Transactions for Mehta Company for the month of May are presented below.
May / 1 / B.D. Mehta invests $3,300 cash in exchange for common stock of Mehta Company, a small welding corporation.3 / Buys equipment on account for $1,245.
13 / Pays $497 to landlord for May rent.
21 / Bills Noble Corp. $511 for welding work done.
Prepare journal entries for each of these transactions.
Date / Description/Account / Debit / CreditMay 1 / Service revenue Rent expense Accounts receivable Cash Investment in Subsidiary Accounts payable Common stock Equipment /
Cash Service revenue Investment in Subsidiary Equipment Common stock Accounts receivable Accounts payable Rent expense /
May 3 / Common stock Service revenue Investment in Subsidiary Equipment Cash Accounts payable Rent expense Accounts receivable /
Accounts receivable Rent expense Service revenue Accounts payable Investment in Subsidiary Equipment Cash Common stock /
May 13 / Equipment Cash Rent expense Investment in Subsidiary Accounts payable Accounts receivable Service revenue Common stock /
Accounts receivable Service revenue Accounts payable Common stock Rent expense Investment in Subsidiary Equipment Cash /
May 21 / Rent expense Common stock Service revenue Cash Investment in Subsidiary Equipment Accounts payable Accounts receivable /
Cash Equipment Accounts payable Common stock Accounts receivable Investment in Subsidiary Rent expense Service revenue /
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On July 1, 2012, Crowe Co. pays $19,352 to Zubin Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Crowe Co. journalize the entry on July 1 and the adjusting entry on December 31. (Round answers to zero decimal places, e.g. 2,555.)
Date / Description/Account / Debit / CreditJuly 1 / Prepaid Insurance Insurance Revenue Cash Rent Revenue Unearned Rent Revenue Insurance Expense /
Cash Unearned Rent Revenue Insurance Expense Rent Revenue Prepaid Insurance Insurance Revenue /
Dec. 31 / Unearned Rent Revenue Prepaid Insurance Insurance Expense Cash Insurance Revenue Rent Revenue /
Insurance Revenue Rent Revenue Insurance Expense Prepaid Insurance Cash Unearned Rent Revenue /
Dresser Company's weekly payroll, paid on Fridays, totals $6,100. Employees work a 5-day week. Prepare Dresser's adjusting entry on Wednesday, December 31, and the journal entry to record the $6,100 cash payment on Friday, January 2. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Date / Description/Account / Debit / CreditDec. 31 / Accounts Payable Cash Salaries Expense Accounts Receivable Salaries Payable /
Accounts Receivable Accounts Payable Salaries Payable Salaries Expense Cash /
Jan. 2 / Accounts Receivable Salaries Payable Salaries Expense Cash Accounts Payable /
Cash Accounts Receivable Accounts Payable Salaries Expense Salaries Payable /
Accounts Payable Cash Salaries Expense Salaries Payable Accounts Receivable /
Side Kicks has year-end account balances of Sales $900,990; Interest Revenue $15,300; Cost of Goods Sold $559,960; Operating Expenses $226,990; Income Tax Expense $36,710; and Dividends $22,699. Prepare the year-end closing entries. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Description/Account / Debit / CreditOperating Expenses Income Summary Retained Earnings Income Tax Expense Dividends Sales Cost of Goods Sold Income Expense Interest Revenue /
Income Expense Retained Earnings Income Tax Expense Operating Expenses Sales Dividends Interest Revenue Income Summary Cost of Goods Sold /
Operating Expenses Income Tax Expense Income Summary Sales Dividends Retained Earnings Income Expense Cost of Goods Sold Interest Revenue /
(To close sales account.)
Dividends Interest Revenue Cost of Goods Sold Income Summary Operating Expenses Income Tax Expense Retained Earnings Income Expense Sales /
Income Expense Operating Expenses Income Tax Expense Interest Revenue Sales Income Summary Retained Earnings Dividends Cost of Goods Sold /
Operating Expenses Dividends Retained Earnings Income Tax Expense Income Expense Income Summary Interest Revenue Sales Cost of Goods Sold /
Income Expense Income Summary Operating Expenses Retained Earnings Sales Dividends Cost of Goods Sold Income Tax Expense Interest Revenue /
(To close expense accounts.)
Sales Income Expense Dividends Retained Earnings Income Summary Interest Revenue Cost of Goods Sold Operating Expenses Income Tax Expense /
Cost of Goods Sold Sales Income Expense Dividends Operating Expenses Interest Revenue Retained Earnings Income Summary Income Tax Expense /
(To close net income to retained earnings.)
Operating Expenses Sales Retained Earnings Income Summary Interest Revenue Dividends Cost of Goods Sold Income Tax Expense Income Expense /
Sales Income Expense Operating Expenses Retained Earnings Income Tax Expense Income Summary Dividends Cost of Goods Sold Interest Revenue /
(To close dividends to retained earnings.)
Starr Co. had sales revenue of $627,800 in 2012. Other items recorded during the year were:
Cost of goods sold / $324,500Wage expense / 128,700
Income tax expense / 26,700
Increase in value of company reputation / 19,300
Other operating expenses / 11,700
Unrealized gain on value of patents / 20,000
Prepare a single-step income statement for Allen for 2012. Allen has 100,000 shares of stock outstanding. (List multiple entries from largest to smallest amount, e.g. 10, 5, 2. Round earnings per share to 2 decimal places, e.g. 0.20. Enter all amounts as positive amounts and subtract where necessary.)
STARR CO.Income Statement
For the Year 2012
Revenues
Other Operating Expenses Sales Cost of Goods Sold Income Tax Expense Wages Expense / $
Expenses
Other Operating Expenses Income Tax Expense Sales Cost of Goods Sold Wages Expense / $
Income Tax Expense Other Operating Expenses Wages Expense Sales Cost of Goods Sold /
Wages Expense Other Operating Expenses Income Tax Expense Sales Cost of Goods Sold /
Wages Expense Income Tax Expense Other Operating Expenses Sales Cost of Goods Sold /
Total Expenses /
Net Income / $
Earnings per share / $
Portman Corporation has retained earnings of $707,080 at January 1, 2012. Net income during 2012 was $1,811,090, and cash dividends declared and paid during 2012 totaled $76,490. Prepare a retained earnings statement for the year ended December 31, 2012. Assume an error was discovered: land costing $87,050 (net of tax) was charged to repairs expense in 2009. (Enter all amounts as positive amounts and subtract where necessary.)
PORTMAN CORPORATIONRetained Earnings Statement
For the Year Ended December 31, 2012
Net income Cash dividends Retained earnings-January 1-as adjusted Retained earnings-December 31 Retained earnings-January 1-as reported Correction for overstatement of expenses in prior period (net of tax) / $
Correction for overstatement of expenses in prior period (net of tax) Cash dividends Net income Retained earnings-December 31 Retained earnings-January 1-as reported Retained earnings-January 1-as adjusted /
Retained earnings-January 1-as adjusted Retained earnings-December 31 Net income Retained earnings-January 1-as reported Cash dividends Correction for overstatement of expenses in prior period (net of tax) /
Add: Retained earnings-December 31 Cash dividends Retained earnings-January 1-as reported Net income Correction for overstatement of expenses in prior period (net of tax) Retained earnings-January 1-as adjusted /
Less: Retained earnings-December 31 Cash dividends Retained earnings-January 1-as reported Correction for overstatement of expenses in prior period (net of tax) Retained earnings-January 1-as adjusted Net income /
Retained earnings-January 1-as reported Retained earnings-December 31 Net income Correction for overstatement of expenses in prior period (net of tax) Cash dividends Retained earnings-January 1-as adjusted / $
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On January 1, 2012, Richards Inc. had cash and common stock of $63,530. At that date the company had no other asset, liability or equity balances. On January 2, 2012, it purchased for cash $21,710 of equity securities that it classified as available-for-sale. It received cash dividends of $4,940net of tax during the year on these securities. In addition, it has an unrealized holding gain on these securities of $6,880 net of tax. Determine the following amounts for 2012: (a) net income; (b) comprehensive income; (c) other comprehensive income; and (d) accumulated other comprehensive income (end of 2012).
(a) / Net income / $(b) / Comprehensive income / $
(c) / Other comprehensive income / $
(d) / Accumulated other comprehensive income / $
Comprehensive Income)
Armstrong Corporation reported the following for 2012: net sales $1,229,700; cost of goods sold $750,700; selling and administrative expenses $335,300; and an unrealized holding gain on available-for-sale securities $17,400.
Prepare a statement of comprehensive income, using the two-income statement format. Ignore income taxes and earnings per share. (Enter all amounts as positive amounts and subtract where necessary.)
ARMSTRONG CORPORATIONIncome Statement and Statement of Comprehensive Income
For the Year Ended December 31, 2012
Selling and administrative expenses Sales Cost of goods sold / $
Cost of goods sold Selling and administrative expenses Sales /
Gross Profit /
Sales Cost of goods sold Selling and administrative expenses /
Net income / $
Net income / $
Unrealized holding gain /
Comprehensive income / $
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ABE18-10Guillen, Inc. began work on a $7,088,400 contract in 2012 to construct an office building. Guillen uses the completed-contract method. At December 31, 2012, the balances in certain accounts were construction in process $1,752,600; accounts receivable $252,600; and billings on construction in process $1,108,600. Indicate how these accounts would be reported in Guillen's December 31, 2012, balance sheet.
Current assetsBillings Costs and recognized profit in excess of billings Construction Expenses Accounts Receivable Cash Construction in Process / $
Inventories
Costs and recognized profit in excess of billings Construction Expenses Construction in Process Cash Accounts Receivable Billings / $
Less: Construction Expenses Cash Billings Accounts Receivable Construction in Process Costs and recognized profit in excess of billings /
Costs and recognized profit in excess of billings Construction Expenses Accounts Receivable Cash Billings Construction in Process /
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Lazaro, Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $890, resulting in a gross profit rate of 40%. At the time of repossession, the uncollected balance is $710, and the fair value of the repossessed merchandise is $281. Prepare Lazaro's entry to record the repossession. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Description/Account / Debit / CreditLoss on Repossession Cash Installment Accounts Receivable Installment Sales Repossessed Merchandise Deferred Gross Profit /
Loss on Repossession Installment Accounts Receivable Cash Installment Sales Deferred Gross Profit Repossessed Merchandise /
Loss on Repossession Cash Deferred Gross Profit Installment Accounts Receivable Repossessed Merchandise Installment Sales /
Cash Installment Sales Installment Accounts Receivable Deferred Gross Profit Repossessed Merchandise Loss on Repossession /
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ABE5-1Harding Corporation has the following accounts included in its December 31, 2012, trial balance: Accounts Receivable $118,190; Inventories $297,600; Allowance for Doubtful Accounts $9,260; Patents $75,110; Prepaid Insurance $9,630; Accounts Payable $85,580; Cash $27,010. Prepare the current assets section of the balance sheet listing the accounts in proper sequence.
Current assetsPatents Allowance for doubtful accounts Inventories Accounts payable Accounts receivable Prepaid insurance Cash / $
Inventories Prepaid insurance Patents Accounts payable Accounts receivable Cash Allowance for doubtful accounts / $
Less: Prepaid insurance Accounts payable Accounts receivable Cash Patents Allowance for doubtful accounts Inventories / /
Inventories Accounts receivable Patents Cash Allowance for doubtful accounts Prepaid insurance Accounts payable /
Accounts receivable Cash Allowance for doubtful accounts Accounts payable Inventories Patents Prepaid insurance /
Total current assets / $
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ABE5-6Patrick Corporation's adjusted trial balance contained the following asset accounts at December 31, 2012: Prepaid Rent $21,860; Goodwill $55,710; Franchise Fees Receivable $4,820; Franchises $40,540; Patents $34,850; Trademarks $13,780. Prepare the intangible assets section of the balance sheet. (List amounts from largest to smallest, e.g. 10, 5, 3, 2.)
