Questions and Answers of Principles Financial Accounting

The following annual account balances are from Armour Sports at December 31.a. What is the change in the number of days’ sales uncollected between Year 1 and Year 2?b. From the analysis in part a,
Prepare journal entries for the following credit card sales transactions. The company uses the perpetual inventory system.1. Sold $20,000 of merchandise, which cost $15,000, on Mastercard credit
Vail Company recorded the following transactions during November.1. Open a general ledger having T-accounts for Accounts Receivable, Sales, and Sales Returns and Allowances. Also open an accounts
Comparative figures for Apple and Google follow.Required1. Compute the accounts receivable turnover for the two most recent years for (a) Apple and (b) Google.2. Which company more quickly collects
Key figures for Samsung follow.1. Compute Samsung’s accounts receivable turnover for the current year.2. In the current year, does Samsung’s accounts receivable turnover underperform or
On August 2, Jun Co. receives a $6,000, 90-day, 12% note from customer Ryan Albany as payment on his $6,000 account receivable. Prepare Jun’s journal entry assuming the note is honored by the
Paloma Co. has four employees. FICA Social Security taxes are 6.2% of the first $137,700 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. Also, for the first $7,000 paid to each
Fishing Guides Co. has four employees. FICA Social Security taxes are 6.2% of the first $137,700 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. Also, for the first $7,000 paid
Shown here are condensed income statements for two different companies (assume no income taxes).Required1. Compute times interest earned for Ellis Company and for Seidel Company.2. What happens to
Tavella Company’s first weekly pay period of the year ends on January 8. On that date, Tavella’s sales employees earned $34,745, office employees earned $21,225, and delivery employees earned
Assume that your team is in business and you must borrow $6,000 cash for short-term needs. You have been shopping banks for a loan, and you have the following two options.A. Sign a $6,000, 90-day,
What is the combined amount (in percent) of the employee and employer Social Security tax rate? (Assume wages do not exceed $137,700 per year.)
Shown here are condensed income statements for two different companies (assume no income taxes).Required1. Compute times interest earned for Miller Company and for Weaver Company.2. What happens to
Francisco Company has 10 employees, each of whom earns $2,800 per month and is paid on the last day of each month. All 10 have been employed continuously at this amount since January 1. On March 1,
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $137,700 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA
Mest Company has nine employees. FICA Social Security taxes are 6.2% of the first $137,700 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes
Watts and Lyon are forming a partnership. Watts invests $42,000 and Lyon invests $63,000. The partners agree that Watts will work one-third of the total time devoted to the partnership and Lyon will
Stark Company has five employees. Employees paid by the hour earn $10 per hour for the regular 40-hour workweek and $15 per hour beyond the 40 hours per week. Hourly employees are paid every two
Cook, Jing, and Schwartz formed the CJS Partnership by making investments of $144,000, $216,000, and $120,000, respectively. They predict annual partnership net income of $240,000 and are considering
Bell and Green are forming a partnership. Bell invests $104,000 and Green invests $156,000. The partners agree that Bell will work one-fourth of the total time devoted to the partnership and Green
Ramer and Knox began a partnership by investing $60,000 and $90,000, respectively. The partners agreed to share net income and loss by giving annual salary allowances of $50,000 to Ramer and $40,000
Lenny Florita, an unmarried employee, works 48 hours in the week ended January 12. His pay rate is $14 per hour, and his wages have deductions for FICA Social Security, FICA Medicare, and federal
Jen Novinska and Jeff Quinlan form a partnership. Novinska contributes the following items (at market value). Prepare the partnership’s journal entry to record Novinska’s investment.
Ramer and Knox began a partnership by investing $60,000 and $90,000, respectively. During its first year, the partnership earned $160,000. Prepare calculations showing how the $160,000 income is
Mike Derr and Mark Finger form a partnership. Derr contributes the following items (at market value). Prepare the partnership’s journal entry to record Derr’s investment.
