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Financial Accounting Tools for Business Decision Making 9th edition Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso - Solutions

Aberkonkie Corporation prepares quarterly financial statements. The post-closing trial balance at December 31, 2021, is presented below. During the first quarter of 2022, the following transaction occurred: 1. On February 1, Aberkonkie collected fees of $12,000 in advance. The company
Milo Corporation’s unadjusted trial balance at December 1, 2022, is presented below The following transactions occurred during December. Dec. 2 Purchased equipment for $16,000, plus sales taxes of $800 (paid in cash). 2 Milo sold for $3,500 equipment which originally cost $5,000.
Megan Corporation purchased machinery on January 1, 2022, at a cost of $250,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $30,000. The company is considering different depreciation methods that could be used for financial
In recent years, Jayme Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is
Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by Inland Corporation. 1. Inland developed a new manufacturing process, incurring research and development costs of $160,000. The company also purchased
The intangible assets section of Amato Corporation’s balance sheet at December 31, 2022, is presented here. Patents ($60,000 cost less $6,000 amortization)...................$54,000 Copyrights ($36,000 cost less $25,200 amortization)
At January 1, 2022, Youngstown Company reported the following property, plant, and equipment accounts: The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjusting entries annually. The buildings are estimated to have a 40-year
Pine Company had the following assets on January 1, 2022. During 2022, each of the assets was removed from service. The machinery was retired on January 1. The forklift was sold on June 30 for $12,000. The truck was discarded on December 31. Instructions Journalize all entries
At December 31, 2022, Arnold Corporation reported the following plant assets. During 2023, the following selected cash transactions occurred. Apr. 1 Purchased land for $2,200,000. May 1 Sold equipment that cost $600,000 when purchased on January 1, 2016. The equipment was sold for
Basic information relating to a new machine purchased by Gotham Company is presented in E9.5. Instructions Using the facts presented in E9.5, compute depreciation using the following methods in the year indicated. a. Declining-balance using double the straight-line rate for 2022 and
Whippet Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2022, at a cost of $100,000. Over its 4-year useful life, the bus is expected to be driven 160,000 miles. Salvage value is expected to be $8,000. Instructions a. Compute the
The following is a list of words or phrases introduced in the chapter. 1. Capital expenditures. 2. Goodwill. 3. Plant assets. 4. Lessor. 5. Patent. 6. Copyright. 7. Impairment. 8. Accelerated-depreciation method. 9. Intangible assets. 10.
Suppose during 2022 that Federal Express reported the following information (in millions): net sales of $35,497 and net income of $98. Its balance sheet also showed total assets at the beginning of the year of $25,633 and total assets at the end of the year of
On January 1, 2022, Haley Company had a balance of $360,000 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. The goodwill had an indefinite life. During 2022, the company had the following additional transactions. Jan. 2 Purchased a patent
These are selected 2022 transactions for Wyle Corporation:Jan. 1 Purchased a copyright for $120,000. The copyright has a useful life of 6 years and a remaining legal life of 30 years. Mar. 1 Purchased a patent with an estimated useful life of 4 years and a legal life of 20 years for
Pryce Company owns equipment that cost $65,000 when purchased on January 1, 2019. It has been depreciated using the straight-line method based on an estimated salvage value of $5,000 and an estimated useful life of 5 years. Instructions.Prepare Pryce Company’s journal entries to record the
Here are selected 2022 transactions of Akron Corporation. Jan. 1 Retired a piece of machinery that was purchased on January 1, 2012. The machine cost $62,000 and had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2020. The
All assets are depreciated by the straight-line method. Santorini Company uses a calendar year in preparing annual fi nancial statements. After discussion, management has agreed to accept Victor’s proposed changes. (The “Proposed” useful life is total life, not remaining life.) Instructions
Victor Mineli, the new controller of Santorini Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2022. Here are his findings: All assets are depreciated by the straight-line method. Santorini Company uses a calendar year in
Linton Company purchased a delivery truck for $34,000 on July 1, 2022. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023. Linton uses the straight-line
Gotham Company purchased a new machine on October 1, 2022, at a cost of $90,000. The company estimated that the machine has a salvage value of $8,100. The machine is expected to be used for 70,000 working hours during its 10-year life. Instructions Compute the depreciation expense under
On March 1, 2022, Boyd Company acquired real estate, on which it planned to construct a small office building, by paying $80,000 in cash. An old warehouse on the property was demolished at a cost of $8,200; the salvaged materials were sold for $1,700. Additional expenditures before construction
The following expenditures relating to plant assets were made by Glenn Company during the first 2 months of 2022. 1. Paid $7,000 of accrued taxes at the time the plant site was acquired. 2. Paid $200 insurance to cover a possible accident loss on new factory machinery while the machinery
For 2022, Sale Company reported beginning total assets of $300,000 and ending total assets of $340,000. Its net income for this period was $50,000, and its net sales were $400,000. Compute the company’s asset turnover for 2022.
Hudson Corporation’s balance sheet at December 31, 2021, is presented below. During January 2022, the following transactions occurred. Hudson uses the perpetual inventory method. Jan. 1 Hudson accepted a 4-month, 8% note from Betheny Company in payment of Betheny’s $1,200
The adjusted trial balance of Doqe Company shows these data pertaining to sales at the end of its fiscal year, October 31, 2022: Sales Revenue $900,000, Freight-Out $14,000, Sales Returns and Allowances $22,000, and Sales Discounts $13,500. Instructions Prepare the sales section of the income
Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred. Sept. 6 Purchased calculators from Dragoo Co. at a total cost of $1,650, on account, terms n/30. 9 Paid
This information relates to Rice Co. 1. On April 5, purchased merchandise on account from Jax Company for $28,000, terms 2/10, n/30. 2. On April 6, paid freight costs of $700 on merchandise purchased from Jax. 3. On April 7, purchased equipment on account for $30,000. 4. On
Owen Wise, Inc. reported the following in its 2022 and 2021 income statements. Determine the company’s gross profit rate and profit margin for both years. Discuss the cause for changes in the ratios. 2022 2021 Net sales Cost of goods sold Operating expenses Income tax expense Net income
Clean Lake Corporation’s accounting records show the following at year-end December 31, 2022: Assuming that Clean Lake Corporation uses the periodic system, compute (a) cost of goods purchased and (b) cost of goods sold. Beginning Inventory Ending Inventory Purchase Returns and Allowances
The following information is available for Berlin Corp. for the year ended December 31, 2022: Prepare a multiple-step income statement for Berlin Corp. and comprehensive income statement. The company has a tax rate of 30%. This rate also applies to the other comprehensive income. Other
At December 31, 2022, Familla Corporation estimates that goods with a selling price of $1,400 and a cost of $650 that were sold on account during the current period will be returned during the next accounting period. Record the entry or entries required to adjust for this information.
Assume the same information as in BE5.11 and also that Spacey Company has beginning an inventory of $60,000, ending inventory of $90,000, and net sales of $612,000. Determine the amounts to be reported for cost of goods sold and gross profit.
The following information relates to Karen Weigel Inc. for the year 2022. After analyzing the data, (a) compute net income and (b) prepare a comprehensive income statement for the year ending December 31, 2022. Retained earnings, January 1, 2022 Dividends during 2022 Service revenue Salaries
The following information is available for Rancid Corp. for the year ended December 31, 2022 Prepare a multiple-step income statement for Rancid Corp. The company has a tax rate of 25%. Other revenues and gains Other expenses and losses Cost of goods sold Sales discounts Sales revenue
Barto Company provides this information for the month ended October 31, 2022: sales on credit $300,000, cash sales $150,000, sales discounts $5,000, and sales returns and allowances $19,000. Prepare the sales section of the multiple-step income statement based on this information.
From the information in BE5.4, prepare the journal entries to record these transactions on McLeena Company’s books under a perpetual inventory system. Data From BE 5.4Prepare the journal entries to record the following transactions on Borst Company’s books using a perpetual inventory
Prepare the journal entries to record the following transactions on Borst Company’s books using a perpetual inventory system. a. On March 2, Borst Company sold $800,000 of merchandise to McLeena Company on account, terms 2/10, n/30. The cost of the merchandise sold was $540,000. b. On
Presented here are the components in Salas Company’s income statement. Determine the missing amounts. Cost of Goods Sold (a) Net Income Sales Revenue Operating Expenses (b) (d) Gross Profit $ 71,200 $ 30,000 $12,100 $29,500 (c) $108,000 (e) $70,000 (f) $71,900 $109,600 $46,200
What treatment do Allowance for Sales Returns and Allowances and the Estimated Inventory Returns receive in the financial statements?
What are the steps to record an end of period adjustment for credit sales with returns and allowances?
What title does Apple use for gross profit? By how much did its total gross profit change, and in what direction, for the year ended September 30, 2017?
In its year-end earnings announcement press release, Ransome Corp. announced that its earnings increased by $15 million relative to the previous year. This represented a 20% increase. Inspection of its income statement reveals that the company reported a $20 million gain under “Other revenues and
Mai Company has always provided its customers with payment terms of 1/10, n/30. Members of its sale force have commented that competitors are offering customers 2/10, n/45. Explain what these terms mean, and discuss the implications to Mai of switching its payment terms to those of its competitors.
Maria Lopez, CEO of Sales Bin Stores, is considering a recommendation made by both the company’s purchasing manager and director of finance that the company should invest in a sophisticated new perpetual inventory system to replace its periodic system. Explain the primary difference between the
If your school has a subscription to the FASB Codification, log in and prepare responses to the following. Instructions Access the glossary (“Master Glossary”) to answer the following. a. What is the definition of revenue? b. What is the definition of compensation?
Abbey Park was organized on April 1, 2021, by Trudy Crawford. Trudy is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Trudy prepared the following income statement for the quarter that ended March 31, 2022. Trudy knew that something was wrong
The financial statements of Amazon.com, Inc. are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. a. Identify two accounts on Amazon’s balance sheet that provide evidence that Amazon uses accrual accounting. In each case, what income
The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of VF Corporation are presented in Appendix C. Instructions a. Identify two accounts on Columbia’s balance sheet that provide evidence that Columbia uses accrual accounting. In
The financial statements of Apple Inc. are presented in Appendix A. Instructions a. Using the consolidated income statement and balance sheet, identify items that may result in adjusting entries for deferrals. b. Using the consolidated income statement, identify two items that may result
At June 30, 2022, the end of its most recent fiscal year, Green River Computer Consultants’ post-closing trial balance was as follows: The company underwent a major expansion in July. New staff was hired and more financing was obtained. Green River conducted the following transactions during
On August 1, 2022, the following were the account balances of B&B Repair Services. During August, the following summary transactions were completed. Aug. 1 Paid $400 cash for advertising in local newspapers. Advertising flyers will be included with newspapers delivered during August
Lars Linken opened Lars Cleaners on March 1, 2022. During March, the following transactions were completed. Mar. 1 Issued 10,000 shares of common stock for $15,000 cash. 1 Borrowed $6,000 cash by signing a 6-month, 6%, $6,000 note payable. Interest will be paid the first day of
Mike Greenberg opened Kleene Window Washing Inc. on July 1, 2022. During July, the following transactions were completed. July 1 Issued 12,000 shares of common stock for $12,000 cash. 1 Purchased used truck for $8,000, paying $2,000 cash and the balance on account. 3
Roadside Travel Court was organized on July 1, 2021, by Betty Johnson. Betty is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Betty prepared the following income statement for her fourth quarter, which ended June 30, 2022. Betty suspected that
A review of the ledger of Lewis Company at December 31, 2022, produces these data pertaining to the preparation of annual adjusting entries. 1. Prepaid Insurance $15,200. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was
Salt Creek Golf Inc. was organized on July 1, 2022. Quarterly financial statements are prepared. The trial balance and adjusted trial balance on September 30 are shown as follows. Instructions a. Journalize the adjusting entries that were made. b. Prepare an income statement and a
The Moto Hotel opened for business on May 1, 2022. Here is its trial balance before adjustment on May 31. Other data: 1. Insurance expires at the rate of $450 per month. 2. A count of supplies shows $1,050 of unused supplies on May 31. 3. Annual depreciation is $3,600 on the
The following selected data are taken from the comparative financial statements of Yankee Curling Club. The club prepares its financial statements using the accrual basis of accounting. Dues are billed to members based upon their use of the club’s facilities. Unearned sales revenues arise
The adjusted trial balance for Ryan Company is given in E4.22. Instructions Prepare the closing entries for the temporary accounts at August 31. The following trial balances are before and after adjustment for Ryan Company at the end of its fiscal year. Ryan Company Trial
The adjusted trial balance for Ryan Company is given in E4.22. Instructions Prepare the income and retained earnings statements for the year and the classified balance sheet at August 31. Data From E.4.22The following trial balances are before and after adjustment for Ryan Company
The following trial balances are before and after adjustment for Ryan Company at the end of its fiscal year. Instructions Prepare the adjusting entries that were made. Ryan Company Trial Balance August 31, 2022 Before After Adjustment Adjustment Cr. Dr. Cr. Dr. Cash $10,900 $10,900 9,400
Selected year-end account balances from the adjusted trial balance as of December 31, 2022, for Tippy Corporation is provided below.Instructions a. Prepare closing entries b. Determine the post-closing balance in Retained Earnings. Credit Debit $ 72,600 Accounts Receivable Dividends
A partial adjusted trial balance for Ramon Company is given in E4.15 . Instructions Prepare the closing entries at January 31, 2022. Data From E4.15This is a partial adjusted trial balance of Ramon Company. Ramon Company Adjusted Trial Balance January 31, 2022 Debit Credit $
The following is a list of terms and phrases discussed in the chapter. 1. Contra asset account 2. Permanent accounts 3. Depreciation 4. Adjusting entries 5. Prepaid expenses (prepayments) 6. Temporary accounts 7. Book value 8. Adjusted trial balance 9.
Greenock Limited has the following information available for accruals for the year ended December 31, 2022. The company adjusts its accounts annually. 1. The December utility bill for $425 was unrecorded on December 31. Greenock paid the bill on January 11. 2. Greenock is open 7 days a
Action Quest Games Inc. adjusts its accounts annually. The following information is available for the year ended December 31, 2022. 1. Purchased a 1-year insurance policy on June 1 for $1,800 cash. 2. Paid $6,500 on August 31 for 5 months’ rent in advance.3. On September 4, received
On December 31, 2022, Waters Company prepared an income statement and balance sheet, but failed to take into account three adjusting entries. The balance sheet showed total assets $150,000, total liabilities $70,000, and stockholders’ equity $80,000. The incorrect income statement showed net
This is a partial adjusted trial balance of Ramon Company. Instructions Answer these questions, assuming the year begins January 1. a. If the amount in Supplies Expense is the January 31 adjusting entry and $300 of supplies was purchased in January, what was the balance in Supplies
The income statement of Norski Co. for the month of July shows net income of $2,000 based on Service Revenue $5,500, Salaries and Wages Expense $2,100, Supplies Expense $900, and Utilities Expense $500. In reviewing the statement, you discover the following: 1. Insurance expired during July of
The ledger of Armour Lake Lumber Supply on July 31, 2022, includes the selected accounts below before adjusting entries have been prepared. An analysis of the company’s accounts shows the following. 1. The investment in the notes receivable earns interest at a rate of 6% per
The unadjusted trial balance for Sierra Corp. is shown in Illustration 4.5 . Instead of the adjusting entries shown in the text at October 31, assume the following adjustment data. 1. Supplies on hand at October 31 total $500. 2. Expired insurance for the month is $100. 3.
Al Medina, D.D.S., opened an incorporated dental practice on January 1, 2022. During the first month of operations, the following transactions occurred. 1. Performed services for patients who had dental plan insurance. At January 31, $760 of such services was completed but not yet billed to
Franken Company, a ski tuning and repair shop, opened on November 1, 2021. The company carefully kept track of all its cash receipts and cash payments. The following information is available at the end of the ski season, April 30, 2022. The repair shop equipment was purchased on November 1 and
In its first year of operations, Gomes Company recognized $28,000 in service revenue, $6,000 of which was on account and still outstanding at year-end. The remaining $22,000 was received in cash from customers. The company incurred operating expenses of $15,800. Of these expenses, $12,000 were paid
Your examination of the records of a company that follows the cash basis of accounting tells you that the company’s reported cash-basis earnings in 2022 are $33,640. If this firm had followed accrual-basis accounting practices, it would have reported the following year-end
These accounting concepts were discussed in this and previous chapters. 1. Economic entity assumption. 2. Expense recognition principle. 3. Monetary unit assumption. 4. Periodicity assumption. 5. Historical cost principle. 6. Materiality. 7. Full disclosure
The following independent situations require professional judgment for determining when to recognize revenue from the transactions. a. Southwest Airlines sells you an advance-purchase airline ticket in September for your flight home in December. b. Ultimate Electronics sells you a home
This information is for Williams Corporation for the year ended December 31, 2022. Instructions a. Prepare the 2022 statement of cash flows for Williams Corporation. b. Suppose you are one of Williams’ creditors. Referring to the statement of cash flows, evaluate Williams’
AP Kellogg Company is the world’s leading producer of ready-to-eat cereal and a leading producer of grain-based convenience foods such as frozen waffl es and cereal bars. Suppose the following items were taken from its 2022 income statement and balance sheet. (All dollars are in
Otay Lakes Park is a private camping ground near the Mount Miguel Recreation Area. It has compiled the following fi nancial information as of December 31, 2022. Instructions a. Determine Otay Lakes Park’s net income for 2022. b. Prepare a retained earnings statement and a balance
The following items and amounts were taken from Lonyear Inc.’s 2022 income statement and balance sheet. Instructions a. In each, case, identify on the blank line whether the item is an asset (A), liability (L), stockholders’ equity (SE), revenue (R), or expense (E) item. b.
