Ellison Heating and Air Conditioning, Inc., uses the direct write-off method to account for bad debts. Record the following transactions that occurred during the year:
> Assume that on January 1 of year 1, Midtown Auto Repair purchased equipment at a cost of $48,000. Management expects the equipment to remain in service for five years, with zero residual value. Midtown Auto Repair uses the straight-line depreciation meth
> Which of the following is not an element of an internal control system? a. Monitoring b. Information and communication c. The control environment d. Auditing
> Pacific Equipment, which sells industrial handling equipment, values its inventory using LIFO. During the recent year, Pacific Equipment has experienced a significant increase in the cost of its inventory items. Although the net income for the current ye
> On March 31, 2016, the Accounts Receivable balance of Dunham Manufacturing, Inc., is $173,000. The Allowance for Uncollectible Accounts has a $1,650 credit balance. Dunham Manufacturing, Inc., prepares the following aging schedule for its accounts receiv
> Eagle Resources, Inc., has the following account balances at October 31, 2016. The inventory balance was determined using FIFO. Eagle Resources, Inc., has determined that the replacement cost (current market value) of the October 31, 2016, ending inv
> Cool Rays Tanning Salon bought three tanning beds in a $15,000 lump-sum purchase. An independent appraiser valued the tanning beds: Cool Rays Tanning Salon paid $5,000 in cash and signed a note payable for $10,000. Record the purchase in the journal,
> Beckett Appliance Repair, Inc., ended December 2015 with Accounts Receivable of $2,400 and a debit balance in Allowance for Uncollectible Accounts of $175. During January 2016, Beckett Appliance Repair, Inc., completed the following transactions: a. Sal
> Assume McCormack Tire, Inc., completed the following perpetual inventory transactions for a line of tires Requirements 1. Compute cost of goods sold and gross profit under FIFO. 2. Compute cost of goods sold and gross profit using LIFO. 3. Compute c
> Rodriguez Transfer manufactures conveyor belts. Early in July 2016, Rodriguez Transfer constructed its own building at a materials, labor, and overhead cost of $980,000. Rodriguez Transfer paid cash for the construction costs. Rodriguez Transfer also pai
> Advantage Electronics, Inc., uses the direct write-off method to account for bad debts. Record the following transactions that occurred during the year:
> Refer to the data for The Bike Hub, Inc., in E5-31B. Data from E5-31B: Assume The Bike Hub, Inc., bought and sold a line of comfort bikes during July as follows: The Bike Hub, Inc., uses the perpetual inventory system. Requirements 1. Compute the
> Ayer Systems purchased land, paying $90,000 cash as a down payment and signing a $170,000 note payable for the balance. In addition, Ayer Systems paid delinquent property tax of $2,100; title insurance costing $4,600; and an $8,800 charge for leveling th
> Information from Grey’s Photography, Inc., Cash account as well as the July bank statement are presented next. Check #210 was written for $500 to pay salaries expense. Requirements 1. Prepare the bank reconciliation on July 31. 2. Prepare all ne
> PDQ, Inc., is a supplier of residence alarm systems to building contractors. Charlie Roberts, the company’s new CEO, is out to make a name for himself and makes it known to his management team that he plans for the company to meet, if not exceed, its sal
> Assume The Bike Hub, Inc., bought and sold a line of comfort bikes during July as follows: The Bike Hub, Inc., uses the perpetual inventory system. Requirements 1. Compute the cost of ending inventory under FIFO. 2. Compute the cost of ending inven
> The following is selected data for Simpson Equipment, Inc., for the current year: Requirement 1. Calculate the return on assets (ROA) and the fixed asset turnover ratio for Simpson Equipment for the current year. Round your answers to two decimal pl
> Casey’s Construction, Inc.’s checkbook lists the following: Casey’s Construction, Inc.’s September bank statement shows the following: Requirements 1. Prepare Casey’s Construction, Inc.’s bank reconciliation on September 30, 2016. How much cash
> Refer to the data for E5-28B. However, instead of the FIFO method, assume Tee Time, Inc., uses the average cost method. Data from E5-28B: Tee Time, Inc., carries a line of monogrammed putters. Tee Time uses the FIFO method and a perpetual inventory syst
> At the end of 2016, Crawford Corp., had total assets of $321,800 and total liabilities of $183,400. Included in the assets were property, plant, and equipment with a cost of $242,000 and accumulated depreciation of $116,000. Also included in the assets w
> Calculate the answers for the missing data:
> Refer to the data for E5-28B. However, instead of the FIFO method, assume Tee Time, Inc., uses the LIFO method. Data from E5-28B: Tee Time, Inc., carries a line of monogrammed putters. Tee Time uses the FIFO method and a perpetual inventory system. The
> Keroak Mining paid $252,000 for the right to extract mineral assets from a 330,000-ton mineral deposit. In addition to the purchase price, Keroak Mining also paid a $2,100 flying fee; a $3,500 license fee to the state of Colorado; and $46,000 for a geolo
> Lakota Equipment reported the following items on December 31, 2016 (last year’s amounts also given as needed): Requirements 1. Compute Lakota Equipment’s (a) quick ratio, (b) current ratio, and (c) accounts receivable turnover for 2016. 2. Evaluate e
> Tee Time, Inc., carries a line of monogrammed putters. Tee Time uses the FIFO method and a perpetual inventory system. The sales price of each putter is $170. Company records indicate the following activity for putters for the month of January: Requi
> What are the three components of the fraud triangle? How can they be helpful in fighting fraud in an organization?
> Rabito Corp., aggressively acquires other companies. Assume that Rabito Corp., purchased Loring, Inc., for $1,500,000 cash. The market value of Loring’s assets is $2,200,000, and it has liabilities with a market value of $825,000. Requirements 1. Compu
> Consider the following data: Requirements 1. Calculate the quick assets and the quick ratio for each company (round your final answer to two decimal places). 2. Calculate the current ratio for each company (round your final answer to two decimal pla
> Wild Things, Inc., has the following information as of December 31, 2016: Requirements 1. Compute the rate of inventory turnover for Wild Things, Inc., for the year ended December 31, 2016. Round the result to two decimal places. 2. The rate of inve
> Part 1. Morris Printing manufactures high-speed printers. Morris Printing recently paid $300,000 for a patent on a new laser printer. Although it gives legal protection for 20 years, the patent is expected to provide a competitive advantage for only ei
> Valley Hardware Supply, Inc., sells on account. When a customer account becomes four months old, Valley Hardware Supply converts the account to a note receivable. During 2016, Valley Hardware Supply completed these transactions: Requirement 1. Recor
> Master Blaster, Inc., sells and installs audio equipment. During a recent fire that occurred at its warehouse, Master Blaster, Inc.’s entire inventory was destroyed. Master Blaster, Inc.’s accounting records reflect the following information. Requirem
> Ludlow Transport is a large trucking company. Ludlow Transport uses the unit’s of-production (UOP) method to depreciate its trucks. In 2013, Ludlow Transport acquired a Mack truck costing $410,000 with a useful life of 10 years or 1,250,000 miles. Estima
> Journalize the following transactions of Lawn Pro, Inc., which ends its accounting year on September 30:
> Mike’s Custom Furniture, Inc., reported the following comparative income statements for the years ended April 30, 2016 and 2015. During 2016, Mike’s Custom Furniture, Inc., discovered that the 2015 ending inventory, as previously reported, was overst
> Assume that Hart Corporation’s comparative balance sheet reported these amounts: Requirement 1. Assume that on January 1, 2016, Hart sold 1/10 of its plant and equipment for $56,000 in cash. Journalize this transaction for Hart.
> Score More Sports uses the FIFO inventory method. Score More Sports started December with 10 helmets that cost $54 each. On December 19, Score More Sports bought 15 helmets at $52 each. On December 28, Score More Sports sold 12 helmets. Prepare a perpetu
> On April 30, 2016, Seattle First National Bank loaned $100,000 to Pugliese Produce, Inc., on a one-year, 8 percent note. Requirements 1. Compute the interest for the years ended December 31, 2016 and 2017, on the note. Round interest calculations to th
> Gabby’s Bakery Company reported sales revenue of $148,000 and cost of goods sold of $93,000. Requirements 1. Compute Gabby’s Bakery Company’s correct gross profit assuming the company’s ending inventory is overstated by $1,500. Show your work. 2. Compu
> On January 2, 2016, Evergreen Lighting purchased showroom fixtures for $18,000 cash, expecting the fixtures to remain in service for 5 years. Evergreen Lighting has depreciated the fixtures on a straight-line basis, with zero residual value. On August 2,
> River City Supply, Inc., uses the allowance method to account for uncollectible accounts. On December 31, 2016, Allowance for Uncollectible Accounts has a $375 credit balance. Journalize the year-end adjusting entry for uncollectible accounts assuming th
> Top Fuel Auto Parts, Inc., had the following FIFO perpetual inventory record for one of its inventory items at November 30, the end of the fiscal year. A physical count of the inventory performed at year-end revealed $172.20 (28 items) of inventory o
> Putnam Freight purchased a building for $500,000 and depreciated it on a straight-line basis over a 30-year period. The estimated residual value was $80,000. After using the building for 15 years, Putnam realized that wear and tear on the building would
> On December 31, 2016, the Accounts Receivable balance of TDS Distribution, Inc., is $194,000. The Allowance for Uncollectible Accounts has a $1,200 credit balance. TDS Distribution, Inc., prepares the following aging schedule for its accounts receivable:
> Eaton Supply, Inc., has the following account balances at May 31, 2016. The inventory balance was determined using FIFO. Eaton Supply, Inc., has determined that the replacement cost (current market value) of the May 31, 2016, ending inventory is $35,
> Mercy Medical Center bought equipment on January 2 for $42,000. The equipment was expected to remain in service for four years and to perform 1,200 operations. At the end of the equipment’s useful life, Mercy estimates that its residual value will be $6,
> DJ’s Auto Repair, Inc., ended December 2015 with Accounts Receivable of $8,500 and a credit balance in Allowance for Uncollectible Accounts of $275. During January 2016, DJ’s Auto Repair, Inc., completed the following transactions: Requirements 1. P
> Sundaze Boats guarantees its boats for three years or 1,500 hours, whichever comes first. Industry experience indicates that Sundaze can expect warranty costs will equal 4 percent of sales. Assume in its first year, Sundaze Boats had sales totalling $607
> Assume Alpine Tire, Inc., completed the following perpetual inventory transactions for a line of tires. Requirements 1. Compute cost of goods sold and gross profit under FIFO. 2. Compute cost of goods sold and gross profit using LIFO. 3. Compute cos
> On January 1 of year 1, Standard Hardware, Inc., purchased equipment at a cost of $52,000. Management expects the equipment to remain in service for fve years, with zero residual value. Standard Hardware, Inc., uses the straight-line depreciation method.
> Refer to the data for Bello’s Bikes, Inc., in E5-19A. Data from E5-19A: Assume Bello’s Bikes, Inc., bought and sold a line of mountain bikes during October as follows: Bello’s Bikes, Inc., uses the perpetual inventory system. Requirements 1. Compu
> Westwood Tanning Salon bought three tanning beds in a $19,000 lump-sum purchase. An independent appraiser valued the tanning beds as follows: Westwood Tanning Salon paid $8,000 in cash and signed a note payable for $11,000. Record the purchase in the
> Information from Karev Photography’s Cash account as well as the January bank statement are presented next. Check #210 was written for $310 to pay salaries expense. Requirements 1. Prepare the bank reconciliation on January 31. 2. Prepare all ne
> Assume Bello’s Bikes, Inc., bought and sold a line of mountain bikes during October as follows: Bello’s Bikes, Inc., uses the perpetual inventory system. Requirements 1. Compute the cost of ending inventory under FIFO. 2. Compute the cost of ending
> Whelan Transfer manufactures conveyor belts. Early in August 2016, Whelan Transfer constructed its own building at a materials, labor, and overhead cost of $910,000. Whelan Transfer paid cash for the construction costs. Whelan Transfer also paid for arch
