What is the balance in the cash short/over account (DR or CR & $ amount)? Is it a revenue or an expense?Balance in Cash Short/Over?

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Title:McGraw Hill Connect, chapters 8, 9,10 and 11 EXAMPLE HERE OF CHAPTER 8 HERE:
Question Detail: Exercise 8-6 Petty cash fund accounting L.O. P2[The following information applies to the questions displayed below.]NetPerks Co. establishes a $200 petty cash fund on January 1. On January 8, the fund shows $28 in cash along with receipts for the following expenditures: postage, $64; transportation-in, $19; delivery expenses, $36; and miscellaneous expenses, $53. NetPerks uses the perpetual system in accounting for merchandise inventory.references1.value:
2.00 pointsExercise 8-6 Part 1(1)Prepare journal entry to establish the fund on January 1. (Omit the “$” sign in your response.)DateGeneral JournalDebitCreditJan. 1check my workeBook LinkView Hint #1references2.value:
2.00 pointsExercise 8-6 Part 2(2)Prepare journal entry to reimburse it on January 8. (Omit the “$” sign in your response.)DateGeneral JournalDebitCreditJan. 8check my workeBook LinkView Hint #1references3.value:
2.00 pointsExercise 8-6 Part 3(3)Prepare journal entries to both reimburse the fund and increase it to $500 on January 8, assuming no entry in part 2. (Omit the “$” sign in your response.)DateGeneral JournalDebitCreditJan. 8value:
6.00 pointsExercise 8-7 Bank reconciliation and adjusting entries L.O. P3A table for a monthly bank reconciliation dated September 30 is given below. For each item 1 through 12, indicate whether the item should be added to or deducted from the book or bank balance, or whether it should not appear on the reconciliation. (Select the answers in the appropriate cells and Leave no cells blank be certain to select “NA” in fields which are not applicable.)Bank BalanceBook BalanceShown/Not Shown1.Bank service charge for September.2.Checks written and mailed to payees on October 2.3.Checks written by another depositor but charged against this company s account.4.Principal and interest on a note receivable to this company is collected by the bank but not yet recorded by the company.5.Special bank charge for collection of note in part 4 on this company’s behalf.6.Check written against the company’s account and cleared by the bank; erroneously not recorded by the company’s recordkeeper.7.Interest earned on the September cash balance in the bank.8.Night deposit made on September 30 after the bank closed.9.Checks outstanding on August 31 that cleared the bank in September.10.NSF check from customer is returned on September 25 but not yet recorded by this company.11.Checks written by the company and mailed to payees on September 30.12.Deposit made on September 5 and processed by the bank on September 6.value:
6.00 pointsProblem 8-2A Establish, reimburse, and adjust petty cash L.O. P2Shawnee Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May (the last month of the company’s fiscal year).May1Prepared a company check for $250 to establish the petty cash fund.15Prepared a company check to replenish the fund for the following expenditures made since May1.a. Paid $78 for janitorial services.b. Paid $63.68 for miscellaneous expenses.c. Paid postage expenses of $43.50.d. Paid $57.15 to The County Gazette (the local newspaper) for an advertisement.e. Counted $11.15 remaining in the petty cash box.16Prepared a company check for $200 to increase the fund to $450.31The petty cashier reports that $293.39 cash remains in the fund. A company check is drawn to replenish the fund for the following expenditures made since May 15.f. Paid postage expenses of $48.36.Reimbursed the office manager for business mileage, $38.50.Paid $39.75 to deliver merchandise to a customer, terms FOB destination.31The company decides that the May 16 increase in the fund was too large. It reduces the fund by $50, leaving a total of $400.Required:1.Prepare journal entries to establish the fund on May 1, to replenish it on May 15 and on May 31, and to reflect any increase or decrease in the fund balance on May 16 and May 31. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)DateGeneral JournalDebitCreditMay 1May 15May 16May 31May 31Problem 8-4A Prepare a bank reconciliation and record adjustments L.O. P3[The following information applies to the questions displayed below.]The following information is available to reconcile Clark Company s book balance of cash with its bank statement cash balance as of July 31, 2011.a.On July 31, the company s Cash account has a $26,193 debit balance, but its July bank statement shows a $28,020 cash balance.b.Check No. 3031 for $1,380 and Check No. 3040 for $552 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $336 and Check No. 3069 for $2,148, both written in July, are not among the canceled checks on the July 31 statement.c.In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent was correctly written and drawn for $1,250 but was erroneously entered in the accounting records as $1,230.d.A credit memorandum enclosed with the July bank statement indicates the bank collected $9,000 cash on a non-interest-bearing note for Clark, deducted a $45 collection fee, and credited the remainder to its account. Clark had not recorded this event before receiving the statement.e.A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Jim Shaw. Clark has not yet recorded this check as NSF.f.Enclosed with the July statement is a $15 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received.g.Clark s July 31 daily cash receipts of $10,152 were placed in the bank s night depository on that date, but do not appear on the July 31 bank statement.references6.value:
3.00 pointsProblem 8-4A Part 1Required:1.Prepare the bank reconciliation for this company as of July 31, 2011. (Input all amounts as positive values. Omit the “$” sign in your response.)CLARK COMPANY
Bank Reconciliation
July 31, 2011Bank statement balance$Book balance$Add:Add:Deduct:Deduct:$$Adjusted bank balance$Adjusted book balance$check my workeBook Linkreferences7.value:
3.00 pointsProblem 8-4A Part 22.Prepare the journal entries necessary to bring the company s book balance of cash into conformity with the reconciled cash balance as of July 31, 2011. (Omit the “$” sign in your response.)DateGeneral JournalDebitCreditJuly 31Problem 8-5A Prepare a bank reconciliation and record adjustments L.O. P3[The following information applies to the questions displayed below.]Els Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,038.05 and No. 5893 for $484.25. The following information is available for its September 30, 2011, reconciliation.From the September 30 Bank StatementPREVIOUS BALANCETOTAL CHECKS AND DEBITSTOTAL DEPOSITS AND CREDITSCURRENT BALANCE16,800.459,620.0511,182.8518,363.25CHECKS AND DEBITSDEPOSITS AND CREDITSDAILY BALANCEDateNo.AmountDateAmountDateAmount09/0358881,038.0509/051,103.7508/3116,800.4509/045902731.9009/122,226.9009/0315,762.4009/0759011824.2509/214,093.0009/0415,030.5009/17588.25 NSF09/252,351.7009/0516,134.2509/205905937.0009/3022.50 IN09/0714,310.0009/225903399.1009/301,385.00 CM09/1216,536.9009/2259042,080.0009/1715,948.6509/285907213.8509/2015,011.6509/2959091,807.6509/2119,104.6509/2216,625.5509/2518,977.2509/2818,763.4009/2916,955.7509/3018,363.25From Els Company s Accounting RecordsCash Receipts DepositedDateCash
DebitSept. 51,103.75122,226.90214,093.00252,351.70301,582.7511,358.10Cash DisbursementsCheck No.Cash
Credit59011,824.255902731.905903399.1059042,050.005905937.005906859.305907213.855908276.0059091,807.659,099.05CashAcct. No. 101DateExplanationPRDebitCreditBalanceAug. 31Balance15,278.15Sept. 30Total receiptsR1211,358.1026,636.2530Total disbursementsD239,099.0517,537.20Additional InformationCheck No. 5904 is correctly drawn for $2,080 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of $2,050. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum is from the collection of a $1,400 note for Els Company by the bank. The bank deducted a $15 collection fee. The collection and fee are not yet recorded.references8.value:
3.00 pointsProblem 8-5A Part 1Required:1.Prepare the September 30, 2011, bank reconciliation for this company. (Round your answers to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.)ELS COMPANY
Bank Reconciliation
September 30, 2011Bank statement balance$Book balance$Add:Add:$Deduct:Deduct:$Adjusted bank balance$Adjusted book balance$check my workeBook Linkreferences9.value:
3.00 pointsProblem 8-5A Part 22.Prepare the journal entries to adjust the book balance of cash to the reconciled balance. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)DateGeneral JournalDebitCreditSept. 30AND CHAPTER TEST EXAMPLE SUBMITTED AS DOC:PROBLEM #1 22 pointsGreenview Food Store developed the following information in recording its bank statement for the month of March 20XX.Balance per books on March 31 $ 829Balance per bank on March 31 $ 7,0301) Checks written in March but still outstanding, $5,200.2) Checks written in February but still outstanding, $1,200.3) Deposits of March 30 and 31 not yet recorded by bank, $3,100.4) NSF check of customer returned by bank, $400.5) Check #210 for $675 was correctly issued and paid by the bank but incorrectly entered in the cash payments journal as payment on account for $657, for payment to a creditor.6) Bank service charge for March was $31.7) A payment on account was incorrectly entered into the cash payments journal and posted to the accounts payable subsidiary ledger for $854 when check #318 was correctly prepared for $584. The check cleared the bank in March.8) The bank collected a note receivable for the company for $3,000 plus $80 interest.Instructions:a) Prepare a bank reconciliation for the Greenview Food Store for the month of March 31, 20XX.b) Journalize the adjusting entries for Greenview Food Store on March 31, 20XX.Bank Reconciliation:Journal Entries:General JournalDateDescriptionDebitCreditPROBLEM #2 18 pointsJenrob Company completed the following selected transactions during January 20XX.January 1 Established a petty cash fund of $50015 The cash sales for the day per the register tape were $3,018.The actual cash received from cash sales were $3,011.31 Petty cash on hand was $123. Replenished the petty cash fund for the followingdisbursements:Jan 2 Office supplies, $4510 Postage due on letter, $29 (Miscellaneous Expense)14 Office supplies, $56.17 Postage stamps, $42 (Office Supplies).20 Express charges on merchandise sold, $136 (Delivery Expense).22 Repair to desk, $63 (Miscellaneous Expense).30 Office supplies, $12.31 The cash sales for the day per the register tape were $2,812.The actual cash received from cash sales were $2,822.31 Decreased the petty cash fund by $100.General JournalDateDescriptionDebitCredit What is the balance in the cash short/over account (DR or CR & $ amount)? Is it a revenue or an expense?Balance in Cash Short/Over? ______________________________Revenue or Expense? ____________________________________

Whiteside Corporation issues $590,000 of 9% bonds, due in 13 years, with interest payable semiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds.

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Whiteside Corporation issues $590,000 of 9% bonds, due in 13 years, with interest payable semiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds. (Use the present value tables in the text. Round your answer to zero decimal places, e.g. 2,510.)

$

Kraft Enterprises owns the following assets at December 31, 2012.

Cash in bank savings account71,025Checking account balance17,426
Cash on hand9,333Postdated checks800
Cash refund due from IRS34,764Certificates of deposit (180-day)91,703

What amount should be reported as cash?

Presented below is information related to Rembrandt Inc.’s inventory.

(per unit)SkisBootsParkas
Historical cost$261.82$146.07$73.03
Selling price299.03199.81101.63
Cost to distribute26.1811.023.45
Current replacement cost279.73144.6970.28
Normal profit margin44.1039.9629.28

Determine the following:

the two limits to market value (e.g., the ceiling and the floor) that should be used in the lower of cost or market computation for skis; (Round answers to 2 decimal places, e.g. 20.25.)

Ceiling$
Floor$

b. the cost amount that should be used in the lower of cost or market comparison of boots; (Round answer to 2 decimal places, e.g. 20.25.)

Cost amount$

c. the market amount that should be used to value parkas on the basis of the lower of cost or market.(Round answer to 2 decimal places, e.g. 20.25.)

Market amount$

Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 69 units that cost $41 each. During June, the company purchased 207 units at $41 each, returned 8 units for credit, and sold 172 units at $69 each. Journalize the June transactions.

Description/AccountDebitCredit
Accounts payableInventoryAccounts receivableSalesCost of goods sold
SalesAccounts receivableCost of goods soldAccounts payableInventory
(To record inventory purchased.)
Cost of goods soldInventoryAccounts payableAccounts receivableSales
Accounts payableAccounts receivableSalesCost of goods soldInventory
(To record inventory returned.)
SalesCost of goods soldAccounts payableAccounts receivableInventory
InventoryAccounts payableAccounts receivableCost of goods soldSales
(To record inventory sold.)
Cost of goods soldSalesInventoryAccounts payableAccounts receivable
InventoryAccounts payableAccounts receivableSalesCost of goods sold
(To record cost of goods sold.)

Amsterdam Company uses a periodic inventory system. For April, when the company sold 700 units, the following information is available.

UnitsUnit CostTotal Cost
April 1 inventory250$15$3,750
April 15 purchase400187,200
April 23 purchase350196,650
1,000$17,600

Compute the April 30 inventory and the April cost of goods sold using the average cost method. (Round computations for cost per unit to 2 decimal places, e.g. 10.25 and answers to 0 decimal places, e.g. 2,250.)

Inventory$
Cost of goods sold$
AE8-15

(FIFO, LIFO, Average Cost Inventory)

Esplanade Company was formed on December 1, 2011. The following information is available from Esplanade’s inventory records for Product BAP.

UnitsUnit Cost
January 1, 2012 (beginning inventory)798$8.00
Purchases:
January 5, 20121,5969.00
January 25, 20121,72910.00
February 16, 20121,06411.00
March 26, 201279812.00

A physical inventory on March 31, 2012, shows 2,128 units on hand.

Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods. Assume Esplanade Company uses the periodic inventory method.

a. FIFO

ESPLANADE COMPANY
Computation of Inventory for Product BAP
BAP under FIFO Inventory Method
March 31, 2012
UnitsUnit CostTotal Cost
March 26, 2012$$
February 16, 2012
January 25, 2012
March 31, 2012, inventory$

b. LIFO

ESPLANADE COMPANY
Computation of Inventory for Product BAP
BAP under LIFO Inventory Method
March 31, 2012
UnitsUnit CostTotal Cost
Beginning inventory$$
January 5, 2012
March 31, 2012, inventory$

c. Weighted average (Round weighted average cost to 2 decimal places, e.g. 2.25 and use this rounded amount for future calculations. Round the inventory on March to 0 decimal places, e.g. 1,250.)

