Questions and Answers of Financial And Managerial Accounting

Compton Associates reported short-term notes payable and salaries payable as follows: During 2025, Compton Associates paid off both current liabilities that were left over from 2024, borrowed cash
The general ledger of Rapid Cleaners at June 30, 2025, the end of the company’s fiscal year, includes the following account balances before payroll and adjusting entries. The additional data
The following transactions of San Jose Pharmacies occurred during 2024 and 2025: Journalize the transactions in San Jose Pharmacies’ general journal. Explanations are not required. Round to the
Estes Industries completed the following transactions during 2025: Journalize the transactions. Explanations are not required. Round to the nearest dollar. Nov. 1 20 Dec. 31 31 Made sales of $8,000.
Otis Long works for TLM all year and earns a monthly salary of $12,000. There is no overtime pay. Long’s income tax withholding rate is 15% of gross pay. In addition to payroll taxes, Long elects
The accounting records of Eastern Automotive included the following at January 1, 2025: In the past, Eastern Automotive’s warranty expense has been 8% of sales. During 2025, Eastern Automotive
Ferdinand Company has monthly salaries of $20,000. Assume Ferdinand Company pays all the standard payroll taxes, no employees have reached the payroll tax limits, total income tax withheld is $2,400,
On December 31, Pineda Company estimates that it will pay its employees a 3% bonus on net income after deducting the bonus. The company reports net income of $40,000 before the calculation of the
The following financial information was obtained from the year ended 2025 income statements for Franco Automotive and Quincy Automotive: Requirements 1. Compute the times-interest-earned ratio for
The income statement for Cardinal Communications follows. Assume Cardinal Communications signed a two-month, 6%, $4,000 note on June 1, 2025, and that this was the only note payable for the
Choi Industries has five employees. Each employee earns one vacation day a month. Choi Industries pays each employee a weekly salary of $1,000 for a five-day workweek. Requirements 1.
Tough Equipment guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 4% of sales. Assume that the Tough Equipment dealer in Colorado
Speedy Motors, a motorcycle manufacturer, had the following contingencies. a. Speedy Motors estimates that it is reasonably possible but not likely that it will lose a current lawsuit. Speedy
The following transactions of Skye Manufacturing occurred during 2025: Requirements 1. Journalize required transactions, if any, in Skye Manufacturing’s general journal. Explanations are not
The general ledger of International Consulting Services at June 30, 2025, the end of the company’s fiscal year, includes the following account balances before payroll and adjusting entries. The
The following transactions of London Manufacturing occurred during 2024 and 2025: Journalize the transactions in London Manufacturing’s general journal. Explanations are not required. 2024 Jan.
Semaj Jarvis manages a Valentino’s restaurant. His straight-time pay is $20 per hour, with time-and-a-half for hours in excess of 40 per week. Jarvis’ payroll deductions include withheld income
The following transactions of Wong Manufacturing occurred during 2025: Requirements 1. Journalize required transactions, if any, in Wong Manufacturing’s general journal. Explanations are not
La Costa Mexican Restaurant incurred salaries expense of $65,000 for 2025. The payroll expense includes employer FICA tax, in addition to state unemployment tax and federal unemployment tax. Of the
Glenn Bartlett is general manager of City Apartments. During 2025, Bartlett worked for the company all year at a $12,200 monthly salary. He also earned a year-end bonus equal to 10% of his annual
The income statement for España Communications follows. Assume España Communications signed a two-month, 4%, $6,000 note on June 1, 2025, and that this was the only note payable for the
Record the following transactions for Winter Consulting. Explanations are not required. Apr. 15 18 25 28 28 30 Provided consulting services to Lim Bao and billed the customer $2,000. Provided
A table of notes receivable for 2025 follows: For each of the notes receivable, compute the amount of interest revenue earned during 2025. Round to the nearest dollar. Note 1 Note 2 Note 3 Note
Shanté Peterson is an attorney in Los Angeles. Peterson Law Office uses the direct write-off method to account for uncollectible receivables. At April 30, 2025, Peterson Law Office’s accounts
Sun City Greenhouse had trouble collecting its account receivable from Sharma Suiza. On June 19, 2025, Sun City Greenhouse finally wrote off Suiza’s $700 account receivable. On December 31, Suiza
Sunshine and Rainbows Resort had the following balances at December 31, 2025, before the year-end adjustments: Requirements 1. Journalize Sunshine and Rainbows Resort’s entry to record bad debts
The Accounts Receivable balance and Allowance for Bad Debts for Breckenridge Company at December 31, 2024, were $10,800 and $2,000 (credit balance), respectively. During 2025, Breckenridge Company
During its first year of operations, Bold Reds Wine Tour earned net credit sales of $322,000. Industry experience suggests that bad debts will amount to 2% of net credit sales. At December 31, 2025,
The following selected transactions occurred during 2025 and 2026 for Bermuda Importers. The company ends its accounting year on September 30. Journalize all required entries. Make sure to determine
The Accounts Receivable balance for Lagoon, Inc. at December 31, 2024, was $18,000. During 2025, Lagoon, Inc. earned revenue of $447,000 on account and collected $324,000 on account. Lagoon, Inc.
