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1 Accounting Concepts and Procedures ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The functions of accounting are to analyze, record, classify, summarize, report, and interpret financial information. 2. Sole proprietorship—1 owner; unlimited liability; easy to form; limited life […]

PROBLEM 1A-4 (a) WILLIAMS HOME DECORATING SERVICE INCOME STATEMENT MONTH ENDED SEPTEMBER 30, 201X Revenue: Home Decorating Fees $2 7 0 0 Operating Expenses: Advertising Expense $ 2 5 5 Repair Expense 4 5 Travel Expense 6 5 0 Supplies […]

PROBLEM 1B-5 OWNER’S EQUITY Expenses 0 0 0 0 +550 550 550 550 +50 600 600 600 600 +650 1,250 +550 1,800 – – – – – – – – – – – – – – – – – – […]

10 Purchases and Cash Payments ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Net purchases is calculated as follows: Purchases – Purchases Returns and Allowances – Purchases Discount. 2. Credit. 3. A reduction in cost such as Purchases Discount. […]

EXERCISES (CONTINUED) 10B-4. CODY’S CLOTHING SCHEDULE OF ACCOUNTS PAYABLE APRIL 30, 201X Hall $ 1,100 Parker 250 Total Accounts Payable $ 1,350 The schedule of accounts payable at April 30, 201X equals the accounts payable account at April 30, 201X. […]

PROBLEM 10A-3 (1) Page 5 Date 201X Account Titles and Description PR Dr. Cr. Mar. 1 Accounts Payable, Henderson Co. 210/√ 2 0 0 00 Computer Purchases Discount 511 1 4 00 Cash 110 1 8 6 00 Paid 1/2 […]

PROBLEM 10A-4 (CONTINUED ACCOUNTS PAYABLE ACCOUNT NO. 210 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Dec. 1 GJ1 4 4 0 0 00 4 4 0 0 00 8 GJ1 1 3 0 0 00 5 7 […]

PROBLEM 10B-1 (CONCLUDED) STORE EQUIPMENT ACCOUNT NO. 121 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Mar. 5 GJ2 5 4 0 0 00 5 4 0 0 00 ACCOUNTS PAYABLE ACCOUNT NO. 210 Date 201X Explanation Post […]

PROBLEM 10B-4 (CONTINUED) ABBY’S TOY HOUSE GENERAL JOURNAL PAGE 2 Date 201X Account Titles and Description PR Dr. Cr. Mar. 10 Sales Returns and Allowances 412 5 0 0 00 Accounts Receivable, John Drayton 112/√ 5 0 0 00 Issued […]

PROBLEM 10B-4 (CONTINUED) NAME AIMEE RAYPOLE ADDRESS 18 VEEK RD., CHESTER, CT 80111 Date 201X Explanation Post Ref. Debit Credit Dr. Balance Mar. 16 GJ3 4 0 0 0 00 4 0 0 0 00 24 GJ3 1 6 0 […]

10A Appendix A Special Journals with Problem Material SOLUTIONS TO CHAPTER 10 APPENDIX PROBLEMS APPENDIX A PROBLEM A-1 (1,2) YUMMY.COM SALES JOURNAL Page 1 Date 201X Accounts Pizza Grocery Invoice Receivable Sales Sales Account Debited No. PR. Dr. Cr. Cr. […]

APPENDIX A PROBLEM A-3(CONTINUED) ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME MILLER.COM ADDRESS 12 SMITH ST., DEARBORN, Ml 09113 Date 201X Explanation Post Ref. Debit Credit Cr. Balance Nov. 4 PJ1 600 00 600 00 14 PJ1 700 00 1,300 00 NAME […]

APPENDIX A PROBLEM A-5 (CONTINUED) ANDREA’S TOY HOUSE SALES JOURNAL Page 1 Date 201X Invoice No. Terms Account Debited PR Accounts Rec.-Dr. Toy Sales – Cr. Dec. 3 1 9/10, n/30 Bill Burton √ 900 00 6 2 9/10, n/30 […]

11 Preparing a Worksheet for a Merchandise Company ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The purchases account records merchandise purchased for resale. 2. Cash received before the service is performed or goods sold. It represents a liability […]

PROBLEM 11A-4 Balance Sheet Credit Debit 4,230 200 7,400 5,100 650 270 2,100 Income Statement Credit Debit RON’S WHOLESALE CLOTHING COMPANY WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 201X Adj. Trial Balance Credit Debit 4,230 200 7,400 5,100 650 270 […]

12 Completion of the Accounting Cycle For a Merchandise Company ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Income Statement columns. 2. Beginning Inventory + Net Purchases + Freight-In – Ending Inventory = Cost of Goods Sold 3. Selling […]

PROBLEM 12A-2 (CONCLUDED) JAMES CO. BALANCE SHEET DECEMBER 31, 201X Assets Current Assets: Cash $24 0 0 0 00 Petty Cash 6 0 00 Accounts Receivable 1 5 5 0 00 Merchandise Inventory 4 2 0 0 00 Supplies 3 […]

