Questions and Answers of Survey of Accounting

Verizon Communications Inc. is one of the world’s largest providers of communication services. The following information, taken from the company’s annual reports, is available for the years 2003,
Following are the net earnings of four large companies for the fiscal years from 1999 to 2002. These amounts are in thousands of dollars.Required:Based on this information alone, decide which of the
The following information relates to two companies in the same industry.Required:a. Calculate the percentage growth rate of each company’s net earnings from 2004 to 2007.b. Based on this
The following information was drawn from the financial statements of Last Minute Inc. and the Just-in-Time Co.Required:a. Calculate the earnings per share (EPS) for each company.b. Calculate the
Many companies grant certain members of management stock options that allow them to purchase designated amounts of stock for less than its market price. These arrangements are referred to as stock
Glenn’s Cleaning Services Company is experiencing cash flow problems and needs a loan. Glenn has a friend who is willing to lend him the money he needs provided she can be convinced that he will be
Although most of this course is concerned with the financial statements themselves, all sections of a company’s annual report are important. A company must file various reports with the SEC, and
Hamby Inc. experienced the following events in 2006, in its first year of operation.1. Received $$15,000$ cash from the issue of common stock.2. Performed services on account for $$48,000$.3.
Pilgram Company earned $$6,000$ of service revenue on account during 2008. The company collected $$5,200$ cash from accounts receivable during 2008.Required:Based on this information alone,
The following events apply to 2005, the first year of operations of ITS Consulting Services:1. Acquired $$20,000$ cash from the issue of common stock.2. Paid $ 12,000 cash in advance for a one-year
The Copy Center Inc. started the 2005 accounting period with $$8,000$ cash, $$6,000$ of common stock, and $$2,000$ of retained earnings. The Copy Center was affected by the following accounting
Meg Sanderfert started a personal financial planning business when she accepted $$60,000$ cash as advance payment for managing the financial assets of a large estate. Sanderfert agreed to manage
Steve Chang received $$500$ in advance for tutoring fees when he agreed to help Jon Seng with his in¬ troductory accounting course. Upon receiving the cash, Steve mentioned that he would have to
Clair Seaton tells you that the accountants where she works are real hair splitters. For example, they make a big issue over the difference between a cost and an expense. She says the two terms mean
On September 1, 2007, Ameriship paid West Coast Rentals $$36,000$ for a 12-month lease on ware¬ house space.Required:a. Record the deferral and the related December 31,2007, adjustment for
The following transactions pertain to the operations of Stone Company for 2008:1. Acquired $$24,000$ cash from the issue of common stock.2. Provided $$40,000$ of services on account.3. Incurred
Explain how each of the following events or series of events and the related adjusting entry will affect the amount of net income and the amount of cashflowfrom operating activities reported on the
D. Downs, Attorney at Law, experienced the following transactions in 2007, the first year of operations:1. Purchased $$1,200$ of office supplies on account.2. Accepted $$18,000$ on February 1,
On May 1, 2007, Dobler Corporation paid $$9,600$ to purchase a 24-month insurance policy. Assume that Dobler records the purchase as an asset and that the books are closed on December
In 2008, Lott Inc. billed its customers $$56,000$ for services performed. The company collected $$42,000$ ofthe amount billed. Lott incurred $$38,000$ of other operating expenses on account.
Morgan Associates experienced the following accounting events during its 2006 accounting period.1. Recognized revenue on account.2. Issued common stock.3. Paid cash to purchase supplies.4. Collected
The following information was drawn from the accounting records of Pearson Company as of December 31,2007, before the temporary accounts had been closed. The Cash balance was $$3,000$, and Notes
Which of the following accounts are closed at the end of the accounting period?a. Accounts Payableb. Unearned Revenuec. Cashd. Accounts Receivablee. Service Revenuef. Advertising Expense g.
Identify whether each of the following items would appear on the income statement (IS), statement of changes in stockholders’ equity (SE), balance sheet (BS), or statement of cash flows (CF). Some
The following information is available for two companies.Required:a. Compute the price-earnings ratio for each company.b. Explain why one company would have a higher price-earnings ratio than the
The following events pertain to The Plains Company:1. Acquired $$12,000$ cash from the issue of common stock.2. Provided services for $$4,000$ cash.3. Provided $$12,000$ of services on
a. On February 1, 2005, Business Help Inc. was formed when it received $$60,000$ cash from the is¬ sue of common stock. On May 1, 2005, the company paid $$36,000$ cash in advance to rent office
Each of the following independent events requires a year-end adjusting entry. Show how each event and its related adjusting entry affect the accounting equation. Assume a December 31 closing date.
Texas Drilling Company was formed on January 1,2008.Events Affecting the 2008 Accounting Period 1. Acquired cash of $$50,000$ from the issue of common stock.2. Purchased $$800$ of supplies on
Rios Company had the following balances in its accounting records as of December 31, 2006:The following accounting events apply to Rios's 2007 fiscal year:Jan. 1 Acquired an additional $$40,000$
The following accounts and balances were drawn from the records of Warren Company at December 31, 2005:Required:Use the accounts and balances from Warren Company to construct an income statement,
Identify whether each of the following items would appear on the income statement (IS), statement of changes in stockholders’ equity (SE), balance sheet (BS), or statement of cash flows (CF). Some
What does the P/E ratio measure?
