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Principles Of Financial Accounting 11th Edition Belverd E Needles, Marian Powers - Solutions

Wu Company sells outdoor sports equipment. At the December 31, 2010, year end, the following financial information was available from the income statement: administrative expenses, $161,600; cost of goods sold, $700,840; interest expense, $45,280; interest income, $5,600; net sales, $1,428,780; and
Rollins Products Company has had poor operating results for the past two years. As the accountant for Rollins Products Company, you have the following information available to you:Total assets and owners equity at the beginning of 2010 were $900,000 and $80,000, respectively. The owner made no
City Parking, which operates a sever-story parking building in downtown Pittsburgh, has a calendar year end. It serves daily and hourly parkers, as well monthly parkers who pay a fixed monthly rate in advance. The company traditionally has recorded all cash receipts as revenues when received. Most
Kubicki Company operates a chain of designer bags and shoes stores in the Houston area. This year the company achieved annual sales of $75 million, on which it earned a net income of $3 million. At the beginning of the year, management implemented a new inventory system that enabled it to track all
Review the multistep income statement presented in Exhibits 5-3 and 5-4. In your group, discuss how this form of the income statement meets each of these qualitative characteristics of accounting information: understandability, usefulness, relevance, and reliability. Be prepared to present your
Two of the largest chains grocery stores in the United States are Albertson's, Inc., and the Great Atlantic & Pacific Tea Company (A&P). In a recent fiscal year, Albertson's had a net income of $765 million, and A&P had a net income of $14 million. It is difficult to judge which company is more
Refer to CVS Corporation’s annual report in the Supplement to Chapter 5 to answer the following questions.1. Consolidated balance sheets:a. Did the amount of working capital increase or decrease from 2007 to 2008? By how much?b. Did the current ratio improve from 2007 to 2008?c. Does the company
Compare the financial performance of CVS and Southwest Airlines Co. on the basis of liquidity and profitability for 2008 and 2007. Use the following ratios: working capita, current ratio, debt to equity ratio, profit margin, asset turnover, return on assets, and return on equity. In 2006, total
Identify each of the following decision as most directly related to(a) Cash flow management(b) Choice of inventory system(c) Foreign merchandising transactions:1. Determination of the amount of time from the purchases of inventory until it is sold and the amount due is collected.2. Determination of
On average, Mason Company holds its inventory 40 days before it is sold, waits 25 days for customers’ payments, and takes 33 days to pay suppliers. For how many days must it provide financing in its operating cycle?
On April 15, Meier Company sold merchandise to Curran Company for $5,000 on terms of 2/10, n/30, Assume a return of merchandise on April 20 of $850 and collection in full on April 25. What is the amount collected by Meier on April 25?
Record in T account form each of the following transactions, assuming the perpetual inventory system is used:Aug. 2 Purchased merchandise on credit from Indio Company, invoice dated August, 1, terms n/10, FOB shipping point, $1,150.3 Received bill from Lee Shipping Company for transportation costs
Record in T account form the transaction sin SE 5, assuming the periodic inventory system is used.
Using the following data and assuming cost of goods sold is $273,700, prepare the cost of goods sold section of a merchandising income statement (periodic inventory system). Include the amount of purchase for the month of October.Freight-in ..................$13,800Merchandise inventory, Sept. 30,
Record in T account form the following transactions, assuming the periodic inventory system is used.Aug. 4 Sold merchandise on credit to Rivera Company, terms n/30, FOB destination, $5,040.5 Paid transportation costs for sale of August 4, 462.9 Part of the merchandise sold on August 4 was accepted
Develop a brief answer to each of the following questions:1. Can a company have a negative financing period?2. Suppose you sold goods to a company in Europe at a time when the exchange rate for the dollar was declining in relation to the euro. Would you want the European company to pay you in
Develop a brief answer toe ach of the following questions:1. Assume a large shipment of uninsured merchandise to your company is destroyed when the delivery truck has an accident and burns. Would you want the terms to be FOB shipping point or FOB destination?2. Under the perpetual inventory system,
The management of Posad Cotton Company made the decision that follow. Indicate whether each decision pertains primarily to(a) Cash flow managements,(b) Choice of inventory system, or(c) Foreign transactions.1. Decided to reduce the credit terms offered to customers from 30 days to 20 days to speed
A household appliance dealer buys refrigerators from a manufacturer and resells them to its customers.a. The manufacturer sets a list or catalogue price of $2,500 for a refrigerator. The manufacturer offers its dealers a 30 percent trade discount.b. The manufacturer sells the machine under terms of
Selected account balances at December 31, 2011, for Receptions, Etc. are listed below. Prepare an income statement for the year ended December 31, 2011. Show detail of net sales. The company uses the perpetual inventory system, and Freight-In has not been included in Cost of GoodsSold.