Dave Krug contributed $1,000 cash along with inventory and land to a new partnership. The inventory had a market value of $2,000. The land had a market value of $5,000. The partnership also accepted
This activity requires teamwork to reinforce understanding of accounting for partnerships.Required1. Assume that Baker, Warner, and Rice form the BWR Partnership by making capital contributions of
Amy and Lester are partners in operating a store. Without consulting Amy, Lester enters into a contract to purchase $10,000 of merchandise for the store. Amy says she did not authorize the order and
On December 1, Home Store sells a mower (that costs $200) for $500 cash with a one-year warranty that covers parts. Warranty expense is estimated at 8% of sales. On January 24 of the following year,
Use the following comparative figures for Apple and Google.Required1. Compute the basic EPS for each company using these data.2. Compute the dividend yield for each company using these data.3.
Turner, Roth, and Lowe are partners who share income and loss in a 1:4:5 ratio (in percents: Turner, 10%; Roth, 40%; and Lowe, 50%). The partners decide to liquidate the partnership. Immediately
Assume that the Turner, Roth, and Lowe partnership of Exercise 12-13 is a limited partnership. Turner and Roth are general partners. Lowe is a limited partner, meaning any remaining deficiency in
At December 31, the end of Chilton Communication’s third quarter, the following stockholders’ equity accounts are reported.In the fourth quarter, the following entries related to its equity are
Kohler Corporation reports the following components of stockholders’ equity at December 31 of the prior year.During the current year, the following transactions affected its stockholders’ equity
On October 10, the stockholders’ equity section of Sherman Systems appears as follows.1. Prepare journal entries to record the following transactions for Sherman Systems.a. Purchased 5,000 shares
Use the following financial information for Samsung.Required1. Compute earnings per share (EPS) for Samsung.2. If Samsung buys back outstanding shares from investors, would we expect EPS to increase
For each transaction, determine the impact—increase, decrease, or no effect—on total assets, total liabilities, and total equity. Issued $12,000 of common stock for cash Issued $23,000 of common
Rose Company had no short-term investments prior to this year. It had the following transactions this year involving short-term stock investments with insignificant influence.Apr. 16 Purchased 3,500
On January 1, 2021, Eagle Company borrows $100,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of $29,523, consisting of accrued interest and principal on
The plant assets section of the comparative balance sheets of Anders Company is reported below.Refer to the balance sheet data above from Anders Company. During 2021, equipment with a book value of
Selected comparative financial statements of Haroun Company follow.Required1. Compute trend percents for all components of both statements using 2015 as the base year. Round percents to one
Summary information from the financial statements of two companies competing in the same industry follows.Required1. For both companies compute the(a) Current ratio,(b) Acid-test ratio,(c) Accounts
Tuscan Inc. had a retained earnings balance of $60,000 at December 31 of the prior year. In the current year, Tuscan reported the following results. Calculate the retained earnings balance at
Brin Company issues bonds with a par value of $800,000. The bonds mature in 10 years and pay 6% annual interest in semiannual payments. The annual market rate for the bonds is 8%.1. Compute the price
Kelley Company reports $960,000 of net income and declares $120,000 of cash dividends on its preferred stock for the year. At year-end, the company had 400,000 weighted-average shares of common
The following information shows Carperk Company’s individual investments in securities during its current year, along with the December 31 fair values.a. Investment in Brava Company bonds: $420,500
Foxburo Company expects to pay a $2.34 per share cash dividend this year on its common stock. The current market value of Foxburo stock is $32.50 per share. Compute the expected dividend yield. If a
Montclair Company is considering a project that will require a $500,000 loan. It presently has total liabilities of $220,000 and total assets of $620,000.1. Compute Montclair’s(a) current
Analyze Rowan’s entries (1 through 3) from QS 15-16 by showing each entry’s effect on the accounting equation—specifically, identify the accounts and amounts (including + or −) for each.Data
Brooks Co. purchases debt investments as trading securities at a cost of $66,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair
Prepare Natura Co.’s journal entries to record the following transactions involving its short-term investments in held-to-maturity debt securities, all of which occurred during the current year.a.