Copyright © 2016 Pearson Education, Inc. 12–21 PROBLEM 12A-4 (CONTINUED) (3) GENERAL JOURNAL PAGE 2 Date 201X Account Titles and Description PR Dr. Cr. Adjusting Entries Dec. 31 Income Summary 332 4 4 5 0 00 Merchandise Inventory 112 4 […]

12–31 PROBLEM 12B–3 (1) Balance Sheet Credit 1,470 5,060 1,810 1,210 10,580 10,580 10,580 P. Justin, Capital 20,130 5,020 25,150 Debit 2,300 3,300 1,350 3,700 4,300 25,150 25,150 Income Statement Credit 10,200 96,440 13,300 3,180 290 123,410 123,410 Debit 10,900 […]

PROBLEM 12B-4 (CONTINUED) CULLEN LUMBER GENERAL LEDGER CASH ACCOUNT NO. 110 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Dec. 31 Balance √ 1 3 4 0 00 ACCOUNTS RECEIVABLE ACCOUNT NO. 111 Date 201X Explanation Post Ref. […]

CONTINUING PROBLEM(CONTINUING) FIT PAYABLE ACCOUNT NO. 2040 Date Explanation Post Ref. Debit Credit Balance Debit Credit SIT PAYABLE ACCOUNT NO. 2050 Date Explanation Post Ref. Debit Credit Balance Debit Credit FUTA TAX PAYABLE ACCOUNT NO. 2060 Date Explanation Post Ref. […]

MINI PRACTICE SET (CONTINUED) THE ELEGANT DRESS SHOP GENERAL JOURNAL PAGE 6 Date 201X Account Titles and Description PR Dr. Cr. Mar. 16 Cash 110 4 6 5 6 00 Sales Discount 414 1 4 4 00 Accounts Receivable, Young […]

MINI PRACTICE SET (CONTINUED) ACCOUNTS RECEIVABLE ACCOUNT NO. 112 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Mar. 1 Balance √ 1 8 0 0 00 1 GJ4 1 8 0 0 00 0 00 3 GJ4 8 […]

MINI PRACTICE SET (CONTINUED) MISCELLANEOUS EXPENSE ACCOUNT NO. 624 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Mar. 30 GJ7 1 1 00 1 1 00 31 Closing GJ9 1 1 00 Copyright © 2016 Pearson Education, Inc. […]

13 Accounting for Bad Debts ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The matching principle estimates the bad expense in the same period the sale is made, although the write-off of the actual bad debt may not occur […]

PROBLEM 13A-3 T.J. RADCLIFF GENERAL JOURNAL PAGE 4 Date Account Titles and Description PR Dr. Cr. 2015 Mar. 13 Bad Debts Expense 1 9 0 0 00 Accounts Receivable—S. Rose 1 9 0 0 00 To Write off Account Apr. […]

14 Notes Receivable and Notes Payable ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. A company may use Notes Payable instead of Accounts Payable: A. To get additional time to settle past due accounts (maker side). B. To borrow […]

PROBLEM 14A-3 JOYE CO. GENERAL JOURNAL PAGE 2 Date 201X Account Titles and Description PR Dr. Cr. Jun. 18 Cash 53 7 1 6 67 Discount on Notes Payable 1 2 8 3 33 Notes Payable 55 0 0 0 […]

15 Accounting for Merchandise Inventory ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The perpetual inventory system keeps continual track of the quantity and cost of inventory. 2. Merchandise inventory and cost of goods sold 3. Merchandise inventory 4. […]

EXERCISES (CONTINUED) 15B-6. The cost of inventory for Sue Company is $27,395. 15B-7. Retail Method Goods Available for Sale Cost Retail Beginning Inventory $ 58,900.00 $ 74,400.00 Net Purchases 255,800.00 405,400.00 Cost of Goods Available for Sale $314,700.00 $479,800.00 Cost […]

PROBLEM 15B-2 SHARON ELETRONICS GENERAL JOURNAL PAGE 2 Date 201X Account Titles and Description PR Dr. Cr. Apr. 10 Merchandise Inventory 114/√ 7 2 4 30 Accounts Payable 201 7 2 4 30 11 Cash 101 1 4 2 50 […]

16 Accounting for Property, Plant, Equipment, and Intangible Assets ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The costs involved in acquiring the asset and getting the asset in position and condition for use in the company. 2. The […]

PROBLEM 16A-2 (a) END OF YEAR COST OF EQUIPMENT YEARLY DEPRECIATION EXPENSE ACCUMULATED DEPRECIATION END OF YEAR BOOK VALUE END OF YEAR 2014 $52,000 $7,000 $7,000 $45,000 2015 52,000 7,000 14,000 38,000 2016 52,000 7,000 21,000 31,000 2017 52,000 7,000 […]

PROBLEM 16B-2 (a) END OF YEAR COST OF EQUIPMENT YEARLY DEP. EXPENSE ACC. DEP. END OF YEAR BOOK VALUE END OF YEAR 2014 $58,000 $10,500 $10,500 $47,500 2015 $58,000 $10,500 21,000 37,000 2016 $58,000 $10,500 31,500 26,500 2017 $58,000 $10,500 […]

