On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows

P3-5A On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows.

No. Debits No. Credits
101 Cash $4,880 154 Accumulated Depreciation $1,500
112 Accounts Receivable 3,520 201 Accounts Payable 3,400
126 Supplies 2,000 209 Unearned Service Revenue 1,400
153 Store Equipment 15,000 212 Salaries Payable 500
311 Common Stock 15,000
320 Retained Earnings 3,600
$25,400 $25,400
During September the following summary transactions were completed.
Sept. 8 Paid $1,400 for salaries due employees, of which $900 is for September.
10 Received $1,200 cash from customers on account.
12 Received $3,400 cash for services performed in September.
15 Purchased store equipment on account $3,000.
17 Purchased supplies on account $1,200.
20 Paid creditors $4,500 on account.
22 Paid September rent $500.
25 Paid salaries $1,250.
27 Performed services on account and billed customers for services provided $1,500.
29 Received $650 from customers for future service.
Adjustment data consist of:
1. Supplies on hand $1,200.
2. Accrued salaries payable $400.
3. Depreciation is $100 per month.
4. Unearned service revenue of $1,450 is earned.

Instructions
(a) Journalize the September transactions. (Your instructor may advise you to post to ledger accounts, that should be turned in as part of the problem.)
(b) Prepare a trial balance at September 30.
(c) Journalize and post adjusting entries.
(d) Prepare an adjusted trial balance.
(e) Prepare an income statement and a retained earnings statement for September and a balance sheet at September 30.

Click here for the solution: On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows

The following data were taken from the balance sheet accounts of Masefield Corporation on December 31, 2007

E15-15 (Dividend Entries) The following data were taken from the balance sheet accounts of Masefield Corporation on December 31, 2007.

Current Assets $540,000
Investments $624,000
Common Stock (par value $10) $500,000
Paid in Capital in excess of par $150,000
Retained Earnings $840,000

Instructions
Prepare the required journal entries for the following unrelated items.
a.) A 5% stock dividend is declared and distributed at a time when the market value of the shares is $39 per share.
b.) The par value of the capital stock is reduced to $2 with a 5-for-1 stock split.
c.) A dividend is declared January 5, 2008, and paid January 25, 2008 in bonds held as an investment. The bonds have a book value of $100,000 and a fair market value of $135,000.

Click here for the solution: The following data were taken from the balance sheet accounts of Masefield Corporation on December 31, 2007

On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows

P3-5A On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows.

No. Debits No. Credits
101 Cash $4,880 154 Accumulated Depreciation $1,500
112 Accounts Receivable 3,520 201 Accounts Payable 3,400
126 Supplies 2,000 209 Unearned Service Revenue 1,400
153 Store Equipment 15,000 212 Salaries Payable 500
311 Common Stock 15,000
320 Retained Earnings 3,600
$25,400 $25,400
During September the following summary transactions were completed.
Sept. 8 Paid $1,400 for salaries due employees, of which $900 is for September.
10 Received $1,200 cash from customers on account.
12 Received $3,400 cash for services performed in September.
15 Purchased store equipment on account $3,000.
17 Purchased supplies on account $1,200.
20 Paid creditors $4,500 on account.
22 Paid September rent $500.
25 Paid salaries $1,250.
27 Performed services on account and billed customers for services provided $1,500.
29 Received $650 from customers for future service.
Adjustment data consist of:
1. Supplies on hand $1,200.
2. Accrued salaries payable $400.
3. Depreciation is $100 per month.
4. Unearned service revenue of $1,450 is earned.

Instructions
(a) Journalize the September transactions. (Your instructor may advise you to post to ledger accounts, that should be turned in as part of the problem.)
(b) Prepare a trial balance at September 30.
(c) Journalize and post adjusting entries.
(d) Prepare an adjusted trial balance.
(e) Prepare an income statement and a retained earnings statement for September and a balance sheet at September 30.

Click here for the solution: On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows

The following events were recorded on the books of Mercy Hospital for the year ended December 31, 2008

CH19 - Problem 1 -- Statement of Activities—Hospital

The following events were recorded on the books of Mercy Hospital for the year ended December 31, 2008.


1. Revenue from patient services totaled $16,000,000. The allowance for uncollectibles was established at $3,400,000. Of the $16,000,000 revenue, $6,000,000 was recognized under cost reimbursement agreements. This revenue is subject to audit and retroactive adjustment by third-party payers (estimated adjustments are included in the allowance account).

