Winter Discussions: Strategies for Success in Accounting
19)
Securities exchanges create efficient markets that do all of the following
EXCEPT
A)
ensure a market in which the price reflects the true value of the security.
B)
allocate funds to the most productive uses.
C)
control the supply and demand for securities through price.
D)
allow the price to be determined by supply and demand of securities.
20)
A competitive market that allocates funds to their most productive use is
called a(n)
A)
liquid market.
B)
middleman’s market.
C)
efficient market.
D)
investor’s market.
21)
The ________ is created by a financial relationship between suppliers and
demanders of short-term funds.
A)
stock market
B)
capital market
C)
financial market
D)
money market
22)
By definition, the money market involves the buying and selling of
A)
stocks and bonds.
B)
short-term funds.
C)
funds that mature in more than one year.
D)
flows of funds.
23)
Most money market transactions are made in
A)
common stock.
B)
marketable securities.
C)
stocks and bonds.
D)
preferred stock.
24)
The ________ is created by a number of institutions and arrangements that allow
the suppliers and demanders of long-term funds to make transactions.
A)
financial market
B)
capital market
C)
money market
D)
credit market
25)
Long-term debt instruments used by both government and business are known as
A)
stocks.
B)
bills.
C)
bonds.
D)
equities.
26)
The two key financial markets are
A)
primary market and secondary market.
B)
primary market and money market.
C)
money market and capital market.
D)
capital market and secondary market.
27)
In a ________ market, the buyer and seller are brought together to trade
securities in an organization called ________.
A)
dealer; securities market
B)
broker; over-the -counter market
C)
broker; securities market
D)
dealer; over-the-counter market
28)
In a ________ market, the buyer and seller are not brought together to trade
securities directly but instead have their orders executed on the ________.
A)
dealer; securities market
B)
broker; over-the -counter market
C)
broker; securities market
D)
dealer; over-the-counter market
Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. During May, the last month of the fiscal year, transactions were completed. In Part 1 of this problem, the accounting cycle was completed up through the preparation of the adjusted trial balance. Required: 8. If you completed the end-of-period work sheet in Part 1, use the adjusted trial balance figures to prepare an income statement, a statement of owner’s equity, and a balance sheet. If you didn’t complete the end-of-period work sheet in Part 1, use the ledger (the Excel spreadsheet) to prepare an income statement, a statement of owner’s equity, and a balance sheet. 9. A. Prepare the closing entries. Record the closing entries on Page 23 of the journal. Refer to the Chart of Accounts for exact wording of account titles. B. Post the closing entries to the ledger of four-column accounts. Add the appropriate posting reference to the journal. 10. Prepare a post-closing trial balance. Accounts with zero balances can be left blank. For guidance in completing the financial statements, be sure to read the instructions above each statement carefully. Chart of Accounts CHART OF ACCOUNTS Palisade Creek Co. General Ledger ASSETS 110 Cash 112 Accounts Receivable 115 Merchandise Inventory 116 Estimated Returns Inventory 117 Prepaid Insurance 118 Store Supplies 123 Store Equipment 124 Accumulated Depreciation-Store Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 212 Customers Refunds Payable EQUITY 310 Lynn Tolley, Capital 311 Lynn Tolley, Drawing 312 Income Summary REVENUE 410 Sales EXPENSES 510 Cost of Merchandise Sold 520 Sales Salaries Expense 521 Advertising Expense 522 Depreciation Expense 523 Store Supplies Expense 529 Miscellaneous Selling Expense 530 Office Salaries Expense 531 Rent Expense 532 Insurance Expense 539 Miscellaneous Administrative Expense Labels and Amount Descriptions Labels Administrative expenses Current assets Current liabilities For the Year Ended May 31, 2016 Long-term liabilities May 31, 2016 Operating expenses Other income and expense Property, plant, and equipment Selling expenses Amount Descriptions Add withdrawals Cost of merchandise purchased Gross profit Income from operations Increase in owner’s equity Lynn Tolley, capital, June 1, 2015 Lynn Tolley, capital, May 31, 2016 Less withdrawals Merchandise available for sale Net income Net income for the year Net loss Net purchases Total administrative expenses Total assets Total current assets Total current liabilities Total liabilities Total liabilities and owner’s equity Total operating expenses Total property, plant, and equipment Total selling expenses Journal Shaded cells have feedback. 