Questions and Answers of Fundamentals Financial Accounting

Stintson Company recently agreed to loan an employee $100,000 for the purchase of a new house. The loan was executed on May 31, 2017, and is a one-year, 6 percent note, with interest payments
During the year ended December 31, 2017, Kelly’s Camera Equipment had sales revenue of $170,000, of which $85,000 was on credit. At the start of 2017, Accounts Receivable showed a $10,000 debit
Jung & Newbicalm Advertising (JNA) recently hired a new creative director, Howard Rachell, for its Bay Street office in Toronto. To persuade Howard to move from Vancouver, JNA agreed to advance
C&Q Marketing (CQM) recently hired a new marketing director, Jeff Otos, for its main office. As part of the arrangement, CQM agreed on February 28, 2017, to advance Jeff $50,000 on a one-year, 8
At the end of 2016, Donnelly Fitness Centre has adjusted balances of $800,000 in Accounts Receivable and $55,000 in Allowance for Doubtful Accounts. On January 2, 2017, the company learns that
Prior to recording the following, E. Perry Electronics, Incorporated, had a credit balance of $2,000 in its Allowance for Doubtful Accounts. Required: Prepare journal entries for each
P & K Consultants has provided business consulting services for several years. The company uses the percentage of credit sales method to estimate bad debts for internal monthly reporting
Web Wizard, Inc., has provided information technology services for several years. The company uses the percentage of credit sales method to estimate bad debts for internal monthly reporting purposes.
Let’s go a bit further with the example in M8-3. Assume that on February 2, 2017, Donnelly received a payment of $500 from one of the customers whose balance had been written off. Prepare the
Prepare journal entries for each transaction listed. a. During the period, customer balances are written off in the amount of $17,000. b. At the end of the period, bad debt expense is
Walmart and Target are two of the largest and most successful retail chains in the world. To evaluate their ability to collect on credit sales, consider the following fictional information reported
For each transaction listed in E8-4, indicate the amount and direction (+ or −) of effects on the financial statement accounts and on the overall accounting equation. Data From E8-4.Prior to
Coca-Cola and PepsiCo are two of the largest and most successful beverage companies in the world in terms of the products that they sell and their receivables management practices. To evaluate their
A local phone company had a customer who rang up $300 in charges during September 2016, but did not pay. Despite reminding the customer of this balance, the company was unable to collect in October,
What is the primary difference between accounts receivable and notes receivable?
Complete the following table by computing the missing amounts (?) for the following independent cases. Principal Amount on Note Receivable Annual Interest Rate Time Period Interest Earned a.
The following transactions took place for Christoff Solutions Ltd. 2016 July 1 Dec. 31 Loaned $70,000 to an employee of the company and received back a one-year, 10 percent note. Accrued
Assume that, as of February 1, 2017, Tim Hortons had $100,000 of Notes Receivable due before January 31, 2018, $1,268,000 of Accounts Receivable, and $249,000 in its Allowance for Doubtful Accounts
Assume that Caterpillar, Inc. reported the following accounts and amounts (in millions) in its December 31, 2017, year-end financial statements. Prepare the current assets section of a classified
Microsoft Corporation develops, produces, and markets a wide range of computer software, including the Windows operating system. Assume Microsoft reported the following information about Net Sales
Assume the 2017 annual report for Sears Holding Corporation contained the following information (in millions): A footnote to the financial statements disclosed that accounts receivable
Complete all the requirements of M8-3, except assume that Extreme Fitness uses the direct write-off method. Note that this means Extreme does not have an Allowance for Doubtful Accounts
Assume that a recent annual report for FedEx Corporation contained the following data (in millions): Required: 1. Determine the receivables turnover ratio and days to collect for 2017.
During 2017, Jesse Jericho Enterprises Corporation recorded credit sales of $650,000. At the beginning of the year, Accounts Receivable, Net of Allowance was $50,000. At the end of the year, after
Trevorson Electronics is a small company privately owned by Jon Trevorson, an electrician who installs wiring in new homes. Because the company’s financial statements are prepared for internal
Assume the following is a list of account titles and amounts (in millions) reported at December 31, 2017, by Hasbro, Inc., a leading manufacturer of games, toys, and interactive entertainment
Refer to PB1-1.Data From PB1-1.Assume that you are the president of Aerospace Explorations. At the end of the first year of operations (December 31, 2017), the following financial data for the
Lex Systems Inc. is a computer software company that makes online public access cataloguing systems for library, business, or home use. It also has a small service department that provides initial
The following accounts are taken from Buck Up! Inc., a company that specializes in horse-breaking services and rodeo lessons, at December 31, 2017. Required: Using the unadjusted trial
Assume that the following accounts are taken from the December 31, 2017, financial statements of Rogers Communications Inc. (Amounts are in millions.) Required: Prepare an income statement
Glidden Consulting provides marketing research for clients in the retail industry. The company had the following adjusted balances at December 31, 2017 (listed alphabetically): Required: 1.
ElecBooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit
Regis Corporation operates hair salons under various brand names including Supercuts, Mia & Maxx, and Style America. Assume the following is a simplified list of accounts and amounts (in
Coach, Inc. is a maker of handbags and other women’s and men’s accessories. Assume the following were reported in Coach’s adjusted trial balance and were used to prepare its June 30,
Brokeback Towing Company is at the end of its accounting year, December 31, 2017. The following data that must be considered were developed from the company’s records and related documents: a.
Cactus Company’s annual accounting year ends on June 30. It is June 30, 2017, and all of the 2017 entries except the following adjusting journal entries have been made: a. The company earned
List the two types of adjusting journal entries and give an example of an adjustment affecting revenues and expenses for each type.
For each of the following transactions for the SkyBlue Corporation, give the accounting equation effects of the adjustments required on December 31, 2017, for the month: a. Collected $2,400 rent
Refer to PA4-2. Data From PA4-2.Brokeback Towing Company is at the end of its accounting year, December 31, 2017. The following data that must be considered were developed from the company’s
Refer to PB4-2. Data From PB4-2. Cactus Company’s annual accounting year ends on June 30. It is June 30, 2017, and all of the 2017 entries except the following adjusting journal entries
For each of the following transactions for the SkyBlue Corporation, give the accounting equation effects of the adjustments required at the end of the month on December 31, 2017: a. Received a
Mobol, a wireless phone carrier, completed its first year of operations on December 31, 2017. All of the 2017 entries have been recorded, except for the following: a. At year-end, employees
Golf Academy Limited provides private golf lessons. Its unadjusted trial balance at December 31, 2017, follows, along with information about selected accounts. Required: 1. Calculate the
Val’s Hair Emporium is a hair salon. Its unadjusted trial balance as of December 31, 2017, follows, along with information about selected accounts. Required: 1. Calculate the
Learn to Play, Inc. is a one-person company that provides private piano lessons. Its unadjusted trial balance at December 31, 2017, follows, along with information about selected
What is a contra-asset? Give an example of one.
Refer to E4-4. Data From E4-4. Mobol, a wireless phone carrier, completed its first year of operations on December 31, 2017. All of the 2017 entries have been recorded, except for the
Fesel Company is making adjusting journal entries for the year ended December 31, 2017. In developing information for the adjusting journal entries, you learned the following: a. A two-year
Pirate Pete Moving Corporation has been in operation since January 1, 2017. It is now December 31, 2017, the end of the annual accounting period. The company has not done well financially during its
Service Pro Corp (SPC) determined that its unadjusted net income was $10,000 for the year ended September 30, 2017. For the following transactions and events, show the adjusting entries that SPC
Refer to E4-6. Data From E4-6.Fesel Company is making adjusting journal entries for the year ended December 31, 2017. In developing information for the adjusting journal entries, you learned the
Nickleby’s Ski Store is completing the accounting process for its first year ended December 31, 2017. The transactions during 2017 have been journalized and posted. The following data are available
Refer to E4-8. Data From E4-8.Nickleby’s Ski Store is completing the accounting process for its first year ended December 31, 2017. The transactions during 2017 have been journalized and
The SkyBlue Corporation has the following adjusted trial balance at December 31, 2017. Prepare an income statement for the SkyBlue Corporation for the year ended December 31, 2017. How much net
On December 31, 2017, J. Alan and Company prepared an income statement and balance sheet but failed to take into account four adjusting journal entries. The income statement, prepared on this
On December 31, 2017, Dyer Inc. completed its first year of operations. Because this is the end of the annual accounting period, the company bookkeeper prepared the following preliminary income
Ninja Sockeye Star prepared the following unadjusted trial balance at the end of its second year of operations, ending December 31, 2017. Other data not yet recorded at December 31, 2017
The following is a list of accounts and amounts reported for Empire Inc., for the fiscal year ended December 31, 2017. The accounts have normal debit or credit balances and the dollars are rounded to
Mint Cleaning Inc. prepared the following unadjusted trial balance at the end of its second year of operations, ending December 31, 2017. To simplify this exercise, the amounts given in the
Refer to E4-16. Data From E4-16.Mint Cleaning Inc. prepared the following unadjusted trial balance at the end of its second year of operations, ending December 31, 2017. To simplify this
The adjusted trial balance for PI Detectives reported the following account balances: Accounts Receivable, $500; Supplies, $9,000; Prepaid Insurance, $7,200; Equipment, $28,000; Accumulated
Midcounty Manufacturing purchased a three-year insurance policy for $30,000 on January 2, 2016. Prepare any journal entries, adjusting journal entries, and closing journal entries required on January
What three types of objectives are the focus of internal control?
What are the five components of an internal control system?