ESPLANADE COMPANY
Computation of Inventory for Product BAP
BAP under Weighted Average Inventory Method
March 31, 2012
UnitsUnit CostTotal Cost
Beginning inventory$$
January 5, 2012
January 25, 2012
February 16, 2012
March 26, 2012
$
Weighted Average cost$
March 31, 2012, inventory$

Floyd Corporation has the following four items in its ending inventory.

ItemCostReplacement CostNet Realizable Value (NRV)NRV Less Normal Profit Margin
Jokers$2,052$2,103$2,155$1,642
Penguins5,1305,2335,0794,207
Riddlers4,5144,6684,7453,796
Scarecrows3,2833,0683,9303,150

Determine the final lower of cost or market inventory value for each item.

Jokers$
Penguins$
Riddlers$
Scarecrows$
ABE9-8

Boyne Inc. had beginning inventory of $13,320 at cost and $22,200 at retail. Net purchases were $133,200 at cost and $188,700 at retail. Net markups were $11,100; net markdowns were $7,770; and sales were $174,270. Compute ending inventory at cost using the conventional retail method. (Round computation for cost-to-retail ratio percentage and answer to 0 decimal places, e.g. 25,250.)

Ending inventory$
AE9-12

(Gross Profit Method)

Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.

Inventory, May 1$179,200
Purchases (gross)716,800
Freight-in33,600
Sales1,120,000
Sales returns78,400
Purchase discounts13,440

Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.

Inventory$

Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.

Inventory$
ABE10-1

Previn Brothers Inc. purchased land at a price of $28,320. Closing costs were $3,270. An old building was removed at a cost of $11,440. What amount should be recorded as the cost of the land?

$

ABE10-5

Garcia Corporation purchased a truck by issuing an $112,800, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck. (Round answers to 0 decimal places, e.g. 15,510. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Hint: Use tables in text.)

Description/AccountDebitCredit
CashNotes receivableDepreciation expenseTruckDiscount on notes payableNotes payable
Notes receivableNotes payableDiscount on notes payableTruckDepreciation expenseCash
CashDepreciation expenseNotes payableNotes receivableTruckDiscount on notes payable
ABE10-6

Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $431,550. The estimated fair values of the assets are land $82,200, building $301,400, and equipment $109,600. At what amounts should each of the three assets be recorded? (Note: Do not round the computation of the % of total.)

Recorded Amount
Land$
Building$
Equipment$
ABE10-7

Fielder Company obtained land by issuing 2,000 shares of its $12 par value common stock. The land was recently appraised at $104,550. The common stock is actively traded at $50 per share. Prepare the journal entry to record the acquisition of the land. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

Description/AccountDebitCredit
Paid-in capital in excess of parCashAdditional paid-in capitalLandCommon stock
LandAdditional paid-in capitalCashPaid-in capital in excess of parCommon stock
Common stockCashPaid-in capital in excess of parLandAdditional paid-in capital
ABE10-8Navajo Corporation traded a used truck (cost $21,800, accumulated depreciation $19,620) for a small computer worth $4,033. Navajo also paid $1,090 in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.) (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)Description/AccountDebitCreditAccumulated depreciationTruckCashGain on disposal of truckComputerComputerAccumulated depreciationTruckCashGain on disposal of truckGain on disposal of truckCashAccumulated depreciationTruckComputerComputerTruckAccumulated depreciationCashGain on disposal of truckGain on disposal of truckAccumulated depreciationComputerTruckCash

ABE10-10

Mehta Company traded a used welding machine (cost $12,240, accumulated depreciation $4,080) for office equipment with an estimated fair value of $6,800. Mehta also paid $4,080 cash in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.) (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

