Question: Condensed balance sheet and income statement data

> Why is it possible to prepare financial statements directly from an adjusted trial balance?

> Here is the ledger for Keisler Co Instructions: (a) Reproduce the journal entries for only the transactions that occurred on October 1, 10, and 20, and provide explanations for each. (b) Prepare a trial balance at October 31, 2014. Cash Common Stock

> Remington Company purchased equipment for $15,000. By the current balance sheet date, the company had depreciated $7,000. Indicate the balance sheet presentation of the data.

> Steve Trevino is interested in comparing the liquidity and solvency of a U.S. software company with a Chinese competitor. Is this possible if the two companies report using different currencies?

> Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial reporting? Explain.

> What terms commonly used under IFRS are synonymous with common stock and balance sheet?

> What is the benefit of a single set of high-quality accounting standards?

> Indicate whether each of the following items is most closely associated with the management discussion and analysis (MD&A), the notes to the financial statements, or the auditor’s report. (a) Description of ability to pay near-term obligations. (b) Unqua

> The adjusted trial balance of Ravine Corporation at December 31, 2014, includes the following accounts: Retained Earnings $17,200; Dividends $6,000; Service Revenue $32,000; Salaries and Wages Expense $14,000; Insurance Expense $1,800; Rent Expense $3,90

> Identify each of the following organizational characteristics with the organizational form or forms with which it is associated. (a) Easier to transfer ownership. (d) Tax advantages. (b) Easier to raise funds. (e) No personal legal l

> Indicate in which financial statement each of the following adjusted trial balance accounts would be presented. Service Revenue Accounts Receivable Notes Payable

> Which is not a required part of an annual report of a publicly traded company? (a) Statement of cash flows. (b) Notes to the financial statements. (c) Management discussion and analysis. (d) All of these are required.

> Indicate whether each of these items is an asset (A), a liability (L), or part of stockholders’ equity (SE). (a) Accounts receivable. (d) Supplies. (b) Salaries and wages payable. (e) Common stock. (c) Equipment. (f) Notes payable.

> Gray’s Books & Music Inc. reported the following selected information at March 31. 2014 Total current assets…………………………………………..$262,787 Total assets ………………………………………………………. 439,832 Total current liabilities ………………………………………. 293,625 Total liabilities ………………

> For each of the following events affecting the stockholders’ equity of Noland, indicate whether the event would: increase retained earnings (IRE), decrease retained earnings (DRE), increase common stock (ICS), or decrease common stock (DCS).

> A list of financial statement items for Morales Company includes the following: accounts receivable $14,000; prepaid insurance $2,600; cash $10,400; supplies $3,800; and debt investments (short-term) $8,200. Prepare the current assets section of the bala

> Journalize these accounting transactions. (a) Stockholders invested $12,000 in the business in exchange for common stock. (b) Insurance of $800 is paid for the year. (c) Supplies of $1,800 are purchased on account. (d) Cash of $7,500 is received for serv

> ValuMart, a large national retail chain, is nearing its fiscal year-end. It appears that the company is not going to hit its revenue and net income targets. The company’s marketing manager, Steve Edmiston, suggests running a promotion selling $50 gift ca

> Ace Technologies provides maintenance service for computers and office equipment for companies throughout the Northeast. The sales manager is elated because she closed a $300,000, three-year maintenance contract on December 29, 2013, two days before the

> The trial balance of Goodwin Company includes the following balance sheet accounts. Identify the accounts that might require adjustment. For each account that requires adjustment, indicate (1) the type of adjusting entry (prepaid expenses, unearned reven

> Terry Rabas, a fellow student, contends that the double entry system means each transaction must be recorded twice. Is Terry correct? Explain.

> (a) Lorie Power believes that the analysis of financial statements is directed at two characteristics of a company: liquidity and profitability. Is Lorie correct? Explain. (b) Are short-term creditors, long-term creditors, and stockholders primarily inte

> “A company’s net income appears directly on the income statement and the retained earnings statement, and it is included indirectly in the company’s balance sheet.” Do you agree? Explain.

> Geog Lav opened Geog Cleaners on March 1, 2014. During March, the following transactions were completed. Mar. 1 Issued 10,000 shares of common stock for $15,000 cash. 1 Purchased used truck for $8,000, paying $3,000 cash and the balance on account. 3

> On August 1, 2014, the following were the account balances of D&D Repair Service During August, the following summary transactions were completed. Aug. 5 Received $1,200 cash from customers in payment of account. 10 Paid $3,120 for salaries due

> Tutors-Plus Test Prep was organized on May 1, 2013, by Jan Cooper. Jan is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Jan prepared the following income statement for her fourth quarter, which ended Apr

> A review of the ledger of Garner Company at December 31, 2014, produces these data pertaining to the preparation of annual adjusting entries. 1. Prepaid Insurance $16,400. The company has separate insurance policies on its buildings and its motor vehicle

> AbDulla Advertising Agency was founded by Miriam AbDulla in January 2009. Presented here are both the adjusted and unadjusted trial balances as of December 31, 2014. Instructions: (a) Journalize the annual adjusting entries that were made. (b) Prepare

> Death Valley Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is presented here Other data: 1. Insurance expires at the rate of $500 per month. 2. A count of supplies on August 31 sh

> Pat Okendo started her own consulting firm, Okendo Consulting, on May 1, 2014. The trial balance at May 31 is as shown on the next page. In addition to those accounts listed on the trial balance, the chart of accounts for Okendo Consulting also contains

> The bookkeeper for Beltran Company asks you to prepare the following accrual adjusting entries at December 31. Use these account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, and Salaries an

> The following data are taken from the comparative balance sheets of Golfview Inn, which prepares its financial statements using the accrual basis of accounting. Fees are billed to members based upon their use of the club’s facilities.

> A first year co-op student working for Solutia Inc. recorded the transactions for the month. He wasn’t exactly sure how to journalize and post, but he did the best he could. He had a few questions, however, about the following transactions. 1. Cash recei

> Roxy Theater Inc. was recently formed. All facilities were completed on March 31. On April 1, the ledger showed: Cash $6,300; Land $10,000; Buildings (concession stand, projection room, ticket booth, and screen) $58,000; Equipment $6,000; Accounts Payabl

> This trial balance of Lindbergh Company does not balance. Your review of the ledger reveals that each account has a normal balance. You also discover the following errors. 1. The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Inco

> The trial balance of American Dry Cleaners on June 30 is given here The July transactions were as follows. July 8 Received $10,189 in cash on June 30 accounts receivable. 9 Paid employee salaries $2,100. 11 Received $7,320 in cash for services perf

> Bob Royce incorporated Royce Consulting, an accounting practice, on May 1, 2014. During the first month of operations, these events and transactions occurred. May 1 Stockholders invested $100,000 cash in exchange for common stock of the corporation.

> Beefeaters RV Park was started on April 1 by Sarah Rhodes. These selected events and transactions occurred during April. Apr. 1 Stockholders invested $100,000 cash in the business in exchange for common stock. 4 Purchased land costing $250,000 for ca

> Joe Thyme opened Thyme Company, a veterinary business in Neosho, Missouri, on August 1, 2014. On August 31, the balance sheet showed Cash $9,000; Accounts Receivable $1,700; Supplies $600; Equipment $5,000; Accounts Payable $3,600; Common Stock $10,000;

> Ned Walz started his own delivery service, Walz Service Inc., on June 1, 2014. The following transactions occurred during the month of June. June 1 Stockholders invested $20,000 cash in the business in exchange for common stock. 2 Purchased a used va

> Hyman Inc. was started on May 1. Here is a summary of the May transactions. 1. Stockholders invested $30,000 cash in the company in exchange for common stock. 2. Purchased equipment for $10,000 cash. 3. Paid $700 cash for May office rent. 4. Paid $300 ca

> On July 1, 2014, Seng Co. pays $12,400 to Nance Insurance Co. for a 2-year insurance contract. Both companies have fiscal years ending December 31. For Seng Co., journalize and post the entry on July 1 and the adjusting entry on December 31.