Intangible assetsPrepaid rent Franchise fees receivable Patents Goodwill Franchises Trademarks / $
Trademarks Prepaid rent Franchises Patents Franchise fees receivable Goodwill /
Trademarks Prepaid rent Franchises Franchise fees receivable Patents Goodwill /
Patents Prepaid rent Franchise fees receivable Goodwill Franchises Trademarks /
Total intangible assets / $
Hawthorn Corporation's adjusted trial balance contained the following accounts at December 31, 2012: Retained Earnings $123,010; Common Stock $707,490; Bonds Payable $109,630; Additional Paid-in Capital $209,230; Goodwill $64,340; Accumulated Other Comprehensive Loss $151,180. Prepare the stockholders' equity section of the balance sheet. (List entries in order of stock preferred status. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
Stockholders equityAdditional paid-in capital Bonds payable Retained earnings Common stock Accumulated other comprehensive loss Goodwill / $
Retained earnings Accumulated other comprehensive loss Goodwill Bonds payable Common stock Additional paid-in capital /
Common stock Goodwill Bonds payable Additional paid-in capital Accumulated other comprehensive loss Retained earnings /
Bonds payable Additional paid-in capital Retained earnings Goodwill Accumulated other comprehensive loss Common stock /
Total stockholders' equity / $
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ABE24-3Linden Corporation is preparing its December 31, 2012, financial statements. Two events that occurred between December 31, 2012, and March 10, 2013, when the statements were issued, are described below.
- A liability, estimated at $155,930 at December 31, 2012, was settled on February 26, 2013, at $181,860.
- A flood loss of $81,160 occurred on March 1, 2013.
What effect do these subsequent events have on 2012 net income? (If there is no impact select not change and 0 for the amount.)
Net income will by $ as a result of the adjustment of the liability.
Net income will by $ as a result of the adjustment of the flood loss.
Operating profits and losses for the seven industry segments of Roder Corporation are:
Penley / $104 / Cheng / $(24)Konami / (48) / Takuhi / 36
KSC / 32 / Molina / 172
Red Moon / 60
Based only on the operating profit (loss) test, which industry segments are reportable?
Enter 1 if the segment is reportable. Enter 0 if the segment is not reportable.
Penley /Konami /
KSC /
Red Moon /
Cheng /
Takuhi /
Molina /
Operating profits and losses for the seven industry segments of Roder Corporation are:
Penley / $104 / Cheng / $(24)Konami / (48) / Takuhi / 36
KSC / 32 / Molina / 172
Red Moon / 60
Based only on the operating profit (loss) test, which industry segments are reportable?
Enter 1 if the segment is reportable. Enter 0 if the segment is not reportable.
Penley /Konami /
KSC /
Red Moon /
Cheng /
Takuhi /
Molina /
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ABE24-9Heartland Company's budgeted sales and budgeted cost of goods sold for the coming year are $147,450,000 and $31,305,000 respectively. Short-term interest rates are expected to average 10%. If Heartland can increase inventory turnover from its present level of 9 times a year to a level of 12 times per year, compute its expected cost savings for the coming year.
$
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ABE5-13Ames Company reported 2012 net income of $151,290. During 2012, accounts receivable increased by $15,170 and accounts payable increased by $9,720. Depreciation expense was $46,910. Prepare the cash flows from operating activities section of the statement of cash flows.(List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)
Cash flows from operating activitiesNet income / $
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation expense Increase in accounts payable Increase in accounts receivable / $
Depreciation expense Increase in accounts payable Increase in accounts receivable /
Increase in accounts payable Depreciation expense Increase in accounts receivable / /
Net cash provided by operating activities / $
Martinez Corporation engaged in the following cash transactions during 2012.
Sale of land and building / $195,500Purchase of treasury stock / 48,320
Purchase of land / 37,490
Payment of cash dividend / 91,480
Purchase of equipment / 55,440
Issuance of common stock / 152,150
Retirement of bonds / 101,240
Compute the net cash provided (used) by investing activities. (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
Purchase of equipment Payment of cash dividend Issuance of common stock Purchase of land Sale of land and building Purchase of treasury stock Purchase of cash dividend / $Purchase of equipment Purchase of land Payment of cash dividend Purchase of treasury stock Issuance of common stock Sale of land and building Purchase of cash dividend /
Payment of cash dividend Purchase of cash dividend Purchase of land Issuance of common stock Purchase of equipment Sale of land and building Purchase of treasury stock /
Net cash provided by investing activities / $
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ABE5-16Martinez Corporation engaged in the following cash transactions during 2012.