During the current year, Reed Consulting acquired long-term available-for-sale debt securities on July 1 at a $70,000 cost. At its December 31 year-end, these securities had a fair value of $58,000.
In each separate case, indicate whether the company has a finance lease or an operating lease.1. The lessor retains title to the asset, and the lease term is 3 years on an asset that has a 10-year
Prepare journal entries to record the following transactions involving both the short-term and long-term investments of Cancun Corp., all of which occurred during the current year.a. On February 15,
Prepare journal entries to record the following transactions and events of Kodax Company.Year 1Jan. 2 Purchased 30,000 shares of Grecco Co. common stock for $411,000 cash. Grecco has 90,000 shares of
If a stock investment with insignificant influence costs $10,000 and is sold for $12,000, how should the difference between these two amounts be recorded?
Each team member is to become an expert on a specific classification of long-term investments. This expertise will be used to facilitate other teammates’ understanding of the concepts and
Roak Company and Clay Company are similar firms that operate in the same industry. Clay began operations two years ago and Roak started five years ago. In the current year, both companies pay 6%
Prepare general journal entries for the following transactions of a new company called Pose-for-Pics. Use the following partial chart of accounts: Cash; Supplies; Prepaid Insurance; Equipment; M.
Prepare compound journal entries for each transaction.a. The owner, J. Cruz, invests $6,500 cash and $3,500 of equipment in the company.b. The company acquires $2,000 of supplies by paying $500 cash
Santana Rey created Business Solutions on October 1, 2021. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up
Costs of $5,000 were incurred to acquire goods and make them ready for sale. The goods were shipped to the buyer (FOB shipping point) for a cost of $200. Additional necessary costs of $400 were
(a) Calculate the current ratio for each of the following competing companies.(b) Which competitor is in the best position to pay its short-term obligations? Current Assets.. Current
Using Sierra Company’s adjusted trial balance from QS 4-16, prepare its December 31 closing entries.Data from Question 4-16Use the following adjusted trial balance of Sierra Company to prepare its
(a) Use the information in the adjusted trial balance reported in Exercise 4-11 to compute the current ratio for Wilson Trucking.(b) Assuming Spalding (a competitor) has a current ratio of 1.5, which
For each account, identify whether it is included or excluded from a post-closing trial balance.a. Accounts Receivable b. Salaries Expensec. Cashd. Lande. Income Tax Expensef. Salaries Payable
The following unadjusted trial balance contains the accounts and balances of Dylan Delivery Company as of December 31.1. Use the following information about the company’s adjustments to complete a
Santo Company’s adjusted trial balance on December 31 follows.Required1. Prepare an income statement and a statement of owner’s equity for the year, and a classified balance sheet at December 31.
