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accounting principles
Accounting Principles A Business Perspective Financial Accounting Chapter 1-8 1st Edition James Edwards, Roger Hermanson, Bill Buxton - Solutions
Alternate problem B Among the account balances shown in the trial balance of Dunwoody Mail Station, Inc., at December 31 of the current year are the following:Debits Credits$10,000 6,000 168,000 Supplies on hand Prepaid insurance Buildings Accumulated depreciation and buildings$ 39,000 The
Alternate problem A The trial balance of Caribbean Vacation Tours, Inc., at December 31 of the current year includes, among other items, the following account balances:Debits Credits Prepaid Insurance ........................................ $24,000 Prepaid Rent
Problem E Jupiter Publishing Company began operations on 2010 December 1. The company’s bookkeeper intended to use the cash basis of accounting. Consequently, the bookkeeper recorded all cash receipts and disbursements for items relating to operations in revenue and expense accounts. No adjusting
Problem D The reported net income amounts for Gulf Coast Magazine, Inc., for calendar years 2010 and 2011 were USD 200,000 and USD 222,000, respectively. No annual adjusting entries were made at either year-end for any of the following transactions:A fire insurance policy to cover a three-year
Problem C Hillside Apartments, Inc., adjusts and closes its books each December 31. Assume the accounts for all prior years have been properly adjusted and closed. Following are some of the company’s account balances prior to adjustment on 2010 December 31:HILLSIDE APARTMENTS, INC.Partial Trial
Problem B Marathon Magazine, Inc., has the following account balances, among others, in its trial balance at December 31 of the current year:Debits Credits Supplies on Hand.................. $3,720 Prepaid Rent ......................... 7,200 Unearned Subscription Fees ... $15,000 Subscriptions
Problem A Among other items, the trial balance of Filmblaster, Inc., a movie rental company, at December 31 of the current year includes the following account balances:Debits Prepaid Insurance USD 10,000 Prepaid Rent USD 14,400 Supplies on Hand USD 2,800 Examination of the records shows that
Exercise P The following data regarding net income (loss) are for Perkins Parts, a medium-sized automotive supplier, for the period 2004–2009.Net Income Net Income(Earnings) (Earnings)($ millions) ($ millions)1989 ...... ........... $ 860 1995 ........ .............. $ 4,139 1990 ......
Exercise O In the following table, indicate the effects of failing to recognize each of the indicated adjustments by writing “O” for overstated and “U” for understated.Effect on Balance Sheet Items Effect on Stockholders'Failure to Recognize Net Income Assets Liabilities Equity 1.
Exercise N State the effect that each of the following independent situations would have on the amount of annual net income reported for 2010 and 2011.a, No adjustment was made for accrued salaries of USD 8,000 as of 2010 December 31.b. The collection of USD 5,000 for services yet unperformed as of
Exercise M Convenient Mailing Services, Inc., incurs salaries at the rate of USD 3,000 per day.The last payday in January is Friday, January 27. Salaries for Monday and Tuesday of the next week have not been recorded or paid as of January 31. Financial statements are prepared monthly. Give the
Exercise L A firm borrowed USD 30,000 on November 1. By December 31, USD 300 of interest had been incurred. Prepare the adjusting entry required on December 31.
Exercise K Guilty & Innocent, a law firm, performed legal services in late December 2010 for clients. The USD 30,000 of services would be billed to the clients in January 2011. Give the adjusting entry that is necessary on 2010 December 31, if financial statements are prepared at the end of each
Exercise J On 2010 April 15, Rialto Theater sold USD 90,000 in tickets for the summer musicals to be performed (one per month) during June, July, and August. On 2010 July 15, Rialto Theater discovered that the group that was to perform the July and August musicals could not do so. It was too late
Exercise I On 2010 September 1, Professional Golfer Journal, Inc., received a total of USD 120,000 as payment in advance for one-year subscriptions to a monthly magazine. A liability account was credited to record this cash receipt. By the end of the year, one-third of the magazines paid for in
Exercise H Assume that a company acquired a building on 2010 January 1, at a cost of USD 1,000,000. The building has an estimated useful life of 40 years and an estimated residual value of USD 200,000. What adjusting entry is needed on 2010 December 31, to record the depreciation for the entire
Exercise G Supplies were purchased for cash on 2010 May 2, for USD 8,000. Show how this purchase would be recorded. Then show the adjusting entry that would be necessary, assuming that USD 2,500 of the supplies remained at the end of the year.
