- •108. On July 1, 2006, Jekel & Hyde Inc. Purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below:
- •Required:
- •Indicate the accounts that would be affected by the above transactions and the resulting balance in each account. Apply the interest on the construction loan to the cost of the building only.
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •In its 2004 annual report to shareholders, Boston Beer Co. Disclosed the following footnote:
- •E. Property, Plant and Equipment
- •128. Use a t- account to show the balances and changes during 2004 in Boston Beer's: Property, Plant and Equipment account and its Accumulated depreciation—Property, Plant & equipment account.
- •Required:
- •130. Use a t- account to show the balances and changes during 2004 in Plank Breweries:
- •Note 4 Property, Plant and Equipment
- •100. A summary of Klugman Company's December 31, 2006, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:
- •101. A summary of London Fashion's December 31, 2006, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:
- •114. Is there any evidence in Winchester's disclosures above that are consistent with earnings management?
- •Required:
- •121. Is there any evidence in hp's disclosures above that are consistent with earnings management?
- •100. Required:
- •101. Required:
- •104. Required:
- •105. Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •127. In its 2004 annual report to shareholders, Martin Marietta Materials, Inc. Included the following in its financial statement footnotes:
- •Note e: property, plant and equipment, net
- •In another footnote, the company reported:
Required:
130. Use a t- account to show the balances and changes during 2004 in Plank Breweries:
Fixed assets account and Accumulated depreciation—fixed assets account (in $ thousands).
Answer:
|
Fixed assets |
|
|
|
Acc.Deprec.-- |
Fixed assets |
|
||
Beg. Balance |
28,750 |
|
|
|
|
|
7,625 |
Beg. Balance |
|
Purchases |
1,279 |
Disposals |
254 |
|
Acc. Deprec. |
|
2,121 |
Depreciation Exp. |
|
|
|
|
|
|
on disposals |
191 |
|
|
|
End. Balance |
29,775 |
|
|
|
|
|
9,555 |
End. Balance |
Learning Objective: 1 Level of Learning: 3
131. Show the journal entry to record Plank's disposal of the fixed assets during 2004.
Answer:
Cash |
15 |
|
Acc. Deprec. |
191 |
|
Loss on disposal |
47 |
|
Fixed assets |
|
253 |
Learning Objective: 1 Level of Learning: 3
132. In its 2004 annual report to shareholders, Custard Cup Inc. disclosed the following footnote:
Note 4 Property, Plant and Equipment
Property, plant and equipment (PPE) at December 31, 2004, and December 31, 2003, consisted of the following:
|
2001 |
2000 |
(In millions) |
|
|
Machinery and equipment |
$244 |
$237 |
Buildings and |
90 |
89 |
improvements |
|
|
Office furniture and |
6 |
6 |
fixtures |
_______ |
_______ |
|
340 |
332 |
Less: Accumulated |
183 |
165 |
depreciation and |
|
|
amortization |
_______ |
_______ |
|
157 |
167 |
Land |
15 |
15 |
Construction in progress |
24 |
6 |
|
$196 |
$188 |
|
|
|
Depreciation expense for property, plant and equipment was $26 million in 2004.
Required: Compute the Accumulated depreciation on PPE disposed of by Custard Cup during 2004.
Answer:
Acc.Deprec.-- |
Property Plant & Equipment (in millions) |
||
|
|
165 |
Beg. Balance |
Acc. Deprec. |
|
26 |
Depreciation Exp. |
On disposals |
8 |
|
|
|
|
183 |
End. Balance |
On May 12, 2006, Falwell Computing sold five computers to Computing Plus for $10,000, subject to terms 3/10, n30. Falwell uses the net method of accounting for sales discounts.
Required:
-
Prepare the journal entry to record the sale.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on May 20, 2006.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 5, 2006.
Answer:
(a.) |
Accounts receivable |
9,700 |
|
|
Sales revenue |
|
9,700 |
|
|
|
|
(b.) |
Cash |
9,700 |
|
|
Accounts receivable |
|
9,700 |
|
|
|
|
(c.) |
Cash |
10,000 |
|
|
Accounts receivable |
|
9,700 |
|
Interest revenue |
|
300 |
Learning Objective: 3 Level of Learning: 3
92. On July 18, 2006, Philly Furniture Factory sold twenty reclining rockers to Dave's Discount Furniture for $8,000, subject to terms 2/10, n30. Philly uses the net method of accounting for sales discounts.
Required:
-
Prepare the journal entry to record the sale.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on July 26, 2006.
-
Prepare the journal entry to record receipt of the payment assuming the correct amount was received on August 15, 2006.
Answer:
(a.) |
Accounts receivable |
7,840 |
|
|
Sales revenue |
|
7,840 |
|
|
|
|
(b.) |
Cash |
7,840 |
|
|
Accounts receivable |
|
7,840 |
|
|
|
|
(c.) |
Cash |
8,000 |
|
|
Accounts receivable |
|
7,840 |
|
Interest revenue |
|
160 |
Learning Objective: 3 Level of Learning: 3
93. On March 12, 2006, Admiral Electronics sold 20 fax machines to Cool Stuff Co. for $10,000, subject to terms 2/10, n30. Admiral uses the gross method of accounting for sales discounts.
Required:
-
Prepare the journal entry to record the sale.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on March 20, 2006.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on April 5, 2006.
