Ethics in Accounting: Navigating Moral Dilemmas_Winter 2024
October 2. Issued check 604 for $7,673.40 to A Fashion Statement, a creditor. in payment of invoice 9387 [ $7,830] less a cash discount [$156.60].
October 3. Sold merchandise on credit for $2,480 plus sales tax of $124 to Dimitri Sayegh, sales slip 241.
October 4. Issued check 605 for $1050 to BMX Supply Co. For supplies.
October 4. Issued check 606 for $8,594.60 to Today's Women, a creditor, in payment of invoice 5671 [$8,770] less a cash discount [$175.40].
October 5. Collected $1,700 on account from Emily Tran, Creditor customer.
October 5. Accepted a return of merchandise from Dimitri Sayegh. The merchandise was originally sold on sales slip 241, dated october3; issued credit memorandum 18 for $630, which includes sales tax of $30.
October 5. Issued check 607 for $1,666 to Classy Threads, a creditor, in payment of invoice 3292 [$1,700], less a cash discount [$34}.
October 6. Had cash sales of $18,600 plus sales tax of $930 during October 1-6.
October 8. Received a check from James Helmer, a creditor customer, for $832 to pay the balance he owes.
October 8. Issued check 608 for $1,884 to deposit social security tax [$702] Medicare tax [$162], and federal income tax withholding [$1,020] from the September payroll. Record the check in the cash payment journal.
October 9. Sold merchandise on credit for $2,050 plus sales tax of $102.50 to Emma Maldonado, sales slip 242.
October 10. Issued check 609 for $1,445 to pay The City Daily for a newspaper advertisement that appeared in October.
October 11. Purchased merchandise for $4,820 from A Fashion Statement, invoice 9422, dated October 8; the terms are 2/10, n/30.
October 12. Issued check 610 for $375 to pay freight charges to Ace Freight Company, the tracking company that delivered merchandise from A Fashion Statement on September 27 and October 11.
October 13. Had cash sales of $12,300 plus sales tax of $615 during October 8-13.
October 15. Sold merchandise of credit for $1,940 plus sales tax of $97 to James Helmer, sales slip 243.
October 16. purchased discontinued merchandise from Acme Jobbers; paid for it immediately with check 611 for $6,420.
October 16. Received $510 on account from Dimitri Sayegh, a credit customer.
October 16. Issued check 612 for $4,723.60 to A Fashion Statement, a creditor, in payment of invoice 9422 {$4,820.00] less a cash discount [$96.40}
October 18. Issued check 613 for $7,200 to Teresa Lajay as a withdrawal for personal use.
October 20. Hold cash sales of $13,500 plus sales tax of $675 during October 15-20.
October 22. Issued check 614 to City Utilities for $1,112 to the monthly electric bill.
October 24. Sold merchandise on credit for $820 plus sales tax of $41 to Megan Greening, sales slip 244.
October 25. Purchased merchandise for $3,380 from Classy Threads, invoice 3418, dated October 23, the terms are 2/10, n/30.
October 26. Issued check 615 to Regional Telephone for $780 to pay the monthly telephone bill.
October 27. Had cash sales of $14,240 plus sales tax of $712 during October 22-27.
October 29. Received credit memorandum 175 for $430 from Classy Threads Inc. For defective goods that were returned. The original purchase was recorded on October 25.
October 29. Sold merchandise on credit for $3,120 plus sales tax of $156 to Emily Tran, sales slip 245.
October 29. Recorded the October payroll. The records prepared by the payroll service show the following totals: earnings, $10,800; social security, $702.00; Medicare, $162.00; income tax, $1,020; and net pay, $8,916. the excess withholding corrected an error made in withholdings in September.
October 29. Recorded the employer's payroll taxes, which were calculated by the payroll service: social security, $702; Medicare, $162; federal unemployment tax $118; and state unemployment tax, $584. this, too reflects an understatement of taxes recorded in September and corrected in this month.
October 30. Purchased merchandise for $4,020 from Today's Women, invoice 5821, dated October 26; the terms are 1/10, n/30.
October 31. Issued check 616 through 619, totaling $8,916.00, to employees to pay October payroll.
October 31. Issued check 620 for $475 to Handy Janitors for October Janitorial services.
October 31. Had cash sales of $1,700 plus sales tax of $85 for October 29-31.
5. Check the accuracy of the subsidiary ledgers by preparing a schedule of accounts receivable and a schedule of accounts payable as of October 31, 2016. Compare the totals with the balances of the accounts receivable account and the account payable account in the general ledger.
6. Check the accuracy of the general ledger by preparing a trial balance in the first two columns of a 10-column worksheet. Make sure that the total debits and the total credits are equal.
