ACCOUNTING
What are the major elements of an internal control over property, plant, and equipment? For the specific control procedures identified, indicate their importance to the audit.
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Saturday, August 20, 2011
What are the major authorization principles the auditor should investigate regarding both cash management and investments in marketable securities
ACCOUNTING
What are the major authorization principles the auditor should investigate regarding both cash management and investments in marketable securities?
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What are the major authorization principles the auditor should investigate regarding both cash management and investments in marketable securities?
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The following items were taken from the balance sheet of Nike, Inc
ACCOUNTING
The following items were taken from the balance sheet of Nike, Inc.
1. Cash $828.0
2. Accounts receivable 2,120.2
3. Common stock 890.6
4. Notes payable 146.0
5. Other assets 1,722.9
6. Other liabilities 2,081 .9
7. Inventories 1,633.6
8. Income taxes payable 118.2
9. Property, plant, and equipment 1,586.9
10. Retained earnings 3,891.1
11. Accounts payable 763.8
Instruction
a. Classify each of these items as an asset, liability, or stockholder equity.
b. Determine Nike's accounting equation by calculating the value of total assets, total liabilities, and total stockholders equity.
c. To what extent does Nike rely on debt versus equity financing?
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The following items were taken from the balance sheet of Nike, Inc.
1. Cash $828.0
2. Accounts receivable 2,120.2
3. Common stock 890.6
4. Notes payable 146.0
5. Other assets 1,722.9
6. Other liabilities 2,081 .9
7. Inventories 1,633.6
8. Income taxes payable 118.2
9. Property, plant, and equipment 1,586.9
10. Retained earnings 3,891.1
11. Accounts payable 763.8
Instruction
a. Classify each of these items as an asset, liability, or stockholder equity.
b. Determine Nike's accounting equation by calculating the value of total assets, total liabilities, and total stockholders equity.
c. To what extent does Nike rely on debt versus equity financing?
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Eskimo Pie Corporation markets a broad range of frozen treats, including its famous Eskimo Pie ice cream bars
ACCOUNTING
Eskimo Pie Corporation markets a broad range of frozen treats, including its famous Eskimo Pie ice cream bars. The following items were taken from a recent income statement and balance sheet. In each case identify whether the item would appear on the balance sheet (BS) or income statement (IS).
a) Income tax expense
b) Inventories
c) Amount payable
d) Retained earnings
e) Property, plant and equipment
f ) Net sales
g) Cost of goods sold
h) Common stock
i) Receivables
j) Interest expense
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Eskimo Pie Corporation markets a broad range of frozen treats, including its famous Eskimo Pie ice cream bars. The following items were taken from a recent income statement and balance sheet. In each case identify whether the item would appear on the balance sheet (BS) or income statement (IS).
a) Income tax expense
b) Inventories
c) Amount payable
d) Retained earnings
e) Property, plant and equipment
f ) Net sales
g) Cost of goods sold
h) Common stock
i) Receivables
j) Interest expense
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Friday, August 19, 2011
Be You Apparel Inc. is considering two investment projects
ACCOUNTING
Be You Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows:
Each project requires an investment of $480,000. A rate of 15% has been selected for the net present value analysis.
Present Value of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 0.890 0.826 0.797 0.756 0.694
3 0.840 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162
1. a. Compute the cash payback period for each project.
b. Compute the net present value. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value.
2. Prepare a brief report advising management on the relative merits of each project. The input in the box below will not be graded, but may be reviewed and considered by your instructor.
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Be You Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows:
Each project requires an investment of $480,000. A rate of 15% has been selected for the net present value analysis.
Present Value of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 0.890 0.826 0.797 0.756 0.694
3 0.840 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162
1. a. Compute the cash payback period for each project.
b. Compute the net present value. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value.
2. Prepare a brief report advising management on the relative merits of each project. The input in the box below will not be graded, but may be reviewed and considered by your instructor.
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BE5-2 Pocras Company buys merchandise on account from Wedell Company
ACCOUNTING
ACC 290 Week 5 Assignment
BE5-2 Pocras Company buys merchandise on account from Wedell Company. The selling price of the goods is $900 and the cost of the goods sold is $590. Both companies use perpetual inventory systems. Journalize the transactions on the books of both companies.
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ACC 290 Week 5 Assignment
BE5-2 Pocras Company buys merchandise on account from Wedell Company. The selling price of the goods is $900 and the cost of the goods sold is $590. Both companies use perpetual inventory systems. Journalize the transactions on the books of both companies.
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8-79 Compensation tied to balanced scorecard
ACCOUNTING
8-79 (Compensation tied to balanced scorecard) Degree of difficulty of target achievement in the mid-1990s mobile corporation's marketing and refining (M&R) division underwent a major reorganization and developed new strategic directions. In conjunction with these changes, M&R developed a balance scorecard around four perspectives: financial customer, internal business processes and learning and growth. Subsequently M&R linked compensation to its balanced scorecard metrics. To illustrate, all salaried employees in M&R's Natural Business Units received the following percentages of their competitive market salary:
Poor Performance within industry Average performance within industry Performance best in industry
Base Pay 90% 90% 90%
Award Based on corporate 1-2% 3-6% 10%
performance on financial metrics
Award based on performance on 0% 5-8% 20%
balanced scorecard metrics for the
M&R division and business unit 91-92% 98-104% 120%
The balanced scorecards included numerous metrics. M&R's financial metrics included return on capital employed and profitability and customer metrics included share of targeted segments of consumers and profitability of dealers. Internal business process metrics included safety and quality indices. Finally learning and growth metrics included an index of employees perceptions of the work climate at M&R
a. What are the advantages and concerns in linking compensation to a balanced scorecard generally?