> The financial statements of Divine Company are presented here. DIVINE COMPANY Income Statement For the Year Ended December 31, 2014 Net sales ……………………………………………………………$700,000 Cost of goods sold ………………………………………………. 400,000 Selling and administrative expen

> Comparative statement data for Omaz Company and Wise Company, two competitors, are presented below. All balance sheet data are as of December 31, 2014. Instructions: (a) Compute the net income and earnings per share for each company for 2014. (b) Commen

> You are provided with the following information for Vern Corporation, effective as of its April 30, 2014, year-end. Accounts payable ………………………………………………………$ 3,100 Accounts receivable ……………………………………………………10,150 Accumulated depreciation—equipment ……………………….

> These items are taken from the financial statements of Mueller, Inc. Prepaid insurance ……………………………………………$ 2,400 Equipment ………………………………………………………. 30,000 Salaries and wages expense ……………………………..34,000 Utilities expense …………………………………………………. 2,100 Accumulate

> Suppose the following items are taken from the 2014 balance sheet of Starbucks Corporation. (All dollars are in millions.) Goodwill …………………………………………………………$ 477 Common stock ……………………………………………………40 Equipment ……………………………………………………. 3,036 Accounts payable ………

> Yocum Software International Inc., headquartered in Toronto, specializes in Internet safety and computer security products for both the home and commercial markets. In a recent balance sheet, it reported a deficit (negative retained earnings) of US$5,678

> Selected financial data of two competitors, Home Depot and Lowe’s, are presented here. (All dollars are in millions.) Suppose the data were taken from the 2014 financial statements of each company. Instructions: For each company, compu

> Walters Corporation was formed during 2013 by John Walters. John is the president and sole stockholder. At December 31, 2014, John prepared an income statement for Walters Corporation. John is not an accountant, but he thinks he did a reasonable job prep

> Presented below are selected financial statement items for Preacher Corporation for December 31, 2014. Instructions: (a) Determine which items should be included in a statement of cash flows, and then prepare the statement for Preacher Corporation. (b)

> Molina Company accumulates the following adjustment data at December 31. Indicate (1) the type of adjustment (prepaid expense, accrued revenue, and so on) and (2) the status of the accounts before adjustment (overstated or understated). (a) Supplies of

> Shaw’s Garden was started on May 1 with an investment of $45,000 cash. Following are the assets, liabilities, and common stock of the company on May 31, 2014, and the revenues and expenses for the month of May, its first month of operat

> Financial decisions often place heavier emphasis on one type of financial statement over the others. Consider each of the following hypothetical situations independently. (a) An investor is considering purchasing common stock of the 24/7 Fitness company.

> Presented below are five independent situations. (a) Randy Gentry, a college student looking for summer employment, opened a produce stand along a busy local highway. Each morning he buys produce from local farmers, then sells it in the afternoon as peop

> Mike Greenberg opened Clean Window Washing Inc. on July 1, 2014. During July,the following transactions were completed. July 1 Issued 12,000 shares of common stock for $12,000 cash. 1 Purchased used truck for $8,000, paying $2,000 cash and the balanc

> On November 1, 2014, the following were the account balances of Rijo Equipment Repair. During November, the following summary transactions were completed. Nov. 8 Paid $1,220 for salaries due employees, of which $600 is for November and $620 is for Oct

> Astromech Travel Court was organized on July 1, 2013, by Jessica Browning. Jessica is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Jessica prepared the following income statement for her fourth quarter,

> A review of the ledger of Dempsey Company at December 31, 2014, produces these data pertaining to the preparation of annual adjusting entries. 1. Prepaid Insurance $15,200. The company has separate insurance policies on its buildings and its motor vehic

> Wolf Creek Golf Inc. was organized on July 1, 2014. Quarterly financial statements are prepared. The trial balance and adjusted trial balance on September 30 are shown here. Instructions: (a) Journalize the adjusting entries that were made. (b) Prepare