Exercise F At 2010 December 31, an adjusting entry was made as follows:Rent Expense 1,500 Prepaid Rent 1,500 You know that the gross amount of rent paid was USD 4,500, which was to cover a one-year period.Determine:a. The opening date of the year to which the USD 4,500 of rent applies.b. The entry
Exercise E Assume that rent of USD 12,000 was paid on 2010 September 1, to cover a one-year period from that date. Prepaid Rent was debited. If financial statements are prepared only on December 31 of each year, what adjusting entry is necessary on 2010 December 31, to bring the accounts involved
Exercise D A one-year insurance policy was purchased on August 1 for USD 2,400, and the following entry was made at that time:Prepaid Insurance 2,400 Cash 2,400 What adjusting entry is necessary at December 31, the end of the accounting year?Show how the T-accounts for Prepaid Insurance and
Exercise C Select the correct response for each of the following multiple-choice questions:Which of the following types of adjustments belongs to the deferred items class?(a) Asset/revenue adjustments.(b)Liability/expense adjustments.(c) Asset/expense adjustments.(d)Asset/liability
Exercise B Select the correct response for each of the following multiple-choice questions:The least common accounting period among the following is:(a)One month.(b)Two months.(c) Three months.(d)Twelve months.The need for adjusting entries is based on:(a) The matching principle.(b)Source
Exercise A Select the correct response for each of the following multiple-choice questions:The cash basis of accounting:(a) Recognizes revenues when sales are made or services are rendered.(b)Recognizes expenses as incurred.(c) Is typically used by some relatively small businesses and professional
Real world question Refer to the financial statements of The Limited, Inc., in the Annual report appendix. Approximately what percentage of the depreciable assets under property, plant, and equipment has been depreciated as of the end of the most recent year shown?
You notice that the Supplies on Hand account has a debit balance of USD 2,700 at the end of the accounting period. How would you determine the extent to which this account needs adjustment?
Give an example of a journal entry for each of the following: Equal growth of an expense and a liability. Earning of revenue that was previously recorded as unearned revenue. Equal growth of an asset and a revenue. Increase in an expense and decrease in an asset.
Why do accountants not keep all the accounts at their proper balances continuously throughout the period so that adjusting entries would not have to be made before financial statements are prepared?
If USD 3,000 has been earned by a company’s workers since the last payday in an accounting period, the necessary adjusting entry would be:a. Debit an expense and credit a liability.b. Debit an expense and credit an asset.c. Debit a liability and credit an asset.d. Debit a liability and credit an
When a company earns interest on a note receivable or on a bank account, the debit and credit are as follows:Debit Credita. Accounts receivable Interest revenueb. Interest receivable Interest revenuec. Interest revenue Accounts receivabled. Interest revenue Interest receivable
A company received cash of USD 24,000 on 2010 October 1, as subscriptions for a one-year period from that date. A liability account was credited when the cash was received. The magazine is to be published by the company and delivered to subscribers each month. The company prepares adjusting entries
A company purchased a truck for USD 20,000 on 2010 January 1. The truck has an estimated residual value of USD 5,000 and is expected to last five years. Adjusting entries are prepared only at year-end. The necessary adjusting entry at 2010 December 31, the company’s year-end, is:a. Depreciation
The Supplies on Hand account has a balance of USD 1,500 at year-end. The actual amount of supplies on hand at the end of the period was USD 400. The necessary adjusting entry is:a. Supplies expense 1,100 Supplies on hand 1,100b. Supplies expense 400 Supplies on hand 400c. Supplies on hand 1,100
An insurance policy premium of USD 1,200 was paid on 2010 September 1, to cover a one-year period from that date. An asset was debited on that date. Adjusting entries are prepared once a year, at year-end. The necessary adjusting entry at the company’s year-end, 2010 December 31, is:a. Prepaid
If all of the adjusting entries are not made, the financial statements are incorrect.true or false
The Unearned Delivery Fees account is a revenue account.true or false
for the current year only.true or false
The accumulated depreciation account is an asset account that shows the amount of depreciation
All calendar years are also fiscal years, but not all fiscal years are calendar years.true or false
Every adjusting entry affects at least one income statement account and one balance sheet account.true or false
Among other items, the trial balance of Korman Company for 2010 December 31, includes the following account balances:Debits Credits Supplies on Hand $ 6,000 Prepaid Rent 25,200 Buildings 200,000 Accumulated Depreciation—Buildings $33,250 Salaries Expense 124,000 Unearned Delivery Fees 4,000 Some
