Question: Wronkovich & Sells, an accounting firm, advises Off
Wronkovich & Sells, an accounting firm, advises Off the Boat Seafood that its financial statements must be changed to conform to GAAP. At December 31, 2018, Off the Boat’s accounts include the following: 
The accounting firm advised Off the Boat of the following: Off the Boat has been using the direct write-off method to account for uncollectible receivables. During 2018, the company wrote off bad receivables of $4,500. The aging of Off the Boat’s receivables at year-end indicated uncollectibles of $28,500. Off the Boat reported net income of $93,000 in 2018. Requirements: 1. Restate Off the Boat’s current accounts to conform to GAAP. (Challenge) 2. Compute the company’s current ratio and quick (acid-test) ratio both before and after your correction. 3. Determine the company’s correct net income for 2018. (Challenge)
> Which of the following statements is correct? a. Sales returns and allowances increase a company’s profit. b. If a customer returns a product, sales revenue will be credited. c. The performance obligation in a sale of products is generally satisfied w
> Which of the following is an example of poor internal control in an organization? a. The company rotates employees through various jobs. b. The accounting department compares goods received with the related purchase order. c. The mailroom clerk record
> Salary Payable at the beginning of the month totals $26,000. During the month, salaries of $125,000 were accrued as expense. If ending Salary Payable is $10,000, what amount of cash did the company pay for salaries during the month? a. $141,000 b. $136
> Unadjusted net income equals $5,500. Calculate what net income will be after the following adjustments: 1. Salaries payable to employees, $510 2. Interest due on note payable at the bank, $90 3. Unearned revenue that has been earned, $850 4. Supplies
> Selected data for the Rubio Company follow: Based on these facts, what are Rubio’s current ratio and debt ratio? Current ratio Debt ratio a. 1.200 0.629 b. 1.590 0.629 c. 8.315 0.833 d. 1.244 0.236
> On April 1, 2018, Solutions Insurance Company sold a one-year insurance policy covering the year ended March 31, 2019. Solutions collected the full $2,700 on April 1, 2018. Solutions made the following journal entry to record the receipt of cash in advan
> Which of the following factors should influence business and accounting decisions? a. Economic b. Legal c. Ethical d. All of the above
> The following are the assets and liabilities of Jill Carlson Realty Company, as of January 31, 2018. Also included are revenue, expense, and selected stockholders’ equity figures for the year ended on that date (amounts in millions): R
> Paulson Company had the following on the dates indicated: Paulson had no stock transactions in 2018, so the change in stockholders’ equity for 2018 was due to net income and dividends. If dividends were $75,000, how much was Paulson&aci
> The stockholders’ equity of Kowalski Company at the beginning and end of 2018 totaled $122,000 and $140,000, respectively. Assets at the beginning of 2018 were $149,000. If the liabilities of Kowalski Company increased by $69,000 in 2018, how much were t
> What effect does the adjusting entry in question 3-46 have on Oliver’s net income for February? a. Net income will decrease by $350. b. Net income will increase by $350. c. Net income will increase by $700. d. Net income will decrease by $700.
> Where is a transaction first recorded? a. Trial balance b. Account c. Journal d. Ledger
> Moody Instruments had retained earnings of $300,000 at December 31, 2017. Net income for 2018 totaled $200,000, and dividends declared for 2018 were $55,000. How much retained earnings should Moody report at December 31, 2018? a. $500,000 b. $445,000
> Maynard Corporation began the year with cash of $135,000 and land that cost $25,000. During the year, Maynard earned service revenue of $260,000 and had the following expenses: salaries, $185,000; rent, $81,000; and utilities, $28,000. At year-end, Mayna
> Assume the same facts as in question 3-45. Oliver’s adjusting entry at the end of February should include a debit to Rent Expense in the amount of a. $700. b. $0. c. $350. d. $1,400.