9. A. Prepare the closing entries. Record the closing entries on Page 23 of the journal. Refer to the Chart of Accounts for exact wording of account titles. 9. B. Add the appropriate posting reference to the journal. Question not attempted. PAGE 23 JOURNAL Score: 0/226 DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 Closing Entries 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Points: 0 / 55 Ledger Use the spreadsheet completed in Part 1 of this problem to complete the following steps of this problem. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem. 9. B. Post the closing entries to the ledger of four-column accounts. Income Statement Shaded cells have feedback. 8. If you completed the end-of-period work sheet in Part 1, use the adjusted trial balance figures to prepare an income statement. If you didn’t complete the end-of-period work sheet in Part 1, use the ledger (the Excel spreadsheet) to prepare an income statement. Be sure to complete the statement heading. If a net loss is incurred, enter that amount as a negative number using a minus sign. Enter all other amounts as positive numbers. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Score: 8/146 Palisade Creek Co. Income Statement For the Year Ended May 31, 2016 ? 1 Sales ? 2 3 4 (Label) 5 Selling expenses: 6 7 8 9 10 11 12 Administrative expenses: 13 14 15 16 17 18 19 Points: 1.86 / 34 Statement of Owner’s Equity Shaded cells have feedback. 8. If you completed the end-of-period work sheet in Part 1, use the adjusted trial balance figures to prepare a statement of owner’s equity. If you didn’t complete the end-of-period work sheet in Part 1, use the ledger (the Excel spreadsheet) to prepare a statement of owner’s equity. Be sure to complete the statement heading. If a net loss has been incurred or there has been a decrease in owner’s equity, enter that amount as a negative number using a minus sign. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Score: 15/45 Palisade Creek Co. Statement of Owner’s Equity For the Year Ended May 31, 2016 ? 1 Lynn Tolley, capital, June 1, 2015 ? $685,300.00 ? 2 3 4 5 Lynn Tolley, capital, May 31, 2016 ? Points: 3.67 / 11 Balance Sheet Shaded cells have feedback. 8. If you completed the end-of-period work sheet in Part 1, use the adjusted trial balance figures to prepare a balance sheet. If you didn’t complete the end-of-period work sheet in Part 1, use the ledger (the Excel spreadsheet) to prepare a balance sheet. Be sure to complete the statement heading. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter all amounts as positive numbers. A colon (:) will automatically appear if it is required. “Less” or “Plus” will automatically appear if it is required. Question not attempted. Score: 0/161 Palisade Creek Co. Balance Sheet (Label) 1 Assets 2 (Label) 3 4 5 6 7 8 9 10 (Label) 11 12 13 14 15 Liabilities 16 (Label) 17 18 19 20 21 Owner’s Equity 22 23 Points: 0 / 38 Post-Closing Trial Balance Shaded cells have feedback. 10. Prepare a post-closing trial balance. Accounts with zero balances can be left blank. How does grading work? Palisade Creek Co. POST-CLOSING TRIAL BALANCE Score: 28/51 May 31, 2016 ACCOUNT TITLE DEBIT CREDIT 1 Cash 84,500.00 ? 2 Accounts Receivable 3 Merchandise Inventory 4 Estimated Returns Inventory 5 Prepaid Insurance 4,800.00 ? 6 Store Supplies 4,000.00 ? 7 Store Equipment 569,500.00 ? 8 Accumulated Depreciation-Store Equipment 70,700.00 ? 9 Accounts Payable 63,150.00 ? 10 Salaries Payable 13,600.00 ? 11 Customers Refunds Payable 12 Lynn Tolley, Capital 13 Totals
18. During 2017, Manion Corp. entered into the following transactions. 1. Borrowed $60,000 by issuing...
During 2017, Manion Corp. entered into the following transactions.
1. Borrowed $60,000 by issuing bonds.
2. Paid $9,000 cash dividend to stockholders.
3. Received $13,000 cash from a previously billed customer for services performed.
4. Purchased supplies on account for $3,100. Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders’ Equity in the right-hand margin. For Retained Earnings, use separate columns for Revenues, Expenses, and Dividends if necessary. Use Illustration 3-3 (page 99) as a model.
19. CPI sells computer peripherals. At December 31, 2011, CPI’s inventory amounted to $500,000....
CPI sells computer peripherals. At December 31, 2011, CPI’s inventory amounted to $500,000. During the first week in January 2012, the company made only one purchase and one sale. These transactions were as follows:
Jan. 2 Purchased 20 modems and 80 printers from Sharp. The total cost of these machines was $25,000, terms 3/10, n/60.
Jan. 6 Sold 30 different types of products on account to Pace Corporation. The total sales price was $10,000, terms 5/10, n/90. The total cost of these 30 units to CPI was $6,100 (net of the purchase discount).
CPI has a full-time accountant and a computer-based accounting system. It records sales at the gross sales price and purchases at net cost and maintains subsidiary ledgers for accounts receiv- able, inventory, and accounts payable.
Instructions
a. Briefly describe the operating cycle of a merchandising company. Identify the assets and lia- bilities directly affected by this cycle.
b. Prepare journal entries to record these transactions, assuming that CPI uses a perpetual inven- tory system.
c. Compute the balance in the Inventory account at the close of business on January 6.
d. Prepare journal entries to record the two transactions, assuming that CPI uses a periodic
inventory system.
e. Compute the cost of goods sold for the first week of January assuming use of the periodic system. (Use your answer to part c as the ending inventory.)
f. Which type of inventory system do you think CPI most likely would use? Explain your reasoning.
g. Compute the gross profit margin on the January 6 sales transaction.
20. Cornerstone Exercise 9-27 Preparing a Cost of Goods Sold Budget Andrews Company manufactures a...
Cornerstone Exercise 9-27 Preparing a Cost of Goods Sold Budget
Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour and the fixed overhead rate is $1.60 per direct labor hour. Andrews expects to produce 20,000 chairs next year and expects to have 675 chairs in ending inventory. There is no beginning inventory of office chairs.
Required:
Prepare a cost of goods sold budget for Andrews Company.
21. The controller of Harrington Company wants to improve the compan
The controller of Harrington Company wants to improve the company’s control system by preparing a month-by-month cash budget. The following information is for the month ending July 31, 2011.
June 30, 2011 cash balance …………………………………. $45,000
Dividends to be declared on July 15* ………………………… 12,000
Cash expenditures to be paid in July for operating expenses … 36,800
Amortization expense in July ………………………………….. 4,500
Cash collections to be received in July ………………………. 89,000
Merchandise purchases to be paid in cash in July …………… 56,200
Equipment to be purchased for cash in July …………………. 20,500
*Dividends are payable 30 days after declaration to shareholders of record on the declaration date.
Harrington Company wants to keep minimum cash balance of $25,000.
Instructions
(a) Prepare a cash budget for the month ended July 31, 2011, and indicate how much money, if any, Harrington Company will need to borrow to meet its minimum cash requirement.
(b) Explain how cash budgeting can reduce the cost of short-term borrowing.
22. Ethics in Action Buddy Dupree is the accounting manager for On-Time Geeks, a tech support company...
Ethics in Action
Buddy Dupree is the accounting manager for On-Time Geeks, a tech support company for individuals and small businesses. As part of his job, Buddy is responsible for preparing the company's trial balance. His supervisor placed a "hard deadline" of Friday at 5pm for the completion ofthe trial balance. Unfortunately, Buddy was unable to get the trial balance to balance by the due date. The credit side of the trial balance exceeded the debit side by $3,000. To make the deadline, Buddy decided to add a $3,000 debit to the vehicles account balance. He selected the vehicles account because it will not be significantly affected by the additional $3,000.
Here are three questions.
1. Is Buddy behaving ethically? Why?
2. Who is affected by Buddy's decision?
3. How should Buddy have handled this situation?
Post a thoughtful answer of not less than 250 words
23. The adjusted trial balance for Carla Vista Co. is given below
The adjusted trial balance for Carla Vista Co. is given below
The adjusted trial balance for Carla Vista Co. is given below. CARLA VISTA CO. Trial Balance August 31, 2017 Before After Adjustment Adjustment Dr Cri Dr. Cr $11,580 $11,580 Cash 8,980 Accounts Receivable 9,690 Supplies 2,740 830 2,920 Prepaid Insurance 4,200 15,200 15,200 Equipment $3,420 Accumulated Depreciation-Equipment $4,620 Accounts Payable 5,080 5,080 Salaries and Wages Payable 1,340 Unearned Rent Revenue 1,940 1,030 Common Stock 13,110 13,110 Retained Earnings 5,630 5,630 Dividends 2,930 2,930 34,030 33,320 Service Revenue 12,840 13,750 Rent Revenue Salaries and Wages Expense 16,530 17,870 Supplies Expense 1,910 Rent Expense 13,180 13,180 Insurance Expense 1,280 Depreciation Expense 1,200 75,340 $75,340 -$28 S90 -$78 S90 Prepare the closing entries for the temporary accounts at August 31. (Tf no entry is required, select "No Entry" for the account titles and enter o for the amounts, Credit account titles are automatically indented when the amount is entered. Do not indent manually,)
For the past 8 months, Jinan Corporation has experienced a steady increase in its cost per unit even though total costs have remained stable This cost per unit increase may be due to _____________ costs because the level of activity at Jinan is _______________.
A) fixed, decreasing
B) fixed, increasing
C) variable, decreasing
D) variable, increasing
25. Problem 4-1A (P4-1A) Thomas Magnum began operations as a private investigator on
Help in ACC 280
Help in XACC 280
Problem 4-1A (P4-1A) Thomas Magnum began operations as a private investigator on January 1, 2008. The trial balance columns of the worksheet for Thomas Magnum, P.I. at March 31 are as follows.
Thomas Magnum began operations as a private investigator on January 1, 2008. The
trial balance columns of the worksheet for Thomas Magnum, P.I. at March 31 are as follows.
THOMAS MAGNUM, P.I., INC.
Worksheet
For the Quarter Ended March 31, 2008
Trial Balance
Account Titles Dr. Cr.
Cash 11,400
Accounts Receivable 5,620
Supplies 1,050
Prepaid Insurance 2,400
Equipment 30,000
Notes Payable 10,000
Accounts Payable 12,350
Common Stock 20,000
Dividends 600
Service Revenue 13,620
Salaries Expense 2,200
Travel Expense 1,300
Rent Expense 1,200
Miscellaneous Expense 200
55,970 55,970
Other data:
1. Supplies on hand total $380.
2. Depreciation is $1,000 per quarter.
3. Interest accrued on 6-month note payable, issued January 1, $300.
4. Insurance expires at the rate of $200 per month.
5. Services provided but unbilled at March 31 total $530.
Instructions
(a) Enter the trial balance on a worksheet and complete the worksheet.
(b) Prepare an income statement and a retained earnings statement for the quarter and a classified balance sheet at March 31. No additional common stock was issued during the quarter ended March 31, 2008.
(c) Journalize the adjusting entries from the adjustments columns of the worksheet.
(d) Journalize the closing entries from the financial statement columns of the worksheet.
26. CVP Analysis
which one of the following is not an assumption of CVP analysis?
all units produced are sold
costs classifications are reasonably accurate
factors other than changes in activity may affect costs
the sales mix remains constant
A company does not include the value of skills gained by its employees from training programmes in its financial statements. Which accounting concept is being applied ?
A. consistency
B. materiality
C. money measurement
D. substance over form
There is great uncertainty about the continuance of a business. This has caused the proprietor to make a large reduction in the valuation of the year-end stock. Which accounting concept does this illustrate ?
A. going concern
B. matching
C. materiality
D. consistency
28. 25. The elimination of a riskless profit opportunity in a market is called A) the efficient market h
25. The elimination of a riskless profit opportunity in a market is called A) the efficient market hypothesis. B) random-walk. C) arbitrage. D) market fundamentals. E) a dream come true26. If the Fed wants to permanently lower interest rates, then it should raise the rate of money growth if A) there is fast adjustment of expected inflation. B) there is slow adjustment of expected inflation. C) the liquidity effect is smaller than the expected inflation effect. D) the liquidity effect is larger than the other effects. E) Call PK or do all the above.27. When the quantity of bonds demanded equals the quantity of bonds supplied there is A) excess supply. B) excess demand. C) market equilibrium. D) asset market approach. E) more movie goers to 007.28. Determining asset prices using stocks of assets rather than flow is called A) asset transformation. B) expected return. C) asset market approach. D) market equilibrium. E) Dartboard method.
29. Which of the following should be disclosed in the Summary of Significant Accounting Policies?
Which of the following should be disclosed in the Summary of Significant Accounting Policies?
a. Rent expense amount
b. Maturity dates of long-term debt
c. Methods of amortizing intangibles
d. Composition of plant assets