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Purchase Returns and Allowances and Purchase Discounts are subtracted from
Purchases to produce net purchases.
Answer:
The following data exists for Carley Company.
Calculate the accounts receivable turnover and the average collection period for
accounts receivable in days for 2015.
Answer:
Ford Co. uses a periodic inventory system. Its records show the following for the month
of May, in which 75 units were sold.
Instructions
Compute the ending inventory at May 31 and cost of goods sold using the FIFO and
LIFO methods. Prove the amount allocated to cost of goods sold under each method.
Answer:
The going concern assumption is that the business will continue in operation long
enough to carry out its existing objectives and commitments.
Answer:
Hibbett Company does not segregate sales and sales taxes on its cash register. Its
register total for the month is $312,700, which includes a 6% sales tax.
Instructions
Compute sales taxes payable, and make the entry to record sales and sales taxes
payable.
Answer:
Gerber Corporation purchased the following long-term investments in stock securities
on January 10, 2015:
10,000 shares of the 100,000 outstanding common shares of Todd Corporation for
$400,000.
3,000 shares of the 10,000 outstanding common shares of Carey Company for
$135,000.
6,000 shares of the 50,000 outstanding common shares of Maris Company for
$150,000.
Other information:
Instructions
Prepare the journal entries for Gerber Corporation to record the acquisition of the
long-term stock investments, the receipt of dividends, and any other necessary entries at
year end on December 31, 2015. Assume that Gerber Corporation's ownership interest
in each company remained constant throughout the year.
Answer:
If a corporation pays taxes on its income, then stockholders will not have to pay taxes
on the dividends received from that corporation.
Answer:
A periodic inventory system requires a detailed inventory record of inventory items.
Answer:
Discount on bonds is an additional cost of borrowing and should be recorded as interest
expense over the life of the bonds.
Answer:
