Questions and Answers of Financial Accounting Tools For Business

In its income statement for the year ended December 31, 2025, Marten Company reported the following condensed data.Instructionsa. Prepare a multiple-step income statement.b. Prepare a single-step
The adjusted trial balance for the year ended December 31, 2025, for Dykstra Company is shown below.InstructionsPrepare a multiple-step income statement for Dykstra Company. Assume a tax rate of \(25
What treatment do Refund Liability and Estimated Inventory Returns receive in the financial statements?
The following information is available for Berlin Corp. for the year ended December 31, 2025:Prepare a multiple-step income statement for Berlin Corp. The company has a tax rate of $30 \%$. Other
Clean Lake Corporation's accounting records show the following at year-end December 31, 2025:Assuming that Clean Lake Corporation uses the periodic system, compute(a) cost of goods purchased and(b)
Owen Wise, Inc. reported the following in its 2025 and 2024 income statements.Determine the company's gross profit rate and profit margin for both years. Discuss the cause for changes in the ratios.
In its income statement for the year ended December 31, 2025, Laine Inc. reported the following condensed data.InstructionsPrepare a multiple-step income statement. Operating expenses Cost of goods
At the end of Oates Department Store's fiscal year on November 30, 2025, these accounts appeared in its adjusted trial balance.Additional facts:1. Inventory on November 30, 2025, is $36,200.2. Note
Zhou Inc. operates a retail operation that purchases and sells snowmobiles, among other outdoor products. The company purchases all inventory on credit and uses a periodic inventory system. The
On December 1, 2025, Devine Distributing Company had the following account balances.During December, the company completed the following summary transactions.Dec. 6 Paid $\$ 1,600$ for salaries due
On November 1, 2025, IKonk, Inc. had the following account balances. The company uses the perpetual inventory method.During November, the following summary transactions were completed.Nov. 8 Paid
The financial statements for Apple Inc. are presented in Appendix A.InstructionsAnswer these questions using the Statement of Operations.a. What was the percentage change in net sales and in net
The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of Under Armour, Inc. are presented in Appendix C.Instructionsa. Based on the information
Three years ago, Karen Suez and her brother-in-law Reece Jones opened Gigasales Department Store. For the first 2 years, business was good, but the following condensed income statement results for
Warren Buffett's company, Berkshire Hathaway, is one of the world's most successful investment companies. Therefore, it might come as a surprise that a company owned by Berkshire Hathaway may have
Kam Company has the following units and costs.If 9,000 units are on hand at December 31, what is the cost of the ending inventory under FIFO?a. $\$ 99,000$.b. $\$ 108,000$.c. $\$ 113,000$.d.
The LIFO reserve is:a. the difference between the value of the inventory under LIFO and the value under FIFO.b. The inventory held on consignment by Rogers should be included in Railway's inventory
Fran Company's ending inventory is understated by $\$ 4,000$. The effects of this error on the current year's cost of goods sold and net income, respectively, are:a. understated and overstated.b.
Harold Company overstated its inventory by $\$ 15,000$ at December 31, 2024. It did not correct the error in 2024 or 2025 . As a result, Harold's stockholders' equity was:a. overstated at December
Fylus Company took a physical inventory on December 31 and determined that goods costing $\$ 180,000$ were on hand. Not included in the physical count were $\$ 18,000$ of goods purchased from
In its first month of operations, Moncada Company made three purchases of merchandise in the following sequence: (1) 200 units at $\$ 7$, (2) 300 units at $\$ 8$, (3) 150 units at \(\$
At December 31, 2025, the following information was available for Garcia Company: ending inventory $\$ 30,000$, beginning inventory $\$ 42,000$, cost of goods sold $\$ 240,000$, and sales
Mika Sorbino, an auditor with Martinez CPAs, is performing a review of Sergei Company's inventory account. Sergei's did not have a good year and top management is under pressure to boost reported
Creve Couer Camera Inc. uses the lower-of-cost-or-net realizable value basis for its inventory. The following data are available at December 31.InstructionsWhat amount should be reported on Creve
a. Jeri Company sells three different categories of tools (small, medium and large). The cost and net realizable value of its inventory of tools are as follows.Determine the value of the company's
Bean Company is concerned about the accuracy of its year-end inventory balance. Inventory shows a year-end balance of $\$ 326,000$. Discussions with the company accountant reveal the following.1.
