After a transaction has been posted, the reference column in the journal should not be
blank.
Answer:
Boxer Corporation is issuing $800,000 of 8%, 5-year bonds when potential bond
investors want a return of 10%. Interest is payable semiannually. The present value of 1
factors are 4%, .67556 and 5%, .6139 The present value of an annuity factors are 4%,
8.1109 and 5%, 7.72173.
Instructions
Compute the market price (present value) of the bonds.
Answer:
You have recently started to work for Storry Malcom, manufacturers of
cemetery markers and monuments. During your first month at work, you
inadvertently recorded as revenue, about $4,000 of prepayments from
Budger Company. The financial statements had been released within the
company when you discovered your error. The month-end closing had not
been completed, however, and you were able to correct the accounts
without incident.
Prepare a short note to accompany the re-released financial statements
explaining the mistake.
Answer:
The maturity date of a 1-month note receivable dated June 30 is July 30.
Answer:
Shoemaker Department Store prepares monthly financial statements but only takes a
physical count of merchandise inventory at the end of the year. The following
information has been developed for the month of July:
The net sales for July amounted to $142,000.
Instructions
Use the retail inventory method to estimate the ending inventory at cost for July. Show
all computations to support your answer.
Answer:
Instructions
State the missing items identified by ?.
1> Gross profit ‘“ Operating expenses = ?
2> Cost of goods sold + Gross profit on sales = ?
3> Sales Revenue ‘“ (? + ?) = Net sales
4> Income from operations + ? ‘“ ? = Net income
5> Net sales ‘“ Cost of goods sold = ?
Answer:
Under the equity method, the investment in common stock is initially recorded at cost,
and the Stock Investments account is adjusted annually.
Answer:
A trial balance does not prove that all transactions have been recorded or that the ledger
is correct.
Answer:
Frostmore Company is considering investing in an annuity contract that will return
$40,000 annually at the end of each year for 10 years. What amount should Frostmore
pay for this investment if it earns an 6% return?
Answer:
On October 1, Steve’s Carpet Service borrows $350,000 from First National Bank on a
3-month, $350,000, 8% note. What entry must Steve’s Carpet Service make on
December 31 before financial statements are prepared?
Answer: