Jacob’s Upholstery, Inc., reported the following comparative income statements for the years ended September 30, 2016 and 2015. During 2016, Jacob’s Upholstery, Inc., discovered that the 2015 ending inventory, as previously reported, was understated by $1,500. Requirements 1. Prepare the corrected comparative income statements for the two-year period, complete with a heading for the statements. 2. What was the effect of the error on net income for the two years combined? Explain your answer.
> The following is selected data for Armada Industries: Requirements 1. Calculate the return on assets (ROA) and the fixed asset turnover ratio for Armada Industries for 2015 and 2016. Round your answers to two decimal places. 2. Have the ratios impro
> Checker Flag Auto Parts, Inc., completed the following selected transactions during 2016: Requirements 1. Open T-accounts for Allowance for Uncollectible Accounts and Bad Debt Expense. These accounts have beginning balances of $1,100 (cr.) and 0, re
> Make the necessary journal entries arising from Greenacres Auto Center’s bank reconciliation presented next. Date each entry May 31 and include an explanation with each entry.
> Titan Truck Parts, Inc., uses the LIFO inventory method and values its inventory using the lower-of-cost-or-market (LCM) rule. Titan Truck Parts, Inc., has the following account balances at December 31, 2016, prior to releasing the financial statements f
> Touchstone Resources, Inc.’s balance sheet includes three assets: Natural Gas, Oil, and Coal Reserves. Suppose Touchstone Resources, Inc., paid $2,100,000 in cash for the right to work a mine with an estimated 100,000 tons of coal. Assume the company pai
> On August 31, Regence Restaurant Equipment, Inc., had a $9,200 debit balance in Accounts Receivable. During September, Regence Restaurant Equipment, Inc., had the following transactions: • Sales of $53,000, all on credit; ignore cost of goods sold • C
> Monitor Industries, Inc., completed the following inventory transactions during the month of March: Requirements 1. Without resorting to calculations, determine which inventory method will result in Monitor Industries, Inc., paying the lowest income
> Tico’s Restaurants acquired Dave’s Diner. The financial records of Dave’s Diner included: Requirements 1. Make the journal entry to record Tico’s Restaurants’ purchase of Dave’s Diner for $380,000 cash, including any goodwill. 2. How should Tico’s R
> The March bank statement of Sparky’s Sub Shop just arrived from Inland Bank. To prepare the bank reconciliation, you gather the following additional data: a. The following checks are outstanding on March 31: Check....................................
> Refer to the data for Star Line Equipment, Inc., in P5-48B. However, assume Star Equipment, Inc., uses the average cost method. Data from P5-48B: Star Equipment, Inc., sells hand-held engine analyzers to automotive service shops. Star Equipment, Inc., s
> Cooper Industries had a piece of equipment that cost $29,000 and had accumulated depreciation of $23,000. Requirement 1. Record the disposition of the equipment assuming the following independent situations: a. Cooper discarded the equipment, receiving
> The May cash records of Van Brunt Coffee, Inc., follow: Van Brunt Coffee, Inc.’s Cash account shows the balance of $6,191 on May 31. On May 31, Van Brunt Coffee, Inc., received the following bank statement: Additional data for the bank reconcilia
> Star Equipment, Inc., sells hand-held engine analyzers to automotive service shops. Star Equipment, Inc., started April with an inventory of 75 units that cost a total of $10,500. During the month, Star Equipment, Inc., purchased and sold merchandise on
> On its books, Nile Valley Company’s Cash account shows an ending balance of $950. The bank statement for the current period shows a $22 service charge and an NSF check for $140. A $220 deposit is in transit, and outstanding checks total $380. What is Nil
> On January 3, 2016, Grey Enterprises, Inc., paid $280,600 for equipment used in manufacturing automotive supplies. In addition to the basic purchase price, the company paid $500 transportation charges, $300 insurance for the equipment while in transit, $
> The comparative financial statements of O’Doherty’s Irish Grille for 2016, 2015, and 2014 include the following selected data: Requirements 1. Compute these ratios for 2016 and 2015: a. Quick ratio b. Current ratio c. Accounts receivable turnover; a
> Pugliese Whole Foods, Inc., has the following information for the years ending December 31, 2016 and 2015: Requirements 1. Compute the rate of inventory turnover for Pugliese Whole Foods, Inc., for the years ended December 31, 2016 and 2015. Round t
> Regal Freightway provides freight service. The company’s balance sheet includes Land, Buildings, and Motor-Carrier Equipment. Regal Freightway uses a separate accumulated depreciation account for each depreciable asset. During 2016, Regal Freightway comp
> Record the following transactions in the journal of Redmond Printing Supply, Inc. Explanations are not required. Use a 360-day year for interest computations and round to the nearest dollar.
