This and similar cases in later chapters focus on the financial statements of a real company—Target Corporation, a discount merchandiser that sells a wide assortment of general merchandise and food. Target sells both national and private and exclusive brands, with approximately one-third of its 2015 sales related to private and exclusive brands. As you work each case, you will gain confidence in your ability to use the financial statements of real companies. Visit http://www.pearsonhighered.com/Horngren to view a link to Target Corporation’s Fiscal 2015 Annual Report. Requirements: 1. How much in cash (including cash equivalents) did Target Corporation have on January 30, 2016? 2. What were the company’s total assets at January 30, 2016? At January 31, 2015? 3. Write the company’s accounting equation at January 30, 2016, by filling in the Dollar amounts: Assets = Liabilities + Equity 4. Identify total sales (revenues) for the year ended January 30, 2016. How much did total revenue increase or decrease from fiscal year 2014 to fiscal year 2015? (Because Target’s fiscal year end of January 30, 2016 ends at the beginning of 2016, the majority of Target’s financial results were obtained in the calendar year of 2015. As a result, Target calls the fiscal year 2015 even though the year reported on the annual report ends on January 30, 2016.) 5. How much net income (net earnings) or net loss did Target earn for 2015 and for2014? Based on net income, was 2015 better or worse than 2014? 6. Calculate Target Corporation’s return on assets for the year ending January 30, 2015. 7. How did Target Corporation’s return on assets compare to Kohl’s Corporation return on assets?
> What does the gross profit percentage measure, and how is it calculated?
> What financial statement is merchandise inventory reported on, and in what section?
> Describe the multi-step income statement.
> Describe the single-step income statement.
> The assets, liabilities, and equities of Damon Design Studio have the following balances at December 31, 2018. The retained earnings was $39,000 at the beginning of the year. At year end, common stock was $13,000 and dividends were $57,000. Prepare the
> What is inventory shrinkage? Describe the adjusting entry that would be recorded to account for inventory shrinkage.
> What is freight out and how is it recorded by the seller?
> When granting a sales allowance is there a return of merchandise inventory from the customer? Describe the journal entry(ies) that would be recorded.
> Under the new revenue recognition standard, what must companies do at the end of the period related to sales returns? Describe the journal entries that would be recorded.
> Under the new revenue recognition standard, how is the sale of inventory recorded?
> What are the two journal entries involved when recording the sale of inventory when using the perpetual inventory system?
> How is the net cost of inventory calculated?
> What is a purchase return? How does a purchase allowance differ from a purchase return?
> What would the credit terms of “2/10, n/EOM” mean?
> What account is debited when recording a purchase of inventory when using the perpetual inventory system?
> The account balances of Wilson Towing Service at June 30, 2018, follow: Requirements: 1. Prepare the balance sheet for Wilson Towing Service as of June 30, 2018. 2. What does the balance sheet report? Equipment $ 25,850 Service Revenue $ 15,000 Off
> What is an invoice?
> How is gross profit calculated, and what does it represent?
> What is Cost of Goods Sold (COGS), and where is it reported?
> Describe the operating cycle of a merchandiser.
> What are the two types of merchandisers? How do they differ?
> What is a merchandiser, and what is the name of the merchandise that it sells?
> Taylor Department Store uses a periodic inventory system. The adjusted trial balance of Taylor Department Store at December 31, 2018, follows: Requirements: 1. Prepare Taylor Department Store’s multi-step income statement for the year
> Journalize the following transactions that occurred in June 2018 for Daley Company. Assume Daley uses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Dale
> The records of Grade A Beef Company list the following selected accounts for the quarter ended September 30, 2018: Requirements: 1. Prepare a single-step income statement. 2. Prepare a multi-step income statement. 3. J. Douglas, manager of the company,
> The unadjusted trial balance for Tuttle Electronics Company follows: Requirements: 1. Journalize the adjusting entries using the following data: a. Interest revenue accrued, $550. b. Salaries (Selling) accrued, $2,800. c. Depreciation Expenseâ
> The account balances of Wilson Towing Service at June 30, 2018, follow: Requirements: 1. Prepare the statement of retained earnings for Wilson Towing Service for the month ending June 30, 2018. 2. What does the statement of retained earnings report?
