Questions and Answers of Financial Accounting Tool

In 2022, Bismark Company has net credit sales of $1,600,000 for the year. It had a beginning accounts receivable (net) balance of $108,000 and an ending accounts receivable (net) balance of
Suppose the 2022 financial statements of 3M Company report net sales of $23.1 billion. Accounts receivable (net) are $3.2 billion at the beginning of the year and $3.25 billion at the end of the
On January 10, 2022, Masterson Co. sold merchandise on account to Tompkins for $8,000, terms n/30. On February 9, Tompkins gave Masterson Co. a 7% promissory note in settlement of this account.
Consider these transactions: a. Tastee Restaurant accepted a Visa card in payment of a $200 lunch bill. The bank charges a 3% fee. What entry should Tastee make? b. Martin Company sold its
Assume the same information as BE8.3 and that on March 4, 2022, Safer Co. receives payment of $4,300 in full from Madonna Inc. Prepare the journal entries to record this transaction. Data From
The international accounting firm Ernst & Young performed a global survey on fraud. The results of that survey are summarized in a report titled Global Fraud Survey 2016. You can find this report
The bank portion of the bank reconciliation for Bogalusa Company at October 31, 2022, is shown below. The adjusted cash balance per bank agreed with the cash balance per books at October 31. The
Identify which control activity is violated in each of the following situations, and explain how the situation creates an opportunity for fraud or inappropriate accounting practices. 1. Once a
A local bank reported that it lost $150,000 as the result of employee fraud. Ray Fairburn is not clear on what is meant by “employee fraud.” Explain the meaning of fraud to Ray and give an
On December 1, 2022, Ravenwood Company had the following account balances.During December, the company completed the following transactions. Dec. 7 Received $3,600 cash from customers in payment
Albert Company discovers in 2022 that its ending inventory at December 31, 2021, was $5,000 understated. What eff ect will this error have on (a) 2021 net income, (b) 2022 net income, and (c) the
Jackson Music Center has five TVs on hand at the balance sheet date that cost $400 each. The net realizable value is $350 per unit. Under the lower-of-cost-or-net realizable value basis of
Fennick Company reports net income of $92,000 in 2022. However, ending inventory was understated by $7,000. What is the correct net income for 2022? What effect, if any, will this error have on total
In a period of rising prices, the inventory reported in Short Company’s balance sheet is close to the current cost of the inventory, whereas King Company’s inventory is considerably below its
Winnebago Industries, Inc. is a leading manufacturer of motor homes. Suppose Winnebago reported ending inventory at August 29, 2022, of $46,850,000 under the LIFO inventory method. In the notes to
Wahlowitz Video Center accumulates the following cost and net realizable value data at December 31. Compute the lower-of-cost-or-net realizable value for the company’s inventory. Net
Bieber Inc. is a retailer operating in Calgary, Alberta. Bieber uses the perpetual inventory method. Assume that there are no credit transactions; all amounts are settled in cash. You are provided
Solar Electronics has enjoyed tremendous sales growth during the last 10 years. However, even though sales have steadily increased, the company’s CEO, Dana Byrnes, is concerned about certain
Jeters Company uses a periodic inventory system and reports the following for the month of June. Instructions a. Compute the cost of the ending inventory and the cost of goods sold under
Nona Hat Shop received a shipment of hats for which it paid the wholesaler $2,940. The price of the hats was $3,000, but Nona was given a $60 cash discount and required to pay freight charges of $75.
A company’s annual report provides various information about inventory.Instructions Answer the following questions based on the current year’s annual report available at Cisco’s
You have the following information for Van Gogh Inc. for the month ended October 31, 2022. Van Gogh uses a periodic method for inventory. a. Calculate (i) ending inventory, (ii) cost of goods
Abe Technologies provides maintenance service for computers and office equipment for companies throughout the Northeast. The sales manager is elated because she closed a $300,000, 3-year maintenance
In completing the engagement in Question 4 , Wilson pays no costs in March, $2,500 in April, and $2,200 in May (incurred in April). How much expense should the fi rm deduct from revenues in the month
Max Wilson, a lawyer, accepts a legal engagement in March, performs the work in April, and is paid in May. If Wilson’s law firm prepares monthly financial statements, when should it recognize
What are the five steps of the revenue recognition process?
Number the following steps of the revenue recognition process (from 1–5) to place in the correct order a. ________ Allocate the transaction price to the separate performance
What are the normal balances for the following accounts of Apple? (a) Accounts Receivable, (b) Accounts Payable, (c) Sales, (d) Selling, General, and Administrative Expenses.
The following is a list of terms or phrases discussed in the chapter. 1. Credit 2. Journal 3. Ledger 4. Chart of accounts 5. Posting 6. Account 7. Trial
Pamper Me Salon Inc.’s general ledger at April 30, 2022, included the following: Cash $5,000, Supplies $500, Equipment $24,000, Accounts Payable $2,100, Notes Payable $10,000, Unearned Service
Klean Sweep Company offers home cleaning service. Two recurring transactions for the company are billing customers for services performed and paying employee salaries. For example, on March 15 bills
Saira Morrow operates Dressage Riding Academy, Inc. The academy’s primary sources of revenue are riding fees and lesson fees, which are provided on a cash basis. Saira also boards horses for
Sprouts Corporation reported net cash provided by operating activities of $412,000, net cash used by investing activities of $250,000, and net cash provided by financing activities of $70,000. In
Suppose during 2022 that Cypress Semiconductor Corporation reported net cash provided by operating activities of $89,303,000, cash used in investing of $43,126,000, and cash used in financing of
Answer the following questions. a. Why is net cash provided by operating activities likely to be lower than reported net income during the growth phase? b. Why is net cash from investing
The T-accounts for Equipment and the related Accumulated Depreciation—Equipment for Goldstone Company at the end of 2022 are shown here. In addition, Goldstone’s income statement reported a
The net income for Mongan Co. for 2022 was $280,000. For 2022, depreciation on plant assets was $70,000, and the company incurred a loss on disposal of plant assets of $28,000. Compute net cash
Miguel, Inc. reported net income of $2.5 million in 2022. Depreciation for the year was $160,000, accounts receivable decreased $350,000, and accounts payable decreased $280,000. Compute net cash
The following T-account is a summary of the Cash account of Alixon Company. What amount of net cash provided (used) by financing activities should be reported in the statement of cash fl ows?
Sheen Company reported these income statement data for a 2-year period. Sheen Company uses a periodic inventory system. The inventories at January 1, 2021, and December 31, 2022, are correct.
Dowell Hardware reported cost of goods sold as follows.Dowell made two errors: 1. 2021 ending inventory was overstated by $2,000. 2. 2022 ending inventory was understated by
Inventory data for Jeters Company are presented in E6.7. Instructions a. Calculate the cost of the ending inventory and the cost of goods sold for each cost flow assumption, using a
Deere & Company is a global manufacturer and distributor of agricultural, construction, and forestry equipment. Suppose it reported the following information in its 2022 annual
The following information is available for Zoe’s Activewear Inc. for three recent fiscal years. Instructions a. Calculate the inventory turnover, days in inventory, and gross profit rate
Tascon Corporation sells coffee beans, which are sensitive to price fluctuations. The following inventory information is available for this product at December 31,
Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2022. For each item, state how it should be shown in the statement of cash
Harbinger Inc. reported sales of $2 million for 2022. Accounts receivable decreased $150,000 and accounts payable increased $300,000. Compute cash receipts from customers, assuming that the
Based on its statement of cash flows, in what stage of the product life cycle is Apple?
During 2022, Slivowitz Company exchanged $1,700,000 of its common stock for land. Indicate how the transaction would be reported on a statement of cash fl ows, if at all.