Consider the following transactions for Rising House Publishing. Journalize all transactions for Rising House Publishing. Round all amounts to the nearest dollar. 2025 Dec. 6 31 31 2026 Mar. 6 Jun.
Vortex Watches completed the following selected transactions during 2025 and 2026: Requirements 1. Journalize the transactions (omit explanations). Open T-accounts for Allowance for Bad Debts and
Golden State Realty loaned money and received the following notes during 2025. Requirements 1. Determine the maturity date and maturity value of each note. 2. Journalize the entries to establish
Quality Chairs completed the following selected transactions: Record the transactions in the journal of Quality Chairs. Explanations are not required. (Round to the nearest dollar.) 2025 Jul. 1 Oct.
On June 6, Auroria Bank & Trust lent $110,000 to Summer Chandler on a 90-day, 9% note. Requirements 1. Journalize for Auroria Bank & Trust the lending of the money on June
On December 1, Katz Corporation accepted a 120-day, 6%, $4,000 note receivable from J. Muñoz in exchange for his account receivable. Requirements 1. Journalize the transaction on December
At September 30, 2025, the accounts of Northwest Medical Center (NWMC) include the following.During the last quarter of 2025, NWMC completed the following selected transactions: Requirements 1.
Timely Watches completed the following selected transactions during 2025 and 2026: Requirements 1. Journalize the transactions (omit explanations). Open T-accounts for Allowance for Bad Debts and
Montana Corporation has a three-month, $10,000, 8% note receivable from L. Perez that was signed on June 1, 2025. Perez defaults on the loan on September 1. Journalize the entry for Montana
The comparative financial statements of Blue Sky Supply for 2025, 2024, and 2023 include the data shown here: Requirements 1. Compute these ratios for 2025 and 2024: a. Acid-test ratio (Round to
On June 1, 2025, Wireless Mobile Devices sold $23,000 of merchandise to Antonio Trucking Company on account. Antonio Trucking Company fell on hard times and on July 15 paid only $8,000 of the account
At January 1, 2025, University Clothing had Accounts Receivable of $34,000, and Allowance for Bad Debts had a credit balance of $3,000. During the year, University Clothing recorded the following
Consider the following transactions for Jamaica Company. Journalize all transactions for Jamaica Company. Round all amounts to the nearest dollar. 2025 Dec. 6 31 31 2026 Mar. 6 Jun. 30 Oct. 2 Dec.
At January 1, 2025, University Clothing had Accounts Receivable of $34,000, and Allowance for Bad Debts had a credit balance of $3,000. During the year, University Clothing recorded the following
Los Angeles Realty loaned money and received the following notes during 2025. Requirements 1. Determine the maturity date and maturity value of each note. 2. Journalize the entries to establish
Premium Chairs completed the following selected transactions: Record the transactions in the journal of Premium Chairs. Explanations are not required. (Round to the nearest dollar.) 2025 Jul. 1 Oct.
