Question: Monroe Corporation is considering the purchase of

> For each of the following accounts, indicate whether the account is shown in the income statement or the balance sheet:

> Refer to the information in BE3–12. (1) Record the lending for Falcon on July 1, 2021. (2) Record the adjusting entry for Falcon on December 31, 2021. (3) Calculate the 2021 year-end adjusted balances of Interest Receivable and Interest Revenue (assumi

> Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watch

> Midshipmen Company borrows $15,000 from Falcon Company on July 1, 2021. Midshipmen repays the amount borrowed and pays interest of 12% (1%/month) on June 30, 2022. (1) Record the borrowing for Midshipmen on July 1, 2021. (2) Record the adjusting entry fo

> Fighting Irish Incorporated pays its employees $5,600 every two weeks ($400/ day). The current two-week pay period ends on December 28, 2021, and employees are paid $5,600. The next two-week pay period ends on January 11, 2022, and employees are paid $5,

> Suppose a customer rents a vehicle for three months from Commodores Rental on November 1, paying $6,000 ($2,000/month). (1) Record the rental for Commodores on November 1. (2) Record the adjusting entry on December 31. (3) Calculate the year-end adjusted

> Below are transactions for Lobos, Inc., during the month of December. Calculate the amount of revenue to recognize in December. If the transaction does not require the company to recognize a revenue, indicate how it would report the transaction. a. Recei

> Consider the following T-account for cash. 1. Compute the balance of the Cash account. 2. Give some examples of transactions that would have resulted in the $4,400 posting to the account. 3. Give some examples of transactions that would have resulted in

> The following transactions occur for Cardinal Music Academy during the month of October: 1. Provide music lessons to students for $17,000 cash. 2. Purchase prepaid insurance to protect musical equipment over the next year for $4,200 cash. 3. Purchase mus

> The following transactions occur for the Panther Detective Agency during the month of July: 1. Purchase a truck and sign a note payable, $15,000. 2. Purchase office supplies for cash, $600. 3. Pay $800 in rent for the current month. Record the transactio

> Fill in the blanks below with the word “debit” or “credit.” a. The balance of an asset account increases with a_____and decreases with a_____. b. The balance of a liability account increases with a ______and decreases with a_____ . c. The balance of a st

> For each of the following accounts, indicate whether a debit or credit is used to increase (+) or decrease (−) the balance of the account. The solution for the first one is provided as an example.

> The following transactions occur for Badger Biking Company during the month of June: a. Provide services to customers on account for $50,000. b. Receive cash of $42,000 from customers in (a) above. c. Purchase bike equipment by signing a note with the ba

> Ernie Upshaw is the supervising manager of Sleep Tight Bedding. At the end of the year, the company’s accounting manager provides Ernie with the following information, before any adjustment. In the previous year, Sleep Tight Bedding rep

> Suppose a local company has the following balance sheet accounts: Calculate the missing amounts assuming the business has total assets of $37,500.

> Using the notion that the accounting equation (Assets = Liabilities + Stockholders’ Equity) must remain in balance, indicate whether each of the following transactions is possible. a. Cash increases; Accounts Payable decreases. b. Service Revenue increas

> Your study partner is having trouble getting total debits to equal total credits in the trial balance. Prepare a corrected trial balance by placing each account balance in the correct debit or credit column.

> Using the following information, prepare a trial balance. Assume all asset, dividend, and expense accounts have debit balances and all liability, stockholders’ equity, and revenue accounts have credit balances. List the accounts in the

> The following transactions occur for the Wolfpack Shoe Company during the month of June: a. Provide services to customers for $30,000 and receive cash. b. Purchase office supplies on account for $20,000. c. Pay $7,000 in salaries to employees for work pe

> Below are the steps in the measurement process of external transactions. Arrange them from first (1) to last (6). a. Post the transaction to the T-accounts in the general ledger. b. Assess whether the impact of the transaction results in a debit or credi

> Each of these parties plays a role in the quality of financial reporting. Match each group with its function.

> Determine on which financial statement you find the following items.

> Match each financial statement with its description.

> For each transaction, indicate whether each account would be classified in the balance sheet as (a) an asset, (b) a liability, or (c) stockholders’ equity; in the income statement as (d) a revenue or (e) an expense; or in the statement

> You have been hired as a consultant by a parts manufacturing firm to provide advice as to the proper accounting methods the company should use in some key areas. In the area of receivables, the company president does not understand your recommendation to

> For each transaction, indicate whether each account would be classified in the balance sheet as (a) an asset, (b) a liability, or (c) stockholders’ equity; in the income statement as (d) a revenue or (e) an expense; or in the statement

> Match each account type with its description.