The financial statements of Louis Vuitton are presented in Appendix F. The complete annual report, including the notes to its financial statements, is available at the company’s
Meenen Corporation has the following accounts at December 31, 2022 (in euros): Share Capital—Ordinary, €10 par, 5,000 shares issued, €50,000; Share Premium—Ordinary €10,000; Retained
On January 1, 2022, Tacoma Corporation had these stockholders’ equity accounts. Common Stock ($10 par value, 70,000 shares issued and outstanding) .................... $700,000 Paid-in
Spahn Company manufactures backpacks. During 2022, Spahn issued bonds at 10% interest and used the cash proceeds to purchase treasury stock. The following financial information is available for Spahn
On January 1, 2022, Kimbel Inc. had these stockholders’ equity balances. Common Stock, $1 par (2,000,000 shares authorized, 600,000 shares issued and outstanding).....................$
Layes Corporation has been authorized to issue 20,000 shares of $100 par value, 7%, noncumulative preferred stock and 1,000,000 shares of no-par common stock. The corporation assigned a $5 stated
The ledger of Waite Corporation at December 31, 2022, after the books have been closed, contains the following stockholders’ equity accounts. Preferred Stock (10,000 shares
On December 31, 2021, Jons Company had 1,300,000 shares of $5 par common stock issued and outstanding. At December 31, 2021, stockholders’ equity had the amounts listed here. Common
The stockholders’ equity accounts of Cyrus Corporation on January 1, 2022, were as follows. Preferred Stock (7%, $100 par noncumulative, 5,000 shares authorized)................$
Tidal Corporation was organized on January 1, 2022. It is authorized to issue 20,000 shares of 6%, $50 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1
On January 1, 2022, Lenne Corporation had $1,200,000 of common stock outstand ing that was issued at par and retained earnings of $750,000. The company issued 30,000 shares of common stock at par
Cabo Company has $1,000,000 in assets and $1,000,000 in stockholders’ equity, with 40,000 shares outstanding the entire year. It has a return on assets of 10%. During 2021, it had net income of
Kojak Corporation decided to issue common stock and used the $300,000 proceeds to redeem all of its outstanding bonds on January 1, 2022. The following information is available for the company for
Suppose the following financial information is available for Walgreen Company.Instructions Calculate the payout ratio and return on common stockholders’ equity for 2022 and 2021. Comment on your
The following financial information is available for Flintlock Corporation. Instructions Calculate the payout ratio and return on common stockholders’ equity for 2022 and 2021. Comment on
The following accounts appear in the ledger of Paisan Inc. after the books are closed at December 31, 2022. Instructions Prepare the stockholders’ equity section at December 31, assuming
The following stockholders’ equity accounts, arranged alphabetically, are in the ledger of Ryder Corporation at December 31, 2022. Common Stock ($2 stated
On January 1, 2022, the ledger of Romada Company contained these liability accounts. Accounts Payable....................$42,500 Sales Taxes Payable....................6,600 Unearned
Waite Corporation issued a $50,000, 10%, 10-year installment note payable on January 1, 2022. Payments of $8,137 are made each January 1, beginning January 1, 2023. Instructions a. What
Yancey Co. receives $300,000 when it issues a $300,000, 10%, mortgage note payable to finance the construction of a building at December 31, 2022. The terms provide for annual installment payments of
Woode Corporation issued $400,000, 7%, 20-year bonds on January 1, 2022, for $360,727. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1.
Woode Corporation issued $400,000, 7%, 20-year bonds on January 1, 2022, for $360,727. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1.
Motley Company issued $300,000, 8%, 15-year bonds on December 31, 2021, for $288,000. Interest is payable annually on December 31. Motley uses the straight-line method to amortize bond premium or
Sehr Company issued $500,000, 6%, 30-year bonds on January 1, 2022, at 103. Interest is payable annually on January 1. Sehr uses straight-line amortization for bond premium or
The following are terms or phrases that were introduced in the chapter. 1. Bond certifi cate. 2. Premium (on a bond). 3. Discount (on a bond). 4. Times interest earned. 5.
