Questions and Answers of Survey of Accounting

Khan Company made several purchases of long-term assets in 2009. The details of each purchase are presented here.New Office Equipment 1. List price: $$40,000$ ; terms: 1/10 n/30; paid within the
KC Company began operations when it acquired $$30,000$ cash from the issue of common stock on January 1, 2005. The cash acquired was immediately used to purchase equipment for $$30,000$ that had
The following transactions pertain to Optimal Solutions Inc. Assume the transactions for the purchase of the computer and any capital improvements occur on January 1 each year.2007 1. Acquired
O’Brian Service Company purchased a copier on January 1,2008, for $$17,000$ and paid an additional $$200$ for delivery charges. The copier was estimated to have a life of four years or 800,000
McNabb Corporation purchased a delivery van for $$25,500$ in 2007. The firm’s financial condition immediately prior to the purchase is shown in the following horizontal statements model:The van
Three different companies each purchased a machine on January 1, 2005, for $$54,000$ . Each machine was expected to last five years or 200,000 hours. Salvage value was estimated to be $$4,000$ .
Favre Exploration Corporation engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities:Jan. 1, 2008
Big Sky Inc. recorded the following transactions over the life of a piece of equipment purchased in 2005:Jan. 1, 2005: Purchased the equipment for $$36,000$ cash. The equipment is estimated to have
Vernon Manufacturing paid $$58,000$ to purchase a computerized assembly machine on January 1, 2002. The machine had an estimated life of eight years and a $$2,000$ salvage value. Vernon’s
Springhill Co. purchased the assets of Canyon Co. for $$1,000,000$ in 2005. The estimated fair market value of the assets at the purchase date was $$920,000$. Goodwill of $$80,000$ was recorded
Cooper Tire Rubber Company claims to be the fourth largest tire manufacturer in North America. Goodyear Tire & Rubber Company is the largest tire manufacturer in North America. The following
Use the Topps Company’s annual report to answer the following questions.a. How long did it take Topps to collect accounts receivable during the year ended March 1, 2003?b. Approximately what
The following selected financial information is available for three companies:Required:a. Divide the class into three sections and divide each section into groups of three to five students. Assign
Presented here are the average days to collect accounts receivable for four companies in different industries. The data are for 2002.Required:Write a brief memorandum that provides possible answers
The following information was drawn from the accounting records of Oakville and Monteray.Required:a. Determine the average number of days to collect accounts receivable for each company.b. Which
The following accounting information exists for Blackjack and Roulette companies at the end of 2007.Required:a. For each company, compute the gross margin percentage and the average number of days to
Alonzo Saunders owns a small training services company that is experiencing growing pains. The company has grown rapidly by offering liberal credit terms to its customers. Although his competitors
Using the most current annual reports or the Forms 10-K for Maytag Company and for Papa John’s International, Inc., complete the requirements below. To obtain the Forms 10-K use either the EDGAR
The following information pertains to a machine purchased by Bakersfield Company on January 1,2005.The machine produced 14,400 units during 2005 and 17,000 units during 2006.Required:Determine the
Nina’s Accounting Service began operation on January 1,2007. The company experienced the following events for its first year of operations.1. Provided $$120,000$ of accounting services on
Big A’s Auto Service was started on January 1, 2006. The company experienced the following events during its first two years of operation.Events Affecting 2006 1. Provided $$30,000$ of repair
Gray Bros, uses the allowance method to account for uncollectible accounts expense. Gray experienced the following four events in 2005:1. Recognized $$48,000$ of revenue on account.2. Collected
The accounts receivable balance for City Shoe Repair at December 31, 2006, was $$84,000$ . Also on that date, the balance in the Allowance for Doubtful Accounts was $$2,400$. During 2007,
King Service Co. experienced the following transactions for 2009, its first year of operations:1. Provided $$66,000$ of services on account.2. Collected $$42,000$ cash from accounts receivable.3.
Bourret Inc. experienced the following events for the first two years of its operations.2009:1. Provided $$60,000$ of services on account.2. Provided $$25,000$ of services and received cash.3.
