Valentine Investigations has the following information for its cash account: Balance, 1/31.............................................................. $ 7,444 Deposits during February......................................... 106,780 Checks written during February............................... 102,341 Valentine’s bank statement for February contained the following information: Balance per bank, 1/31............................................... $ 8,910 Add: February deposits.............................................. 104,950 $ 113,860 Less: Checks paid in February............................................. $(101,400) Bank service charge..................................................... (50) Debit memo (electric bill)........................................... (800) (102,250) Balance per bank, 2/28............................................... $ 11,610 A comparison of company records with the bank statement provided the following data: At 1/31 At 2/28 Deposits in transit $2,750 $4,580 Outstanding checks 4,216 5,157 Required: 1. Prepare a bank reconciliation as of February 28. 2. Prepare adjusting entries for Valentine based on the information developed in the bank reconciliation. 3. What is the amount of cash that should be reported on the February 28 balance sheet?
> When should the net method be used to record sales revenue? a. Never—the gross method should always be used. b. When the discount terms are favorable to the customer. c. When the customer does not pay within the discount period. d. When the customer is e
> On August 31, 2019, Montana Corporation signed a 4-year contract to provide services for Minefield Company at $30,000 per year. Minefield will pay for each year of services on the first day of each service year, starting with September 1, 2019. Using the
> What does the phrase, ‘‘Revenue is recognized at the point of sale’’ mean? a. Revenue is recorded in the accounting records when the cash is received from a customer and reported on the income statement when sold to the customer. b. Revenue is recorded i
> When is revenue from the sale of merchandise normally recognized? a. When the customer takes possession of the merchandise, if sold for cash, or when payment is received, if sold on credit b. When the customer pays for the merchandise c. Either on the da
> H&R Wholesalers is a retailer providing low cost, bulk items to small companies. Companies must pay an annual membership fee of $100 to access H&R’s warehouses. H&R received yearly membership fees from 420 companies on August 1, 2019. Required: At Decem
> Arrow Products is a mail-order computer software sales outlet. Most of Arrow’s customers call on its toll-free phone line and order software, paying with a credit card. Required: Explain why the shipping and billing documents are important internal cont
> Anderson Lawn Service provides mowing, weed control, and pest management services for a flat fee of $300 per lawn per month. During November, Anderson collected $9,900 in cash from customers, which included $1,200 for lawn care provided in October. At th
> Volume Electronics sold a television to Sarah Merrifield on December 15, 2019. Sarah paid $100 at the time of the purchase and agreed to pay $100 each month for 5 months beginning January 15, 2020. Required: Determine in what month or months revenue fro
> Basque Inc. maintains a petty cash fund with a balance of $800. On December 31, Basque’s petty cash account has a balance of $60. Basque replenishes the petty cash account, as it does at the end of every month, but also decides to increase the fund balan
> Wallace Motors buys and sells used cars. Wallace made the following sales during January and February: a. Three cars were sold to Russell Taxi for a total of $75,000; the cars were delivered to Russell on January 18. Russell paid Wallace $20,000 on Janua
> The following information was taken from Logs den Manufacturing’s trial balances as of December 31, 2018, and December 31, 2019. Required: 1. Calculate the gross profit margin and operating margin percentage for 2019. (Note: Round answe
> The following information was taken from Nash Inc.’s trial balances as of December 31, 2018, and December 31, 2019. Required: 1. Calculate the net profit margin and accounts receivable turnover for 2019. (Note: Round answers to two deci
> Marydale Products permits its customers to defer payment by giving personal notes instead of cash. All the notes bear interest and require the customer to pay the entire note in a single payment 6 months after issuance. Consider the following transaction
> On November 30, 2019, Tucker Products performed computer programming services for Thomas Inc. in exchange for a 5-month, $125,000, 9% note receivable. Thomas paid Tucker the full amount of interest and principal on April 30, 2020. Required: Prepare the
> The new bookkeeper at Karlin Construction Company was asked to write off two accounts totaling $1,710 that had been determined to be uncollectible. Accordingly, he debited Accounts Receivable for $1,710 and credited Bad Debt Expense for the same amount.
> Ramsden Inc. provided consulting services with a gross price of $25,000 and terms of 2/10, n/30. Required: 1. Prepare the necessary journal entries to record the sale under the gross method. 2. Prepare the necessary journal entries to record collection
> Mallard Products had a balance of $350 in cash in its petty cash fund at the beginning of November. The following transactions took place in November: a. On November 1, the custodian paid $72 out of petty cash for new pens with Mallard’s newly designed l
> The cash account of Dixon Products reveals the following information: The bank statement for May contains the following information: Bank balance, 4/30................................................... $ 11,750 Add: Deposits during May.................
> Raymond Corporation received the following bank statement for the month of October: *NSF check **Debit memo (Rent Expense) ***Service charge The cash records of Raymond Corporation provide the following information: The items on the bank statement are co
> Shortly after July 31, Morse Corporation received a bank statement containing the following information: *NSF check **Bank service charge July cash transactions and balances on Morse’s records are shown in the following T-account: Requ
> After comparing cash register tapes with inventory records, the accountant for Benning Convenience Stores is concerned that someone at one of the stores is not recording some of that store’s cash sales and is stealing the cash from the unreported sales.
> Lee and Kim Cooper are planning to open and operate a clothing boutique in a newly developed subdivision. Lee and Kim are concerned that employees may try to pocket some of the cash collected from customers. Required: Identify some internal control proc
> Describe the potential sources of difference between a cash account and its associated bank statement balance.
> 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
> What is the primary role of internal controls in managing a business? a. To prevent cash from being stolen b. To ensure that the financial statements are presented in such a manner as to provide relevant and reliable information for financial statement u
> Which one of the following statements is true? a. Sound internal control practice dictates that cash disbursements should be made by check, unless the disbursement is very small. b. Petty cash can be substituted for a checking account to expedite the pay
> Cash management principles do not include a. earning the greatest return possible on excess cash. b. paying suppliers promptly. c. speeding up collection from customers. d. delaying payment of suppliers.
> Effective cash management and control includes all of the following except a. the use of a petty cash fund. b. bank reconciliations. c. purchase of stocks and bonds. d. short-term investments of excess cash.
> High level cash management strategies include a. bank reconciliations b. cash over and short c. petty cash d. delaying payment for suppliers
> The operating cycle is best described as the time between a. production and sale of inventory. b. the sale of inventory and collection of receivables. c. the formation of the company and the start of operations. d. purchase of goods for resale and collec
> Which one of the following is not a cash equivalent? a. 180-day note issued by a local or state government b. 90-day U.S. Treasury bill c. 60-day corporate commercial paper d. 30-day certificate of deposit
> Which one of the following would not appear on a bank statement for a checking account? a. Deposits b. Interest earned c. Service charges d. Outstanding checks
> Deposits made by a company but not yet reflected in a bank statement are called a. deposits in transit. b. debit memoranda. c. credit memoranda. d. None of the above.
> Describe two advantages of performing reconciliations of the cash account to the balances on the bank statements.
> Allowing only certain employees to order goods and services for the company is an example of what internal control procedure? a. Adequate documents and records b. Clearly defined authority and responsibility c. Safeguarding of assets and records d. Check
> Which of the following is not generally an internal control activity? a. Establishing clear lines of authority to carry out specific tasks b. Physically counting inventory in a perpetual inventory system c. Reducing the cost of hiring seasonal employees
> The internal audit function is part of what element of the internal control system? a. Control environment b. Monitoring c. Risk assessment d. Control activities
> Which of the following is not one of the five categories of control activities? a. Checks on recorded amounts b. Defalcation and financial reporting c. Clearly defined authority and responsibility d. Segregation of duties
> Which of the following is not one of the five components of internal control? a. Analysis of control procedures b. Information and communication c. Risk assessment d. Control environment
> Which of the following is not one of the three areas for which internal control systems are intended to provide reasonable assurance? a. Reliability of financial reporting b. Compliance with applicable laws and regulations c. Effectiveness and efficiency
> a. Dither and Sly are attorneys-at-law who specialize in federal income tax law. They complete their typical case in 6 months or less and collect from the typical client within 1 additional month. b. Johnston’s Market specializes in fresh meat and fish.
> A list of businesses is presented below: Required: 1. Match each business with a description of the operating cycle for that business. 2. How does a longer operating cycle (such as Description c or d) change a company’s financing needs
> Business activity is often described as being cyclical in nature. Required: Describe the cyclical nature of business activity.
> The office manager for Stony Company had accumulated the following information at the end of a recent year: Required: Calculate the total cash amount Stony will report on its balance sheet. Item Amount Accounts receivable Change for cash registers (c
> Why is it important to segregate the duties for handling cash from the duties for keeping the accounting records for cash?
> Brown Industries has the following items: Currency................................................................................................ $15,500 Customer checks that have not been deposited.................................... 675 Cash in savin
> During March, Anderson Company engaged in the following transactions involving its petty cash fund: a. On March 1, Anderson Company established the petty cash fund by issuing a check for $1,500 to the fund custodian. b. On March 4, the custodian paid $85
> Hawk Enterprises identified the following items on its January reconciliation that may require adjusting entries: a. A deposit of $1,190 was recorded in Hawk’s accounting records, but not on the January 31 bank statement. b. A check for $3,371 was outsta
> Bank Reconciliation Conway Company reported the following information: Cash balance on balance sheet (12/31)..................................... $22,066 Pre-reconciliation cash account balance (12/31)...................... 23,916 Bank statement (12/31)
> The cash account for Pitt Corporation contains the following information for June: Cash balance, 5/31...................................................... $18,130 Cash received during June.......................................... 42,650 $60,780
> Johnson Corporation’s bank statement for October reports an ending balance of $22,381, whereas Johnson’s cash account shows a balance of $22,025 on October 31. The following additional information is available: a. A $855 deposit made on October 31 was no
> Miller Enterprises deposits the cash received during each day at the end of the day. Miller deposited $48,287 on October 3 and $50,116 on October 4. Cash register records and other documents supporting the deposits are summarized as follows: Required: 1.
> Hannah Thatcher, a longtime employee of a local shoe store, is responsible for maintaining the company’s cash records and for opening the daily mail, through which the company receives about 25% of its daily cash receipts. Virtually all cash received by
> Required: Match each of the control procedures listed below with the most closely related control procedures type. Your answer should pair each of the numbers 1 through 10 with the appropriate letter. Control Procedure Types a. Adequate documents and rec
> Why does a company give particular attention to internal controls for cash?
> Required: A list of terms and a list of definitions and examples are presented below. Make a list numbered 1 through 7 and match the letter of the most directly related definition or example with the number of each term. Definition or Example Term 1.
> Required: A list of terms and a list of definitions and examples are presented below. Make a list numbered 1 through 5 and match the letter of the most directly related definition or example with the number of each term. Definition or Example Term 1
> What is the operating cycle?
> Why do companies invest their cash in short-term investments?
> What are cash equivalents?
> Why do most companies have petty cash funds?
> Why do companies hold short-term investments?
> Describe the basic cash management principles.
> Describe how cash over and short can be used for internal control purposes.
> Over the next 2 months, Front Row Entertainment continued to enjoy success in signing artists and promoting their events. However, the increased business has put considerable stress on keeping timely and up-to-date financial records. In particular, both
> How do control activities relate to the accounting system?
> What is the purpose of an internal control system?
> Would you be willing to participate in an ethnographic research study within your own home? Why or why not?
> Explain decoy pricing. Is decoy pricing ethical?