> Match each form of business organization with its description.

> Match each business activity with its description.

> Match each of the components of faithful representation with its definition.

> Match each of the components of relevance with its definition.

> Below are possible career opportunities for those earning a degree in accounting. Indicate whether the statement related to each career is true or false.

> Indicate which of the following are objectives of financial accounting.

> Indicate whether the definition provided is true or false. (True/False) Accounting can be defined as: 1. _______The language of business. 2. _______A measurement/communication process. 3. _______A mathematics course.

> Wendy Day Kite Company owns 100% of the outstanding stock of Strong String Company. At the end of the year, Wendy Day has total inventory of $14,000 and Strong String has total inventory of $8,000. Determine the amount of inventory that would be reported

> Obtain a copy of the annual report of Avon Products, Inc., for the most recent year. You can find the annual report at the company’s website (www.avon.com) in the investor information section or at the Securities and Exchange Commission’s website (www.se

> Wendy Day Kite Company owns 40% of the outstanding stock of Strong String Company. During the current year, Strong String paid a $10 million cash dividend on its common shares. What effect does Strong String’s dividend have on Wendy Day’s financial state

> Wendy Day Kite Company owns 40% of the outstanding stock of Strong String Company. During the current year, Strong String reported net income of $20 million. What effect does Strong String’s reported net income have on Wendy Day’s financial statements? E

> On December 29, 2021, Adams Apples purchased 1,000 shares of General Electric common stock for $19 per share. On December 31, the market value of the stock increased to $20 per share. On January 24, 2022, all of the shares are sold for $16 per share. Rec

> On December 29, 2021, Adams Apples purchased 1,000 shares of General Electric common stock for $19 per share. On December 31, the market value of the stock increased to $20 per share. On January 24, 2022, all of the shares are sold for $22 per share. Rec

> On December 28, Summit purchased Microsoft common shares for $485,000. On December 31, the shares had a fair value of $487,000. Record the initial investment by Summit and, if appropriate, an adjustment to record the investment at fair value.

> On December 28, Summit purchased Microsoft common shares for $485,000. On December 31, the shares had a fair value of $483,000. Record the initial investment by Summit and, if appropriate, an adjustment to record the investment at fair value.

> On September 1, Leather Suppliers, Inc., purchases 150 shares of Western Wear Clothing for $13 per share. On November 1, Leather Suppliers sells the investment for $17 per share. Record the transactions made by Leather Suppliers for the purchase and sale

> Salt Foods purchases forty $1,000, 7%, 10-year bonds issued by Pretzelmania, Inc., for $42,975 on January 1. The market interest rate for bonds of similar risk and maturity is 6%. Salt Foods receives interest semiannually on June 30 and December 31. 1. R

> Salt Foods purchases forty $1,000, 7%, 10-year bonds issued by Pretzelmania, Inc., for $37,282 on January 1. The market interest rate for bonds of similar risk and maturity is 8%. Salt Foods receives interest semiannually on June 30 and December 31. 1. R

> Salt Foods purchases forty $1,000, 7%, 10-year bonds issued by Pretzelmania, Inc., for $40,000 on January 1. The market interest rate for bonds of similar risk and maturity is 7%. Salt Foods receives interest semiannually on June 30 and December 31. 1. R

> You have recently been hired as the assistant controller for Stanton Industries. Your immediate superior is the controller who, in turn, reports to the vice president of finance. The controller has assigned you the task of preparing the year-end adjustme

> Indicate with an “X” any of the following that represent a common reason why companies invest in other companies. 1. To invest excess cash created by operating in seasonal industries. 2. To increase employees’ morale. 3. To build strategic alliances. 4.

> Calculate the present value of the following annuities, assuming each annuity payment is made at the end of each compounding period.

> Tatsuo has just been awarded a four-year scholarship to attend the university of his choice. The scholarship will pay $8,000 each year for the next four years to reimburse normal school-related expenditures. Each $8,000 payment will be made at the end of

> Calculate the future value of the following annuities, assuming each annuity payment is made at the end of each compounding period.

