Question: The records of Summers Building Company reveal

> Martin Sharp operates a lawn mower repair business. He maintains an inventory of repair parts that are purchased from a wholesale supplier. Martin’s records show the following information for the first 3 months of 2019. Required: 1. Ig

> Cam and Anna are very satisfied with their first month of operations. Their major effort centered on signing various artists to live performance contracts, and they had more success than they had anticipated. In addition to Charm City, they were able to

> Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com. Required: 1. Describe each company’s revenue recognition policy. Is this policy consistent with the

> What are the five categories of control activities?

> Obtain FedEx Corporation’s 2016 annual report either through the ‘‘Investor Relations’’ portion of their website (do a web search for FedEx investor relations) or go to www.sec.gov and click ‘‘Company Filings Search’’ under ‘‘Filings.’’ Required: 1. How

> Barnes Building Systems made the following closing entries at the end of a recent year: a. Income Summary............................. 129,750 Retained Earnings ........................ 129,750 b. Retained Earnings........................... 25,000

> Don Berthrong, the manager of the local Books-A-Million, is wondering how adjusting entries will affect his financial statements. Don’s business has grown steadily for several years, and Don expects it to continue to grow for the next several years at a

> Kelsey’s Kleening provides cleaning services for Clinton Inc., a business with four buildings. Kelsey’s assigned different cleaning charges for each building based on the amount of square feet to be cleaned. The charges for the four buildings are $35,000

> Link Pictures Inc. sells (licenses) the rights to exhibit motion pictures to theaters. Under the sales contract, the theater promises to pay a license fee equal to the larger of a guaranteed minimum or a percentage of the box office receipts. In addition

> Newman Properties Inc. completed construction of a new shopping center in July 2019. During the first 6 months of 2019, Newman spent $550,000 for salaries, preparation of documents, travel, and other similar activities that was directly and incrementally

> Melaney Parks purchased HealthPlus Fitness in January 2019. Melaney wanted to increase the size of the business by selling 3-year memberships for $3,000, payable at the beginning of the membership period. The normal yearly membership fee is $1,500. Since

> Zac Murphy is president of Blooming Colors Inc. which provides landscaping services in Tallahassee, Florida. On November 20, 2019, Mr. Murphy signed a service contract with Eastern State University. Under the contract, Blooming Colors will provide landsc

> Karen Ragsdale owns a business that rents parking spots to students at the local university. Karen’s typical rental contract requires the student to pay the year’s rent of $450 ($50 per month) on September 1. When Karen prepares financial statements at t

> Marsteller Properties Inc. owns apartments that it rents to university students. At December 31, 2019, the following unadjusted account balances were available: The following information is available for adjusting entries: a. An analysis of apartment re

> Tarkington Freight Service provides delivery of merchandise to retail grocery stores in the Northeast. At the beginning of 2019, the following account balances were available: During 2019 the following transactions occurred: a. Tarkington performed deli

> What are business process risks?

> Round Grove Alarm Company provides security services to homes in northwestern Indiana. At year-end 2019, after adjusting entries have been made, the following list of account balances is prepared: Required: 1. Prepare closing entries for Round Grove Ala

> The following schedule shows all the accounts of Fresno Travel Agency that received year end adjusting entries: Required: 1. Calculate the missing amounts identified by the letters (a) through (e). 2. Prepare the five adjusting entries that must have bee

> Harrigan Enterprises utilizes Snoopy Systems to design and implement a cash management system. Due to Harrigan’s cash management problems, it cannot currently pay for the system out of pocket. Snoopy chooses to extend a 6% note on January 1, 2019, for th

> You have the following unadjusted trial balance for Rogers Corporation at December 31, 2019: At year end, you have the following data for adjustments: a. An analysis indicates that prepaid rent on December 31 should be $2,300. b. A physical inventory sh

> Four adjusting entries are shown below. a. Wages Expense................................ 3,410 Wages Payable ............................. 3,410 b. Accounts Receivable ........................ 8,350 Service Revenue ........................... 8,350

> Bartow Photographic Services takes wedding and graduation photographs. At December 31, the end of Bartow’s accounting period, the following information is available: a. All wedding photographs are paid for in advance, and all cash collected for them is c

> Kuepper’s Day Care is a large daycare center in South Orange, New Jersey. The daycare center serves several nearby businesses as well as a number of individual families. The businesses pay $6,180 per child per year for daycare services for their employee

> Security Specialists performs security services for local businesses. During 2019, Security Specialists performed $1,425,700 of security services and collected $1,445,000 cash from customers. Security Specialist’s employees earned salaries of $82,350 per

> George Hathaway, an electrician, entered into an agreement with a real estate management company to perform all maintenance of basic electrical systems and air-conditioning equipment in the apartment buildings under the company’s manage

> Unadjusted account balances at December 31, 2019, for Rapisarda Company are as follows: The following data are not yet recorded: a. Depreciation on the equipment is $18,350. b. Unrecorded wages owed at December 31, 2019: $4,680. c. Prepaid rent at Decem

> James and Susan Morley recently converted a large turn-of-the-century house into a hotel and incorporated the business as Saginaw Enterprises. Their accountant is inexperienced and has made the following closing entries at the end of Saginaw’s first year

> What are strategic risks?