Group project F With one or two other students and using library resources, write a report on the life of Luca Pacioli, sometimes referred to as the father of accounting. Pacioli was a Franciscan monk who wrote a book on double-entry accounting in 1494. Be careful to cite sources and treat direct
Group project E In teams of two or three students, interview in person or by speakerphone a new staff member who has worked for a CPA firm for only one or two years. Seek information on the advantages and disadvantages of working for a CPA firm. Also, inquire about the nature of the work and the
Ethics case – Writing experience D Refer to "An ethical perspective: Financial deals, Inc.".Write out the answers to the following questions:a. What motivated Larry to go along with unethical and illegal actions? Explain.b. What are Larry's options now? List each possibility.c. What would you do
Annual report analysis C In The Home Depot's recent Annual Report, the following passages appear:The primary key to our success is our 39,000 employees who wear those orange aprons you see in our stores.Few great achievements—in business or in any aspect of life—are reached and sustained
Annual report analysis B Refer to the Annual Report of The Limited, Inc. in the Annual Report Appendix. Perform horizontal and vertical analyses of the liabilities and stockholder's equity sections of the balance sheets for the two most recent years shown. Horizontal analysis involves showing the
Business decision case A John Jacobs lost his job as a carpenter with a contractor when a recession hit the construction industry. Jacobs had been making USD 50,000 per year. He decided to form his own company, Jacobs Corporation, and do home repairs.The following is a summary of the transactions
Alternate problem E Bill Baxter prepared a trial balance for Special Party Rentals, Inc., a company that rents tables, chairs, and other party supplies. The trial balance did not balance. The trial balance he prepared was as follows:SPECIAL PARTY RENTALS, INC.Trial Balance 2010 December 31 Acct.No.
Alternate problem 4 The trial balance of California Tennis Center, Inc., at the end of the first 11 months of its fiscal year follows:CALIFORNIA TENNIS CENTER, INC.Trial Balance 2010 November 30 Acct.No. Account Title Debits Credits 100 Cash $71,180 103 Accounts Receivable 81,750 130 Land 60,000
Alternate problem C Rapid Pick Up & Delivery, Inc., was organized 2010 January 1. Its chart of accounts is as follows:Acct.No. Account title 100 Cash 103 Accounts receivable 150 Trucks 160 Office furniture 172 Office equipment 200 Accounts payable 201 Notes payable 300 Capital stock 310 Retained
Alternate problem B The transactions listed below are those of Reliable Computer Repair, Inc., for April 2010:Apr. 1 Cash of USD 500,000 was received for capital stock issued to the owners.3 Rent was paid for April, USD 3,500.6 Trucks were purchased for USD 56,000 cash.7 Office equipment was
Alternate problem A Speedy Laundry Company, Inc., entered into the following transactions in August 2010:Aug. 1 Received cash for capital stock issued to owners, USD 400,000.3 Paid rent for August on a building and laundry equipment rented, USD 3,000.6 Performed laundry services for USD 2,000
Problem E Marc Miller prepared the following trial balance from the ledger of the Quick-Fix TV Repair Company. The trial balance did not balance.QUICK-FIX REPAIR COMPANY Trial Balance 2010 December 31 Acct.No. Account Title Debits Credits 100 Cash $ 69,200 103 Accounts Receivable 60,800 160 Office
Problem D Trim Lawn, Inc., is a lawn care company. Thus, the company earns its revenue from sending its trucks to customers' residences and certain commercial establishments to care for lawns and shrubbery. Trim Lawn's trial balance at the end of the first 11 months of the year follows:TRIM LAWN,
Problem C Clean-Sweep Janitorial, Inc., a company providing janitorial services, was organized 2010 July 1. The following account numbers and titles constitute the chart of accounts for the company:Acct.No. Account Title 100 Cash 103 Accounts receivable 150 Trucks 160 Office equipment 170 Equipment
Problem B Economy Laundry Company had the following transactions in August 2010:Aug. 1 Issued capital stock for cash, USD 150,000.3 Borrowed USD 40,000 from the bank on a note.4 Purchased cleaning equipment for USD 25,000 cash.6 Performed services for customers who promised to pay later, USD
Problem A The transactions of Lightning Package Delivery Company for March 2010 follow:Mar. 1 The company was organized and issued capital stock for USD 300,000 cash.2 Paid USD 6,000 as the rent for March on a completely furnished building.5 Paid cash for delivery trucks, USD 180,000.6 Paid USD
Exercise L Refer to the Consolidated Balance Sheets of The Limited in the Annual Report Appendix located in the back of this text. Perform both horizontal and vertical analysis on each of The Limited's asset accounts, treating total assets as a significant total for vertical analysis. comment on
Exercise K John Adams owns and manages a bowling center called Strike Lanes. He also maintains his own accounting records and was about to prepare financial statements for the year 2010.When he prepared the trial balance from the ledger accounts, the total of the debits column was USD 435,000, and
Exercise J Using your answer for the previous exercise, prepare a trial balance. Assume the date of the trial balance is 2010 March 31.