Given the following transactions engaged in by Stanford Company, prepare journal entries and, assuming the periodic inventory system, determine the total amount received from Penkas Company.Mar. 1 Sold merchandise on credit to Penkas Company, terms 2/10, n/30, FOB shipping point, $1,000.3 Accepted
Lien Company engaged in the following transactions:July 2 Purchased merchandise on credit from Jonak Company, terms 2/10, n/30, FOB destination, invoice dated July, 1, $4,000.6 Returned some merchandise to Jonak Company for full credit, $500.11 Paid Jonak Company for purchase of July 2 less return
The following transactions took place under the perpetual inventory system. Record each transaction in T account form.a. Purchased merchandise on credit, terms n/30, FOB shipping point, $2,500.b. Paid freight on the shipment in transaction a, $135.c. Purchased merchandise credit, terms n/30, FOB
On June 15, Palmyra Company sold merchandise for $5,200 on terms of n/30 to Lim Company. On June 20, Lim Company returned some of the merchandise for a credit of $1,200, and on June 25, Lim paid the balance owed. Give Palmyra’s entries in T account form to record the sale, return, and receipt of
Using the selected year-end account balances at December 31, 2010, for the Morris General Store shown below, prepare a 2010 income system. Beginning merchandise inventory was $28,000; ending merchandise inventory is$21,000.
Determine the missing data for each letter in the following three income statements for Sampson Paper Company (inthousands):
A dealer buys tooling machines from a manufacturer and resells them to its customers.a. The manufacturer sets a list or catalogue price of $12,000 for a machine. The manufacturer offers its dealers a 40 percent trade discount.b. The manufacturer sells the machine under terms of FOB shipping point.
Elm Company purchased a special-purpose machine from Ritholz Company on credit for €75,000. At the date of purchase, the exchange rate was $1.00 per euro. On the date of the payment, which was made in euros, the value of the euro was $1.25. Did Elm incur an exchange gain or loss? How much was it?
Using the data in E 9, give the entries in T account form to record each of the transactions under the periodic inventory system.
Using the relevant data in E 10, give the entries in T account form to record each of the transaction sunder the periodic inventory system.
At the end of the fiscal year, June 30, 2010, selected accounts from the adjusted trial balance for Barbara's Video Store were as follows:Required1. Prepare a multistep income statement for Barbara's Video Store. Freight-In should be combined with Cost of Goods Sold. Store Salaries Expense,
Vargo Company engaged in the following transactions in August 2011:Aug. 7 Sold merchandise on credit to Ken Smith, terms n/30, FOB shipping point, $3,000 (cost, $1,800).8. Purchased merchandise on credit from Novak Company, terms n/30, FOB shipping point, $6,000.9 Paid Smart Company for shipping
Selected accounts from the adjusted trial balance for Louise's Gourmet Shop as of March 31, 2011, the end of the current fiscal year. The merchandise inventory for Louise's Gourmet Shop was $38,200 at the beginning of the year and $29,400 at the end of the year.Required1. Using the information
Merchandising Transactions: Periodic Inventory System Use the data in P2 for this problem.Required1. Prepare entries in journal form to record the transactions, assuming use of the periodic inventory system. (Use the Review Problem in this chapter as a model).2. Most companies call the first line
Tattle Company engaged in the following transactions in October 2010:Oct. 7 Sold merchandise on credit to Lina Ortiz, terms n/30, FOB shipping point, $6,000 (cost, $3,600).8 Purchased merchandise on credit from Ruff Company, terms n/30, FOB shipping point, $12,000.9 Paid Ruff Company for shipping
As the end of the fiscal year, August 31, 2010, selected accounts from the adjusted trial balance for Pasha's Patio Furniture were as follows:Required1. Using the information given, prepare a multistep income statement for Pasha's Patio Furniture Store Salaries Expense, Advertising Expense, Store
Sarah Company engaged in the following transactions in July 2010:July 1 Sold merchandise to Chi Dong on credit, terms n/30, FOB shipping point, $2,100 (cost, $1,260).3 Purchased merchandise on credit from Angel Company, terms n/30, FOB shipping point, $3,800.5. Paid Speed Freight for freight
Selected accounts from the adjusted trial balance of Daniel's Sports Equipment on September 30, 2010, the fiscal year end. The company's beginning merchandise inventory was $81,222 and ending merchandise inventory is $76,664 for the period.Required1. Prepare a multistep income statement for
Use the date in P 7 for this problem.Required1. Prepare entries in journal form to record the transactions, assuming use of the periodic inventory system. (Use the Review Problem in this chapter as a model).2. Receiving cash rebates from suppliers based on the past year’s purchases is common in
Use the date in P 5 for this problem.Required1. Prepare entries in journal form to record the transactions, assuming use of the periodic inventory system. (Use the Review Problem in this chapter as a model.)
Jewell Home Source has operated in Kansas for 30 years. The company has always prided itself on giving customers individual attention. It carries a large inventory so it can offer a good selection and deliver purchases quickly. It accepts credit cards and checks but also provides 90 days of credit
Books-For-All is a well-established chain of 20 bookstores in western Ohio. In recent years, the company has grown rapidly, adding five new stores in regional malls. The manger of each store selects stock based on the market in his or her region. Managers select items from a master list of
E-commerce is a word coined to describe business conducted over the Internet. E-commerce is similar in some ways to traditional retailing, but it presents new challenges. Go to the website of Amazon.com. Investigate and list the steps a customer takes to purchase an item on the site. How do these
Refer to CVS’s annual report in the Supplement to Chapter 5 and to Figure and in this chapter. Assume that at any one time CVS has about 76 days of merchandise inventory available for sale, takes about 18 days to collect its receivables, and takes about 40 days to pay its creditors. Write a
Refer to the CVS annual report in the Supplement to Chapter 5 and to the following data (in millions) for Walgreens in 2008: net sales, $59,034; cost of sales, $42,391; total operating expenses, $13,202l and inventories, $7,249. Determine which company-CVS or Walgreens-had more profitable
Indicate whether each of the following actions relates to(a) Managing liquidity and cash flow,(b) Recognition of liabilities,(c) Valuation of liabilities,(d) Classification of liabilities, or(e) Disclosure of liabilities:1. Determining that a liability will be paid in less than one year2.
Robinson Company has current assets $65,000 and current liabilities of $40,000, of which accounts payable are $35,000. Robinson’s cost of goods sold is $230,000, its merchandise inventory increased by $10,000, and accounts payable were $25,000 the prior year. Calculate Robinson’s working
Indicate whether each of the following is(a) A definitely determinable liability,(b) An estimated liability,(c) A commitment, or(d) A contingent liability:1. Dividends payable2. Pending litigation3. Income taxes payable4. Current portion of long-term debt5. Vacation pay liability6. Guaranteed loans
On the last day of August, Avenue Company borrowed $240,000 on a bank note for 60 days at 12 percent interest. Assume that interest is stated separately. Prepare the following entries in journal form:(1) August 31, recording of note; and(2) October 30, payment of note plus interest.