B. Evaluate M&Rs approach to linking compensation to multiple measures including its system of assigning degrees of difficulty to achieving targets. In your response, consider the process that is involved in developing the compensation scheme.
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8-79 (Compensation tied to balanced scorecard) Degree of difficulty of target achievement in the mid-1990s mobile corporation's marketing and refining (M&R) division underwent a major reorganization and developed new strategic directions. In conjunction with these changes, M&R developed a balance scorecard around four perspectives: financial customer, internal business processes and learning and growth. Subsequently M&R linked compensation to its balanced scorecard metrics. To illustrate, all salaried employees in M&R's Natural Business Units received the following percentages of their competitive market salary:
Poor Performance within industry Average performance within industry Performance best in industry
Base Pay 90% 90% 90%
Award Based on corporate 1-2% 3-6% 10%
performance on financial metrics
Award based on performance on 0% 5-8% 20%
balanced scorecard metrics for the
M&R division and business unit 91-92% 98-104% 120%
The balanced scorecards included numerous metrics. M&R's financial metrics included return on capital employed and profitability and customer metrics included share of targeted segments of consumers and profitability of dealers. Internal business process metrics included safety and quality indices. Finally learning and growth metrics included an index of employees perceptions of the work climate at M&R
a. What are the advantages and concerns in linking compensation to a balanced scorecard generally?
B. Evaluate M&Rs approach to linking compensation to multiple measures including its system of assigning degrees of difficulty to achieving targets. In your response, consider the process that is involved in developing the compensation scheme.
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Evaluating McGraw Industries Capital Structure Case
FINANCE
Evaluating McGraw Industries’ Capital Structure
McGraw Industries, an established producer of printing equipment, expects its sales to remain flat for the next 3 to 5 years because of both a weak economic outlook and an expectation of little new printing technology development over that period. On the basis of this scenario, the firm’s management has been instructed by its board to institute programs that will allow it to operate more efficiently, earn higher profits, and, most important, maximize share value.
In this regard, the firm’s chief financial officer (CFO), Ron Lewis, has been charged with evaluating the firm’s capital structure. Lewis believes that the current capital structure, which contains 10% debt and 90% equity, may lack adequate financial leverage. To evaluate the firm’s capital structure, Lewis has gathered the data summarized in the following table on the current capital structure (10% debt ratio) and two alternative capital structures—A (30% debt ratio) and B (50% debt ratio)—that he would like to consider.
Capital structure*
Source of capital Current (10% debt) A (30% debt) B (50% debt)
Long-term debt $1,000,000 $3,000,000 $5,000,000
Coupon interest rate** 9% 10% 12%
Common stock 100,000 shares 70,000 shares 40,000 shares
Required return on equity*** 12% 13% 18%
*These structures are based on maintaining the firm’s current level of $10,000,000 of total financing.
**Interest rate applicable to all debt.
***Market-based return for the given level of risk.
Lewis expects the firm’s earnings before interest and taxes (EBIT) to remain at its current level of $1,200,000. The firm has a 40% tax rate.
Use the current level of EBIT to calculate the times interest earned ratio for each capital structure. Evaluate the current and two alternative capital structures using the times interest earned and debt ratios.
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Evaluating McGraw Industries’ Capital Structure
McGraw Industries, an established producer of printing equipment, expects its sales to remain flat for the next 3 to 5 years because of both a weak economic outlook and an expectation of little new printing technology development over that period. On the basis of this scenario, the firm’s management has been instructed by its board to institute programs that will allow it to operate more efficiently, earn higher profits, and, most important, maximize share value.
In this regard, the firm’s chief financial officer (CFO), Ron Lewis, has been charged with evaluating the firm’s capital structure. Lewis believes that the current capital structure, which contains 10% debt and 90% equity, may lack adequate financial leverage. To evaluate the firm’s capital structure, Lewis has gathered the data summarized in the following table on the current capital structure (10% debt ratio) and two alternative capital structures—A (30% debt ratio) and B (50% debt ratio)—that he would like to consider.
Capital structure*
Source of capital Current (10% debt) A (30% debt) B (50% debt)
Long-term debt $1,000,000 $3,000,000 $5,000,000
Coupon interest rate** 9% 10% 12%
Common stock 100,000 shares 70,000 shares 40,000 shares
Required return on equity*** 12% 13% 18%
*These structures are based on maintaining the firm’s current level of $10,000,000 of total financing.
**Interest rate applicable to all debt.
***Market-based return for the given level of risk.
Lewis expects the firm’s earnings before interest and taxes (EBIT) to remain at its current level of $1,200,000. The firm has a 40% tax rate.
Use the current level of EBIT to calculate the times interest earned ratio for each capital structure. Evaluate the current and two alternative capital structures using the times interest earned and debt ratios.
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Tuesday, August 9, 2011
Comprehensive Problem: Packard Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the
ACCOUNTING
Comprehensive Problem: Chapters 3, 4, 5, 6, and 7
Packard Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the periodic inventory system. All accounts have normal debit and credit balances.
General Ledger
Account Number Account Title January 1 Opening Balance
101 Cash $33,750
112 Accounts Receivable 13,000
115 Notes Receivable 39,000
120 Merchandise Inventory 20,000
125 Office Supplies 1,000
130 Prepaid Insurance 2,000
157 Equipment 6,450
158 Accumulated Depreciation 1,500
201 Accounts Payable 35,000
301 I. Packard, Capital 78,700
Accounts
Receivable Subsidiary Ledger
Accounts
Payable Subsidiary Ledger
Customer
January 1 Opening
Balance
Creditor
January 1 Opening
Balance
R. Draves $1,500 S. Kosko $ 9,000
B. Hachinski 7,500 R. Mikush 15,000
S. Ingles 4,000 D. Moreno 11,000
Jan. 3 Sell merchandise on account to B. Remy $3,100, invoice no. 510, and J. Fine $1,800, invoice no. 511.
5 Purchase merchandise on account from S. Yost $3,000 and D. Laux $2,700.
7 Receive checks for $4,000 from S. Ingles and $2,000 from B. Hachinski.
8 Pay freight on merchandise purchased $180.
9 Send checks to S. Kosko for $9,000 and D. Moreno for $11,000.
5 Purchase merchandise on account from S. Yost $3,000 and D. Laux $2,700.
7 Receive checks for $4,000 from S. Ingles and $2,000 from B. Hachinski.
8 Pay freight on merchandise purchased $180.
9 Send checks to S. Kosko for $9,000 and D. Moreno for $11,000.
9 Issue credit of $300 to J. Fine for merchandise returned.
10 Summary cash sales total $15,500.
11 Sell merchandise on account to R. Draves for $1,900, invoice no. 512, and to S. Ingles $900, invoice no. 513.
Post all entries to the subsidiary ledgers.
12 Pay rent of $1,000 for January.
13 Receive payment in full from B. Remy and J. Fine.
15 Withdraw $800 cash by I. Packard for personal use.
16 Purchase merchandise on account from D. Moreno for $15,000, from S. Kosko for $13,900, and from S. Yost for $1,500.
17 Pay $400 cash for office supplies.
18 Return $200 of merchandise to S. Kosko and receive credit.
20 Summary cash sales total $17,500.
21 Issue $15,000 note to R. Mikush in payment of balance due.
21 Receive payment in full from S. Ingles.
Post all entries to the subsidiary ledgers.
22 Sell merchandise on account to B. Remy for $3,700, invoice no. 514, and to R. Draves for $800, invoice no. 515.
23 Send checks to D. Moreno and S. Kosko in full payment.
25 Sell merchandise on account to B. Hachinski for $3,500, invoice no. 516, and to J. Fine for $6,100, invoice no. 517.
27 Purchase merchandise on account from D. Moreno for $12,500, from D. Laux for $1,200, and from S. Yost for $2,800.
28 Pay $200 cash for office supplies.
31 Summary cash sales total $22,920.
31 Pay sales salaries of $4,300 and office salaries of $3,600.
Hint: AP, S
Instructions
(a) Record the January transactions in the appropriate journal—sales, purchases, cash receipts, cash payments, and general.
(b) Post the journals to the general and subsidiary ledgers. Add and number new accounts in an orderly fashion as needed.
(c) Prepare a trial balance at January 31, 2010, using a worksheet. Complete the worksheet using the following additional information.
1. Office supplies at January 31 total $700.
2. Insurance coverage expires on October 31, 2010.
3. Annual depreciation on the equipment is $1,500.
4. Interest of $30 has accrued on the note payable.
5. Merchandise inventory at January 31 is $15,000.
Trial balance totals $196,820;
Adj. T/B totals $196,975
(d) Prepare a multiple-step income statement and a statement of owner's equity for January and a classified balance sheet at the end of January.
Net income $9,685
Total assets $126,315
(e) Prepare and post the adjusting and closing entries.
(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.
Post-closing T/B totals $127,940
Click here for the SOLUTION
Comprehensive Problem: Chapters 3, 4, 5, 6, and 7
Packard Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the periodic inventory system. All accounts have normal debit and credit balances.
General Ledger
Account Number Account Title January 1 Opening Balance
101 Cash $33,750
112 Accounts Receivable 13,000
115 Notes Receivable 39,000
120 Merchandise Inventory 20,000
125 Office Supplies 1,000
130 Prepaid Insurance 2,000
157 Equipment 6,450
158 Accumulated Depreciation 1,500
201 Accounts Payable 35,000
301 I. Packard, Capital 78,700
Accounts
Receivable Subsidiary Ledger
Accounts
Payable Subsidiary Ledger
Customer
January 1 Opening
Balance
Creditor
January 1 Opening
Balance
R. Draves $1,500 S. Kosko $ 9,000
B. Hachinski 7,500 R. Mikush 15,000
S. Ingles 4,000 D. Moreno 11,000
Jan. 3 Sell merchandise on account to B. Remy $3,100, invoice no. 510, and J. Fine $1,800, invoice no. 511.
5 Purchase merchandise on account from S. Yost $3,000 and D. Laux $2,700.
7 Receive checks for $4,000 from S. Ingles and $2,000 from B. Hachinski.
8 Pay freight on merchandise purchased $180.
9 Send checks to S. Kosko for $9,000 and D. Moreno for $11,000.
5 Purchase merchandise on account from S. Yost $3,000 and D. Laux $2,700.
7 Receive checks for $4,000 from S. Ingles and $2,000 from B. Hachinski.
8 Pay freight on merchandise purchased $180.
9 Send checks to S. Kosko for $9,000 and D. Moreno for $11,000.
9 Issue credit of $300 to J. Fine for merchandise returned.
10 Summary cash sales total $15,500.
11 Sell merchandise on account to R. Draves for $1,900, invoice no. 512, and to S. Ingles $900, invoice no. 513.
Post all entries to the subsidiary ledgers.
12 Pay rent of $1,000 for January.
13 Receive payment in full from B. Remy and J. Fine.
15 Withdraw $800 cash by I. Packard for personal use.
16 Purchase merchandise on account from D. Moreno for $15,000, from S. Kosko for $13,900, and from S. Yost for $1,500.
17 Pay $400 cash for office supplies.
18 Return $200 of merchandise to S. Kosko and receive credit.
20 Summary cash sales total $17,500.
21 Issue $15,000 note to R. Mikush in payment of balance due.
21 Receive payment in full from S. Ingles.
Post all entries to the subsidiary ledgers.
22 Sell merchandise on account to B. Remy for $3,700, invoice no. 514, and to R. Draves for $800, invoice no. 515.
23 Send checks to D. Moreno and S. Kosko in full payment.
25 Sell merchandise on account to B. Hachinski for $3,500, invoice no. 516, and to J. Fine for $6,100, invoice no. 517.
27 Purchase merchandise on account from D. Moreno for $12,500, from D. Laux for $1,200, and from S. Yost for $2,800.
28 Pay $200 cash for office supplies.
31 Summary cash sales total $22,920.
31 Pay sales salaries of $4,300 and office salaries of $3,600.
Hint: AP, S
Instructions
(a) Record the January transactions in the appropriate journal—sales, purchases, cash receipts, cash payments, and general.
(b) Post the journals to the general and subsidiary ledgers. Add and number new accounts in an orderly fashion as needed.
(c) Prepare a trial balance at January 31, 2010, using a worksheet. Complete the worksheet using the following additional information.
1. Office supplies at January 31 total $700.
2. Insurance coverage expires on October 31, 2010.
3. Annual depreciation on the equipment is $1,500.
4. Interest of $30 has accrued on the note payable.
5. Merchandise inventory at January 31 is $15,000.
Trial balance totals $196,820;
Adj. T/B totals $196,975
(d) Prepare a multiple-step income statement and a statement of owner's equity for January and a classified balance sheet at the end of January.
Net income $9,685
Total assets $126,315
(e) Prepare and post the adjusting and closing entries.
(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.
Post-closing T/B totals $127,940
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Sunday, August 7, 2011
Packard Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the periodic inventory system
ACCOUNTING
Comprehensive Problem: Chapters 3, 4, 5, 6, and 7
Packard Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the periodic inventory system. All accounts have normal debit and credit balances.
General Ledger
Account Number Account Title January 1 Opening Balance
101 Cash $33,750
112 Accounts Receivable 13,000
115 Notes Receivable 39,000
120 Merchandise Inventory 20,000
125 Office Supplies 1,000
130 Prepaid Insurance 2,000
157 Equipment 6,450
158 Accumulated Depreciation 1,500
201 Accounts Payable 35,000
301 I. Packard, Capital 78,700
Accounts
Receivable Subsidiary Ledger
Accounts
Payable Subsidiary Ledger
Customer
January 1 Opening
Balance
Creditor
January 1 Opening
Balance
R. Draves $1,500 S. Kosko $ 9,000
B. Hachinski 7,500 R. Mikush 15,000
S. Ingles 4,000 D. Moreno 11,000
Jan. 3 Sell merchandise on account to B. Remy $3,100, invoice no. 510, and J. Fine $1,800, invoice no. 511.
5 Purchase merchandise on account from S. Yost $3,000 and D. Laux $2,700.
7 Receive checks for $4,000 from S. Ingles and $2,000 from B. Hachinski.
8 Pay freight on merchandise purchased $180.
9 Send checks to S. Kosko for $9,000 and D. Moreno for $11,000.
5 Purchase merchandise on account from S. Yost $3,000 and D. Laux $2,700.
7 Receive checks for $4,000 from S. Ingles and $2,000 from B. Hachinski.
8 Pay freight on merchandise purchased $180.
9 Send checks to S. Kosko for $9,000 and D. Moreno for $11,000.
9 Issue credit of $300 to J. Fine for merchandise returned.
10 Summary cash sales total $15,500.
11 Sell merchandise on account to R. Draves for $1,900, invoice no. 512, and to S. Ingles $900, invoice no. 513.
Post all entries to the subsidiary ledgers.
12 Pay rent of $1,000 for January.
13 Receive payment in full from B. Remy and J. Fine.
15 Withdraw $800 cash by I. Packard for personal use.
16 Purchase merchandise on account from D. Moreno for $15,000, from S. Kosko for $13,900, and from S. Yost for $1,500.
17 Pay $400 cash for office supplies.
18 Return $200 of merchandise to S. Kosko and receive credit.
20 Summary cash sales total $17,500.
21 Issue $15,000 note to R. Mikush in payment of balance due.
21 Receive payment in full from S. Ingles.
Post all entries to the subsidiary ledgers.
22 Sell merchandise on account to B. Remy for $3,700, invoice no. 514, and to R. Draves for $800, invoice no. 515.
23 Send checks to D. Moreno and S. Kosko in full payment.
25 Sell merchandise on account to B. Hachinski for $3,500, invoice no. 516, and to J. Fine for $6,100, invoice no. 517.
27 Purchase merchandise on account from D. Moreno for $12,500, from D. Laux for $1,200, and from S. Yost for $2,800.
28 Pay $200 cash for office supplies.
31 Summary cash sales total $22,920.
31 Pay sales salaries of $4,300 and office salaries of $3,600.
Hint: AP, S
Instructions
(a) Record the January transactions in the appropriate journal—sales, purchases, cash receipts, cash payments, and general.
(b) Post the journals to the general and subsidiary ledgers. Add and number new accounts in an orderly fashion as needed.
(c) Prepare a trial balance at January 31, 2010, using a worksheet. Complete the worksheet using the following additional information.
1. Office supplies at January 31 total $700.
2. Insurance coverage expires on October 31, 2010.
3. Annual depreciation on the equipment is $1,500.
4. Interest of $30 has accrued on the note payable.
5. Merchandise inventory at January 31 is $15,000.
Trial balance totals $196,820;
Adj. T/B totals $196,975
(d) Prepare a multiple-step income statement and a statement of owner's equity for January and a classified balance sheet at the end of January.
Net income $9,685
Total assets $126,315
(e) Prepare and post the adjusting and closing entries.
(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.
Post-closing T/B totals $127,940
Click here for the SOLUTION
Comprehensive Problem: Chapters 3, 4, 5, 6, and 7
Packard Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the periodic inventory system. All accounts have normal debit and credit balances.
General Ledger
Account Number Account Title January 1 Opening Balance
101 Cash $33,750
112 Accounts Receivable 13,000
115 Notes Receivable 39,000
120 Merchandise Inventory 20,000
125 Office Supplies 1,000
130 Prepaid Insurance 2,000
157 Equipment 6,450
158 Accumulated Depreciation 1,500
201 Accounts Payable 35,000
301 I. Packard, Capital 78,700
Accounts
Receivable Subsidiary Ledger
Accounts
Payable Subsidiary Ledger
Customer
January 1 Opening
Balance
Creditor
January 1 Opening
Balance
R. Draves $1,500 S. Kosko $ 9,000
B. Hachinski 7,500 R. Mikush 15,000
S. Ingles 4,000 D. Moreno 11,000
Jan. 3 Sell merchandise on account to B. Remy $3,100, invoice no. 510, and J. Fine $1,800, invoice no. 511.
5 Purchase merchandise on account from S. Yost $3,000 and D. Laux $2,700.
7 Receive checks for $4,000 from S. Ingles and $2,000 from B. Hachinski.
8 Pay freight on merchandise purchased $180.
9 Send checks to S. Kosko for $9,000 and D. Moreno for $11,000.
5 Purchase merchandise on account from S. Yost $3,000 and D. Laux $2,700.
7 Receive checks for $4,000 from S. Ingles and $2,000 from B. Hachinski.
8 Pay freight on merchandise purchased $180.
9 Send checks to S. Kosko for $9,000 and D. Moreno for $11,000.
9 Issue credit of $300 to J. Fine for merchandise returned.
10 Summary cash sales total $15,500.
11 Sell merchandise on account to R. Draves for $1,900, invoice no. 512, and to S. Ingles $900, invoice no. 513.
Post all entries to the subsidiary ledgers.
12 Pay rent of $1,000 for January.
13 Receive payment in full from B. Remy and J. Fine.
15 Withdraw $800 cash by I. Packard for personal use.
16 Purchase merchandise on account from D. Moreno for $15,000, from S. Kosko for $13,900, and from S. Yost for $1,500.
17 Pay $400 cash for office supplies.
18 Return $200 of merchandise to S. Kosko and receive credit.
20 Summary cash sales total $17,500.
21 Issue $15,000 note to R. Mikush in payment of balance due.
21 Receive payment in full from S. Ingles.
Post all entries to the subsidiary ledgers.
22 Sell merchandise on account to B. Remy for $3,700, invoice no. 514, and to R. Draves for $800, invoice no. 515.
23 Send checks to D. Moreno and S. Kosko in full payment.
25 Sell merchandise on account to B. Hachinski for $3,500, invoice no. 516, and to J. Fine for $6,100, invoice no. 517.
27 Purchase merchandise on account from D. Moreno for $12,500, from D. Laux for $1,200, and from S. Yost for $2,800.
28 Pay $200 cash for office supplies.
31 Summary cash sales total $22,920.
31 Pay sales salaries of $4,300 and office salaries of $3,600.
Hint: AP, S
Instructions
(a) Record the January transactions in the appropriate journal—sales, purchases, cash receipts, cash payments, and general.
(b) Post the journals to the general and subsidiary ledgers. Add and number new accounts in an orderly fashion as needed.
(c) Prepare a trial balance at January 31, 2010, using a worksheet. Complete the worksheet using the following additional information.
1. Office supplies at January 31 total $700.
2. Insurance coverage expires on October 31, 2010.
3. Annual depreciation on the equipment is $1,500.
4. Interest of $30 has accrued on the note payable.
5. Merchandise inventory at January 31 is $15,000.
Trial balance totals $196,820;
Adj. T/B totals $196,975
(d) Prepare a multiple-step income statement and a statement of owner's equity for January and a classified balance sheet at the end of January.
Net income $9,685
Total assets $126,315
(e) Prepare and post the adjusting and closing entries.
(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.
Post-closing T/B totals $127,940
Click here for the SOLUTION
Monday, May 16, 2011
Comprehensive Problem 1 Accounting Cycle
The General's Favorite Fishing Hole
College Accounting
Heintz and Parry.
The General’s Favorite Fishing Hole
Comprehensive Problem 1, Period 1 The Accounting Cycle SOLUTION
Comprehensive Problem 1, Period 2 The Accounting Cycle SOLUTION
College Accounting
Heintz and Parry.
The General’s Favorite Fishing Hole
Comprehensive Problem 1, Period 1 The Accounting Cycle SOLUTION
Comprehensive Problem 1, Period 2 The Accounting Cycle SOLUTION
Comprehensive Problem 1 Period 1
The General's Favorite Fishing Hole - Period 1 (Month of April)
Click here for the SOLUTION
Comprehensive Problem. Heintz and Parry. College Accounting 19th Edition and 20th Edition
PERIOD 1
The Account Cycle
Bob night opened "The general's favorite Fishing Hole" The fishing camp is open from April through September and attracts many famous college basketball coaches during the off-season. Guests typically register for one week, arriving on Sunday afternoon and returning home the following Saturday afternoon. The registration fee includes room and board, the use of fishing boats, and professional instruction in fishing techniques. The chart of accounts for the camping operations is provided below.
Required:
1 Enter the above transactions in a general journal. Enter transactions from April 1-5 on pages 1, April 7-8 on page 2, April 21-29 and the first two entries for April 30 on page 3, and the remain entries for April 30 on page 4.
2 Post the entries to the general ledger.(if you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general leger accounts).
3 Prepare a trial balance on a work sheet.
4 Complete the work sheet.
5 Prepare the income statement.
6 Prepare the statement of owner's equity
7 Prepare the balance sheet.
8 Journalise the adjusting entries (page 5)
9 Post the adjusting entries to the general ledger.
10 Journalise the closing entries (page 5 and 6)
11 Post the closing entries to the general ledger.
12 Prepare a post-closing trial balance.
Click here for the SOLUTION
Click here for the SOLUTION
Comprehensive Problem. Heintz and Parry. College Accounting 19th Edition and 20th Edition
PERIOD 1
The Account Cycle
Bob night opened "The general's favorite Fishing Hole" The fishing camp is open from April through September and attracts many famous college basketball coaches during the off-season. Guests typically register for one week, arriving on Sunday afternoon and returning home the following Saturday afternoon. The registration fee includes room and board, the use of fishing boats, and professional instruction in fishing techniques. The chart of accounts for the camping operations is provided below.
Required:
1 Enter the above transactions in a general journal. Enter transactions from April 1-5 on pages 1, April 7-8 on page 2, April 21-29 and the first two entries for April 30 on page 3, and the remain entries for April 30 on page 4.
2 Post the entries to the general ledger.(if you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general leger accounts).
3 Prepare a trial balance on a work sheet.
4 Complete the work sheet.
5 Prepare the income statement.
6 Prepare the statement of owner's equity
7 Prepare the balance sheet.
8 Journalise the adjusting entries (page 5)
9 Post the adjusting entries to the general ledger.
10 Journalise the closing entries (page 5 and 6)
11 Post the closing entries to the general ledger.
12 Prepare a post-closing trial balance.
Click here for the SOLUTION
Comprehensive Problem 1: The Accounting Cycle
The General's Favorite Fishing Hole
College Accounting
Heintz and Parry.
The General’s Favorite Fishing Hole
Comprehensive Problem 1, Period 1 The Accounting Cycle SOLUTION
Comprehensive Problem 1, Period 2 The Accounting Cycle SOLUTION
College Accounting
Heintz and Parry.
