Questions and Answers of Introductory Financial Accounting

Hart, Attorney at Law, experienced the following transactions in Year 1, the first year of operations:1. Accepted $36,000 on April 1, Year 1, as a retainer for services to be performed evenly over
Clark Bell started a personal financial planning business when he accepted $36,000 cash as advance payment for managing the financial assets of a large estate. Bell agreed to manage the estate for a
Yard Designs (YD) experienced the following events in Year 1, its first year of operation:1. On October 1, Year 1, YD collected $54,000 for consulting services it agreed to provide during the coming
Lan, an accounting major, and Pat, a marketing major, are watching a Matlock rerun on late-night TV. Of course, there is a murder, and the suspect wants to hire Matlock as the defense attorney.
On April 1, Year 1, Maine Corporation paid $18,000 cash in advance for a one-year lease on an office building. Assume that Maine records the prepaid rent as an asset and that the books are closed on
Life, Inc. experienced the following events in Year 1, its first year of operation:1. Performed counseling services for $36,000 cash.2. On February 1, Year 1, paid $18,000 cash to rent office space
On June 1, Year 1, Hamlin, Inc. paid $12,000 for 12 months rent on its warehouse in Huntsville, Alabama. In addition, on October 1, Year 1, Hamlin paid $3,000 for a one-year insurance policy on the
Yard Professionals Inc. experienced the following events in Year 1, its first year of operation:1. Performed services for $35,000 cash.2. Purchased $6,000 of supplies on account.3. A physical count
Pizza Express Inc. began the Year 2 accounting period with $2,500 cash, $1,400 of common stock, and $1,100 of retained earnings. Pizza Express was affected by the following accounting events during
Fill in the blanks (indicated by the alphabetic letters in parentheses) in the following financial statements. Assume the company started operations January 1, Year 1, and all transactions involve
Marco’s Consulting experienced the following transactions for Year 1, its first year of operations, and Year 2. Assume that all transactions involve the receipt or payment of cash.Transactions for
Blix Corp. started the Year 2 accounting period with total assets of $50,000 cash, $20,000 of liabilities, and $20,000 of retained earnings. During the Year 2 accounting period, the Retained Earnings
The following unrelated events are typical of those experienced by business entities:1. Pay cash for operating expenses.2. Pay an office manager’s salary with cash.3. Receive cash for services that
Jan Perkins is a business consultant. She analyzed the business processes of one of her clients, Diamond Companies, in November Year 1. She prepared a report containing her recommendation for changes
Corrugated Boxes Inc. is a U.S.-based company that develops its financial statements under GAAP. The total amount of the company’s assets shown on its balance sheet for the current year was
Amelia Company experienced the following events during its first- and second-year operations: Year 1 Transactions:1. Acquired $75,000 cash from the issue of common stock.2. Borrowed $28,000 cash
As of January 1, Year 2, Shundra Inc. had a balance of $4,500 in Cash, $2,500 in Common Stock, and $2,000 in Retained Earnings. These were the only accounts with balances in the ledger on January 1,
On January 1, Year 1, the following information was drawn from the accounting records of Zeke Company: cash of $200; land of $1,800; notes payable of $600; and common stock of $1,000.Requireda.
Tennessee Company experienced the following events during Year 2:1. Acquired $50,000 cash from the issue of common stock.2. Paid $15,000 cash to purchase land.3. Borrowed $25,000 cash.4. Provided
National Service Company experienced the following accounting events during Year 1:1. Paid $4,000 cash for salary expense.2. Borrowed $8,000 cash from State Bank.3. Received $30,000 cash from the
On January 1, Year 1, Palmer, a fast-food company, had a balance in its Cash account of $32,000. During the Year 1 accounting period, the company had (1) net cash inflow from operating activities of
The December 31, Year 1, balance sheet for James Company showed total stockholders’ equity of $156,000. Total stockholders’ equity increased by $65,000 between December 31, Year 1, and December
Petre Company was started on January 1, Year 1. During Year 1, the company experienced the following three accounting events: (1) earned cash revenues of $14,500, (2) paid cash expenses of
Forrest Inc. experienced the following events during its first-year operations: 1. Acquired $65,000 cash from the issue of common stock. 2. Borrowed $20,000 from the First City Bank. 3. Earned
At the end of Year 1, Jameson Co. had $800 of cash, $500 of liabilities, $300 of common stock, and zero in retained earnings. During Year 2, the company generated $650 of cash revenue and
Leaf Company experienced the following events during its first-year operations: 1. Acquired $65,000 cash from the issue of common stock. 2. Borrowed $18,000 from the First City Bank. 3. Earned
The following table shows the transactions experienced by Walter Enterprises during Year 7. The table contains missing data which are labeled with alphabetic characters (a) through (i). Assume all
Both balance sheets shown in the following table were dated as of December 31, Year 3:Requireda. Based only on the information shown in the balance sheets, can Smith Co. pay a $2,000 cash dividend?b.
Lewis Enterprises was started when it acquired $4,000 cash from creditors and $6,000 from owners. The company immediately purchased land that cost $9,000. The land purchase was the only transaction
This exercise continues the scenario described in Exercise 1-11B shown earlier. Specifically, Green Gardens’s Year 1 ending balances become the Year 2 beginning balances. At the beginning of Year
Green Gardens, Inc. began operations on January 1, Year 1. During Year 1, Green Gardens experienced the following accounting events.1. Acquired $20,000 cash from the issue of common stock.2. Borrowed
Morrison Co. experienced the following events during Year 1: 1. Acquired cash from the issue of common stock. 2. Borrowed cash. 3. Collected cash from providing services. 4. Purchased land with
Middleton Co. paid $80,000 cash to purchase land from Saws Lumber Company. Saws originally paid $80,000 for the land. Required a. Did this event cause the balance in Middleton’s cash account
Riley Company paid $60,000 cash to purchase land from Clay Company. Clay originally paid $60,000 for the land.Requireda. Did this event cause the balance in Riley’s cash account to increase,
As of December 31, Year 1, Moss Company had total cash of $195,000, notes payable of $90,500, and common stock of $84,500. During Year 2, Moss earned $42,000 of cash revenue, paid $24,000 for cash
As of December 31, Year 1, Dunn Company had total cash of $156,000, notes payable of $85,600, and common stock of $52,400. During Year 2, Dunn earned $36,000 of cash revenue, paid $20,000 for cash
Calculate the missing amounts in the following table: Stockholders' Equity Common Stock Retained Earnings Company Assets Liabilities $ 50,000 $30,000 $62,000 A 50,000 85,000 215,000 10,000 25,000
Match the terms (identified as a through g) with the definitions and phrases (marked 1 through 7). For example the term “a. Assets” matches with definition 7. Economic resources that will be used
Karen White helped organize a charity fund to help cover the medical expenses of her friend, Vicky Hill, who was seriously injured in a bicycle accident. The fund was named the Vicky Hill Recovery
Explain the term stakeholder. Distinguish between stakeholders with a direct versus an indirect interest in the companies that issue financial reports.
This chapter defined and discussed accrual transactions. Complete the following requirements using the most recent financial statements available on the Internet for Netflix, Inc. Obtain the
Corola Corporation reported $34,000 of net income and $25,000 of net cash flow from operating activities All revenue is earned on account.RequiredWrite a brief memo that explains how earning revenue
The following data are based on information in the 2016 annual report of Buffalo Wild Wings, Inc. As of December 25, 2016, there were 1,240 Buffalo Wild Wings restaurants. The parent company owned
The following data are based on information in the 2016 annual report of Cracker Barrel Old Country Store. As of July 29, 2016, Cracker Barrel operated 640 restaurants and gift shops in 43 states.
