Joe Reese is the accountant for Lawn BoyzLawnservice, Inc. During the month, numerous payments were made for wages for which he was properly debiting the Wage Expense account and crediting Cash. Joe became concerned that if he kept debiting the Wage Expense account, it would end up with a balance much higher than any of the other expense accounts. Accordingly, he began debiting other expense accounts for some of the wage payments and thus “spread the expenses around” to other expense accounts. When he was done posting all the journal entries to the ledger accounts, he printed a trial balance. He saw that the Wage Expense balance was $42,000 and the total of all the other expense accounts was $26,000. Had he properly posted all the wage expensetransactions, Wage Expense would have totaled $54,000 and the other expense accounts would have totaled $14,000. Joe reasoned that his actions provided for “more balanced” expense account totals and, regardless of his postings, the total expenses were still $68,000, so the overall net income would be the same. Were Joe’s actions justified? Do they cause any ethical concerns? If you were the owner of Lawn BoyzLawnservice, Inc., would you have a problem with what Joe did?
> Place the corresponding letter of the definition next to the term. ______ 1. Liabilities ______ 2. Assets ______ 3. Corporation ______ 4. Dividends ______ 5. Sole proprietorship ______ 6. Partnership ______ 7. Transaction a. Any event that affect
> Which accounting principle specifically states that we should record transactions atamounts that can be verified? a. Business entity principle b. Cost principle c. Reliability principle d. Going-concern principle
> Which inventory costing method results in the lowest net income during a period of declining inventory costs? a. Last-in, first-out (LIFO) b. Specific-unit cost c. Average cost d. First-in, first-out (FIFO)
> What is a cost-flow assumption? Why is a cost-flow assumption necessary in accounting for inventory?
> Suppose A-1 Sports purchases $83,000 of sportswear on account from Outdoor Wear, Inc., on December 1, 2016. Credit terms are 2/10, net 45. A-1 Sports pays Outdoor Wear, Inc., on December 8, 2016. 1. Journalize the transactions for A-1 Sports on December
> Which of the following represents the journal entry to record the purchase of $1,500 of inventory on account?
> Why do businesses use subsidiary ledgers?
> Selected accounts of Andover Consulting, Inc., a financial services business, have the following balances at December 31, 2016, the end of its first year of operations. During the year, Lynne Andover, the only stockholder, bought $15,000 of stock in th
> Journalize the following transactions for Luna’s Wholesale, Inc., that occurred during the month of September. Luna’s Wholesale, Inc.’s cost of inventory is 45 percent of the sales price.
> Calculate the missing amounts for each of the Prepaid Insurance situations. For situation A, journalize the adjusting entry. Consider each situation separately.
> McGuire Construction, Inc., completed the following transactions during September 2016, its first month of operations: Requirements 1. Open or set up T-accounts in the ledger for the following accounts: Cash, Accounts Receivable, Supplies, Equipment,
> The following are the balances of the assets, liabilities, and equity of Jerome’s Coffee Shop at March 31, 2016: Requirements 1. What type of business organization is Jerome’s Coffee Shop? 2. Prepare the balance sheet of the business at March 31, 201
> On April 14, 2016, Discount Furniture, Inc., sold $4,200 of inventory (cost is $1,350) on account to one of its customers. The terms were 1/10, n/30, FOB destination. On April 16, Discount Furniture, Inc., paid freight charges of $145 related to the deli
> Suppose you started up your own landscaping business. A customer paid you $140 in advance to mow his or her lawn while he or she was on vacation. You also performed landscaping services for a local business, but the business hasn’t paid you the $325 fee
> Julie Denend started a mobile DJ business named Mobile Music, Inc. on November 1, 2016. In the month of November, prior to providing services to customers, the business incurred six transactions which have been posted to the accounts as follows: Requ
> Trina Lynch opened a medical practice titled Trina Lynch M.D., Inc. During July, the first month of operations, the business experienced the following events: Requirement Analyze the effects of these events on the accounting equation of the medical
> Journalize the following transactions for The Roger’s Computer, Inc., that occurred during the month of December.