The General’s Favorite Fishing Hole
Comprehensive Problem 1, Period 1 The Accounting Cycle SOLUTION
Comprehensive Problem 1, Period 2 The Accounting Cycle SOLUTION
Comprehensive Problem 1 Period 2 : The Accounting Cycle
The General's Favorite Fishing Hole - Period 2
Click here for the SOLUTION
Looking for Period 1 (month of April)? Click here.
Comprehensive Problem. Heintz and Parry. College Accounting 19th Edition and 20th Edition
The General’s Favorite Fishing Hole
PERIOD 2
The General’s Favorite Fishing Hole
Bob Night’s fishing camp, “The General’s Favorite Fishing Hole,” is in the second month of operation. The camp is open from April through September, which allows for many college basketball coaches to attend during their off-season. The camp’s attendees arrive on Sunday afternoon and return home the following Saturday afternoon. Each attendee pays a registration fee that includes room and board, the use of fishing boats, and professional instruction in fishing techniques. Based on suggestions from clients, Night plans to expand the facilities and provide additional services. The post-closing trial balance as of April 30, and chart of accounts are provided below.
The General’s Favorite Fishing Hole
The following transactions took place during May 20--
The General’s Favorite Fishing Hole
May
1 In order to provide snacks for guests on a 24 hour basis, Night signed a contract with Snack Attack. Snack Attack will install vending machines with food and drinks and pay a 10% commission on all sales. Estimated payments are made at the beginning of each month. Night received a check for $200, the estimated commission on sales for May.
2 Night purchased a surround sound system and big screen TV with a Digital Satellite System for the guest lounge. The surround sound system cost $3,600 and has an estimated useful life of 5 years, and no salvage value. The TV cost $8,000 and has an estimated useful life of 8 years, and a salvage value of $800. Night paid cash for both items.
2 Paid for May’s programming on the new Digital Satellite System, $125.
3 Night's office manager returned $100 worth of office supplies to Gordon Office Supply. Night received a $100 reduction in our account with Gordon.
3 Deposited registration fees, $52,700
3 Paid rent for lodge and campgrounds for the month of May, $40,000.
3 In preparation for the purchase of a nearby campground, Night invested an additional $600,000.
4 Paid Gordon Office Supply on account, $400.
4 Purchased the assets of a competing business and paid cash for the following: land $100,000, lodge $530,000 and fishing boats $9,000. The lodge has a remaining useful life of 50 years and a $50,000 salvage value. The boats have remaining lives of 5 years and zero salvage value.
5 Paid May's insurance premium for the new camp, $1,000
5 Purchased food supplies from Acme Super Market on account, $22,950.
5 Purchased office supplies from Gordon Office Supplies on account, $1,200.
7 Night paid $40 each for one-year subscriptions to Fishing Illustrated, Fishing Unlimited, and Fish Master.
10 Deposited registration fees, $62,750
13 Paid wages to fishing guides, $30,000.
14 A guest because ill and was unable to stay for the entire week. A refund was issued in the amount of $1,000.
17 Deposited registration fees, $63,000.
19 Purchased food supplies from Acme Super Market on account, $18,400.
21 Deposited registration fees, $63,400
23 Paid $2,500 for advertising spots on National Sports Talk Radio
25 Paid repair fee for damaged boat, $ 850.
27 Paid wages to fishing guides, $30,000.
28 Paid $1,800 for advertising spots on billboards in the mid-west.
29 Purchased food supplies from Acme Super Market on account, $14,325.
30 Paid utilities bill, $3,300
30 Paid telephone bill, $1,800.
30 Paid Acme Super Market on account, $47,350.
31 Bob Night withdrew cash for personal use, $7,500.
Adjustment information at the end of May is provided below.
a. Total vending machine sales were $2,300 for the month of May.
b. Straight-line depreciation is used for the 10 boats purchased on April 2nd for $60,000. The useful life for these assets is 5 years and there is no salvage value. A full month's depreciation was taken in April on these boats.
c. Straight line depreciation is used for the 2 boats purchased in May.
d. Straight line depreciation is used to depreciate the surround sound system.
e. Straight line depreciation is used to depreciate the big screen TV.
f. Straight line depreciation is used for the building purchased in May.
g. On April 2nd Night paid $9,000 for insurance during the six-month camping season. May's portion of this premium was used up during this month.
h. Night received his May issues of Fishing Illustrated, Fishing Unlimited, and Fish Master.
i. Office supplies remaining on hand, $150.
j. Food supplies remaining on hand, $5,925.
k. Wages earned, but not yet paid, at the end of May, $6,000.
The General’s Favorite Fishing Hole
REQUIRED
1. Enter the above transactions in a general journal. Enter transactions from May 1-4 on page 5, May 5-28 on page 6, and the remaining entries on page 7.
2. Post the entries to the general ledger. (If you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general ledger accounts.)
3. Prepare a trial balance on a work sheet.
4. Complete the work sheet.
5. Prepare the income statement.
6. Prepare the statement of owner’s equity
7. Prepare the balance sheet.
8. Journalize the adjusting entries on page 8 of the general journal.
9. Post the adjusting entries to the general ledger.
10. Journalize the closing entries on page 9 of the general journal.
11. Post the closing entries to the general ledger.
12. Prepare a post-closing trial balance.
Click here for the SOLUTION
Click here for the SOLUTION
Looking for Period 1 (month of April)? Click here.
