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College Accounting A Contemporary Approach 6th International Edition M. David Haddock, John Price, Michael Farina - Solutions

18. On December 31, the Income Summary account of Davidson Company has a debit balance of$111,000 after revenue of $117,000 and expenses of $228,000 were closed to the account. Jackson Davidson, Drawing has a debit balance of $12,000 and Jackson Davidson, Capital has a credit balance of $179,000.
17. The ledger accounts of Perera Company appear as follows on March 31, 20X1:ACCOUNT NO. ACCOUNT BALANCE 101 Cash $160,000 111 Accounts Receivable 119,640 121 Supplies 21,200 131 Prepaid Insurance 50,000 141 Equipment 236,000 142 Accumulated Depreciation—Equipment 82,640 202 Accounts Payable
16. The Income Summary and Henry Peterson, Capital accounts for Peterson Production Company at the end of its accounting period follow.Complete the following statements:1. Total revenue for the period is _____.2. Total expenses for the period are _____.3. Net income for the period is _____.4.
15. Managers often consult financial statements for specific types of information. Indicate whether each of the following items would appear on the income statement, the statement of owner’s equity, or the balance sheet. Use I for the income statement, E for the statement of owner’s equity, and
14. From the following list, identify the accounts that will appear on the postclosing trial balance.ACCOUNTS 1. Cash 2. Accounts Receivable 3. Supplies 4. Equipment 5. Accumulated Depreciation 6. Accounts Payable 7. Brecha Hogan, Capital 8. Brecha Hogan, Drawing 9. Fees Income 10. Depreciation
13. Following are the steps in the accounting cycle. Arrange the steps in the proper sequence.1. Prepare financial statements.2. Prepare a worksheet.3. Prepare a postclosing trial balance.4. Journalize and post adjusting entries.5. Interpret the financial information.6. Analyze transactions.7. Post
12. Based on the account balances in Exercise 6.1 and the account balances after the closing entries, prepare a postclosing trial balance for the De La Rosa Company on December 31, 20X1.
11. On December 31, 20X1, the ledger of De La Rosa Company contained the following account balances:Cash $ 66,000 Rosie De La Rosa, Drawing $ 52,000 Accounts Receivable 5,800 Fees Income 107,500 Supplies 4,200 Depreciation Expense 5,000 Equipment 52,000 Salaries Expense 34,000 Accumulated
10. Edward Foster is a building contractor. He and his customer have agreed that he will submit a bill to them when he is 25 percent complete, 50 percent complete, 75 percent complete, and 100 percent complete. For example, he has a $300,000 room addition. When he has completed 25 percent, he will
9. DuPont reported depreciation expense of $975,000 on its consolidated financial statements for the period ended December 31, 2020. The following excerpt is taken from the company’s consolidated balance sheet for the same year:(Dollars in millions, except per share) December 31, 2020 Property,
8. Journal entries and adjusting journal entries can be used to conceal theft of company assets as well as to inflate a company’s profits or deflate company losses. One of the biggest bankruptcies and biggest accounting scandals in the United States occurred at a company called WorldCom. To hide
7. The account balances for the Wesson International Company on January 31, 20X1, follow. The balances shown are after the first month of operations.101 Cash $36,950 401 Fees Income $61,850 111 Accounts Receivable 6,800 511 Advertising Expense 3,000 121 Supplies 4,300 514 Depr. Expense—Equip. 0
6. Assume you are the accountant for Washington Enterprises. Paulette Washington, the owner of the company, is in a hurry to receive the financial statements for the year ended December 31, 20X1, and asks you how soon they will be ready. You tell her you have just completed the trial balance and
5. Imre Karafaith owns The Wealth Management Company. The trial balance of the firm for June 30, 20X1, the first month of operations, is shown below.INSTRUCTIONS 1. Complete the worksheet for the month.2. Prepare an income statement, statement of owner’s equity, and balance sheet. No additional
4. The completed worksheet for JP’s Accounting Services for the month ended December 31, 20X1, appears on the next page.INSTRUCTIONS 1. Prepare an income statement.2. Prepare a statement of owner’s equity. The owner made no additional investments during the month.3. Prepare a balance
3. The adjusted trial balance of J. Scott Chase, Attorney-at-Law, as of November 30, 20X1, after the company had completed the first month of operations, appears below.Appropriate adjustments have been made for the following items:a. Supplies used during the month, $7,200.b. Expired rent for the
2. The trial balance of Brock Company as of February 28, 20X1, appears below.INSTRUCTIONS 1. Record the trial balance in the Trial Balance section of the worksheet.2. Complete the worksheet by making the following adjustments: supplies on hand at the end of the month, $4,400; expired rent, $4,000;
1. Angela Mosley owns Innovative Designs. The trial balance of the firm for January 31, 20X1, the first month of operations, is shown below.INSTRUCTIONS 1. Complete the worksheet for the month.2. Prepare an income statement, statement of owner’s equity, and balance sheet. No additional
31. The completed worksheet for Montoya Corporation as of December 31, 20X1, after the company had completed the first month of operations, appears below.INSTRUCTIONS 1. Prepare an income statement.2. Prepare a statement of owner’s equity. The owner made no additional investments during the
30. The adjusted trial balance of Heritage Book Store and Supply Company as of November 30, 20X1, after the firm’s first month of operations, appears below.Appropriate adjustments have been made for the following items:a. Supplies used during the month, $11,600.b. Expired rent for the month,
29. The trial balance of Escobedo Company as of January 31, 20X1, after the company completed the first month of operations, is shown in the partial worksheet below.INSTRUCTIONS Complete the worksheet by making the following adjustments: supplies on hand at the end of the month, $2,100; expired
28. Assume the worksheet for Jason Taylor, Counselor and Attorney-at-Law, showed the following Adjusted Trial Balance accounts and balances on January 31, 20X1 (the first month of operation), as reflected below. Assume all accounts have normal balances. Complete the Income Statement and Balance
27. Assume that a firm reports net income of $97,850 prior to making adjusting entries for the following items: expired rent, $9,000; depreciation expense, $7,200; and supplies used, $12,580.Assume that the required adjusting entries have not been made. What effect do these errors have on the
26. Ward’s House of Fashions must make three adjusting entries on December 31, 20X1.a. Supplies used, $3,600 (supplies totaling $9,980 were purchased on December 1, 20X1, and debited to the Supplies account).b. Expired rent, $6,000; on December 1, 20X1, the firm paid $24,000 for four months’
25. Based on the Adjusted Trial Balance of the Southern Logistics Company in Exercise 5.6, complete the Income Statement and Balance Sheet sections of the worksheet.
24. On January 31, 20X1, the adjusted trial balance column of the worksheet from the Southern Logistics Company reflected the account balances reflected below. Assume that every account has the normal debit or credit balance. The worksheet covers the month of January. Determine the Trial Balance
23. McGowan Company must make three adjusting entries on December 31, 20X1.a. Supplies used, $22,000 (supplies totaling $36,000 were purchased on December 1, 20X1, and debited to the Supplies account).b. Expired insurance, $16,400; on December 1, 20X1, the firm paid $98,400 for six
22. Assume that a firm reports net income of $270,000 prior to making adjusting entries for the following items: expired rent, $21,000; depreciation expense, $24,600; and supplies used, $10,800.Assume that the required adjusting entries have not been made. What effect do these errors have on the
21. On January 31, 20X1, the general ledger of Benjamin Company showed the following account balances. Prepare the worksheet through the Adjusted Trial Balance section. Assume that every account has the normal debit or credit balance. The worksheet covers the month of January.ACCOUNTS Cash 36,000
20. For each of the following situations, determine the necessary adjustments.1. A firm purchased a three-year insurance policy for $36,000 on July 1, 20X1. The $36,000 was debited to the Prepaid Insurance account. What adjustment should be made to record expired insurance on the firm’s July 31,
19. Determine the necessary end-of-June adjustments for Keller Company.1. On June 1, 20X1, Keller Company, a new firm, paid $28,000 rent in advance for a seven-month period. The $28,000 was debited to the Prepaid Rent account.2. On June 1, 20X1, the firm bought supplies for $16,320. The $16,320 was
14. A firm purchases machinery, which has an estimated useful life of 10 years and no salvage value, for $60,000 at the beginning of the accounting period. What is the adjusting entry for depreciation at the end of one month if the firm uses the straight-line method of depreciation?
13. What adjustment would be recorded for expired insurance?
12. What are prepaid expenses? Give four examples.
11. Why is it necessary to make an adjustment for supplies used?
10. Give three examples of assets that are subject to depreciation.
9. How does the straight-line method of depreciation work?
8. Are the following assets depreciated? Why or why not?a. Prepaid Insuranceb. Delivery Truckc. Landd. Manufacturing Equipmente. Prepaid Rentf. Furniture g. Store Equipment h. Prepaid Advertising i. Computers
7. Why is an accumulated depreciation account used in making the adjustment for depreciation?
6. How does a contra asset account differ from a regular asset account?
5. What is book value?
4. What three amounts are reported on the balance sheet for a long-term asset such as equipment?
3. Why is it necessary to journalize and post adjusting entries?
2. What effect does each item in Question 1 have on owner’s equity?
1. What effect does each of the following items have on net income?a. The owner withdrew cash from the business.b. Credit customers paid on outstanding balances that were past due.c. The business bought equipment on account.d. The business journalized and posted an adjustment for depreciation of
5. The Supplies account has a debit balance of $9,000 in the Trial Balance column. The Credit column in the Adjustments section is $3,600. What is the new balance? The new balance will be extended to which column of the worksheet?
4. Why are assets depreciated?
3. Is the normal balance for Accumulated Depreciation a debit or credit balance?
2. Why is the net income for a period recorded in the Balance Sheet section of the worksheet as well as the Income Statement section?
1. The Drawing account is extended to which column of the worksheet?
18. An audit trail allows an individual to track a transaction from the journal entry to the general ledger through to the financial statements. The audit trail can also find all the transactions that comprise the dollar amount for each account listed on the income statement and balance sheet. Your
17. Analyze Online: Locate the website for Walmart (https://corporate.walmart.com/), which provides an online store for consumers as well as corporate information. Within the website, locate the consolidated balance sheet for the current year.4. What is the balance reported for cash and cash
16. Review the following excerpt taken from the Walmart consolidated balance sheet as of January 31, 2021.Analyze:Walmart Stores, Inc.Consolidated Balance Sheet January 31, 2021(Amounts in millions)Property and Equipment:Property and Equipment (net) $92,201 Property Under Capital Leases:Property
15. An essential element of a strong system on internal control and fraud prevention is the segregation of duties of employees. Segregation of duties increases the likelihood that a single employee does not have the ability to steal assets of the business and to cover up that illegal activity. For
4. The owner of a new business recently questioned the accountant about the value of having both a journal and a ledger. The owner believes that it is a waste of effort to enter data about transactions in two different records. How would you explain the value of having both records?
3. Why should management insist that a firm’s accounting system have a strong audit trail?
2. Why should management be concerned about the efficiency of a firm’s procedures for journalizing and posting transactions?
14. How might a poor set of recording procedures affect the flow of information to management?
13. French Taylor is a new staff accountant for Fashion House Beauty Supply. He has asked you to review the financial statements prepared for April to find and correct any errors. Review the income statement and balance sheet that follow and identify the errors Taylor made (he did not prepare a
12. On June 1, 20X1, Zenna Brown opened the Leadership Coaching Agency. She plans to use the chart of accounts given below.INSTRUCTIONS 1. Journalize the transactions. Be sure to number the journal pages and write the year at the top of the Date column. Include a description for each entry.2. Post
11. Several transactions that occurred during December 20X1, the first month of operation for Richey’s Accounting Services, follow. The company uses the general ledger accounts listed below.INSTRUCTIONS Record the transactions in the general journal (page 1) and post to the appropriate
10. All the journal entries shown below contain errors. The entries were prepared by an employee of Helena Corporation who does not have an adequate knowledge of accounting.INSTRUCTIONS Examine the journal entries carefully to locate the errors. Prepare journal entries to correct the errors. Assume
9. In June 20X1, Gigi Antoni opened a photography studio that provides services to public and private schools. Her firm’s financial activities for the first month of operations and the chart of accounts appear below.INSTRUCTIONS 1. Journalize the transactions. Number the journal page 1 and write
8. The transactions listed below took place at Rodriguez Cleaning Services during September 20X1.This firm cleans commercial buildings and new residential homes prior to move in for a fee.INSTRUCTIONS Analyze and record each transaction in the general journal. Choose the account names from the
7. Four transactions for Automotive Maintenance and Repair Shop that took place in November 20X1 appear below, along with the general ledger accounts used by the company.INSTRUCTIONS Record the transactions in the general journal and post them to the appropriate ledger accounts. Be sure to number
6. The following journal entries were prepared by an employee of Global Travel Agency who does not have an adequate knowledge of accounting.INSTRUCTIONS Examine the journal entries carefully to locate the errors. Prepare journal entries to correct the errors. Assume that Office Equipment and Office
5. On October 1, 20X1, Shonna Pumphrey opened an advertising agency. She plans to use the chart of accounts listed below.INSTRUCTIONS 1. Journalize the transactions. Number the journal page 1, write the year at the top of the Date column, and include a description for each entry.2. Post to the
4. The transactions that follow took place at the City Recreation and Sports Arena during September 20X1. This firm has indoor courts where customers can play tennis for a fee. It also rents equipment and offers tennis lessons.INSTRUCTIONS Record each transaction in the general journal, using the
3. On August 23, 20X1, an employee of Beal Company mistakenly debited the Utilities Expense account rather than the Repair Expense account when recording a bill of $2,150 for a truck expense.The error was discovered on August 31. Prepare a general journal entry to correct the error.
2. On June 19, 20X1, an employee of Anderson Corporation mistakenly debited Supplies Expense rather than Telephone Expense when recording a bill of $4,000 for the May telephone service. The error was discovered on June 30. Prepare a general journal entry to correct the error.
1. The following transactions took place at Johnson Office Supplies during December 20X1. Record the general journal entries that would be made for these transactions. Use a compound entry for each transaction.DATE TRANSACTIONS Dec. 9 Sales for the day totaled $45,300. Cash sales totaled $19,600,
31. The following transactions took place at the Townsend Employment Agency during October 20X1.Record the general journal entries that would be made for these transactions. Use a compound entry for each transaction.DATE TRANSACTIONS Oct. 4 Performed services for Executive Placement, Inc., for
30. Post the journal entries that you prepared in Exercise 4.5 to the general ledger. Use the account titles shown in Exercise 4.4.data from in Exercise 4.4 101 Cash 111 Accounts Receivable 121 Supplies 137 Prepaid Rent 139 Automobile 141 Equipment 202 Accounts Payable 301 Martin Zillow, Capital
29. Record the general journal entries that would be made to record the transactions in Exercise 4.4. Be sure to include the dates and description in these entries.data from in Exercise 4.4 101 Cash 111 Accounts Receivable 121 Supplies 137 Prepaid Rent 139 Automobile 141 Equipment 202 Accounts
28. Selected accounts from the general ledger of Zillow Consulting Services follow. Analyze the following transactions and indicate by number what accounts should be debited and credited for each transaction.101 Cash 111 Accounts Receivable 121 Supplies 137 Prepaid Rent 139 Automobile 141 Equipment
27. Post the journal entries that you prepared in Exercise 4.2 to the General Ledger.Data from In Exercise 4.2 101 Cash 111 Accounts Receivable 121 Supplies 137 Prepaid Rent 141 Equipment 202 Accounts Payable 301 Angie Castillo, Capital 401 Fees Income 514 Salaries Expense 517 Utilities Expense
26. Journalize the transactions in Exercise 4.1 to the General Journal. Use the account titles shown in Exercise 4.1.Data from In Exercise 4.1 101 Cash 111 Accounts Receivable 121 Supplies 137 Prepaid Rent 141 Equipment 202 Accounts Payable 301 Angie Castillo, Capital 401 Fees Income 514 Salaries
25. Selected accounts from the general ledger of the Castillo Shipping Service follow. Analyze the following transactions and indicate by number what accounts should be debited and credited for each transaction.101 Cash 111 Accounts Receivable 121 Supplies 137 Prepaid Rent 141 Equipment 202
11. What is an audit trail? Why is it desirable to have an audit trail?
10. How should corrections be made in the general journal?
9. What procedure is used to record an entry in the general journal?
8. What is the value of having a description for each general journal entry?
7. What is a compound journal entry?
6. What is the accounting cycle?
5. What are posting references? Why are they used?
4. What is posting?
3. What is a ledger?
2. In what order are accounts arranged in the general ledger? Why?
1. What is the purpose of a journal?
5. Which of the following shows both the debits and credits of the entire transaction?a. An entry in the general journalb. A posting to a general ledger account
4. Give examples of items that might appear in an audit trail.
3. How do you correct an incorrect journal entry that has not been posted?
2. Why is the ledger called the “record of final entry”?
1. What is recorded in the Posting Reference column of a general journal?
24. A chart of accounts varies with each type of business as well as each company. In a group, compare and contrast the accounts that would appear in Cole’s Real Estate Office, Sarah’s Clothing Emporium, Neal’s Grocery Store, and Tanner Plumbing Service. What accounts would appear in all
23. Annual reports released by publicly held companies include a letter to the stockholders written by the chief executive officer, chairman of the board, or president.Analyze Online: Locate the annual financial statements for Adobe, Inc., on its website at:
22. Gloria’s Fabrics is a large fabric provider to the general public. The accounting office has three employees: an accounts receivable clerk, an accounts payable clerk, and a bookkeeper who manages the accounting function in the company. The accounts receivable clerk creates the sales invoices
21. Sara-Jayne Parsons is an architect who operates her own business. The accounts and transactions for the business follow.INSTRUCTIONS(1) Analyze the transactions for January 20X1. Record each in the appropriate T accounts. Identify each entry in the T account by writing the letter of the
20. At the beginning of the summer, Humphrey Nelson was looking for a way to earn money to pay for his college tuition in the fall. He decided to start a lawn service business in his neighborhood. To get the business started, Humphrey used $6,000 from his savings account to open a checking account
19. The accountant for the firm owned by Zachary Morrow prepares financial statements at the end of each month.INSTRUCTIONS Use the figures in the T accounts for Problem 3.4B to prepare a trial balance, an income statement, a statement of owner’s equity, and a balance sheet. (The first line of

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