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18. Bella Beauty Salon's unadjusted trial balance for the current year follows:...Bella Beauty Salon's unadjusted trial balance for the current year follows:
Additional information:
a. An insurance policy examination showed $1,400 of expired insurance.
b. An inventory count showed $280 of unused shop supplies still available.
c. Depreciation expense on shop equipment, $350.
d. Depreciation expense on the building, $2,220.
e. A beautician is behind on space rental payments, and this $200 of accrued revenue was unrecorded at the time the trial balance was prepared.
f. $800 of the Unearned Rent account balance was earned by year-end.
g. The one employee, a receptionist, works a five-day workweek at $50 per day. The employee was paid last week but has worked four days this week for which she has not been paid.
h. Three months' property taxes, totaling $450, have accrued. This additional amount of property taxes expense has not been recorded.
i. One month's interest on the note payable, $600, has accrued but is unrecorded.
Based on the above information, prepare the adjusting journal entries for Bella's Beauty Salon.
Use the above information to prepare the adjusted trial balance for Bella's Beauty Salon.
Bella Beauty Salon Adjusting entries: Account titles Debits Credits a) Insurance expense $1,400 Prepaid insurance $1,400 b) Shop Supplies expense $710 Shop Supplies $710 c) Depreciation expense $350 Accumulated depreciation-Shop eq. $350 d) Depreciation expense $2,220 Accumulated depreciation-Building $2,220 e) Rent receivable $200 Rent revenue $200 f) Unearned rent $800 Rent revenue $800 g) Wages expense $200 Wages payable $200 h) Property taxes expense $450 Property taxes payable $450 i) Interest expense $600 Interest payable $600 Adjusted Trial Balance as on Dec 31 Account titles Debits Credits Cash $4,200 Rent receivable $200 Prepaid insurance $80 Shop supplies $280 Shop equipment $3,860 Accumulated depreciation-Shop equipment $1,120 Building $57,500 Accumulated depreciation-Building $6,060 Land $55,000 Wages payable $200 Property taxes payable $450 Interest payable $600 Unearned rent $800 Long-term notes payable $50,000 Common stock $10,000 Retained earnings $39,860 Rent earned $3,400 Fees earned $23,400 Wages expense $3,400 Utilities expense $690 Property taxes expense $1,050 Insurance expense $1,400 Shop supplies expense $710 Depreciation expense - Shop equipment $350 Depreciation expense-Building $2,220 Interest expense $4,950 Totals $135,890 $135,890
19. Problem 3-2A (P3-2A) Neosho River Resort opened for business on June 1 with eight Problem 3-2A...
Help in ACC 280
Help in XACC 280
Problem 3-2A (P3-2A) Neosho River Resort, Inc., opened for business on June 1 with eight air-conditioned units.
Its trial balance before adjustment on August 31 is as follows
NEOSHO RIVER RESORT
Trial Balance
August 31, 2008
Account Number Debit Credit
101 Cash $ 19,600
126 Supplies 3,300
130 Prepaid Insurance 6,000
140 Land 25,000
143 Cottages 125,000
149 Furniture 26,000
201 Accounts Payable $ 6,500
209 Unearned Rent Revenue 7,400
275 Mortgage Payable 80,000
301 P. Harder, Capital 100,000
306 P. Harder, Drawing 5,000
429 Rent Revenue 80,000
622 Repair Expense 3,600
726 Salaries Expense 51,000
732 Utilities Expense 9,400
$273,900 $273,900
In addition to those accounts listed on the trial balance, the chart of accounts for Neosho River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation—Cottages, No. 150 Accumulated Depreciation—Furniture, No. 212 Salaries Payable,No. 230 Interest Payable, No. 620 Depreciation Expense—Cottages, No. 621 Depreciation Expense—Furniture, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.
Other data:
1. Insurance expires at the rate of $400 per month.
2. A count on August 31 shows $600 of supplies on hand.
3. Annual depreciation is $6,000 on cottages and $2,400 on furniture.
4. Unearned rent revenue of $4,100 was earned prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $1,000 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)
Instructions
(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts
and post the adjusting entries. (Use J1 as the posting reference.)
(c) Prepare an adjusted trial balance on August 31.
(d) Prepare an income statement and an owner’s equity statement for the 3 months ending
August 31 and a balance sheet as of August 31.
20. tax accounting
Fergie has the choice between investing in a State of New York bond at 5 percent and a Surething bond at 8 percent. Assume both bonds have the same nontax characteristics and that Fergie has a 30 percent marginal tax rate. What interest rate does the state of New York need to offer to make Fergie indifferent between investing in the two bonds?
21. In recent years, Jayme Company has purchased three machines. Because of frequent employee...
In recent years, Jayme Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. For the declining-balance method, Jayme Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 30,000. Actual hours of use in the first 3 years were 2016, 800; 2017, 4,500; and 2018, 6,000.
Instructions
(a) Compute the amount of accumulated depreciation on each machine at December 31, 2018.
(b) If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this machine in 2016? In 2017?
22. During September, Khan had sales of 148,000, which made a gross profit of 40,000. Purchases...
During September, Khan had sales of 148,000, which made a gross profit of 40,000. Purchases amounted to 100,000 and opening inventory was 34,000. The value of closing inventory was?
23. 145.Expenses follow the same debit and credit rules as a.revenues b.the drawing account c.the...
145.Expenses follow the same debit and credit rules as
a.revenues
b.the drawing account
c.the capital account
d.liabilities
146.Net income will result when
a.revenues (credits) > expenses (debits)
b.revenues (debits) > expenses (credits)
c.expenses (credits) = revenues (debits)
d.revenues (credits) = expenses (debits)
147.Which of the following will increase owner’s equity?
a.Expenses > revenues.
b.The owner draws money for personal use.
c.Revenues > expenses.
d.Cash is received from customers on account.
148.Which of the following situations increase owner’s equity?
a.Supplies are purchased on account.
b.Services are provided on account.
c.Cash is received from customers on account.
d.Utility bill will be paid next month.
149.Which of the following groups of accounts are increased with a debit?
a.assets, liabilities, owner’s equity
b.assets, drawing, expenses
c.assets, revenues, expenses
d.assets, liabilities, revenues
150.Which of the following groups of accounts increase with a credit?
a.capital, revenues, expenses
b.assets, capital, revenues
c.liabilities, capital, revenues
d.none of these
151.Which of the following is true regarding normal balances of accounts?
a.All accounts have a normal debit balance.
b.The normal balance of all accounts will have either a positive or negative balance.
c.Accounts that have a normal debit balance will only have debit entries, never credit entries.
d.The normal balance is on the increase side of the account.
152.Which of the following is nottrue with a double-entry accounting system?
a.The accounting equation remains in balance.
b.The sum of all debits is always equal to the sum of all credits in each journal entry.
c.Each business transaction will have two debits.
d.Every transaction affects at least two accounts.
153.
March6Cash2,500
Unearned Fees2,500
????????????.
What is the best explanation for this journal entry?
a.Received cash for services performed.
b.Received cash for services to be performed in the future.
c.Paid cash in advance for services to be performed.
d.Performed services for which cash is owed.
154.
April14Equipment15,000
Cash5,000
Note Payable10,000
????????????.
Which is the best explanation for this journal entry?
a.Purchased equipment; paid cash of $5,000, with the remainder to be paid in the future.
b.Purchased equipment; paid cash of $10,000, with the remainder to be received in the future.
c.Purchased equipment with cash.
d.Purchased equipment on account.
24. Assume that on January 1, 2011, Stora Enso (FIN) signs a 10-year non-cancelable lease agreement to..
Assume that on January 1, 2011, Stora Enso (FIN) signs a 10-year non-cancelable lease agreement to lease a storage building from Balesteros Storage Company. The following information pertains to this lease agreement.1. The agreement requires equal rental payments of $90,000 beginning on January 1, 2011.2. The fair value of the building on January 1, 2011, is $550,000.3. The building has an estimated economic life of 12 years, with an unguaranteed residual value of $10,000. Stora Enso depreciates similar buildings on the straight-line method.4. The lease is non-renewable. At the termination of the lease, the building reverts to the lessor.5. Stora Enso’s incremental borrowing rate is 12% per year. It is impracticable to determine the lessor’s implicit rate.6. The yearly rental payment includes $3,088.14 of executory costs related to taxes on the property.InstructionsPrepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2011 and 2012. Stora Enso’s corporate year- end is December 31.View Solution:
Assume that on January 1 2011 Stora Enso FIN signs
25. John House has taken a 20-year, $250,000 mortgage on his house at an interest rate of 6% per year. W
John House has taken a 20-year, $250,000 mortgage on his house at an interest rate of 6% per year. What is the value of the mortgage after the payment of the fifth annual installment?How to solve it without financial calculator
26. 61. Which of the following represents an inflow of cash and therefore would be reported on...
61. Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?
A. appropriation of retained earnings
B. acquisition of treasury stock
C. declaration of stock dividends
D. issuance of long-term debt
62. A ten-year bond was issued at par for $150,000 cash. This transaction should be shown on a statement of cash flows under
A. investing activities
B. financing activities
C. noncash investing and financing activities
D. operating activities
63. Cash paid for preferred stock dividends should be shown on the statement of cash flows under
A. investing activities
B. financing activities
C. noncash investing and financing activities
D. operating activities
64. The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports
A. the increase or decrease in cash
B. cash at the end of the year
C. net cash flow from investing activities
D. net cash flow from financing activities
65. Which of the following is a noncash investing and financing activity?
A. payment of a cash dividend
B. payment of a six-month note payable
C. purchase of merchandise inventory on account
D. issuance of common stock to acquire land
66. Which of the following should be shown on a statement of cash flows under the financing activity section?
A. the purchase of a long-term investment in the common stock of another company
B. the payment of cash to retire a long-term note
C. the proceeds from the sale of a building
D. the issuance of a long-term note to acquire land
67. A company purchases equipment for $29,000 cash. This transaction should be shown on the statement of cash flows under
A. investing activities
B. financing activities
C. noncash investing and financing activities
D. operating activities
68. Cash flow per share is
A. required to be reported on the balance sheet
B. required to be reported on the income statement
C. required to be reported on the statement of cash flows
D. not required to be reported on any statement
69. On the statement of cash flows prepared by the indirect method, the cash flows from operating activities section would include
A. receipts from the sale of investments
B. amortization of premium on bonds payable
C. payments for cash dividends
D. receipts from the issuance of capital stock
70. The statement of cash flows may be used by management to
A. assess the liquidity of the business
B. assess the major policy decisions involving investments and financing
C. determine dividend policy
D. do all of the above
27. Investment in the common stock of keller corp Problem: You are considering an investment in the...
Investment in the common stock of keller corp
Problem:
You are considering an investment in the common stock of Keller Corp. The stock is expected to pay a dividend of $2 a share at the end of the year (D1 = $2.00). The stock has a beta equal to 0.09 , The risk free rate is 5.6%, and the market risk premium is 6%. The stock’s dividend is expected to grow at some constant rate g. The stock currently sells for $25 a share. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3?).
Investment in the common stock of keller corp
Accounting Basics
28. Retirement of Bonds
On June 30, 2002 King Co. had outstanding 9%, $5,000,000 face value bonds maturing on June 30, 2007. It was payable semiannually every June 30 and December 31. On June 2002, after recording amortization for the period, the unamortized bond premium and bond issue costs were $30,000 and $50,000, respectively. On that date, the firm retired all the bonds at 98. Record the retirement of the bonds.
29. 11. No permanent account balances are changed in the closing process. 12. Closing entries are...
11. No permanent account balances are changed in the closing process.
12. Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year.
13. The Dividends account is closed to the Income Summary account in order to properly determine net income (or loss) for the period.
14. After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.
15. Closing revenue and expense accounts to the Income Summary account is an optional bookkeeping procedure.
16. Closing the Dividends account to Retained Earnings is not necessary if net income is greater than dividends paid during the period.
17. The Dividends account is a permanent account whose balance is carried forward to the next accounting period.
18. Closing entries are journalized after adjusting entries have been journalized.
19. The amounts appearing on an income statement should agree with the amounts appearing on the post-closing trial balance.
20. The post-closing trial balance is entered in the first two columns of a worksheet.
30. Luxury Furniture designs and builds factory-made, premium, wood armoires for homes
Luxury Furniture designs and builds factory-made, premium, wood armoires for homes. All are of white oak. Its budgeted manufacturing overhead costs for the year 2012 are as follows.
Overhead Cost Pools Amount
Purchasing $ 45,000
Handling materials 50,000
Production (cutting, milling, finishing) 130,000
Setting up machines 85,000
Inspecting 60,000
Inventory control (raw materials and finished goods) 80,000
Utilities 100,000
Total budget overhead costs $550,000
For the last 4 years, Luxury Furniture has been charging overhead to products on the basis of materials cost. For the year 2012, materials cost of $500,000 were budgeted. Jim Brigham, owner-manager of Luxury Furniture, recently directed his accountant, Bob Borke, to implement the activity-based costing system that he has repeatedly proposed. At Jim Brigham's request, Bob and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools.
Expected
Use of
Overhead Cost Pools Activity Cost Drivers Cost Drivers
Purchasing Number of orders 500
Handling materials Number of moves 5,000
Production (cutting, milling, finishing) Direct labor hours 65,000
Setting up machines Number of setups 1,000
Inspecting Number of inspections 4,000
Inventory control (raw materials and finished goods) Number of components 40,000
Utilities Square feet occupied 50,000
Debbie Steiner, sales manager, has received an order for 12 luxury armoires from Thom's Interior Design. At Debbie's request, Bob prepares cost estimates for producing 12 armoires so Debbie can submit a contract price per armoire to Thom's. He accumulates the following data for the production of 12 armoires.
Direct materials $5,200
Direct labor $3,500
Direct labor hours 200
Number of purchase orders 3
Number of material moves 32
Number of machine setups 4
Number of inspections 20
Number of components 640
Number of square feet occupied 320
Instructions
(a) Compute the predetermined overhead rate using traditional costing with materials cost as the basis.
(b) What is the manufacturing cost per armoire under traditional costing?
(c) What is the manufacturing cost per armoire under the proposed activity-based costing? (Prepare all of the necessary schedules.)
(d) Which of the two costing systems is preferable in pricing decisions and why?
31. During the fourth quarter of 2013, there were seven biweekly paydays on Friday (October 4, 18;...
During the fourth quarter of 2013, there were seven biweekly paydays on Friday (October 4, 18; November 1, 15, 29; December 13, 27) for Quality Repairs. Using the forms supplied on pages 4-44 to 4-47, complete the following for the fourth quarter:
a. Complete the Federal Deposit Information Worksheets reflecting electronic deposits (monthly depositor). The employer’s phone number is (501) 555-7331. Federal deposit liability each pay, $624.11.
b. Employer’s Quarterly Federal Tax Return, Form 941. The form is signed by you as president.
c. Employer’s Report of State Income Tax Withheld for the quarter, due on or before January 31, 2014.
Quarterly Payroll Data
Total Earnings
5 Employees OASDI HI FIT SIT
$18,750.00 $ 787.50 $271.88 $1,875.00 $1,312.50
Employer’s OASDI $1,162.50
Employer’s HI 271.88
Federal deposit liability each pay 624.11
32. Putnam & Putnam, a legal firm, uses the balance sheet approach to estimate uncollectible account
Putnam & Putnam, a legal firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end, an aging of the accounts receivable produced the following five groupings:
a. Not yet due $ 250,000
b. 1Ac€?o30 days past due 105,000
c. 31Ac€?o60 days past due 40,000
d. 61Ac€?o90 days past due 7,500
e. Over 90 days past due 15,000
Total $ 417,500
On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows: Group a, 1 percent; Group b, 3 percent; Group c, 10 percent; Group d, 20 percent; and Group e, 50 percent.
The Allowance for Doubtful Accounts before adjustment at December 31 showed a credit balance of $5,900.
a. Compute the estimated amount of uncollectible accounts based on the above classification by age groups.
b. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount
c. Assume that on January 10 of the following year, Putnam & Putnam learned that an account receivable that had originated on September 1 in the amount of $4,300 was worthless because of the bankruptcy of the client, Safeland Co. Prepare the journal entry required on January 10 to write off this account.
33. EX 8-6 Providing for doubtful accounts At the end of the current year, the accounts receivable...
EX 8-6 Providing for doubtful accounts
At the end of the current year, the accounts receivable account has a debit balance of
$1,400,000 and sales for the year total $15,350,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following assumptions:
a. The allowance account before adjustment has a debit balance of $23,000. Bad debt expense is estimated at ¾ of 1% of sales.
b. The allowance account before adjustment has a debit balance of $23,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $125,000.
c. The allowance account before adjustment has a credit balance of $14,500. Bad debt expense is estimated at ½ of 1% of sales.
d. The allowance account before adjustment has a credit balance of $14,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $180,000.
34. Transfer Pricing Divisional Autonomy System. A transfer pricing system should therefore report
Transfer pricing
a) The transfer pricing system operated by a divisional company has the potential to make a significant contribution towards the achievement of corporate financial objectives.