Classic Auto Parts sells new and used auto parts. Although a majority of its sales are cash sales, it makes a significant amount of credit sales. During 2008, its first year of operations, Classic
Hogan Business Systems has a small number of sales on account but is mostly a cash business. Consequently, it uses the direct write-off method to account for uncollectible accounts. During 2006 Hogan
Royal Carpet Cleaning provided $$90,000$ of services during 2006, its first year of operations. All customers paid for the services with major credit cards. Royal submitted the credit card receipts
Baucom Company accepted credit cards in payment for $$6,850$ of services performed during March 2006. The credit card company charged Baucom a 4 percent service fee. The credit card company paid
Babb Enterprises loaned $$25,000$ to Sneathen Co. on September 1, 2008, for one year at 6 percent interest.Required:Show the effects of the following transactions in a horizontal statements model
On March 1, 2007, Jason’s Deli loaned $$12,000$ to Mark Johnson for one year at 5 percent interest.Required:Answer the following questions.a. What is Jason’s interest income for 2007?b. What is
The following after-closing trial balance was drawn from the accounts of Spruce Timber Co. as of December 31,2006.Transactions for 2007 1. Acquired an additional $$10,000$ cash from the issue of
The following data were taken from Hershey Foods Corporation’s 2004 annual report. All dollar amounts are in thousands.Required:a. Compute Hershey’s accounts receivable ratios for 2004 and
The following transactions apply to Sharp Consulting for 2006, the first year of operation:1. Recognized $$65,000$ of service revenue earned on account.2. Collected $$58,000$ from accounts
During the first year of operation, 2006, Martin’s Appliance recognized $$292,000$ of service revenue on account. At the end of 2006, the accounts receivable balance was $$57,400$. Even though
Hammond Inc. experienced the following transactions for 2007, its first year of operations:1. Issued common stock for $$80,000$ cash.2. Purchased $$225,000$ of merchandise on account.3. Sold
The following information pertains to Bay Cabinet Company’s sales on account and accounts receivable:After several collection attempts, Bay Cabinet Company wrote off $$2,800$ of accounts that
Bishop Supply Company had the following transactions in 2006:1. Acquired $$60,000$ cash from the issue of common stock.2. Purchased $$180,000$ of merchandise for cash in 2006.3. Sold merchandise
The following transactions apply to Bialis Co. for 2006, its first year of operations.1. Issued $$100,000$ of common stock for cash.2. Provided $$86,000$ of services on account.3. Collected
Use the following information to prepare a multistep income statement and a balance sheet for Daniels Company for 2006. Operating Expenses Accounts Payable $ 90,000 Allowance for Doubtful Accounts
The following trial balance was prepared for Lakeview Sales and Service on December 31, 2006, after the closing entries were posted.Lakeview had the following transactions in 2007:1. Purchased
AutoZone, Inc., claims to be “the nation’s leading auto parts retailer.” It sells replacement auto parts directly to the consumer. BorgWarner, Inc., has over 17,000 employees and produces
During 2007 Calico Company experienced the following accounting events:1. Provided $$120,000$ of services on account.2. Collected $$85,000$ cash from accounts receivable.3. Wrote off $$1,800$
What is the advantage of using the allowance method of accounting for uncollectible accounts? What is the advantage of using the direct write-off method?
Assume that on July 1, 2006, Big Corp. loaned Little Corp. $$12,000$ for a period of one year at 6 percent interest. What amount of interest revenue will Big report for 2006? What amount of cash
In which section of the statement of cash flows will Big report the cash collected in question 23?Data From Question 23:-Assume that on July 1, 2006, Big Corp. loaned Little Corp. $$12,000$ for a
Use the Topps Company’s annual report to answer the following questions.a. What was Topps' inventory turnover ratio and average days to sell inventory for the years ended March 1, 2003, and March
The accounting records of Blue Bird Co. showed the following balances at January 1, 2008:Transactions for 2008 were as follows:Required:a. Organize the class into three sections, and divide each
Real-World Case Analyzing inventory management issues at Campbell’s Soup After more than a decade of generally positive economic news, the United States economy began to slow in 2000. At that time,
Edna Valley Fruits has applied for a loan and has agreed to use its inventory to collateralize the loan. The company currently has an inventory balance of $$206,000$. The cost of goods sold for the
Business Applications Case Using ratios to make comparisons The following accounting information pertains to Java Joint and Coffee Corner at the end of 2008. The only difference between the two
The following information pertains to Porter Company for 2005.Ending inventory consisted of 30 units. Porter sold 320 units at $$30$ each. All purchases and sales were made with cash.Required:a.