The following information is drawn from the accounting records of Kristy Company:Divide the class into groups of four or five students. Organize the groups into four sections. Assign each section of
Obtain the Target Corporation’s annual report at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions:a. Which accounts on Target’s
The following information was drawn from the records of Tristan Company:Accounts payable (ending) ......................................................$12,000 Cash collected from accounts
Matchstix was started on January 1, Year 1.Year 1 Transactions1. Acquired $50,000 cash by issuing common stock.2. Earned $24,000 of revenue on account.3. On October 1, Year 1, borrowed $22,000 cash
Waddell Company had the following balances in its accounting records as of December 31, Year 1:The following accounting events apply to Waddell Company’s Year 2 fiscal year:Jan. 1 Acquired
Electronic Enterprises (EE) experienced eight accounting events during Year 6. These events affected EE’s financial statements as shown in the following horizontal financial statements
Daley Company was started on January 1, Year 1, and experienced the following events during its first year of operation:1. Acquired $52,000 cash from the issue of common stock.2. Borrowed $20,000
During Year 6, Shelby Enterprises earned $115,000 of cash revenue. The company incurs all operating expenses on account. The Year 6 beginning balance in Shelby’s accounts payable account was
London Falls Inc. had a beginning balance of $15,000 in its Accounts Receivable account. The ending balance of Accounts Receivable was $8,500. During the period, London Falls collects $65,000 of
Determine the missing amounts in each of the following four independent scenarios:a. W Co. had a $5,500 beginning balance in accounts payable on January 1, Year 8. During Year 8, the company
Determine the missing amounts in each of the following four independent scenarios:a. W Co. had a $5,000 beginning balance in accounts receivable on January 1, Year 4. During Year 4, the company
California Company borrowed $120,000 from the issuance of a note payable on August 1, Year 1. The note had a 7 percent annual rate of interest and a one-year term to maturity.Requireda. What amount
Carry Connelly started Connelly Company on January 1, Year 1. The company experienced the following events during its first year of operation:1. Earned $6,200 of cash revenue.2. Borrowed $10,000 cash
Companies make sacrifices known as expenses to obtain benefits called revenues. The accurate measurement of net income requires that expenses be matched with revenues. In some circumstances, matching
In Year 1, Hall Inc. billed its customers $62,000 for services performed. The company collected $51,000 of the amount billed. Hall incurred $39,000 of other operating expenses on account. Hall paid
Rosewood Inc. experienced the following events in Year 1, its first year of operation:1. Received $50,000 cash from the issue of common stock.2. Performed services on account for $67,000.3. Paid a
The following events apply to Parker and Moates, a public accounting firm, for the Year 1 accounting period:1. Performed $96,000 of services for clients on account.2. Performed $65,000 of services
Talley Inc. experienced the following events in Year 1 in its first year of operation:1. Received $20,000 cash from the issue of common stock.2. Performed services on account for $38,000.3. Paid the
During Year 1, Star Corporation earned $5,000 of cash revenue and accrued $3,000 of salaries expense.RequiredBased on this information alone:a. Prepare the December 31, Year 1, balance sheet.b.
Kendall Company earned $20,000 of cash revenue. Kendall Co. incurred $10,000 of utility expense on account during Year 1. The company made cash payments of $5,000 to reduce its accounts payable
The Woodstock Shop experienced the following events during its first year of operations, Year 1:1. Acquired $38,000 cash by issuing common stock.2. Earned $30,000 revenue on account.3. Paid $25,000
Smith Company earned $12,000 of service revenue on account during Year 1. The company collected $9,800 cash from accounts receivable during Year 1.RequiredBased on this information alone, determine
The following horizontal financial statements model shows the transactions experienced by Surf’s Up Industries during Year 1. The table contains missing data that are labeled with alphabetic
Pet Partners experienced the following events during its first year of operations, Year 1:1. Acquired cash by issuing common stock.2. Borrowed cash from a bank.3. Signed a contract to provide
The Bruce Spruce Co. experienced the following events during its first year of operations, Year 1:1. Acquired $75,000 cash by issuing common stock.2. Earned $48,000 cash revenue.3. Paid $34,000 cash
Pete Chalance is an accountant with a shady past. Suffice it to say that he owes some very unsavory characters a lot of money. Despite his past, Pete works hard at keeping up a strong professional
Castile Inc. had a beginning balance of $4,000 in its Accounts Receivable account. The ending balance of Accounts Receivable was $4,500. During the period, Castile recognized $68,000 of revenue on
The following information was drawn from the records of Bennett Company:Common stock issued .................................................$ 5,000 Retained earnings (beginning)
Sentry, Inc. was started on January 1, Year 1.Year 1 Transactions1. Acquired $20,000 cash by issuing common stock.2. Earned $62,000 of revenue on account.3. On October 1, Year 1, borrowed $12,000
Waddell Company had the following balances in its accounting records as of December 31, Year 1:The following accounting events apply to Waddell Company’s Year 2 fiscal year: Jan. 1
Electronic Enterprises (EE) experienced eight accounting events during Year 6. These events affected EE’s financial statements, as shown in the following horizontal financial statements
Maben Company was started on January 1, Year 1, and experienced the following events during its first year of operation:1. Acquired $30,000 cash from the issue of common stock.2. Borrowed $40,000
Name and provide a brief explanation of the six Principles of Professional Conduct of the AICPA Code of Professional Conduct.
