Questions and Answers of Principles Financial Accounting

Identify the items from the following list that are likely to serve as source documents.a. Sales receipt b. Trial balance c. Balance sheetd. Prepaid insurance accounte. Invoice from
Business transactions completed by Hannah Venedict during the month of September are as follows.a. Venedict invested $60,000 cash along with office equipment valued at $25,000 in a new business named
Identify the item that best completes each of the descriptions below.1. Chart2. General ledger3. Journal4. Account5. Source documenta. A(n)____ of accounts is a list of all accounts a company uses,
Identify the normal balance (debit or credit) for each of the following accounts.a. Rideshare Revenue b. Office Suppliesc. Cashd. Wages Expensee. Accounts Receivablef. Prepaid Rentg. Wages
Complete the following spreadsheet in preparation of the statement of cash flows. Prepare the spreadsheet as in Exhibit 16A.1 under the indirect method. Identify the debits and credits in the
Selected comparative financial statements of Tripoly Company follow.Required1. Compute trend percents for all components of both statements using 2015 as the base year. Round percents to one
Match each of the descriptions with the term or phrase it best reflects.A. AuditB. GAAPC. EthicsD. FASBE. SECF. Public accountantsG. Net incomeH. IASB1. An assessment of whether financial statements
Identify the following users as either External users or Internal users.a. Customersb. Suppliersc. External auditorsd. Business presse. Managersf. District attorneyg. Shareholdersh. Lendersi.
For each of the separate cases in Exercise 3-13, determine the financial statement impact of each required year-end adjusting entry. Fill in the table below by indicating the amount and direction (+
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
Bev’s Dry Cleaners is owned and operated by Beverly Zahn. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by
Review financial news sources such as Yahoo! Finance (finance.yahoo.com) and Google Finance (google.com/finance). Identify a company that has recently purchased 50% or more of another company’s
Visit the website of a major company that interests you. Use the “Investor Relations” link at the website to obtain the toll-free telephone number of the Investor Relations Department. Call the
Teamwork is important in today’s business world. Successful teams schedule convenient meetings, maintain regular communications, and cooperate with and support their members. This assignment aims
Arrange an interview (in person or by phone) with the manager of a retail shop in a mall or in the downtown area of your community. Explain to the manager that you are a student studying
Refer to the December 31, 2015, balance sheet of Samsung in Appendix A. What long-term assets discussed in this chapter are reported by the company?
In the blank next to the following terms, place the letter A through D corresponding to the best description of that term.1. Activity2. Activity driver3. Cost pool4. Cost objectA. Measurement
Key figures for Apple and Google follow.Required1. Compute the recent two years€™ cash flow on total assets ratios for Apple and Google.2. What does the cash flow on total assets ratio
Compute the debt-to-equity ratio for each of the following companies. Which company appears to have a riskier financing structure? Explain. Atlanta Company Spokane Company Total liabilities ..
