Western Corporation made sales of $850 million during 2012. Of this amount, Western collected cash for all but $27 million. The company’s cost of goods sold was $290 million, and all other expenses for the year totaled $325 million. Also during 2012, Western paid $380 million for its inventory and $255 million for everything else. Beginning cash was $75 million. Western’s top management is interviewing you for a job and they ask two questions: a. How much was Western’s net income for 2012? b. How much was Western’s cash balance at the end of 2012? You will get the job only if you answer both questions correctly.
> FedEx Corporation provides a broad portfolio of transportation, e-commerce, and business services. FedEx reported the following information in its 2009 annual report. Note 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Proper
> This problem demonstrates the dramatic effect that consolidation accounting can have on a company’s ratios. Spindler Motor Company (Spindler) owns 100% of Spindler Motor Credit Corporation (SMCC), its financing subsidiary. Spindler&acir
> The beginning balance sheet of Evita Corporation included the following: Long-Term Investment in Reading Software (equity-method investment)....... $611,000 Evita completed the following investment transactions during the year: Mar 16 Purchased 1,600 sha
> Delaware Exchange Company completed the following long-term investment transactions during 2012: 2012 May 12 Purchased 28,000 shares, which make up 35% of the common stock of Brentwood Corporation at total cost of $390,000. Jul 9 Received annual cash div
> Target Corporation operates general merchandise and food discount stores in the United States. The company reported the following information for the three years ending January 31, 2011: Requirements 1. Compute profit margin for Target for the years en
> At the end of the year, Providence Properties’ statement of cash flows reported the following for investing activities: Requirement For each item listed, make the journal entry that placed the item on Providence’s st
> Journalize the following long-term available-for-sale security transactions of Roya Brothers Department Stores: a. Purchased 410 shares of Fordham Foods common stock at $35 per share, with the intent of holding the stock for the indefinite future b. Rece
> Infografix Corporation’s consolidated sales for 2012 were $26.6 billion, and expenses totaled $24.8 billion. Infografix operates worldwide and conducts 37% of its business outside the United States. During 2012, Infografix reported the following items in
> At the end of the year, Blue City Properties’ statement of cash flows reported the following for investment activities: Requirement For each item listed, make the journal entry that placed the item on Blue City’s sta
> Refer to Exercise 3-30A. In Exercise 3-30A The unadjusted trial balance and income statement amounts from the December 31 adjusted trial balance of Anderson Production Company follow. Requirements 1. Use the data in the partial worksheet to prepare An
> The unadjusted trial balance and income statement amounts from the December 31 adjusted trial balance of Anderson Production Company follow. Requirement Journalize the adjusting and closing entries of Anderson Production Company at December 31. There w
> Suppose Cambridge Corporation’s inventory records for a particular computer chip indicate the following at October 31: The physical count of inventory at October 31 indicates that seven units of inventory are on hand. Requirements Co
> Prepare the closing entries from the following selected accounts from the records of North Shore Corporation at December 31, 2012: How much net income did North Shore earn during 2012? Prepare a T-account for Retained Earnings to show the December 31,
> The accounting records of Fairmount Publishing Company include the following unadjusted balances at August 31: Accounts Receivable, $1,500; Supplies, $500; Salary Payable, $0; Unearned Service Revenue, $600; Service Revenue, $4,200; Salary Expense, $1,90
> Morton Motor Company faced the following situations. Journalize the adjusting entry needed at December 31, 2012, for each situation. Consider each fact separately. a. The business has interest expense of $9,600 that it must pay early in January 2013. b.
> Suppose Sparrow Sporting Goods Company reported the following data at March 31, 2012, with amounts in thousands: Use these data to prepare Sparrow Sporting Goods Company’s income statement for the year ended March 31, 2012; statement
> Bird-Watcher, Inc., experienced four situations for its supplies. Compute the amounts that have been left blank for each situation. For situations 1 and 2, journalize the needed transaction. Consider each situation separately. Situation 1 2 $ 500 $
> This exercise should be used in conjunction with Short Exercise 6-4. Jonah is a corporation subject to a 40% income tax. Compute Jonah’s income tax expense under the average, FIFO, and LIFO inventory costing methods. Which method would you select to (a)
> An accountant made the following adjustments at December 31, the end of the accounting period: a. Prepaid insurance, beginning, $400. Payments for insurance during the period, $1,200. Prepaid insurance, ending, $700. b. Interest revenue accrued, $1,600.
> Use the data in Short Exercise 6A-1 to do the following for Flexon Technologies: In Short Exercise 6A-1 Flexon Technologies began the year with inventory of $580. During the year, Flexon purchased inventory costing $1,190 and sold goods for $2,900, with
> Bantley, Inc., collects cash from customers two ways: a. Accrued revenue. Some customers pay Bantley after Bantley has performed service for the customer. During 2012, Bantley made sales of $55,000 on account and later received cash of $35,000 on account
> During 2012, Barron Network, Inc., which designs network servers, earned revenues of $840 million. Expenses totaled $500 million. Barron collected all but $26 million of the revenues and paid $580 million on its expenses. Barron’s top managers are evalua
> During 2012, Tundra Sales, Inc., earned revenues of $530,000 on account. Tundra collected $540,000 from customers during the year. Expenses totaled $440,000, and the related cash payments were $420,000. Show what Tundra would report on its 2012 income st
> During 2012, Consolidated Corporation made sales of $4,300 (assume all on account) and collected cash of $4,500 from customers. Operating expenses totaled $1,200, all paid in cash. At year end, 2012, Consolidated customers owed the company $900. Consolid
> Refer to the Sparrow Sporting Goods Company data in Short Exercise 3-17. In Short Exercise 3-17 Sparrow Sporting Goods reported the following data at March 31, 2012, with amounts adapted in thousands: Sparrow Sporting Goods Company Income Statement For
> Championship Sporting Goods started March with an inventory of 9 sets of golf clubs that cost a total of $1,350. During March, Championship purchased 27 sets of clubs for $4,320. At the end of the month, Championship had 8 sets of golf clubs on hand. The
> Bennett, the British wireless phone service provider, collects cash in advance from customers. All amounts are in millions of pounds sterling (£), the British monetary unit. Assume Bennett collected £430 in advance during 2012 and at year end still owed
> A large auto manufacturer sells large fleets of vehicles to auto rental companies, such as Budget and Hertz. Suppose Budget is negotiating with the auto manufacturer to purchase 827 vehicles. Write a short paragraph to explain to the auto manufacturer wh
> Sparrow Sporting Goods reported the following data at March 31, 2012, with amounts adapted in thousands: Sparrow Sporting Goods Company Income Statement For the Year Ended March 31, 2012 (Amounts in thousands) Net revenues …â
> As the controller of Emblem Consulting, you have hired a new employee, whom you must train. She objects to making an adjusting entry for accrued salaries at the end of the period. She reasons, “We will pay the salaries soon. Why not wait until payment to
> Assume a Whitewater outlet store began May 2012 with 48 units of inventory that cost $18 each. The sale price of these units was $73. During May, the store completed these inventory transactions: Requirements 1. Determine the store’s
> Stanley Williams has owned and operated SW Advertising, Inc., since it began 10 years ago. Recently, Williams mentioned that he would consider selling the company for the right price. Assume that you are interested in buying this business. You obtain its
> On October 1, 2012, Lou Marks opened Eagle Restaurant, Inc. Marks is now at a crossroads. The October financial statements paint a glowing picture of the business, and Marks has asked you whether he should expand the business. To expand the business, Mar
> Refer to Exercise 2-36 of Chapter 2. Start from the trial balance and the posted T-accounts that Steve Ruiz, Certified Public Accountant, Professional Corporation (P.C.), prepared for his accounting practice at January 18. A professional corporation is n
> Bart Morris Company reported these ratios at December 31, 2012 (dollar amounts in millions): Current ratio = $60 / $50 = 1.20 Debt ratio = $70 / $90 = 0.78 Bart Morris Company completed these transactions during 2013: a. Purchased equipment on account,
> Duneside Corporation began 2012 owing notes payable of $4.1 million. During 2012 Duneside borrowed $1.7 million on notes payable and paid off $1.6 million of notes payable from prior years. Interest expense for the year was $0.8 million, including $0.3 m
> Fun Toys prepares budgets to help manage the company. Fun Toys is budgeting for the fiscal year ended January 31, 2012. During the preceding year ended January 31, 2011, sales totaled $9,600 million and cost of goods sold was $6,700 million. At January 3
> The adjusted trial balances of Verne Corporation at March 31, 2012, and March 31, 2011, include these amounts (in millions): Verne completed these transactions during the year ended March 31, 2012. Collections from customers ...........................
> Refer to Exercise 3-44B. In Exercise 3-44B The unadjusted trial balance and income statement amounts from the December 31 adjusted trial balance of Durkin Production Company follow. Requirements 1. Use the data in the partial worksheet to prepare Durk
> The unadjusted trial balance and income statement amounts from the December 31 adjusted trial balance of Durkin Production Company follow. Requirement Journalize the adjusting and closing entries of Durkin Production Company at December 31. There was o
> Use the Sparrow Sporting Goods Company data in Short Exercise 3-15 to make the company’s closing entries at March 31, 2012. Then set up a T-account for Retained Earnings and post to that account. Compare Retained Earningsâ€&#
> Prepare the closing entries from the following selected accounts from the records of North Pole Corporation at December 31, 2012: How much net income did North Pole earn during 2012? Prepare a T-account for Retained Earnings to show the December 31, 20
> Terra, the British wireless phone service provider, collects cash in advance from customers. All amounts are in millions of pounds sterling (£), the British monetary unit. Assume Terra collected £380 in advance during 2012 and at year end still owed cust
> The adjusted trial balances of King Corporation at March 31, 2012, and March 31, 2011, include these amounts (in millions): King completed these transactions during the year ended March 31, 2012. Collections from customers .............................
> The notes are part of the financial statements. They give details that would clutter the statements. This case will help you learn to use a company’s inventory notes. Refer to Amazon.com, Inc.’s consolidated financial statements and related notes in Appe
> The adjusted trial balance of Honeybee Hams, Inc., follows. Requirement Prepare Honeybee Hams, Inc.’s income statement and statement of retained earnings for the year ended December 31, 2012, and its balance sheet on that date. Draw t
> The accounting records of Belmont Publishing Company include the following unadjusted balances at August 31: Accounts Receivable, $1,400; Supplies, $300; Salary Payable, $0; Unearned Service Revenue, $1,000; Service Revenue, $4,600; Salary Expense, $2,40
> Forrest Company faced the following situations. Journalize the adjusting entry needed at December 31, 2012, for each situation. Consider each fact separately. a. The business has interest expense of $9,000 that it must pay early in January 2013. b. Inter
> The adjusted trial balance of Honeyglazed Hams, Inc., follows. Requirement Prepare Honeyglazed Hams, Inc.’s income statement and statement of retained earnings for the year ended December 31, 2012, and its balance sheet on that date.
> Paradise, Inc., experienced four situations for its supplies. Compute the amounts that have been left blank for each situation. For situations 1 and 2, journalize the needed transaction. Consider each situation separately. Situation 3 4 Beginning su
> An accountant made the following adjustments at December 31, the end of the accounting period: a. Prepaid insurance, beginning, $300. Payments for insurance during the period, $900. Prepaid insurance, ending, $500. b. Interest revenue accrued, $1,300. c.
> Supply the missing amounts for each of the following companies: Requirement Prepare the income statement for Gerald Company for the year ended December 31, 2012. Use the cost-of-goods-sold model to compute cost of goods sold. Gerald’s
> Tilton & Taft, a partnership, had these inventory data: Tilton & Taft need to know the company’s gross profit percentage and rate of inventory turnover for 2012 under 1. FIFO. 2. LIFO. Which method produces a higher gross prof
> During 2012, Gibson Network, Inc., which designs network servers, earned revenues of $780 million. Expenses totaled $530 million. Gibson collected all but $25 million of the revenues and paid $560 million on its expenses. Gibson’s top managers are evalua
> During 2012, Valley Sales, Inc., earned revenues of $500,000 on account. Valley collected $510,000 from customers during the year. Expenses totaled $450,000, and the related cash payments were $410,000. Show what Valley would report on its 2012 income st
> During 2012, Orion Corporation made sales of $4,400 (assume all on account) and collected cash of $4,600 from customers. Operating expenses totaled $1,300, all paid in cash. At year end, 2012, Orion customers owed the company $700. Orion owed creditors $
> Johnston Company reported these ratios at December 31, 2012 (dollar amounts in millions): Current ratio = $50 / $40 = 1.25 Debt ratio = $40 / $70 = 0.57 Johnston Company completed these transactions during 2013: a. Purchased equipment on account, $5 b.
