A number of accounting reporting situations are described below.

1. Church Company is in its fifth year of operation and has yet to issue financial statements. (Do

not use full disclosure principle.)

2. Leask Company has inventory on hand that cost $400,000. Leask reports inventory on its

balance sheet at its current market value of $425,000.

3. Ann Zareena, president of Always Music Company, bought a computer for her personal use.

She paid for the computer by using company funds and debited the computers account.

4. Mull Company recognizes revenue at the end of the production cycle, but before sale. The

price of the product, as well as the amount that can be sold, is not certain.

5. In preparing its financial statements, Rupe Company omitted information concerning its

method of accounting for inventories.

6. Martinez Company uses the direct write-off method of accounting for uncollectible accounts.

7. McKane Hospital Supply Corporation reports only current assets and current liabilities on its

balance sheet. Property, plant, and equipment are reported as current assets. Bonds payable

are reported as current liabilities. Liquidation of the company is unlikely.