Questions and Answers of Financial Managerial Accounting

On March 31, 20Y9, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture store, are as follows:a. Prepare a multiple-step income statement for the fiscal year
Statz Company had sales of $1,800,000 and related cost of goods sold of $1,150,000 for its first year of operations ending December 31, 20Y1. Statz provides customers a refund for any returned or
Omega Tire Co.’s perpetual inventory records indicate that $3,145,000 of merchandise should be on hand on August 31, 20Y4. The physical inventory indicates that $3,113,500 of merchandise is
Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid
Name three accounts that would normally appear in the chart of accounts of a retail business but would not appear in the chart of accounts of a service business.
Who is responsible for freight when the terms of sale are (a) FOB shipping point, (b) FOB destination?
(a) What is the difference between liquidity and solvency?(b) What is the difference between working capital and the current ratio?
In a recent balance sheet, Microsoft Corporation (MSFT) reported Property, Plant, and Equipment of $38,156 million and Accumulated Depreciation of $19,800 million.a. What was the book value of the
The adjusting entry for accrued wages was omitted at July 31, the end of the current year. Indicate which items will be in error, because of the omission, on (a) The income statement for the
On June 1, 20Y2, Herbal Co. received $18,900 for the rent of land for 12 months. Journalize the adjusting entry required for unearned rent on December 31, 20Y2.
We-Sell Realty was organized as a corporation on August 1, 20Y7, by the issuance of common stock of $15,000. We-Sell Realty is owned and operated by Omar Farah, the sole stockholder. The following
A summary of cash flows for Parker Consulting Group for the year ended January 31, 20Y4, follows:Cash receipts:Cash received from
Indicate whether each of the following activities would be reported on the statement of cash flows as (a) An operating activity, (b) An investing activity, or (c) A financing
Imaging Services was organized on March 1, 20Y5. A summary of the revenue and expense transactions for March follows:Fees earned.................................................$482,000Wages
Financial information related to Organic Products Company for the month ended June 30, 20Y9, is as follows:Net income for June..............................................$115,000Dividends paid in
From the following list of selected items taken from the records of Bobcat Appliance Service as of a specific date, identify those that would appear on the balance sheet:1. Accounts Payable2. Cash3.
Indicate whether each of the following types of transactions will either (a) Increase stockholders’ equity or (b) Decrease stockholders’ equity:1. Issued common stock in exchange for
Inspirational Inc. is a motivational consulting business. At the end of its accounting period, October 31, 20Y2, Inspirational has assets of $5,250,000 and liabilities of $1,600,000. Using the
The total assets and total liabilities (in millions) of McDonald’s Corporation (MCD) and Starbucks Corporation (SBUX) follow:Determine the stockholders’ equity of each company. Starbucks $14,330
The following data were taken from Alvarado Company’s balance sheet:a. Compute the ratio of liabilities to stockholders’ equity for each year.b. Has the creditor’s risk increased or decreased
A summary of cash flows for Paradise Travel Service for the year ended May 31, 20Y6, follows:Cash receipts:Cash received from customers...................................$880,000Cash received from
Using the following data for Paradise Travel Service as well as the statement of stockholders’ equity from Basic Exercise 1-5, prepare a balance sheet as of May 31, 20Y6:Accounts
Using the income statement for Paradise Travel Service from Basic Exercise 1-4, prepare a statement of stockholders’ equity for the year ended May 31, 20Y6. Everett McCauley invested an additional
The revenues and expenses of Paradise Travel Service for the year ended May 31, 20Y6, follow:Fees earned............................$900,000Office expense........................300,000Miscellaneous
Be-The-One is a motivational consulting business. At the end of its accounting period, December 31, 20Y2, Be-The-One has assets of $395,000 and liabilities of $97,000. Using the accounting equation,
State the effect (cash receipt or cash payment and amount) of each of the following transactions, considered individually, on cash flows:a. Retired $500,000 of bonds, on which there was $4,000 of
In a prior year, United Continental Holdings, Inc. (UAL), the parent company of United Airlines, reported a net loss of $723 million from operations. However, on its statement of cash flows, it
Dillin Inc. reported the following on the company’s statement of cash flows in 20Y2 and 20Y1:Eighty percent of the net cash flow used for investing activities was used for the purchase of property,
Ripley Corporation’s accumulated depreciation—equipment account increased by $15,325 while $3,800 of patent amortization was recognized between balance sheet dates. There were no purchases or
In teams, select a public company that interests you. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and
Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 20Y8, were as follows: a. Issued 15,000 shares of $20 par common stock at $30, receiving
Nav-Go Enterprises Inc. produces aeronautical navigation equipment. Navo-Go Enterprises' stockholders’ equity accounts, with balances on January 1, 20Y1, are as follows:Common Stock, $5 stated
Diamondback Welding & Fabrication Corporation sells and services pipe welding equipment in Illinois. The following selected accounts appear in the ledger of Diamondback Welding & Fabrication
Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Yosemite Bike has declared the following annual dividends over a
The annual examination of Felton Company’s financial statements by its external public accounting firm (auditors) is nearing completion. The following conversation took place between the
In teams, select a public company that interests you. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and
Rodgers Corporation produces and sells football equipment. On July 1, 20Y1, Rodgers issued $65,000,000 of 10-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of
On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236.
