Question: Laura Moss started and operated a small

> Toyo Company is holding land that cost $900,000 for future use. However, plans have changed and the company may not need the land in the foreseeable future. The president is concerned about the return on assets. Current net income is $425,000 and total a

> The following events apply to Kate Enterprises: 1. Collected $16,200 cash for services to be performed in the future. 2. Acquired $50,000 cash from the issue of common stock. 3. Paid salaries to employees: $3,500 cash. 4. Paid cash to rent office space f

> Required Indicate whether each of the following accounts normally has a debit or credit balance: a. Interest Receivable b. Interest Revenue c. Prepaid Insurance d. Land e. Salaries Payable f. Salaries Expense g. Supplies Expense h. Consulting Revenue i.

> Porser Company had the following balances in its accounting records as of December 31, Year 1: The following accounting events apply to Porser Company’s Year 2 fiscal year: Jan.  1 Acquired $15,000 cash from the issu

> Pete Chalance is an accountant with a shady past. Suffice it to say that he owes some very unsavory characters a lot of money. Despite his past, Pete works hard at keeping up a strong professional image. He is a manager at Smith and Associates, a fast-gr

> 1. Acquired $20,000 cash from the issue of common stock. 2. Purchased $800 of supplies on account. 3. Purchased land that cost $14,000 cash. 4. Paid $800 cash to settle accounts payable created in Event 2. 5. Recognized revenue on account of $10,500. 6.

> The following information is available for the Maine Company and the Iowa Company: Required: a. For each company, compute the debt-to-assets ratio and the return-on-equity ratio. b. Determine what percentage of each company’s assets w

> Colton Enterprises experienced the following events for Year 1, the first year of operation: 1. Acquired $35,000 cash from the issue of common stock. 2. Paid $12,000 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Y

> The following transactions pertain to Smith Training Company for Year 1: Jan. 30 Established the business when it acquired $45,000 cash from the issue of common stock. Feb.  1 Paid rent for office space for two years, $24,000 cash. Apr. 10 Purchased $3,2

> The following events pertain to Super Cleaning Company: 1. Acquired $10,000 cash from the issue of common stock. 2. Provided $15,000 of services on account. 3. Provided services for $5,000 cash. 4. Received $2,800 cash in advance for services to be perfo

> Each of the following independent events requires a year-end adjusting entry. Record each event and the related adjusting entry in general journal format. The first event is recorded as an example. Assume a December 31 closing date. a. Paid $48,000 cas

> The following data were taken from the 2016 annual reports of Biogen Idec, Inc. and Amgen Inc. Both companies are leaders in biotechnology. All dollar amounts are in millions. Required: a. For each company, compute the debt-to-assets ratio, return on-a

> The following information is from the records of attorney Glenn Price. Write a brief explanation of the accounting event represented in each of the general journal entries. Date Account Titles Debit Credit Jan. 1 Cash 40,000 Common Stock 40,000 Feb.

> Bower Consulting Company started the period with cash of $25,000, common stock of $13,000, and retained earnings of $12,000. Bower engaged in the following transactions in Year 2: Transactions during Year 2 1. On January 1, Year 2, purchased office furn

> TARVON Inc. acquired $50,000 cash by issuing a promissory note to the National Bank on May 1, Year 1. TARVON issued a promissory note with a one-year term and a 6 percent annual interest rate. Required: Prepare the general journal entries to record: a.

> Maben Company was started on January 1, Year 1, and experienced the following events during its first year of operation: 1. Acquired $30,000 cash from the issue of common stock. 2. Borrowed $40,000 cash from National Bank. 3. Earned cash revenues of $48,

> Pratt Corp. started the Year 2 accounting period with total assets of $30,000 cash, $12,000 of liabilities, and $5,000 of retained earnings. During the Year 2 accounting period, the Retained Earnings account increased by $7,550. The bookkeeper reported t

> Mark’s Consulting Services experienced the following transactions for Year 1, its first year of operations, and Year 2. Assume that all transactions involve the receipt or payment of cash. Transactions for Year 1 1. Acquired $20,000 by

> The following trial balance was prepared from the ledger accounts of Ricardo Company: When the trial balance failed to balance, the accountant reviewed the records and discovered the following errors: 1. The company received $560 as payment for service

> The following unrelated events are typical of those experienced by business entities: 1. Acquire cash by issuing common stock. 2. Pay other operating supplies expense. 3. Agree to represent a client in an IRS audit and to receive payment when the audit i

> Required: a. Match the terms (identified as a through g) with the definitions and phrases (marked 1 through 7). For example, the term “a. Stockholders’ Equity” matches with definition 2. Common Stock

> Ray Steen recently started a business. During the first few days of operation, Mr. Steen transferred $100,000 from his personal account into a business account for a company he named Steen Enterprises. Steen Enterprises borrowed $60,000 from First Bank.

> The following data were taken from Netflix, Inc.’s 2016 annual report. All dollar amounts are in millions. Required: a. For each year, compute Netflix’s debt-to-assets ratio, return on-assets ratio, and return-on-equ

> Accounting is commonly divided into two sectors. One sector is called public accounting. The other sector is called private accounting. Required: a. Identify three areas of service provided by public accountants. b. Describe the common duties performed

> Resource owners provide three types of resources to conversion agents that transform the resources into products or services that satisfy consumer demands. Required: Identify the three types of resources. Write a brief memo explaining how resource owner

> Ross Company performed services on account for $30,000 in Year 1, its first year of operations. Ross collected $24,000 cash from accounts receivable during Year 1 and the remaining $6,000 in cash during Year 2. Required: a. Record the Year 1 transaction

> Required: Record each of the following Wilson Co. events in T-accounts and then explain how the event affects the accounting equation: a. Received $40,000 cash by issuing common stock. b. Purchased supplies for $1,800 cash. c. Performed services on accou

> Required: For each of the following T accounts, indicate the side of the account that should be used to record an increase or decrease in the financial statement element: Assets Llablitles Stockholders' Equlty Debit Credit Debit Credit Debit Credit

> Identify whether each of the following transactions is an asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also explain how each event affects the accounting equation by placing a (+) for increase, (−) fo

> For each of the following independent events, identify the account that would be debited and the account that would be credited. The accounts for the first event are identified as an example. a. Received cash for services to be performed in the future.

> a. In parallel columns, list the accounts that would be debited and credited for each of the following unrelated transactions: (1) Provided services for cash. (2) Recognized accrued salaries at the end of the period. (3) Provided services on account. (4)

> Indicate whether each of the following accounts normally has a debit balance or a credit balance. a. Unearned Revenue b. Service Revenue c. Dividends d. Land e. Accounts Receivable f. Cash g. Common Stock h. Prepaid Rent i. Supplies j. Accounts Payable k

> Using one of the websites referenced in the Focus on International Issues feature earlier in this chapter, define the IASB and describe its function.

> Consider the following brief descriptions of four companies from different industries. Six Flags, Inc. operates regional theme parks. It operates 18 parks in the United States, one in Mexico, and one in Canada. Toll Brothers, Inc. is a home-builder. In i

> The following information was drawn from the balance sheets of two companies: Required: a. Compute the debt-to-assets ratio to measure the level of financial risk of both companies. b. Compare the two ratios computed in Requirement a to identify which

> At the beginning of Year 2, Event Services Co. had the following normal balances in its accounts: The following events apply to Event Services Co. for Year 2: 1. Provided $130,000 of services on account. 2. Incurred $6,200 of operating expenses on acco

> The following financial information was taken from the books of Serenity Spa: Required: a. Prepare the journal entries necessary to close the temporary accounts December 31, Year 2, for Serenity Spa. b. What is the balance in the Retained Earnings acco

> Explain how each of the following posting errors affects a trial balance. State whether the trial balance will be out of balance because of the posting error, and indicate which side of the trial balance will have a higher amount after each independent e

> Jake, Mollie, and Neil, three accounting students, are discussing the rules of debits and credits. Jake says that debits increase account balances and credits decrease account balances. Mollie says that Jake is wrong, that credits increase account balanc

> Required: On December 31, Year 2, Wages Company had the following normal account balances in its general ledger. Use this information to prepare a trial balance. $ 50,000 32,000 3,600 5,000 Common Stock Salaries Expense Office Supplies Advertising E

> The following events apply to Perry Carpet Cleaners in Year 1, its first year of operations: 1. Received $45,000 cash from the issue of common stock. 2. Earned $37,500 of service revenue on account. 3. Incurred $15,000 of operating expenses on account. 4

> The following events apply to Colton Training Co. for Year 1, its first year of operation: 1. Received cash of $60,000 from the issue of common stock. 2. Performed $100,000 worth of services on account. 3. Paid $74,000 cash for salaries expense. 4. Purc

> Virginia Mining began operations by issuing common stock for $150,000. The company paid $135,000 cash in advance for a one-year contract to lease machinery for the business. The lease agreement was signed on March 1, Year 1, and was effective immediately

> On December 31, Year 1, Zeal Company had accrued salaries of $12,000. Required: a. Record in general journal format the adjustment required as of December 31, Year 1. b. Show the above adjustment in a horizontal statements model like the following one:

> The beginning account balances for Miller Company were as follows for Year 2, Year 3, and Year 4: Miller Company experienced the following events for the accounting periods Year 2, Year 3, and Year 4: Year 2 1. Performed services for $36,000 on accoun

> Required: Record each of the following transactions in general journal form and then show the effect of the transaction in the horizontal statements model. The first transaction is shown as an example. a. Performed $50,000 worth of services on account.

> Hun Company began the accounting period with a $36,000 credit balance in its Accounts Payable account. During the accounting period, Hun incurred expenses on account of $108,000. The ending Accounts Payable balance was $48,000. Required: Based on this i

> Barnes Inc. began the accounting period with a $105,000 debit balance in its Accounts Receivable account. During the accounting period, Barnes earned revenue on account of $448,000. The ending Accounts Receivable balance was $86,000. Required: Based on

> James Jones received a $90,000 cash advance on March 1, Year 1, for legal services to be performed in the future. Services were to be provided for a one year term beginning March 1, Year 1. Required: a. Record the March 1 cash receipt in T-accounts. b.

> Complete the following table by indicating whether a debit or credit is used to increase or decrease the balance of the following accounts. The appropriate debit/credit terminology has been identified for the first account as an example. Used to Inc

> The following information was drawn from the accounting records of Earles Company as of December 31, Year 2, before the temporary accounts had been closed. The Cash balance was $6,000, and Notes Payable amounted to $3,000. The company had revenues of $7,

> Beatty Company’s accounting records show an after-closing balance of $19,400 in its Retained Earnings account on December 31, Year 2. During the Year 2 accounting cycle, Beatty earned $15,100 of revenue, incurred $9,200 of expense, and paid $1,500 of div

> In Year 1, Hall Inc. billed its customers $62,000 for services performed. The company collected $51,000 of the amount billed. Hall incurred $39,000 of other operating expenses on account. Hall paid $31,000 of the accounts payable. Hall acquired $40,000 c

> Rosewood Inc. experienced the following events in Year 1, its first year of operation: 1. Received $50,000 cash from the issue of common stock. 2. Performed services on account for $67,000. 3. Paid a $5,000 cash dividend to the stockholders. 4. Collecte

> Required Obtain the Target Corporation’s annual report at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions: a. What was Target’s debt-to-assets ratio for its fiscal year ended January 28, 2017

> Graphic Design Inc. had a beginning balance of $2,000 in its Accounts Receivable account. The ending balance of Accounts Receivable was $2,400. During the period, Graphic Design recognized $40,000 of revenue on account. The Salaries Payable account has a

> The following events apply to Parker and Moates, a public accounting firm, for the Year 1 accounting period: 1. Performed $96,000 of services for clients on account. 2. Performed $65,000 of services for cash. 3. Incurred $45,000 of other operating expens

> Talley Inc. experienced the following events in Year 1, in its first year of operation: 1. Received $20,000 cash from the issue of common stock. 2. Performed services on account for $38,000. 3. Paid the utility expense of $2,500. 4. Collected $21,000 of

> The following transactions pertain to the operations of Blair Company for Year 1: 1. Acquired $30,000 cash from the issue of common stock. 2. Performed services for $12,000 cash. 3. Paid a $7,200 cash advance for a one-year contract to rent equipment. 4.

> Patal Inc. experienced the following accounting events during its Year 1 accounting period: 1. Paid cash to settle an account payable. 2. Collected a cash advance for services that will be provided during the coming year. 3. Paid a cash dividend to the s

> Required: a. Describe a revenue recognition event that results in an increase in assets. b. Describe a revenue recognition event that results in a decrease in liabilities. c. Describe an expense recognition event that results in an increase in liabilitie

> Required: Identify each of the following events as an accrual, deferral, or neither: a. Incurred other operating expenses on account. b. Recorded expense for salaries owed to employees at the end of the accounting period. c. Paid a cash dividend to the s

> On October 1, Year 1, Stokes Company paid Eastport Rentals $4,800 for a 12-month lease on warehouse space. Required: a. Record the deferral and the related December 31, Year 1, adjustment for Stokes Company in the accounting equation. b. Record the defe

> During Year 1, Star Corporation earned $5,000 of cash revenue and accrued $3,000 of salaries expense. Required: Based on this information alone: a. Prepare the December 31, Year 1, balance sheet. b. Determine the amount of net income that Star would rep

> Warren, Attorney at Law, experienced the following transactions in Year 1, the first year of operations: 1. Purchased $1,500 of office supplies on account. 2. Accepted $36,000 on February 1, Year 1, as a retainer for services to be performed evenly over

> The following data are based on information in the 2016 annual reports of H&R Block, Inc. and Intuit, Inc. Dollar amounts are in thousands. H&R Block, Inc. has subsidiaries that provide tax, investment, retail banking, accounting, and business co

> Jake Lewis received $800 in advance for tutoring fees when he agreed to help Laura Dalton with her introductory accounting course. Upon receiving the cash, Jake mentioned that he would have to record the transaction as a liability on his books. Laura ask

> Interior Design Consultants (IDC) experienced the following events in Year 1, its first year of operation: 1. On October 1, Year 1, IDC collected $24,000 for consulting services it agreed to provide during the coming year. 2. Adjusted the accounts to ref

> Forestry Services Inc. experienced the following events in Year 1, its first year of operation: 1. Performed counseling services for $18,000 cash. 2. On February 1, Year 1, paid $12,000 cash to rent office space for the coming year. 3. Adjusted the accou

> A cost can be either an asset or an expense. Required: a. Distinguish between a cost that is an asset and a cost that is an expense. b. List three costs that are assets. c. List three costs that are expenses.

> Janitorial Professionals Inc. experienced the following events in Year 1, its first year of operation: 1. Performed services for $20,000 cash. 2. Purchased $4,000 of supplies on account. 3. A physical count on December 31, Year 1, found that there were $

> Handy Andy Inc. began the Year 2 accounting period with $9,000 cash, $5,000 of common stock, and $4,000 of retained earnings. Handy Andy was affected by the following accounting events during Year 2: 1. Purchased $9,500 of operating expenses supplies on

> California Company borrowed $120,000 from the issuance of a note payable on August 1, Year 1. The note had a 7 percent annual rate of interest and a one year term to maturity. Required: a. What amount of interest expense will California recognize for th

> Carry Connelly started Connelly Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $6,200 of cash revenue. 2. Borrowed $10,000 cash from the bank. 3. Adjusted the accounting records to

> On January 1, Year 1, Yallow Cab Inc. paid $29,000 cash to purchase a taxi cab. The taxi had a four-year useful life and a $5,000 salvage value. Required: a. Determine the amount of depreciation expense that would appear on the Year 1 and Year 2 income

> The following events apply to Highland Grill for the Year 1 fiscal year: 1. Started the company when it acquired $40,000 cash by issuing common stock. 2. Purchased a new stove that cost $24,000 cash. 3. Earned $21,000 in cash revenue. 4. Paid $3,500 of c

> The following data are based on information in the 2016 annual report of Buffalo Wild Wings, Inc. As of December 25, 2016, there were 1,240 Buffalo Wild Wings restaurants. The parent company owned 631 restaurants and 609 were franchised. Dollar amounts a

> An October 31, 2012, news release from Hewlett-Packard Company (HP) included the following: HP recorded a non-cash charge for the impairment of goodwill and intangible assets within its Software segment of approximately $8.8 billion in the fourth quarter

> Identify whether each of the following transactions is an asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also show the effects of the events on the financial statements using the horizontal statements model. Indicate whe

> Required: a. Name an asset use transaction that will affect the income statement. b. Name an asset use transaction that will not affect the income statement. c. Name an asset exchange transaction that will not affect the statement of cash flows. d. Name

> Smith Company earned $12,000 of service revenue on account during Year 1. The company 339 collected $9,800 cash from accounts receivable during Year 1. Required: Based on this information alone, determine the following for Smith Company. (Hint: Record t

