BE 2-2: June 1 Sheldon Cooper invests $4,000 cash in exchange for shares of common stock in a small welding business. 2 Purchases equipment on account for

> In alphabetical order below are balance sheet items for Ellerby Company at December 31, 2019. Prepare a balance sheet, following the format of Illustration 1-10. Accounts payable……………………. $85,000 Accounts receivable…………………..72,500 Cash………………………………………..4

> Given the accounting equation, answer each of the following questions. (a) The liabilities of Holland Company are $120,000 and its stockholders’ equity is $232,000. What is the amount of Holland Company’s total assets? (b) The total assets of Holland Com

> Presented below is the basic accounting equation. Determine the missing amounts. Assets Liabilities Stockholders' Equity (a) $78,000 (b) (c) $94,000 $50,000 $45,000 ? $70,000 $60,000 ? ? II

> Goods costing $3,000 are purchased on account on July 15 with credit terms of 2/10, n/30. On July 18, a $200 credit was received from the supplier for damaged goods. Give the journal entry on July 24 to record payment of the balance due within the discou

> Goods costing $2,000 are purchased on account on July 15 with credit terms of 2/10, n/30. On July 18, a $200 credit memo is received from the supplier for damaged goods. Give the journal entry on July 24 to record payment of the balance due within the di

> What is the major advantage and major disadvantage of the specific identification method of inventory costing?

> Kyle Ebert believes that the allocation of cost of goods available for sale should be based on the actual physical flow of the goods. Explain to Kyle why this may be both impractical and inappropriate.

> Explain the difference between the terms FOB shipping point and FOB destination.

> Katz Hat Shop received a shipment of hats for which it paid the wholesaler $2,970. The price of the hats was $3,000, but Katz was given a $30 cash discount and required to pay freight charges of $50. What amount will Katz record for inventory? Why?

> Your friend Theo Dolan has been hired to help take the physical inventory in Silker Hardware Store. Explain to Theo Dolan what this job will entail.

> Emporia Shoe Shop had goods available for sale in 2019 with a retail price of $120,000. The cost of these goods was $84,000. If sales during the period were $80,000, what is the estimated cost of ending inventory using the retail inventory method?

> Wiggins Company has net sales of $400,000 and cost of goods available for sale of $300,000. If the gross profit rate is 35%, what is the estimated cost of the ending inventory? Show computations.

> When is it necessary to estimate inventories?

> How does the average-cost method of inventory costing differ between a perpetual inventory system and a periodic inventory system?

> An item must possess two characteristics to be classified as inventory by a merchandiser. What are these two characteristics?

> Distinguish between FOB shipping point and FOB destination. Identify the freight terms that will result in a debit to Inventory by the buyer and a debit to Freight-Out by the seller.

> What inventory cost flow does Apple use for its inventories? (Hint: You will need to examine the notes for Apple’s financial statements.)

> Under what circumstances might inventory turnover be too high? That is, what possible negative consequences might occur?

> Ryder Company’s balance sheet shows Inventory $162,800. What additional disclosures should be made?

> Kuzu Company discovers in 2019 that its ending inventory at December 31, 2018, was $7,000 understated. What effect will this error have on (a) 2018 net income, (b) 2019 net income, and (c) the combined net income for the 2 years?

> Taylor Entertainment Center has 5 TVs on hand at the balance sheet date that cost $400 each. The net realizable value is $350 per unit. Under the lower-of-cost-or net realizable value basis of accounting for inventories, what value should Taylor report f

> Which assumed inventory cost flow method: (a) usually parallels the actual physical flow of merchandise? (b) divides cost of goods available for sale by total units available for sale to determine a unit cost? (c) assumes that the latest units purchased

> “The key to successful business operations is effective inventory management.” Do you agree? Explain.

> Ming Xu believes revenues from credit sales may be recorded before they are collected in cash. Do you agree? Explain.

> Explain the meaning of the credit terms 2/10, n/30.

> Define two generally accepted accounting principles that relate to adjusting the accounts.

> When is cost of goods sold determined in a perpetual inventory system?

> How does income measurement differ between a merchandising and a service company?

> What components of revenues and expenses are different between merchandising and service companies?

> Identify the accounts that are added to or deducted from Purchases in a periodic system to determine the cost of goods purchased. For each account, indicate whether it is added or deducted.

> Indicate the columns of the worksheet in a perpetual system in which (a) inventory and (b) cost of goods sold will be shown.

> Determine Apple’s gross profit rate for 2015 and 2014. Indicate whether it increased or decreased from 2014 to 2015.

> Why is the normal operating cycle for a merchandising company likely to be longer than for a service company?

> How does the single-step form of income statement differ from the multiple-step form?

> Identify the sections of a multiple-step income statement that relate to (a) operating activities, and (b) non-operating activities.

> Identify the distinguishing features of an income statement for a merchandising company.

> Why may a trial balance not contain up-to-date and complete financial information?

> What merchandising account(s) will appear in the post-closing trial balance?

> Explain why the Inventory account will usually require adjustment at year-end.

> (a) “The steps in the accounting cycle for a merchandising company are different from the accounting cycle for a service company.” Do you agree or disagree? (b) Is the measurement of net income for a merchandising company conceptually the same as for a s

> Which of the following accounts would not appear in the post-closing trial balance? Interest Payable; Equipment; Depreciation Expense; Dividends; Unearned Service Revenue; Accumulated Depreciation— Equipment; and Service Revenue.

> What are the content and purpose of a post-closing trial balance?

> Describe the nature of the Income Summary account and identify the types of summary data that may be posted to this account.

> Identify the account(s) debited and credited in each of the four closing entries, assuming the company has net income for the year.

> Why is it necessary to prepare formal financial statements if all of the data are in the statement columns of the worksheet?

> If a company’s revenues are $125,000 and its expenses are $113,000, in which financial statement columns of the worksheet will the net income of $12,000 appear? When expenses exceed revenues, in which columns will the difference appear?

> What is the relationship, if any, between the amount shown in the adjusted trial balance column for an account and that account’s ledger balance?

> Harper Travel Agency purchased land for $85,000 cash on December 10, 2019. At December 31, 2019, the land’s value has increased to $93,000. What amount should be reported for land on Harper’s balance sheet at December 31, 2019? Explain.

> Cigale Company prepares reversing entries. If the adjusting entry for interest payable is reversed, what type of an account balance, if any, will there be in Interest Payable and Interest Expense after the reversing entry is posted?

> Explain the purpose of the worksheet.

> Using Apple’s annual report, determine its current liabilities at September 27, 2014, and September 26, 2015. Were current liabilities higher or lower than current assets in these two years?

> Distinguish between long-term investments and property, plant, and equipment.

> What is meant by the term “operating cycle?”

> What standard classifications are used in preparing a classified balance sheet?

> How do correcting entries differ from adjusting entries?

> Identify, in the sequence in which they are prepared, the three trial balances that are used in the accounting cycle.

> Indicate, in the sequence in which they are made, the three required steps in the accounting cycle that involve journalizing.

> Distinguish between a reversing entry and an adjusting entry. Are reversing entries required?

> (a) How does the time period assumption affect an accountant’s analysis of business transactions? (b) Explain the terms fiscal year, calendar year, and interim periods.

> “A worksheet is a permanent accounting record and its use is required in the accounting cycle.” Do you agree? Explain.

> What is the debit/credit effect of a prepaid expense adjusting entry?

> Distinguish between the two categories of adjusting entries, and identify the types of adjustments applicable to each category.

> “Adjusting entries are required by the historical cost principle of accounting.” Do you agree? Explain.

> In completing the engagement in Question 3, Zupan pays no costs in March, $2,000 in April, and $2,500 in May (incurred in April). How much expense should the firm deduct from revenues in the month when it recognizes the revenue? Why?

> Susan Zupan, a lawyer, accepts a legal engagement in March, performs the work in April, and is paid in May. If Zupan’s law firm prepares monthly financial statements, when should it recognize revenue from this engagement? Why?

> Laurie Belk is president of Better Books. She has no accounting background. Belk cannot understand why fair value is not used as the basis for all accounting measurement and reporting. Discuss.

> Describe the constraint inherent in the presentation of accounting information.

> What is the distinction between comparability and consistency?

> The bank portion of the bank reconciliation for Bogalusa Company at October 31, 2019, is shown below. The adjusted cash balance per bank agreed with the cash balance per books at October 31. The November bank statement showed the following checks and de

> On July 31, 2019, Keeds Company had a cash balance per books of $6,140. The statement from Dakota State Bank on that date showed a balance of $7,690.80. A comparison of the bank statement with the Cash account revealed the following facts. 1. The bank se

> Kael Company maintains a petty cash fund for small expenditures. These transactions occurred during the month of August. Aug. 1 Established the petty cash fund by writing a check payable to the petty cash custodian for $200. 15 Replenished the petty cas