WileyPLUS Assignment: Test

Exercise 129

The following data relate to the accounts of Edmiston Company.

a.		Unpaid salaries and wages at year end amount to $750.
b.		Edmiston Company owns bonds of another corporation that pay annual interest of $800. These bonds were purchased on April 1, 2017, and the next interest payment will be received on April 1, 2018.
c.		A two-year insurance policy was purchased on June 1, 2017. The $1,200 insurance premium was paid on that date and was debited to Prepaid Insurance.
d.		Service Revenue was credited for $900 on June 1, 2017. The amount represents a one-year advance payment for services to be performed by Edminston Company through May 31, 2018.
e.		The Supplies account shows a balance of $2,500 on December 31, 2017. A physical count of the supplies on hand at this date reveals a total of $1,000 available.

Prepare the necessary adjusting journal entries indicated by each item for the year ended December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
a.
b.
c.
d.
e.

 

 

 

 

 

 

 

 

Exercise 132

The adjusted trial balance of Ryan Financial Planners appears below.

RYAN FINANCIAL PLANNERS Adjusted Trial Balance December 31, 2017
		Debit		Credit
Cash			$2,940
Accounts Receivable			2,200
Supplies			1,660
Equipment			15,700
Accumulated Depreciation—Equipment						$3,925
Accounts Payable						3,260
Unearned Service Revenue						4,155
Common Stock						10,000
Retained Earnings						4,300
Dividends			1,500
Service Revenue						4,250
Supplies Expense			600
Depreciation Expense			2,360
Rent Expense			2,930
			$29,890			$29,890

Using the information from the adjusted trial balance, you are to prepare for the month ending December 31: 1. An income statement. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

RYAN FINANCIAL PLANNERS Income Statement
		$
	$
		$

2. A retained earnings statement.

RYAN FINANCIAL PLANNERS Retained Earnings Statement
				$
:
		$
				$

3. A balance sheet. (List Assets in order of liquidity.)

RYAN FINANCIAL PLANNERS Balance Sheet
Assets
				$
		$
:
				$
Liabilities and Stockholders’ Equity
		$
				$
				$

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Brief Exercise 3-2

Indigo Repair Shop had the following transactions during the first month of business as a proprietorship. Journalize the transactions. (If no entry is required, select “No entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Aug. 2		Invested $13,080 cash and $2,700 of equipment in the business.
7		Purchased supplies on account for $480. (Debit asset account.)
12		Performed services for clients, for which $1,365 was collected in cash and $731 was billed to the clients.
15		Paid August rent $548.
19		Counted supplies and determined that only $297 of the supplies purchased on August 7 are still on hand.

 

Date	Account Titles and Explanation	Debit	Credit
Aug. 2
Aug. 12

 

 

 

 

 

 

 

 

 

 

Brief Exercise 3-8

Included in Bonita Company’s December 31 trial balance is a note receivable of $11,280. The note is a 4-month, 10% note dated October 1. Prepare Bonita’s December 31 adjusting entry to record $282 of accrued interest, and the February 1 journal entry to record receipt of $11,656 from the borrower. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 4-3

Bramble Corporation had net sales of $2,414,200 and interest revenue of $35,800 during 2017. Expenses for 2017 were cost of goods sold $1,459,300, administrative expenses $221,600, selling expenses $284,400, and interest expense $54,200. Bramble’s tax rate is 30%. The corporation had 103,500 shares of common stock authorized and 74,490 shares issued and outstanding during 2017. Prepare a condensed multiple-step income statement for Bramble Corporation. (Round earnings per share to 2 decimal places, e.g. 1.48.)

BRAMBLE CORPORATION Income Statement
		$
	$
		$
		$

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Exercise 4-2

Presented below is information related to Indigo Company at December 31, 2017, the end of its first year of operations.

Sales revenue		$317,050
Cost of goods sold		144,760
Selling and administrative expenses		49,700
Gain on sale of plant assets		28,090
Unrealized gain on available-for-sale investments		9,890
Interest expense		6,250
Loss on discontinued operations		12,880
Dividends declared and paid		4,760

Compute the following:

(a)		Income from operations		$
(b)		Net income		$
(c)		Comprehensive income		$
(d)		Retained earnings balance at December 31, 2017		$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 4-7

Riverbed Company has recorded bad debt expense in the past at a rate of 1.5% of accounts receivable, based on an aging analysis. In 2017, Riverbed decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $385,800 instead of $301,600. In 2017, bad debt expense will be $132,100 instead of $94,390. If Riverbed’s tax rate is 25%, what amount should it report as the cumulative effect of changing the estimated bad debt rate? (Do not leave any answer field blank. Enter 0 for amounts.)

The cumulative effect of changing the estimated bad debt rate

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise 104

Presented below are changes in the account balances of Wenn Company during the year, except for retained earnings.

		Increase (Decrease)				Increase (Decrease)
Cash			$29,430			Accounts payable			$33,430
Accounts receivable (net)			(17,960)			Bonds payable			(18,300)
Inventory			50,740			Common stock			60,950
Plant assets (net)			47,790			Paid-in capital			16,290

The only entries in Retained Earnings were for net income and a dividend declaration of $16,980. (a) Compute the net income for the current year.

Net income

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 13

The Nash, Inc. sold 10,830 season tickets at $2,130 each. By December 31, 2017, 16 of the 40 home games had been played. What amount should be reported as a current liability at December 31, 2017?

Current liability

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 5-2

Indigo Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2017: Cash $8,410, Land $49,100, Patents $16,300, Accounts Receivable $92,050, Prepaid Insurance $6,090, Inventory $35,100, Allowance for Doubtful Accounts $4,880, and Equity Investments (to be sold in the next quarter) $14,620. Prepare the current assets section of the balance sheet. (List Current Assets in order of liquidity.)

INDIGO CORPORATION Balance Sheet (Partial)
					$
			$
:
					$

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Brief Exercise 5-8

Included in Grouper Company’s December 31, 2017, trial balance are the following accounts: Accounts Payable $221,400, Pension Liability $380,600, Discount on Bonds Payable $31,100, Unearned Rent Revenue $43,600, Bonds Payable $406,600, Salaries and Wages Payable $29,000, Interest Payable $13,460, and Income Taxes Payable $30,460. Prepare the current liabilities section of the balance sheet.

GROUPER COMPANY Balance Sheet (Partial)
			$
			$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 5-9

Included in Marigold Company’s December 31, 2017, trial balance are the following accounts: Accounts Payable $247,900, Pension Liability $380,200, Discount on Bonds Payable $32,900, Unearned Rent Revenue $49,900, Bonds Payable $403,900, Salaries and Wages Payable $33,100, Interest Payable $14,470, and Income Taxes Payable $37,500. Prepare the long-term liabilities section of the balance sheet.

MARIGOLD COMPANY Balance Sheet (Partial)
	$
:			$
			$

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Brief Exercise 5-13

Teal Company reported 2017 net income of $157,800. During 2017, accounts receivable increased by $13,770 and accounts payable increased by $9,719. Depreciation expense was $42,000. Prepare the cash flows from operating activities section of the statement of cash flows. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

TEAL COMPANY Cash Flow Statement
		$
Adjustments to reconcile net income to
	$
		$

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 5-14

Blossom Corporation engaged in the following cash transactions during 2017.

Sale of land and building		$196,900
Purchase of treasury stock		49,100
Purchase of land		44,100
Payment of cash dividend		90,000
Purchase of equipment		56,300
Issuance of common stock		155,200
Retirement of bonds		103,700

Compute the net cash provided (used) by investing activities. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

BLOSSOM CORPORATION Statement of Cash Flows (Partial)
		$
		$

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 5-15

Windsor Corporation engaged in the following cash transactions during 2017.

Sale of land and building		$187,370
Purchase of treasury stock		40,400
Purchase of land		44,700
Payment of cash dividend		93,500
Purchase of equipment		57,900
Issuance of common stock		157,000
Retirement of bonds		102,100

Compute the net cash used (provided) by financing activities. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

WINDSOR CORPORATION Statement of Cash Flows (Partial)
		$
		$

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 6-2

Adams Bautista needs $26,700 in 3 years. Click here to view factor tables What amount must he invest today if his investment earns 12% compounded annually? What amount must he invest if his investment earns 12% annual interest compounded quarterly? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)

Investment at 12% annual interest		$
Investment at 12% annual interest, compounded quarterly		$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 6-6

Tony Madison needs $252,800 in 10 years. Click here to view factor tables How much must he invest at the end of each year, at 12% interest, to meet his needs? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)

Investment amount

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 6-15

Kingbird Inc. issues $2,069,100 of 9% bonds due in 10 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 10%. Click here to view factor tables What amount will Kingbird receive when it issues the bonds? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)

Amount received by Kingbird when bonds were issued

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise 6-12

The Nash Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to do so, Nash has decided to locate a new factory in the Panama City area. Nash will either buy or lease a site depending upon which is more advantageous. The site location committee has narrowed down the available sites to the following three very similar buildings that will meet their needs. Building A: Purchase for a cash price of $611,800, useful life 26 years. Building B: Lease for 26 years with annual lease payments of $70,900 being made at the beginning of the year. Building C: Purchase for $655,200 cash. This building is larger than needed; however, the excess space can be sublet for 26 years at a net annual rental of $6,230. Rental payments will be received at the end of each year. The Nash Inc. has no aversion to being a landlord. Click here to view factor tables In which building would you recommend that The Nash Inc. locate, assuming a 12% cost of funds? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

		Net Present Value
Building A		$
Building B		$
Building C		$

 

The Nash Inc. should locate itself in

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 18-2

On May 10, 2017, Stellar Co. enters into a contract to deliver a product to Greig Inc. on June 15, 2017. Greig agrees to pay the full contract price of $1,880 on July 15, 2017. The cost of the goods is $1,180. Stellar delivers the product to Greig on June 15, 2017, and receives payment on July 15, 2017. Prepare the journal entries for Stellar related to this contract. Either party may terminate the contract without compensation until one of the parties performs. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
	(To record contract entered into)
	(To record sales)
	(To record cost of goods sold)
	(To record payment received)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 18-8 Presented below are three revenue recognition situations. (a)   Groupo sells goods to MTN for $908,000, payment due at delivery. (b)   Groupo sells goods on account to Grifols for $797,000, payment due in 30 days. (c)   Groupo sells goods to Magnus for $499,000, payment due in two installments, the first installment payable in 18 months and the second payment due 6 months later. The present value of the future payments is $462,200. Indicate the transaction price for each of these situations and when revenue will be recognized.     (a)   (b)   (c) Transaction Price   $   $   $ Revenue will be recognized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 18-10

On March 1, 2017, Vaughn Company sold goods to Goosen Inc. for $600,000 in exchange for a 5-year, zero-interest-bearing note in the face amount of $923,174 (an inputed rate of 9%). The goods have an inventory cost on Vaughn’s books of $368,000. (a) Prepare the journal entries for Vaughn on March 1, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Mar. 1, 2017
	(To record sales)
	(To record cost of goods sold)

(b) Prepare the journal entries for Vaughn on December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 18-13

On July 10, 2017, Novak Music sold CDs to retailers on account and recorded sales revenue of $740,000 (cost $621,600). Novak grants the right to return CDs that do not sell in 3 months following delivery. Past experience indicates that the normal return rate is 15%. By October 11, 2017, retailers returned CDs to Novak and were granted credit of $85,500. Prepare Novak’s journal entries to record (a) the sale on July 10, 2017, and (b) $85,500 of returns on October 11, 2017, and on October 31, 2017. Assume that Novak prepares financial statement on October 31, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.)

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	Jul. 10, 2017
		(To record sales)
		(To record cost of goods sold)
(b)	Oct. 11, 2017
		(To record sales returns)
		(To record cost of goods returned)
	Oct. 31, 2017

 

 

 

 

 

 

 

 

 

Question 17

Classify the following items as (1) operating, (2) investing, (3) financing, or (4) significant noncash investing and financing activities, using the direct method.