> Grand Rapids Consulting Inc. began 2019 with a retained earnings balance of $38,100 and has the following accounts and balances at year end: Sales Revenue $162,820 Supplies Expense $ 4,348 Salaries Expense 91,660 Income Taxes Expense 13,800 Re

> Jarrod’s Meat Shop doubles as a butcher shop and a sandwich shop that sells to both individuals and a nearby hospital system. On a particular day, Jarrod’s had cash sales of $450, credit sales of $600, sales on MasterCard of $657, and sales on Visa of $9

> Refer to the unadjusted trial balance for Ox moor Corporation in Exercise 3-56. Unadjusted trial balance for Ox moor Corporation in Exercise 3-56: Required: Prepare a classified balance sheet for Ox moor at December 31, 2019. Oxmoor Corporadion Adjus

> Refer to the unadjusted trial balance for Ox moor Corporation in Exercise 3-56. Unadjusted trial balance for Ox moor Corporation from Exercise 3-56: Required: Prepare a retained earnings statement for Ox moor for the year ended December 31, 2019. Oxm

> Ox moor Corporation prepared the following adjusted trial balance. Required: Prepare a single-step income statement for Ox moor for the year ended December 31, 2019. Oxmoor Corporadion Adjusted Trial Balance December 31, 2019 Debit Ассount Credit Cas

> Van Brush Enterprises, a painting contractor, prepared the following adjusting entries at year end: a. Wages Expense................................ 2,550 Wages Payable............................. 2,550 b. Accounts Receivable .......................

> Selected balance sheet accounts for Gardner Company are presented below. Prepaid Insurance May 5 4,300 ?  1,250    Wages Payable ?   5,400   Unearned Sales Revenue ? 9,500 May 10   2,250   Interest Receivable ?   825    Required

> Reynolds Computer Service offers data processing services to retail clothing stores. The following data have been collected to aid in the preparation of adjusting entries for Reynolds Computer Service for 2019: a. Computer equipment was purchased from IB

> Allentown Services Inc. is preparing adjusting entries for the year ending December 31, 2019. The following data are available: a. Interest is owed at December 31, 2019, on a 6-month, 8% note. Allentown borrowed $120,000 from NBD on September 1, 2019. b.

> The downtown location of Chicago Clothiers purchases large quantities of supplies, including plastic garment bags and paper bags and boxes. At December 31, 2019, the following information is available concerning these supplies: Supplies inventory, 1/1/2

> JDM Inc. made the following prepayments for expense items during 2019: a. Prepaid building rent for 1 year on April 1 by paying $6,600. Prepaid rent was debited for the amount paid. b. Prepaid 12 months’ insurance on October 1 by paying $4,200. Prepaid i

> What is meant by ‘‘tone at the top’’? Why is it so important to an effective system of internal controls?

> Ray’s beginning and ending accounts receivables balances are $147,990 and $142,720, respectively. Ray’s sold $3,745,060 of merchandise, of which 50% was on credit. Required: Determine the amount of cash collections for the period.

> Greensboro Properties Inc. owns a building in which it leases office space to small businesses and professionals. During 2019, Greensboro Properties engaged in the following transactions: a. On March 1, Greensboro Properties paid $10,500 in advance to Pa

> Faraday Electronic Service repairs stereos and DVD players. During 2019, Faraday engaged in the following activities: a. On September 1, Faraday paid Wausau Insurance $4,860 for its liability insurance for the next 12 months. The full amount of the prepa

> Sentry Transport Inc. of Atlanta provides in-town parcel delivery services in addition to a full range of passenger services. Sentry engaged in the following activities during the current year: a. Sentry received $5,000 cash in advance from Rich’s Depart

> Medina Motor Service is preparing adjusting entries for the year ended December 31, 2019. The following items describe Medina’s continuous transactions during 2019: a. Medina’s salaried employees are paid on the last day of every month. b. Medina’s hourl

> Conklin Services prepares financial statements only once per year using an annual accounting period ending on December 31. Each of the following statements describes an entry made by Conklin on December 31 of a recent year. a. On December 31, Conklin com

> Carrico Advertising Inc. performs advertising services for several Fortune 500 companies. The following information describes Carrico’s activities during 2019. a. At the beginning of 2019, customers owed Carrico $45,800 for advertising services performed

> Treadway Dental Services gives each of its patients a toothbrush with the name and phone number of the dentist office and a logo imprinted on the brush. Treadway purchased 15,000 of the toothbrushes in October 2019 for $3,130. The toothbrushes were deliv

> Omega Transportation Inc., headquartered in Atlanta, Georgia, uses accrual-basis accounting and engaged in the following transactions: . Billed customers $3,580,000 for transportation services . Collected cash from customers in the amount of $2,479,000 .

> Electronic Repair Company repaired a high-definition television for Sarah Merrifield in December 2019. Sarah paid $80 at the time of the repair and agreed to pay Electronic Repair $80 each month for 5 months beginning on January 15, 2020. Electronic Repa

> XYZ Corp sells widgets to consumers for $20 each. Its beginning accounts receivable balance was $24,975, and it sold 12,376 widgets throughout the year. The total cash collections for the year amounted to $217,750. Required: Calculate the ending account

> What are the five components of internal control?

> Each of the following situations relates to the recognition of revenue: a. A store sells a gift card in December which will be given as a Christmas present. The card is not redeemed until January. b. A furniture store sells and delivers furniture to a cu

> The following information is taken from the accrual accounting records of Kroger Sales Company: a. During January, Kroger paid $9,150 for supplies to be used in sales to customers during the next 2 months (February and March). The supplies will be used e

> Businesses must decide whether to issue credit to customers. Required: Describe how selling to customers on credit affects the operating cycle.

> Richter Industries has the following items: Currency..................................................................................................... $27,500 Customer checks that have not been deposited........................................ 850 U.

> Canary Inc. maintains a petty cash fund with a balance of $1,800. During the month of September, Canary’s employees made routine expenses using cash from the petty cash fund totaling $1,150. At the end of September, Canary replenishes the petty cash acco

> Kingery Inc. maintains a balance of $3,000 in its petty cash fund for routine purchases such as supplies. During the year, Kingery’s employees paid for various office supplies and food purchases for office birthdays. As a result, Kingery’s petty cash acc

> Milner Department Store has one cash register on which it performs daily cash counts. Recently, the cash count indicated that there was $9,218.47 in the register after deducting and removing the opening change amount of $50. However, the cash register ta

> What accounts are used to record inventory purchase transactions under the periodic inventory system? Why aren’t these accounts used in a perpetual inventory system?

> Why do sales transactions under a perpetual inventory system require two journal entries?

> Hart Inc. began the year with $315,700 of accounts receivable. During the year, Hart sold a considerable amount of merchandise on credit and collected $2,427,000 of its credit sales. At the end of the year, the accounts receivable balance is $16,800 lowe

> Internal control systems include policies and procedures designed to provide reasonable assurance that the corporation’s objectives are being met in three areas: (a) Effectiveness and efficiency of operations, (b) Reliability of financial reporting, an

> Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory system, what is the cost of ending inventory under average cost at April 30? (Note Use four decimal places for per-unit calculations and round all other numbers to the ne

> Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory system, what is the cost of ending inventory under LIFO at April 30? a. $32,800 b. $38,400 c. $63,600 d. $69,200 Units Purchased at Cost Units Sold at Retail 1,200 u

> Refer to the information for Morgan Inc. below. If Morgan uses a periodic inventory system, what is the cost of goods sold under FIFO at April 30? a. $32,800 b. $38,400 c. $63,600 d. $69,200 Units Purchased at Cost Units Sold at Retail 1,200 units a

> Which of the following statements is true for a company that uses a periodic inventory system? a. The purchase of inventory requires a debit to Inventory. b. The return of defective inventory requires a debit to Purchase Returns and Allowances. c. The pa

> At the end of each day, Spangle counts the cash in its cash registers. Spangle then compares the physical amount of cash to the amount of cash that the register tape indicates should be in the cash drawer. On a recent day, Spangle Company obtained the fo

> Ignoring taxes, if a company understates its ending inventory by $10,000 in the current year: a. Assets for the current year will be overstated by $10,000. b. Net income for the subsequent year will be overstated by $10,000. c. Cost of goods sold for the

> An increasing inventory turnover ratio indicates that a company: a. Has reduced the time it takes to purchase and sell inventory. b. Is having trouble selling its inventory. c. May be holding too much inventory. d. Has sold inventory at a higher profit.

> Which of the following statements is true with regard to the gross profit ratio? 1. An increase in cost of goods sold would increase the gross profit rate (assuming sales remain constant). 2. An increase in the gross profit rate may indicate that a compa

> Which of the following statements regarding the lower of cost or market (LCM) rule is true? a. The LCM rule is an application of the historical cost principle. b. When the net realizable value of inventory drops below the historical cost of inventory, an

> Which method results in a more realistic amount for income because it matches the most current costs against revenue? a. FIFO b. Average cost c. Specific identification d. LIFO

> Hannah purchased a laptop computer from Perry Corp. for $1,500. Hannah’s receivable has been outstanding for over 180 days, and Perry determines that the total amount is uncollectible and writes off all of Hannah’s debt. Hannah later receives a windfall

> When purchase prices are rising, which of the following statements is true? a. LIFO produces a higher cost of goods sold than FIFO. b. LIFO produces a higher cost for ending inventory than FIFO. c. FIFO produces a lower amount for net income than LIFO. d

> Refer to the information for Morgan Inc. below. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under average cost at April 30? (Note: Use four decimal places for per-unit calculations and round to the nearest dollar.)

> Refer to the information for Morgan Inc. below. If Morgan uses a perpetual inventory system, what is the cost of goods sold under LIFO at April 30? a. $37,500 b. $38,400 c. $63,600 d. $64,500 Units Purchased at Cost Units Sold at Retail 1,200 units

> Refer to the information for Morgan Inc. below. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under FIFO at April 30? a. $32,500 b. $38,400 c. $63,600 d. $69,500 Units Purchased at Cost Units Sold at Retail 1,200 u

> U-Save Automotive Group purchased 10 vehicles during the current month. Two trucks were purchased for $20,000 each, two SUVs were purchased for $31,000 each, and six hybrid cars were purchased for $27,000 each. A review of the sales invoices revealed tha

> Zing Corp. prepares monthly bank reconciliations as part of its cash controls. Zing’s bank provided the following amount about Zing’s cash balance at the bank for during the month of April 2020: Balance, April 30, 2020...................................

> Which of the following transactions would not result in an adjustment to the inventory account under a perpetual inventory system? a. Sale of merchandise for cash b. Sale of merchandise on credit c. Receipt of payment from a customer within the discount

> Briggs Company purchased $15,000 of inventory on credit with credit terms of 2/10, n/30. Briggs paid for the purchase within the discount period. How much did Briggs pay for the inventory? a. $14,700 b. $14,850 c. $15,000 d. $15,300

> Which of the following transactions would not result in an entry to the inventory account in the buyer’s accounting records under a perpetual inventory system? a. Purchase of merchandise on credit b. Return of merchandise to the supplier c. Payment of a

> If beginning inventory is $20,000, purchases are $185,000, and ending inventory is $30,000, what is cost of goods sold as determined by the cost of goods sold model? a. $135,000 b. $175,000 c. $195,000 d. $235,000

> Ingrid Inc. has strict credit policies and only extends credit to customers with outstanding credit history. The company examined its accounts and determined that at January 1, 2019, it had balances in Accounts Receivable and Allowance for Doubtful Accou

> ‘‘For each inventory costing method, perpetual and periodic systems yield the same amounts for ending inventory and cost of goods sold.’’ Do you agree or disagree with this statement? Explain.

> How does an error in the determination of ending inventory affect the financial statements of two periods?

> What is the LIFO reserve, and when is it used?

> What do the gross profit and inventory turnover ratios tell company management about inventory?

> What is the effect on the current period income statement and the balance sheet when inventories are written down using the lower of cost or market method? What is the effect on future period income statements and balance sheets?

> Why are inventories written down to the lower of cost or market?

> Garrison Corporation was closing its books on May 31, 2020. Garrison’s accountant prepared a bank reconciliation as of May 31, 2020, and has found the following possible reconciling items between its book balance and its cash balance per the bank: Garri

> The Sarbanes-Oxley Act increased top management’s responsibility for what?

> How would the balance sheet accounts be affected if LIFO rather than FIFO were used when purchase prices are rising? When purchase prices are falling?

> How would reported income differ if LIFO rather than FIFO were used when purchase prices are rising? When purchase prices are falling?

> Firebird Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement for February 2019 indicated the following: Balance, February 28, 2019 …………………………………………………….. $87,392 Service charge for February …………………………………………………

> If inventory prices are rising, which inventory costing method should produce the smallest payment for taxes?

> The costs of which units of inventory (oldest or newest) are allocated to ending inventory or cost of goods sold using the FIFO, LIFO, and average cost methods?

> Why do the four inventory costing methods produce different amounts for the cost of ending inventory and cost of goods sold?

> Describe the difference between F.O.B. shipping point and F.O.B. destination.