The following information is available for Randall Inc. Instructions Using the information above, prepare a balance sheet as of December 31, 2022. (Hint: Solve for the missing retained earnings amount.) Accounts receivable Accounts payable Interest payable Salaries and wages expense
Presented here is information for Zheng Inc. for 2022. Instructions Prepare the 2022 retained earnings statement for Zheng Inc. Retained earnings, January 1 Service revenue Total expenses Dividends $130,000 400,000 175,000 65,000
Suppose the following information was taken from the 2022 financial statements of pharmaceutical giant Merck and Co. (All dollar amounts are in millions.) Instructions a. After analyzing the data, prepare an income statement and a retained earnings statement for the year ending December
This information relates to Benser Co. for the year 2022. Instructions. Prepare an income statement and a retained earnings statement for the year ending December 31, 2022 Retained earnings, January 1, 2022 Advertising expense Dividends Rent expense Service revenue Utilities expense
The following list of terms or phrases are discussed in this chapter. 1. Certifi ed public accountant (CPA) 2. Management discussion and analysis (MD&A) 3. Revenue4. Dividends 5. Stockholders’ equity 6. Net loss 7. Sole proprietorship 8. Basic accounting
The accounts in the ledger of Rapid Delivery Service contain the following balances on July 31, 2022. Instructions a. Prepare a trial balance with the accounts arranged as illustrated in the chapter, and fi ll in the missing amount for Cash. b. Prepare an income statement, a retained
Beyers Corporation provides security services. Selected transactions for Beyers are presented below. Oct. 1 Issued common stock in exchange for $66,000 cash from investors. 2 Hired part-time security consultant. Salary will be $2,000 per month.
Here is the ledger for Kriscoe 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, 2022. Common Stock Cash Oct. 1 Oct. 4 Oct, 1 7,000 400 7,000
Selected transactions from the journal of Baylee 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, 2022. Account Titles Debit Date Credit Aug. 1 Cash 8,000 Common Stock 8,000
The T-accounts below summarize the ledger of Salvador’s Gardening Company, Inc. at the end of the first month of operations. a. Prepare the journal entries (including explanations) that resulted in the amounts posted to the accounts. Present them in the order they occurred. b. Prepare a
Transaction data and journal entries for McCall Real Estate Agency are presented in E3.8 and E3.9. Instructions a. Post the transactions to T-accounts. b. Prepare a trial balance at October 31, 2022 Data from E3.8 & E3.9This information relates to McCall Real Estate Agency. Oct.
Suppose the following information was reported by Gap, Inc. a. Determine the overall percentage decrease in Gap’s total assets from 2018 to 2022. What was the average decrease per year? b. Comment on the change in Gap’s liquidity. Does working capital or the current ratio appear to
Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. a. For each company, calculate the following values for the most recent year provided. 1. Working capital. 2. Current ratio. 3.
The financial statements of Apple Inc. are presented in Appendix A. Instructions Answer the following questions using the financial statements and the notes to the financial statements. a. What were Apple’s total current assets at September 30, 2017, and September 24,
Selected financial data of two competitors, Target and Wal-Mart, are presented here. (All dollars are in millions.) Suppose the data were taken from the 2022 financial statements of each company. Instructions For each company, compute these values and ratios. a. Working
Condensed balance sheet and income statement data for Danke Corporation are presented as follows. Compute these values and ratios for 2021 and 2022. a. Earnings per share. b. Working capital. c. Current ratio. d. Debt to assets ratio. e. Free cash flow.f. Based on the
The following are financial statements of Ohara Company.Additional information: The net cash provided by operating activities for 2022 was $190,800. The cash used for capital expenditures was $92,000. The cash used for dividends was $31,000. The weighted-average common shares outstanding during
Comparative financial statement data for Loeb Corporation and Bowsh Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2022. Instructions a. Comment on the relative profitability of the companies by computing the net income and earnings per share

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