2. Patient service revenue is accounted for at established rates on the accrual basis.

3. Other operating revenue totaled $346,000, of which $160,000 was from specific purpose funds.

4. Mercy received $410,000 in unrestricted gifts and bequests. They are recorded at fair market value when received.

5. Endowment funds earned $160,000 in unrestricted income.

6. Board designated funds earned $82,000 in income.

7. Mercy’s operating expenses for the year amounted to $13,370,000. This included $500,000 in straight-line depreciation.

Prepare a statement of activities for Mercy Hospital for the year ended December 31, 2008.

Click here for the solution: The following events were recorded on the books of Mercy Hospital for the year ended December 31, 2008

The units of an item available for sale during the year were as follows

Ex 6-8 The units of an item available for sale during the year were as follows:

Jan 1 Inventory 27 units at $120
Feb 17 Purchase 54 units at $138
July 21 Purchase 63 units at $156
Nov 23 Purchase 36 units at $165

There are 50 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the inventory cost by (a) the first-in, first-out method, (b) the last-in, first-out method, and (c) the average cost method.

Click here for the solution: The units of an item available for sale during the year were as follows

The May transactions of StepAside Corporation were as follows

E3-9 The May transactions of StepAside Corporation were as follows.

May 4 Paid $700 due for supplies previously purchased on account.
7 Performed advisory services on account for $6,800.
8 Purchased supplies for $850 on account.
9 Purchased equipment for $1,000 in cash.
17 Paid employees $530 in cash.
22 Received bill for equipment repairs of $900.
29 Paid $1,200 for 12 months of insurance policy. Coverage begins June 1.

Instructions
Journalize the transactions. Do not provide explanations.

Click here for the solution: The May transactions of StepAside Corporation were as follows

Selected transactions completed by Blackwell Company during its first fiscal year ending December 31 were as follow (Chapter 11 Comprehensive Problem 3)

Chapter 11 Comprehensive Problem 3 Selected transactions completed by Blackwell Company during its first fiscal year ending December 31 were as follow:

Jan. 2. Issued a check to establish a petty cash fund of $2,000.
Mar. 4. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $789; miscellaneous selling expense, $256; miscellaneous administrative expense, $378.

AND SO ON

Click here for the solution: Selected transactions completed by Blackwell Company during its first fiscal year ending December 31 were as follow (Chapter 11 Comprehensive Problem 3)

The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows

The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows.

Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized) $300,000
Common Stock ($5 stated value, 300,000 shares authorized) 1,000,000
Paid-in Capital in Excess of Par Value - Preferred Stock 15,000
Paid-in Capital in Excess of Stated Value - Common Stock 480,000
Retained Earnings 688,000
Treasury Stock - Common (5,000 shares) 40,000

During 2010 the corporation had these transactions and events pertaining to its stockholders' equity.

Feb. 1 Issued 5,000 shares of common stock for $30,000.
Mar. 20 Purchased 1,000 additional shares of common treasury stock at $7 per share.
Oct. 1 Declared a 8% cash dividend on preferred stock, payable November 1.
Nov. 1 Paid the dividend declared on October 1.
Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2010.
Dec. 31 Determined that net income for the year was $280,000. Paid the dividend declared on December 1.

Instructions
(a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)
(b) Enter the beginning balances in the accounts and post the journal entries to the stockholders’ equity accounts. (Use T accounts.)
(c) Prepare the stockholders’ equity section of the balance sheet at December 31, 2010.
(d) Calculate the payout ratio, earnings per share, and return on common stockholders’ equity ratio. (Note: Use the common shares outstanding on January 1 and December 31 to determine the average shares outstanding.)

Click here for the solution: The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows

The units of Product YY2 available for sale during the year were as follows

The units of Product YY2 available for sale during the year were as follows:

Apr 1 Inventory 16 units @ $30
Jun 16 Purchase 30 units @ $33
Sep 28 Purchase 45 units @ $37

There are 17 units of the product in the physical inventory at March 31. The periodic inventory system is used.

Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.

Click here for the solution: The units of Product YY2 available for sale during the year were as follows

The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year

PR 11-1A The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year.

Jan 15. Purchased merchandise on account from hood Co., $200,000, terms n/30.
Feb 14. Issued 60-day, %6 note for $200,000 to Hood Co on account.
April 15. Paid Hood Co. the amount owed on the note of February 14.
June2. Borrowed $187,500 from Acme Bank, issuing a 60-day, 8% note.
July 10. Purchased tools by issuing a $190,000, 90-day note to Columbia supply Co., which discounted the note at the rate of 6%.
Aug 1. Paid Acme Bank the interest rate due on the note of June 2 and renewed the loan by issuing a new 60-day, 10% not for $187,500 (Journalize both the debit and credit to the notes payable account.)
Sept 30. Paid Acme Bank the amount due on the note of August 1.
Oct 8. Paid Columbia Supply co. the amount due on the note of July 10.
Dec 1. Purchased office equipment from Mountain Equipment co. for $120,000 paying $20,000 and issuing a series of ten 6% notes for $10,000 each coming due at 30-day intervals.
Dec 5. Settled a product liability lawsuit with a customer for $76,000, payable in January. Emerald Bay accrued the loss in litigation claims payable account.
Dec 31. paid the amount due Mountain Equipment co. on the first note in the series issued on December 1.

Instructions:
1. Journalize the transactions.
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year.
(a) Product warranty cost $16,400;
(b) Interest on the nine remaining notes owed to Mountain Equipment Co

Click here for the solution: The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year

The transactions completed by Over-Nite Express Company during May 2010, the first month of the fiscal year, were as follows

PR 5-5A The transactions completed by Over-Nite Express Company during May 2010, the first month of the fiscal year, were as follows:

May1: Issued check no. 205 for May rent. $1000
2. Purchased a vehicle on account from McIntyre Sales Co. $22,300
3. Purchased office equipment on account from Office Mate $520
5. Issued Invoice No. 91 to Martin Co., $5,200

AND SO ON

Check: 2. Total Cash Receipts $73,230

Click here for the solution: The transactions completed by Over-Nite Express Company during May 2010, the first month of the fiscal year, were as follows

The following items were taken from the balance sheet of Nike, Inc

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?


Click here for the solution: The following items were taken from the balance sheet of Nike, Inc

For several years, a number of Food Lion, Inc., grocery stores were unprofitable

For several years, a number of Food Lion, Inc., grocery stores were unprofitable. The company closed, and continues to close, some of these locations. It is apparent that the company will not be able to recover the cost of the assets associated with the closed stores. Thus, the current value of these impaired assets must be written down.

A recent Food Lion income statement reports a $9.5 million charge against income pertaining to the write-down of impaired assets.

Instructions
a. Explain why Food Lion must write down the current carrying value of its unprofitable stores.
b. Explain why the recent $9.5 million charge to write down these impaired assets is considered a noncash expense.


Click here for the solution: For several years, a number of Food Lion, Inc., grocery stores were unprofitable

The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011

ACC 291 Week 2 Assignment

E9‑1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011.

1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.

Instructions
(a) Explain the application of the cost principle in determining the acquisition cost of plant assets.
(b) List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited.


Click here for the solution: The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011

According to the accountant of Ulner Inc., its payroll taxes for the week were as follows

ACC 291 Week 3 Assignment

E10-6 According to the accountant of Ulner Inc., its payroll taxes for the week were as follows: $198.40 for FICA taxes, $19.84 for federal unemployment taxes, and $133.92 for state unemployment taxes.

Instructions
Journalize the entry to record the accrual of the payroll taxes.


Click here for the solution: According to the accountant of Ulner Inc., its payroll taxes for the week were as follows

Rick Company’s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows

7. Rick Company’s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (Note: The company uses a perpetual system of inventory.)

Units Unit Price Total Cost
January 1—Beginning inventory 18 $24 $432
March 12—Sold 13
April 11—Purchase 45 $29 $1,305
June 20—Sold 33
Aug 16—Purchase 35 $27 $945
Sept 11—Sold 29
Total Cost of Inventory
Ending inventory is 23 units. $2,682

What is the cost of goods sold for Rick Company for 2012 using LIFO?


