Frank’s Tattoos and Body Piercing operates near campus. At the end of a recent day, Frank’s cash register included credit card documents for the following sales amounts: MasterCard............................................... $756 Visa............................................................ 486 The merchant’s charges are 1.8% for MasterCard and 2.1% for Visa. Frank’s also had cash sales of $375 and $800 of sales on credit to a local business. Required: Prepare a journal entry to record these sales.
> Glencoe Supply had the following accounts receivable aging schedule at the end of a recent year. The balance in Glencoe’s allowance for doubtful accounts at the beginning of the year was $58,620 (credit). During the year, accounts in th
> Murphy Inc. maintains a balance of $2,500 in its petty cash fund. On December 31, Murphy’s petty cash account has a balance of $216. Murphy replenishes the petty cash account to bring it back up to $2,500. Murphy classifies all petty cash transactions as
> Bradford Plumbing had the following data for a recent year: Credit sales...................................................................................... $547,900 Allowance for doubtful accounts, 1/1 (a credit balance)................. 8,740 Accoun
> Gilmore Electronics had the following data for a recent year: Cash sales....................................................................................... $135,000 Credit sales........................................................................
> The accountant for Porile Company prepared the following data for sales and losses from uncollectible accounts: * Losses from uncollectible accounts are the actual losses related to sales of that year (rather than write-offs of that year). Required: 1.
> Rubin Enterprises had the following sales-related transactions on a recent day: a. Billed customer $27,500 on account for services already provided. b. Collected $5,875 in cash for services to be provided in the future. c. The customer complained about a
> Wilburton Riding Stables provides stables, care for animals, and grounds for riding and showing horses. The account balances at the beginning of 2019 were: During 2019, the following transactions occurred: a. Wilburton provided animal care services, all
> Citron Mechanical Systems makes all sales on credit, with terms 1/15, n/30. During 2019, the list price (pre discount) of services provided was $687,500. Customers paid $482,000 (list price) of these sales within the discount period and the remaining $20
> Chicago Inc. had a balance of $1,200 in cash in its petty cash fund at the beginning of September. The following transactions took place in September: a. On September 4, the custodian paid $75 out of petty cash for new stationery on which the company pre
> Nevada Company provided services with a list price of $48,500 to Small Enterprises with terms 2/15, n/45. Nevada records sales at gross. Required: 1. Prepare the entries to record this sale in Nevada’s journal. 2. Prepare the entry for Nevada’s journal
> What documents must be present to trigger the recording of a sale (and associated receivable) in the accounting records?
> A business borrows $1,000, signing a note that requires an interest rate of 12% per year and repayment of principal plus interest in a single payment at the end of 1 year. Calculate the total interest on the note. What is the amount of the single payment
> A business borrows $1,000, signing a note that requires repayment of the amount borrowed in two payments of $600 each, one at the end of each of the next two 6-month periods. Calculate the total interest on the note. What is the principal amount of the n
> What kind of account is allowance for doubtful accounts? What does it represent?
> Walker Department Store has one cash register. On a recent day, the cash register tape reported sales in the amount of $13,729.87. Actual cash in the register (after deducting and removing the opening change amount of $75) was $13,747.21, which was depos
> What is the conceptual difference between the (1) Percentage of credit sales and (2) Aging methods of estimating bad debts?
> Why is the direct write-off method not GAAP?
> How do these control activities help protect a company against error, theft, and fraud?
> Under the allowance method, why do we make an entry to record bad debt expense in the period of sale rather than in the period in which an account is determined to be uncollectible?
> What are the principal types of receivables?
> The cash account of Mason Products reveals the following information: The bank statement for May contains the following information: Bank balance, 4/30...................................................... $ 9,750 Add: Deposits during May...............
> What are sales returns?
> At what amount should sales revenue be recorded when sales discounts are present?
> When is a performance obligation satisfied?
> When is revenue recognized?
> How may analyzing sales and receivables provide information about a firm’s profitability?
> Describe the documents that underlie the typical accounting system for sales. Give an example of a failure of internal control that might occur if these documents were not properly prepared.
> On a recent day, Pence Company obtained the following data from its cash registers: Pence deposits its cash receipts in its bank account daily. Required: Prepare a journal entry to record these cash sales. Cash Sales per Register Tape $12,675.12 I1,4
> Port Austin Boat Repair Inc. has entered and posted its adjusting entries for 2019. The following are selected account balances after adjustment: Required: 1. Using the accounts and balances above, prepare the closing entries for 2019. 2. Prepare an inc
> Why is interest typically charged on notes receivable, but not on accounts receivable?
> Accepting major credit cards requires the seller to pay a service charge. What advantages does the seller obtain by accepting major credit cards?
> Describe what happens when receivables are factored.
> Donald Corporation received the bank statement shown below for the month of October: *NSF check **Debit memo (Rent Expense) ***Service charge The cash records of Donald Corporation provide the following information: The items on the bank statement are co
> How much interest will be due at maturity for each of the following interest-bearing notes? Principal Months to Maturity Annual Interest Rate $10,000 42,000 18,000 37,000 a. 12% b. 14 с. 13 d. 11 2546
> Why do companies issue credit when their past experience indicates that some customers will not pay?
> What are trade discounts and quantity discounts?
> What are sales allowances? How do sales allowances differ from sales discounts?
> Why are sales discounts offered?
> How may analyzing sales and receivables provide information about a firm’s asset management?
> The following schedule shows all the accounts of Eagle Imports that received year end adjusting entries: Required: 1. Calculate the missing amounts identified by the letters (a) through (e). 2. Prepare the five adjusting entries that must have been made
> At December 31, 2019, Garner has a $15,000 credit balance in its allowance for doubtful accounts. Garner estimates that 3% of its 2019 credit sales will eventually default. During 2019, Garner had credit sales of $970,000. Required: Estimate the bad deb
> Tiny Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement indicated the following: Balance, beginning of the month............................................................... $15,640 Service charge for Octob
> Internal control systems include policies and procedures to do what?
> Softball Magazine Company received advance payments of $75,000 from customers during 2019. At December 31, 2019, $20,000 of the advance payments still had not been earned. Required: After the adjustments are recorded and posted at December 31, 2019, cal
> What kinds of bank reconciliation items require the firm to make adjusting entries?
> Diviney Corporation’s net sales and average net trade accounts receivable were $8,750,000 and $630,000, respectively. Required: Calculate Diviney’s accounts receivable turnover.
> The following information pertains to Cobb Corporation’s financial results for the past year. Net sales.................................................. $135,000 Cost of goods sold.................................... 48,000 Other expenses..............
> Link Communications programs voicemail systems for businesses. For a recent project, they charged $135,000. The customer secured this amount by signing a note bearing 9% interest on February 1, 2019. Required: 1. Prepare the journal entry to record the
> Metzler Communications designs and programs a website for a local business. Metzler charges $46,000 for the project, and the local business signs an 8% note January 1, 2019. Required: 1. Prepare the journal entry to record the sale on January 1, 2019. 2
> The unadjusted trial balance for Mitchell Pharmacy appears below. The following information is available at year end for adjustments: a. An analysis of insurance policies indicates that $2,180 of the prepaid insurance is coverage for 2020. b. Depreciatio
> Beginning accounts receivable were $80,200, and ending accounts receivable were $83,700. All sales were on credit and totaled $562,900. Required: Determine how much cash was collected from customers.
> Beginning accounts receivable were $275,500, and ending accounts receivable were $302,300. Cash amounting to $2,965,000 was collected from customers’ credit sales. Required: Calculate the amount of sales on account during the period.
> Beginning accounts receivable were $43,375. All sales were on account and totaled $187,600. Cash collected from customers totaled $182,450. Required: Calculate the ending accounts receivable balance.
> On January 1, 2019, Smith Inc. has the following balances for accounts receivable and allowance for doubtful accounts: Accounts Receivable..................................................................... $382,000 Allowance for Doubtful Accounts (a c
> Pyramid Corporation is assessed a $40 fee as the result of a $126 NSF check received from a customer for services purchased on account. Neither the fee nor the NSF check has been accounted for on Pyramid’s books. Required: Record the appropriate journal
> Shortly after July 31, Towanda Corporation received a bank statement containing the following information: *NSF check (deposited in previous period, but withdrawn this period) **Bank service charge July cash transactions and balances on Towandaâ
> On January 1, 2019, Hungry man Inc. has the following balances for accounts receivable and allowance for doubtful accounts: Accounts Receivable ....................................................................$1,280,000 Allowance for Doubtful Account
> The Rock has credit sales of $425,000 during 2019 and estimates at the end of 2019 that 1.5% of these credit sales will eventually default. Also, during 2019 a customer defaults on a $1,200 balance related to goods purchased in 2019. Required: 1. Prepar
> Clarissa Company has credit sales of $550,000 during 2019 and estimates at the end of 2019 that 2.5% of these credit sales will eventually default. Also, during 2019 a customer defaults on a $775 balance related to goods purchased in 2018. Prior to the w
> Bolton sold a customer service contract with a price of $37,000 to Sammy’s Wholesale Company. Bolton offered terms of 1/10, n/30 and expects Sammy to pay within the discount period. Required: Prepare the journal entry assuming the payment is made after
> Four adjusting entries are shown below. a. Interest Expense ............................... 1,875 Interest Payable ............................ 1,875 b. Interest Receivable ........................... 1,150 Interest Income ............................
