Questions and Answers of Fundamental Accounting

Burgess Services Co. experienced the following events in 2011:1. Provided services on account.2. Collected cash for accounts receivable.3. Attempted to collect an account and, when unsuccessful,
Justin's Cleaning Service began operation on January 1, 2011. The company experienced the following events for its first year of operations.Events Affecting 2011:1. Provided $\$ 80,000$ of cleaning
The following account balances come from the records of Fiesta Company.During the accounting period, Fiesta recorded $\$ 7,000$ of sales revenue on account. The company also wrote off an $\$ 80$
Hughes Dry Cleaning was started on January 1, 2011. It experienced the following events during its first two years of operation.Events Affecting 2011 1. Provided $\$ 10,000$ of cleaning services on
Smith Inc. uses the allowance method to account for uncollectible accounts expense. Smith experienced the following four accounting events in 2011:1. Recognized $\$ 72,000$ of revenue on account.2.
The accounts receivable balance for Get-N-Shape Spa at December 31,2011 , was $\$ 80,000$. Also on that date, the balance in the Allowance for Doubtful Accounts was $\$ 3,000$. During 2012, \(\$
Harper Service Co. experienced the following transactions for 2011, its first year of operations:1. Provided $\$ 98,000$ of services on account.2. Collected $\$ 76,000$ cash from accounts
Swanson Inc. experienced the following events for the first two years of its operations.2011:1. Provided $\$ 75,000$ of services on account.2. Provided $\$ 30,000$ of services and received
Hunan Service Co. does make a few sales on account but is mostly a cash business. Consequently, it uses the direct write-off method to account for uncollectible accounts. During 2011 Hunan Service
Ted's Bike Shop sells new and used bicycle parts. Although a majority of its sales are cash sales, it makes a significant amount of credit sales. During 2011, its first year of operations, Ted's Bike
Mann Enterprises loaned $\$ 12,000$ to Snell Co. on June 1, 2011, for one year at 5 percent interest.Required a. Record these general journal entries for Mann Enterprises:(1) The loan to Snell
On May 1, 2011, Lenny's Sandwich Shop loaned \$20,000 to Joe Lopez for one year at 6 percent interest.Required Answer the following questions:a. What is Lenny's interest income for 2011?b. What is
Super Day Spa provided $\$ 120,000$ of services during 2012. All customers paid for the services with credit cards. Super submitted the credit card receipts to the credit card company immediately.
Elk Company accepted credit cards in payment for $\$ 3,000$ of services performed during July 2012. The credit card company charged Elk a 4 percent service fee; it paid Elk as soon as it received
The following post-closing trial balance was drawn from the accounts of Millers Metal Co. (MMC) as of December 31, 2011.Transactions for 2012 1. MMC acquired an additional $\$ 4,000$ cash from the
The following information is available for Spring Inc. and Winter Inc. at December 31, 2011:Required a. What is the accounts receivable turnover for each of the companies for 2011?b. What is the
The following transactions apply to KC Company for 2011, the first year of operation:1. Recognized $\$ 255,000$ of service revenue earned on account.2. Collected $\$ 159,000$ from accounts
During the first year of operation, 2012, Wells Appliance Co. recognized $\$ 300,000$ of service revenue on account. At the end of 2012, the accounts receivable balance was $\$ 58,000$. For this
The following information is available for Book Barn Company's sales on account and accounts receivable:After several collection attempts, Book Barn wrote off $\$ 4,500$ of accounts that could not
Ming Inc. experienced the following transactions for 2011, its first year of operations:1. Issued common stock for $\$ 50,000$ cash.2. Purchased $\$ 145,000$ of merchandise on account.3. Sold
Northeast Sales had the following transactions in 2011:1. The business was started when it acquired $\$ 500,000$ cash from the issue of common stock.2. Northeast purchased $\$ 1,200,000$ of
The following transactions apply to Kenyon Co. for 2011, its first year of operations.1. Issued $\$ 80,000$ of common stock for cash.2. Provided $\$ 110,000$ of services on account.3. Collected
Identify each of the following independent transactions as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also explain how each event affects assets, liabilities,
Use the following information to prepare a multistep income statement and a balance sheet for Belmont Equipment Co. for 2011. (Some of the items will not appear on either statement, and ending
The following information comes from the accounts of Jersey Company:Required a. There were $\$ 170,000$ of sales on account during the accounting period. Write-offs of uncollectible accounts were
Nina's Accounting Service began operation on January 1, 2011. The company experienced the following events for its first year of operations.Events Affecting 2011:1. Provided $\$ 120,000$ of
Big A's Auto Service was started on January 1, 2011. The company experienced the following events during its first two years of operation.Events Affecting 2011 1. Provided $\$ 30,000$ of repair
Gray Bros. uses the allowance method to account for uncollectible accounts expense. Gray experienced the following four events in 2011:1. Recognized $\$ 48,000$ of revenue on account.2. Collected
King Service Co. experienced the following transactions for 2011, its first year of operations:1. Provided $\$ 66,000$ of services on account.2. Collected $\$ 42,000$ cash from accounts
Bourret Inc. experienced the following events for the first two years of its operations.2011:1. Provided $\$ 60,000$ of services on account.2. Provided $\$ 25,000$ of services and received
Hogan Business Systems has a small number of sales on account but is mostly a cash business. Consequently, it uses the direct write-off method to account for uncollectible accounts. During 2011 Hogan
Classic Auto Parts sells new and used auto parts. Although a majority of its sales are cash sales, it makes a significant amount of credit sales. During 2012, its first year of operations, Classic
Babb Enterprises loaned $\$ 25,000$ to Sneathen Co. on September 1, 2011, for one year at 6 percent interest.Required a. Record these general journal entries for Babb Enterprises:(1) The loan to
On March 1, 2011, Jason's Deli loaned \$12,000 to Mark Johnson for one year at 5 percent interest.Required Answer the following questions.a. What is Jason's interest income for 2011?b. What is
Baucom Company accepted credit cards in payment for $\$ 6,850$ of services performed during March 2011. The credit card company charged Baucom a 4 percent service fee. The credit card company paid
The following post-closing trial balance was drawn from the accounts of Spruce Timber Co. as of December 31, 2011.Transactions for 2012 1. Acquired an additional $\$ 10,000$ cash from the issue of
The following information is available for Market Inc. and Supply Inc. at December 31, 2012:Required a. What is the accounts receivable turnover for each of the companies for 2012 ?b. What is the
The following transactions apply to Sharp Consulting for 2011, the first year of operation:1. Recognized $\$ 65,000$ of service revenue earned on account.2. Collected $\$ 58,000$ from accounts
The following information pertains to Bay Cabinet Company's sales on account and accounts receivable:After several collection attempts, Bay Cabinet Company wrote off $\$ 2,800$ of accounts that
During the first year of operation, 2011, Martin's Appliance recognized \$292,000 of service revenue on account. At the end of 2011 , the accounts receivable balance was $\$ 57,400$. Even though
Hammond Inc. experienced the following transactions for 2011, its first year of operations:1. Issued common stock for $\$ 80,000$ cash.CHECK FIGURES b. Net Income: $\$ 62,520$Total Assets: \(\$
The following transactions apply to Bialis Co. for 2012, its first year of operations.1. Issued $\$ 100,000$ of common stock for cash.2. Provided $\$ 86,000$ of services on account.3. Collected
Use the following information to prepare a multistep income statement and a balance sheet for Daniels Company for 2011. (Some of the items will not appear on either statement, and ending retained
The following trial balance was prepared for Lakeview Sales and Service on December 31, 2011, after the closing entries were posted.Lakeview had the following transactions in 2012:1. Purchased
Assume that on July 1, 2011, Big Corp. loaned Little Corp. $\$ 12,000$ for a period of one year at 6 percent interest. What amount of interest revenue will Big report for 2011? What amount of cash
As of June 30, 2012, the bank statement showed an ending balance of $\$ 13,879.85$. The unadjusted Cash account balance was $\$ 13,483.75$. The following information is available:1. Deposit in
Manu Company established a $\$ 300$ petty cash fund on January 1, 2011.Required a. Is the establishment of the petty cash fund an asset source, use, or exchange transaction?b. Record the
Family Medical Center established a petty cash fund of $\$ 100$ on January 2. On January 31, the fund contained cash of $\$ 16.75$ and vouchers for the following cash payments:The three distinct
Consider the following events:1. A petty cash fund of $\$ 220$ was established on April $1,2012$.2. Employees were reimbursed when they presented petty cash vouchers to the petty cash
Bob Carson owns a card shop, Card Talk. The following cash information is available for the month of August, 2012.As of August 31, the bank statement shows a balance of $\$ 17,000$. The August 31
The following data apply to Superior Auto Supply Inc. for May 2011.1. Balance per the bank on May $31, \$ 8,000$.2. Deposits in transit not recorded by the bank, $\$ 975$.3. Bank error; check
The following information is available for Cooters Garage for March 2012:The following is a list of checks and deposits recorded on the books of Cooters Garage for March 2012:Other Information 1.
After reconciling its bank account, Obian Company made the following adjusting entries:Required Identify the event depicted in each journal entry as asset source (AS), asset use (AU), asset exchange
Martinez Co. established a petty cash fund by issuing a check for \$250 and appointing Bob Potts as petty cash custodian. Potts had vouchers for the following petty cash payments during the
Shay Ding is a partner of a regional accounting firm. Ms. Ding was hired by a client to audit the company's books. After extensive work, Ms. Ding determined that she was unable to perform the
As of May 31, 2011, the bank statement showed an ending balance of $\$ 17,250$. The unadjusted Cash account balance was $\$ 16,450$. The following information is available:1. Deposit in transit,
The following information is available for Stone Company for the month of August:1. The unadjusted balance per the bank statement on August 31 was $\$ 56,300$.2. Deposits in transit on August 31
Macon Timber Company established a $\$ 150$ petty cash fund on January 1, 2012.Required a. Is the establishment of the petty cash fund an asset source, use, or exchange transaction?b. Record the
Toro Inc. established a petty cash fund of \$200 on January 2. On January 31, the fund contained cash of $\$ 15.30$ and vouchers for the following cash payments:The three distinct accounting events
The following data apply to Smoot Sports Inc. for April 2011:1. Balance per the bank on April $30, \$ 12,250$.2. Deposits in transit not recorded by the bank, $\$ 2,100$.3. Bank error; check
Determine whether the following items in National Imports' bank reconciliation require adjusting or correcting entries on National Imports' books. When an entry is required, record it in general
The following information is available for Mountain Top Hotel for July 2011:The following is a list of checks and deposits recorded on the books of the Mountain Top Hotel for July 2011 :Other
After reconciling its bank account, Hull Equipment Company made the following adjusting entries:Required Identify the event depicted in each journal entry as asset source (AS), asset use (AU), asset
Following is a bank reconciliation for Holt's Sandwich Shop for May 31, 2012:Because of limited funds, Holt's employed only one accountant who was responsible for receiving cash, recording receipts
For each of the following situations, fill in the blank with FIFO, LIFO, or weighted average. a. b. c. d. e. f. would produce the highest amount of net income in an inflationary environment. would
Berryhill Co. started the year with no inventory. During the year, it purchased two identical inventory items at different times. The first purchase cost $\$ 750$ and the other, $\$ 1,000$.
Alfonza Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 100 units at $\$ 40$ per unit. During the year, Alfonza made two batch purchases of this
The following information pertains to Ping Company for 2011.Ending inventory consisted of 30 units. Ping sold 210 units at $\$ 50$ each. All purchases and sales were made with cash.Required a.