> The adjusted trial balance of Rockin Robbin Dance Company at April 30, 2018, follows: Requirements: 1. Prepare Rockin Robbin’s multi-step income statement for the year ended April 30, 2018. 2. Journalize Rockin Robbinâ€
> Journalize the following transactions that occurred in January 2018 for Sylvia’s Amusements. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Sylvia estimates sales ret
> Journalize the following transactions that occurred in February 2018 for Oceanic. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Oceanic estimates sales returns at the end of each mont
> Triton Department Store uses a periodic inventory system. The adjusted trial balance of Triton Department Store at December 31, 2018, follows: Requirements: 1. Prepare Triton Department Store’s multi-step income statement for the year
> Journalize the following transactions that occurred in March 2018 for Double Company. Assume Double uses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. D
> The records of Farm Quality Steak Company list the following selected accounts for the quarter ended April 30, 2018: Requirements: 1. Prepare a single-step income statement. 2. Prepare a multi-step income statement. 3. M. Doherty, manager of the compan
> The unadjusted trial balance for Trudel Electronics Company at March 31, 2018, follows: Requirements: 1. Journalize the adjusting entries using the following data: a. Interest revenue accrued, $200. b. Salaries (Selling) accrued, $2,300. c. Depreciatio
> The adjusted trial balance of Rachael Rey Music Company at June 30, 2018, follows: Requirements: 1. Prepare Rachael Rey’s multi-step income statement for the year ended June 30, 2018. 2. Journalize Rachael Rey’s clos
> Journalize the following transactions that occurred in November 2018 for Julie’s Fun World. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Julie’s F
> Journalize the following transactions that occurred in September 2018 for Aquamarines. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Aquamarines estimates sales returns at the end of
> The account balances of Wilson Towing Service at June 30, 2018, follow: Requirements: 1. Prepare the income statement for Wilson Towing Service for the month ending June 30, 2018. 2. What does the income statement report? Equipment $ 25,850 Service
> This problem continues the Crystal Clear Cleaning practice set begun in Chapter 2 and continued through Chapters 3 and 4. Crystal Clear Cleaning has decided that, in addition to providing cleaning services, it will sell cleaning products. Crystal Clear u
> Rae Philippe was a warehouse manager for Atkins Oilfield Supply, a business that operated across eight Western states. She was an old pro and had known most of the other warehouse managers for many years. Around December each year, auditors would come to
> This case uses both the income statement (consolidated statements of operations) and the balance sheet (consolidated statements of financial position) of Target Corporation. Visit http://www.pearsonhighered.com/Horngren to view a link to the Target Corpo
> Ocean Life Boat Supply uses the periodic inventory method. The adjusted trial balance of Ocean Life Boat Supply at December 31, 2018, follows: Requirements: 1. Journalize the required closing entries at December 31, 2018. Assume ending Merchandise Inve
> Journalize the following transactions for Master Bicycles using the periodic inventory system. Explanations are not required. Nov. 2 Purchased $3,400 of merchandise inventory on account under terms 2/10, n/EOM and FOB shipping point. 6 Returned $800
> Journalize the following sales transactions for Straight Shot Archery using the periodic inventory system. Explanations are not required. The company estimates sales returns and allowances at the end of each month. Aug. 1 Sold $6,500 of equipment on
> Lawrence Appliances had the following purchase transactions. Journalize all necessary transactions using the periodic inventory system. Explanations are not required. Sep. 4 Purchased inventory of $6,900 on account from Max Appliance Wholesale, an a
> Journalize the following sales transactions for Morris Supply. Explanations are not required. Mar. 1 Morris Supply sold merchandise inventory for $3,000. The cost of the inventory was $1,800. The customer paid cash. Morris Supply was running a promo
> The adjusted trial balance of Quality Office Systems at March 31, 2018, follows: Requirements: 1. Journalize the required closing entries at March 31, 2018. 2. Set up T-accounts for Income Summary; Retained Earnings; and Dividends. Post the closing ent
> Estella Osage publishes an online travel magazine. In need of cash, the business applies for a loan with National Bank. The bank requires borrowers to submit financial statements. With little knowledge of accounting, Estella Osage, a stockholder, does no
> Journalize the following transactions for Soul Art Gift Shop. Explanations are not required. Feb. 3 Purchased $3,300 of merchandise inventory on account under terms 3/10, n/EOM and FOB shipping point. 7 Returned $900 of defective merchandise purchas
> Journalize the following sales transactions for Antique Mall. Explanations are not required. The company estimates sales returns at the end of each month. Jan. 4 Sold $16,000 of antiques on account, credit terms are n/30. Cost of goods is $8,000. 8
> Howie Jewelers had the following purchase transactions. Journalize all necessary transactions. Explanations are not required. Jun. 20 Purchased inventory of $5,100 on account from Sanders Diamonds, a jewelry importer. Terms were 2/15, n/45, FOB ship
> Clink Electric uses the periodic inventory system. Clink reported the following selected amounts at May 31, 2018: Compute the following for Clink: a. Cost of goods sold. b. Gross profit. Merchandise Inventory, June 1, 2017 $ 16,000 Freight In $ 6,0
> Crazy Cookies earned net sales revenue of $66,000,000 in 2018. Cost of goods sold was $39,600,000, and net income reached $7,000,000, the company’s highest ever. Compute the company’s gross profit percentage for 2018.
