Write the journal entry on the maturity date (February 1, 2013). On August 1, 2012, Azores, Inc., sold equipment and accepted a six-month, 11%, $30,000 notereceivable. Azores’ year-end is December 31.
> Roper stores use point-of-sale terminals as cash registers. The register shows the amount of each sale, the cashreceived from the customer, and any change returned to the customer. The machine also produces a customer receipt but keeps no record of trans
> Gretchen Cilla sells memberships to the Denver Symphony Association in Denver, Colorado. The Symphony’s procedure requires Cilla to write a patron receipt for all memberships sold. The receipt forms are prenumbered. Cilla is having personal financial pro
> Brenda Small manages Harris Manufacturing. Small fears that a trusted employee has been stealing from the company. This employee receives cash from clients and also prepares the monthly bank reconciliation. To check up on the employee, Small prepares her
> After preparing Rampart Corp.’s bank reconciliation in Short Exercise 4-8 , make the company’s journal entries for transactions that arise from the bank reconciliation. Date each transaction October 31, and include an explanation with each entry.
> The Cash account of Rampart Corp. reported a balance of $2,540 at October 31. Included were outstanding checks totaling $900 and an October 31 deposit of $400 that did not appear on the bank statement. The bank statement, which came from Tri Bank, listed
> Peacock Company requires that all documents supporting a check be cancelled by punching a hole through the packet. Why is this practice required? What might happen if it were not?
> Cash may be a small item on the financial statements. Nevertheless, internal control over cash is very important. Why is this true?
> How do computer viruses, Trojan Horses, and phishing expeditions work? How can these e-commerce pitfalls hurt you? Be specific.
> Identify the other control procedures usually found in a company’s system of internal control besides separation of duties, and tell why each is important.
> Explain why separation of duties is often described as the cornerstone of internal control for safeguarding assets. Describe what can happen if the same person has custody of an asset and also accounts for the asset.
> List the components of internal control. Briefly describe each component.
> Irish Imports is an importer of silver, brass, and furniture items from Ireland. Kathleen O’Shea is the general manager of Irish Imports. O’Shea employs two other people in the business. Molly Fitzpatrick serves as the buyer for Irish Imports. In her wor
> Refer to the facts in S5-5. Suppose that, when store personnel uncrate the shipment of merchandise, they find that ashipment of clothing worth $5,000 is defective. They notify Big Sky of the problem and return the shipment to the company. What entry will
> Define “fraud.” List and briefly discuss the three major components of the “fraud triangle.”
> Sunrise Bank recently appointed the accounting firm of Smith, Godfroy, and Hannaford as the bank’s auditor. Sunrise quickly became one of Smith, Godfroy, and Hannaford’s largest clients. Subject to banking regulations, Sunrise must provide for any expect
> Barry Galvin is executive vice president of Community Bank. Active in community affairs, Galvin serves on the board of directors of The Salvation Army. The Salvation Army isexpanding rapidly and is considering relocating. At a recent meeting, The Salvati
> A friend named Jay Barlow has asked what effect certain transactions will have on his company.Time is short, so you cannot apply the detailed procedures of journalizing and posting. Instead,you must analyze the transactions without the use of a journal.
> Refer to the RadioShack Corporation financial statements in Appendix B at the end of the book. Suppose you are an investor consideringbuying RadioShack Corporation common stock. The following questions are important: Show amounts in millions. 1. Explain
> Refer to Amazon.com, Inc.’s financial statements in Appendix A at the end of the book. Assume that Amazon.com completedthe following selected transactions during 2010. a. Made company sales (revenue) of $34,204 million, all on account (debit accountsrece
> Sophia Loren opened anItalian restaurant. Business has been good, and Loren is considering expanding the restaurant.Loren, who knows little accounting, produced the following financial statements for Little Italy,Inc., at December 31, 2012, the end of th
> This case is based on RadioShack Corporation’s consolidated balance sheets, consolidated statements of income, and Note 2 of its financial statements (Significant Accounting Policies) in Appendix B at the end of this book. 1. Describe RadioShack Corporat
> Refer to Amazon.com, Inc.’s Consolidated financial statements in Appendix A at the end of this book. 1. Examine the account “marketable securities” in the consolidated balance sheet. a. What does this account consist of? b. Why do you think the company h
> Scrumptious Crumpets Bakery is budgeting cash for 2012. The cash balance at December 31, 2011, was $14,000. Scrumptious Crumpets Bakery budgets 2012 cash receipts at $81,000. Estimated cash payments include $44,000 for inventory, $34,000 for operating ex
> A fire during 2012 destroyed most of the accounting records of Clearview Cablevision, Inc. The only accounting data for 2012 that Clearview can come up with are the following balances at December 31, 2012. The general manager also knows that bad-debt exp
> Refer to the facts in S5-5. The sales terms on the invoice are 2/10, net 30. What does this mean? What is Sports R Us’ potential savings, if any? How much time does the company have to take advantage of these savings? In S5-5 On December 23, 2012, Big S
> Suppose you work in the loan department of Superior Bank. Dean Young, owner of Dean Young Beauty Aids, has come to you seeking a loan for $500,000 to expand operations. Young proposes to use accounts receivable as collateral for the loan and has provided
> Suppose Overpriced, Inc., reported net receivables of $2,582 million and $2,269 million at January 31, 2013, and 2012, after subtracting allowances of $71 million and $67 million at these respective dates. Overpriced earned total revenue of $26,667 milli
> Retro Shirt Company sells on credit and manages its own receivables. Average experience for the past three years has been as follows: Jed Rivers, the owner, is considering whether to accept bankcards (VISA, MasterCard). Rivers expects total sales to in
> The comparative financial statements of Lakeland Pools, Inc., for 2013,2012, and 2011 included the following select data: Requirements 1. Compute these ratios for 2013 and 2012: a. Current ratio b. Quick (acid-test) ratio c. Days’ sal
> Easy Nutrition completed thefollowing selected transactions: 2012 Oct 31 Sold goods to Basic Foods, receiving a $38,000, three-month, 5.00% note. Dec 31 Made an adjusting entry to accrue interest on the Basic Foods note. 2013 Jan 31 Collected the Basic F
> Assume Cline & Nichols, the accounting firm, advises Derbyshire Seafood that its financial statement must be changed to conform to GAAP. AtDecember 31, 2012, Derbyshire’s accounts include the following: Cash...............................................
> The September 30,2013, records of Media Communications include these accounts: Accounts Receivable.................................... $242,000 Allowance for Doubtful Accounts .................. (8,300) During the year, Media Communications estimates do
> This problem takes you through the accounting forsales, receivables, and uncollectibles for Ship Fast Corp, the overnight shipper. By selling on credit,the company cannot expect to collect 100% of its accounts receivable. At July 31, 2012, and 2013,respe
> Before paying an invoice for goods received on account, the controller or treasurer should ensure that a. The company is paying for the goods it ordered. b. The company is paying for the goods it actually received. c. The company has not already paid thi
> Mini ComputerSolutions makes all sales on account, so virtually all cash receipts arrive in the mail. Luke Hill,the company president, has just returned from a trade association meeting with new ideas for thebusiness. Among other things, Hill plans to in
> During the fourthquarter of 2012, California, Inc., generated excess cash, which the company invested in tradingsecurities, as follows: 2012 Nov 17 Purchased 1,200 common shares as an investment in trading securities,paying $11 per share. Dec 19 Received
> On December 23, 2012, Big Sky Sports Manufacturing sells a truckload of sporting goods to the Sports R Us store in Amarillo, Texas. The terms of the sale are FOB destination. The truck runs into bad weather on the way to Amarillo and doesn’t arrive until
> The comparative financial statements of True Beauty Pools, Inc., for 2013,2012, and 2011 included the following select data: Requirements 1. Compute these ratios for 2013 and 2012: a. Current ratio b. Quick (acid-test) ratio c. Days’
> Yummy Foods completed thefollowing selected transactions. 2012 Oct 31 Sold goods to Bob’s Foods, receiving a $36,000, three-month, 6% note. Dec 31 Made an adjusting entry to accrue interest on the Bob’s Foods note. 2013 Jan 31 Collected the Bob’s Foods n
> Assume Adams & Murray, theaccounting firm, advises Pappadeaux Seafood that its financial statements must be changed toconform to GAAP. At December 31, 2012, Pappadeaux’s accounts include the following: Cash................................................
> The September 30,2013, records of Up-To-Date Communications include these accounts: Accounts Receivable.................................... $243,000 Allowance for Doubtful Accounts................... (8,100) During the year, Up-To-Date Communications es
> This problem takes you through the accounting forsales, receivables, and uncollectibles for Quick Mail Corp., the overnight shipper. By selling on credit,the company cannot expect to collect 100% of its accounts receivable. At July 31, 2012, and 2013,res
> Lance Products,Inc., makes all sales on account. Selena Camp, accountant for the company, receives and opensincoming mail. Company procedure requires Camp to separate customer checks from the remittanceslips, which list the amounts that Camp posts as cre
> During the fourth quarter of2012, Spring, Inc., generated excess cash, which the company invested in trading securities as follows: 2012 Nov 16Purchased 1,300 common shares as an investment in trading securities,paying $8 per share. Dec 16 Received cash
> In a bank reconciliation, interest revenue earned on your bank balance is a. Deducted from the book balance. b. Added to the bank balance. c. Added to the book balance. d. Deducted from the bank balance.
> A company sells on credit terms of “2/10, n/30” and has days’ sales in account receivableof 30 days. Its days’ sales in receivables is a. Too low. b. Too high. c. About right. d. Not able to be evaluated from the data given.
> A company with net sales of $1,095,000, beginning net receivables of $90,000, and endingnet receivables of $114,000 has days’ sales in accounts receivable of a. 34 days. b. 37 days. c. 31 days. d. 40 days.
> Which of the following is included in the calculation of the quick (acid-test) ratio? a. Prepaid expenses and cash b. Cash and accounts receivable c. Inventory and short-term investments d. Inventory and prepaid expenses
> Sharon Peel keeps the Accounts Receivable T-account of Ace & Pool, a partnership. What duty will a good internal control system withhold from Peel? Why?
> Which of the following accounts will Azores credit in the journal entry at maturity onFebruary 1, 2013, assuming collection in full? a. Interest Receivable b. Interest Payable c. Note Payable d. Cash On August 1, 2012, Azores, Inc., sold equipment and a
> How much interest does Azores, Inc., expect to collect on the maturity date(February 1, 2013)? a. $1,650 b. $1,375 c. $3,300 d. $1,100 On August 1, 2012, Azores, Inc., sold equipment and accepted a six-month, 11%, $30,000 notereceivable. Azores’ year-en
> If Azores, Inc., fails to make an adjusting entry for the accrued interest, a. Net income will be understated and liabilities will be overstated. b. Net income will be understated and assets will be understated. c. Net income will be overstated and asset
> How much interest revenue should Azores accrue on December 31, 2012? a. $1,650 b. $1,375 c. $3,300 d. $1,100 On August 1, 2012, Azores, Inc., sold equipment and accepted a six-month, 11%, $30,000 notereceivable. Azores’ year-end is December 31.
> Refer to Quiz questions 5-50 and 5-51. The following year, Linus Company wrote off$2,000 of old receivables as uncollectible. What is the balance in the Allowance account now? In Quiz questions 5-50 and 5-51 Linus Company uses the percent-of-sales metho
> If a bank reconciliation included a deposit in transit of $790, the entry to record this reconciling item would include a a. Credit to prepaid insurance for $790. b. Debit to cash for $790. c. Credit to cash for $790. d. No entry is required.
> Refer to question 5-50. The balance of Allowance for Doubtful Accounts, after adjustment,will be a. $5,000. b. $2,000. c. $1,000. d. $1,500. In question 5-50 Linus Company uses the percent-of-sales method to estimate uncollectibles. Net creditsales for
> Linus Company uses the percent-of-sales method to estimate uncollectibles. Net creditsales for the current year amount to $100,000, and management estimates 2% will be uncollectible.Allowance for doubtful accounts prior to adjustment has a credit balance
> Refer to Question 5-48. The net receivables on the balance sheet is ____________. In Question 5-48 Maverson Company uses the aging method to adjust the allowance for uncollectibleaccounts at the end of the period. At December 31, 2012, the balance of ac
> Maverson Company uses the aging method to adjust the allowance for uncollectibleaccounts at the end of the period. At December 31, 2012, the balance of accounts receivable is$220,000, and the allowance for uncollectible accounts has a credit balance of $
> Siegal Investments purchased Demer shares as a trading security on December 16 for $109,000. 1. Suppose the Demer shares decreased in value to $100,000 at December 31. Make the Siegal journal entry to adjust the Short-Term Investment account to market va
> Under the allowance method for uncollectible receivables, the entry to record uncollectible-accountexpense has what effect on the financial statements? a. Decreases owners’ equity and increases liabilities b. Decreases net income and decreases assets c.
> Refer to the All America Bank data in Quiz question 5-45. At December 31, All AmericaBank’s balance sheet should report a. Short-term investment of $655,000. b. Unrealized gain of $5,000. c. Short-term investment of $650,000. d. Dividend revenue of $45,0
> All America Bank, the nationwide banking company, owns many types of investments.Assume that All America Bank paid $650,000 for trading securities on December 5. Two weekslater, All America Bank received a $45,000 cash dividend. At December 31, these tra
> Unique Co., Inc., the electronics and appliance chain, reported these figures in millions of dollars: Requirements 1. Compute Unique’s days’ sales in receivables or days’ sales outstanding (DSO) dur
> Seminole, Inc., reported the following items at December 31, 2012, and 2011: Requirements 1. Compute Seminole’s (a) Quick (acid-test) ratio and (b) Days’ sales in average receivables for 2012. Evaluate each ratio val
> If a bookkeeper mistakenly recorded a $72 deposit as $27, the error would be shown on the bank reconciliation as a a. $45 deduction from the book balance. b. $27 deduction from the book balance. c. $27 addition to the book balance. d. $45 addition to the
> Assume Thrifty-One Credit Union completed these transactions: 2012 Sep 1 Loaned $75,000 to Lily Heart on a one-year, 11% note. Dec 31 Accrued interest revenue on the Heart note. 2013 Sep 1 Collected the maturity value of the note from Heart (principal pl
> Record the following note receivable transactions in the journal of Coral Realty. How much interest revenue did Coral earn this year? Use a 365-day year for interest computations, and round interest amounts to the nearest dollar. Assume that Coral Realty
> Assume Beech Tree Foods, Inc., experienced the following revenue and accounts receivable write-offs: Suppose Beech Tree estimates that 4% of revenues will become uncollectible. Requirement Journalize service revenue (all on account), bad-debt expense,
> At December 31, 2012, before any year-end adjustments, the Accounts Receivable balance of TM Manufacturing is $130,000. The Allowance for Doubtful Accounts has a $8,000 credit balance. TM Manufacturing prepares the following aging schedule for Accounts R
> Refer to Exercise 5-37B. In Exercise 5-37B On September 30, Premier Party Planners had a $28,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts. During October, the store made credit sales of $163,000.
> Newfield Corp. holds a portfolio of trading securities. Suppose that on October 15, Newfield paid $85,000 for an investment in Turok shares to add to its portfolio. At December 31, the market value of Turok shares is $96,000. For this situation, show eve
> On September 30, Premier Party Planners had a $28,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts. During October, the store made credit sales of $163,000. October collections on account were $127,00
> At December 31, 2012, Get Away Travel has an Accounts Receivable balance of $89,000. Allowance for Doubtful Accounts has a credit balance of $810 before the year-end adjustment. Service Revenue for 2012 was $700,000. Get Away Travel estimates that Doubtf
> Drake Designs reported the following transactions in November: Nov 8 Sold merchandise on account to Jennifer Grant, $500, terms 2/10, n/30. 15 Sold merchandise on account to Art Glass, $1,200, terms 2/10, n/30. 16 Art Glass returned $500 of the merchandi
> Southern Corporation reports short-term investments on its balance sheet. Suppose a division of Southern completed the following short-term investment transactions during 2012: 2012 Dec 12 Purchased 700 shares of Trad, Inc., stock for $24,500. Southern p
> In a bank reconciliation, an EFT cash payment is a. Added to the bank balance. b. Deducted from the book balance. c. Added to the book balance. d. Deducted from the bank balance.
