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Financial Accounting Tools for business decision making 6th Edition Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso - Solutions
Transactions for Marlin Company for the month of June are presented below. Identify the accounts to be debited and credited for each transaction. June 1 Issues common stock to investors in exchange for $5,000 cash. 2 Buys equipment on account for $1,100. 3 Pays $740 to landlord for
Use the data in BE3-5 and journalize the transactions. (You may omit explanations.)
Eugenie Steckler, a fellow student, is unclear about the basic steps in the recording process. Identify and briefly explain the steps in the order in which they occur.
Acker Corporation has the following transactions during August of the current year. Indicate (a) The basic analysis and (b) The debit–credit analysis illustrated on pages 121–126. Aug. 1 Issues shares of common stock to investors in exchange for $10,000. 4 Pays insurance in advance for
Use the data in BE3-8 and journalize the transactions. (You may omit explanations.)
Selected transactions for Rojas Company are presented below in journal form (without explanations). Post the transactions to Taccounts.
From the ledger balances below, prepare a trial balance for Lyndon Company at June 30, 2012. All account balances arenormal.
An inexperienced bookkeeper prepared the following trial balance that does not balance. Prepare a correct trial balance, assuming all account balances arenormal.
Transactions made by Leonardo Bloom Co. for the month of March are shown below. Prepare a tabular analysis that shows the effects of these transactions on the expanded accounting equation, similar to that shown in Illustration 3-3.1. The company provided $20,000 of services for customers on
Phil Eubanks has just rented space in a strip mall. In this space, he will open a photography studio, to be called Picture This! A friend has advised Phil to set up a double entry set of accounting records in which to record all of his business transactions. Identify the balance sheet accounts
Phil Eubanks engaged in the following activities in establishing his photography studio, Picture This!:1. Opened a bank account in the name of Picture This! and deposited $8,000 of his own money into this account in exchange for common stock.2. Purchased photography supplies at a total cost of
Phil Eubanks recorded the following transactions during the month of April. Post these entries to the Cash account of the general ledger to determine the ending balance in cash. The beginning balance in cash on April 1 was $1,900.
Selected transactions for Arnett Advertising Company, Inc., are listed here.1. Issued common stock to investors in exchange for cash received from investors.2. Paid monthly rent.3. Received cash from customers when service was provided.4. Billed customers for services performed.5. Paid dividend to
Delmont Company entered into these transactions during May 2012. 1. Purchased computers for office use for $30,000 from Dell on account. 2. Paid $4,000 cash for May rent on storage space. 3. Received $12,000 cash from customers for contracts billed in April. 4. Provided computer services to Lawton
During 2012, its first year of operations as a delivery service, Underwood Corp. entered into the following transactions. 1. Issued shares of common stock to investors in exchange for $100,000 in cash. 2. Borrowed $45,000 by issuing bonds. 3. Purchased delivery trucks for $60,000 cash. 4. Received
A tabular analysis of the transactions made during August 2012 by Nigel Company during its first month of operations is shown below. Each increase and decrease in stockholders?? equity is explained. Instructions(a) Describe each transaction.(b) Determine how much stockholders?? equity increased
The tabular analysis of transactions for Nigel Company is presented in E3-4.InstructionsPrepare an income statement and a retained earnings statement for August and a classified balance sheet at August 31, 2012.
Selected transactions for Home Place, an interior decorator corporation, in its first month of business, are as follows.1. Issued stock to investors for $15,000 in cash.2. Purchased used car for $10,000 cash for use in business.3. Purchased supplies on account for $300.4. Billed customers $3,700
This information relates to Plunkett Real Estate Agency. Oct. 1 Stockholders invest $30,000 in exchange for common stock of the corporation. 2 Hires an administrative assistant at an annual salary of $36,000. 3 Buys office furniture for $3,800, on account. 6 Sells a house and lot for M.E.
Transaction data for Plunkett Real Estate Agency are presented in E3-7.InstructionsJournalize the transactions. Do not provide explanations.
The May transactions of StepAside Corporation were as follows.May 4 Paid $700 due for supplies previously purchased on account.7 Performed advisory services on account for $6,800.8 Purchased supplies for $850 on account.9 Purchased equipment for $1,000 in cash.17 Paid employees $530 in cash.22
Transaction data and journal entries for Plunkett Real Estate Agency are presented in E3-7 and E3-8.Instructions(a) Post the transactions to T accounts.(b) Prepare a trial balance at October 31, 2012.
Selected transactions for Charlotte Corporation during its first month in business are presented below.Sept. 1 Issued common stock in exchange for $20,000 cash received from investors.5 Purchased equipment for $9,000, paying $3,000 in cash and the balance on account.25 Paid $4,000 cash on balance
The T accounts on the next page summarize the ledger of McGregor Gardening Company, Inc. at the end of the first month of operations. Instructions(a) Prepare in the order they occurred the journal entries (including explanations) that resulted in the amounts posted to the accounts.(b) Prepare a
Selected transactions from the journal of Galaxy Inc. during its first month of operations are presented here. Instructions(a) Post the transactions to T accounts.(b) Prepare a trial balance at August 31,2012.
Here is the ledger for Stampfer Co. Instructions(a) Reproduce the journal entries for only the transactions that occurred on October 1,10, and 20, and provide explanations for each.(b) Prepare a trial balance at October 31, 2012.
The bookkeeper for Bullwinkle Corporation made these errors in journalizing and posting.1. A credit posting of $400 to Accounts Receivable was omitted.2. A debit posting of $750 for Prepaid Insurance was debited to Insurance Expense.3. A collection on account of $100 was journalized and posted as
The accounts in the ledger of Roshek Delivery Service contain the following balances on July 31, 2012. Instructions(a) Prepare a trial balance with the accounts arranged as illustrated in the chapter, and fill in the missing amount for Cash.(b) Prepare an income statement, a retained earnings
The following accounts, in alphabetical order, were selected from recent financial statements of Krispy Kreme Doughnuts, Inc.Accounts payable .........Interest income Accounts receivable....... .Inventories Common stock ...........Prepaid expenses Depreciation expense
Review the transactions listed in E3-1 for Arnett Advertising Company, and classify each transaction as either an operating activity, investing activity, or financing activity, or if no cash is exchanged, as a noncash event.
Review the transactions listed in E3-3 for Underwood Corp. and classify each transaction as either an operating activity, investing activity, or financing activity, or if no cash is exchanged, as a noncash event.
On April 1, Vagabond Travel Agency Inc. was established. These transactions were completed during the month.1. Stockholders invested $30,000 cash in the company in exchange for common stock.2. Paid $900 cash for April office rent.3. Purchased office equipment for $3,400 cash.4. Purchased $200 of
Susan Taylor started her own consulting firm, Taylor Made Consulting Inc., on May 1, 2012. The following transactions occurred during the month of May. May 1 Stockholders invested $15,000 cash in the business in exchange for common stock. 2 Paid $600 for office rent for the month. 3 Purchased $500
Robin Klann created a corporation providing legal services, Robin Klann Inc., on July 1, 2012. On July 31 the balance sheet showed: Cash $4,000; Accounts Receivable $2,500; Supplies $500; Equipment $5,000; Accounts Payable $4,200; Common Stock $6,200; and Retained Earnings $1,600. During August
Clear View Miniature Golf and Driving Range Inc. was opened on March 1 by Roger Prince. These selected events and transactions occurred during March.Mar. 1 Stockholders invested $50,000 cash in the business in exchange for common stock of the corporation.3 Purchased Arnie’s Golf Land for $38,000
Towne Architects incorporated as licensed architects on April 1, 2012. During the first month of the operation of the business, these events and transactions occurred:Apr. 1 Stockholders invested $18,000 cash in exchange for common stock of the corporation.1 Hired a secretary-receptionist at a
This is the trial balance of Mimosa Company on September 30. The October transactions were as follows.Oct. 5 Received $1,300 in cash from customers for accounts receivable due.10 Billed customers for services performed $5,100.15 Paid employee salaries $1,200.17 Performed $600 of services for
This trial balance of Michels Co. does not balance. Each of the listed accounts has a normal balance per the general ledger. An examination of the ledger and journal reveals the following errors:1. Cash received from a customer on account was debited for $780, and Accounts Receivable was credited