> Bolton sold a customer service contract with a price of $37,000 to Sammy’s Wholesale Company. Bolton offered terms of 1/10, n/30 and expects Sammy to pay within the discount period. Required: Prepare the journal entry to record the sale. Then prepare th
> Kibitz Fitness received $30,000 from customers on August 1, 2019. These payments were advance payments of yearly membership dues. Required: At December 31, 2019, calculate what the balances in the Unearned Service Revenue and Service Revenue accounts wi
> Bo Sports’ net sales, average net trade accounts receivable, and net income were $5,700,000, $629,000, and $340,000, respectively. Required: Calculate Bo’s (1) Accounts receivable turnover and (2) Net profit margin ratio.
> Alan Spalding is CEO of a large appliance wholesaler. Alan is under pressure from Wall Street Analysts to meet his aggressive sales revenue growth projections. Unfortunately, near the end of the year he realizes that sales must dramatically improve if hi
> While Front Row Entertainment has had considerable success in signing artists and promoting concerts, Cam and Anna still had a few ideas to grow their business that they wanted to implement. One idea that they both agree on is to start an online fan ‘‘co
> Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com. Required: 1. Look at Under Armour’s Note 2 (Summary of Significant Accounting Policies) under the he
> After comparing cash register tapes with inventory records, the accountant for Good Times Music store is concerned that someone at one of the stores is not recording some of that store’s cash sales and is stealing the cash from the unreported sales. Req
> A customer of Mutare paid for merchandise originally purchased on account with a check that has been erroneously entered into Mutare’s cash account for $570 (it actually has been issued and paid for $750). Required: Record the appropriate journal entry
> Obtain Whirlpool’s Fiscal 2016 10-K (filed Feb. 13, 2017) through the ‘‘Investor Relations’’ portion of its website (do a web search for Whirlpool investor relations). Once at the Investor Relations section of the website, look for ‘‘SEC Filings’’ under
> The credit manager and the accountant for Goldsmith Company are attempting to assess the effect on net income of writing off $100,000 of receivables. Goldsmith uses the aging method of determining bad debt expense and has the following aging schedule for
> Dobby’s income statement lists net sales of $179,000 and a gross margin of $111,000. All other expenses not included in the gross margin totaled $46,500. Required: 1. Calculate Dobby’s gross profit ratio. 2. Calculate Dobby’s net profit margin ratio.
> A chain of retail stores located in Kansas and Nebraska has requested a loan from the bank at which you work. The balance sheet of the retail chain shows significant accounts receivable related to its in-house credit card. You have been assigned to evalu
> Consider three businesses, all of which offer price reductions to their customers. The first is an independently owned gas station located at a busy intersection in Cincinnati, Ohio, that offers a 3% discount for cash purchases of gasoline. The second is
> Beth Rader purchased North Shore Health Club in June 2019. Beth wanted to increase the size of the business by selling 5-year memberships for $2,000, payable at the beginning of the membership period. The normal yearly membership fee is $500. Since few p
> Jackson Dunlap is president of New Miami Maintenance Inc. which provides building maintenance services. On October 15, 2019, Jackson signed a service contract with Western College, and, Western made a down payment of $12,000. Under the contract, New Miam
> Ruby Red manufactures, markets, and distributes citrus flavored soft drinks across the globe. Ruby Red hired a collection agency in 2018 to increase collection rates from customers. As a result, Ruby estimates that only 2% of its 2019 credit sales will b
> Melrose Milk Delivery provides weekly gourmet milk delivery to the residents of Nice town. Melrose charges each customer $45 per week for its milk delivery, and it received advance payments for 2,000 weeks of milk delivery services in 2019. At December 3
> Harry Gardner provides tax services for small businesses. This year’s tax season has proved especially lucrative for Harry; he earned $45,000 for providing his services. Harry uses terms of 1/10, n/30 in billing his customers. Required: 1. Prepare the n
> Sean and Liz Kinsella are planning to open and operate a coffee shop on a university campus. Sean and Liz are concerned that part of the cash that customers pay for food might be kept by some of the store’s employees. Required: Identify some internal co
> Watts Inc. specializes in imported goods, focusing particularly on food products. For 2019, the company realized net sales of $9,700,000 and average net trade accounts receivable were $1,057,000. In 2018, Watts had realized a net loss for the year in the
> The accountant for Bellows Corp. was preparing a bank reconciliation as of April 30. The following items were identified: Bellows’ book balance....................................................... $28,750 Outstanding checks............................