17 Partnerships ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. There is more than one capital account as well as more than one withdrawals account in the equity of a partnership. 2. Characteristics of a partnership are unlimited liability, […]

PROBLEM 17A-3 GENERAL JOURNAL Date Account Titles and Description PR Dr. Cr. Sit. 1 Villone, Capital 5 0 0 0 00 Johnson, Capital 5 0 0 0 00 Sit. 2 Lee, Capital 6 0 0 00 Rapada, Capital 6 0 […]

18 Corporations: Organizations and Capital Stock ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The articles of incorporation are submitted to the state in applying for a charter. A charter is a document issued to a corporation by a […]

PROBLEM 18A-1 (CONCLUDED) (2) Paid-in Capital: Preferred Stock, $96 par, authorized 23,000 shares, 14,200 shares issued and outstanding $1,363 2 0 0 00 Paid-in Capital in Excess of Par Value-Preferred 180 2 0 0 00 Common Stock, $27 par, authorized […]

PROBLEM 18B-1 (CONTINUED) PREFERRED STOCK ACCOUNT NO. 310 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Jun. 1 Balance √ 552 0 0 0 00 1 GJ3 285 2 0 0 00 837 2 0 0 00 Jul. […]

19 Corporations: Stock Values, Dividends, Treasury Stocks, and Retained Earnings ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Market value represents the price of stock that is bought and sold in the open market. Book value is not market […]

PROBLEM 19A-3 (CONTINUED) (2) LONG VIEW CORPORATION STOCKHOLDERS’ EQUITY Paid-in Capital: Common Stock, $26 par value, authorized 52,000 shares, 13,600 shares issued and outstanding $353 6 0 0 00 Common Stock Dividend Distributable 31 8 2 4 00 $385 4 […]

Copyright © 2016 Pearson Education, Inc. 19–17 PROBLEM 19B-3 (1) PLAIN VIEW CORPORATION GENERAL JOURNAL PAGE 3 Date 201X Account Titles and Description PR Dr. Cr. June 7 Treasury Stock 29 7 0 0 00 Cash 29 7 0 0 […]

2 Debits and Credits: Analyzing and Recording Business Transactions ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. A ledger is a group of accounts that records in monetary value the data from business transactions. 2. The left-hand side is […]

PROBLEM 2A-2 Cash 111 (A) 20,000 90(D) (C) 2,900 550(E) 1,000(G) Office Equipment 121 (B) 8,000 Accounts Payable 211 (G) 1,000 8,000 (B) 1,400 (F) Brett Pillows, Capital 311 20,000 (A) Brett Pillows, Withdrawals 312 (D) 90 Consulting Fees Earned […]

PROBLEM 2B-4 (a) GRETCHEN LYMAN, ATTORNEY AT LAW INCOME STATEMENT FOR MONTH ENDED JANUARY 31, 201X Revenue: Revenue from Legal Fees $1 3 5 0 Operating Expenses: Utilities Expense $ 3 0 0 Rent Expense 3 0 0 Salaries Expense […]

20 Corporations and Bonds Payable ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. 99% × $1,000 = .99 × $1,000 = $990. 2. Secured bonds pledge assets as security, while debenture bonds pledge no specific assets. 3. False. Dividends […]

Copyright © 2016 Pearson Education, Inc. 20–10 SOLUTIONS TO SET A PROBLEMS PROBLEM 20A-1 (1) Period Carrying Value, Beginning of Period Total Interest Expense Interest Paid to Bondholders (Semiannual Rate x Face Value) Amortized Discount Transferred to Increase Interest Expense […]

21 Statement of Cash Flows ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The three main sections of the statement of cash flows are: cash flows from operating activities, cash flows from investing activities, and cash flows from financing […]

SOLUTIONS TO SET B EXERCISES 21B–1. Increase in Inventory Subtract from Cash Flow from Operations Decrease in Accounts Payable Subtract from Cash Flow from Operations 21B-2. Cash Flows from Operating Activities: Net Income $17,300 Add(Deduct) Items to Convert Net Income […]

22 Analyzing Financial Statements ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Investor’s needs: profitability, dividends, financing, etc. Creditor’s needs: can company pay debts on time? Management’s needs: are we operating efficiently? 2. Disagree. It is used on comparative […]

PROBLEM 22A-2 (CONCLUDED) (c) WOOD COMPANY COMMON-SIZE COMPARATIVE INCOME STATEMENT FOR YEARS ENDED DECEMBER 31, 2016 AND 2015 2016 2015 Net Sales 1 0 0 0 1 0 0 0 Cost of Goods Sold 6 0 4 5 5 7 […]

22–17 PROBLEM 22B-2 CARNEY COMPANY COMPARATIVE INCOME STATEMENT FOR YEARS ENDED DECEMBER 31, 2016 AND 2015 PERCENT OF INCREASE OR DECREASE DURING 2016 6% 8 8) 0) 0) 3) 8 5) 3 3 3% 4 5 0 0 2 7 […]

23 The Voucher System ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Payable to; invoice no. and amount; purchase order no.; verification slip and approved by; account distribution; summary of voucher and payment summary. 2. Vouchers, voucher register, unpaid […]