The SciFi Theater Inc. was recently formed. It began operations in March 2012. The SciFi is unique in that it will show only triple features of sequential theme movies. On March 1, the ledger of The SciFi showed: Cash $16,000; Land $38,000; Buildings (concession stand, projection room, ticket
The bookkeeper for Fred Kelley??s dance studio made the following errors in journalizing and posting.1. A credit to Supplies of $600 was omitted.2. A debit posting of $300 to Accounts Payable was inadvertently debited to Accounts Receivable.3. A purchase of supplies on account of $450 was debited
New Dawn Window Washing Inc. was started on May 1. Here is a summary of the May transactions.1. Stockholders invested $20,000 cash in the company in exchange for common stock.2. Purchased equipment for $9,000 cash.3. Paid $700 cash for May office rent.4. Paid $300 cash for supplies.5. Purchased
Samuel Aldrich started his own delivery service, Aldrich Service Inc., on June 1, 2012. The following transactions occurred during the month of June. June 1 Stockholders invested $15,000 cash in the business in exchange for common stock. 2 Purchased a used van for deliveries for $15,000. Samuel
Joy Tiede opened Tiede Company, a veterinary business in Neosho, Wisconsin, on August 1, 2012. On August 31, the balance sheet showed: Cash $9,000; Accounts Receivable $1,700; Supplies $600; Equipment $5,000; Accounts Payable $3,600; Common Stock $12,000; and Retained Earnings $700. During
RV Oasis was started on April 1 by Taras Dankert. These selected events and transactions occurred during April.Apr. 1 Stockholders invested $70,000 cash in the business in exchange for common stock. 4 Purchased land costing $50,000 for cash.8 Purchased advertising in local newspaper for $1,200 on
Troy Ridgell incorporated Ridgell Consulting, an accounting practice, on May 1, 2012. During the first month of operations, these events and transactions occurred. May 1 Stockholders invested $40,000 cash in exchange for common stock of the corporation.2 Hired a secretary-receptionist at a salary
The trial balance of Kinnear Dry Cleaners on June 30 is given here. The July transactions were as follows.July 8 Received $5,189 in cash on June 30 accounts receivable.9 Paid employee salaries $2,100.11 Received $7,320 in cash for services provided.14 Paid creditors $9,810 of accounts payable.17
This trial balance of Lagerstrom Company does not balance. Your review of the ledger reveals that each account has a normal balance. You also discover the following errors.1. The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Income Tax Expense were each understated $100.2.
Riviera Theater Inc. was recently formed. All facilities were completed on March 31. On April 1, the ledger showed: Cash $6,300; Land $10,000; Buildings (concession stand, projection room, ticket booth, and screen) $8,000; Equipment $6,000; Accounts Payable $2,300; Mortgage Payable $8,000; and
A first year co-op student working for Solutions.com recorded the transactions for the month. He wasn't exactly sure how to journalize and post, but he did the best he could. He had a few questions, however, about the following transactions. 1. Cash received from a customer on account was recorded
In November 2011, after having incorporated Cookie Creations Inc., Natalie begins operations. She has decided not to pursue the offer to supply cookies to Biscuits. Instead, she will focus on offering cooking classes. The following events occur. Nov. 8 Natalie cashes in her U.S. Savings Bonds and
The financial statements of Tootsie Roll in Appendix A at the back of this book contain the following selected accounts, all in thousands of dollars.Common Stock .................$ 24,862Accounts Payable ................................9,140Accounts Receivable ..............37,512Selling,
The financial statements of The Hershey Company appear in Appendix B, following the financial statements for Tootsie Roll in Appendix A.Instructions(a) Based on the information contained in these financial statements, determine the normal balance for: Tootsie Roll Industries
Sid Cato provides critiques of corporate annual reports. He maintains a website at www.sidcato.com that provides many useful resources for those who are interested in preparing or using annual reports.InstructionsGo to the website and answer the following questions.(a) Read the section, “What
Chieftain International, Inc., is an oil and natural gas exploration and production company. A recent balance sheet reported $208 million in assets with only $4.6 million in liabilities, all of which were short-term accounts payable.During the year, Chieftain expanded its holdings of oil and gas