REI sells snowboards. Assume the following information relates to REI's purchases of snowboards during September. During the same month, 102 snowboards were sold. REI uses a periodic inventory
Best Buy uses the lower-of-cost-or-net realizable value basis for its inventory. The following data are available at December 31.InstructionsWhat amount should be reported on Best Buy's financial
Wisconsin Trading Company uses a periodic inventory system and has a beginning inventory as of April 1 of 150 tents. This consists of 150 tents purchased in February at a cost of $\$ 210$ each.
Information about REI is presented in E6.5. Additional data regarding the company's sales of snowboards are provided below. Assume that REI uses a perpetual inventory system.InstructionsCompute
Dowell Hardware reported cost of goods sold as follows.Dowell made two errors:1. 2024 ending inventory was overstated by $\$ 2,000$.2. 2025 ending inventory was understated by \(\$
Sheen Company reported these income statement data for a 2-year period.Sheen Company uses a periodic inventory system. The inventories at January 1, 2024, and December 31, 2025 , are correct.
Pitt Limited is trying to determine the value of its ending inventory as of February 28, 2025 , the company's year-end. The accountant counted everything that was in the warehouse as of February 28 ,
On December 1, 2025, Waylon Company had the account balances shown below.The following transactions occurred during December.Dec. 3 Purchased 4,000 units of inventory on account at a cost of \(\$
Suppose the following information is from the 2025 annual report of American Greetings Corporation (all dollars in thousands).The notes to the company's financial statements also include the
All companies should take steps to prevent inventory theft. This exercise reviews ways that companies can reduce inventory-related frauds.InstructionsSearch online for the article entitled "6 Ways to
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 aspects
You are the controller of Garton Inc. H. K. Logan, the president, recently mentioned to you that she found an error in the 2024 financial statements which she believes has corrected itself. She
Internal control is used in a business to:a. safeguard its assets.b. enhance the accuracy and reliability of its accounting records.c. ensure compliance with laws and regulations.d. All of the answer
Which of the following would not be an example of good cash management?a. Provide discounts to customers to encourage early payment.b. Invest temporary excess cash in stock of a small company.c.
Which of the following is not one of the sections of a cash budget?a. Cash receipts section.b. Cash disbursements section.c. Financing section.d. Cash from operations section.
At August 31, Saladino Company has the following bank information: cash balance per bank $\$ 5,200$, outstanding checks $\$ 1,462$, deposits in transit $\$ 1,211$, and a bank debit memo \(\$
Zian Company has the following cash balances: Cash in Bank $\$ 18,762$, Payroll Bank Account $\$ 8,000$, Petty Cash $\$ 150$, and Plant Expansion Fund Cash $\$ 30,000$ to be used 2 years from
The following information is available for Bohemia Company for the month of June: expected cash receipts $\$ 73,000$, expected cash disbursements $\$ 81,000$, and cash balance on June 1 , \(\$
On May 31, Tyler's petty cash fund of $\$ 200$ is replenished when the fund contains $\$ 7$ in cash and receipts for postage $\$ 105$, freight-out $\$ 49$, and miscellaneous expense \(\$
Listed below are five procedures followed by Shepherd Company.1. Total cash receipts are compared to bank deposits daily by someone who has no other cash responsibilities.2. Time clocks are used for
The information below relates to the Cash account in the ledger of Ansel Company.The June bank statement shows a balance of $\$ 16,422$ on June 30 and the following memoranda.At June 30 , deposits
Trillo Company's bank statement for May 2025 shows these data.The cash balance per books at May 31 is $\$ 13,319$. Your review of the data reveals the following.1. The NSF check was from Hup Co., a
Perth Inc.'s bank statement from Main Street Bank at August 31, 2025, gives the following information.A summary of the Cash account in the ledger for August shows the following: balance, August 1,
Rigley Company expects to have a cash balance of $\$ 46,000$ on January 1, 2025. These are the relevant monthly budget data for the first two months of 2025.1. Collections from customers: January
On July 31, 2025, Keeds Company had a cash balance per books of \$6,140. The statement from Dakota State Bank on that date showed a balance of $\$ 7,690.80$. A comparison of the bank statement with
The bank portion of the bank reconciliation for Bogalusa Company at October 31, 2025 , is shown below.The adjusted cash balance per bank agreed with the cash balance per books at October 31. The
Timmins Company of Emporia, Kansas, spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2025, the company's Cash account per its general ledger showed a balance of \(\$
You are provided with the following information taken from Moynahan Inc.'s March 31, 2025, balance sheet.Additional information concerning Moynahan Inc. is as follows.1. Gross profit is 25% of
On December 1, 2025, Ravenwood Company had the following account balances.During December, the company completed the following transactions.Adjustment data:1. Depreciation $\$ 200$ per month.2.
