Randie Company lends Luann Company $10,000 on April 1, accepting a four-month,
6% interest note. Randie Company prepares financial statements on April 30. What
adjusting entry should be made before the financial statements can be prepared?
Answer:
When making a payment from the petty cash fund for postage stamps, the following
journal entry is made.
Answer:
The following information is available for Evans Corporation:
Instructions
Compute the return on common stockholders’ equity ratio for both years. Briefly
comment on your findings.
Answer:
Record the following transactions for Lett Company.
1> On August 4, Lett sold merchandise on account to Smiley Company for $610, terms
2/10, n/30.
2> On August 7, Lett granted Smiley a sales allowance and reduced the cost of the
merchandise by $60 because some of the goods were slightly damaged.
3> On August 12, Smiley paid the account in full.
Answer:
The study of accounting is not useful for a business career unless your career objective
is to become an accountant.
Answer:
Hutton Cape Company, which prepares annual financial statements, is preparing
adjusting entries on December 3 Analysis indicates the following:
1> The company is the defendant in an employee discrimination lawsuit involving
$50,000 of damages. Legal counsel believes it is unlikely that the company will have to
pay any damages.
2> Employees are entitled to one day’s vacation for each month worked. The company
employs 50 people who earn $120 per day and 30 who earn $160 per day. All
employees worked the entire year.
3> The company is a defendant in a $500,000 product liability lawsuit. Legal counsel
believes that the company probably will have to pay the amount requested.
4> The company has a defined benefit pension plan in which total pension expense for
December is $50,000. The company funds one half of the expense and records a
liability or the balance due.
Instructions
Prepare any adjusting entries necessary at the end of the year.
Answer:
Net income from operations is generally not the same as cash provided from operations
because revenues and expenses are recognized in the income statement on the
______________ basis.
Answer: