Winter Accounting Excellence: Your Path to Success
32. The balance sheet items of The Sweet Soda Shop (arranged in alphabetical order) were as follows...
The balance sheet items of The Sweet Soda Shop (arranged in alphabetical order) were as follows at the close of business on September 30, 2011:
|
Accounts Payable . . . . . . . . . . . $ 8,500 Furniture and Fixtures . . . . . . . . 20,000 Accounts Receivable . . . . . . . . . 1,250 Land . . . . . . . . . . . . . . . . . . . . . . $55,000
The transactions occurring during the first week of October were:
Oct. 3 Additional capital stock was sold for $30,000. The accounts payable were paid in full. (No payment was made on the notes payable.)
Oct. 6 More furniture was purchased on account at a cost of $18,000, to be paid within
30 days. Supplies were purchased for $1,000 cash from a restaurant supply center that was going out of business. These supplies would have cost $1,875 if purchased under normal circumstances.
Oct. 1–6 Revenues of $5,500 were earned and paid in cash. Expenses required to earn the rev- enues of $4,000 were incurred and paid in cash.
Instructions
a. Prepare a balance sheet at September 30, 2011. (You will need to compute the missing figure for Notes Payable.)
b. Prepare a balance sheet at October 6, 2011. Also prepare an income statement and a statement of cash flows for the period October 1–6, 2011. In your statement of cash flows, treat the pur- chase of supplies and the payment of accounts payable as operating activities.
c. Assume the notes payable do not come due for several years. Is The Sweet Soda Shop in a stronger financial position on September 30 or on October 6? Explain briefly.
33. What are the distinctive features of accural accounting and cash-basis accounting?
Question 1
What are the distinctive features of accural accounting and cash-basis accounting?
Answer a. Cash-basis accounting records all transactions
b. Accrual accounting is superior because it provides more information
c. Accrual accounting records only receivables, payables, and depreciation
d. All t...
34. Greenock Limited has the following information available for accruals for the year ended December...
Greenock Limited has the following information available for accruals for the year ended December 31, 2017. The company adjusts its accounts annually.
1. The December utility bill for $425 was unrecorded on December 31. Greenock paid the bill on January 11.
2. Greenock is open 7 days a week and employees are paid a total of $3,500 every Monday for a 7-day (Monday–Sunday) workweek. December 31 is a Thursday, so employees will have worked 4 days (Monday, December 28–Thursday, December 31) that they have not been paid for by year-end. Employees will be paid next on January 4.
3. Greenock signed a $45,000, 5% bank loan on November 1, 2016, due in 2 years. Interest is payable on the first day of each following month.
4. Greenock receives a fee from Pizza Shop next door for all pizzas sold to customers using Greenock’s facility. The amount owed for December is $300, which Pizza Shop will pay on January 4. (Hint: Use the Service Revenue account.)
5. Greenock rented some of its unused warehouse space to a client for $6,000 a month, payable the first day of the following month. It received the rent for the month of December on January 2.
Instructions
(a) For each situation, prepare the adjusting entry required at December 31. (Round all calculations to the nearest dollar.)
(b) For each situation, prepare the journal entry to record the subsequent cash transaction in 2018.
35. Calculate the wages of the workers under Gantt's task and bonus plan.
The following are particulars applicable to a work process:
Time rate: Rs 5 per hour |
High task: 40 units per week |
Piece rate above high task: Rs 6.50 per unit |
In a 40-hour week, each of the following workers produced |
A—35 units |
B—40 units |
C—41 units |
Calculate the wages of the workers under Gantt's task and bonus plan.
36. Zambrano Wholesale Corporation maintains its records on a cash basis.
Zambrano Wholesale Corporation maintains its records on a cash basis. At the end of each year the company's accountant obtains the necessary information to prepare accrual basis financial statements. The following cash flows occurred during the year ended December 31, 2013:
Cash receipts: | ||
From customers | $ | 675,000 |
Interest on note | 4,000 | |
Loan from a local bank | 100,000 | |
Total cash receipts | $ | 779,000 |
Cash disbursements: | ||
Purchase of merchandise | $ | 390,000 |
Annual insurance payment | 6,000 | |
Payment of salaries | 210,000 | |
Dividends paid to shareholders | 10,000 | |
Annual rent payment | 24,000 | |
Total cash disbursements | $ | 640,000 |
Selected balance sheet information: |
12/31/12 | 12/31/13 | |||||
Cash | $ | 25,000 | $ | 164,000 | ||
Accounts receivable | 62,000 | 92,000 | ||||
Inventory | 80,000 | 62,000 | ||||
Prepaid insurance | 2,500 | ? | ||||
Prepaid rent | 11,000 | ? | ||||
Interest receivable | 3,000 | ? | ||||
Note receivable | 50,000 | 50,000 | ||||
Equipment | 100,000 | 100,000 | ||||
Accumulated depreciation"equipment | (40,000 | ) | (50,000 | ) | ||
Accounts payable (for merchandise) | 110,000 | 122,000 | ||||
Salaries payable | 20,000 | 24,000 | ||||
Notes payable | 0 | 100,000 | ||||
Interest payable | 0 | ? | ||||
Additional information: | |
1. | On March 31, 2012, Zambrano lent a customer $50,000. Interest at 8% is payable annually on each March 31. Principal is due in 2016. |
2. | The annual insurance payment is made in advance on April 30. The policy period begins on May 1. |
3. | On October 31, 2013, Zambrano borrowed $100,000 from a local bank. Principal and interest at 6% are due on October 31, 2014. |
4. | Annual rent on the company's facilities is paid in advance on June 30. The rental period begins on July 1. |
Required: | |
1. | Prepare an accrual basis income statement for 2013 (ignore income taxes). |
37. Financial accounting statements tend to reflect past events. In view of this, how can they be of any...
Financial accounting statements tend to reflect past events. In view of this, how can they be of any assistance to a user in making a decision when decisions, by their very nature, can only be made about future actions?
38. Transactions of Bud's Computer are as follows:
Transactions of Bud's Computer are as follows:
May 1 Buddy Bungal invested210, 000 in an accounting entitled Bud's Computer Repair Shop. The deposit slip was#100.
2 &...
39. One of the costs listed below is an opportunity cost. Identify this cost.
One of the costs listed below is an opportunity cost. Identify this cost.
1. Product promotion costs
2. Cost of finished-goods inventory at year-end
3. Rental of office space for sales personnel
4. Administrative costs
5. Direct labor: fringe benefits
6. Sales commissions
40. Exercise 7-24 (Part Level Submission) Whispering Lansbury Company deposits all receipts and makes...
Exercise 7-24 (Part Level Submission) Whispering Lansbury Company deposits all receipts and makes all payments by check. The following information is available from the cash records. June 30 Bank Reconciliation $11,200 Balance per bank 2,464 Add: Deposits in transit Deduct: Outstanding checks (3,200) $10,464 Balance per books Month of July Results Per Bank Per Books Balance July 31 $13,840 $14,800 July deposits 9,296 8,000 July checks 4,960 6,400 July note collected (not included in July deposits) 1,600 July bank service charge 24 July NSF check from a customer, returned by the bank (recorded by bank as a charge) 536 WHISPERING LANSBURY COMPANY Bank Reconciliation July 31 Balance per bank statement, July 31 13840 Add Deposits in transit 3760 Less Outstanding checks 1760 15840 Correct cash balance, July 31 14800 Balance per books, July 31 T Add Collection of note 1600 Less 24 Bank service charge NSF check 536 560 15840 Correct cash balance, July 31
41. 129.On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month...
129.On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by Griffith Publishing Company for the second year of the subscription assuming the company uses a calendar reporting period?
A.$0.
B.$516.
C.$387.
D.$129.
E.$430.
130.On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The company credited Unearned Fees for the amount received and the subscriptions started immediately. What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the first year?
A.debit Unearned Fees, $1,548; credit Fees Earned, $1,548.
B.debit Unearned Fees, $516; credit Fees Earned, $516.
C.debit Unearned Fees, $1,161; credit Fees Earned, $1,161.
D.debit Unearned Fees, $129; credit Fees Earned, $129.
E.debit Unearned Fees, $387; credit Fees Earned, $387.
131.On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The company credited Unearned Fees for the amount received and the subscriptions started immediately. What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the second year?
A.debit Unearned Fees, $1,548; credit Fees Earned, $1,548.
B.debit Unearned Fees, $516; credit Fees Earned, $516.
C.debit Unearned Fees, $1,161; credit Fees Earned, $1,161.
D.debit Unearned Fees, $129; credit Fees Earned, $129.
E.debit Unearned Fees, $387; credit Fees Earned, $387.
132.On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month subscriptions to several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Santa Fe, Inc. after adjustments on December 31 of the first year assuming the company is using a calendar reporting period and no previous adjustment has been made?
A.$1,548.
B.$387.
C.$516.
D.$1,161.
E.$0.
133.On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month subscriptions to several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Santa Fe, Inc. after adjustments on December 31 of the second year assuming the company is using a calendar reporting period and the previous year adjustment had been made?
A.$1,548.
B.$387.
C.$516.
D.$645.
E.$0.
134.On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month subscriptions to several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What adjusting entry should be made by Santa Fe, Inc. for the adjustment on December 31 of the first year assuming the company is using a calendar reporting period and no previous adjustments had been made?
A.Debit Subscription Expense $516 and credit Prepaid Subscriptions $516.
B.Debit Prepaid Subscriptions $516 and credit Subscription Expense $516.
C.Debit Subscription Expense $387 and credit Cash $387.
D.Debit Unearned Subscriptions $387 and credit Subscription Expense $387.
E.Debit Subscription Expense $387 and credit Prepaid Subscriptions $387.
135.A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. Which of the following statements is true?
A.It will have no effect on income.
B.It will overstate assets and liabilities by $9,000.
C.It will understate net income by $9,000.
D.It will understate assets by $9,000.
E.It will understate expenses and overstate net income by $9,000.
136.The correct adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31 is:
A.debit Salary Expense, $9,000; credit Cash, $9,000
B.debit Salary Expense, $9,000; credit Fees Earned, $9,000
C.debit Salary Expense, $9,000; credit Prepaid Salary, $9,000
D.debit Salary Expense, $9,000; credit Salaries Payable, $9,000
E.debit Salaries Payable, $9,000; credit Salary Expense $9,000
137.A company purchased new furniture at a cost of $14,000 on September 30. The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the furniture for the first year ended December 31?
A.$437.50
B.$375.00
C.$1,500.00
D.$500
E.$1,750
138.A company purchased new furniture at a cost of $14,000 on September 30. The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000. The company uses the straight-line method of depreciation. What is the book value of the furniture on December 31 of the first year?
A.$13,562.50
B.$12,250.00
C.$12,500.00
D.$13,500.00
E.$13,625.00
42. The Bloomberg market concept(BMC) currencies answers
The Bloomberg market concept(BMC) currencies answers
43. Baxtell Company manufactures and sells a single product. The following costs were incurred during...
Baxtell Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: During the year, the company produced 31, 250 units and sold 26, 500 units. The selling price of the company's product is $94 per unit. Assume that the company uses absorption costing: a. Compute the unit product cost. Unit product cost $ b. Prepare an income statement for the year. Sales $ Cost of goods sold: Beginning inventory $ Less: cost of goods manufactured Goods available for sale Less: ending inventory Gross margin Selling and administrative expenses Operating loss $