The financial statements of Apple Inc. are presented in Appendix A. The complete annual report, including the notes to its financial statements, is available at the company's
The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of Under Armour, Inc. are presented in Appendix C.InstructionsAnswer the following questions
The financial statements of Amazon.com, Inc. are presented in Appendix D. Financial statements of Walmart Inc. are presented in Appendix E.InstructionsAnswer the following questions for each
The international accounting firm Ernst \& Young performed a global survey on fraud. The results of that survey are summarized in a report titled 15th Global Fraud Survey 2018. You can find this
While blockchain technology is currently costly and complex, it has numerous potential benefits to improve internal control. An article by Ken Tysiac in the Journal of Accountancy entitled
Kersee Company on June 15 sells merchandise on account to Eng Co. for $\$ 1,000$, terms 2/10, n/30. On June 20, Eng Co. returns merchandise worth $\$ 300$ to Kersee Company. On June 24, payment
In 2025, Patterson Wholesale Company had net credit sales of $\$ 750,000$. On January 1,2025 , Allowance for Doubtful Accounts had a credit balance of $\$ 18,000$. During $2025, \$ 30,000$ of
An analysis and aging of the accounts receivable of Raja Company at December 31 reveal these data:What is the cash realizable value of the accounts receivable at December 31, after adjustment?a. \(\$
Good Stuff Retailers accepted $\$ 50,000$ of Citibank Visa credit card charges for merchandise sold on July 1.Citibank charges $4 \%$ for its credit card use. The entry to record this transaction
A company can accelerate its cash receipts by all of the following except:a. offering discounts for early payment.b. accepting national credit cards for customer purchases.c. selling receivables to a
Michael Co. accepts a $\$ 1,000,3$-month, $12 \%$ promissory note in settlement of an account with Tani Co. The entry to record this transaction is: a. Notes Receivable Accounts Receivable b.
Schleis Co. holds Murphy Inc.'s $\$ 10,000,120$-day, $9 \%$ note. The entry made by Schleis Co. when the note is collected, assuming no interest has previously been accrued, is: a. Cash Notes
If a company is concerned about extending credit to a risky customer, it could do any of the following except:a. require the customer to pay cash in advance.b. require the customer to provide a
Eddy Corporation had net credit sales during the year of $\$ 800,000$ and cost of goods sold of $\$ 500,000$. The balance in receivables at the beginning of the year was $\$ 100,000$ and at the
Suppose the following items are taken from the 2025 balance sheet of Verizon Communications. (All dollars are in millions.)Instructions Prepare a classified balance sheet for Verizon Communications
Comparative financial statement data for Loeb Corporation and Bowsh Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2025.Instructionsa. Comment on the
The following are financial statements of Ohara Company.Additional information: The weighted-average common shares outstanding during the year was 50,000.Instructionsa. Compute the following values
AP Writing Condensed balance sheet and income statement data for Danke Corporation are presented as follows.InstructionsCompute these values and ratios for 2024 and 2025.a. Earnings per share.b.