> Fessler Enterprises, Inc., lost its entire inventory in a hurricane that occurred on May 31, 2016. Over the past five years, gross profit has averaged 39 percent of net sales. The company’s records reveal the following data for the month of May: Requ
> Arrow Manufacturing incurred the following costs in acquiring land, making land improvements, and constructing and furnishing a new building Arrow Manufacturing depreciates buildings over 40 years, land improvements over 20 years, and furniture over
> Titan Truck, Inc., received the following notes during 2016: Requirements 1. Identifying each note by number, compute the total interest on each note over the note term using a 360-day year, and determine the due date and maturity value of each note
> Build Right Supply, Co., shows the following financial statement data for 2014, 2015, and 2016. Prior to issuing the 2016 statements, auditors found the ending inventory for 2014 was understated by $1,000 and that the ending inventory for 2016 was overst
> The following is selected data for Nelson Equipment, Inc., for the current year: Requirement 1. Calculate the return on assets (ROA) and the fixed asset turnover ratio for Nelson Equipment for the current year. Round your answers to two decimal plac
> Why does the allowance method of accounting for bad debts conform to GAAP while the direct write-off method does not?
> Reliable Auto Parts, Inc., completed the following selected transactions during 2016: Requirements 1. Open T-accounts for Allowance for Uncollectible Accounts and Bad Debt Expense. These accounts have beginning balances of $2,300 (cr.) and 0, respec
> Due to a nationwide recession, Liquidation Universe, Inc.’s merchandise inventory is gathering dust. It is now November 30, 2016, and the $162,750 that Liquidation Universe, Inc., paid for its ending inventory is $3,125 higher than current replacement co
> At the end of 2016, Zepher Corp., had total assets of $331,500 and total liabilities of $164,300. Included in the assets were property, plant, and equipment with a cost of $237,600 and accumulated depreciation of $114,800. Also included in the assets wer
> On October 31, Ames Athletic Equipment, Inc., had a $2,400 debit balance in Accounts Receivable. During November, Ames Athletic Equipment, Inc., had the following transactions: • Sales of $49,000, all on credit. Ignore cost of goods sold • Collections on
> Mid Valley Sporting Goods, Inc., uses the LIFO inventory method and values its inventory using the lower-of-cost-or-market (LCM) rule. Mid Valley Sporting Goods, Inc., has the following account balances at December 31, 2016, prior to releasing the financ
> Mirabeau Mining paid $582,000 for the right to extract mineral assets from a 400,000-ton mineral deposit. In addition to the purchase price, Mirabeau Mining also paid a $1,600 filing fee; a $4,400 license fee to the state of Colorado; and $52,000 for a g
> The December bank statement of Charly’s Burger Haven, Inc., just arrived from United Bank. To prepare the bank reconciliation, you gather the following additional data: a. The following checks are outstanding at December 31: Check...................
> MAC Industries, Inc., completed the following inventory transactions during the month of July: Requirements 1. Without resorting to calculations, determine which inventory method will result in MAC Industries, Inc., paying the lowest income taxes. 2
> Raferty Corp., aggressively acquires other companies. Assume that Raferty Corp., purchased Lucas Inc., for $1,200,000 cash. The market value of Lucas Inc.’s assets is $2,300,000, and it has liabilities with a market value of $1,250,000. Requirements 1.