> Matt plans to start his own business once he graduates from college. He plans to save $3,000 every six months for the next five years. If his savings earn 10% annually (or 5% every six months), determine how much he will save by the end of the fifth year

> Tom and Suri decide to take a worldwide cruise. To do so, they need to save $30,000. They plan to invest $4,000 at the end of each year for the next seven years to earn 8% compounded annually. Determine whether Tom and Suri will reach their goal of $30,0

> Calculate the present value of the following single amounts.

> Ronald has an investment opportunity that promises to pay him $55,000 in three years. He could earn a 6% annual return investing his money elsewhere. What is the most he would be willing to invest today in this opportunity?

> Maddy works at Burgers R Us. Her boss tells her that if she stays with the company for five years, she will receive a bonus of $6,000. With an annual discount rate of 8%, calculate the value today of receiving $6,000 in five years.

> Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book. Required: Try to estimate each company’s ratio of total current receivable

> Calculate the future value of the following single amounts.

> Dungy Training Company has a current ratio of 0.70 to 1, based on current assets of $3.43 million and current liabilities of $4.90 million. How, if at all, will a $900,000 cash purchase of inventory affect the current ratio? How, if at all, will a $900,0

> The Intramural Sports Club reports sales revenue of $1,140,000. Inventory at both the beginning and end of the year totals $200,000. The inventory turnover ratio for the year is 4.9. What amount of gross profit does the company report in its income state

> Universal Sports Supply began the year with an inventory balance of $65,000 and a year-end balance of $75,000. Sales of $750,000 generate a gross profit of $250,000. Calculate the inventory turnover ratio for the year.

> Universal Sports Supply began the year with an accounts receivable balance of $200,000 and a year-end balance of $220,000. Credit sales of $750,000 generate a gross profit of $250,000. Calculate the receivables turnover ratio for the year.

> If sales are $1,150,000 in 2022 and this represents a 15% increase over sales in 2021, what were sales in 2021?

> Sales are $2.6 million in 2020, $2.7 million in 2021, and $2.5 million in 2022. What is the percentage change from 2020 to 2021? What is the percentage change from 2021 to 2022? Be sure to indicate whether the percentage change is an increase or a decrea

> Athletic World reports the following vertical analysis percentages. Did Athletic World’s income before tax as a percentage of sales increase, decrease, or stay the same? If net income as a percentage of sales increases, does that mean n

> Using the information presented in BE12–1, perform a horizontal analysis providing both the amount and percentage change.

> Classify each of the following accepted accounting practices as conservative or aggressive. 1. Use lower-of-cost-or-market to value inventory. 2. Expense all research and development costs rather than recording some research and development costs as an a

> Financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. Determine whether the trend in net sales has been increasing or decreasing for the past three years. 2. Where is accounts receivable reported? Explain why us

> Classify each of the following accounting practices as conservative or aggressive. 1. Increase the allowance for uncollectible accounts. 2. When costs are rising, change from LIFO to FIFO. 3. Change from declining-balance to straight-line depreciation in

> Game Time Sports owns a recreational facility with basketball courts, pitching machines, and athletic fields. Determine whether the firm should report each of the following items as discontinued operations, other revenues, or other expenses. 1. Due to in

> Kobe’s Clinics provides health services and career counseling. Net income from the health services business this year is $32 million after tax. During the year, Kobe’s Clinics sold the career counseling side of the business at a loss after tax of $7.5 mi

> LaDanion’s Limos reports net income of $130,000, average total assets of $700,000, and average total liabilities of $340,000. Calculate LaDanion’s return on assets and return on equity ratios.

> Peyton’s Palace has net income of $15 million on sales revenue of $130 million. Total assets were $96 million at the beginning of the year and $104 million at the end of the year. Calculate Peyton’s return on assets, profit margin, and asset turnover rat

> Perform a vertical analysis on the following information.

> On April 1, 2020, Teleworks Company lent $100,000 to IT Industries. IT Industries pays back in full the note plus 10% interest on April 1, 2021. Determine the investing cash flows to be reported by Teleworks Company in 2021.

> Creative Sound Systems sold investments, land, and its own common stock for $40 million, $16 million, and $42 million, respectively. Creative Sound Systems also purchased treasury stock, equipment, and a patent for $22 million, $26 million, and $13 milli

> Engineering Wonders reports net income of $70 million. Included in that number is building depreciation expense of $6 million and a gain on the sale of land of $2 million. Records reveal decreases in accounts receivable, accounts payable, and inventory o

> Hi-Tech, Inc., reports net income of $70 million. Included in that number are depreciation expense of $6 million and a loss on the sale of equipment of $2 million. Records reveal increases in accounts receivable, accounts payable, and inventory of $3 mil

> Financial information for American Eagle is presented in Appendix A at the end of the book. Required: 1. Determine whether the trend in net sales has been increasing or decreasing for the past three years. 2. Where is accounts receivable reported? Explai

> Macrosoft Company reports net income of $75,000. The accounting records reveal depreciation expense of $90,000 as well as increases in prepaid rent, accounts payable, and income tax payable of $70,000, $10,000, and $23,000, respectively. Prepare the oper

> Laser World reports net income of $650,000. Depreciation expense is $50,000, accounts receivable increases $11,000, and accounts payable decreases $30,000. Calculate net cash flows from operating activities using the indirect method.

> Place the following items in the correct order as they would appear in the statement of cash flows. Financing activities. Net increase (decrease) in cash. Operating activities. Beginning cash balance. Ending cash balance. Investing activities.

> Wifi Around reports net income for the year of $220,000. Retained earnings at the beginning and end of the year are $810,000 and $930,000, respectively. What is the cash paid for dividends during the year (assume any dividends declared were paid)?

> The following selected transactions occur during the first year of operations. Determine how each should be reported in the statement of cash flows. 1. Issued one million shares of common stock at $20 per share. 2. Paid $75,000 to suppliers for inventory

> Computer World reports income tax expense of $340,000. Income taxes payable at the beginning and end of the year are $60,000 and $75,000, respectively. What is the cash paid for income taxes during the year?

> Wireless Solutions reports operating expenses of $985,000. Operating expenses include both rent expense and salaries expense. Prepaid rent increases during the year by $30,000 and salaries payable increases by $20,000. What is the cash paid for operating

> Electronic Superstore’s inventory increases during the year by $5 million, and its accounts payable to suppliers increases by $7 million during the same period. What is the amount of cash paid to suppliers of merchandise during the reporting period if it

> Video Shack’s accounts receivable decreases during the year by $9 million. What is the amount of cash received from customers during the reporting period if its net sales are $73 million?

> The balance sheet of Innovative Products reports total assets of $620,000 and $820,000 at the beginning and end of the year, respectively. The cash return on assets for the year is 25%. Calculate Innovative Products’ net cash flows from operating activit

> Tony and Suzie are ready to expand Great Adventures even further in 2022. Tony believes that many groups in the community (for example, Boy Scouts, church groups, civic groups, and local businesses) would like to hold one-day outings for their members. G

> Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book. Required: Determine which company’s growth rate in total assets, net sales

> The balance sheet of Cranium Gaming reports total assets of $500,000 and $800,000 at the beginning and end of the year, respectively. Sales revenues are $2.10 million, net income is $75,000, and operating cash flows are $60,000. Calculate the cash return

> A-2-Z Design Services engaged in the following significant activities during the year: a. The company issued common stock for $250,000. Management expects to use the proceeds to purchase land next year. b. A new office building was purchased by issuing a

> Refer to the situation described in BE11–9. Determine the financing cash flows to be reported by IT Industries in 2021.

> Refer to the situation described in BE11–8. What amount should Creative Sound Systems report as net cash flows from financing activities?

> Technologies Worldwide purchased land for $850,000 in 2020 with the intent to expand operations. In 2021, the company decides the land is no longer needed, and the land is sold for $900,000. Determine the investing cash flows to be reported in 2021. Dete

> Classify each of the following items as an operating, investing, or financing activity. 1. Dividends paid. 2. Repayment of notes payable. 3. Payment for inventory. 4. Purchase of equipment. 5. Interest paid.

> Refer to the situation described in BE10–8. Record the transaction if California Surf resells the 100 shares of treasury stock at $40 per share.

> California Surf Clothing Company issues 1,000 shares of $1 par value common stock at $35 per share. Later in the year, the company decides to purchase 100 shares at a cost of $38 per share. Record the purchase of treasury stock.

> Rachel’s Designs has 2,000 shares of 7%, $50 par value cumulative preferred stock issued at the beginning of 2019. All remaining shares are common stock. Due to cash flow difficulties, the company was not able to pay dividends in 2019 or 2020. The compan