The following payroll totals for the month of April are from the payroll register of Young Corporation: salaries, $223,000; federal income taxes withheld, $31,440; Social Security tax withheld, $13,826; Medicare tax withheld, $3,234; medical insurance deductions, $6,580; and salaries subject to
Harper Corp. manufactures and sells travel clocks. Each clock costs $12.50 to produce and sells for $25. In addition, each clock carries a warranty that provides for free replacement if it fails during the two years following the sale. In the past, 5 percent of the clocks sold have had to be
Find the present value of(1) A single payment of $24,000 at 6 percent for 12 years,(2) 12 annual payments of $2,000 at 6 percent,(3) A single payment of $5,000 at 9 percent for five years, and(4) Five annual payments of $5,000 at 9 percent.
Hogan Whitner owns a machine shop and has the opportunity to purchase a new machine for $30,000. After carefully studying projected costs and revenues, Whitner estimates that the new machine will produce a net cash flow of $7,200 annually and will last for eight years. Whitner believes that an
Develop a brief answer to each of the following questions:1. Nimish Banks, a star college basketball player, received a contract from the Midwest Blazers to play professional basketball. The contract calls for a salary of $420,000 a year for four years, dependent on his making the team in each of
Develop a brief answer to each of the following questions:1. Is a friend who borrows money from you for three years and agrees to pay you interest after each year paying you simple or compound interest?2. Ordinary annuities assume that the first payment is made at the end of each year. In a
Indicate whether each of the following actions relates to(a) Managing liquidity and cash flows,(b) Recognition of liabilities,(c) Valuation of liabilities,(d) Classification of liabilities, or(e) Disclosure of liabilities:1. Setting a liability at the fair market value of goods to be delivered2.
On the last day of October, Wicker Company borrows $120,000 on a bank note for 60 days at 11 percent interest. Interest is not included in the face amount. Prepare the following entries in journal form:(1) October 31, recording of note;(2) November 30, accrual of interest expense, and(3) December
Web Design Services billed its customers a total of $490,200 for the month of August, including 9 percent federal excise tax and 5 percent sales tax.1. Determine the proper amount of service revenue to report for the month.2. Prepare an entry in journal form to record the revenue and related
At the end of October, the payroll register for Global Tool Corporation contained the following totals; wages, $742,000; federal income taxes withheld, $189,768; state income taxes withheld, $31,272; Social Security tax withheld, $46,004; Medicare tax withheld, $10,759; medical insurance
Sanchez Company manufactures and sells electronic games. Each game costs $50 to produce, sells for $90, and carries a warranty that provides for free replacement if it fails during the two years following the sale. In the Past 7 percent of the games sold had to be replaced under the warranty.
Angel Corporation gives three weeks paid vacation to each employee who has worked at the company for one year. Based on studies of employee turnover and previous experience, management estimates that 65 percent of the employees will qualify for vacation pay this year.1. Assume that Angel’s July
Tracy Collins is contemplating paying five years’ rent in advance. Her annual rent is $25,200. Calculate the single sum that would have to be paid now for the advance rent if we assume compound interest of 8 percent.
Find the present value of(1) A single payment of $24,000- at 6 percent for 12 years,(2) 12 annual payments of $2,000 at 6 percent,(3) A single payment of $5,000 at 9 percent for five years, and(4) 5 annual payments of $5,000 at 9 percent.
A contract calls for a lump-sum payment of $15,000. Find the present value of the contract, assuming that(1) The payment is due in five years and the current interest rate is 9 percent;(2) The payment is due in ten years and the current interest rate is 9 percent;(3) The payment is due in five
A contract calls for annual payments of $1,200. Find the present value of the contract, assuming that(1) The number of payments is 7 and the current interest rate is 6 percent:(2) The number of payments is 14 and the current interest rate is 6 percent(3) The number of payments is 7 and the current
Robert Baka owns a service station and has the opportunity to purchase a car-wash machine for $30,000. After carefully studying projected costs and revenues, Baka estimates that the car-wash machine will produce a net cash flow of $5,200 annually and will last for eight years. He determines that an
Antwone Equipment Corporation sold a precision tool machine with computer controls to Trudeau Corporation for $200,000 on January 2 and agreed to take payment nine months later on October 2. Assuming that the prevailing annual interest rate for such a transaction is 16 percent compounded quarterly,
Eva Prokop is attempting to sell her business to Joseph Khan 2. The company has assets of $3,600,000, liabilities of $3,200,000, and owner’s equity of $400,000. Both parties agree that the proper rate of return to expect is 12 percent; however, they differ on other assumptions. Prokop believes
In 2010, Hagler Company had current assets of $310,000 and current liabilities of $200,000, of which accounts payable were $130,000. Cost of goods sold was $850,000, merchandise inventory increased by $80,000, and accounts payable were $110,000 in the prior year. In 2011, Hagler had current
Listed below are common types of current liabilities, contingencies, and commitments:a. Accounts payableb. Bank loans and commercial paperc. Notes payabled. Dividends payablee. Sales and excise taxes payablef. Current portion of long-term debtg. Payroll liabilitiesh. Unearned revenuesi. Income
The management of K&S, Inc., took the following actions that went into effect on January 2, 2010. Each action involved an application of present value.a. Asked for another fund to be established by a single payment to accumulate to $75,000 in four years.b. Approved the purchase of a parcel of
Part A: State Mill Company, whose fiscal year ends December 31, completed the following transactions involving notes payable:2010Nov. 25 Purchased a new loading cart by issuing a 60-day 10 percent note for $86,400.Dec. 31 Made the end-of-year adjusting entry to accrue interest expense.2011Jan. 24
The Smart Way Products Company manufactures and sells wireless video cell phone, which it guarantees for five years. If a cell phone fails, it is replaced free, but the customer is charged a service fee for handling. In the past, management has found that only 3 percent of the cell phones sold
Tony Garcia opened a small dryer repair shop, Garcia Repair Shop, on January 2, 2010. The shop also sells a limited number of dryer parts. In January 2011, Garcia realized he had never filed any tax reports for his business and therefore probably owes a considerable amount of taxes. Since he has
Andy Corporations’ management took the following actions, which went into effect on January 2, 2010. Each action involved an application of present value.a. Andy Corporation enters into a purchase agreement that calls for a payment of $500,000 three years from now.b. Bought out the contract of a
Part A: Nazir Corporation, whose fiscal year ended June 30, 2011, completed the following transactions involving notes payable:May 21 Obtained a 60-day extension on an $18,000 trade account payable owed to a supplier by signing a 60-day $18,000 note. Interest is in addition to the face value, at
Telemix Company is engaged in the retail sale of high-definition televisions (HDTVs). Each HDTV has a 24-month warranty on parts. If a repair under warranty is required, a charge for the labor is made. Management has found that 20 percent of the HDTVs sold require some work before the warranty
Jose Hernandez opened a small motorcycle repair shop, Hernandez Cycle Repair, on January 2, 2011. The shop also sells a limited number of motorcycle parts. In January 2012, Hernandez realized he had never filed any tax reports for his business and therefore probably owes a considerable amount of
JetGreen Airways instituted a frequent flyer program in which passengers accumulate points toward a free flight based on the number of miles they fly on the airline. One point was awarded for each mile flown, with a minimum of 750 miles being given for any flight. Because of competition in 2010,
In its Year-End Countdown Sales, a local Cadillac auto dealer advertised 0% interest 60 months. What role does the time value of money play in this promotion? Assuming that Cadillac is able to borrow funds at 8 percent interest, what is the cost Cadillac of every customer who takes advantage of
The decision to recognize and record a liability is sometimes a matter of judgment. People who use General Motors credit cards earn rebates toward the purchase or lease of GM vehicles in relation to the amount of purchases they make with their cards. General Motors chooses to treat these
Assume that you work for Theater-At-Home, Inc., a retail company that sells basement movie projection systems for $10,000. Your boss is considering two types of promotions:1. Offering customers a $1,000 coupon that they can apply to future purchases, including the purchases of annual maintenance.2.