Why might a high-growth company sell for a higher P/E multiple than a low-growth company?
The following selected financial information is available for J&G Inc. Amounts are in millions of dollars.Required:-a. Divide the class into groups of four or five students each. Organize the
The following cash transactions occurred in five real world companies during 2004:1. FedEx Corp., which is the holding company of Federal Express, purchased Kinko's, Inc., on February 12, 2004, for
The following information was drawn from the annual report of Machine Import Company (MIC):Required:-a. Compute the percentage of growth in net income from 2001 to 2002. Can stockholders expect a
Research Assignment Finding real-world accounting information The Curious Accountant story at the beginning of this chapter referred to McDonald’s Corporation and discussed who its stakeholders
Gifford Company experienced the following accounting events during 2008.1. Started operations on January 1 when it acquired $$20,000$ cash by issuing common stock.2. Earned $$18,000$ of revenue
Assume that Mallory Company acquires $$700$ cash from creditors and $$900$ cash from investors (stockholders). The company then has an operating loss of $$1,000$ cash and goes out of
Reza Piemo recently started a business. During the first few days of operation, Mr. Pierno transferred $$15,000$ from his personal account into a business account for a company he named Pierno
White a briefmemo that distinguishes between the dements of financial statements and the accounts that appear on financial statements.
The following three requirements are independent of each other.a. James Auto Parts has assets of $$9,100$ and equity of $$6,500$. What is the amount of liabilities? What is the amount of
Sun Co. experienced the following events during 2006.1. Acquired cash from the issue of common stock.2. Provided services to clients for cash.3. Borrowed cash.4. Paid operating expenses with cash.5.
Jeter Company was started in 2009 when it acquired $$18,000$ cash by issuing common stock. The cash acquisition was the only event that affected the business in 2009.Required:a. Write an accounting
South Pacific Company was started in 2007 when it issued a note to borrow $$8,400$ cash. Assume this is the only accounting event that occurred during 2007.Required:a. Write an accounting equation,
Epps Company was started on January 1, 2005. During 2005, the company experienced the following three accounting events: (1) earned cash revenues of $$13,500$, (2) paid cash expenses of $$8,600$,
At the beginning of 2004, Quick Service Company’s accounting records had the following general ledger accounts and balances.Quick completed the following transactions during 2004:1. Purchased
Dale Company experienced the following events during 2004.1. Acquired $$30,000$ cash from the issue of common stock.2. Paid $$12,000$ cash to purchase land.3. Borrowed $$8,000$ cash.4. Provided
Foster Company experienced the following events during its first year of operations.1. Acquired $$10,000$ cash from the issue of common stock.2. Borrowed $$8,000$ cash from First Bank.3. Paid
Eastern Company was organized when it acquired $$1,000$ cash from the issue of common stock. During its first accounting period the company earned $$800$ of cash revenue and incurred $$500$ of
Feloma Company purchased land in April 2001 at a cost of $$520,000$. The estimated market value of the land is $$600,000$ as of December 31, 2004. Feloma purchased marketable equity securities
Hanson Company was started in 2004 when it acquired $$50,000$ cash by issuing common stock to Michael Hanson.Required:a. Was this event an asset source, use, or exchange transaction for Hanson
As of December 31, 2006, Thomas Company had total assets of $$156,000$, total liabilities of $$85,600$, and common stock of $$48,400$. During 2007 Thomas earned $$36,000$ of cash revenue,
The December 31, 2006, balance sheet for Kerr Company showed total stockholders’ equity of $$62,500$. Total stockholders’ equity increased by $$53,400$ between December 31, 2006, and December
Hayes Consulting Services experienced the following events during 2006.1. Acquired cash by issuing common stock.2. Collected cash for providing tutoring services to clients.3. Borrowed cash from a
Marshall Co. was started in 2006. During 2006, the company (1) acquired $$9,000$ cash from the issue of common stock, (2) earned cash revenue of $$18,000$, (3) paid cash expenses of $$12,500$,
Tax Help Inc. was started on January 1, 2006. The company experienced the following events during its first year of operation.1. Acquired $$30,000$ cash from the issue of common stock.2. Paid
The Shoe Shop experienced the following events during its first year of operations, 2008.1. Acquired cash by issuing common stock.2. Provided services and collected cash.3. Borrowed cash from a
Jane Wong is a certified public accountant (CPA). She follows a code of professional conduct in the performance of her duties.Required:a. Name the organization that established the code of conduct
Keller Consulting experienced the following transactions for 2006, its first year of operations, and 2007. Assume that all transactions involve the receipt or payment ofcash.Transactions for 2006 1.