> The following is the adjusted trial balance of Inland Home Health, Inc., for December 31, 2016. Requirement 1. Journalize the closing entries at December 31, 2016.
> White Glove Cleaning Inc., had the following transactions for the month of September 2016. The following T-accounts have been set up for White Glove Cleaning, Inc., with their beginning balances as of September 1, 2016. Requirements 1. Journalize
> The balance sheet data for Bell Computers, Inc., at August 31, 2016, and September 30, 2016, follow: Requirement The following are three independent assumptions about the business during September. For each assumption, compute the amount of net incom
> On September 15, 2016, A.D. Wholesale, Inc. purchased $4,200 of inventory onaccount from one of its suppliers. The terms were 1/15, n/30, FOB shipping point. OnSeptember 17, A.D. Wholesale, Inc. paid freight charges of $150 related to the deliveryof the
> The following post-closing trial balance was prepared for Sepia Studios, Inc., but some balances were entered in the wrong column. Prepare a corrected post-closing trial balance. Assume all accounts have normal balances and the amounts are correct.
> The transactions for Inspired Design, Inc., for the month of March 2016 are posted in the following T-accounts. Requirements 1. Calculate account balances at March 31, 2016. 2. Prepare the trial balance for Inspired Design, Inc., at March 31, 2016.
> Tony’s Advertising started a business in 2016 with total assets of $50,000 and total liabilities of $18,000. At the end of 2016, Tony’s Advertising’s total assets were $39,000 and total liabilities were $10,000. After analyzing the data, answer the foll
> The Inventory account for Richards Industrial, Inc., had a balance of $110,100 at the end of its fiscal year. A physical count taken at year-end revealed that the value of inventory on hand amounted to $108,400. Requirements 1. Journalize the adjustment
> From the following accounts of Classy Restorations, Inc., prepare the business’s state ment of retained earnings for the year ended November 30, 2016:
> Rudenko& Associates, Inc., completed the following transactions during July 2016, its first month of operations: Requirement 1. Using the steps outlined in the five-step transaction analysis, journalize the transactions of Rudenko& Associates, Inc. L
> Amicho Deli had $94,000 of total assets and $10,000 of total stockholders’ equityat July 31, 2016. At July 31, 2017, Amicho Deli had assets totaling $151,000 andstockholders’ equity totaling $112,000. After analyzing the data, answer the following quest
> Whole Foods, Inc., had Gross Sales of $582,000, Sales Returns and Allowances of $18,000, and Sales Discounts of $4,000 in 2016. Cost of goods sold was $224,000, and net income was $84,000 for the year. The average number of shares of common stock outstan
> Requirements 1. Using the following selected accounts of Ramirez Electrical, Inc., at November 30, 2016, prepare the entity’s closing entries: 2. What is Ramirez Electrical, Inc.’s ending Retained Earnings balance at November 30, 2016?
> Using the steps outlined in the five-step transaction analysis, record the following transactions in the general journal for Marx Plumbing, Inc. Explanations are not required.
> Determine the missing amounts in the following accounting equations.
> Use the data for Tesla Electrical Supply, Inc., from E4-21A. Requirement 1. Prepare Tesla Electrical Supply, Inc.’s classified balance sheet. Use the account format. The balance shown for retained earnings represents the balance prior to closing the tem
> The adjusted trial balance for Chef on Demand Catering, Inc., is presented next. Prepare the income statement and statement of retained earnings for Chef on Demand Catering, Inc., for the month ended January 31, 2016. Also prepare a balance sheet at Janu
> The following are six journal entries Advanced Auto, Inc., made during the month of May. Requirement 1. For each transaction shown, determine the accounts affected, the type of account, whether the account increases or decreases, and whether it would
> Presented here is information for Anderson Sign, Inc., for the year ended August 31, 2016. Requirements 1. What is the beginning stockholders’ equity of Anderson Sign, Inc.? 2. What is the ending stockholders’ equity of Anderson Sign, Inc.? 3. What i
> Use the data for Tesla Electrical Supply, Inc., from E4-21A. Information from E4-21A The account balances for Tesla Electrical Supply, Inc., for the year ended August 31, 2016, are presented next in random order: Requirements 1. Prepare Tesla Electr
> The adjusted trial balances of Allied Coatings, Inc., at October 31, 2016, and October 31, 2017, include these amounts: Analysis of the accounts at October 31, 2017, reveals these transactions for the past 12 months: Requirement Compute the amoun
> Kylie Cunnington has trouble keeping her debits and credits equal. During a recent month, Kylie made the following errors: a. Kylie recorded an $800 payment of rent by debiting rent expense for $80 and crediting Cash for $80. b. In recording a $250 payme
> Selected accounts of Annis Consulting, Inc., a financial services business, have the following balances at December 31, 2016, the end of its first year of operations. During the year, Laura Annis, the only stockholder, bought $27,000 of stock in the busi
> The account balances for Tesla Electrical Supply, Inc., for the year ended August 31, 2016, are presented next in random order: Requirements 1. Prepare Tesla Electrical Supply, Inc.’s single-step income statement. 2. Would you recommend the use of th
> Sentry Alarm, Inc., began the year with $19,000 of common stock and $22,600 of retained earnings. On June 5, investors bought $12,000 of additional stock in the business. On September 22, the business purchased land valued at $65,000. The income statemen
> Willis Construction, Inc., completed the following transactions during June 2016, its frst month of operations: Requirements 1. Open, or set up, T-accounts in the ledger for the following accounts: Cash, Accounts Receivable, Supplies, Equipment, Furn
> The following are the balances of the assets, liabilities, and equity of Fitness Fanatics at March 31, 2016: Requirements 1. What type of business organization is Fitness Fanatics? 2. Prepare the balance sheet of the business at March 31, 2016. 3. Wh
> Consider the following incomplete table of a merchandiser’s profit data: Requirement 1. Complete the table by computing the missing amounts.
> The accountant for Stanley Siding, Inc., posted adjusting entries (a) through (e) to the accounts at May 31, 2016. Selected balance sheet accounts and all the revenues and expenses of the entity follow in T-account form. Requirements 1. Explain the p
> Chad Simpson started a mobile DJ business named Sounds on Wheels, Inc., on April 1, 2016. In the month of April, prior to providing services to customers,Analyzing and Recording Business Transactions 85 the business incurred six transactions which have b
> This problem is the first problem in a sequence that begins an accounting cycle. The cycle iscontinued in Chapter 2 and completed in Chapter 3. Adam Mazella recently left his job to open his own gym equipment repair business. Adamtook all of the money he
> You’re sitting in your CPA office late on a Friday afternoon when you get an e-mail from a client. You know that she has been working on setting up a new accounting system in her office for a new business that she just started. You figured this would eve
> What type of transaction would result in the recording of a prepaid asset? What do you think will happen to that prepaid asset eventually?
> This problem continues with the business of Fitness Equipment Doctor, Inc., begun in the continuing problem in Chapter 1. Here you will account for Fitness Equipment Doctor, Inc.’s transactions using formal accounting practices. The trial balance for Fit
> Jack Sanders owns and operates Jack’s Java Coffee Shop. He proposes to account for the shop’s assets at their current market value in order to have current amounts on the balance sheet. Which accounting concept or principle does Jack violate? a. Busines
> The majority of Generally Accepted Accounting Principles (GAAP) are created by the a. Institute of Management Accountants (IMA). b. Securities and Exchange Commission (SEC). c. American Institute of Certified Public Accountants (AICPA). d. Financial Acco
> Blackstone, Inc., was in the final phase of completing a land development project it started earlier in the year. Blackstone, Inc., had acquired 50 acres of raw land for $400,000 and then spent an additional $1,700,000 in land development costs to create
> Which inventory costing method assigns the newest, most recent costs incurred during the period to ending inventory? a. Last-in, first-out (LIFO) b. Specific-unit cost c. Average cost d. First-in, first-out (FIFO)
> How are the financial statements of a manufacturer different from those of a merchandiser with respect to inventory?
> Would you describe accounting as primarily a technical discipline or primarily an ethicaldiscipline? Why?