During Year 6, Kincaid, Inc. earned $85,000 of cash revenue. The company incurs all operating expenses on account. The Year 6 beginning balance in Kincaid’s accounts payable account was $2,000,
Harbert, Inc. had a beginning balance of $12,000 in its Accounts Receivable account. The ending balance of Accounts Receivable was $10,500. During the period, Harbert collects $72,000 of its
Determine the missing amounts in each of the following four independent scenarios:a. X Co. had a $4,700 beginning balance in accounts payable on January 1, Year 8. During Year 8, the company
Determine the missing amounts in each of the following four independent scenarios:a. X Co. had a $4,500 beginning balance in accounts receivable on January 1, Year 4. During Year 4, the company
Leach Company borrowed $80,000 cash by issuing a note payable on June 1, Year 1. The note had an 8 percent annual rate of interest and a one-year term to maturity.Requireda. What amount of interest
Ben Bradley started Bradley Company on January 1, Year 1. The company experienced the following events during its first year of operation:1. Earned $2,000 of cash revenue for performing services.2.
Companies make sacrifices known as expenses to obtain benefits called revenues. The accurate measurement of net income requires that expenses be matched with revenues. In some circumstances, matching
In Year 1, Lee Inc. billed its customers $62,000 for services performed. The company collected $51,000 of the amount billed. Lee incurred $39,000 of other operating expenses on account, and paid
Cordell Inc. experienced the following events in Year 1, its first year of operation:1. Received $40,000 cash from the issue of common stock.2. Performed services on account for $82,000.3. Paid a
The following events apply to Lewis and Harper, a public accounting firm, for the Year 1 accounting period:1. Performed $70,000 of services for clients on account.2. Performed $40,000 of services for
Milea Inc. experienced the following events in Year 1, its first year of operations:1. Received $20,000 cash from the issue of common stock.2. Performed services on account for $56,000.3. Paid the
During Year 1, Chung Corporation earned $8,000 of cash revenue and accrued $5,000 of salaries expense.RequiredBased on this information alone:a. Prepare the December 31, Year 1, balance sheet.b.
Troy Company earned $15,000 of cash revenue. Troy incurred $12,000 of utility expense on account during Year 1. The company made cash payments of $8,000 to reduce its accounts payable during Year
The Containers Inc. experienced the following events during its first year of operations, Year 1:1. Acquired $42,000 cash by issuing common stock.2. Earned $25,000 revenue on account.3. Paid $18,000
Holloway Company started operations on January 1, Year 1. During Year 1, Holloway earned $18,000 of service revenue and collected $14,000 cash from accounts receivable.RequiredBased on this
The following horizontal financial statements model shows the transactions experienced by The Frame Shop (TFS) during Year 1. The table contains missing data which are labeled with alphabetic
The Candle Shop experienced the following events during its first year of operations, Year 1:1. Acquired cash by issuing common stock.2. Paid a cash dividend to the stockholders.3. Paid cash for
The Ramires, Incorporated experienced the following events during its first year of operations, Year 1:1. Acquired $56,000 cash by issuing common stock.2. Earned $52,000 cash revenue.3. Paid $27,000
How does the recognition of revenue earned on account affect the income statement compared to its effect on the statement of cash flows?
Complete the requirements below using the most recent (20xx) financial statements available on Sonic Drive-In’s website. Obtain the statements on the Internet by following the steps below. (The
Sam and his sister Blair both attend the state university. As a reward for their successful completion of the past year (Sam had a 3.2 GPA in business, and Blair had a 3.7 GPA in art), their father
The following information was drawn from the annual report of Machine Imports Company (MIC):Requireda. Compute the percentage of growth in net income from Year 1 to Year 2. Can stockholders expect a
The following cash transactions occurred in five real-world companies:1. During the third quarter of 2016 (July 1 through September 30), Ford Motor Company paid approximately $31.5 billion in

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