Answer:
(a.) |
Accounts receivable |
10,000 |
|
|
Sales revenue |
|
10,000 |
|
|
|
|
(b.) |
Cash |
9,800 |
|
|
Sales discounts |
200 |
|
|
Accounts receivable |
|
10,000 |
|
|
|
|
(c.) |
Cash |
10,000 |
|
|
Accounts receivable |
|
10,000 |
Learning Objective: 3 Level of Learning: 3
94. On October 18, 2006, Flying Chicken sold 2,000 pounds of chicken to Healthier Grocery for $3,400, subject to terms 2/10, n30. Flying Chicken uses the gross method of accounting for sales discounts.
Required:
-
Prepare the journal entry to record the sale.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on October 26, 2006.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on November 15, 2006.
Answer:
(a.) |
Accounts receivable |
3,400 |
|
|
Sales revenue |
|
3,400 |
|
|
|
|
(b.) |
Cash |
3,332 |
|
|
Sales discounts |
68 |
|
|
Accounts receivable |
|
3,400 |
|
|
|
|
(c.) |
Cash |
3,400 |
|
|
Accounts receivable |
|
3,400 |
Learning Objective: 3 Level of Learning: 3
95. On June 14, 2006, Rumsfeld Company sold 100 air conditioning units to Powell Heating and Cooling. The units list for $600 each but Powell was granted a 25% trade discount. All of Rumfeld's sales are subject to terms 2/10, n30. Rumsfeld uses the gross method of accounting for sales discounts.
Required:
-
Prepare the journal entry to record the sale.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 22, 2006.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on July 10, 2006.
Answer:
(a.) |
Accounts receivable |
45,000 |
|
|
Sales revenue |
|
45,000 |
|
|
|
|
(b.) |
Cash |
44,100 |
|
|
Sales discounts |
900 |
|
|
Accounts receivable |
|
45,000 |
|
|
|
|
(c.) |
Cash |
45,000 |
|
|
Accounts receivable |
|
45,000 |
Learning Objective: 3 Level of Learning: 3
96. On February 14, 2006, Prime Company sold 50 air conditioning units to L&P Heating and Cooling. The units list for $700 each but L&P was granted a 30% trade discount. All of Prime's sales are subject to terms 2/10, n30. Prime uses the net method of accounting for sales discounts.
Required:
-
Prepare the journal entry to record the sale.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on February 22, 2006.
-
Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on March 10, 2006.
Answer:
(a.) |
Accounts receivable |
24,010 |
|
|
Sales revenue |
|
24,010 |
|
|
|
|
(b.) |
Cash |
24,010 |
|
|
Accounts receivable |
|
24,010 |
|
|
|
|
(c.) |
Cash |
24,500 |
|
|
Accounts receivable |
|
24,010 |
|
Interest revenue |
|
490 |
Learning Objective: 3 Level of Learning: 3
97. Beethoven Music Company started business in March, 2006. Sales for its first year were $400,000. Beethoven priced its merchandise to yield a 45% gross profit based on sales dollars. Industry statistics suggest that a 10% of the merchandise sold to customers will be returned later. Beethoven estimated its sales returns based on the industry average. During the year, customers returned $30,000 in sales. Beethoven uses a perpetual inventory system.
Required:
Prepare summary journal entries to record (1) sales, (2) sales returns, and (3) the year-end adjusting entry for estimated sales returns.
Answer:
(1) |
Accounts receivable |
400,000 |
|
|
Sales revenue |
|
400,000 |
|
|
|
|
|
Cost of goods sold |
220,000 |
|
|
Inventory |
|
220,000 |
|
|
|
|
(2) |
Sales returns |
30,000 |
|
|
Accounts receivable |
|
30,000 |
|
|
|
|
|
Inventory |
16,500 |
|
|
Cost of goods sold |
|
16,500 |
|
|
|
|
(3) |
Sales returns |
10,000 |
|
|
Allowance for sales returns |
|
10,000 |
|
|
|
|
|
Inventory-estimated returns |
5,500 |
|
|
Cost of goods sold |
|
5,500 |
Learning Objective: 4 Level of Learning: 3
98. During Burns Company's first year of operations, credit sales totaled $140,000 and collections on credit sales totaled $105,000. Burns estimates that bad debt losses will be 1.5% of credit sales. By year-end, Burns had written off $300 of specific accounts as uncollectible.
Required:
-
Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense.
-
Show the year-end balance sheet presentation for accounts receivable.
Answer:
(a.) |
Allowance for uncollectible accounts |
300 |
|
|
|
Accounts receivable |
|
300 |
|
|
|
|
|
|
|
Bad debt expense |
2,100 |
|
|
|
Allowance for uncollectible accounts |
|
2,100 |
|
|
|
|
|
|
(b.) |
Partial balance sheet presentation: |
|
|
|
|
Accounts receivable |
$34,700 |
|
|
|
Less: Allowance for uncollectible accounts |
1,800 |
$32,900 |
(A/R at net realizable value) |
Learning Objective: 5 Level of Learning: 3
99. During Bricker Company's first year of operations, credit sales totaled $200,000 and collections on credit sales totaled $145,000. Bricker estimates that $1,000 of its ending accounts receivable balance will not be collected. By year-end, Bricker had written off $330 of specific accounts as uncollectible.
Required:
-
Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense.
-
Show the year-end balance sheet presentation for accounts receivable.
Answer:
(a.) |
Allowance for uncollectible accounts |
330 |
|
|
|
Accounts receivable |
|
330 |
|
|
|
|
|
|
|
Bad debt expense |
1,330 |
|
|
|
Allowance for uncollectible accounts |
|
1,330 |
|
|
|
|
|
|
(b.) |
Partial balance sheet presentation: |
|
|
|
|
Accounts receivable |
$54,670 |
|
|
|
Less: Allowance for uncollectible accounts |
1,000 |
$53,670 |
(A/R at net realizable value) |
Learning Objective: 5 Level of Learning: 3