If a Saskatchewan-based company ships goods on September 30 to a customer in Toronto with sales terms FOB destination, do the Saskatchewan-based company include the inventory or the sale in its
Great Canadian Oilchange (GCO) sells a package that combines oil change service with a parts package for $30. A customer who supplies the parts (oil and filter) is charged $20 for the service only,
Hospital Equipment Company (HEC) acquired several MRI machines for its inventory at a cost of $2,300 per machine. HEC usually sells these machines to hospitals at a price of $5,800. HEC also
During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows: June 3 Purchased goods for $3,200 from Diamond Inc. with terms 2/10,
Using the information in E6-9, prepare journal entries to record the transactions, assuming Ace uses a perpetual inventory system. Data From E6-9.During the month of June, Ace Incorporated
Supply the missing dollar amounts for the income statement of Williamson Company for each of the following independent cases: Case A Case B Case C Sales Revenues $8,000 $6,000 $ ? Sales Returns
A company separately sells home security equipment and twelve months of system monitoring service for $120 and $240, respectively. The company sells an equipment/monitoring bundle on January 1 for a
Match the type of inventory with the type of business by placing checkmarks in the applicable columns: Ty pe of Busine ss Type of Inventory Merchandising Manufacturing Merchandise Finished
In October 2017, Nicole of Nicole’s Getaway Spa (NGS) eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In
Mondeara Clothing prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply LC&NRV to the ending inventory. The
E&Z Reader was founded in January 2017 to provide text reading and recording services. Selected transactions for E&Z Reader’s first month of business are as follows: a. Issued shares
Virtual Golf Corporation operates indoor golf simulators that allow individual customers and golf club members to experience courses like Pebble Beach and Augusta without leaving their own
Junk2Trade is an online company that specializes in matching buyers and sellers of used items. Buyers and sellers can purchase a membership with Junk2Trade, which provides them advance notice of
The following transactions are February activities of Swing Hard Incorporated, which offers indoor golfing lessons in Western Canada. If an expense is to be recognized in February, indicate the
The following transactions are February activities of Swing Hard Incorporated, which offers indoor golfing lessons in Western Canada. If revenue is to be recognized in February, indicate the amount.
Hordichuk Painting Service Company was organized on January 20, 2017, by three individuals, each receiving 5,000 shares from the new company. The following is a schedule of the cumulative account
Assume you are the owner of The University Shopper, which specializes in items of special interest to university students. You opened your doors for business on September 1, 2017. The following
You have been hired as the new assistant financial controller for Autobody Corp., an auto body repair shop. Prepare journal entries for the following transactions, which occurred during August
Under accrual basis accounting, expenses are recognized when incurred, which means the activity giving rise to the expense has occurred. Assume the following transactions occurred in January
Since June 1, 2017, FunnyFlatables has been renting out fun items like moonwalks and inflatable slides for parties and corporate events. The company has obtained the use of an abandoned ice rink
Sunny Valley Stables Inc. was established on April 1, 2017. The company provides stables, care for animals, and grounds for riding and showing horses. You have been hired as the new assistant
Barbara Jones opened Barb’s Book Business on February 1, 2017. The company specializes in editing accounting textbooks. You have been hired as manager. Your duties include maintaining the
The following transactions are February 2017 activities of InGolfHelp, which offers indoor golfing lessons. You have been hired to analyze the following transactions for a week in February
Diana Mark is the president of TempEmp, Inc., a company that provides temporary employees for not-for-profit companies. TempEmp has been operating for five years; its revenues have increased each
Robin Harrington established Timely Delivery on January 1, 2017. The following transactions occurred during the company’s most recent quarter. a. Issued shares for $80,000 b. Provided
The following list includes a series of accounts for B-Ball Corporation, which has been operating for three years. These accounts are listed alphabetically and numbered for identification. Following
Starting in May 2017, Nicole decided that she has everything she needs to open her doors to customers. To keep up with competition, Nicole has added items such as gift certificates and has started to
Using the material learned from the first three chapters, answer the following question. Vanishing Games Corporation (VGC) operates a massive multi-player online game, charging players a monthly
Refer to M2-23. Evaluate whether the current ratio of Robust Ribs Restaurant will increase or decrease as a result of the following transactions. Data From M2-23The balance sheet of Robust
The following accounts are taken from the financial statements of Knight Entertainments Resorts, Inc. at its September 30, 2017, year-end. (Amounts are in thousands.) Required:1. Prepare a
Lee Delivery Company Inc. (LDC) was incorporated in 2017. The following transactions occurred during the year: a. Received $40,000 cash from organizers in exchange for shares in the new
During its first month of operations, March 2017, Falla Fashions, Inc. completed four transactions with the dollar effects indicated in the following schedule: Required: 1. Write a brief
What is a T-account? What is its purpose?
During its first week of operations, January 1 to 7, 2017, Cosy Comfort Furniture Company completed six transactions with the dollar effects indicated in the following
With forty locations in eight provinces, Discount Books is the country’s favourite new-and used bookstore chain. Do the following events result in a recordable transaction for Discount Books?
Starbucks is a coffee company—a big coffee company. During a ten-year period, the number of Starbucks locations grew from 165 to over 8,800 stores in fifty countries. Assume the following is from

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