PROBLEM 23A-2 THE SADIE CORPORATION VOUCHER REGISTER PAGE 9 Sundry Accounts Cr. Dr. PR Account Purchases Dr. Vouchers Payable Cr. Check No. Date of Payment Payable to Voucher Number Date 201X Copyright © 2016 Pearson Education, Inc. 23–11 00 00 […]

PROBLEM 23B-2 THE SAFFRON CORPORATION VOUCHER REGISTER Sundry Accounts Cr. Dr. PR Account Purchases Dr. Vouchers Payable Cr. Check No. Date of Payment Payable to Voucher Number Date 201X Copyright © 2016 Pearson Education, Inc. 23–18 00 00 0 0 […]

24 Departmental Accounting ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Profit center allows the manager to control both costs and revenues. A cost center doesn’t allow the manager to directly generate revenue. 2. Net Sales less Cost of […]

PROBLEM 24A-2 PHILLIPS COMPANY DEPARTMENTAL EXPENSES CLOTHING HARDWARE TOTAL OPERATING EXPENSE DIRECT INDIRECT DIRECT INDIRECT DIRECT INDIRECT 1. Rent Expense $4,737 $7,263 $12,000 2. Insurance Expense $1,500 3,000 $2,300 4,600 $3,800 7,600 3. Depreciation Expense 330 640 970 4. Advertising […]

25 Manufacturing Accounting ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Raw material, direct labor, overhead. 2. Disagree. Direct labor includes the wages of personnel whose efforts directly change the product. 3. Raw material inventory; work-in-process inventory; finished goods […]

Copyright © 2016 Pearson Education, Inc. 25–11 SOLUTIONS TO SET A PROBLEMS PROBLEM 25A-1 BILLINGS MANUFACTURING STATEMENT OF COST OF GOODS MANUFACTURED FOR THE MONTH ENDED OCTOBER 31, 201X Direct Materials: Raw Material Inventory, 10/1/1X $21 0 0 0 00 […]

3 Beginning the Accounting Cycle ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Disagree; the accounting cycle represents a certain period of time a business has to perform the normal accounting procedures (usually one year). 2. Disagree; it is […]

SOLUTIONS TO SET B EXERCISES 3B-1. Date Account Titles and Description PR Dr. Cr. 201X Apr. 1 Cash 100 0 0 0 00 Equipment 18 0 0 0 00 J. Dimon, Capital 118 0 0 0 00 Owner investment 3 […]

PROBLEM 3A-2 (CONTINUED) Date Accounts and Explanation Debit Credit June 29 Telephone Expense 531 2 2 0 00 Cash 111 2 2 0 00 Paid telephone bill GENERAL LEDGER OF BRENDA’S ART STUDIO CASH ACCOUNT NO. 111 Date 201X Explanation […]

PROBLEM 3B-2 (CONTINUED) GENERAL LEDGER OF BETH’S ART STUDIO CASH ACCOUNT NO. 111 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Apr. 1 GJ1 15 0 0 0 00 15 0 0 0 00 1 GJ1 1 6 […]

CASH ACCOUNT NO. 1000 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit 8/31 balance forward √ 3 0 8 0 00 9/1 GJ1 1 5 0 0 00 1 5 8 0 00 2 GJ1 4 2 0 […]

4 The Accounting Cycle Continued ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Disagree; worksheets are optional (and often used), but are not required. 2. The purpose of adjusting is to update accounts to the latest balance before financial […]

4-11 EXERCISES (CONTINUED) (C) LIABILITIES AND OWNER’S EQUITY 00 00 00 3 2 5 1 3 4 $ $ 00 00 1 2 1 $ Accounts Payable Wages Payable Total Liabilities Owner’s Equity J. Tutle, Capital Total Liabilities and Owner’s […]

PROBLEM 4B-2 Account Titles Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet Credit Debit 3,100 Credit Debit Credit LAJOIE’S LANDSCAPING SERVICE WORKSHEET FOR THE MONTH ENDED JANUARY 31, 201X Debit 3,100 Credit Debit Credit Debit 3,100 Cash in […]

4-27 PROBLEM 4B-4 (CONCLUDED) LIABILITIES AND OWNER’S EQUITY 00 00 00 0 0 0 7 8 5 4 8 3 $5 7 $13 00 00 0 0 7 0 1 3 $5 DON’S REPAIR SERVICE BALANCE SHEET SEPTEMBER 30, 201X […]

5 The Accounting Cycle Completed ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Only the balances in the original trial balance are found in the general ledger. At this point, no adjustments have been journalized or posted. 2. Adjusting […]

5-11 PROBLEM 5A-1 Balance Sheet 9,500 14,000 34,500 700 58,700 18,100 76,800 11,000 800 800 14,000 200 76,800 76,800 Income Statement 23,800 23,800 23,800 DREW’S DANCE STUDIO WORKSHEET FOR THE MONTH ENDED NOVEMBER 30, 201X 2,000 400 700 400 700 […]

PROBLEM 5A-3 (CONTINUED) CASH ACCOUNT NO. 111 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Jan. 1 GJ1 16,000 00 16,000 00 1 GJ1 2,400 00 13,600 00 6 GJ1 300 00 13,300 00 8 GJ1 8,000 00 […]