> Required: Give an example of a transaction that will a. Increase an asset and decrease another asset (asset exchange event). b. Increase an asset and increase a liability (asset source event). c. Decrease an asset and decrease a liability (asset use even

> Corrugated Boxes Inc. is a U.S. based company that develops its financial statements under GAAP. The total amount of the company’s assets shown on its balance sheet for the current year was approximately $305 million. The president of Corrugated is consi

> Pet Partners experienced the following events during its first year of operations, Year 1: 1. Acquired cash by issuing common stock. 2. Borrowed cash from a bank. 3. Signed a contract to provide services in the future. 4. Purchased land with cash. 5. Pai

> Carr Company was started on January 1, Year 1. During the month of January, Carr earned $4,600 of revenue and incurred $3,000 of expenses. During the remainder of Year 1, Carr earned $52,000 and incurred $42,000 of expenses. Carr closes its books on Dece

> Pam’s Crafts opened on January 1, Year 1. Pam’s reported the following for cash revenues and cash expenses for the years Year 1 to Year 3: Required: a. What would Pam’s Crafts report for net income

> As of December 31, Year 1, Big Horn Company had total assets of $100,000, total liabilities of $30,000, and common stock of $50,000. The company’s Year 1 income statement contained revenue of $16,000 and expenses of $11,000. The Year 1 statement of chang

> The following data are based on information in the 2016 annual report of Cracker Barrel Old Country Store. As of July 29, 2016, Cracker Barrel operated 640 restaurants and gift shops in 43 states. Dollar amounts are in thousands. Required: a. Calculate

> As of January 1, Year 2, Shundra Inc. had a balance of $4,500 in Cash, $2,500 in Common Stock, and $2,000 in Retained Earnings. These were the only accounts with balances in the ledger on January 1, Year 2. Further analysis of the companyâ€&#1

> On January 1, Year 2, the following information was drawn from the accounting records of Zeke Company: cash of $200; land of $1,800; notes payable of $600; and common stock of $1,000. Required: a. Determine the amount of retained earnings as of January

> Brandon Baily started a personal financial planning business when he accepted $120,000 cash as advance payment for managing the financial assets of a large estate. Baily agreed to manage the estate for a one-year period beginning May 1, Year 1. Require

> Tennessee Company experienced the following events during Year 2: 1. Acquired $50,000 cash from the issue of common stock. 2. Paid $15,000 cash to purchase land. 3. Borrowed $25,000 cash. 4. Provided services for $60,000 cash. 5. Paid $12,000 cash for re

> National Service Company experienced the following accounting events during Year 1: 1. Paid $4,000 cash for salary expense. 2. Borrowed $8,000 cash from State Bank. 3. Received $30,000 cash from the issue of common stock. 4. Purchased land for $8,000 cas

> On January 1, Year 1, Palmer, a fast-food company, had a balance in its Cash account of $32,000. During the Year 1 accounting period, the company had (1) net cash inflow from operating activities of $15,600, (2) net cash outflow for investing activities

> On June 1, Year 1, Ark Corporation paid $8,400 to purchase a 24-month insurance policy. Assume that Ark records the purchase as an asset and that the books are closed on December 31. Required: a. Show the purchase of the insurance policy and the related

> Petre Company was started on January 1, Year 1. During Year 1, the company experienced the following three accounting events: (1) earned cash revenues of $14,500, (2) paid cash expenses of $9,200, and (3) paid a $500 cash dividend to its stockholders. Th

> The December 31, Year 1, balance sheet for James Company showed total stockholders’ equity of $156,000. Total stockholders’ equity increased by $65,000 between December 31, Year 1, and December 31, Year 2. During Year 2 James Company acquired $20,000 cas

> Trip’s Business Services experienced the following events during its first year of operations: 1. Acquired $20,000 cash from the issue of common stock. 2. Borrowed $12,000 cash from First Bank. 3. Paid $5,000 cash to purchase land. 4. Received $25,000 ca

> Verizon Communications, Inc. is one of the world’s largest providers of communication services. The following information, taken from the company’s annual reports, is available for the years 2016, 2015, and 2014: Req

> a. What are the major elements of design planning? b. Define capacity. Why is it important for a manufacturing business or a service business? c. What factors should be considered when selecting a site for a new manufacturing facility? d. What is the obj