The following transactions were completed by Montague Inc., whose fiscal year is the calendar year:20Y1July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1, 20Y1, at a market
Rodgers Corporation produces and sells football equipment. On July 1, 20Y1, Rodgers issued $65,000,000 of 10-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of
On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236.
In teams, select a public company that interests you. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and
Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5, were as follows: Jan. 3. Issued a check to establish a petty cash fund of $4,500.Feb. 26.
An employee earns $30 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. If the employee worked 54 hours during the week, determine the employee’s (a) gross pay and (b)
In teams, select a public company that interests you. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and
Verizon Communications Inc. (VZ) is a major telecommunications company in the United States. Two recent balance sheets for Verizon disclosed the following information regarding fixed
Layton Company purchased tool sharpening equipment on October 1 for $108,000. The equipment was expected to have a useful life of three years or 12,000 operating hours, and a residual value of
Waylander Coatings Company purchased waterproofing equipment on January 6 for $320,000. The equipment was expected to have a useful life of four years, or 20,000 operating hours, and a residual value
The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk.Instructions1.
Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years or 18,000 operating hours, and a residual value of $9,000. The equipment
Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Best Buy, Inc. (BBY) is a leading retailer of consumer electronics and media products in the United States. Amazon and
Journalize the following transactions in the accounts of Missouri Gaming Co., which operates a riverboat casino:Mar. 29. Received a $30,000, 60-day, 5% note dated March 29 from Karie Platt on
Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31:Customer...............................................AmountKim
During the preparation of the bank reconciliation for Building Concepts Co., Joel Knolls, the assistant controller, discovered that Lone Peak National Bank incorrectly recorded a $3,290 check written
Cedar Springs Company completed the following selected transactions during June 20Y3:June 1. Established a petty cash fund of $1,000.12. The cash sales for the day, according to the cash register
Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined
Identify each of the following reconciling items as: (a) An addition to the cash balance according to the bank statement, (b) A deduction from the cash balance according to the bank
The general merchandise retail industry has a number of segments represented by the following companies:For a recent year, the following cost of goods sold and beginning and ending inventories are
Suzi Nomro operates Watercraft Supply Company, an online boat parts distributorship that is in its third year of operation. The following income statement was prepared for the year ended October 31,
In teams, select a public company that interests you. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and
On April 18, 20Y7, Bontanica Company, a garden retailer, purchased $9,800 of seed, terms 2/10, n/30, from Whitetail Seed Co. Even though the discount period had expired, Shelby Davey subtracted the
Palisade Creek Co. is a retail business that uses the perpetual inventory system. The account balances for Palisade Creek as of May 1, 20Y6 (unless otherwise indicated), are as follows:During May,
On June 30, 20Y9, the balances of the accounts appearing in the ledger of Simkins Company are as follows:Instructions1. Does Simkins Company use a periodic or perpetual inventory system? Explain.2.
The unadjusted trial balance of PS Music as of July 31, 20Y5, along with the adjustment data for the two months ended July 31, 20Y5, are shown in Chapter 3. Based upon the adjustment data, the
The unadjusted trial balance of Recessive Interiors at January 31, 20Y2, the end of the year, follows:The data needed to determine year-end adjustments are as follows:(a) Supplies on hand at January
The unadjusted trial balance of La Mesa Laundry at August 31, 20Y5, the end of the fiscal year, follows:The data needed to determine year-end adjustments are as follows:(a) Wages accrued but not paid
Last Chance Company offers legal consulting advice to prison inmates. Last Chance prepared the end-of-period spreadsheet that follows at June 30, 20Y3, the end of the fiscal year.Instructions1.
For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which
The unadjusted trial balance of Lakota Freight Co. at March 31, 20Y4, the end of the year, follows:The data needed to determine year-end adjustments are as follows:(a) Supplies on hand at March 31
Based on the data in Exercise 4-22, prepare the closing entries for Alert Security Services Co.Data from 4-22:Alert Security Services Co. offers security services to business clients. Complete the
Based on the data in Exercise 4-21, prepare the adjusting entries for Alert Security Services Co.Data from 4-21:Alert Security Services Co. offers security services to business clients. The trial
Based on the data in Exercise 4-22, prepare an income statement, statement of stockholders’ equity, and balance sheet for Alert Security Services Co. During the year ended October 31, 20Y3, common
Alert Security Services Co. offers security services to business clients. Complete the following end-of-period spreadsheet for Alert Security Services Co.: A B D E 1 Alert Security Services Co.
Alert Security Services Co. offers security services to business clients. The trial balance for Alert Security Services has been prepared on the following end-of-period spreadsheet for the year ended
The following revenue and expense account balances were taken from the ledger of Acorn Health Services Co. after the accounts had been adjusted on January 31, 20Y7, the end of the fiscal year:Prepare
The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, statement
The following accounts appear in an adjusted trial balance of Bridgewater Consulting. Indicate whether each account would be reported in the (a) Current assets; (b) Property, plant, and equipment;
The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, statement
In teams, select a public company that interests you. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and
Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance at the end of its first year of operations:For preparing the adjusting entries,
Good Note Company specializes in the repair of music equipment and is owned and operated by Robin Stahl. On June 30, 20Y6, the end of the current year, the accountant for Good Note prepared the
The accountant for Eva’s Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance and the amounts of the adjustments are
The unadjusted and adjusted trial balances for American Leaf Company on October 31, 20Y2, follow:Journalize the five entries that adjusted the accounts at October 31, 20Y2. None of the accounts were
Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry:a. Building b. Cash c. Wages Expense
State College requires students to pay tuition each term before classes begin. Students who have not paid their tuition are not allowed to enroll or to attend classes. What journal entry do you
The transactions completed by PS Music during June 20Y5 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the business’s
Tech Support Services has the following unadjusted trial balance as of January 31, 20Y5:The debit and credit totals are not equal as a result of the following errors:a. The cash entered on the trial
Valley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 20Y8, follows:The following business transactions were completed by
On August 1, 20Y7, Rafael Masey established Planet Realty, which completed the following transactions during the month:a. Rafael Masey transferred cash from a personal bank account to an account to
Ken Jones, an architect, organized Jones Architects on April 1, 20Y2. During the month, Jones Architects completed the following transactions:a. Transferred cash from a personal bank account to an
The Lexington Group has the following unadjusted trial balance as of May 31, 20Y6:The debit and credit totals are not equal as a result of the following errors:a. The cash entered on the trial
Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 20Y3, follows:The following business transactions were completed by
On November 1, 20Y9, Lexi Martin established an interior decorating business, Heritage Designs. During the month, Lexi completed the following transactions related to the business: Nov. 1. Lexi
On October 1, 20Y6, Jay Crowley established Affordable Realty, which completed the following transactions during the month:a. Jay Crowley transferred cash from a personal bank account to an account
Marjorie Knaus, an architect, organized Knaus Architects on January 1, 20Y4. During the month, Knaus Architects completed the following transactions:a. Issued common stock to Marjorie Knaus in
Identify each of the following accounts of Liken Services Co. as asset, liability, stockholders’ equity, revenue, or expense, and state in each case whether the normal balance is a debit or a
During the month, Gates Labs Co. has a substantial number of transactions affecting each of the following accounts. State for each account whether it is likely to have (a) Debit entries
The following table summarizes the rules of debit and credit. For each of the items a through l, indicate whether the proper answer is a debit or a credit. Decrease Normal Balance Increase Balance
Superior Interiors is owned and operated by Ken Lopez, an interior decorator. In the ledger of Superior Interiors, the first digit of the account number indicates its major account classification
The following accounts appeared in recent financial statements of Delta Air Lines (DAL):Accounts Payable........................................................Flight EquipmentAdvanced Payments for

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