> The Solo Hotel opened for business on May 1, 2014. Here is its trial balance before adjustment on May 31. Other data: 1. Insurance expires at the rate of $450 per month. 2. A count of supplies shows $1,050 of unused supplies on May 31. 3. Annual depreci

> Ken Lumas started his own consulting firm, Lumas Consulting, on June 1, 2014. The trial balance at June 30 is as follows. In addition to those accounts listed on the trial balance, the chart of accounts for Lumas also contains the following accounts: Ac

> The required steps in the accounting cycle are listed in random order below. List the steps in proper sequence. (a) Prepare a post-closing trial balance. (b) Prepare an adjusted trial balance. (c) Analyze business transactions. (d) Prepare a trial balanc

> The Sequel Theater Inc. was recently formed. It began operations in March 2014. The Sequel is unique in that it will show only triple features of sequential theme movies. On March 1, the ledger of The Sequel showed Cash $16,000; Land $38,000; Buildings (

> This trial balance of Swisher Co. does not balance. Each of the listed accounts has a normal balance per the general ledger. An examination of the ledger and journal reveals the following errors: 1. Cash received from a customer on account was debited

> This is the trial balance of Solis Company on September 30. The October transactions were as follows. Oct. 5 Received $1,300 in cash from customers for accounts receivable due. 10 Billed customers for services performed $5,100. 15 Paid employee sal

> Foyle Architects incorporated as licensed architects on April 1, 2014. During the first month of the operation of the business, these events and transactions occurred: Apr. 1 Stockholders invested $18,000 cash in exchange for common stock of the corp

> Friendley’s Miniature Golf and Driving Range Inc. was opened on March 1 by Dean Barley. These selected events and transactions occurred during March. Mar. 1 Stockholders invested $50,000 cash in the business in exchange for common stock of the corpor

> Cindy Braun created a corporation providing legal services, Cindy Braun Inc., on July 1, 2014. On July 31 the balance sheet showed Cash $4,000; Accounts Receivable $2,500; Supplies $500; Equipment $5,000; Accounts Payable $4,200; Common Stock $6,200; and

> Nina Finzelberg started her own consulting firm, Finzelberg Consulting Inc., on May 1, 2014. The following transactions occurred during the month of May. May 1 Stockholders invested $15,000 cash in the business in exchange for common stock. 2 Paid $

> On April 1, DeDonder Travel Agency Inc. was established. These transactions were completed during the month. 1. Stockholders invested $30,000 cash in the company in exchange for common stock. 2. Paid $900 cash for April office rent. 3. Purchased office e

> The bookkeeper for Ginger’s dance studio made the following errors in journalizing and posting. 1. A credit to Supplies of $600 was omitted. 2. A debit posting of $300 to Accounts Payable was inadvertently debited to Accounts Receivable

> A friend of yours, Sue Yaeger, recently completed an undergraduate degree in science and has just started working with a biotechnology company. Sue tells you that the owners of the business are trying to secure new sources of financing which are needed i

> The income statement for the Four Oaks Golf Club Inc. for the month ended July 31 shows Service Revenue $16,000; Salaries and Wages Expense $8,400; Maintenance and Repairs Expense $2,500; and Income Tax Expense $1,000. The statement of retained earnings

> Condensed balance sheet and income statement data for Sadecki Corporation are presented here and on the next page. Instructions: Compute these values and ratios for 2013 and 2014. (a) Earnings per share. (b) Working capital. (c) Current ratio. (d) Debt

> Here and on page 84 are financial statements of Ogleby Company. OGLEBY COMPANY Income Statement For the Year Ended December 31, 2014 Net sales………………………………………………………………. $2,218,500 Cost of goods sold ……………………………………………………. 1,012,400 Selling and administrati

> Comparative financial statement data for Bosch Corporation and Fielder Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2014. Instructions: (a) Comment on the relative profitability of the companies by computing

> Merando Corporation was formed on January 1, 2014. At December 31, 2014, Bill Jensen, the president and sole stockholder, decided to prepare a balance sheet, which appeared as follows. Bill willingly admits that he is not an accountant by training. He i

> Presented below is selected financial information for Wenger Corporation for December 31, 2014. Instructions: (a) Determine which items should be included in a statement of cash flows and then prepare the statement for Wenger Corporation. (b) Comment on

> On June 1, Hightower Service Co. was started with an initial investment in the company of $22,100 cash. Here are the assets, liabilities, and common stock of the company at June 30, and the revenues and expenses for the month of June, its first month of

> Presented below are five independent situations. (a) Three physics professors at MIT have formed a business to improve the speed of information transfer over the Internet for stock exchange transactions. Each has contributed an equal amount of cash and

> The financial statements of Zetar plc are presented in Appendix C. The company’s complete annual report, including the notes to its financial statements, is available in the Investors section at www.zetarplc.com. Instructions: Visit Zetar’s corporate we

> Under IFRS, do the definitions of revenues and expenses include gains and losses? Explain.

> Compare and contrast the rules regarding revenue recognition under IFRS versus GAAP.

> The required steps in the accounting cycle are listed in random order below. List the steps in proper sequence. (a) Prepare a post-closing trial balance. (b) Prepare an adjusted trial balance. (c) Analyze business transactions. (d) Prepare a trial balanc

> The financial statements of Zetar plc are presented in Appendix C. The company’s complete annual report, including the notes to its financial statements, is available in the Investors section at www.zetarplc.com. Instructions: Describe in which stateme

> The financial statements of Zetar plc are presented in Appendix C. The company’s complete annual report, including the notes to its financial statements, is available in the Investors section at www.zetarplc.com. Instructions: Identify five differences

> The statement of financial position for Ruiz Company includes the following accounts (in British pounds): Accounts Receivable £12,500; Prepaid Insurance £3,600; Cash £15,400; Supplies £5,200; and Debt Investments (short-term) £6,700. Prepare the current

> The following information is available for Cole Bowling Alley at December 31, 2014. Prepare a classified statement of financial position; assume that $13,900 of the notes payable will be paid in 2015. Buildings Accounts Receivable Prepaid Insurance

> Widmer Company recently received the following information related to the company’s December 31, 2014, statement of financial position (in Swiss francs). Prepare the assets section of the company’s classified statemen

> The financial statements of Zetar plc are presented in Appendix C. The company’s complete annual report, including the notes to its financial statements, is available in the Investors section at www.zetarplc.com. Instructions: Visit Zetar’s corporate we

> Discuss the potential advantages and disadvantages that countries outside the United States should consider before adopting regulations, such as those in the Sarbanes-Oxley Act, that increase corporate internal control requirements.

> Describe some of the issues the SEC must consider in deciding whether the United States should adopt IFRS.

> The February 13, 2010, issue of the Wall Street Journal includes an article by Scott Thurm entitled “For Some Firms, a Case of ‘Quadrophobia’.” Instructions: Read the article and answer the following. (a) What method did the study’s authors use to deter

> The financial statements of The Hershey Company are presented in Appendix B, following the financial statements for Tootsie Roll in Appendix A. Instructions: (a) Identify two accounts on Hershey’s balance sheet that provide evidence that Hershey uses ac

> The income statement for the Four Oaks Golf Club Inc. for the month ended July 31 shows Service Revenue $16,000; Salaries and Wages Expense $8,400; Maintenance and Repairs Expense $2,500; and Income Tax Expense $1,000. The statement of retained earnings

> In alphabetical order below are balance sheet items for Burnett Company at December 31, 2014. Prepare a balance sheet following the format of Illustration 1-7 (page 14). Accounts payable…………………. $65,000

> How is interest on long-term debt accounted for in the debt service fund?

> Which governmental funds use operating budgets? Which use capital budgets?

> The initial transfer of cash from the general fund to establish an internal service fund requires the general fund to credit Cash and debit Accounts Receivable—Internal Service Fund. Transfers Out. Budgetary Fund Balance—Assigned for Enc