Purpose: This activity provides information about career opportunities for CPAs.1. Go to the address shown above and click on Students/Educators.2. Click on High School, then CPA101 for parts a, b, and c.3. Click College to answer part d.InstructionsAnswer the following questions.(a) What does CPA
Donna Dye operates Double D Riding Academy, Inc. The academy??s primary sources of revenue are riding fees and lesson fees, which are provided on a cash basis. Donna also boards horses for owners, who are billed monthly for boarding fees. In a few cases, boarders pay in advance of expected use. For
Clean Sweep Company offers home cleaning service. Two recurring transactions for the company are billing customers for services provided and paying employee salaries. For example, on March 15 bills totaling $6,000 were sent to customers, and $2,000 was paid in salaries to
Courtney Delacey is the assistant chief accountant at BIT Company, a manufacturer of computer chips and cellular phones. The company presently has total sales of $20 million. It is the end of the first quarter and Courtney is hurriedly trying to prepare a general ledger trial balance so that
The July 28, 2007, issue of the Wall Street Journal includes an article by Kathryn Kranhold entitled “GE’s Accounting Draws Fresh Focus on News of Improper Sales Bookings.”InstructionsRead the article and answer the following questions.(a) What improper activity did the employees at GE engage
In their annual reports to stockholders, companies must report or disclose information about all liabilities, including potential liabilities related to environmental clean-up. There are many situations in which you will be asked to provide personal financial information about your assets,
Describe some of the issues the SEC must consider in deciding whether the UnitedStates should adopt IFRS.
The financial statements of Zetar plc are presented in Appendix C. The company’s complete annual report, including the notes to its financial statements, is available at www.zetarplc.com.InstructionsDescribe in which statement each of the following items is reported, and the position in the
Emily Frazier believes a current liability is a debt that can be expected to be paid in one year. Is Emily correct? Explain.
Verona Company obtains $20,000 in cash by signing a 9%, 6-month, $20,000 note payable to First Bank on July 1. Verona’s fiscal year ends on September 30. What information should be reported for the note payable in the annual financial statements?
(a) Your roommate says, “Sales taxes are reported as an expense in the income statement.” Do you agree? Explain.(b) Pearl’s Cafe has cash proceeds from sales of $8,550. This amount includes $550 of sales taxes. Give the entry to record the proceeds.
Helena University sold 9,000 season football tickets at $100 each for its five-game home schedule. What entries should be made (a) When the tickets are sold and (b) After each game?
Identify three taxes commonly withheld by the employer from an employee’s gross pay.
(a) Identify three taxes commonly paid by employers on employees’ salaries and wages.(b) Where in the financial statements does the employer report taxes withheld from employees’ pay?
(a) What are long-term liabilities? Give two examples.(b) What is a bond?
Contrast these types of bonds:(a) Secured and unsecured.(b) Convertible and callable.
Explain each of these important terms in issuing bonds:(a) Face value.(b) Contractual interest rate.(c) Bond certificate.
(a) What is a convertible bond?(b) Discuss the advantages of a convertible bond from the standpoint of the bondholders and of the issuing corporation.
Phil and Mason are discussing how the market price of a bond is determined. Phil believes that the market price of a bond is solely a function of the amount of the principal payment at the end of the term of a bond. Is he right? Discuss.
If the Bonds Payable account has a balance of $700,000 and the Discount on Bonds Payable account has a balance of $36,000, what is the carrying value of the bonds?
Which accounts are debited and which are credited if a bond issue originally sold at a premium is redeemed before maturity at 97 immediately following the payment of interest? Discuss.
Barbara Monroe, the chief financial officer of Helaine Inc., is considering the options available to her for financing the company’s new plant. Shortterm interest rates right now are 6%, and long-term rates are 8%. The company’s current ratio is 2.2:1. If she finances the new plant with
(a) In general, what are the requirements for the financial statement presentation of long-term liabilities?(b) What ratios may be computed to evaluate a company’s liquidity and solvency?
Gerald Bachus says that liquidity and solvency are the same thing. Is he correct? If not, how do they differ?