During August 2025, Leon Company recorded the following: ■ Sales of $75,600 ($66,000 on account; $9,600 for cash). Ignore Cost of Goods Sold. ■ Collections on account, $53,200. ■
On September 30, 2025, First Bank loaned $88,000 to Kaine Construction on a one-year, 12% note. First Bank’s fiscal year ends on December 31. Requirements 1. Journalize all entries for
The comparative financial statements of Big Rig Truck Supply for 2025, 2024, and 2023 include the data shown here: Requirements 1. Compute these ratios for 2025 and 2024: a. Acid-test ratio (Round
On August 31, 2025, Tulip Floral Supply had a $180,000 debit balance in Accounts Receivable and a $7,200 credit balance in Allowance for Bad Debts. During September, Tulip Floral Supply made the
RenFair Clothing purchased land, paying $80,000 cash and signing a $220,000 note payable. In addition, RenFair Clothing paid delinquent property tax of $1,500, title insurance costing $800, and
Friendly Pet Care Clinic paid $130,000 for a group purchase of land, building, and equipment. At the time of the acquisition, the land had a fair value of $70,000, the building $56,000, and the
On January 1, 2025, Air Scotland purchased a used airplane for $43,000,000. Air Scotland expects the plane to remain useful for five years (4,000,000 miles) and to have a residual value of
On January 1, 2025, Swifty Airline purchased a used airplane at a cost of $46,000,000. Swifty Airline expects the plane to remain useful for eight years (5,000,000 miles) and to have a residual value
On July 31, 2024, Green Oak Support purchased a copy machine for $40,400. Green Oak Support expects the machine to last for four years and have a residual value of $2,000. Compute depreciation
Assume that Rapid Auto Sales paid $75,000 for equipment with a 15-year life and zero expected residual value. After using the equipment for six years, the company determines that the asset will
Hummingbird Properties bought three lots in a subdivision for a lump-sum price. An independent appraiser valued the lots as follows: Hummingbird Properties paid $210,000 in cash. Record the purchase
On June 15, 2024, Quality Furniture discarded equipment that had a cost of $10,000, a residual value of $0, and was fully depreciated. Journalize the disposal of the equipment.
On March 31, 2025, Lush Landscapes discarded equipment that had a cost of $20,000. Accumulated Depreciation as of December 31, 2024, was $18,000. Assume annual depreciation on the equipment is
Beta Communication purchased equipment on January 1, 2025, for $36,000. Suppose Beta Communication sold the equipment for $26,000 on December 31, 2027. Accumulated Depreciation as of December 31,
4x4 Company purchased equipment on January 1, 2025, for $20,000. Suppose 4x4 Company sold the equipment for $7,000 on December 31, 2026. Accumulated Depreciation as of December 31, 2026, was $10,000.
Adventure Cruise Line reported the following figures on its December 31, 2025, income statement and balance sheet: Compute the asset turnover ratio for 2025. Round to two decimal places. Net
Gulf Coast Petroleum holds huge reserves of oil assets. Assume that at the end of 2025, Gulf Coast Petroleum’s cost of oil reserves totaled $72,000,000, representing 8,000,000,000 barrels of
On October 1, 2025, Lantana Company purchased a patent for $80,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only five
United Bank recently traded in office fixtures. Here are the facts: Requirements 1. Record United Bank’s trade-in of old fixtures for new ones. Assume the exchange had commercial substance.2. Now
Quick Shop paid $170,000 to acquire Rapid Gas, a corner store and gas station. At the time of the acquisition, Rapid Gas’ balance sheet reported total assets of $130,000 and liabilities of $70,000.
Bengal, Inc. had net sales of $50,200,000 for the year ended May 31, 2025. Its beginning and ending total assets were $51,200,000 and $88,300,000, respectively. Determine Bengal, Inc.’s asset
Cordoba, Inc. purchased a computer for $2,600, debiting Computer Equipment. During 2023 and 2024, Cordoba, Inc. recorded total depreciation of $2,000 on the computer. On January 1, 2025, Cordoba,
Brown Corporation purchased equipment for $15,000. Brown Corporation recorded total depreciation of $12,000 on the equipment. On January 1, 2025, Brown Corporation traded in the equipment for new
Uptown Telecom, a communication service provider in Iowa, Nebraska, the Dakotas, and Montana had the following transactions related to its intangibles during the year: Requirements 1. Journalize
Outdoor Furniture purchased land, paying $70,000 cash and signing a $300,000 note payable. In addition, Outdoor Furniture paid delinquent property tax of $2,500, title insurance costing $2,000, and
Online Associates surveys American online shopping habits. The company’s accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation
Hot Fried Chicken bought equipment on January 2, 2025, for $39,000. The equipment was expected to remain in service for four years and to operate for 11,000 hours. At the end of the equipment’s