> Cole’s Furniture uses the perpetual inventory method. At the end of the year, Cole’s Furniture’s Inventory account had a ledger balance of $163,000. A physical inventory count revealed that the actual inventory on hand totaled $161,800. Journalize the tr
> The two main inventory accounting systems are the a. perpetual and periodic. b. cash and accrual. c. returns and allowances. d. purchase and sale.
> Dolly Harding owns and operates Dolly Jo’s Café. Dolly has requested a credit application from LRM, Inc., a major food supplier from which she hopes to begin purchasing inventory. LRM, Inc., has requested that Dolly submit a full set of financial stateme
> What are some reasons why a merchandiser might prefer to use a perpetual inventory system over a periodic inventory system?
> Match the accounting term with the corresponding definition. ____ 1. Accumulated depreciation ____ 2. Adjusted trial balance ____ 3. Adjusting entry ____ 4. Book value ____ 5. Contra-account ____ 6. Depreciation ____ 7. Long-term asset a. An account wh
> Adjusting the accounts is the process of a. subtracting expenses from revenues to measure net income. b. recording transactions as they occur during the accounting period. c. updating the accounts at the end of the accounting period. d. zeroing out accou
> Brent Robertson and his banker were reviewing the quarterly income statements for his consulting business, Robertson and Associates, Inc. The banker was impressed with the growth of sales revenue and net income for the second quarter of this year as comp
> What does the matching principle require companies to match?
> For each of the following accounts, place the corresponding letter(s) of its account type in the space provided. Use the most detailed account type appropriate. (A) Asset (L) Liability (SE) Stockholders’ Equity (R) Revenue (E) Expense SE Dividends _____
> The left side of an account is used to record a. debits. b. increases. c. credits. d. debits or credits, depending on the type of account
> ShavonLoreal opened a medical practice titled ShavonLoreal M.D., Inc. During August, the first month of operations, the business experienced the following events: Requirement Analyze the effects of these events on the accounting equation of the medic
> The following transactions occurred during June 2016 for Soulful Art, Inc.: Requirement 1. Journalize the June transactions for Soulful Art, Inc. Omit explanations.
> The accounting records of Vacations Unlimited include the following unadjusted balances at November 30: Accounts Receivable, $1,200; Supplies, $600; Salaries Payable, $0; Unearned Service Revenue, $1,300; Service Revenue, $5,300; Salaries Expense, $1,500
> Clocktower Cleaning, Inc., had the following transactions for the month of March 2016. The following T-accounts have been set up for Clocktower Cleaning, Inc., with theirbeginning balances as of March 1, 2016. Requirements 1. Journalize the transa
> The balance sheet data for Angel’s Countertops, Inc.at August 31, 2016, and September 30, 2016, follow: Requirement The following are three independent assumptions about the business during September. For each assumption, compute the amount of net in
> Journalize the following transactions for Bridgeport Audio, Inc., that occurred during the month of November. Bridgeport Audio’s cost of inventory is 55 percent of the sales price.
> Journalize the adjusting entry needed at October 31, the fiscal year-end, for each of the following independent situations. No other adjusting entries have been made for the year. a. On August 1, $3,600 rent was collected in advance. Cash was debited and
> The transactions for Creative Design, Inc., for the month of January 2016 are posted in the following T-accounts. Requirements 1. Calculate account balances at January 31, 2016. 2. Prepare the trial balance for Creative Design, Inc., at January 31, 2
> Tim’s Tee Shirts started business in 2016 with total assets of $40,000 and total liabilitiesof $26,000. At the end of 2016, Tim’s Tee Shirts total assets were $53,000 and totalliabilities were $16,000. After analyzing the data, answer the following quest
> On July 14, 2016, Salem Food Wholesale, Inc., sold $2,700 of inventory (cost is $1,050) on account to one of its customers. The terms were 2/10, n/30, FOB destination. On July 16, Salem Food Wholesale, Inc., paid freight charges of $115 related to the de
> The adjusting entries for the following adjustments were omitted at period-end: a. Prepaid rent expired, $1,300 b. Depreciation, $1,000 c. Employee salaries owed for Monday through Wednesday of a five-day workweek, $2,200 d. Supplies used during the peri
> Wu & Associates, Inc., completed the following transactions during March 2016, its frst month of operations: Requirement 1. Using the steps outlined in the five-step transaction analysis, journalize the transactions of Wu & Associates, Inc. List tran
> The Poorboy Deli had $95,000 of total assets and $62,000 of total stockholders’ equityat December 31, 2016. At December 31, 2017, The Poorboy Deli had assets totaling$151,000 and stockholders’ equity totaling $105,000. After analyzing the data, answer th
> Journalize the following transactions for Inland Empire Supply, Inc., that occurred during the month of March.
> Journalize the adjusting entries for the following adjustments at March 31, the end of the accounting period, omitting explanations. a. Employee salaries owed for Monday through Thursday of a five-day workweek, $8,000 b. Unearned service revenue now earn
> Using the steps outlined in the five-step transaction analysis, record the following transactions in the general journal for Gulaine Plumbing, Inc. Explanations are not required.
> Assests = Liabilities + Stockholder’s Equity  
> On October 15, 2016, Chandler’s Department Store purchased $3,900 of inventory on account from one of its suppliers. The terms were 2/15, n/45, FOB shipping point. On October 17, Chandler’s Department Store paid freight charges of $140 related to the del
> Calculate the missing amounts for each of the following Prepaid Insurance situations. For situation A, journalize the adjusting entry. Consider each situation separately.
> The following are six transactions for Aaron’s Auto Repair, Inc., during the month of February: Requirement 1. Complete the following table. For each transaction shown, determine the accounts affected, the type of account, whether the account increas
> The analysis of Cunnington, Inc.’s first eight transactions follows. The business only soldstock once and paid no dividends. 1. Label each of the transactions in the preceding analysis with the correspondingletter of the description that best fits it
> The Inventory account for Kelly’s Florist, Inc., had a balance of $27,300 at the end of its fscal year. A physical count taken at year-end revealed that the value of inventory on hand amounted to $26,950. Requirements 1. Journalize the adjustment for in
> Suppose you started up your own landscaping business. A customer paid you $120 in advance to mow his or her lawn while he or she was on vacation. You also performed landscaping services for a local business, but the business hasn’t paid you the $390 fee
> Accounting has its own vocabulary and basic relationships. Match the accounting termsat the left with the corresponding phrase at the right. 1. Posting 2. Normal balance 3. Payable 4. Journal 5. Receivable 6. Chart of accounts 7. Debit 8. Trial ba
> Presented here are nine transactions and the analysis used to account for them. Evaluateeach of the suggested accounting treatments, and indicate whether it is true or false. 1. Received cash of $41,000 from the stockholders, who bought stock in the bus
> Use the data from S4-11 to calculate the gross profit percentage and the net income percentage for The Skate Shed, Inc., for 2016. Information S4-11: The accounting records for The Skate Shed, Inc., reflected the following amounts at the end of January 2
> After closing its accounts at July 31, 2016, Anderson Realty, Inc., had the following account balances: Prepare Anderson Realty’s post-closing trial balance at July 31, 2016. List accounts in proper order.
> To the left of each account listed on the trial balance, indicate the financial statement that will include the account: income statement (IS), statement of retained earnings (RE), or balance sheet (BS).
> According to the Real World Accounting Video, _________ are important reports businessmanagers use in managing their business. a. balance sheets b. income statements c. both balance sheets and income statements
> According to the Real World Accounting Video, ABC Wines has a supply chain composed of its __________. a. landlords b. importers and distributors c. customers d. employees
> Use the data from S4-11 to prepare the classifed balance sheet for The Skate Shed, Inc., at January 31, 2016. Use the report format. Information S4-11: The accounting records for The Skate Shed, Inc., reflected the following amounts at the end of January
> According to the Real World Accounting Video, vendors generally sell merchandise expecting to be paid in _________________ days. a. 0 b. 30 c. 90 d. 180
> For the following series of journal entries, indicate whether each is an adjusting entry (ADJ) or a closing entry (CL).