> West Beach Resort operates a resort complex that specializes in hosting small business and professional meetings. West Beach closes its fiscal year on January 31, a time when it has few meetings under way. At January 31, 2020, the following data are avai
> Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com. Required: 1. How much cash and equivalents and short-term investments (or current marketable securit
> Obtain Microsoft’s June 30, 2016, 10-K either through the ‘‘Investor Relations’’ portion of its website (do a search for Microsoft investor relations) or go to www.sec.gov and click ‘‘Company Filings Search’’ under ‘‘Filings.’’ Required: 1. How much cas
> Hollis Corporation has the following budgeted schedule for expected cash receipts and cash disbursement. Hollis begins July with a cash balance of $20,000, $15,000 of short-term debt, and no short-term investments. Hollis uses the following cash manageme
> Carolyn Furniture Galleries sells traditional furniture from two stores in St. Louis. Carolyn’s credit terms allow customers to pay for purchases over 3 months with no finance charges. Carolyn’s accountant has been responsible for approving customers for
> Campus Supply Store purchases merchandise on credit from a large number of suppliers. During the past 5 years, Campus’s annual sales have grown from $100,000 to $1,500,000. A recent article in the local newspaper disclosed that an employee of another fir
> Rose Corporation sells upscale lamps to boutiques across the country. The average net trade accounts receivable for Rose is $540,000. In addition, the company has average net sales of $6,950,000. Required: Calculate Rose’s accounts receivable turnover.
> There are two retail stores in Millersburgh. One is a full-service store that typically sells on credit to its customers; the other is a smaller discount store that usually sells for cash. Full-service stores typically charge higher prices than discount
> You have just been hired as a part-time clerk in a large department store. Each week you work three evenings and all day Saturday. Without the income provided by this job, you would be unable to stay in college. Charles Riley, the manager in the clothing
> Effective cash management is very important to the operating performance of a business. Required: Explain the principles of cash management. Why might it be advantageous to delay paying suppliers?
> Flint Inc. operates a cable television system. At December 31, 2019, the following unadjusted account balances were available: The following data are available for adjusting entries: a. At year end, $1,500 of office supplies remain unused. b. Annual dep
> Morgan Dance Inc. provides ballet, tap, and jazz dancing instruction to promising young dancers. Morgan began operations in January 2020 and is preparing its monthly financial statements. The following items describe Morgan’s transactions in January 2020
> Aunt Bea’s Catering Service provides catering service for special occasions. During 2019, Aunt Bea performed $228,500 of catering services and collected $218,200 of cash from customers. Salaries earned by Aunt Bea’s employees during 2019 were $49,900. Au
> Martin Sharp operates a lawn mower repair business. He maintains an inventory of repair parts that are purchased from a wholesale supplier. Martin’s records show the following information for the first 3 months of 2019. Required: 1. Ig
> Cam and Anna are very satisfied with their first month of operations. Their major effort centered on signing various artists to live performance contracts, and they had more success than they had anticipated. In addition to Charm City, they were able to
> Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com. Required: 1. Describe each company’s revenue recognition policy. Is this policy consistent with the
> What are the five categories of control activities?
> Obtain FedEx Corporation’s 2016 annual report either through the ‘‘Investor Relations’’ portion of their website (do a web search for FedEx investor relations) or go to www.sec.gov and click ‘‘Company Filings Search’’ under ‘‘Filings.’’ Required: 1. How
