(Comprehensive Problem 1) Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2010

Comprehensive Problem 1
Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2010. The accounting cycle for Kelly Consulting for April, including financial statements was illustrated on page 157-168. During May, Kelly consulting entered the following transactions:

Check Figure: 8. Net Income $27,665

May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $2,500.
5. Received cash from clients on account, $1,750.
9. Paid cash for a newspaper advertisement, $300.
13. Paid office station company for part of the debt incurred on april 5, $400.
15. Recorded services provided on account for the period May 1-15, $6,100.
16. paid part-time receptionist for two weeks' salary including the amount owed on April 30, $750.
17. Recorded cash from cash clients for fees earned during the period May 1-16, $8,200.
20. Purchased supplies on account, $400
21. Recorded services provided on account for the period May 16-20, $3,900.
25. Recorded cash from cash clients for fees earned for the period May 17-23, $5,100.
27. Received cash from clients on account, $9,500.
28. Paid part-time receptionist for two weeks salary, $750.
30. Paid telephone bill for May, $120.
31. Paid electricity bill for May $290.
31. Recorded cash from cash clients for fees earned for the period May 26-31, $3,875.
31. Recorded services provided on account for the remainder of May, $3,200.
31. Kelly withdrew $8,000 for personal use.

Instructions:
1. The chart of accounts for Kelly Consulting is shown on page 158, and the post-closing trial balance as of April 30, 2010 is shown on page 166. For each account in the post-closing trial balance, enter the balance in the appropriate balance column of a four column account. Date the balances May 1, 2010, and place a check mark in the posting reference column. Journalize each of the May transactions in a two column journal using Kelly Consulting's chart of accounts. (do not insert the account numbers in the journal at this time.)
2. Post the journal to a ledger of four-column accounts.
3. Prepare an unadjusted trail balance
4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts 5 and 6.
a. Insurance expired during May is $300.
b. Supplies on hand on May 31 are $600.
c. Depreciation of office equipment for May is $330.
d. Accrued receptionist salary on May 31 is $240.
e. Rent expired during May is $1,600.
f. Unearned fees on May 31 are $2,000
5. Enter the unadjusted trial balance on an end-of-period spreadsheet (worksheet) and complete the spreadsheet.
6. Journalize and post the adjusting entries.
7.Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner's equity, and a balance sheet.
9. Prepare and post the closing entries. (Income summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.
10. Prepare a post-closing trial balance

Click here for the solution: (Comprehensive Problem 1) Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2010

During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation

Problem 12-7 Foreign Currency Risk

During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation, was distressed to notice the company’s transaction loss had been steadily increasing each month. HAL is a publicly held manufacturer of “PC clone” personal computers. Like most manufacturers of its kind, HAL does not manufacture domestically but utilizes lower cost offshore suppliers for components and subcontractors for assembly. As it is HAL’s policy to denominate foreign contracts in U.S. dollars whenever possible, the increase in transaction losses was particularly puzzling. Subsequent conversations with HAL’s controller, Tom Stewart, revealed all new contracts had been denominated in foreign currencies (primarily the South Korean won and Taiwanese dollar) in order to obtain more favorable purchase terms. Further, Mr. Stewart believed that the U.S. dollar would strengthen due to it being an election year. Since these contracts specify delivery and payment at various dates over the next 12 months, tremendous potential for exposure exists for the company if the dollar continues to decline against the major foreign currencies.

Required:
A. Mr. Stewart executed all new foreign contracts in foreign currencies in the belief it would help the company. (1) Do you think he was justified in his actions given the company policy? (2) On what basis did you decide if the controller was justified or not? (3) Was the loss a factor in your decision? Is this appropriate?
B. A substantial amount of foreign denominated contracts already exist for goods and services not yet received. (1) What actions may HAL take to minimize potential losses? (2) What are the advantages and disadvantages of these actions? (3) What implication does each of these scenarios have for financial statement disclosure?
C. Assume that you are Ms. Bell, and you are concerned about how the Board of Directors and the stockholders may react. Additionally, you are about to purchase a new home and are planning to sell some HAL stock for the down payment. (1) After carefully considering all of your options, what action do you decide to take? (2) Did concern over the Board, stockholders, or HAL’s stock price enter into your decision? Why or why not?

Click here for the solution: During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation

For the past several years, Emily Page has operated a part-time consulting business from her home

PR 4-6A For the past several years, Emily Page has operated a part-time consulting business from her home. As of June 1, 2010, Emily decided to move to rented quarters and to operate the business, which was to be known as Bottom Line Consulting, on a full-time basis. Bottom Line Consulting entered into the following transactions during June:

June 1: The following assets were received from Emily Page: cash, $20,000; accounts receivable, $4,500, supplies, $2,000; and office equipment, $11,500. There were no liabilities received.
1. Paid three months rent on a lease rental contract, $6,000.
2. Paid the premiums on property casualty insurance policies, $2,400.

AND SO ON

Check: 8. Net Income $16,455

Click here for the solution: For the past several years, Emily Page has operated a part-time consulting business from her home

Linda Ace started her own consulting firm, Modine Consulting, Inc. on May 1, 2008

P3-1B Linda Ace started her own consulting firm, Modine Consulting, Inc. on May 1, 2008. The trial balance at May 31 is as follows.

MODINE CONSULTING, INC.
Trial Balance
May 31, 2008
Account
Number Debit Credit
101 Cash $ 7,700
112 Accounts Receivable 4,000
126 Supplies 1,500
130 Prepaid Insurance 4,800
149 Office Furniture 9,600
201 Accounts Payable $ 3,500
209 Unearned Service Revenue 3,000
311 Common Stock 19,100
400 Service Revenue 6,000
726 Salaries Expense 3,000
729 Rent Expense 1,000
$31,600 $31,600

In addition to those accounts listed on the trial balance, the chart of accounts for Modine Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Office Furniture, No. 212 Salaries Payable, No. 229 Travel Payable, No. 631 Supplies Expense,No. 717 Depreciation Expense,No. 722 Insurance Expense, and No. 736 Travel Expense.

Other data:
1. $500 of supplies have been used during the month.
2. Travel expense incurred but not paid on May 31, 2008, $200.
3. The insurance policy is for 2 years.
4. $1,000 of the balance in the unearned service revenue account remains unearned at the end of the month.
5. May 31 is a Wednesday, and employees are paid on Fridays. Modine Consulting has two employees, who are paid $700 each for a 5-day work week.
6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $160 per month for 60 months.
7. Invoices representing $1,000 of services performed during the month have not been recorded as of May 31.

Instructions
(a) Prepare the adjusting entries for the month of May. Use J4 as the page number for your journal.
(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column.
(c) Prepare an adjusted trial balance at May 31, 2008.

Check: (c) Adj. trial balance $33,800


Click here for the solution: Linda Ace started her own consulting firm, Modine Consulting, Inc. on May 1, 2008

Mindy Feldkamp and her two colleagues, Oscar Lopez and Lori Melton, are personal trainers at an upscale health spa/resort in Tampa, Florida

pg 724-725

1. Mindy Feldkamp and her two colleagues, Oscar Lopez and Lori Melton, are personal trainers at an upscale health spa/resort in Tampa, Florida. They want to start a health club that specializes in health plans for people in the 50 + age range. The growing population in this age range and strong consumer interest in the health benefits of physical activity have convinced them they can profitably operate their own club. In addition to many other decisions, they need to determine what type of business organization they want. Oscar believes there are more advantages to the corporate form than a partnership, but he hasn't yet convinced Mindy and Lori. They have come to you, a small business consulting specialist, seeking information and advice regarding the choice of starting a partnership versus a corporation.

a) Prepare a memo (dated May 26, 2009) that describes the advantages and disadvantages of both partnerships and corporations. Advise Mindy, Oscar and Lori regarding which organizational form you believe would better serve their purposes. Make sure to include reasons supporting your advice.

AND SO ON

All Parts 1 to 5


Click here for the solution: Mindy Feldkamp and her two colleagues, Oscar Lopez and Lori Melton,

For the past several years, Sara Keith has operated a part-time consulting business from her home

ACC 1800 – Accounting Procedures
Fall 2011 - Comprehensive Problem

For the past several years, Sara Keith has operated a part-time consulting business from her home. As of June 1, 2011, Sara decided to move to rented quarters and to operate the business, which was to be known as S&K Consulting, on a full-time basis. S&K Consulting entered into the following transactions during June:

June 1 The following assets were received from Sara Keith: cash, $20,000; accounts receivable, $4,500; supplies, $2,000; and office equipment, $11,500. There were no liabilities received.
June 1 Paid three month’s rent on a lease contract, $6,000.
June 2 Paid the annual premiums on property and casualty insurance policies, $2,400.
June 4 Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $2,700.
June 5 Purchased additional office equipment on account, $3,500.
June 6 Received cash from clients on account, $3,000.
June 10 Paid cash for a newspaper advertisement, $200.
June 12 Paid for part of the debt incurred on June 5, $750.
June 12 Recorded services provided on account for the period June 1-12, $5,100.
June 14 Paid part-time receptionist for two weeks’ salary, $1,100.
June 17 Recorded cash from clients for fees earned for the period June 1-16, $6,500.
June 18 Paid cash for supplies, $750.
June 20 Recorded services provided on account for the period June 13-20, $3,100.
June 24 Recorded cash from cash clients for fees earned for the period June 17-24, $5,150.
June 26 Received cash from clients on account, $6,900.
June 27 Paid part-time receptionist for two weeks’ salary, $1,100.
June 29 Paid telephone bill for June, $150.
June 29 Paid electricity bill for June, $400.
June 30 Recorded cash from cash clients for fees earned for the period June 25-30, $2,500.
June 30 Recorded services provided on account for the remainder of June, $1,100.
June 30 Sara withdrew $5,000 for personal use.