The adjusted trial balance of Karise Repairs on December 31 follows.Required1. Prepare an income statement and a statement of owner’s equity for the year, and a classified balance sheet at December
The ledger of Claudell Company includes the following unadjusted normal balances: Prepaid Rent $1,000, Services Revenue $55,600, and Wages Expense $5,000. Adjustments are required for(a) prepaid rent
Use the adjusted accounts for Stark Company from Exercise 3-16 to prepare the(1) income statement(2) statement of owner’s equity for the year ended December 31(3) balance sheet at December 31. The
Use the following information to compute profit margin for each separate company a through e. Which of the five companies is the most profitable according to the profit margin ratio? Interpret the
On July 1, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company’s first month.July 2 Plume invested $30,000 cash and buildings
These 16 accounts are from the Adjusted Trial Balance columns of a company’s work sheet. Determine the letter of the financial statement column (A, B, C, or D) where a normal account balance is
List the following steps in preparing a work sheet in the proper order.a. Total the statement columns, compute net income (loss), and complete the work sheet.b. Extend adjusted balances to
The adjusted trial balance for Tybalt Construction on December 31 of the current year follows. Oro Tybalt invested $5,000 cash in the business during the year. The O. Tybalt, Capital account balance
Key figures for the recent two years of both Apple and Google follow.Required1. Compute current ratios for(a) Apple(b) Google for the two years reported above.2. In the current year, which company
Common categories of a classified balance sheet include Current Assets, Long-Term Investments, Plant Assets, Intangible Assets, Current Liabilities, Long-Term Liabilities, and Equity. For each of the
For each of the following separate cases, prepare the required December 31 year-end adjusting entries.a. Depreciation on the company’s wind turbine equipment for the year is $5,000.b. The Prepaid
For each separate case, record an adjusting entry (if necessary).a. Lonzo Co. receives $3,000 cash in advance for six months of recycling services on September 1 and records it by debiting Cash and
For each of the following separate cases, prepare adjusting entries required of financial statements for the year ended December 31. Entries can draw from the following partial chart of accounts:
Use the information in QS 2-14 to prepare a December 31 balance sheet for Lawson Consulting. The ending I. Lawson, Capital account balance as of December 31 is $13,000.Data from Question 2-14Lawson
Victoria Rivera owns and manages a consulting firm called Prisek, which began operations on July 1. On July 31, the company’s records show the following selected accounts and amounts for the month
Yi Min started an engineering firm called Min Engineering. He began operations and completed seven transactions in May, which included his initial investment of $18,000 cash. After those seven
Identify whether a debit or credit results in the indicated change for each of the following accounts.a. To increase Landb. To decrease Cashc. To increase Consulting Revenued. To increase Salaries
Use the information in Exercise 2-25 to prepare a December 31 balance sheet for Help Today. The ending C. Camry, Capital account balance as of December 31 is $106,470.Data from Exercise 2-25Carmen
Pablo Management has five employees, each of whom earns $250 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the five employees worked
The following three separate situations require adjusting journal entries to prepare financial statements as of April 30. For each situation, present both: The April 30 adjusting entry. The
Natsu Company’s annual accounting period ends on October 31. The following information concerns the adjusting entries that need to be recorded as of that date. Entries can draw from the following
A company had the following assets and liabilities at the beginning and end of this year.Determine net income or net loss for the business during the year for each of the following separate cases.a.
Use the information in Exercise 2-25 to prepare a December statement of owner’s equity for Help Today. The C. Camry, Capital account balance at December 1 was $0, and the owner invested $102,000 in
Use the information in QS 2-14 to prepare a December income statement for Lawson Consulting. The company began operations on December 1.Data from Question 2-14Lawson Consulting had the following
Use the information in QS 2-14 to prepare a December statement of owner’s equity for Lawson Consulting. The I. Lawson, Capital account balance at December 1 was $0. Net income for December is
For each of the following, (1) identify the account as an asset, liability, equity, revenue, or expense; (2) identify the normal balance of the account; and (3) enter debit or credit to identify the
Indicate whether a debit or credit decreases the normal balance of each of the following accounts.a. Interest Payable b. Accounts Receivablec. Prepaid Insuranced. Buildingse. Accounts Payablef.
Groro Co. bills a client $62,000 for services provided and agrees to accept the following three items in full payment:(1) $10,000 cash,(2) $80,000 of equipment,(3) $28,000 note payable owed on the
Use the information in Problem 1-3B to prepare the statement of owner’s equity for Audi Company for the current year ended December 31. The owner invested $100 cash during the year.Data from
Lita Lopez started Biz Consulting, a new business, and completed the following transactions during its first year of operations.a. Lita Lopez invested $70,000 cash and equipment valued at $10,000 in
Jarvis began operations on January 1, Year 1. Jarvis made an owner investment of $10,000 early in Year 1. There have been no additional owner investments. In its first two years of operations, it
Refer to Apple’s financial statements in Appendix A for the following questions.Required1. What amount of total liabilities does Apple report for each of the fiscal years ended(a) September 28,

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