Question: Two Wheeler, a bike shop, opened for

> The following income statement items, arranged in alphabetical order, are taken from the records of Corbin Enterprises for the current year: Required: 1. Prepare a single-step income statement for the current year. 2. What weaknesses do you see in this

> The balance sheet of Kapinski Inc. includes the following items: Required: 1. Determine the current ratio and working capital. 2. Kapinski appears to have a positive current ratio and a large net working capital. Why would it have trouble paying bills

> The following items, in alphabetical order, are available from the records of Quinn Corporation as of December 31, 2017 and 2016: Required: 1. Calculate the following as of December 31, 2017, and December 31, 2016: a. Working capital b. Current ratio 2

> The following balance sheet items, listed in alphabetical order, are available from the records of Singer Company at December 31, 2017: Required: 1. Prepare a classified balance sheet as of December 31, 2017. 2. Compute Singer’s curre

> Roosevelt Inc., a consulting service, has a history of paying annual dividends of $1 per share. Management is trying to determine whether the company will have adequate cash on December 31, 2018, to pay a dividend if one is declared by the board of direc

> The following income statements were provided by Chisholm Company, a wholesale food distributor: Required: 1. Identify each income statement as either single- or multiple-step format. 2. Restate each item in the income statements as a percentage of sal

> As chief lending officer for a bank, you need to decide whether to make a loan to Starwood Hotels & Resorts Worldwide, Inc. The current items, listed in alphabetical order, are taken from the consolidated balance sheets of Starwood Hotels & Resor

> Taggart Corp. records adjustments each month before preparing monthly financial statements. The following selected account balances on May 31, 2017 and June 30, 2017, reflect month-end adjustments: Required: 1. The company purchased a 36-month insuranc

> Bob Reynolds operates a real estate business. A list of accounts on April 30, 2017, before any adjustments are recorded, appears as follows: Cash …………………………………………………………………………………………… $15,700 Prepaid Insurance ……………………………………………………………………………… 450 Office Sup

> Susan Spiffy, owner of Spiffy Cleaners, a drive-through dry cleaners, would like to expand her business from its current location to a chain of cleaners. Revenues at the one location have been increasing an average of 8% each quarter. Profits have been i

> The following financial statements are available for Elm Corporation for its first month of operations: Required: Using the format illustrated in Exhibit 3-1, prepare a table to summarize the transactions entered into by Elm Corporation during its fir

> Expert Consulting Services Inc. was organized on March 1 by two former college roommates. The corporation provides computer consulting services to small businesses. The following transactions occurred during the first month of operations: Required: 1.

> Just Rolling Along Inc. was organized on May 1 by two college students who recognized an opportunity to make money while spending their days at a beach along Lake Michigan. The two entrepreneurs plan to rent bicycles and in-line skates to weekend visitor

> The following events take place at Dillon’s Delivery Service: 1. Supplies are ordered from vendors who will deliver the supplies within the week. 2. Vendors deliver supplies on account, payment due in 30 days. 3. Customers’ deliveries are made, and the c

> Stegner Inc. reported net income of $130,000 for the year ended December 31, 2017. The following items were included on Stegner’s balance sheets at December 31, 2017 and 2016: Stegner uses the indirect method to prepare its statement

> Atlas Superstores occasionally finds itself with excess cash to invest and consequently entered into the following transactions during 2017: Required: Identify and analyze all transactions on the books of Atlas Superstores during 2017, including any ne

> Swartz Inc. enters into the following transactions during 2017: Required: Identify and analyze all transactions on Swartz’s records to account for its investments during 2017. July 1: Paid $10,000 to acquire on the open market $10

> Gas stations sometimes sell gasoline at a lower price to customers who pay cash than to customers who use a credit card. A local gas station owner pays 2% of the sales price to the credit card company when customers pay with a credit card. The owner pays

> You are considering making a loan to The Coca-Cola Company. The following information is from the financial statements included in Form 10-K for fiscal years 2014 and 2013 (in millions of dollars): Net operating revenues for the year ended: December 31,

> Sparkle Jewels distributes fine stones. It sells on credit to retail jewelry stores and extends terms that require the stores to pay in 60 days. For accounts that are not overdue, Sparkle has found that there is a 95% probability of collection. For accou

> Financial statements are the means by which accountants communicate to external users. Recent financial reporting scandals have focused attention on the accounting profession and its role in the preparation of these statements and the audits performed on

> At the beginning of 2017, EZ Tech Company’s Accounts Receivable balance was $140,000, and the balance in Allowance for Doubtful Accounts was $2,350. EZ Tech’s sales in 2017 were $1,050,000, 80% of which were on credit. Collections on account during the y

> Motel $49.99 has purchased a large warehouse to store all supplies used by housekeeping departments in the company’s expanding chain of motels. In the past, each motel bought supplies from local distributors and paid for the supplies from cash receipts.

> You are opening a summer business, a chain of three drive-through snow-cone stands. You have hired other college students to work and have purchased a cash register with locked-in tapes. You retain one key, and the other is available to the lead person o

> The following information is available to assist you in preparing a bank reconciliation for Calico Corners on May 31: a. The balance on the May 31 bank statement is $8,432.11. b. Not included on the bank statement is a $1,250 deposit made by Calico Corn

> Copeland Antiques reported a net loss of $33,200 for the year ended December 31, 2017. The following items were included on Copeland’s balance sheets at December 31, 2017 and 2016: Copeland uses the indirect method to prepare its stat

> You are considering an investment in the common stock of Apple Inc. The following information is from the financial statements included in Form 10-K for fiscal years 2015 and 2014 (in millions of dollars): Cost of sales for the year ended: September 26,

> The following highly condensed income statements and balance sheets are available for Budget Stores for a two-year period. (All amounts are stated in thousands of dollars.) Before releasing the 2017 annual report, Budget’s controller

> Users of financial statements rely on the information available to them to decide whether to invest in a company or lend it money. As an investor, you are comparing three companies in the same industry. The cost to purchase inventory is rising in the ind

> You are considering an investment in the common stock of Wal-Mart. The following information is from the consolidated statements of income of Wal-Mart Stores, Inc. and Subsidiaries for the years ended January 31, 2016 and 2015 and the consolidated statem

> Businesses incur various costs in selling goods and services. Each business must decide which costs are expenses of the period and which should be included in the cost of the inventory. The following table lists various types of businesses along with cer

> Lakeside Slammers Inc. is a minor league baseball organization that has just completed its first season. You and three other investors organized the corporation; each put up $10,000 in cash for shares of capital stock. Because you live out of state, you

> The following account balances are taken from the records of Chauncey Company at December 31, 2017. The Prepaid Insurance account represents the cost of a three-year policy purchased on August 1, 2017. The Rent Collected in Advance account represents the

> Palmer Industries prepares annual financial statements and adjusts its accounts only at the end of the year. The following information is available for the year ended December 31, 2017: a. Palmer purchased computer equipment two years ago for $15,000. T

> Kretz Corporation prepares monthly financial statements and therefore adjusts its accounts at the end of every month. The following information is available for March 2017: a. Kretz Corporation takes out a 90-day, 8%, $15,000 note on March 1, 2017, with

> Four Star Video has been in the video rental business for five years. The following is a list of accounts for Four Star Video at May 31, 2017. It reflects the recurring transactions for the month of May but does not reflect any month-end adjustments. Ca

> Atkins Advertising Agency began business on January 2. The transactions entered into by Atkins during its first month of operations are as follows: a. Acquired its articles of incorporation from the state and issued 100,000 shares of capital stock in ex

> Refer to the table for Beverly Entertainment Enterprises in part (1) of Problem 3-9. Problem 3-9: Four brothers organized Beverly Entertainment Enterprises on October 1. The following transactions occurred during the first month of operations: Requir

> Four brothers organized Beverly Entertainment Enterprises on October 1. The following transactions occurred during the first month of operations: Required: 1. Prepare a table to summarize the preceding transactions as they affect the accounting equatio

> Two years ago, Darlene Darby opened a delivery service. Darby reports the following accounts on her income statement: Sales ………………………………………………………………..………. $69,000 Advertising Expense ………………………………………………………. 3,500 Salaries Expense ……………………………………………………………

> Neveranerror Inc. was organized on June 2 by a group of accountants to provide accounting and tax services to small businesses. The following transactions occurred during the first month of business: Required: 1. Prepare a table to summarize the preced