Bristol Sales had the following transactions for DVDs in 2004, its first year of operations.During the year, Bristol Sales sold 775 DVDs for $$60$ each.Required:a. Compute the amount of ending
The following information pertains to the inventory of the La Bonne Company:During the year, La Bonne sold 3,400 units of inventory at $$40$ per unit and incurred $$17,000$ of operating expenses.
Holly Hocks Inc. had sales of $$225,000$ for 2006, its first year of operation. On April 2, the company purchased 200 units of inventory at $$190$ per unit. On September 1, an additional 150
Assume you are the owner of a small business that has only two employees.a. Which of the internal control procedures are most important to you?b. How can you overcome the limited opportunity to use
The bank statement of Zone Supplies included a $$200$ NSF check that one of Zone’s customers had written to pay for services that were provided by Zone.Required:a. Show the effects of recognizing
Identify which of the following items are added to or subtracted from the unadjusted book balance to arrive at the true cash balance. Distinguish the additions from the subtractions by placing a +
Identify which of the following items are added to or subtracted from the unadjusted bank balance to arrive at the true cash balance. Distinguish the additions from the subtractions by placing a +
Adjusting the cash account As of May 31, 2004, the bank statement showed an ending balance of $$17,250$. The unadjusted Cash account balance was $$16,450$. The following information is
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 $$56,300$ .2. Deposits in transit on August 31
Lee Company had an unadjusted cash balance of $$7,850$ as of April 30. The company’s bank statement, also dated April 30, included a $$75$ NSF check written by one of Lee’s customers. There
Safeway, Inc. operated 1,802 stores as of January 1, 2005. The following data were taken from the company’s annual report. All dollar amounts are in thousands.Required:a. Compute Safeway’s
The accounting records of Clear Photography, Inc., reflected the following balances as of January 1, 2007:The following five transactions occurred in 2007:1. First purchase (cash) 120 units @ $$92$
Jim Guidry owns a construction business, Guidry Supply Co. The following cash information is avail¬ able for the month of October 2006.As of October 31, the bank statement shows a balance of
The following data apply to Smoot Sports Inc. for April 2007:1. Balance per the bank on April 30, $$12,250$ .2. Deposits in transit not recorded by the bank, $$2,100$ .3. Bank error; check
The following items apply to National Imports’ bank reconciliation. Indicate whether each item would be added to, subtracted from, or not included when converting the bank balance to the true cash
The following information is available for Mountain Top Hotel for July 2005:The following is a list of checks and deposits recorded on the books of the Mountain Top Hotel for July 2005:Other
Following is a bank reconciliation for Holt’s Sandwich Shop for May 31, 2006:Because of limited funds. Holt’s employed only one accountant who was responsible for receiving cash, recording
Ruby Tuesday’s, Inc., operated 484 casual dining restaurants across the United States as of June 1, 2004. Zale Corporation claims to be “North America’s largest specialty' retailer of fine
Erie Jewelers sells gold earrings. Its beginning inventory of Model 407 gold earrings consisted of 100 pairs of earrings at $$50$ per pair. Erie purchased two batches of Model 407 earrings during
The following information pertains to Terry’s Pest Control Company (TPCC) for July:1. The unadjusted bank balance at July 31 was $$870$.2. The bank statement included the following items:(a) A
Refer to Questions 9 and 10. Which method might be preferable for financial statements? For income tax reporting? Explain.Data From Question 10:-Assume that Key Co. purchased 1,500 units of
Use the Topps Company’s annual report to answer the following questions.a. What was Topps’ gross margin percentage for 2003 and 2002?b. What was Topps’ return on sales percentage for 2003 and
Real-World Case Identifying companies based on financial statement information Presented here is selected information from the 2002 fiscal-year reports of four companies. The four companies, in
At the end of 2006, the following information is available for Kinlaw and Parker companies:Required:a. Prepare common size income statements for each company.b. Compute the return on assets and
The following information is available for two different types of businesses for the 2007 accounting period. Markin Consulting is a service business that provides consulting services to small
Justin Harris started a small merchandising business in 2006. The business experienced the following events during its first year of operation. Assume that Harris uses the perpetual inventory
During 2007, Etc. Merchandising Company purchased $$40,000$ of inventory on account. The company sold inventory on account that cost $$30,000$ for $$45,000$. Cash payments on accounts payable
Tom’s Paint Supply experienced the following events during 2006, its first year of operation:1. Acquired $ 15,000 cash from the issue of common stock.2. Purchased inventory for $$12,000$ cash.3.
The trial balance for The Copy Shop as of January 1, 2006, was as follows:The following events affected the company during the 2006 accounting period:1. Purchased merchandise on account that cost
Brislin Co. experienced the following events for the 2007 accounting period:1. Acquired $$5,000$ cash from the issue of common stock.2. Purchased $$18,000$ of inventory on account.3. Received
On March 6, 2006, Lie’s Imports purchased merchandise from The Glass Exchange with a list price of $$15,500$, terms 2/10, n/45. On March 10, Lie’s returned merchandise to The Glass Exchange for
Cain Company began the 2006 accounting period with $$18,000$ cash, $$50,000$ inventory, $$40,000$ com¬ mon stock, and $$28,000$ retained earnings. During the 2006 accounting period, Cain
Lane Sales was started in 2006. The company experienced the following accounting events during its first year of operation:1. Started business when it acquired $$40,000$ cash from the issue of
Boone Sales Company had the following balances in its accounts on January 1, 2005:Boone experienced the following events during 2005:1. Sold merchandise inventory that cost $$16,000$ for
Mia Sales experienced the following events during 2005, its first year of operation:1. Started the business when it acquired $$50,000$ cash from the issue of common stock 2. Paid $$42,000$ cash
Lopez Sales Company experienced the following events:1. Purchased merchandise inventory for cash.2. Purchased merchandise inventory on account.3. Sold merchandise inventory for cash. Label the
The following information was taken from the accounts of Good Foods Store, a delicatessen. The accounts are listed in alphabetical order, and each has a normal balance.Required:First, prepare an
On January 1, 2008, Mel Stark started a small sailboat merchandising business that he named Mel’s Sails. The company experienced the following events during the first year of operation:1. Started
May Haynes came to you for advice. She has just purchased a large amount of inventory with the terms 2/TO, n/60. The amount of the invoice is $$260,000$. She is currently short on cash but has good
Sunset Retailers uses the periodic inventory system to account for its inventory transactions. The following account titles and balances were drawn from Sunset’s records for the year 2007:
Ramsey Company was started in 2007 when it acquired $$30,000$ from the issue of common stock. The following data summarize the company’s first three years’ operating activities. Assume that all
For each of the following events, determine the amount of freight paid by Tom’s Parts House. Also in- Event (b): Freight Costs dicate whether the freight is classified as a product or period cost.
At the beginning of 2005, the C. Eaton Company had the following balances in its accounts:During 2005, the company experienced the following events.1. Purchased inventory with a list price of
The following income statements were drawn from the annual reports of Hall Company:The president’s message in the company’s annual report stated that the company had implemented a strat¬ egy to
The following account titles and balances were taken from the adjusted trial balance of Scoggins Sales Co. at December 31, 2004. The company uses the periodic inventory method.Required:a. Prepare a
The following trial balance pertains to Reeves Hardware as of January 1, 2005:The following events occurred in 2005. Assume that Reeves Hardware uses the periodic inventory system.1. Purchased land
Supervalu, Inc., claims to be the largest publicly held food wholesaler in the United States. In addition to being a food wholesaler, it operates “extreme value” retail grocery stores under the
Academy Sales Company (ASC) started the 2007 accounting period with the balances given in the following financial statements model. During 2007 ASC experienced the following business events.1.

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