Instructions:
1. Journalize each transaction in a two-column journal, referring to the following chart of accounts in selecting the accounts to be debited and credited.
11 Cash 31 Sara Keith, Capital
12 Accounts Receivable 32 Sara Keith, Withdrawals
14 Supplies 41 Service Revenue
15 Prepaid Rent 51 Salary Expense
16 Prepaid Insurance 52 Rent Expense
18 Office Equipment 53 Supplies Expense
19 Accumulated Depreciation 54 Depreciation Expense
21 Accounts Payable 55 Insurance Expense
22 Salaries Payable 59 Miscellaneous Expense
23 Unearned Service Revenue
2. Open T-accounts and post the journal entries to the T-accounts.
3. Complete a worksheet at end of June using the following adjustment data:
a. Insurance expired during June is $200.
b. Supplies on hand on June 30 are $650.
c. Depreciation of office equipment for June is $250.
d. Accrued receptionist salary on June 30 is $220.
e. Rent expired during June is $2,000.
f. Unearned service revenue on June 30 is $1,875.
4. Prepare an income statement, a statement of owner’s equity and a balance sheet.
5. Journalize and post the adjusting entries.
6. Journalize and post the closing entries.
7. Compute final balances in each T-account.
8. Prepare the post-closing trial balance.


Click here for the solution: For the past several years, Sara Keith has operated a part-time consulting business from her home

Margaret started her own business in the current year and will report a profit for her first year

Margaret started her own business in the current year and will report a profit for her first year. Her results of operations are as follows:

Gross income $50,000
Travel 1,000
Transportation 6,173 miles, using standard mileage method
Entertainment in" total 4,000
Seven gifts at $50 each 350
Rent and utilities for apartment in total 10,000
(20% is used for a home office)

What is the net income Margaret should show on her Schedule C? Show the calculation of her taxable business income.


Click here for the solution: Margaret started her own business in the current year and will report a profit for her first year

Becky Knauer recently resigned from her position as controller for Shamalay Automotive, a small, struggling foreign car dealer in Upper Saddle River, New Jersey

Chapter 16 Ethical Issue 16-1 Becky Knauer recently resigned from her position as controller for Shamalay Automotive, a small, struggling foreign car dealer in Upper Saddle River, New Jersey. Becky has just started a new job as controller for Mueller Imports, a much larger dealer for the same car manufacturer. Demand for this particular make of car is exploding, and the manufacturer cannot produce enough to satisfy demand. The manufacturer's regional sales managers are each given a certain number of cars. Each sales manager then decides how to divide the cars among the independently owned dealerships in the region. Because of high demand for these cars, dealerships all want to receive as many cars as they can from the regional sales manager.

Becky's former employer, Shamalay Automotive, receives only about 25 cars a month. Consequently, Shamalay was not very profitable.

Becky is surprised to learn that her new employer, Mueller Imports, receives over 200 cars a month. Becky soon gets another surprise. Every couple of months, a local jeweler bills the dealer $5,000 for “miscellaneous services.” Franz Mueller, the owner of the dealership, personally approves payment of these invoices, noting that each invoice is a “selling expense.” From casual conversations with a salesperson, Becky learns that Mueller frequently gives Rolex watches to the manufacturer's regional sales manager and other sales executives. Before talking to anyone about this, Becky decides to work through her ethical dilemma.

Requirement
Put yourself in Becky's place.
a. What is the ethical issue?
b. What are your options?
c. What are the possible consequences?
d. What should you do?


Click here for the solution: Becky Knauer recently resigned from her position as controller for Shamalay Automotive, a small, struggling foreign car dealer in Upper Saddle River, New Jersey

Barbara Whitley had great expectations about her future as she sat in her graduation ceremony in May 2010

4-28 Barbara Whitley had great expectations about her future as she sat in her graduation ceremony in May 2010. She was about to receive her Master of Accountancy degree, and next week she would begin her career on the audit staff of Green, Thresher & Co., CPAs. Things looked a little different to Barbara in February 2011. She was working on the audit of Delancey Fabrics, a textile manufacturer with a calendar year- end. The pressure was enormous. Everyone on the audit team was putting in 70- hour weeks, and it still looked as if the audit wouldn’t be done on time. Barbara was doing work in the property area, vouching additions for the year. The audit program indicated that a sample of all items over $ 20,000 should be selected, plus a judgmental sample of smaller items. When Barbara went to take the sample, Jack Bean, the senior, had left the client’s office and couldn’t answer her questions about the appropriate size of the judgmental sample. Barbara forged ahead with her own judgment and selected 50 smaller items. Her basis for doing this was that there were about 250 such items, so 50 was a reasonably good proportion of such additions. Barbara audited the additions with the following results: The items over $ 20,000 contained no misstatements; however, the 50 small items contained a large number of misstatements. In fact, when Barbara projected them to all such additions, the amount seemed quite significant. A couple of days later, Jack Bean returned to the client’s office. Barbara brought her work to Jack in order to apprise him of the problems she found and got the following response: “ Gosh, Barbara, why did you do this? You were only supposed to look at the items over $ 20,000 plus 5 or 10 little ones. You’ve wasted a whole day on that work, and we can’t afford to spend any more time on it. I want you to throw away the schedules where you tested the last 40 small items and forget you ever did them.”
When Barbara asked about the possible audit adjustment regarding the small items, none of which arose from the first 10 items, Jack responded, “ Don’t worry, it’s not material anyway. You just forget it; it’s my concern, not yours.’’ a. In what way is this an ethical dilemma for Barbara? b. Use the six- step approach discussed in the book to resolve the ethical dilemma.

Click here for the solution: Barbara Whitley had great expectations about her future as she sat in her graduation ceremony in May 2010

Jackie pays $20 every time she visits her doctor

1) Jackie pays $20 every time she visits her doctor. She is covered by a(n)

2) If your employment is terminated, COBRA provides for

3) Ben's health coverage charges a low ($15) deductible each time he visits the doctor or hospital. Other than the low per-service deductible, there is very little cost sharing. However, Ben must go to the health care providers listed by the provider of the health coverage. If he goes to a provider that is not on the list, there is very little coverage. Which of the following types of entity most likely provides Abe's health coverage?

4) All property insurance companies require you to show the following when making a claim:

5) Given a $500 annual deductible, a $4,000 lid on the coinsurance, 80/20 coinsurance, and a $250,000 policy limit, how much of a $15,000 medical bill will be paid by the insured?

6) Disability income policies usually have ____ that is a time delay from the date of the issuance of the policy until benefit privileges are activated.

7) Which of the following best describes a "pre-existing condition"?

8) The insurance designed to help with nursing home or in-home care due to chronic illness is called

9) Surgical expenses now generally are reimbursed on the basis of

10) All of the following except a ____ are highly recommended for a long-term disability income policy.

11) A comprehensive major medical insurance would not

12) Some common liability risks include:

13) A liability suit could result when

14) Homeowners' insurance premiums are determined by

15) Supplementary Medical Insurance (SMI) provides health care protection beyond basic hospital coverage for

16) Medicare is a government-sponsored health care plan composed of Part A and Part B. Part A covers

17) Your son left his skateboard at the bottom of the basement stairs. While going downstairs to change a broken light bulb, you step on the skateboard and break your ankle during the fall. Medical damages total $1,455. How much will your $140,000 homeowners' insurance policy pay for this accident? The policy has $100,000 comprehensive liability coverage and medical payments of $1,000/person.

18) Your standard HO policy will not include coverage for damage done by

19) Negligence results when a person

20) Many airline passengers purchase a special life insurance policy frequently sold at the airport. This is an example of a(n) ____ policy.

21) Which of the following events would probably increase your auto premiums?

22) Homeowner's property insurance does not provide protection on the

23) Suppose a person has a health insurance policy with a $500 calendar year deductible, a $2,000 out-of-pocket cap, and an 80% coinsurance provision. If this person suffers a $600 covered loss, how much will the insurance company pay? (Assume no previous losses have occurred.)

24) Social security provides health care coverage to persons age ____ and those who are ____.

25) Donna, who is single and 30-years-old, has received several speeding tickets recently and was shocked by the effect on her auto insurance. Donna drives a 2002 Pontiac Firebird, is currently not covered by health insurance, has an emergency fund of $25,000, an income of $100,000 per year, and an investment portfolio of $230,000. She is trying to reduce the price of her auto insurance. Which of the following actions is most likely to be advisable.

Click here for the solution: 1) Jackie pays $20 every time she visits her doctor