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Financial Accounting 6th Edition Libby, Short - Solutions

Given the transactions in M3–7 and M3–8 (including the examples), prepare an income statement for Bob’s Bowling, Inc., for the month of July 2011.
Given the transactions in M3–7 and M3–8 (including the examples), prepare the Operating Activities section of the statement of cash flows for Bob’s Bowling, Inc., for the month of July 2011.
The following data are from annual reports of Jill€™s Jewelry Company:Compute Jill€™s total asset turnover ratio for 2012 and 2011. What do these results suggest to you about Jill€™s JewelryCompany?
Ru€™s Sports, Inc., sells sports equipment to customers. Its fiscal year ends on December 31. The following transactions occurred in 2011:a. Paid employees $54,200 in wages for the year; an additional $4,800 for 2011 wages will be paid in January 2012.b. Purchased $334,000 of new sports
Revenues are normally recognized when the delivery of goods or services has occurred, there is persuasive evidence of an arrangement for customer payment, the price is fixed or determinable, and collection is reasonably assured. The amount recorded is the cash-equivalent sales price. The following
Revenues are normally recognized when goods or services have been provided and payment or promise of payment has been received. Expense recognition is guided by an attempt to match the costs associated with the generation of those revenues to the same time period. The following transactions
Wolverine World Wide, Inc., manufactures military, work, sport, and casual footwear and leather accessories under a variety of brand names, such as Hush Puppies, Wolverine, and Bates, to a global market. The following transactions occurred during a recent year. Dollars are in thousands.a. Issued
Sysco, formed in 1969, is North America’s largest marketer and distributor of food service products, serving approximately 400,000 restaurants, hotels, schools, hospitals, and other institutions. The following summarized transactions are typical of those that occurred in a recent year (dollars
Vail Resorts, Inc., owns and operates five premier year-round ski resort properties (Vail Mountain, Beaver Creek Resort, Breckenridge Mountain, and Keystone Resort, all located in the Colorado Rocky Mountains, and Heavenly Valley Mountain Resort, located in the Lake Tahoe area of
Rowland & Sons Air Transport Service, Inc., has been in operation for three years. The following transactions occurred in February:February 1 Paid $225 for rent of hangar space in February.February 2 Purchased fuel costing $490 on account for the next flight to Dallas.February 4 Received
Eddy's Piano Rebuilding Company has been operating for one year (2010). At the start of 2011, its income statement accounts had zero balances and its balance sheet account balances were as follows:Required:1. Create T-accounts for the balance sheet accounts and for these additional accounts:
Wendy Fonder and Susan Engelkemeyer had been operating a catering business, Traveling Gourmet, for several years. In March 2011, the partners were planning to expand by opening a retail sales shop and decided to form the business as a corporation called Traveling Gourmet, Inc. The following
Katie€™s Kite Company (a corporation) sells and repairs kites from manufacturers around the world. Its stores are located in rented space in malls and shopping centers. During its first month of operations ended April 30, 2010, Katie€™s Kite Company completed eight transactions
DeVita Company, which has been operating for three years, provides marketing consulting services worldwide for dot-com companies. You are a financial analyst assigned to report on the DeVita management team’s effectiveness at managing its assets efficiently. At the start of 2012 (its fourth
A recent annual report of The New York Times Company, a diversified media company that currently includes newspapers (including The New York Times), Internet businesses, and television and radio stations, included the following accounts. Dollars are in millions:Required:1. For each T-account,
Chris Chudkosky organized a new company, CollegeCaps, Inc. The company operates a small store in an area mall and specializes in baseball-type caps with logos printed on them. Chris, who is never without a cap, believes that his target market is college and high school students. You have been hired
Syrena Shirley, a connoisseur of fine chocolate, opened Syrena's Sweets in Collegetown on February 1, 2011. The shop specializes in a selection of gourmet chocolate candies and a line of gourmet ice cream. You have been hired as manager. Your duties include maintaining the store's financial
Following are several account balances (in millions of dollars) from a recent FedEx annual report, followed by several typical transactions. Assume that the following are account balances on June 30, 2009:These accounts are not necessarily in good order and have normal debit or credit balances. The
Cedar Fair, L. P. (Limited Partnership) is one of the largest regional amusement park operators in the world, owning 12 amusement parks, five outdoor water parks, one indoor water park, and six hotels.The parks include Cedar Point in Ohio, Valleyfair near Minneapolis/St. Paul, Dorney Park and
James Evans is the president of ServicePro, Inc., a company that provides temporary employees for not-for-profit companies. ServicePro has been operating for five years; its revenues are increasing with each passing year. You have been hired to help James analyze the following transactions for the
Spicewood Stables, Inc., was established in Austin, Texas, on April 1, 2010. The company provides stables, care for animals, and grounds for riding and showing horses. You have been hired as the new assistant controller. The following transactions for April 2010 are provided for your review.a.
The following are the summary account balances from a recent balance sheet of Exxon Mobil Corporation. The accounts have normal debit or credit balances, but they are not necessarily listed in good order. The amounts are shown in millions of dollars. Assume the year-end is December 31, 2010.The
Lippitt Painting Service Company was organized on January 20, 2011, by three individuals, each receiving 5,000 shares of stock from the new company. The following is a schedule of the cumulative account balances immediately after each of the first 10 transactions ending on January 31,
Complete the following tabulation, indicating the sign of the effect (+ for increase, €“ for decrease, and NE for no effect) of each transaction. Consider each item independently.a. Recorded sales on account of $80 and related cost of goods sold of $50.b. Recorded advertising expense of
Using the following categories, indicate the effects of the following transactions. Use + for increase and – for decrease and indicate the accounts affected and the amounts.a. Sales on account were $500 and related cost of goods sold was $200.b. Issued 5,000 shares of $1 par value stock for
Chen, Inc., recently reported the following December 31 amounts in its financial statements (dollars in thousands):Compute return on equity for the current year. What does this ratiomeasure?
Campbell Soup Company is the world€™s leading maker and marketer of soup, and sells other well-known brands of food in 120 countries. Presented here are the items listed on its recent balance sheet (dollars in millions) presented in alphabetical order:Required:Prepare a classified
Lance, Inc., manufactures, markets, and distributes a variety of snack foods. Product categories include sandwich crackers, cookies, restaurant crackers and bread basket items, candy, chips, meat snacks, nuts, and cake items. These items are sold under trade names including Lance, Toastchee,
Oakley, designer and manufacturer of high-performance eyewear, reported the following December 31 balances in its stockholders€™ equity accounts (dollars in thousands):During the current year, Oakley reported net income of $50,371.Required:1. How much did Oakley pay in dividends for the
Supply the missing dollar amounts for the 2010 income statement of Ultimate Style Company for each of the following independent cases
The following data were taken from the records of Village Corporation at December 31, 2011:Sales revenue .......... $79,000Gross profit ............ 28,000Selling (distribution) expense ..... 7,000Administrative expense ...... ?Pretax income ............ 13,000Income tax rate
The following data were taken from the records of Thayer Appliances, Incorporated, at December 31, 2010:Sales revenue ............... $130,000Administrative expense ........... 16,000Selling (distribution) expense ........ 18,000Income tax rate ............... 25%Gross profit
Hasbro is one of the world€™s leading toy manufacturers, and maker of such popular board games as Monopoly, Scrabble, and Clue, among others. Listed here are selected aggregate transactions from the first quarter of a recent year (dollars in millions). Complete the following tabulation,
Listed here are selected aggregate transactions for Restful Furniture Company from the first quarter of a recent year (dollars in millions). Complete the following tabulation, indicating the sign (+ for increase €“ for decrease, and NE for no effect) and amount of the effect of each
Blackwell Corporation is preparing its annual financial statements at December 31, 2009. Listed here are the items on its statement of cash flows presented in alphabetical order. Parentheses indicate that a listed amount should be subtracted on the cash flow statement. The beginning balance in
Tiffany & Co. is one of the world€™s premier jewelers and designer of other fine gifts and house-wares. Presented here are selected income statement and balance sheet amounts (dollars in thousands).Required:1. Compute ROE for the current and prior years and explain the meaning of the
Papa John€™s is one of the fastest-growing pizza delivery and carry-out restaurant chains in the country. Presented here are selected income statement and balance sheet amounts (dollars in thousands).Required:1. Compute ROE for the current and prior years and explain the meaning of the
Gold Jewelers is developing its annual financial statements for 2011. The following amounts were correct at December 31, 2011: cash, $58,000; accounts receivable, $71,000; merchandise inventory, $154,000; prepaid insurance, $1,000; investment in stock of Z corporation (long-term), $36,000; store
At the end of the 2009 annual reporting period, El Paso Corporation’s balance sheet showed the following:EL PASO CORPORATIONBalance SheetAt December 31, 2009Stockholders’ EquityContributed capitalCommon stock (par $15; 6,000 shares) ........$ 90,000Paid-in capital ..................
Tommy Hilfiger Corporation designs, sources, and markets men’s and women’s sportswear, jeanswear, and childrenswear under the Tommy Hilfiger trademarks. The company prides itself in producing distinctive designs that recognize tradition while adding a fresh, youthful perspective. The items
Thomas Sales Company (organized as a corporation on April 1, 2009) has completed the accounting cycle for the second year, ended March 31, 2011. Thomas also has completed a correct trial balance as follows:Required:Complete the financial statements, as follows:a. Classified (multiple-step) income
Creative Technology, a computer hardware company based in Singapore, developed the modern standard for computer sound cards in the early 1990s. Recently, Creative has released a line of portable audio products to directly compete with Apple€™s popular I-Pod mp3 player. Presented here is a
Newell Rubbermaid Inc. manufactures and markets a broad array of office products, tools and hardware, and home products under a variety of brand names including Sharpie, Paper Mate, Rolodex, Rubbermaid, Levolor, and others. The items reported on its income statement for the year ended December 31,
The Java House is developing its annual financial statements for 2012. The following amounts were correct at December 31, 2012: cash, $58,800; investment in stock of PIZ corporation (long term), $36,400; store equipment, $67,200; accounts receivable, $71,820; inventory, $154,000; prepaid rent,
At the end of the 2010 annual reporting period, Zephyr Industries’ balance sheet showed the following:ZEPHYR INDUSTRIESBalance SheetAt December 31, 2010Stockholders’ EquityCommon stock (par $15; 7,000 shares) ......... $105,000Additional paid-in capital ............. 9,000Retained
Atomic Sales (organized as a corporation on September 1, 2008) has completed the accounting cycle for the second year, ended August 31, 2010. Atomic also has completed a correct trial balance as follows:Required:Complete the financial statements, as follows:a. Classified (multiple-step) income
Avon Products, Inc. is a leading manufacturer and marketer of beauty products and related merchandise. The company sells its products in 143 countries through a combination of direct selling and use of individual sales representatives. Presented here is a recent income statement (dollars in
The Committee of Sponsoring Organizations (COSO) published a research study that examined financial statement fraud occurrences between 1987 and 1997. A summary of the findings by M. S. Beasley, J. V.Carcello, and D. R. Hermanson, "Fraudulent Financial Reporting: 1987-1997: An Analysis of U.S.
Merchandise invoiced at $9,500 is sold on terms 1/10, n/30. If the buyer pays within the discount period, what amount will be reported on the income statement as net sales?