Description/AccountDebitCredit
Accumulated depreciationMachineOffice equipmentDepreciation expenseGain on disposal of machineLoss on disposal of machineCash
Loss on disposal of machineCashAccumulated depreciationDepreciation expenseGain on disposal of machineMachineOffice equipment
Accumulated depreciationLoss on disposal of machineCashDepreciation expenseOffice equipmentMachineGain on disposal of machine
CashGain on disposal of machineMachineOffice equipmentLoss on disposal of machineAccumulated depreciationDepreciation expense
Accumulated depreciationDepreciation expenseGain on disposal of machineCashOffice equipmentLoss on disposal of machineMachine
ABE11-1Fernandez Corporation purchased a truck at the beginning of 2012 for $50,820. The truck is estimated to have a salvage value of $2,420 and a useful life of 193,600 miles. It was driven 27,830 miles in 2012 and 37,510 miles in 2013. Compute depreciation expense for 2012 and 2013.(Round answers to 0 decimal places, i.e. 2,250.)2012$2013$
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ABE11-4Lockhard Company purchased machinery on January 1, 2012, for $80,400. The machinery is estimated to have a salvage value of $8,040 after a useful life of 8 years.(a)Compute 2012 depreciation expense using the double-declining balance method.$(b)Compute 2012 depreciation expense using the double-declining balance method assuming the machinery was purchased on October 1, 2012.(Round answer to 0 decimal places, i.e. 2,250.)$
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ABE11-8Jurassic Company owns machinery that cost $1,054,800 and has accumulated depreciation of $421,920. The expected future net cash flows from the use of the asset are expected to be $586,000. The fair value of the equipment is $468,800. Prepare the journal entry, if any, to record the impairment loss.Description/AccountDebitCreditLoss on impairmentAccumulated depreciationMachineryDepreciation expenseCashCashAccumulated depreciationDepreciation expenseLoss on impairmentMachinery
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ABE11-9Everly Corporation acquires a coal mine at a cost of $539,200. Intangible development costs total $134,800. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $107,840), after which it can be sold for $215,680. Everly estimates that 5,392 tons of coal can be extracted. If 944 tons are extracted the first year, prepare the journal entry to record depletion.Description/AccountDebitCreditDevelopment costsAccumulated depletionRestoration costsInventoryDevelopment costsRestoration costsAccumulated depletionInventory
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ABE11-11Francis Corporation purchased an asset at a cost of $48,500 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $4,850. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2012 2017. (Round answers to 0 decimal places.)2012$2013$2014$2015$2016$2017$
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ABE12-1Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for $56,170. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare Celine Dion’s journal entries to record the purchase of the patent and 2012 amortization.Account/DescriptionDebitCreditCashPatent amortization expenseAccounts payableAccumulated amortizationPatentsAccounts receivableAccumulated amortizationAccounts receivableAccounts payablePatentsCashPatent amortization expense(To record purchase of patent.)CashAccounts receivableAccounts payableAccumulated amortizationPatent amortization expensePatentsAccounts payablePatentsCashPatent amortization expenseAccounts receivableAccumulated amortization(To record amortization.)
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ABE12-14Karen Austin Corporation has capitalized software costs of $789,600, and sales of this product the first year totaled $415,620. Karen Austin anticipates earning $969,780 in additional future revenues from this product, which is estimated to have an economic life of 4 years. Compute the amount of software cost amortization for the first year.(a)Compute the amount of software cost amortization for the first year using the percent of revenue approach.$(b)Compute the amount of software cost amortization for the first year using the straight-line approach.$
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ABE13-1Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $82,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,290. On July 3, Roley returned damaged goods and received credit of $8,200. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley. (For multiple debit/credit entries, list amounts from largest to smallest, e.g. 10, 8, 6.)DateDescription/AccountDebitCreditJuly 1Purchase returns and allowancesAccounts payablePurchasesPurchase discountsCashPurchase discountsAccounts payablePurchasesCashPurchase returns and allowancesFreight-inCashAccounts payablePurchasesPurchase returns and allowancesPurchase discountsJuly 3Accounts payableCashPurchase returns and allowancesPurchasesPurchase discountsPurchase returns and allowancesPurchase discountsCashPurchasesAccounts payableJuly 10Purchase returns and allowancesPurchasesAccounts payableCashPurchase discountsPurchasesAccounts payablePurchase returns and allowancesPurchase discountsCashCashPurchase discountsPurchasesAccounts payablePurchase returns and allowances
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ABE13-3Takemoto Corporation borrowed $65,400 on November 1, 2012, by signing a $66,872, 3-month, zero-interest-bearing note. Prepare Takemoto’s November 1, 2012, entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013, entry. (For multiple debit/credit en tries, list amounts from largest to smallest, e.g. 10, 8, 6. Round all answers to 0 decimal places, e.g. 11,150.)DateDescription/AccountDebitCredit11/1/12Notes receivableInterest expenseInterest payableCashDiscount on notes payableNotes payableInterest expenseNotes payableNotes receivableInterest payableDiscount on notes payableCashNotes payableInterest expenseNotes receivableInterest payableCashDiscount on notes payable12/31/12Discount on notes payableNotes payableNotes receivableCashInterest expenseInterest payableNotes payableInterest payableNotes receivableInterest expenseCashDiscount on notes payable2/1/13Interest payableInterest expenseCashNotes receivableDiscount on notes payableNotes payableNotes receivableInterest payableDiscount on notes payableCashNotes payableInterest expenseInterest payableCashDiscount on notes payableNotes payableInterest expenseNotes receivableCash
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ABE14-1Whiteside Corporation issues $590,000 of 9% bonds, due in 13 years, with interest payable semiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds. (Use the present value tables in the text. Round your answer to zero decimal places, e.g. 2,510.)$
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ABE21-10Indiana Jones Company enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of $41,170 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $21,150 at lease-end. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the carrying amount of the machinery is $209,176. Prepare Lost Ark’s January 1, 2012, journal entries.DescriptionDebitCreditLease LiabilityMachineryLease ReceivableCashRent ExpenseLeased Machinery Under Capital LeasesInterest PayableInterest Expense$Rent ExpenseInterest PayableInterest ExpenseMachineryLease ReceivableCashLeased Machinery Under Capital LeasesLease Liability$(To record the lease)Lease ReceivableLeased Machinery Under Capital LeasesRent ExpenseMachineryLease LiabilityInterest PayableInterest ExpenseCash$Interest ExpenseLease ReceivableRent ExpenseInterest PayableMachineryCashLease LiabilityLeased Machinery Under Capital Leases$(To record first lease payment)
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ABE21-12On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $27,600 and immediately leased it back. The truck was carried on Irwin’s books at $21,850. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $7,847 at the end of each year. The appropriate rate of interest is 13%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin’s 2012 journal entries.(Round your answer to the nearest dollar eg 58,591.For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
DateDescriptionDebitCreditJan. 1Unearned Profit on Sale-LeasebackTruckLeased EquipmentCashDepreciation ExpenseAccumulated DepreciationLease LiabilityInterest Expense$Interest ExpenseLease LiabilityDepreciation ExpenseTruckAccumulated DepreciationCashUnearned Profit on Sale-LeasebackLeased Equipment$Accumulated DepreciationTruckDepreciation ExpenseLease LiabilityInterest ExpenseUnearned Profit on Sale-LeasebackCashLeased Equipment$(To record the sale )Jan. 1CashUnearned Profit on Sale-LeasebackAccumulated DepreciationDepreciation ExpenseInterest ExpenseLeased EquipmentTruckLease Liability$Lease LiabilityAccumulated DepreciationUnearned Profit on Sale-LeasebackLeased EquipmentDepreciation ExpenseInterest ExpenseCashTruck$(To record the leaseback)Dec. 31CashInterest ExpenseDepreciation ExpenseLeased EquipmentTruckAccumulated DepreciationUnearned Profit on Sale-LeasebackLease Liability$Depreciation ExpenseAccumulated DepreciationLeased EquipmentLease LiabilityCashInterest ExpenseTruckUnearned Profit on Sale-Leaseback$(To record depreciation)Dec. 31Depreciation ExpenseUnearned Profit on Sale-LeasebackCashLease LiabilityInterest ExpenseAccumulated DepreciationTruckLeased Equipment$Leased EquipmentDepreciation ExpenseCashTruckLease LiabilityUnearned Profit on Sale-LeasebackAccumulated DepreciationInterest Expense$Dec. 31Leased EquipmentInterest ExpenseLease LiabilityDepreciation ExpenseCashTruckUnearned Profit on Sale-LeasebackAccumulated Depreciation$Interest ExpenseDepreciation ExpenseLease LiabilityCashTruckLeased EquipmentUnearned Profit on Sale-LeasebackAccumulated Depreciation$Leased EquipmentUnearned Profit on Sale-LeasebackTruckCashLease LiabilityDepreciation ExpenseAccumulated DepreciationInterest Expense$(To record first lease payment)

Suppose that after specializing according to comparative advantage, a country is trading with another nation that also specializes according to its comparative advantage. Which of the following statements are true for the first country?

/in /by

The opportunity cost of one more slice of pizza in terms of sodas is the

total number of pizza slices that we have divided by the total number of sodas that we have.
number of sodas we have to give up in order to get one extra pizza slice.
number of pizza slices we have to give up in order to get one extra soda.
total number of sodas that we have divided by the total number of pizza slices that we have.

1 points

QUESTION 2

A production possibilities frontier shows

how money can be allocated among two kinds of goods.
the limits to future growth of a nation.
the various combinations of output a nation can produce a certain time, given its available resources and technology.
that if price of one good decreases, the price of the other has to increase.

1 points

QUESTION 3

When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost

remains constant.
might increase, decrease, or remain constant depending on how much people value the additional units of the good.
increases.
decreases.

1 points

QUESTION 4

When all of the available factors of production are being efficiently employed, the

economy is producing at a point within its PPF.
PPF disappears.
economy is producing at a point beyond its PPF.
economy is producing at a point on its PPF.

1 points

QUESTION 5

If a nation devotes a larger share of its current production to consumption goods, then

its PPF will shift inward.
its economic growth will slow down.
its PPF will shift outward.
some productive factors will become unemployed.

1 points

QUESTION 6

A point on the production possibilities frontier reflects an

attainable point with full employment of all resources.
attainable point without full employment of all resources.
unattainable point without full employment of all resources.
unattainable point with full employment of all resources.

1 points

QUESTION 7

When drawing a production possibilities frontier, which of the following is held constant?

the available factors of production and the state of technology
the amount of money in the economy
the prices of goods and services
the quantity of the goods and services that are produced

1 points

QUESTION 8

As we move along the production possibilities frontier,

more of both goods can be produced.
the possibilities of tradeoffs diminish.
a tradeoff is not possible because nations need all goods.
the production of one good increases as the production of the other good decreases.

1 points

QUESTION 9

Which of the following is an assumption used when drawing a production possibilities frontier?

i.Human wants and desires are limited to what is available.

ii.Only two goods are considered.

iii.The level of technology is fixed and unchanging.

i and iii
ii only
i, ii, and iii
i only

1 points

QUESTION 10

To achieve gains from trade, a country

needs to have an absolute advantage in the production of all goods.
specializes in the producing a good in which it has a lower opportunity cost.
must produce at a point beyond its PPF.
should produce at the midpoint of its PPF.

1 points

QUESTION 11

Relative to Al, Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

a comparative advantage
more production efficiency
a marginal benefit
a comparative benefit

1 points

QUESTION 12

Economic growth depends upon which of the following?

i.Improving the quality of labor

ii.Technological advancement

iii.Increasing the amount of capital

iii only
ii only
i only
i, ii, and iii

1 points

QUESTION 13

In one hour John can produce 20 loaves of bread or 18 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true?

John has a comparative advantage in producing cakes.
Phyllis has an absolute advantage in both goods.
Phyllis has a comparative advantage in producing cakes.
John has an absolute advantage in both goods.

1 points

QUESTION 14

As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?

It decreases.
It might increase, decrease, or remain constant depending on how much people value the additional units of the good.
It remains constant.
It increases.

1 points

QUESTION 15

The production possibilities frontier illustrates the

goods and services that people want.
maximum combinations of goods and services that can be produced.
resources the economy possess, but not its level of technology.
limits to people’s wants.

1 points

QUESTION 16

The United States produced approximately ________ worth of goods and services in 2007.

$14 billion
$14 trillion
$140 billion
$140 trillion

1 points

QUESTION 17

The fact of increasing opportunity cost when moving on the PPF means that

to increase the production of one product requires smaller and smaller sacrifices of the other good.
to decrease the production of one product requires smaller and smaller sacrifices of the other good.
to increase the production of one product requires larger and larger sacrifices of the other good.
when the government forces a movement from one point on the PPF to another point, no production is lost.

1 points

QUESTION 18

Other things equal, if India devotes more resources to educate its population than China,

China will grow faster than India.
India will be able to eliminate scarcity faster than China.
India will be able to eliminate opportunity cost faster than China.
India will grow faster than China.

1 points

QUESTION 19

In order for Ireland to grow more potatoes, wool production must decrease. This situation is an example of

zero opportunity cost.
producing at a point that lies beyond the PPF.
opportunity benefit.
a tradeoff.

1 points

QUESTION 20

Moving from one point to another on a production possibilities frontier implies

increasing the production of both goods.
increasing the production of one good and decreasing the production of another.
holding the production levels of both goods constant.
decreasing the production of both goods.

1 points

QUESTION 21

The United States is one of the richest nations in the world,

but it can still benefit from specialization and trade.
so does not need to trade with poor nations in order to achieve any gains from trade.
so might not have a comparative advantage in producing any goods.
so it must have a comparative advantage in the production of all goods.

1 points

QUESTION 22

“Comparative advantage” is defined as a situation in which one person can produce

more of all goods than another person.
a good for a lower opportunity cost than another person.
a good for a lower dollar cost than another person.
more of a good than another person.

1 points

QUESTION 23

The idea of increasing opportunity cost is reflected in the

linear shape of the production possibilities frontier.
bowed in shape of the production possibilities frontier.
bowed out shape of the production possibilities frontier.
positive slope of the production possibilities frontier.

1 points

QUESTION 24

Suppose that after specializing according to comparative advantage, a country is trading with another nation that also specializes according to its comparative advantage. Which of the following statements are true for the first country?

i)It enjoys gains from trade.

ii)It must have an absolute advantage in the production of the good it produces.

iii)It is producing at a point beyond its PPF.

i only.
i and ii.
i and iii.
ii and iii.

1 points

QUESTION 25

If a society moves from a period of time with significant unemployment to a time with full employment, its production possibilities frontier will

shift rightward.
not shift because the society moves from one point on the frontier to a point inside the frontier.
not shift because the society moves from a point inside the frontier to a point on the frontier.
shift leftward.

Comprehensive Problem

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Intermediate Accounting III

Comprehensive Problem

You are about to begin working on a comprehensive problem. This means that when you prepare the journal entries and financial statements for this problem you need to follow ALL the rules applicable to the accounting process. You need to prepare the journal entries and financial statements as if you were doing it for your employer. Be sure to look over the grading rubric prior to starting this problem.