5-31 SOLUTIONS TO SET B PROBLEMS PROBLEM 5B-1 DEB‘S DANCE STUDIO WORKSHEET FOR THE MONTH ENDED APRIL 30, 201X Balance Sheet Credit 6,900 20,000 46,100 600 73,600 11,700 85,300 Debit 62,000 200 400 19,000 700 85,300 85,300 Income Statement Credit […]

PROBLEM 5B-3 (CONTINUED) PALMER’S PLOWING GENERAL JOURNAL PAGE 2 Date 201X Account Titles and Description PR Dr. Cr. Jan. 28 Accounts Payable 211 4 8 0 0 00 Cash 111 4 8 0 0 00 Paid on Account 29 Advertising […]

PROBLEM 5B-3 (CONTINUED) LIABILITIES AND OWNER’S EQUITY PALMER’S PLOWING BALANCE SHEET JAN. 31, 201X Liabilities ASSETS 00 0 2 3 $ Cash Copyright © 2016 Pearson Education, Inc. 5-51 00 00 00 0 0 0 4 7 1 4 4 […]

Copyright © 2016 Pearson Education, Inc. 5-61 MINI PRACTICE SET SOUSA REALTY (1) SOUSA REALTY GENERAL JOURNAL PAGE 1 Date 201X Account Titles and Description PR Dr. Cr. Sept. 1 Cash 111 12 0 0 0 00 Office Equipment 121 […]

MINI PRACTICE SET SOUSA REALTY COMMISSIONS EARNED ACCOUNT NO. 411 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Sept. 6 GJ1 11 0 0 0 00 11 0 0 0 00 17 GJ2 10 0 0 0 00 […]

Copyright © 2016 Pearson Education, Inc. 5-77 SOUSA REALTY (5) SOUSA REALTY POST-CLOSING TRIAL BALANCE SEPTEMBER 30, 201X Dr. Cr. Cash 22 5 4 5 00 Accounts Receivable 10 0 0 0 00 Prepaid Rent 8 0 0 00 Office […]

6 Banking Procedures and Control of Cash ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. A smartphone app is a tool that can be used to make deposits, check balances, and other transactions for both business and personal banking. […]

PROBLEM 6A-2 Checkbook Balance $ 5,600 Balance per Bank $ 4,515 Add: Add: ____ Deposits in Transit 2,400 Subtotal $ 5,600 Subtotal $ 6,915 Deduct: Deduct: NSF Check $800 Outstanding Checks Bank Service Charge 15 815 Check No. 111 Check […]

6-21 PROBLEM 6B-4 (CONCLUDED) Category of Payment Amount 00 3 1 Misc. Exp. 00 7 00 00 9 5 2 00 00 00 00 9 7 3 5 2 1 Postage Delivery Donation Postage 1 2 3 4 5 9 […]

ACCOUNTS PAYABLE ACCOUNT NO. 2000 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Sept. 30 Balance forward √ 1 7 0 00 Oct. 16 GJ3 3 5 00 1 3 5 00 17 GJ3 8 5 00 5 […]

7 Calculating Pay and Recording Payroll Taxes: The Beginning of the Payroll Process ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The Fair Labor Standards Act regulates the minimum hourly wage as well as the maximum number of hours […]

7-11 PROBLEM 7A-3 PAYROLL REGISTER OCTOBER 13, 201X Distribution of Expense Accounts 00 00 00 00 00 Sales 0 0 0 1 1 6 6 2 7 1 9 1 1 Office 00 00 50 00 50 8 0 7 […]

CASH ACCOUNT NO. 1000 Date Explanation Post Ref. Debit Credit Balance Debit Credit Oct. 31 Balance Forward √ 6 4 8 5 00 Nov. 12 GJ4 7 2 5 00 7 2 1 0 00 18 GJ5 9 0 0 […]

8 Paying the Payroll, Depositing Payroll Taxes, and Filing the Required Quarterly and Annual Tax Forms: The Conclusion of the Payroll Process ANSWERS TO DISCUSSION AND CRITICAL THINKING QUESTIONS/ETHICAL CASE 1. Better internal control, bank reconciliation is easier and manage […]

PROBLEM 8A-1 (CONTINUED) (2) Feb. 15 FICA OASDI Payable 1 1 0 9 80 FICA Medicare Payable 2 5 9 56 FIT Payable 1 1 0 7 00 Cash 2 4 7 6 36 Deposit Form 941 Taxes Copyright © […]

PROBLEM 8B-1 (CONTINUED) (2) Feb. 15 FICA OASDI Payable 1 1 0 7 32 FICA Medicare Payable 2 5 8 98 FIT Payable 1 1 1 3 00 Cash 2 4 7 9 30 Deposit Form 941 Taxes For Feb. […]

8-31 CONTINUING PROBLEM–ON THE JOB: SMITH COMPUTER CENTER Requirement 1 SMITH COMPUTER CENTER PAYROLL REGISTER DECMEBER 7, 201X Distr. of Expense Accts. Taxable Earnings OASDI 00 00 00 Wages Exp. 00 00 00 0 0 0 0 0 0 8 […]

