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An inexperienced accountant for Douglas Corporation made the following entries.
Instructions
On the basis of the explanation for each entry, prepare the entry that should have been
made for the transactions.
Answer:
On May 1, Howard Corporation purchased 2,000 shares of its $10 par value common
stock at a cash price of $15/share. On July 15, 900 shares of the treasury stock were
sold for cash at $17/share.
Instructions
Journalize the two transactions.
Answer:
Using the following data for Renfro, Inc., compute its asset turnover.
Answer:
Postretirement benefits are accounted for on a cash basis.
Answer:
Accountants believe that the write down from cost to market should not be made in the
period in which the price decline occurs.
Answer:
Sandy Company uses both special journals and a general journal. The company
accountant made the following errors during July.
1> Incorrectly added the credit entries in a customer's account in the accounts
receivable subsidiary ledger. The total was listed as $2,690; it should have been $2,790.
2> A remittance of $400 from Tom Short was correctly recorded in the cash receipts
journal, but the amount was posted incorrectly to the account of customer Will Short in
the subsidiary ledger.
3> A purchase of merchandise on account from Easton Company for $1,000 was
incorrectly entered in the purchases journal at $10,000.
4> In the sales journal, the entries were incorrectly added for the month. The monthly
total was listed as $24,620; it should have been $24,260.
Instructions
Indicate how each of the above errors might be discovered.
Answer:
James Corporation has the following accounts at December 31: Common Stock, $10
par 7,000 shares issued, $70,000; Paid-in Capital in Excess of Par $10,000; Retained
Earnings $55,000; and Treasury Stock, 500 shares, $10,000. Prepare the stockholders'
equity section of the balance sheet.
Answer:
In a multiple-step income statement, income from operations excludes other revenues
and gains and other expenses and losses.
Answer:
The ________________ method of computing depreciation expense results in an equal
amount of periodic depreciation throughout the service life of the plant asset.
Answer:
Fine Boat Company often requires customers to sign promissory notes for major credit
purchases. Journalize the following transactions for Fine Boat Company.
Answer:
