Questions and Answers of Fundamentals Financial Accounting

The transactions listed below are typical of those involving Amalgamated Textiles and American Fashions. Amalgamated is a wholesale merchandiser and American Fashions is a retail merchandiser. Assume
Cactus Company’s annual accounting year ends on June 30. Assume it is now June 30 and all of the entries except the following adjusting journal entries have been made: a. The company earned
Regis Corporation operates hair salons under various brand names including Supercuts, Mia & Maxx, and Style America. The following is a simplified list of accounts and amounts (in millions)
Val’s Hair Emporium operates a hair salon. Its unadjusted trial balance as of December 31, 2018, follows, along with information about selected accounts.Required:1. Calculate the (preliminary)
Refer to PA4-2.Required:Indicate the accounting equation effects (amount and direction) of each adjusting journal entry. Use + for increase, − for decrease, and NE for no effect. Provide an
Brokeback Towing Company is at the end of its accounting year, December 31, 2018. The following data that must be considered were developed from the company’s records and related documents:a. On
Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit
Golf Academy, Inc., provides private golf lessons. Its unadjusted trial balance at December 31, 2018, follows, along with information about selected accounts.Required:1. Calculate the (preliminary)
Refer to CP4-2.Required:Indicate the effects (account, amount, and direction) of each adjusting journal entry. Use + for increase, − for decrease, and NE for no effect. Provide an appropriate
Jordan Company’s annual accounting year ends on December 31. It is now December 31, 2018, and all of the 2018 entries have been made except for the following:a. The company owes interest of $700 on
The following is a list of accounts and amounts reported for Rollcom, Inc., for the fiscal year ended September 30, 2018. The accounts have normal debit or credit balances.Required:1. Prepare an
1. Use the companies’ fiscal 2016 balance sheets to determine the amounts in the accounting equation (A = L + SE). Is Lowe’s or The Home Depot larger in terms of total assets? 2. Does
1. What were the year-end dates for the “Fiscal 2016” and “Fiscal 2015” periods? Fiscal 2016
Starbucks is a coffee company—a big coffee company. During a 10-year period, the number of Starbucks locations in China grew from 24 to over 1,000. The following is adapted from Starbucks’s
Ethan Allen Interiors Inc. is a leading manufacturer and retailer of home furnishings in the United States and abroad. The following is adapted from Ethan Allen’s September 30, 2016, trial balance.
Columbia Sportswear Company reported the following in recent balance sheets (amounts in millions).Required:1. Calculate the current ratio (rounded to two decimal places) at September 30, 2016, and
The following accounts are taken from the financial statements of Facebook Inc. at September 30, 2016. (Amounts are in millions.)Required1. Prepare a classified balance sheet at September 30,
Explain the cost principle.
What is a T-account? What is its purpose?
What two different accounting equalities must be maintained in transaction analysis and recording?
Briefly explain what is meant by transaction analysis. What are the two principles underlying transaction analysis?
Define the following:a. Assetb. Current assetc. Liabilityd. Current liabilitye. Common stockf. Retained earnings
Stinson Company recently agreed to loan an employee $100,000 for the purchase of a new house. The loan was executed on May 31, 2018, and is a one-year, 6 percent note, with interest payments
Coca-Cola and PepsiCo are two of the largest and most successful beverage companies in the world in terms of the products that they sell and their receivables management practices. To evaluate their
C&S Marketing (CSM) recently hired a new marketing director, Jeff Otos, for its downtown Minneapolis office. As part of the arrangement, CSM agreed on February 28, 2018, to advance Jeff $50,000
Expedia, Inc., disclosed the following rounded amounts (in thousands) concerning the Allowance for Doubtful Accounts on its Form 10-K annual report.Required:1. Create a T-account for the Allowance
Mattel, Inc., and Hasbro are two of the largest and most successful toymakers in the world, in terms of the products they sell and their receivables management practices. To evaluate their ability to
Jung & Newbicalm Advertising (JNA) recently hired a new creative director, Howard Rachell, for its Madison Avenue office in New York. To persuade Howard to move from San Francisco, JNA agreed to
Callaway Golf Company sells on account to golf pro shops and general sporting goods retailers. In its financial statements for the year ended December 31, 2015, Callaway reported the following
Red Hat, Inc., is a software development company that recently reported the following amounts (in thousands) in its unadjusted trial balance as of February 29, 2016.Required:1. Assume Red Hat uses ¼
Trevorson Electronics is a small company privately owned by Jon Trevorson, an electrician who installs wiring in new homes. Because the company’s financial statements are prepared only for tax
FedEx Corporation reported the following rounded amounts (in millions):Required:1. Determine the receivables turnover ratio and days to collect for 2016. Round your answers to one decimal place.2.
The annual report for Sears Holdings Corporation contained the following information:Assume that accounts receivable write-offs amounted to $1 during 2016 and $9 during 2015 and that Sears did not
Microsoft Corporation develops, produces, and markets a wide range of computer software including the Windows operating system. Microsoft reported the following information about Net Sales Revenue
To attract retailers to its shopping center, the Marketplace Mall will lend money to tenants under formal contracts, provided that they use it to renovate their store space. On November 1, 2017, the
The following transactions took place for Smart Solutions Inc. 2017a. July 1 Loaned $70,000 to an employee of the company and received back a one-year, 10 percent note. b. Dec. 31 Accrued
During the year ended December 31, 2018, Kelly’s Camera Shop had sales revenue of $170,000, of which $85,000 was on credit. At the start of 2018, Accounts Receivable showed a $10,000 debit balance
Adobe Systems Incorporated reported the following accounts and amounts (in millions) in its financial statements for the year ended December 2, 2016. Prepare a classified balance sheet. The
Let’s go a bit further with the example from M8-3. Assume that on February 2, 2018, Extreme Fitness received a payment of $500 from one of the customers whose balance had been written off. Prepare
On December 31, 2017, Extreme Fitness has adjusted balances of $800,000 in Accounts Receivable and $55,000 in Allowance for Doubtful Accounts. On January 2, 2018, the company learns that certain
1. Does Lowe’s hold more or less inventory than The Home Depot at the end of Fiscal 2016?2. What method does Lowe’s use to determine the cost of the majority of its inventory? Comment on how this
1. How much inventory does the company hold on January 29, 2017? Does this represent an increase or decrease in comparison to the prior year?a. $11,809, which is a decreaseb. $11,809, which is an
Complete C7-9 but assume Stolte Trimble Corporation (STC) uses LIFO in its perpetual inventory system.Data from C7-9:Stolte Trimble Corporation (STC) uses a perpetual inventory system. At the
Complete C7-9 but assume Stolte Trimble Corporation (STC) uses weighted average cost in its perpetual inventory system.Data from C7-9:Stolte Trimble Corporation (STC) uses a perpetual inventory
Stolte Trimble Corporation (STC) uses a perpetual inventory system. At the beginning of May, STC had 30 units of inventory, of which 10 units were purchased in March for $60 per unit and 20 units
Complete C7-6 but assume Chipolo uses LIFO in its perpetual inventory system.Data from C7-6:Chipolo sells a coin-sized tracking tag that attaches to keys, wallets, and other personal items. Chipolo
Complete C7-6 but assume Chipolo uses weighted average cost in its perpetual inventory system.Data from C7-6:Chipolo sells a coin-sized tracking tag that attaches to keys, wallets, and other personal
Chipolo sells a coin-sized tracking tag that attaches to keys, wallets, and other personal items. Chipolo began January with an inventory of 200 tags purchased from its supplier in November last year
Complete C7-3 but assume Tracer Advance Corporation (TAC) uses LIFO in its perpetual inventory system.Data from C7-3:Tracer Advance Corporation (TAC) sells a tracking implant that veterinarians
Complete C7-3 but assume Tracer Advance Corporation (TAC) uses weighted average cost in its perpetual inventory system.Data from C7-3:Tracer Advance Corporation (TAC) sells a tracking implant that
Tracer Advance Corporation (TAC) sells a tracking implant that veterinarians surgically insert into pets. TAC began January with an inventory of 400 tags purchased from its supplier in November last