O’Shea Enterprises started the 2006 accounting period with $$30,000$ of assets (all cash), $$18,000$ of li¬ abilities, and $$4,000$ of common stock. During the year, O’Shea earned cash
Lighthouse Services experienced the following transactions during 2006.1. Acquired cash by issuing common stock.2. Received cash for performing services.3. Paid cash expenses.4. Borrowed cash from
Flick Company was started on January 1, 2007, and experienced the following events during its first year of operation.1. Acquired $$30,000$ cash from the issue of common stock.2. Borrowed
Clair Cubelic, a private accountant employed by a large corporation, holds the CMA professional designation. She is a trusted employee who is eager to help others whenever necessary. For example,
During 2005 Rustic Camp Sites experienced the following transactions.1. RCS acquired $$32,000$ cash by issuing common stock.2. RCS received $$116,000$ cash for providing services to customers
Ma Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Southwest. Ma Restaurant Corporation, which had 40,000 shares of common stock outstanding, declared a 4-for-1 stock
Awesome Audio Works, Inc. warrants its products for one year. The estimated product warranty is 2% of sales. Assume that sales were $500,000 for January. In February, a customer received warranty
The price-earnings ratio for the common stock of Breeden Company was 12 at December 31, the end of the current fiscal year. What does the ratio indicate about the selling price of the common stock in
An owner of 250 shares of Reynolds Spring Company common stock receives a stock dividend of 20 shares. (a) What is the effect of the stock dividend on the stockholder’s proportionate interest
The treasury stock in Question 14 is resold for $3,250,000. (a) What is the effect on the corporation’s revenue of the period? (b) What is the effect on stockholders’ equity?
The following data relate to a $5,000,000, 6% bond issue for a selected semiannual interest period:(a) Were the bonds issued at a discount or at a premium?(b) What expense account was decreased to
When are short-term notes payable issued?
Pac Vac Company purchased a machine that has a manufacturer’s suggested life of 15 years. The company plans to use the machine on a special project that will last 12 years. At the completion of the
Immediately after a used truck is acquired, a new motor is installed and the tires are replaced at a total cost of $3,175. Is this a capital expenditure or a revenue expenditure?
My Mother’s Closet Company solicited bids from several contractors to construct an addition to its office building. The lowest bid received was for $375,000. My Mother’s Closet Company decided to
Mancini Outfitters Co. has a fleet of automobiles and trucks for use by salespersons and for delivery of office supplies and equipment. East Village Auto Sales Co. has automobiles and trucks for
Which of the three methods of inventory costing—FIFO, LIFO, or average cost—will in general yield an inventory cost most nearly approximating current replacement cost?
Gallatin’s Hardware is a small hardware store in the rural township of Willow Creek that rarely extends credit to its customers in the form of an account receivable. The few customers that are
For a recent year, Best Buy reported revenue of $40,023 million. Its gross profit was $9,546 million. What was the amount of Best Buy’s cost of merchandise sold?
Employees performed services in 2010, but the wages were not paid until 2011. During which year would the wages expense be reported on the income statement under (a) the cash basis? (b) the accrual
Fees for services provided are billed to a customer during 2010. The customer remits the amount owed in 2011. During which year would the revenues be reported on the income statement under (a) the
If the net income for the current year had been $424,300 in Exercise 3–18, what would have been the correct net income if the proper adjustments had been made?Data From Exercise 3-18:The accountant
The balances of the two wages accounts at December 31, after adjustments at the end of the first year of operations, are Wages Payable, $3,175, and Wages Expense, $93,800. Determine the amount of
The balance in the unearned fees account, before adjustment at the end of the year, is $27,300. What is the adjustment if the amount of unearned fees at the end of the year is $14,650? Indicate each
The balance in the unearned fees account, before adjustment at the end of the year, is $29,300. What is the adjustment if the amount of unearned fees at the end of the year is $14,650? Indicate each
The balance in the unearned fees account, before adjustment at the end of the year, is $27,300. What is the adjustment if the amount of unearned fees at the end of the year is $15,650? Indicate each
Answer each of the following independent questions concerning supplies and the adjustment for supplies.(a) The balance in the supplies account, before adjustment at the end of the year, is $3,175.
The total assets and total liabilities of Marathon Oil and Dell are shown here.Determine the stockholders’ equity of each company.
The following information concerns production in the Finishing Department for July. The Finishing Department uses the weighted average cost (WAC) method.
The Hershey Foods Company manufactures chocolate confectionery products. The three largest raw materials are cocoa beans, sugar, and dehydrated milk. These raw materials first go into the Blending
The following table summarizes the rules of debit and credit. For each of the items (a) through (l), indicate whether the proper answer is a debit or a credit.
Carnival Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships can hold up to 3,600 passengers and cost $750 million to build. Assume the
How does using the return on investment facilitate comparability between divisions of decentralized companies?
Why should the factors under the control of the investment center manager (revenues, expenses, and invested assets) be considered in computing the return on investment?
What is the major shortcoming of using operating income as a performance measure for investment centers?
The following data relate to factory overhead cost for the production of 8,000 computers:
H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (6,000 pounds) has the following standards:
A new assistant controller recently said: “All the assembly workers in this plant are covered by union contracts, so there should be no labor variances.” Was the controller’s remark correct?
Bozeman Coffee Company produces Columbian coffee in batches of 10,000 pounds. The standard quantity of materials required in the process is 10,000 pounds, which cost $3.50 per pound. Columbian coffee

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