> Blue Jay Delivery Service is incorporated on January 2 and enters into the following transactions during its first month of operations: Required: 1. Prepare a table to summarize the preceding transactions as they affect the accounting equation. Ignore

> Roberto is the plant superintendent of a small manufacturing company that is owned by a large corporation. The corporation has a policy that any expenditure over $1,000 must be approved by the chief financial officer in the corporate headquarters. The ap

> Many events are linked to a source document. The following is a list of events that occurred in an entity: a. Paid a one-year insurance policy. b. Paid employee payroll. c. Provided services to a customer on account. d. Identified supplies in the storero

> The following current assets are listed in a company’s general ledger. The accountant wants to place the items in order of liquidity on the balance sheet. Accounts Receivable Certificates of Deposit (six months) Investment in Stock Prepaid Rent Money Ma

> Lenox Corp. sold merchandise for $5,000 to M. Baxter on May 15, 2017, with payment due in 30 days. Subsequent to this, Baxter experienced cash-flow problems and was unable to pay its debt. On August 10, 2017, Lenox stopped trying to collect the outstandi

> At Morris Mart Inc., all sales are on account. Mary Morris-Manning is responsible for mailing invoices to customers, recording the amount billed, opening mail, and recording the payment. Mary is very devoted to the family business and never takes off mor

> A list of accounts for Maple Inc. at December 31, 2017, follows: Required: 1. Determine cost of goods sold for 2017. 2. Determine net income for 2017. 3. Prepare a balance sheet dated December 31, 2017. Accounts Receivable $ 2,359 Land $20,000 Adve

> The consolidated balance sheets of Gap Inc. included merchandise inventory in the amount of $1,873,000,000 as of January 30, 2016 (the end of fiscal year 2015) and $1,889,000,000 as of January 31, 2015 (the end of fiscal year 2014). Net sales were $15,79

> The 2015 Form 10-K of Gannett Co., Inc. (publisher of USA Today and many other newspapers) includes the following in the note that summarizes its accounting policies: Inventories Inventories, consisting principally of newsprint, printing ink and plate ma

> Following is an inventory acquisition schedule for Weaver Corp. for 2017: During the year, Weaver sold 12,500 units at $12 each. All expenses except cost of goods sold and taxes amounted to $20,000. The tax rate is 30%. Required: 1. Compute cost of go

> Oxendine Company’s inventory records for the month of November reveal the following: Inventory, November 1 ……………………………………………….. 200 units @ $18.00 November 4, purchase ………………………………………………… 250 units @ $18.50 November 7, sale ……………………………………………………….. 300 u

> You have just forwarded to your boss the monthly bank reconciliation you prepared for the company. One of the reconciling items is a customer’s NSF check in the amount of $10,000. As part of your responsibility as controller, you have drafted an adjustme

> Refer to the financial statements for Chipotle reproduced in the chapter and answer the following questions. Chipotle reproduced: 1. What was the company’s net income for 2015? 2. State Chipotle’s financial position

> Repeat Problem 5-10 using the perpetual system. Problem 5-10: Bitten Company’s inventory records show 600 units on hand on October 1 with a unit cost of $5 each. The following transactions occurred during the month of October: All e

> Bitten Company’s inventory records show 600 units on hand on October 1 with a unit cost of $5 each. The following transactions occurred during the month of October: All expenses other than cost of goods sold amount to $3,000 for the m

> Moonlight Bay Inn is incorporated on January 2, 2017, by its three owners, each of whom contributes $20,000 in cash in exchange for shares of stock in the business. In addition to the sale of stock, the following transactions are entered into during the

> Refer to the transactions for Neveranerror Inc. in Problem 3-7. Problem 3-7: Neveranerror Inc. was organized on June 2 by a group of accountants to provide accounting and tax services to small businesses. The following transactions occurred during the

> Refer to the transactions for Blue Jay Delivery Service in Problem 3-6. Problem 3-6: Blue Jay Delivery Service is incorporated on January 2 and enters into the following transactions during its first month of operations: Required: 1. Prepare journal

> Malcolm Inc. was incorporated on January 1 with the issuance of capital stock in return for $90,000 of cash contributed by the owners. The only other transaction entered into prior to beginning operations was the issuance of a $75,300 note payable in exc

> Refer to the transactions for Atkins Advertising Agency in Problem 3-11. Problem 3-11: Atkins Advertising Agency began business on January 2. The transactions entered into by Atkins during its first month of operations are as follows: a. Acquired its

> Lori Matlock operates a graphic arts business. A list of accounts on June 30, 2017, before recording any adjustments, appears as follows: Cash ……………………………………………………………………………………….... $ 7,000 Prepaid Rent …………………………………………………………………………….... 18,000 Supplies …

> The following financial statements are available for Oak Corporation for its first month of operations: Required: Describe as many transactions as you can that were entered into by Oak Corporation during the first month of business. Oak Coporation

> Dynamic Services Inc. was organized on March 1 by two former college roommates. The corporation will provide computer tax services to small businesses. The following transactions occurred during the first month of operations: Required: 1. Prepare a ta

> The following information is available from the financial statements included in Form 10-K for fiscal years 2014 and 2013 for Under Armour, Inc. and Columbia Sportswear Company (in thousands of dollars): Required: 1. Calculate the accounts receivable t

> Beach way Enterprises was organized on June 1 by two college students who recognized an opportunity to make money while spending their days at a beach in Florida. The two entrepreneurs plan to rent beach umbrellas. The following transactions occurred dur

> The following events take place at Anaconda Accountants Inc.: 1. Supplies are ordered from vendors, who will deliver the supplies within the week. 2. Vendors deliver supplies on account, payment due in 30 days. 3. New computer system is ordered. 4. Old c

> St. Charles Antique Market reported a net loss of $6,000 for the year ended December 31, 2017. The following items were included on St. Charles Antique Market’s balance sheets at December 31, 2017 and 2016: St. Charles Antique Market

> Trendy Supercenter occasionally finds itself with excess cash to invest and consequently entered into the following transactions during 2017: Required: Identify and analyze all transactions on the books of Trendy Supercenter during 2017, including any

> Vermont Corp. enters into the following transactions during 2017: Required: Identify and analyze all transactions on Vermont’s records to account for its investments during 2017. July 1: Paid $10,000 to acquire on the open market

> A local fast-food store is considering accepting major credit cards in its outlets. Current annual sales are $800,000 per outlet. The company can purchase the equipment needed to handle credit cards and have an additional phone line installed in each out

> You are considering making a loan to The Hershey Company. The following information is from the financial statements included in Form 10-K for fiscal years 2014 and 2013 (in thousands of dollars): Net sales for the year ended: December 31, 2014 ……………………

> Rough Stuff is a distributor of large rocks. It sells on credit to commercial landscaping companies and extends terms that require customers to pay in 60 days. For accounts that are not overdue, Rough Stuff has found that there is a 90% probability of co

> At the beginning of 2017, Miyazaki Company’s Accounts Receivable balance was $105,000, and the balance in Allowance for Doubtful Accounts was $1,950. Miyazaki’s sales in 2017 were $787,500, 80% of which were on credit. Collections on account during the y

> Tiger’s Group is a newly formed company that produces and sells children’s movies about an imaginary character. The movies are in such great demand that they are shipped to retail outlets as soon as they are produced. The company must pay a royalty to se

> The following items appeared in the Investing Activities section of Apple Inc.’s statement of cash flows included in Form 10-K for the year ended September 26, 2015. (All amounts are in millions of dollars.) Required: 1. What amount d

> The loan department in a bank is subject to regulation. Internal auditors work for the bank to ensure that the loan department complies with requirements. The internal auditors must verify that each car loan file has a note signed by the maker, verificat

> The following information is available to assist you in preparing a bank reconciliation for Karen’s Catering on March 31: a. The balance on the March 31 bank statement is $6,506.10. b. Not included on the bank statement is a $423 depos

> Carpetland City reported net income of $78,500 for the year ended December 31, 2017. The following items were included on Carpetland’s balance sheet at December 31, 2017 and 2016: Carpetland uses the indirect method to prepare its sta

> You are considering an investment in the common stock of Wal-Mart. The following information is from the financial statements of Wal-Mart Stores, Inc. and Subsidiaries included in Form 10-K for fiscal years 2016 and 2015 (in millions of dollars): Cost o

> The following condensed income statements and balance sheets are available for Planter Stores for a two-year period. (All amounts are stated in thousands of dollars.) Before releasing the 2017 annual report, Planter’s controller lear

> Three large mass merchandisers use the following methods to value ending inventory: Company X—weighted average cost Company Y—first-in, first-out (FIFO) Company Z—last-in, first-out (LIFO) The cost of inventory has steadily increased over the past ten

> You are considering an investment in the common stock of Coca-Cola. The following information is from the consolidated statements of income of The Coca-Cola Company and Subsidiaries for the years ended December 31, 2015 and 2014 and for its competitor Pe

> Sound Traxs Inc. sells and rents DVDs to retail customers. The accountant is aware that at the end of the year, she must account for inventory, but is unsure what DVDs are considered inventory and how to value them. DVDs purchased by the company are plac

> The following account balances are taken from the records of Laugherty Inc. at December 31, 2017. The Supplies account represents the cost of supplies on hand at the beginning of the year plus all purchases. A physical count on December 31, 2017, shows o

> Ogonquit Enterprises prepares annual financial statements and adjusts its accounts only at the end of the year. The following information is available for the year ended December 31, 2017: a. Ogonquit purchased office furniture last year for $25,000. Th

> The following current asset appears on the balance sheet in 3M Company’s Form 10-K for the year ended December 31, 2014 (amounts in millions of dollars): Required: 1. What is the balance in 3M Company’s Allowance for

> Flood Relief Inc. prepares monthly financial statements and therefore adjusts its accounts at the end of every month. The following information is available for June 2017: a. Flood received a $10,000, 4%, two-year note receivable from a customer for serv

> Lewis and Associates has been in the termite inspection and treatment business for five years. The following is a list of accounts for Lewis on June 30, 2017. It reflects the recurring transactions for the month of June but does not reflect any month-end

> Zola Corporation records adjustments each month before preparing monthly financial statements. The following selected account balances reflect the month-end adjustments. Required: 1. The company paid for a six-month lease on April 1, 2017. Identify and

> Two years ago, Sue Stern opened an audio book rental shop. Sue reports the following accounts on her income statement: Sales ……………………………………………………………………………….… $84,000 Advertising Expense ……………………………………………………………… 10,500 Salaries Expense ………………………………………………

> Krittersbegone Inc. was organized on July 1 by a group of technicians to provide termite inspections and treatment to homeowners and small businesses. The following transactions occurred during the first month of business: Required: 1. Prepare a table

> Overnight Delivery Inc. is incorporated on February 1 and enters into the following transactions during its first month of operations: Required: 1. Prepare a table to summarize the preceding transactions as they affect the accounting equation. Use the

> Many events are linked to a source document. The following is a list of events that occurred in an entity: a. Paid a security deposit and six months’ rent on a building. b. Hired three employees and agreed to pay them $400 per week. c. Provided services

> The following current assets are listed in a company’s general ledger: Required: 1. Which items are cash equivalents? 2. Explain where items that are not cash equivalents should be classified on the balance sheet. 3. What are the amou

> Tuscon Inc. sold merchandise for $6,000 to P. Paxton on July 31, 2017, with payment due in 30 days. Subsequent to this, Paxton experienced cash-flow problems and was unable to pay its debt. On December 24, 2017, Tuscon stopped trying to collect the outst

> Abbott Inc. is expanding and needs to hire more personnel in the accounting office. Barbara Barker, the chief accounting clerk, knew that her cousin Cheryl was looking for a job. Barbara and Cheryl are also roommates. Barbara offered Cheryl a job as her

> IBM’s Form 10-K for the year ended December 31, 2015, includes the following section from its Report of Management found on page 74: Management Responsibility for Financial Information Responsibility for the integrity and objectivity of the financial inf

> A list of accounts for Lloyd Inc. at December 31, 2017, follows: Required: 1. Determine cost of goods sold for 2017. 2. Determine net income for 2017. 3. Prepare a balance sheet dated December 31, 2017. Accounts Receivable $56,359 Net purchases $ 6

> The following information was summarized from the consolidated balance sheets of Walgreens Boots Alliance, Inc. and Subsidiaries (the company created with the combination of Walgreens and Boots Alliance) as of August 31, 2015 and 2014 and the consolidate