Underwood Boutique reported the following financial data for 2022 and 2021. Instructions a. Calculate the current ratio for Underwood Boutique for 2022 and 2021. b. Suppose that at the
Suppose 3M Company reported the following financial data for 2022 and 2021 (in millions). Instructions a. Calculate the current ratio for 3M for 2022 and 2021. b. Suppose that at the
Suppose McDonald’s 2022 financial statements contain the following selected data (in millions).Instructions Compute the following values and provide a brief interpretation of each. a.
Sanchez, Inc. reports the following liabilities (in thousands) on its December 31, 2022, balance sheet and notes to the financial statements. Instructions a. Identify which of the above
The following situations are independent of each other. Instructions For each situation, prepare the appropriate journal entry for the redemption of the bonds. a. Mikhail Corporation
Kale Company issued $350,000 of 8%, 20-year bonds on January 1, 2022, at face value. Interest is payable annually on January 1. Instructions Prepare the journal entries to record the
Assume that the following are independent situations recently reported in the Wall Street Journal. 1. General Electric (GE) 7% bonds, maturing January 28, 2023, were issued at 111.12. 2.
Mobbe Company issued $500,000, 15-year, 7% bonds at 96. Instructions a. Prepare the journal entry to record the sale of these bonds on January 1, 2022. b. Suppose the remaining
Arroyo Company issued $600,000, 10-year, 6% bonds at 103. Instructions a. Prepare the journal entry to record the sale of these bonds on January 1, 2022. b. Suppose the remaining
On August 1, 2022, Gonzaga Corporation issued $600,000, 7%, 10-year bonds at face value. Interest is payable annually on August 1. Gonzaga’s year-end is December 31. Instructions Prepare
Cassini Company Ltd. publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $28 per year. During November 2022, Cassini sells 6,300 subscriptions for cash, beginning
Dan Noll’s gross earnings for the week were $1,780, his federal income tax withholding was $303, and his FICA total was $136. There were no state income taxes. Instructions Instructions.a.
During the month of March, Munster Company’s employees earned wages of $64,000. With holdings related to these wages were $4,896 for FICA, $7,500 for federal income tax, $3,100 for state income
In performing accounting services for small businesses, you encounter the following situations pertaining to cash sales. 1. Cerviq Company enters sales and sales taxes separately on its cash
Kelly Jones and Tami Crawford borrowed $15,000 on a 7-month, 8% note from Gem State Bank to open their business, JC’s Coffee House. The money was borrowed on June 1, 2022, and the note matures
Under what circumstances will the return on assets and the return on common stockholders’ equity be equal?
Explain the circumstances under which debt financing will increase the return on common stockholders’ equity.
What was the cost of Apple’s treasury stock acquired in fiscal year 2017?
Ratzlaff Company issues (in euros) €2 million, 10-year, 8% bonds at 97, with interest payable annually on January 1. Instructions a. Prepare the journal entry to record the sale of these
On January 1, 2020, Picard Corporation issued $3,000,000, 5-year, 8% bonds at 97. The bonds pay interest annually on January 1. By January 1, 2022, the market rate of interest for bonds of risk
Bond or debt securities pay a stated rate of interest. This rate of interest is dependent on the risk associated with the investment. Also, bond prices change when the risks associated with those
Aimes Corporation’s balance sheet at December 31, 2021, is presented below.During 2022, the following transactions occurred. Aimes uses a perpetual inventory system. 1. Aimes paid $2,500
Suppose the amounts presented here are basic financial information (in millions) from the 2022 annual reports of Nike and adidas. Instructions Calculate the accounts receivable turnover and
On January 1, 2022, Harvee Company had Accounts Receivable of $54,200 and Allowance for Doubtful Accounts of $3,700. Harvee Company prepares fi nancial statements annually. During the year, the
At December 31, 2022, the trial balance of Malone Company contained the following amounts before adjustment. Instructions a. Prepare the adjusting entry at December 31, 2022, to record bad
Here is information related to Morgane Company for 2022. Total credit sales........................$1,500,000 Accounts receivable at December..........31 840,000 Bad debts are written

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