Comprehensive Problem. Heintz and Parry. College Accounting 19th Edition and 20th Edition
The General’s Favorite Fishing Hole
PERIOD 2
The General’s Favorite Fishing Hole
Bob Night’s fishing camp, “The General’s Favorite Fishing Hole,” is in the second month of operation. The camp is open from April through September, which allows for many college basketball coaches to attend during their off-season. The camp’s attendees arrive on Sunday afternoon and return home the following Saturday afternoon. Each attendee pays a registration fee that includes room and board, the use of fishing boats, and professional instruction in fishing techniques. Based on suggestions from clients, Night plans to expand the facilities and provide additional services. The post-closing trial balance as of April 30, and chart of accounts are provided below.
The General’s Favorite Fishing Hole
The following transactions took place during May 20--
The General’s Favorite Fishing Hole
May
1 In order to provide snacks for guests on a 24 hour basis, Night signed a contract with Snack Attack. Snack Attack will install vending machines with food and drinks and pay a 10% commission on all sales. Estimated payments are made at the beginning of each month. Night received a check for $200, the estimated commission on sales for May.
2 Night purchased a surround sound system and big screen TV with a Digital Satellite System for the guest lounge. The surround sound system cost $3,600 and has an estimated useful life of 5 years, and no salvage value. The TV cost $8,000 and has an estimated useful life of 8 years, and a salvage value of $800. Night paid cash for both items.
2 Paid for May’s programming on the new Digital Satellite System, $125.
3 Night's office manager returned $100 worth of office supplies to Gordon Office Supply. Night received a $100 reduction in our account with Gordon.
3 Deposited registration fees, $52,700
3 Paid rent for lodge and campgrounds for the month of May, $40,000.
3 In preparation for the purchase of a nearby campground, Night invested an additional $600,000.
4 Paid Gordon Office Supply on account, $400.
4 Purchased the assets of a competing business and paid cash for the following: land $100,000, lodge $530,000 and fishing boats $9,000. The lodge has a remaining useful life of 50 years and a $50,000 salvage value. The boats have remaining lives of 5 years and zero salvage value.
5 Paid May's insurance premium for the new camp, $1,000
5 Purchased food supplies from Acme Super Market on account, $22,950.
5 Purchased office supplies from Gordon Office Supplies on account, $1,200.
7 Night paid $40 each for one-year subscriptions to Fishing Illustrated, Fishing Unlimited, and Fish Master.
10 Deposited registration fees, $62,750
13 Paid wages to fishing guides, $30,000.
14 A guest because ill and was unable to stay for the entire week. A refund was issued in the amount of $1,000.
17 Deposited registration fees, $63,000.
19 Purchased food supplies from Acme Super Market on account, $18,400.
21 Deposited registration fees, $63,400
23 Paid $2,500 for advertising spots on National Sports Talk Radio
25 Paid repair fee for damaged boat, $ 850.
27 Paid wages to fishing guides, $30,000.
28 Paid $1,800 for advertising spots on billboards in the mid-west.
29 Purchased food supplies from Acme Super Market on account, $14,325.
30 Paid utilities bill, $3,300
30 Paid telephone bill, $1,800.
30 Paid Acme Super Market on account, $47,350.
31 Bob Night withdrew cash for personal use, $7,500.
Adjustment information at the end of May is provided below.
a. Total vending machine sales were $2,300 for the month of May.
b. Straight-line depreciation is used for the 10 boats purchased on April 2nd for $60,000. The useful life for these assets is 5 years and there is no salvage value. A full month's depreciation was taken in April on these boats.
c. Straight line depreciation is used for the 2 boats purchased in May.
d. Straight line depreciation is used to depreciate the surround sound system.
e. Straight line depreciation is used to depreciate the big screen TV.
f. Straight line depreciation is used for the building purchased in May.
g. On April 2nd Night paid $9,000 for insurance during the six-month camping season. May's portion of this premium was used up during this month.
h. Night received his May issues of Fishing Illustrated, Fishing Unlimited, and Fish Master.
i. Office supplies remaining on hand, $150.
j. Food supplies remaining on hand, $5,925.
k. Wages earned, but not yet paid, at the end of May, $6,000.
The General’s Favorite Fishing Hole
REQUIRED
1. Enter the above transactions in a general journal. Enter transactions from May 1-4 on page 5, May 5-28 on page 6, and the remaining entries on page 7.
2. Post the entries to the general ledger. (If you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general ledger accounts.)
3. Prepare a trial balance on a work sheet.
4. Complete the work sheet.
5. Prepare the income statement.
6. Prepare the statement of owner’s equity
7. Prepare the balance sheet.
8. Journalize the adjusting entries on page 8 of the general journal.
9. Post the adjusting entries to the general ledger.
10. Journalize the closing entries on page 9 of the general journal.
11. Post the closing entries to the general ledger.
12. Prepare a post-closing trial balance.
Click here for the SOLUTION
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