... Prepare the adjusting entries on January 31 for a) service revenue, b) salaries expense, and c) supplies expense. Omit explanations. For each journal entry write Dr. for debit and Cr. for credit. 3. (TCO B) Adjusting Entries: Seymor Stars is the new owner of Night Computer Services. At the end of August 201X, his first month of ownership, Seymor is trying to prepare monthly financial statements. At August 31, Seymor owed his employees $2,900 in wages that will be paid on September 1. At the end of the month he had not yet received the month’s utility bill. Based on past experience, he estimated that the bill would be approximately $600. A telephone bill in the amount of $117 covering August charges is unpaid at August 31. You are to prepare the adjusting entries for a) wage expense, b) utilities expense, and c) telephone expense. For each journal entry write Dr. for debit and Cr. for credit. 4. (TCO B) Adjusting Entries: When the accounts of Upside Down Inc. are examined, the adjusting data listed below are uncovered on...
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...periodic inventory system, prepare the journal entries that summarize the transactions that created these balances. Include all end-of-period adjusting entries indicated. [pic] [pic] Exercise 8-2 Goods in transit; consignment ( LO8-2 Text: E 8-7 The December 31, 2013, year-end inventory balance of the Delphi Printing Company is $317,000. You have been asked to review the following transactions to determine if they have been correctly recorded. 1. Materials purchased from a supplier and shipped to Delphi f.o.b. destination on December 28, 2013, were received on January 2, 2014. The invoice cost of $50,000 is not included in the preliminary inventory balance. 2. At year-end, Delphi had $12,000 of merchandise on consignment from the Harvey Company. This merchandise is included in the preliminary inventory balance. 3. On December 29, merchandise costing $17,000 was shipped to a customer f.o.b. shipping point and arrived at the customer’s location on January 3, 2014. The merchandise is not included in the preliminary inventory balance. 4. Materials purchased from a supplier and shipped to Delphi f.o.b. shipping point on December 28, 2013 were received on January 4, 2014. The invoice cost of $32,000 is not included in the preliminary inventory balance Required: Determine the correct inventory amount to be reported on...
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... |Item |Material Number | |500 |Entry-level skateboard |ENSB3000 | |200 |Helmet |HLMT5000 | |50 |SSB Inc. T-Shirt |SHRT4000 | |200 |Skateboard first aid kit |FAID6000 | A quote by email or fax would be ideal. Thank you Paul Reynolds Purchasing Agent Fax: (734) 555-6666 Super Skateboard Builders, Inc Quotation 1 Skateboard Drive, Grand Rapids, MI, 49525 Quotation Number:1100436 Phone 616.555.1234 Fax 616.555.1235 TO: Date: 07/02/08 Mr. Paul Reynolds This quotation is valid for 30 days MI Sporting Company Terms of...
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...person must adapt and endure through the trials and tribulations in their life and (4) that no matter what you have or don’t’ have in life you must always be true to yourself. Some of the other main points in this story are that Suki’s father owned shipping, mining and hotel companies in South Korea and that the Kim family was millionaires who lived in a mansion on top of a hill surrounded by ponds, peacocks and orchards with chauffeurs and maids. They had lived in a society were money, education and family history dictated who you were and how you lived. “Gone in an instant was my small world, made possible by my father’s shipping company, mining business and hotels. In queens, most of my E.S.L. classmates came from our families who had escaped Korea’s ridge class hierarchy, one dictated by education level, family background and financial status”, (2004, pgs. 62-63). Suki’s family has to flee South Korea because her father went bankrupt and in South Korea bankruptcy is a crime punishable by jail time so the family immigrated to New York. Arriving in Queens in the early 80’s Suki’s family was penniless; they had to share a two story brownstone in Woodside with a Korean family that ran a dry cleaner in Harlem. Suki’s made friends with Billy and Andy the sons of the family that ran the dry cleaners. The first word she learned in English was “fresh off the boat” (F.O.B.). She wondered why people would say that about her when she arrived in New...
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...Problem 1: You are the Senior Accountant for the Patty Corporation which has several divisions. They each keep their own accounting books and have chosen the appropriate method of revenue recognition based on their operations. | | | | Pat's Electronics Division | | | | | Pat's Electronics Division sells computers through agents in various cities. Agents send orders and down payments to our company. The division then ships the goods F.O.B. shipping point directly to the customers. Revenue is recognized at the point of sale. | | | | | | | Additional Financial Data: | | | Orders for fiscal year 2012 | $ 3,000,000 | | Down Payments collected in 2012 | $ 300,000 | | Billed and shipped in 2012 | $ 2,400,000 | | Freight billed in 2012 | $ 70,000 | | Commissions paid to Agents (after ship to customer) | 10% | | Warranty Returns as % of Sales | 1% | | | | Pickle Construction Division | | | | | The Pickle construction division was working on one project for the 2012 fiscal year. They use the percentage of completion revenue recognition method. | | | | Contract for new administration building | | | Total Contract Amount | $ 60,000,000 | | Contract Grant Date | August 14, 2012 | | Construction Began | September 1, 2012 | | | | | Estimated...
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...C H A P T E R 8 VALUATION OF I NVE NTOR I E S : A COST-BASIS APPROAC H LEARNING OBJECTIVES After studying this chapter, you should be able to: •1 •2 •3 •4 •5 •6 •7 •8 •9 •10 Identify major classifications of inventory. Distinguish between perpetual and periodic inventory systems. Identify the effects of inventory errors on the financial statements. Understand the items to include as inventory cost. Describe and compare the cost flow assumptions used to account for inventories. Explain the significance and use of a LIFO reserve. Understand the effect of LIFO liquidations. Explain the dollar-value LIFO method. Identify the major advantages and disadvantages of LIFO. Understand why companies select given inventory methods. Inventories in the Crystal Ball A substantial increase in inventory may be a leading indicator of an upcoming decline in profit margins. Take the auto industry as an example. Detroit’s inventories have been growing for several years because the domestic manufacturers like to run the factories at full capacity, even if they are not selling cars as fast as they can make them. The current arrangement is particularly tough for General Motors. It overproduces and then tries to push the sales with incentives and month-long “blow-out” sales. GM is hoping that the ever-growing market will cover the problem until customer demand grows to the point where the cars are purchased without so many incentives. But recently, all that was growing was GM inventories...
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...Unit I Accounting for Merchandising Business Overview Background Merchandising business deals primarily with the buying and selling of finished goods. This unit will introduce readers on the different activities done by a trading business. A brief discussion of the perpetual inventory systems is also included. Purpose The purpose of Unit I “Accounting for Merchandising Business ” is to illustrate the various buying and selling activities of a trading business. This unit also illustrates the basic entries using perpetual inventory system. A brief discussion of business documents are also included to give readers ideas of what are the basic papers being used that support a merchandising transaction. In this unit This unit contains the following topics: Topics Merchandising Business Inventory System Merchandise Accounts Business Documents Proprietor’s Investment and Withdrawal Purchase of Merchandise Purchase Returns and Allowances Discounts on Purchases Sales Sales Returns and Allowances Discounts on Sales Freight on Merchandise Income Statement Review Questions Exercises See Page 2 of F 3 of F 7 of F 9 of F 14 of F 15 of F 18 of F 20 of F 25 of F 27 of F 28 of F 29 of F 33 of F 38 of F 39 of F Marivic D. Valenzuela-Manalo Page 1of F Merchandising Business Overview An organization that is engaged in the buying and selling of goods or merchandise is a merchandising or trading concern. Merchandise refers to goods purchased for resale in the same form...
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...8394d_c08.qxd 6/11/02 12:30 PM Page 345 mac62 mac62:1253_GE: Accounting for Inventories Inventories in the Crystal Ball Policy makers, economists, and investors all want to know where the economy is headed. For example, if the economy is headed for a slow-down, it might be prudent on the part of the Federal Reserve to cut interest rates or for Congress to consider a tax cut to head off an economic downturn. Information on inventories is a key input into various decision makers’ economic prediction models. For example, every month the U.S. Commerce Department reports data on inventory levels and sales. As shown in the table below, in a recent month these data indicated an increasing level of inventories. November Inventory and Sales (billions of dollars, seasonally adjusted) Total business inventories Total business sales Inventory/Sales ratio 1999 $1,145 $ 862 1.33 2000 $1,221 $ 896 1.36 Percent Change ϩ6.64% ϩ3.94% More importantly, not only were inventories rising, but they were rising at a faster rate than sales. These data raised some warnings about future economic growth, because rising inventory levels relative to sales indicate that consumers are trimming spending faster than companies can slow production.1 These data also raised warning flags for investors in individual companies. As one analyst remarked, “When inventory grows faster than sales, profits drop.” That is, when companies face slowing sales and growing inventory...
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... The year-end price indexes were 100 at 12/31/13, 113 at 12/31/14, and 118 at 12/31/15. Brief Exercise 8-8 Brief Exercise 8-9 Your answer is correct. Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow. Brief Exercise 8-9 2014 inventory at base amount ($22,363 ÷ 1.07) $20,900 2013 inventory at base amount (20,000 ) Exercise 8-10 Exercise 8-2 Your answer is correct. In your audit of Jose Oliva Company, you find that a physical inventory on December 31, 2014, showed merchandise with a cost of $449,800 was on hand at that date. You also discover the following items were all excluded from the $449,800. Exercise 8-2 Inventory per physical count $449,800 The goods in transit from a vendor of $83,150, shipped f.o.b. destination, are properly excluded from the inventory because the title to the goods does not pass to Oliva until the buyer (Oliva) receives them. Exercise 8-15 Weighted average-cost per unit $ 8.91 Exercise 8-15 Beginning inventory January 5, 2014 January 25, 2014 February 16, 2014 March 26, 2014 Your answer is correct. Exercise...
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...Topic: Cash basis versus Accrual basis of accounting The cash basis of accounting, sometimes called cash accounting, is still used by some small companies whose business activity is uniform throughout the year--receiving and disbursing roughly the same amount of cash each month. Many individuals also use cash accounting.( Edmonds, McNair, Milam, and Olds, Fundamental Financial Accounting Concepts, 4th edition, McGraw-Hill Irwin, 2002) In the cash basis of accounting, the business records are "cash in" (deposits to the bank account) called cash receipts, and "cash out" (checks) called cash disbursements. Cash receipts - Cash disbursement = Cash flow. Each month's cash flow is added to the preceding month's cash balance yielding the current month’s cash balance. The cash basis of accounting is more likely to be used by service businesses than by retail or manufacturing businesses. Service businesses usually do not need equipment and can sell a service they perform with nothing more than their own hands and minds. Think of people who are lawyers, writers, public relations and advertising personnel, and accountants. There are two problems with cash accounting: 1) A business has difficulty in determining if it is earning a profit unless it is a small service business that does not own any property or equipment and does not have a number of contracts in progress, and 2) A business cannot keep track of any asset except cash. The cash basis of accounting does a poor job of...
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...punishable by jail time, so Kim and her family fled to America penniless. Unfortunately, this move was very hard due to the fact that her and her family were used to living a catered life with chauffeurs and butlers. After arriving they ended up with a Korean family in Harlem NY. Life of poverty was not so easy being classified as “f.o.b, (fresh off the boat)” knowing little English was hard to communicate and make friends. When it came to school it was strange having to take public transportation and doing homework without governess. In America Kim says the students were very ‘disrespectful in the eyes of Korean schools “were they were taught to bow to a teacher.” In America students did not really pay the teachers any mind and in the “ghetto” were they did search and police guarded doors. In her ESL (English as second language) class there was more peace were she could actually be with others like herself speaking and acting in their culture. But easily found out that they “had nothing in common” due to the “hierarchy of Korea’s class that dictates on education and family status.” She learned that being a teenager coming from Korea and knows being in America you were classified as “1.5 generation”. This was a common ground between second generation Korean Americans an first generation which merely used “minimal English traps”. The tone of this story is informative to help others like her out. Once they arrived it was not easy...
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...Suki Kim starts out in the early 80’s. Suki and her family came to America from Korea because her father lost his business and in Korea you could be placed in jail for bankruptcy. Suki and her family stayed in a house that belonged to another Korean family. Suki thought the house was ugly. There in the house she met her first playmates Billy and Andy. They spoke English and she learned to speak from them. One of the first term she learned from being around them was F.O.B(Fresh off the Boat). She couldn’t understand what they meant, but she was pretty sure she flew on a plane from Korea. Being in America life changed for her, from having people do things for her such as laundry to her being chaffureffed everywhere. Now she had to do all things as she said “Each week I found it humiliating to wheel out dirty clothes to a bleak place called the laundromat”. (Kim,2002 para.3) Manners and being respectful were taught to all Korean school children, but here in America kids didn’t bow, girls wore skimpy clothing and made out with boys in class. The school also was different, graffiti on the walls, guards at the front doors with metal detectors to check book bags. Suki found that she had little in common with her fellow Koreans. She realized that they were put into separate classes like back home in Korea. You had the wealthy Koreans and then you had the poor ones. So when it came to schools it was either private or public. So off to public school she went. Coming from Korea she...