7. complete the adjustments section of the worksheet. Use the following data. Identify each adjustment with the appropriate letter.
a. During October, the firm had net credit sales of $9,810. From experience with similar businesses, the previous accountant had estimated that 1.0 percent of the firm's net credit sales would result in uncollectible accounts. Record an adjustment for the expected loss from uncollectible accounts for the month of October.
b. On October 31, an inventory of the supplies showed that items costing $3,240 were on hand. Record an adjustment for the supplies used in October.
c. On September 30, 2016, the firm purchased a six-month insurance policy for $8,400. Record an adjustment for the expired insurance for October.
d. On October 1, the firm signed a three-month advertising contract for $4,800 with a local cable television station and paid the full amount in advance. Record an adjustment for the expired advertising for October.
e. On April 1, 2016, the firm purchased equipment for $83,000. The equipment was estimated to have a useful life of five years and a salvage value of $12,500. Record an adjustment for depreciation on the equipment for October.
f-g. Based on physical count, ending merchandise inventory was determined to be $81,260.
8. Complete the adjusted Trial Balance section of the worksheet.
9. Determine the net income or net loss for October and complete the worksheet.
10. Prepare a classified income statement for the month ended October 31, 2016. The firm does not divide its operation expenses into selling and administrative expenses.
11. Prepare a statement of owner's equity for the month ended October 31, 2016.
12. Prepare a classified balance sheet as of October 31,2016.
13. Journalize and post the adjusting entries using general journal page 17.
14. Prepare and post the closing entries using general journal page 18.
15. Prepare postclosing trial balance.
The Fashion Rack Chart of Accounts.
101 Cash 111 Account Receivable 112 Allowance for Doubtful Accounts 121 Merchandise Inventory 131 Supplies 133prepaid insurance 135 Prepaid Advertising 141 Equipment 142 Accumulated-Depreciation-Equipment 203 Account Payable 221 Social security tax payable 222 Medicare tax payable 223 Employee income tax payable 225Federal unemployment tax payable 227 State unemployment tax payable 229 Salaries payable 231 Sales tax payable 301 Teresa Ljay, Capital 302 Teresa Lajay, Drawing 399 Income summary 401 Sales 402 Sales return and Allowances 501 Purchases 502 Freight in 503 Purchases Return and Allowance 504 Purchases Discount 611 Advertising Expense 614 Depreciation Expense- Equipment 617 Insurance Expense 620 Uncollectible Accounts Expense 623 Janitorial service expense 626 Payroll taxes expense 629 Rent Expense 632 Salaries expense 635 Supplies expense 936 Telephone expense 644 Utilities expense.
Practice Set 2 Mini Accounting Business Cycle The Fashion Rack mnr Fas Rack is a retail merchandising business that sells brand-name clothing at The film is owned and by Teresa Loja misP will give you an opportunity to put your knowledge of accounting into practice as you heaccoun'ing work of ness 1, 2016. ne Fashion Rack has a monthly Rack during month 2016 The accounting period. The fi of accounts is shown below journals record transactions are the sales are sh receipts journal cash payments journal, and general journal. Postings are made from the ls to the accounts receivable ledger, accounts payable ledger and general lol paid at the end of the month. A computerized payroll service prepares all payroll records and open the general ledger accounts and enter the balances for october 1, 2016. obtain the pecessary figures from the postclosing trial balance prepared on September 30, 2016. which is shown on page 454. df you are using the Srudy Guide & Working Papers you will find that the general ledger accounts are already open.) 2 open the subsidiary ledger accounts and enter the balances for october 1.2016. obtain the necessary figures from the schedule of accounts payable and schedule of accounts receivable prepared on September 30. 20 which appear on page 455 (fyou are using the Giride d Working Papers, you will find that the subsidiary ledger accounts are already open.) 3 Analyze the transactions for October and record each transaction in the general journal. (Use 16 as the number for the first page of the general journal.) Post the individual entries from the general journal to the general ledger and the subsidiary The Fashion Rock Chart of Accounts Liabilities Assets 221 Sociol Security Tax Payable 111 Accounts Receivable m Medioare x Payable 12 AIowance for Doubtful Accounts 223 Employee Income Payable 121 Merchandise Inventory 215 Federal Unemployment Tax Payuble 221 stole unemployment lax Payoble 131 Supplies 33 Prepaid Insurance 135 Prepaid Advertising soles Payable Accumulated Depreciation-Equipment CHAPTER 13 INTRODUCTION INSTRUCTIONS
47. 1. A management information system should do which of the following? Collect data Organize data for.
1. A management information system should do which of the following?
Collect data Organize data for managers Analyze data for management
a. yes no yes
b. yes yes no
c. no no yes
d. yes yes yes
2. A management information system should emphasize satisfying
a. external demands for information.
b. external and internal demands for information.
c. internal demands for information.
d. the Accounting Department’s demands for information.
3. Who of the following are external users of data gathered by a management information system?
Creditors Regulatory Bodies Suppliers
a. yes no yes
b. no no no
c. no yes yes
d. yes yes yes
4. Which of the following is not a primary component of a control system?
a. operator
b. communications network
c. effector
d. assessor
5. Which of the following would be considered a detector?
a. computer program
b. source document
c. variance report
d. all of the above
6. Which of the following statements is false concerning a management control system?
a. A management control system may be referred to as a black box.
b. A management control system should serve as a guide to organizations.
c. A management control system should help implement strategies.
d. A management control system is separate from a cost management system.