FUTA TAX PAYABLE ACCOUNT NO. 2060 Date Explanation Post Ref. Debit Credit Balance Debit Credit Nov. 30 Balance Forward √ 0 Dec. 31 GJ6 1 2 18 1 2 18 Dec. 31 GJ6 1 2 18 0 SUTA TAX PAYABLE […]

9 Sales and Cash Receipts ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING QUESTIONS/ETHICAL CASE 1. Contra-revenue accounts record Sales Discounts, Sales Returns or Allowances. 2. The normal balance of Sales Discounts is a Dr. balance. 3. Sales Discounts and Sales […]

EXERCISES (CONTINUED) 9B-3. Date 201X Account Titles and Description PR Dr. Cr. Aug. 24 Cash 8 9 3 00 Sales Discount 4 7 00 Accounts Receivable, Ralph Co. 9 4 0 00 Copyright © 2016 Pearson Education, Inc. 9-11 EXERCISES […]

PROBLEM 9A-2 (CONTINUED) JEFF’S AUTO SUPPLY PARTIAL GENERAL LEDGER ACCOUNTS RECEIVABLE ACCOUNT NO. 110 Date 201X Explanation Post Ref. Debit Credit Balance Debit Credit Feb. 1 Balance √ 1 4 0 0 00 1 GJ2 8 8 0 00 2 […]

PROBLEM 9A-4 (CONTINUED) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME LOIS KOZAK CO. ADDRESS 2 RYAN RD., BUFFALO, NY 09113 Date 201X Explanation Post Ref. Debit Credit Debit Balance May 8 GJ1 6 3 8 00 6 3 8 00 15 GJ1 […]

PROBLEM 9B-2 (CONTINUED) (2) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME R. NONACK ADDRESS 12 ASTER RD., MERIMACK, NH 02134 Date 201X Explanation Post Ref. Debit Credit Dr. Balance Jan. 1 Balance √ 1 4 0 0 00 1 GJ2 7 1 […]

PROBLEM 9B-4 (CONTINUED) AL‘S COSMETIC MARKET GENERAL JOURNAL PAGE 2 Date 201X Account Titles and Description PR Dr. Cr. Dec. 21 Accounts Receivable, John Tobin Co. 12√ 3 7 8 / 00 Sales Tax Payable 20 2 8 00 Lipstick […]

CONTINUING PROBLEM SOLUTION: ON THE JOB: SMITH COMPUTER CENTER (1) SMITH COMPUTER CENTER GENERAL JOURNAL PAGE 4 Date 201X Account Titles and Description PR Dr. Cr. Jan. 1 Accounts Receivable, Phil’s Photography 1020/√ 7 8 0 00 Sales 4010 7 […]

Financial statements that are prepared for a period shorter than a year are called: A) accounting period statements. B) fiscal year statements. C) interim statements. D) operating statements. The two methods of accounting for uncollectible receivables are the direct write-off […]

The ending merchandise inventory was overstated. This error would cause: A) net income to be understated. B) revenue to be understated. C) net income to be overstated. D) expense to be overstated. Corbin Corporation issued 300, $1,000, 11% bonds at […]

When a corporation has only one class of stock, it will be preferred stock. The Purchases Discount account normally has a debit balance and is a contra-cost account. Answer: FALSE Under the accrual method of accounting, the allowance method is […]

Department contribution margin equals gross profit on sales minus direct departmental expenses. A deposit ticket usually combines checks deposited with coin and currency deposited. Answer: TRUE On the worksheet, the Beginning Inventory account is found in the debit column of […]

A company has four departments (A, B, C and D) and the net sales are $35,000; $40,000; $60,000 and $25,000 respectively. The cost of goods sold per department is $25,000; $15,000; $30,000 and $15,000 respectively. What department has the highest […]

A document submitted by incorporators when applying for a charter is known as: A) articles of incorporation. B) charter. C) proxy. D) stock certificate. Boxes R’ Us paid $5,000 in salaries and wages for February. This transaction will: A) increase […]

Which of the following accounts would most likely NOT need to be adjusted at the end of the year? A) Office Supplies B) Prepaid Insurance Expense C) Accumulated Depreciation D) Cash Record the following transactions into the expanded accounting equation […]

Income Summary, before closing to Capital, contains a debit balance of $110 and a credit balance of $200. What is the entry to close Income Summary to Capital? A) Debit Income Summary $100; credit Capital $200 B) Debit Income Summary […]

The sale of assets for liquidation purposes of a partnership is called: A) a sheriff’s sale. B) dissolution. C) net liquidation. D) None of the above The entry to close the Fees Earned account would cause: A) the Capital account […]

The goods a company has available to sell to customers are called: A) Supplies. B) Sales. C) Cost of Goods Sold. D) Merchandise Inventory. Under MACRS, which of the following classes uses the straight-line method? A) 10-year property B) 15-year […]

Important control features provided by a voucher system: A) assure only approved invoices are paid. B) centralize the recording of all expenditures in one placethe voucher register. C) include using the check register along with the voucher register. D) All […]