Total gross sales for the period include the following:Credit card sales (discount 3%) ........ $8,400Sales on account (1/15, n/60) ......... $10,500Sales returns related to sales on account were $500. All returns were made before payment. One-half of the remaining sales on account was paid
Net sales for the period was $49,000 and cost of sales was $28,000. Compute gross profit percentage for the current year. What does this ratio measure?
Prepare journal entries for each transaction listed.a. During the period, bad debts are written off in the amount of $22,000.b. At the end of the period, bad debt expense is estimated to be $13,000.
Using the following categories, indicate the effects of the following transactions. Use + for increase and – for decrease and indicate the accounts affected and the amounts.a. At the end of the period, bad debt expense is estimated to be $17,000.b. During the period, bad debts are written off in
During the months of January and February, Gold Corporation sold goods to three customers. The sequence of events was as follows:Jan. 6 Sold goods for $950 to S. Green and billed that amount subject to terms 2/10, n/30.6 Sold goods to M. Munoz for $600 and billed that amount subject to terms 2/10,
The following transactions were selected from the records of Evergreen Company:July 12 Sold merchandise to Customer R, who charged the $2,000 purchase on his Visa credit card. Visa charges Evergreen a 2 percent credit card fee.15 Sold merchandise to Customer S at an invoice price of $7,000; terms
The following transactions were selected from among those completed by Clem Retailers in 2011:Nov. 20 Sold two items of merchandise to Customer B, who charged the $350 sales price on her Visa credit card. Visa charges Clem Wholesalers a 2 percent credit card fee.25 Sold 20 items of merchandise to
Rockland Shoe Company records Sales Returns and Allowances, Sales Discounts, and Credit Card Discounts as contra-revenues. Complete the following tabulation, indicating the effect (+ for increase, €“ for decrease, and NE for no effect) and amount of the effects of each transaction,
Laura’s Landscaping bills customers subject to terms 4/10, n/60.Required:1. Compute the annual interest rate implicit in the sales discount. (Round to two decimal places)2. If his bank charges 15 percent interest, should the customer borrow from the bank so that he can take advantage of the
Wolverine World Wide Inc. prides itself as being the “world’s leading marketer of U.S. branded nonathletic footwear.” It competes in many markets with Deckers, often offering products at a lower price point. Its brands include Wolverine, Bates, Sebago, and Hush Puppies. The following data
The following summarized data were provided by the records of Slate, Incorporated, for the year ended December 31, 2010:Sales of merchandise for cash ............ $223,000Sales of merchandise on credit .............. 40,000Cost of goods sold .................. 143,000Selling expense
During 2009, Chun Productions, Inc., recorded credit sales of $700,000. Based on prior experience, it estimates a 1 percent bad debt rate on credit sales.Required:Prepare journal entries for each transaction:a. The appropriate bad debt expense adjustment was recorded for the year 2009.b. On
During 2011, Gonzales Electronics Incorporated, recorded credit sales of $790,000. Based on prior experience, it estimates a 3 percent bad debt rate on credit sales.Required:Prepare journal entries for each transaction:a. The appropriate bad debt expense adjustment was recorded for the year 2011.b.
During 2012, Kim and Silverman Electronics recorded credit sales of $640,000. Based on prior experience, it estimates a 3.5 percent bad debt rate on credit sales.Required:1. Prepare journal entries for each of the following transactions.a. The appropriate bad debt expense adjustment was recorded
Brown Cow Dairy uses the aging approach to estimate bad debt expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due $14,000, (2) up to 120 days past due $4,500, and (3) more than 120 days past due $2,500. Experience has shown that for
Arias Company uses the aging approach to estimate bad debt expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due $60,000, (2) up to 180 days past due $12,000, and (3) more than 180 days past due $4,000. Experience has shown that for
Bhojraj Company uses the aging approach to estimate bad debt expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due $250,000, (2) up to 120 days past due $50,000, and (3) more than 120 days past due $30,000. Experience has shown that
Siemens is one of the world€™s largest electrical engineering and electronics companies. Headquartered in Germany, the company has been in business for over 160 years and operates in 190 countries. In a recent filing pursuant to its listing on the New York Stock Exchange, it disclosed the
Microsoft develops, produces, and markets a wide range of computer software including the Windows operating system. On its recent financial statements, Microsoft reported the following information about net sales revenue and accounts receivable.According to its Form 10-K, Microsoft recorded bad
A recent annual report for Target contained the following information (dollars in thousands) at the end of its fiscal year:A footnote to the financial statements disclosed that uncollectible accounts amounting to $322,000 were written off as bad debts during year 1 and $512,000 during year 2.
During 2011, Martin's Camera Shop had sales revenue of $150,000, of which $75,000 was on credit.At the start of 2011, Accounts Receivable showed a $13,000 debit balance, and the Allowance for Doubtful Accounts showed an $800 credit balance. Collections of accounts receivable during 2011 amounted
A recent annual report for FedEx contained the following data:Required:1. Determine the accounts receivable turnover ratio and average days sales in receivables for the current year.2. Explain the meaning of eachnumber.
A recent annual report for Dell, Inc., contained the following data:Required:1. Determine the accounts receivable turnover ratio and average days sales in receivables for the current year.2. Explain the meaning of eachnumber.
Apple, Inc., is best known for its Mac and iPod product lines. Three recent years produced a pattern of strong increases in sales revenue and net income. Cash flows from operations declined in the middle of the period, however. Contributing to that declining cash flow was the change in accounts
Jones Company has the June 30, 2010, bank statement and the June ledger accounts for cash, which are summarized here:Required:1. Reconcile the bank account. A comparison of the checks written with the checks that have cleared the bank shows outstanding checks of $1,000. A deposit of $2,900 is in
The September 30, 2011, bank statement for Russell Company and the September ledger accounts for cash are summarized here:No outstanding checks and no deposits in transit were carried over from August; however, there are deposits in transit and checks outstanding at the end of September.Required:1.
At what point should revenue be recognized in each of the following independent cases?Case A. For Christmas presents, a McDonald's restaurant sells coupon books for $10. Each of the $1 coupons may be used in the restaurant any time during the following 12 months. The customer must pay cash when
The following data were selected from the records of Larker Company for the year ended December 31, 2010.Balances January 1, 2010Accounts receivable (various customers) ...... $115,000Allowance for doubtful accounts .......... 7,000In the following order, except for cash sales, the company
The following data presented in income statement order were taken from the year-end records of Nomura Export Company. You are to fill in all of the missing amounts. Show computations.
Peet's Coffee & Tea, Inc. is a specialty coffee roaster and marketer of branded fresh roasted whole bean coffee. It recently disclosed the following information concerning the Allowance for Doubtful Accounts on its Form 10-K Annual Report submitted to the Securities and Exchange Commission.A
The bookkeeper at Hopkins Company has not reconciled the bank statement with the Cash account, saying, €œI don€™t have time.€ You have been asked to prepare a reconciliation and review the procedures with the bookkeeper.The April 30, 2010, bank statement and the April
The August 2011 bank statement for Hirst Company and the August 2011 ledger account for cash follow:Outstanding checks at the end of July were for $270, $430, and $320. No deposits were in transit at the end of July.Required:1. Compute the deposits in transit at the end of August by comparing the
Use the data presented in P6–2, which was selected from the records of Larker Company for the year ended December 31, 2010.Required:1. Give the journal entries for these transactions, including the write-off of the uncollectible account and the adjusting entry for estimated bad debts. Do not
Under various registered brand names, Saucony, Inc., and its subsidiaries develop, manufacture, and market bicycles and component parts, athletic apparel, and athletic shoes. It recently disclosed the following information concerning the allowance for doubtful accounts on its Form 10-K Annual
Rang Corporation is a local grocery store organized seven years ago as a corporation. At that time, a total of 10,000 shares of common stock were issued to the three organizers. The store is in an excellent location, and sales have increased each year. At the end of 2012, the bookkeeper prepared
