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fundamentals financial accounting
Questions and Answers of
Fundamentals Financial Accounting
During 2020, Valley Sales Inc. earned revenues of \(\$ 500,000\) on account. Valley Sales collected \(\$ 410,000\) from customers during the year. Expenses totalled \(\$ 420,000\), and the related
Marquis Inc. made sales of \(\$ 700\) million during 2020. Of this amount, Marquis Inc. collected cash for all but \(\$ 30\) million. The company's cost of goods sold was \(\$ 300\) million, and all
Great Sporting Goods Inc. began 2020 owing notes payable of \(\$ 4.0\) million. During 2020 , the company borrowed \(\$ 2.6\) million on notes payable and paid off \(\$ 2.5\) million of notes payable
Ford Canada sells large fleets of vehicles to auto rental companies, such as Budget and Avis. Suppose Budget is negotiating a contract with Ford to purchase 1,000 Explorers by the end of next year.
Answer the following questions about prepaid expenses:a. On November 1, World Travel Ltd. prepaid \(\$ 6,000\) for three months' rent. Give the adjusting entry to record rent expense at December 31.
During 2020, Many Miles Trucking paid salary expense of \(\$ 40\) million. At December 31, Many Miles accrued salary expense of \(\$ 2\) million. Many Miles paid \(\$ 1.9\) million to its employees
Return to the situation in exercise 3-7. Here you are accounting for the same transactions on the books of Scotiabank, which lent the money to Schwartz \& Associates Inc. Perform all three steps in
Write a paragraph explaining why unearned revenues are liabilities instead of revenues. In your explanation, use the following actual example: Maclean's magazine collects cash from subscribers in
Josie Inc. collects cash from customers two ways:1. Accrued Revenue. Some customers pay Josie after Josie has performed service for the customer. During 2020, Josie made sales of \(\$ 50,000\) on
Entertainment Centre Ltd. reported the following data at March 31, 2020, with amounts adapted and in thousands:You are the CFO responsible for reporting Entertainment Centre Ltd. (ECL) results. Use
Use the Entertainment Centre Ltd. data in exercise 3-12 to make the company's closing entries at March 31, 2020. Then set up a T-account for Retained Earnings and post to that account. Compare
Use the Entertainment Centre Ltd. data in exercise 3-12 to answer the following questions.1. Was the net revenue high enough to cover all of ECL's costs?2. What could you do to improve this
Use the Entertainment Centre Ltd. data in exercise 3-12 to compute ECL'sa. Current ratiob. Debt ratio Round to two decimal places. Report to the CEO whether these values look strong, weak, or
During 2020, Organic Foods Inc. made sales of \(\$ 4,000\) (assume all on account) and collected cash of \(\$ 4,100\) from customers. Operating expenses totalled \(\$ 800\), all paid in cash. At
During 2020, Dish Networks Inc. earned revenues of \(\$ 700\) million. Expenses totalled \(\$ 540\) million. Dish collected all but \(\$ 20\) million of the revenues and paid \(\$ 530\) million on
On December 1, 2019, Neu Consulting Ltd. signed a contract with Kraftwerk Inc., which obligated Neu to provide Kraftwerk with 10 hours of consulting services per month from January through December
An accountant made the following adjustments at December 31, the end of the accounting period:a. Prepaid insurance, beginning, \(\$ 700\). Payments for insurance during the period, \(\$ 2,100\).
The adjusted trial balance of Honeybee Hams Inc. follows.{Requirement}Prepare Honeybee Hams's income statement and statement of retained earnings for the year ended December 31, 2020, and its balance
Clark Moters Lid. faced the following situations. Journalize the adjusting entry needed at year-end (December 31, 2020) for each situation. Consider each fact separately.a. The business paid interest
The adjusted trial balances of Tower Development Inc. for March 31, 2019, and March 31, 2020, include these amounts (in millions):Compute the amount of sales revenue, insurance expense, and other
This question deals with the items and the amounts that two entities, Mountain Services Inc. (Mountain) and City of Squamish (Squamish), should report in their financial statements.1. On March 31,
Prepare the required closing entries for the following selected accounts from the records of SouthWest Transport Inc. at December 31, 2020 (amounts in thousands):December 31, 2020? Prepare a
You have just signed a contract with Rogers Wireless that provides you with a new iPhone and two years of wireless phone and data service. The terms of the contract specify that the price of the
The unadjusted trial balance and the income statement amounts from the December 31, 2020, adjusted trial balance of Yosaf Portraits Ltd. are given below.{Requirement}Journalize the adjusting and
Le Gasse Inc. reported this information at December 31:{Requirements}1. Using this information, calculate the current ratio and the debt ratio for 2020, 2019, and 2018.2. Explain whether each ratio
The accounts of Maritime Specialists Ltd. prior to the year-end adjustments are given belowAdjusting data at the end of the year include:a. Unearned sales revenue that has been earned, \(\$ 1,000\)b.
Refer to exercise E2-28 of Chapter 2. Start from the trial balance and the posted T-accounts prepared at January 18, 2020. Later in January, the business completed these transactions:Requirements1.
Refer to exercise E3-31.Requirements1. After solving exercise E3-30, use the data in that exercise to prepare Yosaf Portraits Ltd.'s classified balance sheet at December 31, 2020. Use the report
Valley Bleu Ltée reported the following current accounts at December 31, 2019 (amounts in thousands):During 2020, Valley Bleu completes these transactions:- Used inventory of \(\$ 3,800\)- Sold
Satterfield Corporation reported the following current accounts at Deccmber 31, 2019 (amounts in thousands):During January 2020, Satterfield completed these selected transactions:- Sold services on
Tidy Car, Inc.. proviḑes mohile detailing to its customers. The Income Statement for the month ended January 31, 2020, the Balance Sheet for December 31, 2019, and details of postings to the Cash
Lewitas Ltd. earned revenues of \(\$ 35\) million during 2020 and ended the year with income of \(\$ 8\) million. During 2020, Lewitas Ltd. collected \(\$ 33\) million from customers and paid cash
Prairies Consultants Inc. had the following selected transactions in August 2020:Requirements1. Show how each transaction would be handled using the cash basis and the accrual basis. Under each
Journalize the adjusting entry needed on December 31, 2020, the end of the current accounting period, for each of the following independent cases affecting Callaway Corp. Include an explanation for
The adjusted trial balance of Marshall Ltd. at December 31, 2020.Requirements1. Prepare Marshall Ltd.'s 2020 income statement, statement of retained earnings, and balance sheet. List expenses (except
Fred's Catering Ltd. had the following selected transactions during May 2020:Requirements1. Show how each transaction would be handled using the cash basis and the accrual basis, Under each column,
The balance sheet at December 31, 2018, 2019) and 2020 and income statement for the years ended December 31, 2018, 2019, and 2020 for Ojibway Inc. include the following data:RequirementsUse the
Refer to Problem P3-46Problem P3-46The accounts of Marciano Services Ltd. at March 31, 2020, are listed in alphabetical order.1. Use the Marciano Lid. data in problem P3-46A to prepare the company's
The accounts of Marciano Services Ltd. at March 31, 2020, are listed in alphabetical order.Requirements1. All adjustments have been journalized and posted, but the closing entries have not been made.
Sundance Apartments Inc.'s unadjusted and adjusted trial balance at April 30, 2020, follow:Requirements1. Make the adjusting entries that account for the differences between the two trial balances.2.
The unadjusted trial balance of The Rock Industries Ltd. at January 31, 2020, appears below.Adjustment data:a. Accrued service revenue at January \(31, \$ 2,000\)b. Prepaid rent expired during the
During 2020, Schubert Inc. earned revenues of \(\$ 19\) million from the sale of its products. Schubert ended the year with net income of \(\$ 4\) million. Schubert collected cash of \(\$ 20\)
Journalize the adjusting entry needed on December 31, 2020, the end of the current accounting period, for each of the following independent cases affecting Lee Computer Systems Inc. (LCSI). Include
In a bank reconciliation, an EFT cash payment isa. added to the book balance.b. deducted from the book balance.c. added to the bank balance.d. deducted from the bank balance.
If a bookkeeper mistakenly recorded a \(\$ 58\) deposit as \$85, the error would be shown on the bank reconciliation as a(n)a. \(\$ 27\) addition to the book balanceb. \(\$ 85\) deduction from the
At December 31, 2020, before any year-end adjustments are made, White Corporation had a \(\$ 50\) balance in Accounts Receivable and a \(\$ 0.6\) debit balance in the Allowance for Uncollectible
Under the allowance method for uncollectible receiv( ables, the entry to record bad debt expense has what effect on the financial statements?a. Increases expenses and increases owners' equityb.
Collins Woodworking accepts VISA and MasterCard at its store. Collins is charged a processing fee of 3\% of the total amount of any credit card sale. Assume that Russell Knight purchases \(\$ 8,000\)
Snead Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. At December 31, 2020, the balance of accounts receivable is \(\$ 210,000\) and the
The Cash account of SWITZER Ltd. reported a balance of \(\$ 2,500\) at August 31, 2020 Included were outstanding cheques totalling \(\$ 900\) and an August 31 deposit of \(\$ 500\) that did not
Refer to question 4. The net receivables on the balance sheet areQuestion 4Snead Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. At December
After preparing the SWITZER Ltd. bank reconciliation in Exercise 4-4, make the company's journal entries for transactions that arise from the bank reconciliation. Include an explanation with each
Accounts Receivable has a debit balance of \(\$ 3,200\), and (1) the Allowance for Uncollectible Accounts has a credit balance of \(\$ 300\). A \(\$ 100\) accounts receivable is written off. What is
A company's balance sheet at December 31, 2018, 2019, and 2020 and income statement for the years ended December 31, 2018, 2019, and 2020 include the data on pages \(168-169\)RequirementsUse the
Refer to Problem 3-56B.1. Use the For You eTravel Inc. data in problem P3-56B to prepare the company's classified balance sheet at December 31, 2020. Show captions for total assets, total
The accounts of For You eTravel Inc. at December 31, 2020, are listed in alphabetical order.Requirements1. All adjustments have been journalized and posted, but the closing entries have not been
The adjusted trial balance of Reid and Campbell Ltd. at December 31, 2020, appears below.Requirements1. Prepare Reid and Campbell Ltd.'s 2020 income statement, statement of retained earnings, and
Your Talent Agency Ltd.'s unadjusted and adjusted trial balances at December 31, 2020 , are shown below.Requirements1. Make the adjusting entries that account for the difference between the two trial
Consider the unadjusted trial balance of Creative Advertising Ltd. at October 31, 2020 , and the related month-end adjustment data.Adjustment data:a. Accrued advertising revenue at October \(31, \$
On June 30, 2020, Perfect Party Planners (PPP) had a \$40,000 balance in Accounts Receivable and a \(\$ 3,000\) credit balance in Allowance for Uncollectible Accounts. During July, PPP made credit
How much interest revenue should Maritimes Ltd. accrue (N December 31, 2019?a. \(\$ 225\)b. \(\$ 450\)c. \(\$ 375\)d. Some other amount
This exercise continues the situation of exercise S4-7, in which Environmental Products ended the year 2019 with accounts receivable of \(\$ 80,000\) and an allowance for uncollectible accounts of
Jordan Quinn manages the local homeless shelter. He fears that a trusted employee has been stealing from the shelter. This employee receives cash from supporters and also prepares the monthly bank
Refer to question 6. The balance of Allowance for Uncollectible Accounts, after adjustment, will bea. $100$100.b. $200$200.c. $300$300.d. impossible to determine from the information given.Question
During its first year of operations, Environmental Products Inc. had sales of \(\$ 875,000\), all on account. Industry experience suggests that Environmental Products's bad debt expense will be \(\$
Refer to questions 6 and 7. Early the following year, Harper wrote off \(\$ 150\) of old receivables as uncollectible. The balance in the Allowance account is now The next four questions use the
Use the solution to exercise S4-8 to answer these questions about Environmental Products Inc. for 2020.1. Start with Accounts Receivable's beginning balance \((\$ 80,000)\) and then post to the
If Maritimes Ltd. fails to make an adjusting entry for the accrued interest, which of the following will happena. Net income will be understated, and liabilities will be overstated.b. Net income will
Gulig and Durham, a law firm, started 2020 with accounts receivable of \(\$ 60.000\) and an allowance for uncollectible accounts of \(\$ 5,000\). The 2020 service revenue on account was
How much interest does Maritimes Itd. expect to collect on the maturity date (February 1, 2020)?a. \(\$ 450\)b. \(\$ 280\)c. 575d. Some other amount
Perform the following accounting for the receivables of Benoit. Brown \& Hill, an accounting firm, at December 31, 2020.1. Start with the beginning balances for these \(T\)-accounts:- Accounts
Which of the following accounts will Maritimes Ltd.credit in the journal entry at maturity on February 1, 2020 , assuming collection in full?a. Interest Receivableb. Note Payablec. Interest Payabled.
Write the journal entry for question 12Question 12Which of the following accounts will Maritimes Ltd.credit in the journal entry at maturity on February 1, 2020 , assuming collection in full?a.
1. Compute the amount of interest during 2018,2019 , and 2020 for the following note receivable: On June 30, 2018, Scotiabank loaned \(\$ 100,000\) to Heather Hutchison on a two-year, \(8 \%\)
A company with net sales of \(\$ 1,217,000\), beginning net receivables of \(\$ 90,000\), and ending net receivables of \(\$ 110,000\), has a days' sales in accounts receivable value ofa. 50 daysb.
On May 31, 2019, Nancy Thomas borrowed \$6,000 from Assiniboine Credit Union. Thomas signed a note payable, promising to pay the credit union principal plus interest on May 31, 2020. The interest
Which of the following is included in the calculation of the acid-test ratio?a. Cash and accounts receivableb. Prepaid expenses and cashc. Inventory and short-term investmentd. Inventory and prepaid
The company in question 15 sells on credit terms of "net(30 days." Its days' sales in receivables figure isa. too high.b. too low.c. about right.d. impossible to evaluate from the data given.
Using your answers to exercise 4-14, show how the Assiniboine Credit Union will report the following:a. Whatever needs to be reported on the bank's classified balance sheet at December 31, 2019.
Botany Clothiers reported the following amounts in its 2020 financial statements. The 2019 figures are given for comparison.{Requirements}1. Compute Botany's acid-test ratio at the end of 2020. Round
Victoria Medical Service reported the following selected items (amounts in thousands):1. Classify each item as(a) income statement or balance sheet and as(b) debit balance or credit balance2. How
Green Construction Inc. has poor internal control. Recently, Jean Ouimet, the owner, has suspected the bookkeeper of stealing. Here are some details of the business's cash position at June 30, 2020a.
LeAnn Bryant's chequebook lists the following:{Requirement}Prepare Bryant's bank reconciliation at November 30. Date A Cheque No. Item Cheque Deposit Balance Nov $ 705 622 Direct Energy $ 19 686
The following items appear on a bank reconciliation:1. Outstanding cheques2. Bank error: The bank credited our account for a deposit made by another bank customer.3. Service charge4. Deposits in
At December 31, 2020, before any year-end adjustments, the Accounts Receivable balance of Sunset Hills Clinic is \(\$ 235,000\). Allowance for Uncollectible Accounts has a \(\$ 6,500\) credit
Tim Wong operates a FedEx Kinko's store. He has just received the monthly bank statement at May 31, 2020, from Royal Bank of Canada, and the statement shows an ending balance of \(\$ 595\). Listed on
Use the data from exercise 4-21 to make the journal entries that Wong should record on May 31 to update his Cash account. Include an explanation for each entry.Exercise 4-21Tim Wong operates a FedEx
At December 31, 2020, Credit Valley Nissan has an Accounts Receivable balance of \(\$ 101,000\). Allowance for Uncollectible Accounts has a credit balance of \(\$ 2,000\) before the year-end
At December 31, 2020, before any year-end adjustments, the Accounts Receivable balance of Sunset Hills Clinic is \(\$ 235,000\). Allowance for Uncollectible Accounts has a \(\$ 6,500\) credit
Assume Black Corporation reported the following items at year-ends 2020 and 2019.{Requirements}1. Using the facts provided, calculate the information that is relevant in measuring the liquidity of
Assume Loblaw Companies Limited reported these figures in millions of dollars:{Requirements}1. Compute Loblaw's average collection period during 20202. Was Loblaw's collection period long or short?
Answer these questions about receivables and uncollectibles. For the true-false questions, explain any answers that are false1. True or false? Credit sales increase receivables. Collections and
Ripley Shirt Company sells on credit and manages its own receivables. Average experience for the past three years has been as follows:John Ripley, the owner, is considering whether to accept credit
The October 1, 2020, records of First Data Communications include these accounts:At year-end, the company ages its receivables and adjusts the balance in Allowance for Uncollectible Accounts to
FedEx Corporation sells its services for cash and on account. By selling on credit, FedEx cannot expect to collect \(100 \%\) of its accounts receivable. Assume that at May 31, 2020 and 2019,
FedEx Corporation sells its services for cash and on account. By selling on credit, FedEx cannot expect to collect \(100 \%\) of its accounts receivable. Assume that at May 31, 2020 and 2019,
Nixtel Inc. reported net receivables of \(\$ 2,583\) million and \(\$ 2,785\) million at December 31, 2020 , and 2019, after subtracting allowances of \(\$ 62\) million and \(\$ 88\) million at these
Assume Deloitte \& Touche, the accounting firm, advises Pappadeaux Seafood that Pappadeaux's financial statements must be changed to conform to IFRS. At December 31, 2020, Pappadeaux's accounts
Assume that General Mills Canada, famous for Cheerios, Chex snacks, and Yoplait yogurt, completed the following selected transactions:{Requirements}1. Record the transactions in General Mills's
The comparative financial statements of Sunset Pools Inc. for 2020, 2019, and 2018 included the following selected data:{Requirements}1. As a financial advisor to an investor of Sunset Pools,
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