> The September cash records of Povich Industrial, Inc., follow: Povich Industrial’s Cash account shows the balance of $5,941 on September 30. On September 30, Povich Industrial, Inc., received the following bank statement: Additional data for the
> Janson, Corp., maintains a petty cash fund of $225. On July 31, the fund holds $14 cash and petty cash tickets for office supplies, $172, and delivery expense, $32. Requirements 1. Make the journal entry to replenish the petty cash fund. 2. Janson, Cor
> Refer to the data for Inland Equipment Sales, Inc., in P5-40A. However, assume Inland Equipment Sales, Inc., uses the average cost method. Data from P5-40A: Inland Equipment Sales, Inc., sells hand-held engine analyzers to automotive service shops. Inla
> Part 1. Millennium Printing manufactures high-speed printers. On January 1 of year 1, Millennium Printing recently paid $400,000 for a patent on a new laser printer. Although it gives legal protection for 20 years, the patent is expected to provide a com
> Tri-State Equipment reported the following items on July 31, 2016 (last year’s amounts also given as needed): Requirements 1. Compute Tri-State Equipment’s (a) quick ratio, (b) current ratio, and (c) accounts receivable turnover for 2016. 2. Evaluat
> Inland Equipment Sales, Inc., sells hand-held engine analyzers to automotive service shops. Inland Equipment Sales, Inc., started November with an inventory of 55 units that cost a total of $8,470. During the month, Inland Equipment Sales, Inc., purchase
> Mesa Transport is a large trucking company. Mesa Transport uses the unit’s of-production (UOP) method to depreciate its trucks. In 2013, Mesa Transport acquired a Mack truck costing $330,000 with a useful life of 10 years or 900,000 miles. Estimated resi
> Consider the following data: Requirements 1. Calculate the quick assets and the quick ratio for each company. 2. Calculate the current ratio for each company. 3. Which of the companies should be concerned about its liquidity?
> Julia’s Jungle, Inc., has the following information as of August 31, 2016: Requirements 1. Compute the rate of inventory turnover for Julia’s Jungle, Inc., for the year ended August 31, 2016. Round the result to two decimal places. 2. The rate of in
> Assume that Branson Corporation’s comparative balance sheet reported these amounts: Requirement 1. Assume that on January 1, 2016, Branson sold 1/8 of its plant and equipment for $60,500 in cash. Journalize this transaction for Branson.
> Jitterz Coffee Supply, Inc., sells on account. When a customer account becomes four months old, Jitterz Coffee Supply, Inc., converts the account to a note receivable. During 2016, Jitterz Coffee Supply, Inc., completed these transactions: Requiremen
> Tune Time, Inc. sells and installs audio equipment. During a recent fire that occurred at its warehouse, Tune Time, Inc.’s entire inventory was destroyed. Tune Time, Inc.’s accounting records reflect the following information. Requirement 1. Use the
> Indicate by letters which of the following control activities match with the following descriptions: Separation of duties (SD) Restricted access (RA) Proper authorization (PA) Adequate documents and records (ADR) _______ 1. Pre-numbered invoices ______
> On January 2, 2016, Trendz Lighting purchased showroom fixture for $20,000 cash, expecting the fixture to remain in service for four years. Trendz Lighting has depreciated the fixture on a straight-line basis, with zero residual value. On March 31, 2017,
> Journalize the following transactions of Cramer Art Supply, Inc., which ends its accounting year on September 30:
> Silsbee Freight purchased a building for $600,000 and depreciated it on a straight-line basis over a 40-year period. The estimated residual value was $100,000. After using the building for 15 years, Silsbee realized that wear and tear on the building wou
> On July 31, 2016, Virginia State Bank loaned $175,000 to Swanson Paint, Inc., on a one-year, 7 percent note. Requirements 1. Compute the interest for the years ended December 31, 2016 and 2017, on the note. Round interest calculations to the nearest do
> Hudson River Truck Parts, Inc., reported sales revenue of $351,000 and cost of goods sold of $216,000. Requirements 1. Compute Hudson River Truck Parts, Inc.’s correct gross profit assuming the company’s ending inventory is overstated by $1,300. Show y
> Providence Medical Center bought equipment on January 2 for $39,000. The equipment was expected to remain in service for four years and to perform 1,240 operations. At the end of the equipment’s useful life, Providence estimates that its residual value w
> Inland Paving, Inc., uses the allowance method to account for uncollectible accounts. On December 31, 2016, Allowance for Uncollectible Accounts has a $725 credit balance. Journalize the year-end adjusting entry for uncollectible accounts assuming the fo
> Parts Plus, Inc., had the following FIFO perpetual inventory record for one of its inventory items at September 30, the end of the fiscal year. A physical count of the inventory performed at year-end revealed $83.25 (9 items) of inventory on hand. R
> 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,