AP Selected financial data of two competitors, Target and Walmart, are presented here. (All dollars are in millions.) Suppose the data were taken from the 2025 financial statements of each
The financial statements of Apple Inc. are presented in Appendix A.InstructionsAnswer the following questions using the financial statements and the notes to the financial statements.a. What were
The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of Under Armour, Inc. are presented in Appendix C. Assume Columbia's weighted average common
Suppose the following information was reported by Gap, Inc.a. Determine the overall percentage decrease in Gap's total assets from 2021 to 2025 . What was the average decrease per year? (Note: The
Genesis Company buys a $\$ 900$ machine on credit. This transaction will affect the:a. income statement only.b. balance sheet only.c. income statement and retained earnings statement only.d. income
During 2025, Gibson Company assets decreased $\$ 50,000$ and its liabilities decreased $\$ 90,000$. Its stockholders' equity therefore:a. increased $\$ 40,000$.b. decreased $\$ 140,000$.c.
A ledger:a. contains only asset and liability accounts.b. should show accounts in alphabetical order.c. is a record of all accounts maintained by a company and their amounts.d. provides a
During 2025, Rain Corp. entered into the following transactions.1. Purchased equipment for $\$ 31,000$ by issuing a note.2. Received $\$ 960$ from tenant for rent.3. Paid $\$ 520$ for supplies
Transactions for Warren Potter Inc. for the month of May are presented below. Identify the accounts to be debited and credited for each transaction. May 1 6 12 18 Stockholders invested $22,000 in the
Using the data from Practice Brief Exercise 2, journalize the transactions (omit explanations).Data from Brief Exercises 2Transactions for Warren Potter Inc. for the month of May are presented below.
Selected transactions for Carlos Santana Company are presented in journal form below. Post the transactions to T-accounts. Make one T-account for each account and determine each account's ending
From the ledger accounts below, prepare a trial balance for Bundy Corporation at December 31, 2025. List the accounts in the order shown in the text. All account balances are normal. Accounts
Legal Services Inc. was incorporated on July 1, 2025. During the first month of operations, the following transactions occurred.1. Stockholders invested $\$ 10,000$ in cash in exchange for common
Presented below is information related to Conan Real Estate Agency.Oct. 1 Arnold Conan begins business as a real estate agent with a cash investment of $\$ 18,000$ in exchange for common stock.2
Bob Sample and other student-investors opened Campus Carpet Cleaning, Inc. on September 1, 2025. During the first month of operations, the following transactions occurred.Sept. 1 Stockholders
During 2025, Manion Corp. entered into the following transactions.1. Borrowed $\$ 60,000$ by issuing bonds.2. Paid $\$ 9,000$ cash dividend to stockholders.3. Received $\$ 13,000$ cash from a
During 2025, Rostock Company entered into the following transactions.1. Purchased equipment for $\$ 286,176$ cash.2. Issued common stock to investors for $\$ 137,590$ cash.3. Purchased inventory
Journalize the following transactions for Matt's Carpentry, Inc. (You may omit explanations.)Sept. 1 Purchased supplies for $\$ 910$ cash.5 Paid $\$ 300$ cash dividend to stockholders.7 Received
From the ledger balances below, prepare a trial balance for Peete Company at June 30, 2025. All account balances are normal. Accounts Payable Cash Common Stock Dividends Equipment $1,000 5,400 18,000
Tracy has the following selected accounts.1. Unearned Service Revenue.2. Accounts Payable.3. Common Stock.4. Salaries and Wages Expense.5. Dividends.Indicate whether each of the above accounts is an
The following accounts are taken from the ledger of Chillin' Company at December 31, 2025.Prepare a trial balance in good form. Notes Payable Common Stock Equipment Dividends Salaries and Wages
AP Brady Company entered into these transactions during May 2025, its first month of operations.1. Stockholders invested $\$ 40,000$ in the business in exchange for common stock of the company.2.
The tabular analysis of transactions for Wolfe Company is presented in E3.4.InstructionsPrepare an income statement and a retained earnings statement for August and a classified balance sheet at
Wood Renew Corp. incurred the following selected transactions during the month of April.Apr. 2 Paid monthly rent, $\$ 800$.3 Completed floor refinishing on account for $\$ 1,000$.5 Received \(\$
The T-accounts below summarize the ledger of Salvador's Gardening Company, Inc. at the end of the first month of operations.Instructionsa. Prepare the journal entries (including explanations) that
Selected transactions from the journal of Baylee Inc. during its first month of operations are presented here.Instructionsa. Post the transactions to T-accounts.b. Prepare a trial balance at August
Here is the ledger for Kriscoe Co.Instructionsa. 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

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