A signature card shows the signature of only the person who authorizes others in the company to sign checks. Beginning inventory is adjusted by debiting Income Summary and crediting Merchandise Inventory. Answer: TRUE A purchases journal may be used to […]

A statement presenting data from two or more consecutive periods is called a: A) comparative statement. B) compromising statement. C) common-size statement. D) Both A and C The risk of creditors in relation to the risk taken by stockholders is […]

The final step in the accounting cycle is: A) preparing the post-closing trial balance. B) preparing the financial statements. C) posting the closing entries. D) posting the adjusting entries. When the balance of the Income Summary account is a credit, […]

In a perpetual inventory system, the Merchandise Inventory account is updated: A) when merchandise is sold. B) at the end of the period. C) when merchandise is purchased. D) All of the above are correct Ending inventory: A) increases Cost […]

The amount shown in the balance sheet debit column of worksheet for Merchandise Inventory is: A) the Cost of Goods Sold. B) net purchases + beginning merchandise inventory. C) the ending inventory. D) the beginning inventory. The cash flows from […]

Bonds are short-term interest-bearing notes issued to multiple lenders, usually in increments of $1,000. Form 941 taxes include OASDI, Medicare, and federal unemployment tax. Answer: FALSE Depreciation Expense is reported on the statement of cash flows only when using the […]

To distinguish the total on a financial statement, use single underline. Retained Earnings is the account in which the stockholders’ investments are placed. Answer: FALSE A bond that pays interest on February 28 and October 31 will have to be […]

From the following data, make the following adjustments, and complete the worksheet for the month. a. Depreciation Expense is $350. b. Supplies remaining at end of period $75. c. Prepaid Insurance balance $400, $100 has expired. d. Wages for the […]

Using MACRS rates for a 15 and 20-year property, what is the percentage for the depreciable rate? A) 200 percent B) 150 percent C) 125 percent D) 100 percent A purchase of a vehicle for cash would have what effect […]

Indicate the normal balance of each of the following accounts: a) Purchases Returns and Allowances b) Merchandise Inventory c) Freight-In d) Sales Returns and allowances e) Unearned Revenue When closing the expense account, which of the following accounts will also […]

An accounting device used to record increases and decreases in individual assets, liabilities, capital, revenue, expenses, and withdrawals is a(n): A) chart of accounts. B) account. C) trial balance. D) footing. If treasury stock is sold for less than cost, […]

Returned merchandise paid for within the discount period for a Cash refund. This will be recorded with: A) a credit to a liability. B) a credit to an asset. C) a debit to a liability. D) a debit to an […]

Journalize the following independent transactions: a) Casey Company sells 300 shares of $20 par-value common stock at $20. b) Jacob Corporation sells 100 shares of $20 par-value common stock at $30. c) Moss Inc. sells 40 shares of no-par common […]

Which of the following items are on both the balance sheet and the statement of owner’s equity? A) Net loss B) Capital C) Additional owner’s investments D) Owner’s withdrawals Which of the following could be recorded as a reversing entry? […]

When a bond issued at face value is retired, the journal entry would include: A) debit Bond Interest Expense. B) debit Bonds Payable. C) credit Cash. D) Both B and C The write-off of an intangible asset is called: A) […]

The payroll information for a pay period is found in the payroll register. To calculate gross profit, subtract operating expenses from net sales. Answer: FALSE Debits must exceed credits on the Statement of Owner’s equity. Answer: FALSE Sales is a […]

A work week is 180 hours in length. If ending inventory is overstated this period, beginning inventory will be overstated in the next period. Answer: TRUE Under the indirect method, net income is considered the primary source of cash from […]

What would be the depreciation expense in year 1, using units-of-production, for a molding machine that cost $22,000, had a useful life of 7 years, and an estimated total machine hours of 40,000? The salvage value is $2,000 and production […]

Empire has a credit balance of $450 in its Allowance for Doubtful Accounts. The balance in the Accounts Receivable account is $92,500, with $2,015 estimated to be uncollectible after aging the accounts. Under the balance sheet approach, the debit to […]

A debit to a liability account was posted as a debit to the Capital account. This error would cause: A) assets to be overstated. B) liabilities to be overstated. C) capital to be overstated. D) None of the above is […]

The data processing department of a tax firm would be a cost center. The income statement reports the work in process inventory. Answer: FALSE Trends in the industry, such as advancements in technology, should not be a consideration in determining […]

Overhead includes labor costs of assembly line supervisors but not the assembly workers. The income statement is completed after the statement of owners equity. Answer: FALSE When merchandise is sold, the periodic inventory system requires a debit to Cost of […]

Under the direct method of the statement of cash flows, a sale of merchandise inventory for cash is a(n): A) managing activity. B) investing activity. C) financing activity. D) operating activity. The ratios that measure a company’s ability to pay […]

J. Long purchased computer equipment for $7,000 on January 1, 2015. It has a residual value of $700 with a useful life of 5 years. After the appropriate adjusting entry is made, the book value of the asset on December […]

Creditors’ claims against assets are called liabilities. Using the balance sheet approach, the balance in Allowance for Doubtful Accounts is not taken into consideration when finding the adjustment. Answer: FALSE Bonds discount and bonds premium are expenses to the corporation. […]