> Macrovision.com uses the LIFO method to account for inventory. Macrovision is having an unusually good year, with net income well above expectations. The company’s inventory costs are rising rapidly. What can Macrovision do immediately before the end of
> Refer to the data in Exercise E6-35B. Compute all ratio values to answer the following questions: â–¶ Which company has the highest, and which company has the lowest, gross profit percentage? â–¶ Which company has the high
> Jonah’s Copy Center uses laser printers. Assume Jonah started the year with 100 containers of ink (average cost of $9.50 each, FIFO cost of $8.40 each, LIFO cost of $8.10 each). During the year, Jonah purchased 700 containers of ink at $9.90 and sold 600
> Flexon Technologies began the year with inventory of $580. During the year, Flexon purchased inventory costing $1,190 and sold goods for $2,900, with all transactions on account. Flexon ended the year with inventory of $650. Journalize all the necessary
> Dove Golf Co. prepaid three years’ rent ($18,000) on January 1, 2012. At December 31, 2012, Dove prepared a trial balance and then made the necessary adjusting entry at the end of the year. Dove adjusts its accounts once each year—on December 31. What am
> Write a paragraph to explain why unearned revenues are liabilities instead of revenues. In your explanation, use the following actual example: The World Star, a national newspaper, collects cash from subscribers in advance and later delivers newspapers t
> Return to the situation in Short Exercise 3-10. Here you are accounting for the same transactions on the books of Community Bank, which lent the money to Cheap Travel. 1. Make Community Bank’s adjusting entry to accrue monthly interest revenue at October
> Cheap Travel borrowed $60,000 on October 1 by signing a note payable to Community Bank. The interest expense for each month is $250. The loan agreement requires Cheap to pay interest on December 31. 1. Make Cheap’s adjusting entry to accrue monthly inter
> During 2012, Transit Airlines paid salary expense of $42.4 million. At December 31, 2012, Transit accrued salary expense of $2.2 million. Transit then paid $2.2 million to its employees on January 3, 2013, the company’s next payday after the end of the 2
> Suppose that on January 1 Foreton Golf Company paid cash of $50,000 for computers that are expected to remain useful for five years. At the end of five years, the computers’ values are expected to be zero. 1. Make journal entries to record (a) Purchase o
> Answer the following questions about prepaid expenses: a. On October 1, Up & Down Travel prepaid $3,000 for six months’ rent. Give the adjusting entry to record rent expense at October 31. Include the date of the entry and an explanation. Then post all a
> Identify the accounting concept or principle that gives the most direction on how to account for each of the following situations: a. Salary expense of $38,000 is accrued at the end of the period to measure income properly. b. March has been a particular
> Erie Garden Supplies uses a perpetual inventory system. Erie Garden Supplies has these account balances at August 31, 2012, prior to making the year-end adjustments: A year ago, the replacement cost of ending inventory was $11,500, which exceeded the c
> Write a short paragraph to explain in your own words the concept of depreciation as used in accounting.
> Accounting records for Parkland Pastries, Inc., yield the following data for the year ended December 31, 2012 (amounts in thousands): Inventory, Dec 31, 2011.................................................................................... $ 520 Purcha
> Suppose a Robak store in Denver, Colorado, ended September 2012 with 1,000,000 units of merchandise that cost an average of $7.00 each. Suppose the store then sold 950,000 units for $9,500,000 during October. Further, assume the store made two large purc
> Arnold Financial Management believes that the biotechnology industry is a good investment and is considering investing in one of two companies. However, one company, HeartStart, Inc., uses the FIFO method of inventory, and another company, GeneTech, Inc.
> Accounting records for Total Desserts, Inc., yield the following data for the year ended December 31, 2012 (amounts in thousands): Inventory, Dec 31, 2011..................................................................................... $ 490 Purchase
> Assume a Waverly outlet store began August 2012 with 52 units of inventory that cost $13 each. The sale price of these units was $67. During August, the store completed these inventory transactions: Requirements 1. Determine the store’
> Use the data in Exercise 6A-5B. In Exercise 6A-5B Suppose Synergy Corporation’s inventory records for a particular computer chip indicate the following at December 31: The physical count of inventory at December 31 indicates that sev
> Suppose Synergy Corporation’s inventory records for a particular computer chip indicate the following at December 31: The physical count of inventory at December 31 indicates that seven units of inventory are on hand. Requirements Co
> Use the data for Donovan, Inc., in Exercise 6-29B to illustrate Donovan’s income tax advantage from using LIFO over FIFO. Sales revenue is $9,200, operating expenses are $1,800, and the income tax rate is 40%. How much in taxes would Do
> Use the data for Donovan, Inc., in Exercise 6-29B to answer the following. In Exercise 6-29B Donovan, Inc.’s inventory records for a particular development program show the following at August 31: Requirements 1. Compute cost of good
> Donovan, Inc.’s inventory records for a particular development program show the following at August 31: At August 31, nine of these programs are on hand. Journalize the following for Donovan: 1. Total August purchases in one summary e
> Accounting records for Thames Corporation yield the following data for the year ended March 31, 2012: Inventory, March 31, 2011 ........................................................................ $ 9,000 Purchases of inventory (on account)..........