> Emerson St. Book Shop’s unadjusted Merchandise Inventory at June 30, 2018 was $5,200. The cost associated with the physical count of inventory on hand on June 30, 2018, was $4,900. In addition, Emerson St. Book Shop estimated approximately $1,000
> Kingston Tires received the following invoice from a supplier (Fields Distribution, Inc.): Requirements: 1. Journalize the transaction required by Kingston Tires on September 23, 2018. Do not round numbers to the nearest whole dollar. Assume tires are
> Match the accounting terms with the corresponding definitions. 1. Credit Terms a. The cost of the merchandise inventory that the business has sold to customers. 2. FOB Destination b. An amount granted to the purchaser as an incentive to keep goods t
> Dobbs Wholesale Antiques makes all sales under terms of FOB shipping point. The company usually ships inventory to customers approximately one week after receiving the order. For orders received late in December, Kathy Dobbs, the owner, decides when to s
> Ashley Stamper opened a medical practice. During July, the first month of operation, the business, titled Ashley Stamper, MD, experienced the following events: Analyze the effects of these events on the accounting equation of the medical practiceof Ash
> Party-Time T-Shirts sells T-shirts for parties at the local college. The company completed the first year of operations, and the shareholders are generally pleased with operating results as shown by the following income statement: Bill Hildebrand, the
> This problem continues the Canyon Canoe Company situation and focuses on no merchandising transactions, adjusting and closing entries, and preparing financial statements. Canyon Canoe Company does not typically prepare adjusting and closing entries each
> This problem continues the Canyon Canoe Company situation from Chapter 4. At the beginning of the new year, Canyon Canoe Company decided to carry and sell T-shirts with its logo printed on them. Canyon Canoe Company uses the perpetual inventory system to
> Hyatt Hotels Corporation is headquartered in Chicago and is a leading global hospitality company. The company develops, owns, and operates hotels, resorts, and vacation ownership properties in 52 different countries. For the year ended December 31, 2015,
> Kathy Wintz formed a lawn service business as a summer job. To start the corporation on May 1, 2018, she deposited $1,000 in a new bank account in the name of the business. The $1,000 consisted of a $600 loan from Bank One to her company, Wintz Lawn Serv
> End of the Line Montana Refrigeration has these account balances at December 31, 2018: Requirements: 1. Calculate End of the Line Montana Refrigeration’s current ratio. 2. How much in current assets does End of the Line Montana Refrig
> Review the steps in the accounting cycle, and answer the following questions: 1. What is the first step? 2. Are any steps optional? 3. Which steps are completed throughout the period? 4. Which steps are completed only at the end of the period? 5. What i
> The following balances appear on the books of Sarah Simmons Enterprises: Retained Earnings, $29,600; Dividends, $10,500; Income Summary, $0; Service Revenue, $24,500; Salaries Expense, $6,200; Rent Expense, $3,500; and Advertising Expense, $2,000. All ac
> Brett Teddy Enterprises had the following accounts and normal balances listed on its December 31st adjusted trial balance: Service Revenue, $21,900; Salaries Expense, $6,000; Rent Expense, $4,400; Advertising Expense, $3,100; and Dividends, $6,900. Journ
> Refer to the data in Short Exercise S4-1. Prepare Dalton’s classified balance sheet at December 31, 2018. Assume the Notes Payable is due on December 1, 2025. Use the report form. Short Exercise 4-1: Dalton Hair Stylistsâ€&#
> The analysis of the first eight transactions of Advanced Accounting Service follows. Describe each transaction. ASSETS LIABILITIES ++ EQUITY Contributed Capital Retained Earnings Cash + Accounts +Equipment Accounts + Common Dividends + Service - Sal