Exercise I Using the data in the previous problem, post the entries to T-accounts. Write the letter of the transaction in the account before the dollar amount. Determine a balance for each account.
Exercise H Prepare journal entries to record each of the following transactions for Sanchez Company. Use the letter of the transaction in place of the date. Include an explanation for each entry.a. Capital stock was issued for cash, USD 300,000.b. Purchased trucks by signing a note bearing no
Exercise G Assume the ledger accounts given in the previous problem are those of Tuxedos, Inc., as they appear at 2010 December 31. Prepare the trial balance as of that date.
Exercise F Explain each of the sets of debits and credits in these accounts for Tuxedos, Inc., a company that rents wedding clothing and accessories. There are 10 transactions to be explained. Each set is designated by the small letters to the left of the amount. For example, the first transaction
Exercise E For each of the following unrelated transactions, give the journal entry to record the transaction. Then show how the journal entry would be posted to T-accounts. You need not include explanations or account numbers.a. Capital stock was issued for USD 100,000 cash.b. Salaries for a
Exercise D Prepare the journal entry required for each of the following transactions:a. Capital stock was issued for USD 200,000 cash.b. A USD 30,000 loan was arranged with a bank. The bank increased the company's checking account by USD 30,000 after management of the company signed a written
Exercise C Prepare the journal entry required for each of the following transactions:a. Capital stock was issued for USD 100,000.b. Purchased machinery for cash, USD 30,000.
Exercise B Prepare the journal entry required for each of the following transactions:a. Cash was received for services performed for customers, USD 1,200.b. Services were performed for customers on account, USD 4,200.
Exercise A A diagram of the various types of accounts follows. Show where pluses (+) or minuses(-) should be inserted to indicate the effect debits and credits have on each account.Asset Accounts = Liability Accounts + Stockholders' Equity Accounts Debit Credit Debit Credit Debit Credit Expense and
Store equipment was purchased for USD 2,000. Instead of debiting the Store Equipment account, the debit was made to Delivery Equipment. Of what help will the trial balance be in locating this error? Why?
You have found that the total of the Debits column of the trial balance of Burns Company is USD 200,000, while the total of the Credits column is USD 180,000. What are some possible causes of this difference? If the difference between the columns is divisible by 9, what types of errors are
What types of accounts appear in the unadjusted trial balance? What are the purposes of this trial balance?
Which of the following cash payments would involve the immediate recording of an expense? Why? Paid vendors for office supplies previously purchased on account. Paid an automobile dealer for a new company auto. Paid the current month's rent. Paid salaries for the last half of the
Are the following possibilities conceivable in an entry involving only one debit and one credit? Why? Increase a liability and increase an expense. Increase an asset and decrease a liability. Increase a revenue and decrease an expense. Decrease an asset and increase another
Do you think this system makes sense? Can you conceive of other possible methods for recording changes in accounts?
Describe the steps in recording and posting the effects of a business transaction. Give some examples of source documents.
A cash dividend of USD 500 was declared and paid to stockholders. The correct journal entry is:a. Capital stock 500 Cash 500b. Cash 500 Dividends 500c. Dividends 500 Cash 500d. Cash 500 Capital stock 500
If the trial balance has equal debit and credit totals, it cannot contain any errors.true or false.
The dividends account is increased by debits.true or false.
Revenues, liabilities, and capital stock accounts are increased by debits.true or false.
The left side of any account is the credit side.true or false.
A transaction must be journalized in the journal before it can be posted to the ledger accounts.true or false.
All of the steps in the accounting cycle are performed only at the end of the accounting period.true or false.