> Use the data in Exercise 6A-3A. In Exercise 6A-3A Suppose Cambridge Corporation’s inventory records for a particular computer chip indicate the following at October 31: The physical count of inventory at October 31 indicates that sev
> Myrtle Bay Marine Supply reported the following comparative income statements for the years ended June 30, 2012, and 2011: Myrtle Bay’s president and shareholders are thrilled by the company’s boost in sales and net
> Z Mart, Inc., declared bankruptcy. Let’s see why. Z Mart reported these figures: Requirement Evaluate the trend of Z Mart’s results of operations during 2010 through 2012. Consider the trends of sales, gross profit,
> RK Company began September with inventory of $45,300. The business made net purchases of $33,300 and had net sales of $61,600 before a fire destroyed the company’s inventory. For the past several years, RK’s gross profit percentage has been 45%. Estimate
> Super Toys prepares budgets to help manage the company. Super Toys is budgeting for the fiscal year ended January 31, 2012. During the preceding year ended January 31, 2011, sales totaled $9,500 million and cost of goods sold was $6,600 million. At Janua
> Burner & Brett, a partnership, had the following inventory data: Burner & Brett need to know the company’s gross profit percentage and rate of inventory turnover for 2012 under 1. FIFO. 2. LIFO. Which method produces a higher
> Refer to the data in Exercise 6-22A. Compute all ratio values to answer the following questions: â–¶ Which company has the highest, and which company has the lowest, gross profit percentage? â–¶ Which company has the highe
> Supply the missing income statement amounts for each of the following companies (amounts adapted, in millions): Requirement Prepare the income statement for Baker Company for the year ended December 31, 2012. Use the cost-of-goods-sold model to compute
> Princeton Garden Supplies uses a perpetual inventory system. Princeton Garden Supplies has these account balances at October 31, 2012, prior to making the year-end adjustments: A year ago, the replacement cost of ending inventory was $13,500, which exc
> Suppose a Corse store in Kansas City, Missouri, ended May 2012 with 700,000 units of merchandise that cost an average of $6 each. Suppose the store then sold 650,000 units for $8,450,000 during June. Further, assume the store made two large purchases dur
> MusicWorld.net specializes in sound equipment. Because each inventory item is expensive, MusicWorld uses a perpetual inventory system. Company records indicate the following data for a line of speakers: Requirements 1. Determine the amounts that MusicW
> Use the data for Ontario, Inc., in Exercise 6-16A to illustrate Ontario, Inc.’s income tax advantage from using LIFO over FIFO. Sales revenue is $9,000, operating expenses are $1,400, and the income tax rate is 28%. How much in taxes wo
> Refer to the RadioShack Corporation consolidated financial statements in Appendix B at the end of this book. Show amounts in millions and round to the nearest $1 million. 1. Three important pieces of inventory information are (a) The cost of inventory on
> Suppose In Style Fashions, a specialty retailer, had these records for ladies’ evening gowns during 2012. Beginning inventory (44 @ $975)....................... $ 42,900 Purchase in February (19 @ $1,050) ...................... 19,950 Purchase in June (5
> Use the data for Ontario, Inc., in Exercise 6-16A to answer the following: In Exercise 6-16 Ontario, Inc.’s inventory records for a particular development program show the following at January 31: Requirements 1. Compute cost of good
> Ontario, Inc.’s inventory records for a particular development program show the following at January 31: At January 31, eight of these programs are on hand. Journalize the following for Ontario, Inc: 1. Total January purchases in one
> Accounting records for Dundas Corporation yield the following data for the year ended June 30, 2012: Inventory, June 30, 2011................................................................................. $10,000 Purchases of inventory (on account)....
> Determine whether each of the following actions in buying, selling, and accounting for inventories is ethical or unethical. Give your reason for each answer. 1. In applying the lower-of-cost-or-market rule to inventories, Tundra Financial Industries reco