> Ocean Breeze Associates accrued $8,500 of Service Revenue at December 31. Ocean Breeze Associates received $14,500 on January 15, including the accrued revenue recorded on December 31. Requirements: 1. Record the adjusting entry to accrue Service Revenu
> For each account listed, identify whether the account would be included on a post- closing trial balance. Signify either Yes (Y) or No (N). a. Office Supplies b. Interest Expense c. Retained Earnings d. Dividends e. Service Revenue f. Accumulated Deprec
> For each account listed, identify whether the account is a temporary account (T) or a permanent account (P). a. Rent Expense b. Prepaid Rent c. Equipment d. Common Stock e. Salaries Payable f. Dividends g. Service Revenue h. Supplies Expense i. Office S
> A partial worksheet for Aaron Adjusters is presented below. Solve for the missing information. A L M Income Statement Balance Sheet 5 Debit Credit Debit Credit 32 Total 33 Net (c) $ 22,400 (a) (b) $ 61,400 5,300 (d) 34 Total (e) (f) (g) $ 61,400 35
> A partial worksheet for Ramey Law Firm is presented below. Solve for the missing information. A м Income Statement Balance Sheet 6 Debit Credit Debit Credit 32 Total 33 Net (b) (a) $ 24,850 $ 211,325 $ 202,950 8,375 (c) 34 Total (d) $ 24,850 (e) (f)
> Answer the following questions: Requirements: 1. What type of normal balance does the Retained Earnings account have—debit or credit? 2. Which type of income statement account has the same type of balance as the Retained Earnings account? 3. Which type
> For each account listed, identify the category in which it would appear on a classified balance sheet. a. Office Supplies b. Interest Payable c. Retained Earnings d. Copyrights e. Land f. Accumulated Depreciation—Furniture g. Land (held for long-term in
> Refer to the data in Short Exercise S4-1. Prepare Dalton’s statement of retained earnings for the year ended December 31, 2018. Short Exercise 4-1: Dalton Hair Stylists’s adjusted trial balance follows. Prepare Dalton’s income sta
> Dalton Hair Stylists’s adjusted trial balance follows. Prepare Dalton’s income statement for the year ended December 31, 2018.
> Indicate the effects of the following business transactions on the accounting equation for Sam’s Snack Foods, a supplier of snack foods. Transaction (a) is answered as a guide. a. Sam’s Snack Foods received cash from issuance of common stock to stockhold
> List the steps of the accounting cycle.
> What are the steps in the closing process?
> How is the Income Summary account used? Is it a temporary or permanent account?
> What is the closing process?
> Why are financial statements prepared in a specific order? What is that order?
> What are reversing entries? Are they required by GAAP?
> What is the current ratio, and how is it calculated?
> What types of accounts are listed on the post-closing trial balance?
> If a business had a net loss for the year, what would be the closing entry to close Income Summary and transfer the net loss to the Retained Earnings account?
> What are permanent accounts? Are permanent accounts closed in the closing process?
> Indicate the effects of the following business transactions on the accounting equation of Vivian’s Online Video store. Transaction (a) is answered as a guide. a. Received cash of $10,000 from issuance of common stock. b. Earned video rental revenue on ac
> What are temporary accounts? Are temporary accounts closed in the closing process?
> If a business had a net loss for the year, where would the net loss be reported on the worksheet?
> How could a worksheet help in preparing financial statements?
> What does liquidity mean?
> Identify two liability categories on the classified balance sheet, and give examples of each category.
> Identify two asset categories on the classified balance sheet, and give examples of each category.
> What is a classified balance sheet?
> What does the balance sheet report?
> What does the statement of retained earnings show?
> What does the income statement report?