Peachtree Company uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, and a general journal. The following transactions occur in the month of May.May 1
Key figures for Apple and Google follow.Required1. Compute common-size percents for each of the companies using the data provided. (Round percents to one decimal.)2. Which company retains a higher
Key figures for Apple and Google follow.Required1. Compute the debt-to-equity ratios for Apple and Google for both the current year and the prior year.2. Use the ratios you computed in part 1 to
Merger Co. has 10 employees, each of whom earns $2,000 per month and has been employed since January 1. FICA Social Security taxes are 6.2% of the first $118,500 paid to each employee, and FICA
What amount of income tax is withheld from the salary of an employee who is single with two withholding allowances and earns $725 per week? What if the employee earns $625 and has no withholding
1. Compute the additional annual net income or loss expected under (a) Plan A and (b) Plan B.2. Should the company pursue either plan? Discuss both the financial and non-financial factors relevant to
At December 31, 2017, Hawke Company reports the following results for its calendar year.Cash sales ............................ $900,000Credit sales ............................. 300,000Its year-end
Review the opening feature of this chapter that highlights Vlad Tenev and Baiju Bhatt and their company Robinhood. Their company plans to open a kiosk in the Ferry Building in San Francisco to sell
The July transactions of Acorn Industries are described in Problem 7-2B.Problem 7-2B,Acorn Industries completes these transactions during July of the current year (the terms of all its credit sales
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
On October 1, 2017, Santana Rey launched a computer services company, Business Solutions, that is organized as a proprietorship and provides consulting services, computer system installations, and
The December 31, 2017, adjusted trial balance of Business Solutions (reflecting its transactions from October through December of 2017) follows.Required1. Record and post the necessary closing
Prepare journal entries to record each of the following transactions. The company records purchases using the gross method and a perpetual inventory system.Aug. 1 Purchased merchandise with an
Prepare journal entries to record each of the following transactions. The company records purchases using the gross method and a perpetual inventory system.Sept. 15 Purchased merchandise with an
The operating cycle of a merchandiser with credit sales includes the following five activities. Starting with merchandise acquisition, identify the chronological order of these five activities.a.
Refer to the information in Exercise 5-12 and indicate whether the failure to include in-transit inventory as part of the physical count results in an overstatement, understatement, or no effect on
Refer to the information in Exercise 6-3 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory and to cost of goods sold usingRefer to Exercise
Identify the most likely role in an accounting system played by each of the numbered items 1 through 10 by assigning a letter from the list A through E on the left.A. Source documentsB. Input
1. Compute the ratio of segment revenue divided by segment assets for each of the segments of Apple and Google for the most recent year shown.2. Interpret and comment on your results from part 1.Key
Ski-Doo Company manufactures, markets, and sells snowmobiles and snowmobile equipment and accessories. The average total assets for Ski-Doo is $3,000,000. In its most recent year, Ski-Doo reported
Neva Nadal started a new business, Nadal Computing, and completed the following transactions during its first year of operations.a. Neva Nadal invested $90,000 cash and office equipment valued at
Sanyu Sony started a new business and completed these transactions during December.Dec. 1 Sanyu Sony transferred $65,000 cash from a personal savings account to a checking account in the name of Sony
Create the following table similar to the one in Exhibit 1.9.EXHIBIT 1.9: Summary of Transactions Using the Accounting EquationThen use additions and subtractions to show the dollar effects of each
Create the following table similar to the one in Exhibit 1.9.EXHIBIT 1.9: Summary of Transactions Using the Accounting EquationThen use additions and subtractions to show the dollar effects of each
Match each of the numbered descriptions 1 through 9 with the term or phrase it best reflects. Indicate your answer by writing the letter A through H for the term or phrase in the blank provided.A.
The following describe several different business organizations. Determine whether each description best refers to a sole proprietorship (SP), partnership (P), or corporation (C).a. Micah and Nancy
Ming Chen began a professional practice on June 1 and plans to prepare financial statements at the end of each month. During June, Ming Chen (the owner) completed these transactions.a. Owner
Gabi Gram started The Gram Co., a new business that began operations on May 1. The Gram Co. completed the following transactions during its first month of operations.May 1 G. Gram invested $40,000
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 office equipment valued at
The shareholders’ equity accounts of Tsui, Inc. at December 31, 2013, are as follows:Preferred shares, $3 noncumulative, unlimited number authorized, 4,000 issued
Tsung Company signs a contract to sell the use of its patented manufacturing technology to Herlitz Corp. for 12 years. The contract for this transaction stipulates that Herlitz Corp. pays Tsung
Lee Company must perform an impairment test on its equipment. The equipment will pro- duce the following cash flows: Year 1, $35,000; Year 2, $45,000; Year 3, $55,000. Lee requires a minimum rate of
Sam Waterston owns a garage and is contemplating purchasing a tire retreading machine for $16,100. After estimating costs and revenues, Sam projects a net cash flow from the retreading machine of
Assume the same information as in BEPV–15, except that you can only afford to make annual payments of $6,500. If you decide to trade in your present car to help reduce the amount of financing
You would like to purchase a car that costs $32,000, and the dealer offers financing over a five- year period at 3%. If repayments are to be made annually, what would your annual payments be?
You have borrowed $18,000. If the annual rate of interest is 4%, how long will it take you to repay the note if you are making semi-annual blended principal plus interest payments of $1,702?
The municipality of Lansdown issued a three-year, 5% mortgage note payable for $185,000 to finance the purchase of three salt trucks. The terms provide for equal quarterly blended principal plus
Phang Ltd. issues a six-year, $1,058,871 mortgage note on January 1, 2014, to obtain financing for new equipment. The terms provide for semi-annual instalment payments of $112,825. What is the
Assume the same information as BEPV–10, except that the interest rate is 9% instead of 8%. What is the annual payment that Marsdon will receive from its customer? Refer in BEPV-10, Marsdon
Marsdon Company receives a six-year, $50,000 note that bears interest at 8% from a customer. The customer will make annual blended principal plus interest payments at the end of each year. What is
Assume the same information as in BEPV–8, except that the market interest rate is 6% instead of 5%. In this case, how much can New Line expect to receive from the sale of these bonds? Refer to
New Line Railroad Co. is about to issue $100,000 of 10-year bonds that pay a 5.5% annual inter- est rate, with interest payable semi-annually. The market interest rate is 5%. How much can New Line
For each of the following cases, indicate in the chart below the appropriate discount rate (i) and the appropriate number of periods (n) to be used in present value calculations. Show calculations.
Tarzwell Ltd. is considering investing in an annuity contract that will return $25,000 at the end of each year for 15 years. What amount should Tarzwell Ltd. pay for this investment if it earns a 6%
If Jin Fei invests $3,152 now, she will receive $10,000 at the end of 15 years. What annual rate of interest will Jin earn on her investment? Round your answer to the nearest whole number.
Xin Su has been offered the opportunity to invest $44,401 now. The investment will earn 7% per year, and at the end of that time will return Xin $100,000. How many years must Xin wait to receive
Wong Ltd. is considering an investment that will return a lump sum of $600,000 five years from now. What amount should Wong Ltd. pay for this investment in order to earn a 4% return?
In the €œAll About You€ feature, you learned that there are on-line investment services that provide advice to investors. These services offer stock quotes, company research
Match each of the following terms with the most appropriate description. Terms Description 1. Intracompany (a) An analysis tool that expresses relationships among selected items of financial
Can vertical analysis be used to compare two companies of different sizes, such as Walmart, the world’s largest retailer, and Costco, the eighth-largest retailer in the world? Explain
Facebook became a public corporation in May 2012. Can a meaningful horizontal and vertical analysis be prepared for its first full year of operations as a public company, the year ended December 31,
Refer to the information presented for Lancer Ltd. in P16â€“7A. Additional information:Refer Data in P16-7A,Additional Information:1. Accounts payable relate only to merchandise creditors.2.
The shareholders’ equity accounts of Cedeno Inc. at December 31, 2013, are as follows:Common shares (unlimited number of shares authorized, 1,000,000 issued) ... $3,000,000Stock dividends
Condensed financial data follow for Lancer Ltd. Additional information:1. New equipment costing $99,000 was purchased for $39,000 cash and a $60,000 note payable.2. Equipment with an original
You are provided with the following transactions that took place during a recent fiscal year: InstructionsAssuming the company is reporting under IFRS, complete the above table for each of the
Shankman Limited is a private company reporting under ASPE. Its comparative balance sheet at December 31 is as follows: Additional information:1. Profit for 2014 was $200,000 2. Equipment
The income statement and account balances for Chartrand Inc. are presented in E16€“4. Refer Data in E16-4,InstructionsPrepare the operating section of a cash flow statement using the
Hammond Ltd. completed its first year of operations on September 30, 2014. Hammond reported the following information at September 30, 2014:
The current assets and liabilities sections of the comparative balance sheets of Charron Inc., a private company reporting under ASPE, at October 31 are presented below: InstructionsPrepare the
The following was reported in Shania Ltd.€™s 2014 financial statements. Calculate cash payments for dividends? 2014 2013 Dividends payable Retained earnings Profit $ 24,000 $ 20,000
Manoharan Ltd. reported the following information in its balance sheet and income statement for the year ended March 31, 2014: Calculate the net cash provided (used) by operating activities
Indicate whether each of the following transactions would be added to (1) or subtracted from (2) profit in determining the cash provided (used) by operating activities using the indirect method: (a)
For each of the following transactions, indicate whether it will increase (1), decrease (2), or have no effect (NE) on a company’s cash flows:(a) Repayment of a mortgage payable(b) Sale of land for
How is cash generally defined for purposes of the cash flow statement?
As indicated in the “All About You” feature in this chapter, a student can benefit from financial leverage by borrowing to pay for an education. However, too much leverage can result in graduates
Plankton Corporation€™s trial balance at December 31, 2015, is presented below:All transactions and adjustments for 2015 have been recorded and reported in the trial balance except for the
The following is from Creasor Corp.’s balance sheet: CREASOR CORP.Balance Sheet (partial) December 31, 2013Current liabilitiesInterest payable
Frauts Corporation issued $600,000 of 10-year, 8% bonds on January 1, 2014, for $642,637. This price resulted in a market interest rate of 7% on the bonds. Interest is payable semi-annually on July 1
Ontario Inc. issued $800,000 of 10-year, 4% bonds on January 1, 2013, when the market interest rate was 5%. Interest is payable semi-annually on July 1 and January 1. Ontario has a December 31 year
Mertsis Corporation issued $400,000 five-year bonds on April 1, 2011. Interest is paid semi- annually on April 1 and October 1 and the company€™s year end is March 31. Below is a partial
Eaton Inc. issues a $360,000, 10-year, 6% mortgage note payable on November 30, 2013, to obtain financing for a new building. The terms provide for monthly instalment payments. Prepare the journal
Turpin Ltd. issued $1 million of five-year, 4% bonds dated May 1, 2014, for $1,046,110 when the market interest rate was 3%. Interest is paid semi-annually on May 1 and November 1. Prepare an
Estabrooks Corp. issued $500,000 of 10-year, 5% bonds with interest payable semi-annually. How much did Estabrooks receive from the sale of these bonds if the market interest rate was (a) 4%,(b)
Monk Inc. is considering two alternatives to finance its construction of a new $4-million plant at the beginning of the year: (a) Issue 200,000 common shares at a market price of $20 per share,
Place the number corresponding to each of the following characteristics in the appropriate section of the diagram. If a characteristic applies to both bonds payable and common shares, place that
Abira is wondering why the debt to total assets and interest coverage ratios are calculated. Answer her question and explain why the debt to total assets ratio should never be interpreted without
Magda borrowed $15,000 from the bank and signed a three-year, 6% instalment note payable with fixed principal payments. She wants to know how to calculate what the annual fixed principal payment will
In the “All About You” feature, we learned about investing in shares of a company. You have recently inherited $10,000 and you are considering investing in Canadian Tire Corporation, Limited’s
On January 1, 2014, Hewitt Corporation had an unlimited number of common shares authorized, and 120,000 of them issued for $1.2 million. It also had retained earnings of $750,000 and accumulated
Cherkas Ltd. has profit from continuing operations of $320,000 for the year ended December 31, 2014. It also has the following items (before considering income tax):1. A net gain of $60,000 from the
Before preparing financial statements for the current year, the chief accountant for Patel Ltd. discovered the following errors in the accounts:1. Patel has 20,000, $4 noncumulative preferred shares

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