7. Feedback is reflected in which component of a management control system?
a. sensor
b. assessor
c. effector
d. detector
8. Reactions to information provided by the management control system are
a. formulated in the organization’s strategic plan.
b. judgmental, and are based on interpretations and circumstances.
c. assessed by the communications network of the MCS.
d. determined as those activities that will be most efficient and effective given the organization’s available technology.
9. A cost management system should
a. identify and evaluate new activities.
b. determine whether the organization is effective and efficient.
c. identify the cost of consumed resources within the organization.
d. all of the above.
10. A cost management system should provide information to
a. all functional areas of the organization.
b. only the accounting area of the organization.
c. only the production area of the organization.
d. organizational managers, but not to staff personnel.
48. solve and show your solution Problein 1-29 (AICPA Adapted) Christian Company has a bonus agreement w
solve and show your solution. that the general manager shall receive an annual bonus of 10% of the net income after bonus and tax. The income tax rate is 30%. The general manager received P280,000 for the current year as bonus. What is the income before bonus and tax? a. 4,280,000 b. 4,000,000 c. 2,800,000 d. 3,720,000 Problem 1-30 (AICPA Adapted) After three profitable years, Gretchen Company decided to offer a bonus to the branch manager of 25% of income over P1,000,000 earned by the branch during the current year. The income for the branch was P1,600,000 before tax and before bonus for the current year. The bonus is computed on income in excess of P1,000,000 after deducting the bonus but before deducting tax. What is the bonus for the current year? a. 120,000 b. 150,000 c. 250,000 d. 320,000 Problem 1-31 (AICPA Adapted) Jackson Company has an incentive compensation plan under which the president is to receive a bonus equal to 10% of incorre in excess of P1,000,000 before deducting income tax but after deducting the bonus. The income before income tax and the bonus is P3,200,000. What is the amount of the bonus? a. 220,000 b. 200,000 c. 320,000 d. 440,000
49. 11. A total variance is best defined as the difference between total a. actual cost and total cost..
11. A total variance is best defined as the difference between total
a. actual cost and total cost applied for the standard output of the period.
b. standard cost and total cost applied to production.
c. actual cost and total standard cost of the actual input of the period.
d. actual cost and total cost applied for the actual output of the period.
12. The term standard hours allowed measures
a. budgeted output at actual hours.
b. budgeted output at standard hours.
c. actual output at standard hours.
d. actual output at actual hours.
13. A large labor efficiency variance is prorated to which of the following at year-end?
WIP FG
Cost of Goods Sold Inventory Inventory
a. no no no
b. no yes yes
c. yes no no
d. yes yes yes
14. Which of the following factors should not be considered when deciding whether to investigate a variance?
a. magnitude of the variance
b. trend of the variances over time
c. likelihood that an investigation will reduce or eliminate future occurrences of the variance
d. whether the variance is favorable or unfavorable
15. At the end of a period, a significant material quantity variance should be
a. closed to Cost of Goods Sold.
b. allocated among Raw Material, Work in Process, Finished Goods, and Cost of Goods Sold.
c. allocated among Work in Process, Finished Goods, and Cost of Goods Sold.
d. carried forward as a balance sheet account to the next period.
16. When computing variances from standard costs, the difference between actual and standard price multiplied by actual quantity used yields a
a. combined price-quantity variance.
b. price variance.
c. quantity variance.
d. mix variance.
17. A company wishing to isolate variances at the point closest to the point of responsibility will determine its material price variance when
a. material is purchased.
b. material is issued to production.
c. material is used in production.
d. production is completed.
18. The material price variance (computed at point of purchase) is
a. the difference between the actual cost of material purchased and the standard cost of material purchased.
b. the difference between the actual cost of material purchased and the standard cost of material used.
c. primarily the responsibility of the production manager.
d. both a and c.
19. The sum of the material price variance (calculated at point of purchase) and material quantity variance equals
a. the total cost variance.
b. the material mix variance.
c. the material yield variance.
d. no meaningful number.
20. A company would most likely have an unfavorable labor rate variance and a favorable labor efficiency variance if
a. the mix of workers used in the production process was more experienced than the normal mix.
b. the mix of workers used in the production process was less experienced than the normal mix.
c. workers from another part of the plant were used due to an extra heavy production schedule.
d. the purchasing agent acquired very high quality material that resulted in less spoilage.
50. On March 31, 2016, the following data were accumulated to assist the accountant in preparing the...
On March 31, 2016, the following data were accumulated to assist the accountant in preparing the adjusting entries for Potomac Realty:
a. The supplies account balance on March 31 is $5,620 The supplies on hand on March 31 are $1,290.
b. The unearned rent account balance on March 31 is $5,000 representing the receipt of an advance payment on March 1 of four months’ rent from tenants.
c. Wages accrued but not paid at March 31 are $2,290.
d. Fees accrued but unbilled at March 31 are $16,825.
e. Depreciation of office equipment is $4,600.
Instructions
1. Journalize the adjusting entries required at March 31, 2016.
2. Briefly explain the difference between adjusting entries and entries that would be made to correct errors.