University Sales had the following transactions for T-shirts for 2011, its first year of operations.During the year, University Sales sold 725 T-shirts for $\$ 20$ each.Required a. Compute the
The following information pertains to the inventory of Starr Company:During 2011, Starr sold 3,400 units of inventory at $\$ 40$ per unit and incurred $\$ 34,000$ of operating expenses. Starr
The Keys Company had cash sales of $\$ 250,000$ for 2011, its first year of operation. On April 2, the company purchased 200 units of inventory at $\$ 350$ per unit. On September 1 , an
The following inventory transactions apply to Willow Company for 2012.The beginning inventory consisted of 175 units at $\$ 34$ per unit. All transactions are cash transactions.Required a. Record
Sand Hill, Inc., had the following series of transactions for 2012:Required a. Determine the quantity and dollar amount of inventory at the end of the year, assuming Sand Hill uses the FIFO cost flow
The following information pertains to Superior Woodwork Co.'s ending inventory for the current year.Required a. Determine the value of the ending inventory using the lower-of-cost-or-market rule
Wygal Company carries three inventory items. The following information pertains to the ending inventory:Required a. Determine the ending inventory that Wygal will report on the balance sheet,
A substantial portion of inventory owned by Prairie Hunting Goods was recently destroyed when the roof collapsed during a rainstorm. Prairie also lost some of its accounting records. Prairie must
Ralph Kaye owned a small company that sold garden equipment. The equipment was expensive, and a perpetual system was maintained for control purposes. Even so, lost, damaged, and stolen merchandise
Sharp Company failed to count $\$ 50,000$ of inventory in its 2011 year-end physical count.Required Write a memo explaining how Sharp Company's balance sheet will be affected in 2011. Assume Sharp
The ending inventory for Elm Co. was incorrectly adjusted, which caused it to be understated by $\$ 12,500$ for 2011.Required Was each of the following amounts overstated, understated, or not
The following footnote related to accounting for inventory was taken from the 2008 annual report of Alcoa, Inc.Inventory Valuation Inventories are carried at the lower of cost or market, with cost
Evans Winery Inc. has inventory that cost $\$ 500,000$. The aging process for the inventory requires several years. At the company's closing date (December 31, 2011) the inventory had a market
The accounting records of Helen's Clock Shop reflected the following balances as of January 1,2011.The following five transactions occurred in 2011:1. First purchase (cash) 120 units $@ \$ 300$2.
The Fireplace Shop had the following sales and purchase transactions during 2012. Beginning inventory consisted of 60 items at $\$ 350$ each. The company uses the FIFO cost flow assumption and
At the end of the year, Ralph's Repair Service had the following items in inventory:Required a. Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each
The inventory of Second Chance Grocery was destroyed by a tornado on October 6 of the current year. Fortunately, some of the accounting records were at the home of one of the owners and were not
Mae's Market Place wishes to produce quarterly financial statements, but it takes a physical count of inventory only at year end. The following historical data were taken from the 2011 and 2012
The following income statement was prepared for Hot Fireworks for the year 2011:During the year-end audit, the following errors were discovered:1. A $\$ 2,000$ payment for repairs was erroneously
The following accounting information pertains to Frost and Wells companies at the end of 2011. The only difference between the two companies is that Frost uses FIFO while Wells uses LIFO.Requireda.
The following data were extracted from the 2008 financial statements of Penske Automotive Group, Inc. This company operates automobile dealerships, mostly in the United States and the United Kingdom.
Safeway, Inc., operated 1,739 stores as of January 3, 2009. The following data were taken from the company's annual report. All dollar amounts are in thousands.Requireda. Compute Safeway's inventory
Ruby Tuesday's, Inc., operated 680 casual dining restaurants across the United States as of June 3, 2008. Zale Corporation claims to be a leading supplier retailer of fine jewelry. The following data
The trial balance of Pacilio Security Services Inc. as of January 1, 2015, had the following normal balances:During 2015, Pacilio Security Services experienced the following transactions:1. Paid the
The following information pertains to Porter Company for 2011.Ending inventory consisted of 30 units. Porter sold 320 units at $\$ 30$ each. All purchases and sales were made with cash.Required a.
Bristol Sales had the following transactions for DVDs in 2012, its first year of operations.During the year, Bristol Sales sold 775 DVDs for $\$ 60$ each.Required a. Compute the amount of ending
The following inventory transactions apply to TNT Company for 2011.The beginning inventory consisted of 175 units at $\$ 11$ per unit. All transactions are cash transactions.Required a. Record
Solar Heating, Inc., had the following transactions for 2011:Required a. Determine the quantity and dollar amount of inventory at the end of the year, assuming Solar Heating Inc. uses the FIFO cost
Guzman Company carries three inventory items. The following information pertains to the ending inventory:Required a. Determine the ending inventory that will be reported on the balance sheet,
Rich French, the owner of Rich's Fishing Supplies, is surprised at the amount of actual inventory at the end of the year. He thought there should be more inventory on hand based on the amount of
Carol Lapaz owned a small company that sold boating equipment. The equipment was expensive, and a perpetual system was maintained for control purposes. Even so, lost, damaged, and stolen merchandise
The ending inventory for Tokro Co. was erroneously written down causing an understatement of $\$ 5,200$ at the end of 2011.Required Was each of the following amounts overstated, understated, or not

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