(a)		Cash payments to employees.
(b)		Redemption of bonds payable.
(c)		Sale of building at book value.
(d)		Cash payments to suppliers.
(e)		Exchange of equipment for furniture.
(f)		Issuance of preferred stock.
(g)		Cash received from customers.
(h)		Purchase of treasury stock.
(i)		Issuance of bonds for land.
(j)		Payment of dividends.
(k)		Purchase of equipment.
(l)		Cash payments for operating expenses.

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 23-1 Novak Corporation is preparing its 2017 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2017 statement of cash flows. Code Letter   Effect A   Added to net income in the operating section D   Deducted from net income in the operating section R-I   Cash receipt in investing section P-I   Cash payment in investing section R-F   Cash receipt in financing section P-F   Cash payment in financing section N   Noncash investing and financing activity   (a)   Purchase of land and building.   (b)   Decrease in accounts receivable.   (c)   Issuance of stock.   (d)   Depreciation expense.   (e)   Sale of land at book value.   (f)   Sale of land at a gain.   (g)   Payment of dividends.   (h)   Increase in accounts receivable.   (i)   Purchase of available-for-sale debt investment.   (j)   Increase in accounts payable.   (k)   Decrease in accounts payable.   (l)   Loan from bank by signing note.   (m)   Purchase of equipment using a note.   (n)   Increase in inventory.   (o)   Issuance of bonds.   (p)   Redemption of bonds payable.   (q)   Sale of equipment at a loss.   (r)   Purchase of treasury stock.

 

 

 

 

 

 

 

Brief Exercise 23-7

Sunland Corporation had January 1 and December 31 balances as follows.

		1/1/17		12/31/17
Inventory		$85,000		$101,000
Accounts payable		61,000		67,000

For 2017, cost of goods sold was $411,000. Compute Sunland’s 2017 cash payments to suppliers.

Cash payments to suppliers

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 23-8

In 2017, Marigold Corporation had net cash provided by operating activities of $515,000, net cash used by investing activities of $893,000, and net cash provided by financing activities of $542,000. At January 1, 2017, the cash balance was $327,000. Compute December 31, 2017, cash.

Cash, December 31, 2017

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brief Exercise 23-9

Metlock Corporation had the following 2017 income statement.

Revenues		$102,000
Expenses		65,000
		$37,000

In 2017, Metlock had the following activity in selected accounts.

Accounts Receivable
1/1/17 22,000 Revenues 102,000 12/31/17 25,000	Write-offs 1,000 Collections 98,000
Allowance for Doubtful Accounts
Write-offs 1,000	1/1/17 1,300 Bad debt expense 2,000 12/31/17 2,300

(a) Prepare Metlock’s cash flows from operating activities section of the statement of cash flows using the direct method.

Metlock Corporation Statement of Cash Flows-Direct Method (Partial)
		$
		$

(b) Prepare Metlock’s cash flows from operating activities section of the statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Metlock Corporation Statement of Cash Flows-Indirect Method (Partial)
		$
		$

 

 

 

Brief Exercise 24-8

Answer each of the questions in the following unrelated situations. (a) The current ratio of a company is 5:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $485,000, what is the amount of current liabilities?

Current Liabilities

$

(b) A company had an average inventory last year of $212,000 and its inventory turnover was 5. If sales volume and unit cost remain the same this year as last and inventory turnover is 8 this year, what will average inventory have to be during the current year? (Round answer to 0 decimal places, e.g. 125.)

Average Inventory

$

(c) A company has current assets of $91,000 (of which $44,000 is inventory and prepaid items) and current liabilities of $44,000. What is the current ratio? What is the acid-test ratio? If the company borrows $16,000 cash from a bank on a 120-day loan, what will its current ratio be? What will the acid-test ratio be? (Round answers to 2 decimal places, e.g. 2.50.)

Current Ratio			:1
Acid Test Ratio			:1
New Current Ratio			:1
New Acid Test Ratio			:1

 

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