On January 2, 2024, Quality Clothing Consignments purchased showroom fixtures for $11,000 cash, expecting the fixtures to remain in service for five years. Quality Clothing Consignments has
During 2025, Meadows Corporation completed the following transactions: Record the transactions in the journal of Meadows Corporation. Jan. 1 Apr. 1 Dec. 31 Traded in old office equipment with book
On January 2, 2023, Oasis Day Spa purchased fixtures for $20,000 cash, expecting the fixtures to remain in service for six years. Oasis Day Spa has depreciated the fixtures on a straight-line basis,
Winter Mountain Mining paid $448,500 for the right to extract mineral assets from a 500,000-ton deposit. In addition to the purchase price, Winter Mountain Mining also paid a $500 filing fee, a
Limón Associates surveys American online shopping habits. The company’s accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation
Sierra has acquired several companies. Assume that Sierra purchased Outdoors Unlimited for $6,000,000 cash. The book value of Outdoors Unlimited’s assets is $12,000,000 (fair value, $15,000,000),
Western Trucking Corporation uses the units-of-production depreciation method because units-of-production best measures wear and tear on the trucks. Consider these facts about one Mack truck in the
Western Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana and had the following transactions during the year: Requirements 1. Journalize the entry to record
On January 3, 2025, Meal Delivery Service purchased a truck at a cost of $90,000. Before placing the truck in service, Meal Delivery Service spent $3,000 painting it, $1,500 replacing tires, and
Alaskan Oil, Inc. has an account titled Oil and Gas Properties. Alaskan Oil, Inc. paid $6,200,000 for oil reserves holding an estimated 500,000 barrels of oil. Assume the company paid $510,000 for
On January 3, 2025, Rapid Delivery Service purchased a truck at a cost of $65,000. Before placing the truck in service, Rapid Delivery Service spent $4,000 painting it, $2,500 replacing tires, and
Denton Oil Incorporated has an account titled Oil and Gas Properties. Denton Oil Incorporated paid $6,400,000 for oil reserves holding an estimated 500,000 barrels of oil. Assume the company paid
During 2025, Lui Company completed the following transactions: Record the transactions in the journal of Lui Company. Jan. 1 Apr. 1 Dec. 31 Traded in old office equipment with book value of $60,000
Clean Pool Service had the following selected accounts and normal balances listed on its December 31 adjusted trial balance: Service Revenue Accounts Payable Salaries Expense Common Stock Utilities
The adjusted trial balance of Gold Sign Company follows: Requirements 1. Assume Gold Sign Company has a January 31 year-end. Journalize Gold Sign Company’s closing entries at January 31. 2. How
The unadjusted trial balance of Konnor’s Game Shop at December 31, 2025, and the data for the adjustments follow: Adjustment data: a. Unearned Revenue still unearned at December 31, $400. b.
Samanta’s Bowling Alley’s adjusted trial balance as of December 31, 2025, is presented below: Requirements 1. Prepare the closing entries for Samanta’s Bowling Alley. 2. Prepare a
Selected accounts for Cate Photography at December 31, 2025, follow: Requirements 1. Journalize Cate Photography’s closing entries at December 31, 2025. 2. Determine Cate Photography’s ending
The adjusted trial balance of Primitivo Real Estate Appraisal at June 30, 2025, follows: Requirements 1. Prepare the company’s income statement for the year ended June 30, 2025. 2. Prepare the
The unadjusted trial balance of Gordie’s Solution at November 30, 2025, follows: Additional information at November 30, 2025: a. Accrued Service Revenue, $600. b. Depreciation, $300. c. Accrued
Consider the following transactions for Snap Toys: Requirements 1. Journalize the purchase transactions. Explanations are not required. 2. In the final analysis, how much did the inventory cost
Consider the following transactions for Tacoma Drug Store: Requirements 1. Journalize the purchase transactions. Explanations are not required. 2. In the final analysis, how much did the inventory
The adjusted trial balance of Rosaire Irrigation System at December 31, 2025, follows:Requirements 1. Prepare the company’s income statement for the year ended December 31, 2025. 2. Prepare the
Journalize the following sales transactions for Action Boats. Explanations are not required. Mar. 1 12 Action Boats sold $200,000 of boats on account, credit terms are 2/15, n/30 to Outdoors
Journalize the following sales transactions for Upscale Boutique. Explanations are not required. Mar. 3 7 10 Upscale Boutique sold $60,000 of women's clothes on account, credit terms are 3/10,
Journalize the following sales transactions for Cosmic Games. Explanations are not required. Feb. 3 23 Cosmic Games sold $14,000 of games on account, credit terms are 2/10, n/30, to Gamers Online.
Journalize the following sales transactions for Tiffani Sportswear. Explanations are not required. Aug. 1 5 10 Tiffani Sportswear sold $61,000 of sportswear on account, credit terms are 2/10, n/30.

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