Departmental income statements would be a useful to tool for management to determine the viability of a department. The left and right columns on the financial statements are used for debits and credits. Answer: FALSE The Petty Cash account should […]

The correct journal entry to record the payment of SUTA is: A) debit SUTA Expense; credit Cash. B) debit Cash; credit SUTA Expense. C) debit Cash; credit SUTA Payable. D) debit SUTA Payable; credit Cash. Barkley’s Resort had 2,000 shares […]

The Petty Cash account is debited when: A) the account is being replenished. B) the account balance is being decreased. C) the account balance is being increased. D) the account is closed. Casey issued bonds for $20,000 at 12% face […]

The check register replaces the voucher journal. Gross pay is the amount that the employee takes home. Answer: FALSE The financial loss that each stockholder in a corporation can incur is unlimited. Answer: FALSE The Uniform Partnership Act defines a […]

The Manufacturing Overhead-Control account is used to apply overhead costs to production. The Income Summary account can be found on the worksheet. Answer: FALSE Stockholders do not have to pay federal income tax on their stock dividends. Answer: FALSE The […]

Individual amounts are recorded during the month to the accounts payable ledger. When an employee’s earnings are greater than FICA base limit during the calendar year, no more FICA-OASDI tax is deducted from earnings. Answer: TRUE Purchase discounts are given […]

Preferred stockholders have what right over common stockholders? A) Voting rights B) Prior claim to dividends C) More risk than common stockholders D) Preemptive rights If management wishes to measure how effectively the assets were used in generating a profit, […]

Vouchers Payable is a liability account on the balance sheet. A profit center and a cost center both generate costs. Answer: TRUE The statement of retained earnings does not include the account Preferred Stock. Answer: TRUE Nonparticipating preferred stock allows […]

Calculate, from the following information accumulated by Bob Clark, the adjusted cash balance at the end of April. A) $4,000 B) $4,250 C) $4,205 D) $5,500 An employee has gross earnings of $2,000 with withholdings of 6.2% FICA-OASDI, 1.45 % […]

If the company uses special journals, all payments should be recorded on a: A) cash receipts journal. B) cash payments journal. C) purchases journal. D) sales journal. Other Expense is used to record: A) selling expenses. B) administrative expenses. C) […]

The amount of FICA-OASDI and FICA-Medicare withheld from the employee’s check is determined by the employee’s: A) W-2. B) net pay. C) earnings for the period and cumulative earnings. D) W-4. Under the perpetual system, when merchandise is sold the […]

If partial payment is made and installment payments are set up after the voucher is prepared for the total amount owed: A) the old voucher is cancelled and a new voucher is prepared for the new amount owed. B) the […]

Estimated manufacturing overhead costs were $60,000 and the number of estimated machine hours was 20,000. Actual overhead costs were $61,000 and the actual number of machine hours used was 20,500. Based on machine hours, the overhead application rate per hour […]

The purchase of supplies for cash would affect which account category? A) Assets B) Liabilities C) Capital D) Expense When an interest-bearing note comes due and is uncollectible, the journal entry includes: A) debiting Notes Receivable; crediting Accounts Receivable. B) […]

Regular earnings include hours of overtime worked during the weekend. Merchandise Inventory is an asset account. Answer: TRUE To find the percent of increase or decrease of an item in a comparative balance sheet you use the formula: % change […]

Ending finished goods inventory is subtracted from cost of goods available for sale to get: A) cost of goods manufactured. B) cost of goods sold. C) net purchases. D) None of the above The separation of duties among the employees […]

From the following items, which would most likely cause the recording of unearned revenue? A) Potential sale of merchandise B) Purchase of merchandise on account C) Legal fees collected after work is performed D) Subscriptions collected in advance for a […]

When making the adjustment for prepaid insurance, instead of writing off only the time that has passed, the entire policy was written off. This would: A) overstate the assets. B) overstate the liabilities. C) understate net income. D) None of […]

When two proprietors decide to combine their businesses and form a partnership, GAAP usually requires that noncash assets be taken over at their: A) residual value on the date of the partnership. B) book value on the date of the […]

The entry to record the incurrence of an expense will include: A) a debit to Capital and a credit to Cash. B) a debit to the expense and a credit to Vouchers Payable. C) a debit to the expense and […]

When the amount received for the bond is less than the face value, the difference is written off over time in an account called Premium on Bonds Payable. Nominal accounts are called temporary accounts because their balances are carried forward […]

Which of the following transactions would most likely NOT be recorded in an auxiliary petty cash record? A) Purchase of first aid supplies B) Purchase of postage stamps C) Payment on a $400 rent bill D) Payment of gas for […]

A business issues 10-year bonds payable in exchange for common stock. This transaction would be reported on the statement of cash flows in: A) operating activities. B) financing activities. C) investing activities. D) a separate schedule. A wholesale customer returned […]

Of two departments, the men’s department has 8,000 square feet and the women’s department has 22,000 square feet. Depreciation is divided by square footage. If total depreciation is $50,000, the total amount allocated to the men’s department would be approximately […]