Amazon.com reported the following amounts in its financial statements (in millions):Required:1. Determine the inventory turnover ratio and average days to sell inventory for 2015 and 2014. Round to
Harman International Industries is a world-leading producer of loudspeakers and other electronics products, which are sold under brand names like JBL, Infinity, and Harman/Kardon. The company
GameStop Corp. is the world’s largest multichannel video game retailer. The company reported the following amounts (in millions) in its annual financial statements at the end of
1. Does Lowe’s report higher or lower Net Sales than The Home Depot for fiscal 2016?2. Assuming that Cost of Sales is the same thing as Cost of Goods Sold, compute Lowe’s gross profit percentage
1. What amount of Net Sales does the company report during the year ended January 29, 2017?a. $32,313b. $62,282c. $7,957d. $94,5952. Assuming that Cost of Sales is the company’s term for Cost of
Use the information in C6-1 to complete the following requirements.Required:1. Prepare journal entries for the transactions described in events (a) through (j), using the date of each transaction as
(a) On October 1, the Business Students’ Society (BSS) placed an order for 100 golf shirts at a unit cost of $20, under terms 2/10, n/30. (b) The order was received on October 10, but some golf
Emily’s Greenhouse Corporation is a local greenhouse organized 10 years ago as a corporation. The bookkeeper prepared the following statement at year-end (assume that all amounts are correct, but
Sky Communcations (SKY) usually sells a cell phone for $320 plus 12 months of cellular service for $480. SKY has a special, time-limited offer in which it gives the phone for free and sells the 12
Emily’s Greenhouse Corporation is a local greenhouse organized 10 years ago as a corporation. The bookkeeper prepared the following statement at year-end (assume that all amounts are correct, but
Sky Communcations (SKY) usually sells a cell phone for $320 plus 12 months of cellular service for $480. SKY has a special, time-limited offer in which it gives the phone for free and sells the 12
Great American Oilchange (GAO) sells a combined oil change service and parts package for $30. A customer who supplies the parts (oil and filter) is charged $20 for only the service, whereas a
1. Does Lowe’s report more or less Cash and Cash Equivalents than The Home Depot at the end of fiscal 2016?2. According to the company’s management and independent registered public accounting
1. How much does The Home Depot report for Cash and Cash Equivalents and Restricted Cash (in millions) at January 29, 2017?a. $2,538 and $2,216b. $2,538 and $2,029c. $17,724 and $1,235d. $2,538 and
On January 1, Pulse Recording Studio (PRS) had the following account balances.The following transactions occurred during January.a. Received $2,500 cash on 1/1 from customers on account for recording
The September bank statement and cash T-account for Terrick Company follow:There were no deposits in transit or outstanding checks at August 31.Required:1. Identify and list the deposits in transit
Expedia, Inc., reported total cash of $1,862 million at September 30, 2016. Of this amount, $18 million was set aside and could be used only to fulfill the requirement of an aviation authority of a
What is the primary internal control goal for cash payments?
What is the primary internal control goal for cash receipts?
What are some of the methods for restricting access?
Why is it a good idea to assign each task to only one employee?
What aspect(s) of the Sarbanes-Oxley Act might allow honest employees to prevail?
What aspect(s) of the Sarbanes-Oxley Act might counteract the incentive to commit fraud?
What are three categories of employee fraud? Which is most common? Which is associated with the largest losses?
1. For each of the items listed below, identify whether an accrual adjustment, a deferral adjustment, or no adjustment is required.2. For each of the deferral adjustments, prepare the initial journal
1. Refer to the notes to the financial statements to determine how much The Home Depot and Lowe’s each incurred for advertising expenses in fiscal 2016.2. How much did The Home Depot and Lowe’s
1. How much did The Home Depot owe for salaries and related expenses at January 29, 2017? Was this an increase or decrease from the previous year?a. $1,484 million (Decrease)b. $1,484 million
Fast Deliveries, Inc. (FDI), was organized in December last year and had limited activity last year. The resulting balance sheet at the beginning of the current year is provided below:Two employees
Alison and Chuck Renny began operations of their furniture repair shop (Lazy Sofa Furniture, Inc.) on January 1, 2017. The annual reporting period ends December 31. The trial balance on January 1,
Drs. Glenn Feltham and David Ambrose began operations of their physical therapy clinic, called Northland Physical Therapy, on January 1, 2017. The annual reporting period ends December 31. The trial
Learn to Play, Inc., is a one-person company that provides private piano lessons. Its unadjusted trial balance at December 31, 2018, follows, along with information about selected
On December 31, 2018, Alan and Company prepared an income statement and balance sheet but failed to take into account four adjusting journal entries. The income statement, prepared on this incorrect
The following accounts are used by Mouse Potato, Inc., a computer game maker.Required:For each of the following independent situations, give the journal entry by entering the appropriate code(s) and
Partial comparative income statements are presented below for Commonplace Corporation. The company’s manager provides the following additional information:a. The company received a bill for
Refer to E4-8.Required:For each of the transactions in E4-8, indicate the amount and direction of effects of the adjusting journal entry on the elements of the accounting equation. Using the
Jaworski’s Ski Store is completing the accounting process for its first year ended December 31, 2018. The transactions during 2018 have been journalized and posted. The following data are available
Refer to E4-6.Required:Prepare adjusting journal entries at December 31, 2018, for (a) insurance and (b) supplies.Data from E4-6:Fes Company is making adjusting journal entries for the year ended
Fes Company is making adjusting journal entries for the year ended December 31, 2018. In developing information for the adjusting journal entries, you learned the following:a. A two-year insurance
Refer to E4-4.Required:Record the required adjusting journal entry for transactions (a) and (b).Data from E4-4:Mobo, a wireless phone carrier, completed its first year of operations on October 31.
Mobo, a wireless phone carrier, completed its first year of operations on October 31. All of the year’s entries have been recorded, except for the following:a. At year-end, employees earned wages
FedEx Corporation reported its balance sheet at May 31, 2016. Assume the following alphabetically listed accounts were included in its trial balance immediately prior to preparing the financial
Gibson Company’s adjusted balances at December 31, 2018 (listed alphabetically), were:Gibson prepared, but did not yet post, additional adjusting journal entries (AJEs) for $3,000 of depreciation
Midwest Manufacturing purchased a three-year insurance policy for $30,000 on January 2, 2018. Prepare any journal entries, adjusting journal entries, and closing journal entries required on January
For each of the following independent situations, prepare journal entries to record the initial transaction on December 31 and the adjustment required on January 31.a. Magnificent Magazines received
For each of the following transactions for New Idea Corporation, give the accounting equation effects of the adjustments required at the end of the month on July 31:a. Received a $600 utility bill
Using the information in M4-7, prepare the adjusting journal entries required on July 31.Data from M4-7:For each of the following transactions for New Idea Corporation, give the accounting equation
1. Did Lowe’s sales revenues increase or decrease in the year ended February 3, 2017, as compared to the previous year? By how much? Calculate this change as a percentage of the previous year’s
1. How much did The Home Depot’s sales revenue increase or decrease in the year ended January 29, 2017?a. Decreased $6,076 (million) b. Decreased $948 (million) c. Increased $6,076
Abercrombie & Fitch Co. (ANF) is a specialty retailer of casual apparel. The following is a series of accounts for ANF. The accounts are listed alphabetically and numbered for identification.

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