Refer to the quarterly financial report near the end of the notes to the financial statements in CVS’s annual report. Is CVS’s a seasonal business? Would you expect short-term borrowings and accounts payable to be unusually high or unusually low at the balance sheet date of December 31,
Refer to CVS's financial statements in the Supplement to Chapter 5 and to the following data for Walgreens:
Indicate whether each of the following actions is related to(a) Managing cash needs,(b) Setting credit policies,(c) Financing receivables, or(d) Ethically reporting receivables:1. Selling accounts receivables to a factor2. Borrowing funds for short-term needs during slow periods3. Conducting
Graff Company has cash of $40,000, net accounts receivable of $90,000, and net sales of $720,000. Last year’s net accounts receivable were $70,000. Compute the following ratios:(a) Receivable turnover and(b) Days sales uncollected.
Compute the amount of cash and cash equivalent on Car Wash Company’s balance sheet if, on the balance sheet date, it has currency and coins on hand of $125, deposits in checking accounts of $750, U.S. Treasury bills due in 80 days of $7,500, and U.S. Treasury bonds due in 200 days of $12,500.
Prepare a bank reconciliation from the following information:a. Balance per bank statement as of June 30, $4,862.77b. Balance per books as of June 30, $2,479.48c. Deposits in transit, $654.24d. Outstanding checks, $3,028.89e. Interest on average balance, $8.64
At the end of October, Zion Company’s management estimates the uncollectible accounts expense to be 1 percent of net sales of $1,500,000. Prepare the entry to record the uncollectible accounts expense, assuming the Allowance for Uncollectible Accounts has a debit balance of $7,000.
An aging analysis on June 30 of the accounts receivable of Sung Corporation indicates that uncollectible accounts amount to $86,000. Prepare the entry to record uncollectible accounts expense under each of the following independent assumptions:a. Allowance for Uncollectible Accounts has a credit
Windy Corporation, which uses the allowance method, has accounts receivable of $50,800 and an allowance for uncollectible accounts of $9,800. An account receivable from Tom Novak of $4,400 is deemed to be uncollectible and is written off. What is the amount of net accounts receivable before and
On August 25, Champion Company received a 90-day, 9 percent note in settlement of an account receivable in the amount of $20,000. Determine the maturity date, amount of interest on the note, and maturity value.
Develop a brief answer to each of the following questions:1. Name some business whose needs for cash fluctuate during the year. Name some whose needs for cash are relatively stable over the year.2. Why is it advantageous for a company to finance its receivables?3. To increase its sales, a company
Develop a brief answer to each of the following questions:1. What accounting rule is violated by the direct charge-off method of recognizing uncollectible accounts? Why?2. In what ways is Allowance for Uncollectible Accounts similar to Accumulated Depreciation? In what ways is it different?3. Under
Indicate whether each of the following actions is primarily related to(a) Managing cash needs,(b) Setting credit policies,(c) Financing receivables, or(d) Ethically reporting accounts receivable:1. Buying a U.S. Treasury bill with cash that is not needed for a few months2. Comparing receivable
Using the following data from Lopez Corporation’s financial statements, compute the receivable turnover and the days sales uncollected:Current assetsCash ............................................................$ 35,000Short-term investments ............................. 85,000Notes receivable
At year end, Lam Company had currency and coins in cash registers of $2,800, money orders from customers of $5,00, deposits in checking accounts of $32,000, U.S. Treasury bills due in 80 days of $90,000, certificates of deposit at the bank that mature in six months of $100,000, and U.S. Treasury
Prepare a bank reconciliation from the following information:a. Balance per bank statement as of May 31, $17,755.44b. Balance per books as of May 31, $12, 211.94c. Deposits in transit, $2,254.81d. Outstanding checks, $7,818.16e. Bank service charge, $19.85
At the end of the year, Email Enterprises estimates the uncollectible accounts expense to be 0.8 percent of net sales of $7,575,000. The current credit balance of Allowance for Uncollectible Accounts is $12,900. Prepare the entry to record the uncollectible accounts expense. What is the balance of
The Accounts Receivable account of Samson Company shows a debit balance of $52,000 at the end of the year. An aging analysis of the individual accounts indicates estimated uncollectible accounts to be $3,350.Prepare the entry to record the uncollectible accounts expense, under each of the

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