> Summer Corporation, the investment banking company, often has extra cash to invest. Suppose Summer buys 700 shares of Musica, Inc., stock at $59 per share. Assume Summer expects to hold the Musica stock for one month and then sell it. The purchase occurs
> Creative Co., Inc., the electronics and appliance chain, reported these figures in millions of dollars: Requirements 1. Compute Creative’s days’ sales in receivables, or days’ sales outstanding (DSO
> Algonquin, Inc., reported the following items at December 31, 2012, and 2011: Requirements 1. Compute Algonquin’s (a) Quick (acid-test) ratio and (b) Days’ sales in average receivables for 2012. Evaluate each ratio v
> Assume Queen City Credit Union completed these transactions: 2012 May 1 Loaned $90,000 to Lois Frank on a one-year, 9% note. Dec 31 Accrued interest revenue on the Frank note. 2013 May 1 Collected the maturity value of the note from Frank (principal plus
> Record the following note receivable transactions in the journal of Arabian Realty. How much interest revenue did Arabian earn this year? Use a 365-day year for interest computations, and round interest amounts to the nearest dollar. Arabian Realty has a
> Assume Oak Leaf Foods, Inc., experienced the following revenue and accounts receivable write-offs: Suppose Oak Leaf estimates that 3% of revenues will become uncollectible. Requirement Journalize service revenue (all on account), bad-debt expense, and
> Answer these questions about investments. 1. What is the amount to report on the balance sheet for a trading security? 2. Why is a trading security always a current asset? Explain.
> At December 31, 2012, before any year-end adjustments, the Accounts Receivable balance of Stenner’s Electronics is $180,000. The Allowance for Doubtful Accounts has an $11,600 credit balance. Stenner’s Electronics prep
> Refer to Exercise 5-25A. In Exercise 5-25A On November 30, High Peaks Party Planners had a $34,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts. During December, the store made credit sales of $159,0
> On November 30, High Peaks Party Planners had a $34,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts. During December, the store made credit sales of $159,000. December collections on account were $13
> In a bank reconciliation, a bank collection of a note receivable is a. Deducted from the book balance. b. Deducted from the bank balance. c. Added to the bank balance. d. Added to the book balance.
> At December 31, 2012, Warm Weather Travel has an Accounts Receivable balance of $91,000. Allowance for Doubtful Accounts has a credit balance of $840 before the year-end adjustment. Service Revenue for 2012 was $600,000. Warm Weather estimates that doubt
> Unique Interiors reported the following transactions in July: Jul 2 Sold merchandise on account to Erin Bailey, $800, terms 2/10, n/30. 10 Sold merchandise on account to Alise O’Brien, $1,500, terms 2/10, n/30. 12 Collected payment from Erin Bailey for t
> Norton Corporation reports short-term investments on its balance sheet. Suppose a division of Norton completed the following short-term investment transactions during 2012: 2012 Dec 12 Purchased 900 shares of Armor, Inc., stock for $38,700. Norton plans
> Eastern Corporation, the investment banking company, often has extra cash to invest. Suppose Eastern buys 1,000 shares of Dream, Inc., stock at $57 per share. Assume Eastern expects to hold the Dream stock for one month and then sell it. The purchase occ
> The trial balance of Rectangle 120, Inc., at August 31, 2012,does not balance. Requirements 1. How much out of balance is the trial balance? Determine the out-of-balance amount. Theerror lies in the Accounts Receivable account. Add the out-of-balance a
> Themanager of Eisenhower Furniture needs to compute the following amounts. a. Total cash paid during December. b. Cash collections from customers during December. Analyze Accounts Receivable. c. Cash paid on a note payable during December. Analyze Notes
> During the first month of operations (February 2012), StarrEntertainment Corporation completed the following selected transactions: a. The business received cash of $19,000 and a building valued at $53,000. The corporationissued common stock to the stock
> During the first month of operations, Johnson Plumbing, Inc., completed the following transactions: Mar 2 Johnson received $35,000 cash and issued common stockto the stockholders. 3 Purchased supplies, $200, and equipment, $3,200, on account. 4 Performed
> During December, Blanton Auction Co. completedthe following transactions: Dec 1 Blanton received $25,000 cash and issued common stockto the stockholders. 5 Paid monthly rent, $1,600. 9 Paid $8,500 cash and signed a $36,000 note payable topurchase land fo
> Farmore Medical Service reported the following items (amounts in thousands): Requirements 1. Classify each item as (a) Income statement or balance sheet and as (b) Debit balance or credit balance. 2. How much net income (or net loss) did Farmore report
> In a bank reconciliation, an outstanding check is a. Deducted from the bank balance. b. Deducted from the book balance. c. Added to the bank balance. d. Added to the book balance.
> Jones RealEstate Co. experienced the following events during the organizing phase and its first month ofoperations. Some of the events were personal for the stockholders and did not affect the business.Others were transactions of the business. Nov 4 Evan