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...supports my heritage. Brown like the table of which my family sits and eats upon. Brown like the paper bag containing burgers and fries by which my people consume. Brown like the mud on a rugby field by which my people play. Brown like the coat of the guitar by which my people strum. Brown like the sugar or the crust, the grain or the nut, whatever ingredient you want to use to mix up and around, you see my brother, I am Brown. My demographic is: high school cleaning ladies, fast food burger-making, factory box-packing, rubbish truck drivers, bus drivers, taxi drivers, sober drivers and living off the pension joy riders — I am a dropout. I hate science, math, English. Love P.E, music dance and drama — I play rugby. No, I am good at rugby. And if I am lucky my future in rugby might be sealed, not to reveal my flaws in education which are faulty because hey, who needs to be able to quote Shakespeare if you can play rugby? I will probably never graduate and if I do then I will be the first. Either by myself or with a baby in or beside me, victim of teen pregnancy with a guy in high school I thought was ‘skux’. Which really sucks. You see ‘cause when push came to shove he couldn’t pay the bucks. While I was focusing on this relationship I was trying to get through NCEA one, two and three purely on luck. Now I am stuck in a muck trying to scrub my skin with ‘lux’, soap. Trying to scrub away the fact that I have added to the brown statistic. While my mother is a gambler and my father...
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...1. (T/F) The scope of Article 2 includes secured transactions, i.e. those in which the seller retains a security interest in the goods. 1. False. 2-102. 2. (T/F) “Goods” include all things which are movable at the time of contract formation. 2. True 2-105(1). 3. Andy owns a hot dog cart in Balboa Park. He has a license from the park authority to operate the stand at a very visible and busy location in front of one of the museums. Andy contracts to sell the hot dog stand business, including the cart, the inventory, and the license, to Bill. Bill repudiates. At a subsequent trial for damages, which portions of the sale (i.e., the cart, the inventory, the license) will be governed by Article 2? 3. The answer depends on the local case law. By 2-102, Article 2 “applies to transactions in goods.” 2-105(1) defines “goods” as “all things...which are movable at the time of identification to the contract.” 2-501(1)(a) defines “identification” as occurring “when the contract is made if it is for the sale of goods already existing and identified.” Here, the “goods” are the cart and the inventory, but not the license. The license is an intangible. And since the goods were in existence at the time of contract formation, they have been identified to the contract, and movable at the time of identification to the contract. Some courts will use the “primary purpose” test to determine whether the entire contract is governed by Article 2. Here, the intent of the parties...
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...Topic: Cash basis versus Accrual basis of accounting The cash basis of accounting, sometimes called cash accounting, is still used by some small companies whose business activity is uniform throughout the year--receiving and disbursing roughly the same amount of cash each month. Many individuals also use cash accounting.( Edmonds, McNair, Milam, and Olds, Fundamental Financial Accounting Concepts, 4th edition, McGraw-Hill Irwin, 2002) In the cash basis of accounting, the business records are "cash in" (deposits to the bank account) called cash receipts, and "cash out" (checks) called cash disbursements. Cash receipts - Cash disbursement = Cash flow. Each month's cash flow is added to the preceding month's cash balance yielding the current month’s cash balance. The cash basis of accounting is more likely to be used by service businesses than by retail or manufacturing businesses. Service businesses usually do not need equipment and can sell a service they perform with nothing more than their own hands and minds. Think of people who are lawyers, writers, public relations and advertising personnel, and accountants. There are two problems with cash accounting: 1) A business has difficulty in determining if it is earning a profit unless it is a small service business that does not own any property or equipment and does not have a number of contracts in progress, and 2) A business cannot keep track of any asset except cash. The cash basis of accounting does a poor job of...
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