The December 31, 2011, bank statement for Packer Company and the December 2011 ledger accounts for cash follow.The November 2011 bank reconciliation showed the following: correct cash balance at November 30,$64,100; deposits in transit on November 30, $17,000; and outstanding checks on November 30,
UPS, Federal Express, and Airborne are three of the major players in the highly competitive package delivery industry. Comparability is a key qualitative characteristic of accounting numbers that allows analysts to compare similar companies. A number of years ago, the revenue recognition footnotes
Multiple-Choice Questions1. Simon Company and Allen Company both bought a new delivery truck on January 1, 2008. Both companies paid exactly the same cost, $30,000, for their respective vehicles. As of December 31, 2011, the net book value of Simon’s truck was less than Allen Company’s net book
The following information was reported by Cutter’s Air Cargo Service for 2007:Net fixed assets (beginning of year) .......$1,500,000Net fixed assets (end of year) ................... 2,300,000Net sales for the year ................................ 3,300,000Net income for the year
For each of the following items, enter the correct letter to the left to show the type of expenditure. Use the following:Type of Expenditure ___________Transactions____________________________C Capital expenditure _____ (1) Paid $400 for
Calculate the book value of a three-year-old machine that cost $21,000, has an estimated residual value of $1,000, and has an estimated useful life of four years. The company uses straight-line depreciation.
Calculate the book value of a three-year-old machine that cost $25,000, has an estimated residual value of $5,000, and has an estimated useful life of five years. The company uses double-declining-balance depreciation. Round to the nearest dollar.
Calculate the book value of a four-year-old machine that cost $21,000, has an estimated residual value of $1,000, and has an estimated useful life of 20,000 machine hours. The company uses units-of-production depreciation and ran the machine 3,200 hours in year 1, 7,050 hours in year 2, and 7,500
For each of the following scenarios, indicate whether an asset has been impaired (Y for yes and N for no) and, if so, the amount of loss that should berecorded.
As part of a major renovation at the beginning of the year, Mullins’ Pharmacy, Inc., sold shelving units (store fixtures) that were 10 years old for $3,000 cash. The original cost of the shelves was $6,000 and had been depreciated on a straight-line basis over an estimated useful life of 13 years
Elizabeth Pie Company has been in business for 30 years and has developed a large group of loyal restaurant customers. Bonanza Foods made an offer to buy Elizabeth Pie Company for $5,000,000. The book value of Elizabeth Pie’s recorded assets and liabilities on the date of the offer is $4,300,000
Wagner Company had the following activities for the year ended December 31, 2011: Sold land for cash at a cost of $16,000. Purchased $81,000 of equipment, paying $76,000 in cash and the rest on a note payable. Recorded $2,500 in depreciation expense for the year. Net income for the year was
The following is a list of account titles and amounts (dollars in millions) reported by Hasbro, Inc., a leading manufacturer of games, toys, and interactive entertainment software for children and families:Required:Prepare the asset section of the balance sheet for Hasbro, Inc., classifying the
The following data were included in a recent Apple Inc. annual report ($ in millions):Required:1. Compute Apple's fixed asset turnover ratio for 2005, 2006, and 2007.2. How might a financial analyst interpret theresults?
KD Company bought a building for $71,000 cash and the land on which it is located for $107,000 cash. The company paid transfer costs of $3,000 ($1,000 for the building and $2,000 for the land).Renovation costs on the building were $23,000.Required:1. Give the journal entry to record the purchase of
Kalriess Company ordered a machine on January 1, 2011, at an invoice price of $21,000. On date of delivery, January 2, 2011, the company paid $8,000 on the machine, and the balance was on credit at 10 percent interest. On January 3, 2011, it paid $1,000 for freight on the machine. On January 5,

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