Click here for the solution: Rick Company’s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows

The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year

The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year:

2010
July 1. Issued $10,000,000 of 10-year, 15% callable bonds dated july1, 2010, at an effective of 11, receiving cash of $12,390,085. Interest is payable semi annually on December 31 and June 30. Oct. 1. Borrowed $225,000 as a six year, 8% installment note from Titan Bank. The note requires annual payments of $48,671, with the first payment occurring on September 30, 2011. Dec. 31. Accrued $4,500of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest of the bond. Dec. 31. Recorded bond premium amortization of $119,504, which was determined using the straight line method. Dec. 31. Closed the interest expense account. 2011 June 30. Paid the semiannual interest of the bond. Sept. 30. Paid the annual payment of the note, which consist of interest of $18,000 and principal of $30, 671. Dec. 31. Accrued $3,887 of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest of the bond. Dec. 31. Recorded bond premium amortization of $239,008, which was determined using the straight line method. Dec. 31. Closed the interest expense account. 2012 June 30. Recorded the redemption of the bonds, which were called at101,5. the balance in the bond premium account is $1,912,069 after payment of interest and amortization of premium have been recorded.(Record the redemption only) Sept. 30. Paid the second annual payment on the note, which consist of interest of $15,546 and principal of $33,125 Instructions:

1. Journalize the entries to record the foregoing transactions.
2. Indicate the amount of the interest expense in 2010 and 2011
3. Determine the carrying amount of the bonds as of December 31, 2011.


Click here for the solution: The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year

The following conclusions were taken from a staff auditor’s summary worksheet for fixed assets and the worksheet for prepaid insurance

13-33 (Audit Evidence and Conclusions) The following conclusions were taken from a staff auditor’s summary worksheet for fixed assets and the worksheet for prepaid insurance.

Audit Conclusions or Situations

1. The choice of eight years for straight-line depreciation of the company’s trucks appears unreasonable. I would suggest that the client change to a six-year life and use DDB depreciation.

2. Insurance coverage appears to be inadequate, because the client has chosen to carry only liability insurance on the cement trucks. There is no provision for collision or damage done to the trucks.

3. The client acquired a substantial piece of real estate from the town of Baraboo to build a warehouse in the town’s new industrial complex. The land was donated to the company provided it maintains operations for a minimum of ten years and pays real estate taxes on its appraised
value. The land is carried on the books at the fair market value at the time of donation of $250,000.

4. Several pieces of idle equipment were noted. It is recommended that the equipment be written down to the scrap value of $50,000 from the current net book value of $185,000.

5. The company has self-constructed the warehouse located in the town of Baraboo.

It has capitalized all payroll expense directly related to construction of the project. The adjusting entry debited Building for $73,000 and credited Payroll Expense for the same amount.

6. The company completely overhauled ten of its trucks at a significant cost. The overhaul should extend the life of the trucks by at least three years. Because the company performs similar overhauls each year, the cost has been properly charged to repairs and maintenance.

7. The company sold 15 of its old trucks to Virgin Distributors, a new company owned by the brother of the company’s chief executive officer. The equipment was old, and a gain of $70,000 on the sale was credited to income.

Required
a. For each conclusion or situation listed, identify the type of audit evidence needed to support the auditor’s conclusion.
b. Briefly indicate the audit implications if the auditor’s conclusion is justified.


Click here for the solution: The following conclusions were taken from a staff auditor’s summary worksheet for fixed assets and the worksheet for prepaid insurance

Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows

Chapter 15, Comprehensive Problem 4, 24th EDITION

Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows:

AND SO ON


Click here for the solution: Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows

Gordon & Groton, CPA's were the auditors of Bank & Company, a brokerage firm and member of a national stock exchange

Auditing P 5-26 Gordon & Groton, CPA's were the auditors of Bank & Company, a brokerage firm and member of a national stock exchange. Gordon & Groton audited and reported on the financial statements of Bank, which were filed with the Securities and Exchange Commission.
Several of Bank's customers were swindled by a fraudulent scheme perpetrated by Bank's president, who owned 90% of the voting stock of the company. The facts establish that Gordon & Groton were negligent but not reckless or grossly negligent in conduct of the audit, and neither participated in the fraudulent scheme or knew of its existence.

The customers are suing Gordon & Groton under the antifraud provisions of Section10b and Rule 10b-5 of the securities Exchange Act of 1934 for aiding and abetting the fraudulent scheme of the president. The customer’s suit for fraud is predicated exclusively on the nonfeasance of the auditors in failing to conduct a proper audit, thereby failing to discover the fraudulent scheme.

Required:
Answer the following questions, setting forth reasons for any conclusions stated:
a. What is the probable outcome of the lawsuit?
b. What other theory of liability might the customers have asserted?


Click here for the solution: Gordon & Groton, CPA's were the auditors of Bank & Company, a brokerage firm and member of a national stock exchange