> Cryer’s Produce, Inc.’s checkbook lists the following: Cryers’s Produce, Inc.’s November bank statement shows the following: Requirements 1. Prepare Cryer’s Produce, Inc.’s bank reconciliation on November 30, 2016. How much cash does Cryer’s Pro
> Refer to the data for E5-16A. However, instead of the FIFO method, assume Golfer’s Delight, Inc., uses the average cost method. Data from E5-16A: Golfer’s Delight, Inc., carries a line of titanium putters. Golfer’s Delight, Inc., uses the FIFO method an
> Your company sells $90,000 of goods, and you collect sales tax of 8 percent. What current liability does the sale create? a. Sales Revenue of $97,200 b. Accounts Payable of $7,200 c. Unearned Revenue of $7,200 d. Sales Tax Payable of $7,200
> Murphy Industrial Systems purchased land, paying $70,000 cash as a down payment and signing a $150,000 note payable for the balance. In addition, Murphy Industrial Systems paid delinquent property tax of $1,800, title insurance costing $2,700, and a $5,5
> Calculate the answers for the missing data:
> Refer to the data for E5-16A. However, instead of the FIFO method, assume Golfer’s Delight, Inc., uses the LIFO method. Data from E5-16A: Golfer’s Delight, Inc., carries a line of titanium putters. Golfer’s Delight, Inc., uses the FIFO method and a perp
> Specify how each of the following items would be reported in the financial statements of Cunnington Enterprises for its current fiscal year. Also specify the amount that would appear on the statement. Some items may be reported on more than one financial
> Calculate accounts receivable turnover for the following two companies:
> Golfer’s Delight, Inc., carries a line of titanium putters. Golfer’s Delight, Inc., uses the FIFO method and a perpetual inventory system. The sales price of each putter is $195. Company records indicate the following activity for putters for the month o
> Classify each of the following as: Trading security (T) Available-for-sale security (A) Held-to-maturity security (H) None of the above (N) ______ 1. A bond that management plans on owning until it is repaid; management does not believe it will need to
> Calculate the quick assets and the quick ratio for each of the following companies:
> Swanson, Incorporated’s sales for the year ended March 31, 2016, were $1,275,000, and cost of goods sold amounted to $728,000. Beginning inventory was $55,000, and ending inventory was $68,000. Compute Swanson, Incorporated’s rate of inventory turnover f
> Bargain Oil, a small Texas oil company, holds huge reserves of oil. Assume that at the end of 2016, Bargain Oil’s cost of oil reserves totaled approximately $14.4 million, representing 1.2 million barrels of oil reserves in the ground. Requirements 1.
> What journal entry is made when unearned revenue is earned?
> Pacific Bank lent $125,000 to Robert Simmons on a 30-day, 6 percent note. Record the following transactions for Pacific Bank (explanations are not required): 1. Lending the money on June 12 2. Collecting the principal and interest at maturity (specify t
> Let’s resume our examination of Dick’s Sporting Goods (Dick’s). Return to Dick’s Annual Report (see the Continuing Financial Statement Analysis Problem in Chapter 2 for instructions on how to access the Annual Report). Now answer the following questions:
> Haskin’s Wholesale began the year with inventory of $51,600 and made purchases of $326,800 during the year. Sales for the year are $505,300, and Haskin’s Wholesale’s gross profit percentage is 38 percent of sales. Compute Haskin’s Wholesale’s estimated c
> On April 1, Micro Apps paid $750,000 to acquire a patent on software. Micro Apps expects the patent to have a useful life of five years. Requirements 1. Journalize the entry to record the purchase of the patent on April 1. 2. Journalize the entry to re
> For each of the following notes receivable, compute the amount of interest revenue earned during 2016. Use a 360-day year, and round to the nearest dollar.
> Describe the major differences between US GAAP and International Financial Reporting Standards.
> Inland Industrial Supply’s income statement data for the year ended December 31 2016, follow Assume the ending inventory was accidentally overstated by $3,200 in 2016. How would the inventory error affect Inland Industrial Supply’s cost of goods sold
> When one media company buys another, goodwill is often the most costly asset acquired. TXL Publishing paid $925,000 to acquire the Thrifty Nickel, a weekly advertising paper. At the time of the acquisition, the Thrifty Nickel’s balance sheet reported tot
> Match the term with its definition by placing the corresponding letter in the space provided: ______ 1. A written promise to pay a specified amount of money at a particular future date ______ 2. The date when final payment of the note is due; also calle
> What are the main provisions of the Sarbanes-Oxley Act? Be specific.
> Identify each of the following as land (L) or land improvements (LI): ______ 1. Survey fees ______ 2. Fencing ______ 3. Lighting ______ 4. Clearing land ______ 5. Parking lot
> Inland Industrial Supply’s income statement data for the year ended October 31, 2016, follow. Assume the ending inventory was accidentally overstated by $2,800. What are the correct amounts for cost of goods sold and gross profit?
> According to the Real World Accounting Video, a working capital loan is used to finance _______________. a. buildings and equipment b. intangible assets c. current assets d. tangible assets
> Top Flight Airways purchased a baggage-handling truck for $64,000. Suppose Top Flight Airways sold the truck on December 31, 2016, for $42,000 cash, after using the truck for three full years and accumulating depreciation of $27,000. Make the journal ent
> According to the Real World Accounting Video, the cost of a fixed asset minus its estimated residual value is called an asset’s ____________________. a. cost b. depreciable cost c. liquidation value d. depreciation expense
> Claire Billiot, the office manager of a local office supply company, is designing its internal control system. Billiot proposes the following procedures for credit checks on new customers, sales on account, cash collections, and write-offs of uncollectib
> According to the Real World Accounting Video, cash sales account for approximately _______ of all sales at Alphabet City Beer. a. half, or 50 percent b. a quarter, or 25 percent c. none, or 0 percent d. all, or 100 percent
> Place the corresponding letter of the defnition next to the term. _______ 1. Unqualifed opinion _______ 2. Audit _______ 3. IFRS _______ 4. GAAP _______ 5. External audit _______ 6. CPA _______ 7. FASB _______ 8. Qualifed opinion _______ 9. IASB _______
> According to the Real World Accounting Video, CPAs are very special people in the accounting world. The initials CPA stand for _______. a. Chartered Public Auditor b. Certified Public Accountant c. Certified Pubic Auditor d. Commerce Practicing Accountan
> Match the accounting terms on the right with the corresponding definitions on the left a. Conservatism b. Full-disclosure c. LIFO d. Average cost e. FIFO f. Consistency g. Materiality h. Specific-Identification ______ 1. Assigns the most recent invento
> In the Real World Accounting Video, Bill Mencer talks about being a controller. A controller is _______________. a. the individual who controls the production of a product b. the individual who controls the hiring and firing of all personnel c. the indi
> How should a capital expenditure for a long-term asset be recorded? a. Debit a liability b. Debit an expense c. Debit capital d. Debit an asset
> Classify each of the following expenditures for machinery as a capital expenditure (CAP) or a revenue expenditure (REV): a. Purchase price b. Ordinary recurring repairs to keep the machinery in good working order c. Lubrication of the machinery before i
> According to the Real World Accounting Video, a quantitative expression of a plan is called a ____________________. a. directive b. scheme c. budget d. dream
> Umbrella.com had the following balances on December 31, 2016, before the year-end adjustments: The aging of receivables yields these data: Journalize Umbrella’s entry to adjust the allowance account to its correct balance on December 31, 2016.
> In the Real World Accounting Video, Zachery Mack talks about the challenges of cash management. He was able to survive a catastrophe due to Hurricane Sandy. He was able to pay his bills and keep his business operating. He attributed his survival to which
> Each of the following situations has an internal control weakness. a. Crystal Lund has been your trusted employee for 25 years. She performs all cash handling and accounting duties. Crystal just purchased a new Lexus and a new home in an expensive subur
> According to the Real World Accounting Video, Generally Accepted Accounting Principles (GAAP) provide all of the following except _______. a. standardization b. investor confidence c. comparability d. confusion
> At the end of the current year, Cottage Cafe’s inventory account balance was $13,550. A physical count of the inventory revealed that inventory on hand totaled $13,480. What amount should Cottage Cafe report on its balance sheet for inventory?
> A company recognizes a lease as a capital lease when a. the lease transfers title of the leased asset to the lessee at the end of the lease term. b. the present value of the lease payments is less than 90 percent of the market value of the leased asset.
> What are some ways that companies might use improper recording of liabilities to manipulate financial statements?
> On January 1, Harry’s Hot Dogs purchased a hot dog stand for $120,000 with an estimated useful life of 10 years and no residual value. Suppose that after using the hot dog stand for four years and straight-line depreciation, the company determines that t