The management of Lakeland Corporation is concerned because survey data suggest that many potential customers do not buy vehicles due to quality concerns. It is considering taking the bold step of increasing the length of its warranty from the industry standard of 3 years up to an unprecedented 10
Rick Flowers needs a few new trucks for his business. He is considering buying the trucks but is concerned that the additional debt he will need to borrow will make his liquidity and solvency ratios look bad. What options does he have other than purchasing the trucks, and how will these options
Miller Corporation has a current ratio of 1.1. Ron has always been told that a corporation’s current ratio should exceed 2.0. Miller argues that its ratio is low because it has a minimal amount of inventory on hand so as to reduce operating costs. Miller also points out that it has significant
What are the implications for analysis if a company has significant operating leases?
What criteria must be met before a contingency must be recorded as a liability? How should the contingency be disclosed if the criteria are not met?
Explain the straight-line method of amortizing discount and premium on bonds payable. Discuss.
Melanie Corporation issues $200,000 of 6%, 5-year bonds on January 1, 2012, at 103. Assuming that the straight-line method is used to amortize the premium, what is the total amount of interest expense for 2012?
Joslyn Topp is discussing the advantages of the effective-interest method of bond amortization with her accounting staff. What do you think Joslyn is saying?
Ziegler Corporation issues $400,000 of 9%, 5-year bonds on January 1, 2012, at 104. If Ziegler uses the effective-interest method in amortizing the premium, will the annual interest expense increase or decrease over the life of the bonds? Explain.
Jasper Company has these obligations at December 31: (a) A note payable for $100,000 due in 2 years, (b) A 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments, (c) Interest payable of $15,000 on the mortgage, and (d) Accounts payable of $60,000. For each obligation,
Canney Company borrows $90,000 on July 1 from the bank by signing a $90,000, 7%, 1-year note payable. Prepare the journal entries to record (a) The proceeds of the note and (b) Accrued interest at December 31, assuming adjusting entries are made only at the end of the year.
Home Town Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $10,388. All sales are subject to a 6% sales tax. Compute sales taxes payable and make the entry to record sales taxes payable and sales.
Franklin University sells 3,500 season basketball tickets at $80 each for its 10-game home schedule. Give the entry to record (a) The sale of the season tickets and(b) The revenue earned by playing the first home game.
Cindy Neuer’s regular hourly wage rate is $16, and she receives an hourly rate of $24 for work in excess of 40 hours. During a January pay period, Cindy works 47 hours. Cindy’s federal income tax withholding is $95, and she has no voluntary deductions. Compute Cindy Neuer’s gross earnings and
Data for Cindy Neuer are presented in BE10-5. Prepare the employer’s journal entries to record(a) Cindy’s pay for the period and(b) The payment of Cindy’s wages. Use January 15 for the end of the pay period and the payment date.
Palmer Corporation issued 3,000 7%, 5-year, $1,000 bonds dated January 1, 2012, at face value. Interest is paid each January 1.(a) Prepare the journal entry to record the sale of these bonds on January 1, 2012.(b) Prepare the adjusting journal entry on December 31, 2012, to record interest
The balance sheet for Claremont Company reports the following information on July 1, 2012. Claremont decides to redeem these bonds at 102 after paying annual interest. Prepare the journal entry to record the redemption on July 1,2012.
Presented here are long-term liability items for Borders Inc. at December 31, 2012. Prepare the long-term liabilities section of the balance sheet for Borders Inc.Bonds payable (due 2016) .......$700,000Notes payable (due 2014) .........80,000Discount on bonds payable .......28,000
Presented here are liability items for Azarian Inc. at December 31, 2012. Prepare the liabilities section of Azarian??s balance sheet.
The 2009 adidas financial statements contain the following selected data (in millions). Compute the following values and provide a brief interpretation of each.(a) Working capital. (b) Current ratio. (c) Debt to total assets ratio.(d) Times interest earned ratio.
The Canadian National Railway Company’s (CN) total assets in a recent year were $24,004 million and its total liabilities were $14,180 million. That year, CN reported operating lease commitments for its locomotives, freight cars, and equipment totaling $740 million. If these assets had been
Strite Company issues $2 million, 10-year, 7% bonds at 99, with interest payable on December 31. The straight-line method is used to amortize bond discount.(a) Prepare the journal entry to record the sale of these bonds on January 1, 2012.(b) Prepare the journal entry to record interest expense and
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