Green Hills Riding Stable, Incorporated, had the following balance sheet on 2010 June 30:GREEN HILLS RIDING STABLE, INCORPORATED Balance Sheet 2010 June 30 Assets Cash $ 7,500 Accounts receivable 5,400 Land 40,000 Total assets $ 52,900 Liabilities and Stockholders' Equity Liabilities:Accounts
Ethics case- writing experience D Refer to “An ethical perspective: State university”. Write a short essay discussing the alternatives James Stevens could pursue and the likely outcomes of those alternatives. Which of the alternatives you have discussed would you recommend?Group project E In
Annual report analysis C Look at The Limited, Inc., annual report in the Annual report appendix. In that report you will find a letter outlining Management’s responsibilities concerning the financial statements, as well as the report of the independent auditors.Write answers to the following
Annual report analysis B Recall that in this chapter we showed that the equity ratio is calculated by dividing stockholders’ equity by total equities (or total assets). Another format for analyzing solvency is to divide total debt by total equities. This latter calculation tells the proportion of
Suppose Crane comes to you for assistance in gathering the information needed to help him make a decision. He brings along the accounting records that have been maintained for his business by an experienced accountant. Using logic and your own life experiences, indicate the nature of the
Business decision case A Upon graduation from high school, Jim Crane went to work for a builder of houses and small apartment buildings. During the next six years, Crane earned a reputation as an excellent employee—hardworking, dedicated, and dependable—in the light construction industry.He
Alternate problem E The following balance sheets for 2010 June 30, and 2010 May 31, and the income statement for June are for Beach Camping Trailer Storage, Inc. (Common practice is to show the most recent period first.)BEACH CAMPING TRAILER STOR AGE, INC Comparative Balance Sheet June 30, May 31,
Alternate problem D The following data are for Central District Parking Corporation:CENTRAL DISTRICT PARKING CORPORATION Balance Sheet 2010 October 1 Assets Cash$344,00 0Accounts Receivable 18,000 Total assets$362,00 0Liabilities and Stockholders' Equity Accounts payable $94,000 Capital stock
Alternate problem C Following are summarized transaction data for Luxury Apartments, Inc., for the year ending 2010 June 30. The company owns and operates an apartment building.Rent revenue from building owned USD 150,000 Building repairs 2870 Building cleaning, labor cost 3185 Property taxes on
Alternate problem B Quick-Start Home Repair Company completed the following transactions in June 2010:June 1 The company was organized and received USD 200,000 cash from the issuance of capital stock.4 The company paid USD 48,000 cash for a truck.7 The company borrowed USD 10,000 from its bank on a
Alternate problem A Preston Auto Paint Company had the temporary free use of an old building and completed the following transactions in September 2010:Sept. 1 The company was organized and received USD 100,000 cash from the issuance of capital stock.5 The company bought painting and sanding
Problem D Little Folks Baseball, Inc., was formed by a group of parents to meet a need for a place for kids to play baseball. At the beginning of its second year of operations, its balance sheet appeared as follows:LITTLE FOLKS BASEBALL Balance Sheet 2010 April 30 Assets Cash $ 56,000 Accounts
Problem C Analysis of the transactions of the Moonlight Drive-In Theater for June 2010 disclosed the following:Ticket revenue USD 180000 Equipment rent expense 50000 Film rent expense 53400 Concession revenue 29600 Advertising expense 18600 Salaries expense 60000 Utilities expense 14100 Cash
Problem B Reliable Lawn Care Service, Inc., a company that takes care of lawns and shrubbery of personal residences, engaged in the following transactions in April 2010:Apr.1 The company was organized and received USD 400,000 cash from the owners in exchange for capital stock issued.4 The company
Problem A Lakewood Personal Finance Company, which provides financial advisory services, engaged in the following transactions during May 2010:May 1Received USD 300,000 cash for shares of capital stock issued when company was organized.2 The company borrowed USD 40,000 from the bank on a note.7 The
Exercise M Merck & Co., Inc. is a world leader in the discovery, development, manufacture and marketing of a broad range of human and animal health products. The company, which has 70,000 employees, spends over USD 2 billion every year on the research and development of new drugs. As of the end of
Exercise K Given the following facts, prepare a statement of retained earnings for Brindle Company, a tanning salon, for August 2010:Balance in retained earnings at end of July, USD 188,000.Dividends paid in August, USD 63,600.Net income for August, USD 72,000.The column totals of a summary of
Exercise J Assume that the following items were included in the Retained Earnings column in the summary of transactions for Cinck Company for July 2010:Salaries expense $120,000 Service revenue 300,000 Gas and oil expense 27,000 Rent expense 48,000 Dividends paid 40,000 Prepare an income statement
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