> Divide the following list of topics among your team and ask each person to be responsible for developing a set of questions to ask during the interview to learn about the company’s program: • What customer segments the company targets. • How it determine
> You work as a marketer for a large chain of upscale boutique-like stores that sells all-natural and other fresh beauty products. Your research tells you that the market won’t tolerate a price increase, so to save money during tough times you have decided
> Select a recently successful product that you believe is innovative and do some research on how the product was introduced. Using the adopter categories in the chapter, identify adopters of the product that you consider to be innovators and provide evide
> Many firms wish to market their products to consumers in bottom of the pyramid countries. Being successful now will create consumer familiarity with the brand establishing a presence in the countries for the future when the economy of the countries impro
> In this chapter, we talked about how airlines use yield management pricing to ensure that every seat is filled on every flight, thus maximizing profits. Go to the websites of at least two different airlines. Check the prices of a flight for each airline
> Assume that you have been hired as the assistant manager of a local store that sells fresh fruits and vegetables. As you look over the store, you notice that there are two different displays of tomatoes. In one display, the tomatoes are priced at $2.39 p
> What is the difference between the core product, the actual product, and the augmented product?
> It is not necessarily true that all new products benefit consumers or society. What are some new products that have made our lives better? What are some new products that have actually been harmful to consumers or to society? Should there be a way to mon
> In this chapter, we explained that knockoffs are slightly modified copies of original product designs. Should knockoffs be illegal? Who is hurt by knockoffs? Is the marketing of knockoffs good or bad for consumers in the short run? Or in the long run?
> Consider the differences in marketing to consumer markets versus business markets. Which aspects of the processes of product adoption and diffusion apply to both markets? Which aspects are unique to one or the other? Provide evidence of your findings.
> Patent trolling is the practice of acquiring patents with the sole purpose of making money off of them either by suing those who infringe on the patent or by licensing the patent. What do you think of the practice of patent trolling? What effect does pat
> Explain two-part pricing, payment pricing, price bundling, captive pricing, and distribution-based pricing tactics.
> For each of the following products, determine at least three different prices that might be charged. Then survey each of the individuals within your group to find out how much of each product they would buy at each price point for each of the produc
> If a company knows that a snack or beverage is typically consumed in a single sitting (such as a bottle of soda or a bag of chips), is it ethical for that company to include on the product’s nutrition label values based on the identification of multiple
> Select one of the product categories below. Identify two different firms that offer consumers a line of product offerings in the category. For example, Dell, HP, and Apple each market a line of laptop computers, while Hoover, Dyson, and Bissell offer lin
> What are the functions of packaging? What are some important elements of effective package design?
> What does it mean to license a brand? What is cobranding?
> What is a brand extension? What is sub-branding?
> What is a brand? What are the characteristics of a good brand name? How do firms protect their brands?
> What is dynamic pricing? What is discriminatory pricing? What is the difference between the two?
> Select a company and identify an existing product sold by that company that could potentially be further developed to meet new consumer needs. Using the selected product, develop an approach to engage consumers in the process of value co-creation with th
> List and explain the categories of adopters.
> You are part of an up-and-coming coffeehouse chain inthe United States, and you know that you need to participate in competitive intelligence activities to learn more about your competitors. Using the Internet, collect at least five distinct pieces of in
> Briefly explain what marketing is.
> In this chapter, we talked about the core product, the actual product, and the augmented product. Does this mean that marketers are simply trying to make products that are really the same seem different? When marketers understand these three layers of th
> How are products managed during the different stages of the product life cycle?
> Explain the product life cycle concept. What are the stages of the product life cycle?
> Why is quality such an important product strategy objective? What are the dimensions of product quality? How has e-commerce affected the need for quality product objectives?
> What are some reasons a firm might determine it should expand a product line? What are some reasons for contracting a product line? Why do many firms have a product mix strategy?
> Describe some of the different ways firms organize the marketing function to manage existing products. What are the ways firms organize for the development of new products?
> What should marketers know about package labeling?