> Purchasing a building for $115,000 by paying cash of $25,000 and signing a note payable for $90,000 will a. decrease total assets and increase total liabilities by $25,000. b. increase both total assets and total liabilities by $115,000. c. decrease b
> For 2018, Broadview Company had revenues in excess of expenses. Which statement describes Broadview’s closing entries at the end of 2018? (Assume there is only one closing entry for both revenue and expenses.) a. Revenues will be credited, expenses will
> On January 1 of the current year, Oliver Company paid $2,100 rent to cover six months (January–June). Oliver recorded this transaction as follows: Oliver adjusts the accounts at the end of each month. Based on these facts, the adjusting
> At December 31, 2018, Landy Products has cash of $24,000, receivables of $18,000, and inventory of $80,000. The company’s equipment totals $182,000. Landy owes accounts payable of $22,000 and long-term notes payable of $172,000. Common stock is $34,500.
> The Unearned Revenue account of Melrose Incorporated began 2018 with a normal balance of $5,500 and ended 2018 with a normal balance of $16,000. During 2018, the Unearned Revenue account was credited for $19,000 that Melrose will earn later. Based on the
> During February, assets increased by $83,000 and liabilities increased by $23,000. Equity must have a. increased by $60,000. b. increased by $106,000. c. decreased by $106,000. d. decreased by $60,000.
> Assume that a business is headed for certain bankruptcy and it is evident that its liabilities greatly exceed its assets. Which principle would be violated if its financial statements were prepared using standard U.S. GAAP? a. Entity assumption b. Cont
> Girard Unlimited, a new company, completed these transactions. 1. Stockholders invested $55,000 cash and inventory with a fair value of $30,000. 2. Sales on account, $25,000. What will Girard’s total assets equal? a. $110,000 b. $85,000 c. $55,000 d.
> If a corporation purchases a delivery van for $35,000 cash, the net impact of this transaction will be a. a decrease in total assets of $35,000. b. an increase in total assets of $35,000. c. an increase in both assets and liabilities of $35,000. d. n
> The primary objective of financial reporting is to provide information a. useful for making investment and credit decisions. b. on the cash flows of a company. c. about the profitability of an enterprise. d. to the federal government.
> An organization’s investors and creditors will primarily use information provided by: a. the organization’s financial accounting system. b. the organization’s managerial accounting system. c. the Internal Revenue Service. d. the Financial Accounting
> Jenna Newbury began a music business in July 2018. Newbury prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Newbury Company’s only activities during July through October: If
> Jenna Newbury began a music business in July 2018. Newbury prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Newbury Company’s only activities during July through October: In
> Beaumont Independent School District (BISD) is a public school district in Beaumont, Texas. It has three high schools, six middle schools, and 16 elementary schools, serving approximately 21,000 students. In February, 2015, Patricia Lambert, former BISD
> Butler Tech, Inc., is expanding into India. The company must decide where to locate and how to finance the expansion. Identify the financial statement where these decision makers can find the following information about Butler Tech, Inc. In some cases, m
> Each of the following situations reveals an internal control weakness: a. Tom Dickens has been an employee of the city of Fulton for many years. Because the city is small, Dickens performs all of its accounting duties, in addition to opening the mail and
> Parisian Imports buys furniture and décor items from France and sells them to retailers. Erin Moreland is the general manager of the company. Moreland employs two other people in the business. Nadine Mast serves as the buyer for the company. Mast travels
> The cash data of Duffy Automotive for May 2018 follow: Duffy Automotive received the following bank statement on May 31, 2018: Additional data for the bank reconciliation include the following: a. The EFT deposit was a receipt of monthly rent. The EFT d
> Mark Kershey, a former Smucker employee, was charged with defrauding the J.M. Smucker Company of more than $4.1 million over a 16-year period. Charges were filed in October 2014. In 2015, Kershey was sentenced to nearly five years in prison. Kershey was
> Each of the following situations reveals an internal control weakness: a. Jake Bates has been an employee of the city of Elmhurst for many years. Because the city is small, Bates performs all of its accounting duties, in addition to opening the mail and
> Italian Imports buys furniture and décor items from Italy and sells them to retailers. Amelia Rossi is the general manager of the company. Rossi employs two other people in the business. Marcia Moretti serves as the buyer for the company. Moretti travels
> Baker Variety Store had the following balances as of November 1: Accounts Receivable $10,100 Allowance for Uncollectible Accounts $760 The following selected transactions occurred at Baker Variety Store during the month of November: Requirements: 1. Re
> The comparative financial statements of Diamond Pools, Inc., for 2020, 2019, and 2018 included the following select data: Requirements : 1. Compute the following ratios for 2020 and 2019: a. Current ratio b. Quick (acid-test) ratio c. Daysâ€&