Balance Sheet accounts are provided in the table below. *The debits and credits do not equal/balance because the net income earned so far this year ($79,000) has not yet been included in retained earnings. This amount will show up as part of the net income when you prepare the financial statements

AccountDebitCredit
Cash100,000
Trading Securities50,000
Available-for-Sale Securities50,000
Fair Value Adjustment-AFS5,000
Accounts Receivable75,000
Receivable from Employee10,000
Inventories200,000
Assets Held-for-Sale25,000
Cash Value of Insurance10,000
Equipment54,000
Accumulated Depreciation-Equipment16,500
Building96,000
Accumulated Depreciation-Building32,000
Land25,000
Goodwill275,000
Accounts Payable80,000
Interest Payable15,000
Salaries Payable10,000
Taxes Payable5,000
Current Portion of Note40,000
Note Payable (noncurrent portion of note)190,000
Mortgage Liability110,000
Common Stock300,000
Retained Earnings92,500
Accumulated Other Comprehensive Income/Loss5,000______
$975,000$896,000

The following information relates to the revenues earned and expenses incurred during the first half of 2012.

DebitCredit
Sales$1,911,500
Sales Returns and Allowances100,000
Sales Discounts22,500
Cost of Goods Sold1,240,000
Selling Expenses250,000
General and Administrative Expenses220,000

Transactions occurring in 2012 but not considered in the current net income of 79,000 are as follows:

1. On July 1st, the corporation entered into a lease agreement for a machine that qualifies as a capital lease. The lease calls for annual lease payments of $26,269 over a six-year lease term, with the first payment at July 1st, the leases inception. The interest rate is 5%. *(Round your answer to the nearest whole dollar).

2. On July 1st, the corporation sold a $15,000, 5 year bond with a stated rate of 8%. The effective yield on the bonds is 10%. Interest on the bond is paid semiannually on January 1st and July 1st. The company uses the effective interest method to amortize any bond discount or premium. *(Round your answer to the nearest whole dollar).

3. One month following the issue of the bonds, the corporation invested $5,000 into a sinking fund in order to have the money to pay off the bonds when they come due.

4. On September 3rd, the corporation experienced an uninsured flood loss (extraordinary) which destroyed the building. The tax rate is 40%.

5. On September 20th, the company sold their shares in Hobokin Company resulting in a loss of $1,000 (pretax). See the portfolio tables below.

6. When its president died, on October 8th, the corporation realized $110,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $10,000 (the gain is nontaxable).

7. On November 1st, the corporation filed a suit against Tri-Star, Inc. seeking damages for patent infringement. Legal counsel believes that it is probable that the company will be successful against Tri-Star for an estimated amount in the range of $100,000 to $150,000, with all amounts in the range considered equally likely.

8. On November 15th, the corporation disposed of its wholesale division at a loss of $5,000 before taxes. The wholesale operations were shut down at the beginning of the year. This transaction meets the criteria for discontinued operations. The assets associated with this sale are being classified as Af?cAc‚¬A??oAssets Held-For-SaleAf?cAc‚¬.

9. The corporation decided to change its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior years is to increase 2010 income by $60,000 and decrease 2011 income by $20,000 before taxes. The FIFO method has been used for 2012. The tax rate on these items is 40%.

10. On December 18th, the corporation purchased 2,000 shares of its own common stock at $20 a share.

11. On December 20th, the corporation paid off the current portion of the note payable along with the $15,000 in interest that had been accrued.

12. December 31st, interest on the lease has accrued.

13. December 31st, interest on the bonds has accrued.

14. The company’s products carry a one year warranty against manufacturer’s defects. Warranty costs are expected to be 1% of net sales.

15. At the beginning of 2011, the corporation purchased a piece of equipment for $54,000, salvage value of $9,000 that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2011 and 2012. However, in 2012 the bookkeeper failed to deduct the salvage value in computing the depreciation base (an error was made). The journal entry for this year depreciation has already been made, but a correcting entry is required to fix the mistake.

16. Adjust the Trading securities and AFS securities to their respective fair values. See the portfolio tables below.

Portfolio Tables

AFS Securities PortfolioCostFair Value 2011Fair Value 2012
Disney Corporation$5,000$8,000$10,000
Monster Truck, Inc.25,00020,00022,000
Hobokin Company20,00017,000______
Totals$50,000$45,000$32,000
Trading Securities PortfolioCostFair Value 2011Fair Value 2012
GM Company$15,000$20,000$23,000
Shaffer Corporation35,00030,00034,000
Totals$50,000$50,000$57,000

Required:

A. Journalize transactions 1 – 16. The corporation’s tax rate is 40%.

B. Don’t forget to include a journal entry for your income taxes once you have prepared the income statement.

C. Prepare a multiple-step income statement, statement of retained earnings, and a balance sheet. Do each statement on a separate page in Excel and put your name as part of the company name on all of the statements (e.g., Frilly Things, Fay Barton). List Af?cAc‚¬A??oOther Comprehensive IncomeAf?cAc‚¬ below net income on the income statement. Be sure to list the unrealized holding gains & losses, but do not list them net of taxes. Use good form in preparing these financial statements. Financial statements will be graded on presentation which means that the proper categories and subcategories are to be used, proper placement of dollar values in appropriate columns as well as appropriate use of dollar signs and underlines, etc.