> Garrett Meals completed the following selected transactions: Requirements: 1. Record the transactions in Garrett Meals’ journal. Assume that no sales returns are expected. Round all amounts to the nearest dollar. Explanations are not r
> McClinton and Jefferson, an accounting firm, advises Lakeside Seafood that its financial statement must be changed to conform to GAAP. At December 31, 2018, Lakeside’s accounts include the following: The accounting firm advised Lakeside
> Collinswood Company’s comparative balance sheet at January 31, 2019, and 2018, reports the following (in millions): Requirements The following are three situations related to Collinswood Company’s issuance of stock an
> Identify the missing amount for each of the following situations:
> The September 30, 2019, records of West Point Communications include these accounts: During the year, West Point Communications estimates Uncollectible-account expense at 1% of credit sales. At year-end (December 31), the company ages its receivables and
> Hopewell Shipping Corporation is an overnight shipper. Since it sells on credit, the company cannot expect to collect 100% of its accounts receivable. At October 31, 2018, and 2019, respectively, Hopewell reported the following on its balance sheet (in m
> Marshall Industrial Supply offers terms of 2/10, n/30 to its wholesale customers. Marshall’s cost of goods sold is 30% of sales. The company had the following transactions during October: Requirements: 1. Record Marshallâ€&#
> Dearborn Industries sells to wholesalers. Customers must pay within 15 days or at the point of sale using a credit card. Dearborn’s cost of goods sold is 35% of sales. The company had the following selected transactions during March: R
> Bowers ton Variety Store had the following balances as of November 1: Accounts Receivable $5,100 Allowance for Uncollectible Accounts $360 The following selected transactions occurred at Bowers ton Variety Store during the month of November: Requirem
> The comparative financial statements of Sunset Pools, Inc., for 2020, 2019, and 2018 included the following select data: Requirements : 1. Compute the following ratios for 2020 and 2019: a. Current ratio b. Quick (acid-test) ratio c. Daysâ€
> Markley Foods completed the following selected transactions. Requirements: 1. Record the transactions in Markley Foods’ journal. Assume that no sales returns are expected. Round all amounts to the nearest dollar. Explanations are not r
> The September 30, 2019, records of New York Communications include these accounts: During the year, New York Communications estimates Uncollectible-account expense at 1% of credit sales. At year-end (December 31), the company ages its receivables and adj
> McClain Company’s condensed and adapted balance sheet at December 31, 2018, follows: Assume that during the first quarter of the following year, 2019, McClain completed the following transactions: a. Earned revenue of $2.8 million, on
> Willow, Inc., has current assets of $220 million; property, plant, and equipment of $320 million; and other assets totaling $130 million. Current liabilities are $160 million and long-term liabilities total $380 million. Requirements: 1. Use these data
> Refer back to Problem 3-71B. Requirements : 1. Use the Meadowbrook Services data in Problem 3-71B to prepare the company’s classified balance sheet at January 31, 2018. 2. Calculate Meadowbrook’s net working capital, current ratio, and debt ratio at Ja
> The accounts of Meadowbrook Service, Inc., at January 31, 2018, are listed in alphabetical order. Requirements: 1. All adjustments have been journalized and posted, but the closing entries have not yet been made. Journalize Meadowbrook’
> The adjusted trial balance for the year of Nelson Corporation at July 31, 2018, follows: Requirements: 1. Prepare Nelson Corporation’s 2018 single-step income statement, statement of retained earnings, and balance sheet. Draw arrows li
> Crossway Rental Company’s unadjusted and adjusted trial balances at June 30, 2018, follow: Requirements: 1. Make the adjusting entries that account for the differences between the two trial balances. 2. Calculate Crosswayâ€
> Consider the unadjusted trial balance of Royal, Inc., at December 31, 2020, and the related month-end adjustment data. Adjustment data at December 31, 2020, include the following: a. Accrued service revenue at December 31, $3,850. b. Prepaid rent expir
> Journalize the adjusting entry needed on December 31, the end of the current accounting period, for each of the following independent cases affecting Rowling Corp. Include an explanation for each entry. a. The details of Prepaid Insurance are as follows
> Westchester Consulting had the following selected transactions in May: Requirements: 1. Show how each transaction would be handled (in terms of recognizing revenues and expenses) using the cash basis and the accrual basis. 2. Calculate May income (loss
> Bellwood Company’s condensed and adapted balance sheet at December 31, 2018, follows: Assume that during the first quarter of the following year, 2019, Bellwood completed the following transactions: a. Earned revenue, $2.6 million, on
> Refer back to Problem 3-63A. Requirements: 1. Use the Valley Services data in Problem 3-63A to prepare the company’s classified balance sheet at January 31, 2018. 2. Calculate Valley’s net working capital, current ratio, and debt ratio at January 31, 2
> The accounts of Valley Services, Inc., at January 31, 2018, are listed in alphabetical order. Requirements: 1. All adjustments have been journalized and posted, but the closing entries have not yet been made. Journalize Valley’s closin
> Compute the missing amount in the accounting equation for each company (amounts in billions): Which company appears to have the strongest financial position? Explain your reasoning.
> The adjusted trial balance for the year of Sunray Corporation at March 31, 2018, follows.e/ Requirements: 1. Prepare Sunray Corporation’s 2018 single-step income statement, statement of retained earnings, and balance sheet. Draw arrows linking the three
> Appletree Rental Company’s unadjusted and adjusted trial balances at June 30, 2018, follow. Requirements : 1. Make the adjusting entries that account for the differences between the two trial balances. 2. Calculate Appletreeâ
> Consider the unadjusted trial balance of Princess, Inc., at December 31, 2020, and the related month-end adjustment data. Adjustment data at December 31, 2020: a. Accrued service revenue at December 31, $2,980. b. Prepaid rent expired during the month.
> Journalize the adjusting entry needed on December 31, the end of the current accounting period, for each of the following independent cases affecting Castaway Corporation. Include an explanation for each entry. a. The details of Prepaid Insurance are as
> Berkley Consulting had the following selected transactions in July: Requirements: 1. Show how each transaction would be handled (in terms of recognizing revenues and expenses) using the cash basis and the accrual basis. 2. Calculate July income (loss)
> During the first month of operations (May 2018), Shreve Music Corporation completed the following selected transactions: a. The business received cash of $46,000 and a building with a fair value of $106,000. The corporation issued common stock to the st
> During the first month of operations, Augusta Services, Inc., completed the following transactions: Requirements : 1. Record each transaction in the journal. Be sure to record the date in each entry. Explanations are not required. 2. Post the transacti
> This problem can be used in conjunction with Problem 2-64B; see that problem for the relevant data. Requirements: 1. Journalize the transactions of Davis Computing, Inc. Explanations are not required. 2. Prepare a T-account for each account. Insert in
> The following amounts summarize the financial position of Davis Computing, Inc., on September 30, 2018: During October 2018, Davis Computing completed these transactions: a. The company received cash of $3,500 and issued common stock. b. Performed serv
> The trial balance of Colby Design, Inc., follows: Clara Lancey, your best friend, is considering making an investment in Colby Design, Inc. Clara seeks your advice in interpreting the company’s information. Specifically, she asks how t
> The following selected events were experienced by either Smith Eldercare Services, Inc., a corporation, or Tony Smith, its major stockholder. State whether each event (1) increased, (2) decreased, or (3) had no effect on the total assets of the business.
> During the first month of operations (January 2018), Samuels Music Services Corporation completed the following selected transactions: a. The business received cash of $41,000 and a building with a fair value of $110,000. The corporation issued common s
> Summarized versions of Weaverton Corporation’s financial statements for two recent years are as follows. Requirement 1. Complete Weaverton Corporation’s financial statements by determining the missing amounts denoted
> The following data come from the financial statements of Tidal Wave Company for the year ended March 31, 2019 (in millions): Requirements: 1. Prepare Tidal Wave Company’s cash flow statement for the year ended March 31, 2019. Not all
> The assets and liabilities of Full Moon Products, Inc., as of December 31, 2018, and revenues and expenses for the year ended on that date are as follows: Beginning retained earnings was $364,800, and dividends declared and paid totaled $108,000 for the
> Hudson Alvarez is a realtor. He organized his business as a corporation on June 16, 2019. The business received $75,000 from Alvarez and issued common stock. Consider these facts as of June 30, 2019. a. Alvarez has $17,000 in his personal bank account a
> The manager of Parker Design, Inc., prepared the company’s balance sheet as of March 31, 2018, while the company’s accountant was ill. The balance sheet contains numerous errors. In particular, the manager knew that th
> Compute the missing amount (?) for each company. (Amounts are in millions.) At the end of the year, which company had the â– â– highest net income? â– â– highest percent of net income to r
> Summarized versions of Calabasa Corporation’s financial statements for two recent years are as follows. Requirement 1. Complete Calabasa Corporation’s financial statements by determining the missing amounts denoted b
> The following data come from the financial statements of Mitchell Company for the year ended March 31, 2019 (in millions): Requirements: 1. Prepare Mitchell Company’s cash flow statement for the year ended March 31, 2019. Not all item
> The assets and liabilities of Oak Hill Garden Supply, Inc., as of December 31, 2018, and revenues and expenses for the year ended on that date are as follows: Beginning retained earnings was $364,600, and dividends declared and paid totaled $107,000 for
> Set up the following T-accounts: Cash, Accounts Receivable, Office Supplies, Office Furniture, Accounts Payable, Common Stock, Dividends, Service Revenue, Salary Expense, and Rent Expense. Record the following transactions directly in the T-accounts with
> Brandon Hilton is a realtor. He organized his business as a corporation on June 16, 2019. The business received $65,000 cash from Hilton and issued common stock. Consider the following facts as of June 30, 2019: a. Hilton has $15,000 in his personal bank
> The manager of City News, Inc., prepared the company’s balance sheet as of May 31, 2018, while the company’s accountant was ill. The balance sheet contains numerous errors. In particular, the manager knew that the bala
> Compute the missing amount (?) for each company. (Amounts are in millions.) At the end of the year, which company had the â– â– highest net income? â– â– highest percent of net income to
> During the first month of operations, Cloutier Services, Inc., completed the following transactions: Requirements: 1. Record each transaction in the journal. Be sure to record the date in each entry. Explanations are not required. 2. Post the transact
> This problem can be used in conjunction with Problem 2-59A; see that problem for the relevant data. Requirements : 1. Journalize the transactions of Grueser Computing, Inc. Explanations are not required. 2. Prepare a T-account for each account. Insert
> The following amounts summarize the financial position of Grueser Computing, Inc., on September 30, 2018: During October 2018, Grueser Computing completed these transactions: a. The company received cash of $3,700 and issued common stock. b. Performed
> The trial balance of Baker Specialties, Inc., follows: Veronica Gomez, your best friend, is considering investing in Baker Specialties, Inc. Veronica seeks your advice in interpreting the company’s information. Specifically, she asks ho
> Lincoln Delivery Corporation is an overnight shipper. Since it sells on credit, the company cannot expect to collect 100% of its accounts receivable. At December 31, 2018, and 2019, respectively, Lincoln reported the following on its balance sheet (in mi
> Preston Industrial Supply offers terms of 2/10, n/30 to its wholesale customers. Preston’s cost of goods sold is 25% of sales. The company had the following transactions during October: Requirements: 1. Record Preston’
> Treno Industries sells to wholesalers. Customers must pay within 15 days or at the point of sale using a credit card. Treno’s cost of goods sold is 40% of sales. The company had the following selected transactions during March: Require
> Cedar Point is an amusement park in Sandusky, Ohio, owned by Cedar Fair Entertainment Company. Over 3.5 million people visit Cedar Point each year between May and October. It covers 364 acres and has more than 150 rides and attractions, including 16 roll
> The president of The Peterson Company suspects the bookkeeper is embezzling cash from the company. She asks you, confidentially, to look over the bank reconciliation that the bookkeeper has prepared to see if you discover any discrepancies between the bo
> Janet Black, the owner of Janet’s Catering, has delegated the management of the business to Danielle Vale, a friend. Black drops by to meet customers and check up on cash receipts, but Vale buys the merchandise and handles cash payments. Business has bee
> The cash data of Eddy Automotive for October 2018 follow: Eddy Automotive received the following bank statement on October 31, 2018: Additional data for the bank reconciliation include the following: a. The EFT deposit was a receipt of monthly rent. The
> Lexitech Company’s checkbook lists the following: The January bank statement shows: Requirement : 1. Prepare Lexitech’s bank reconciliation at January 31, 2018.
