Accounts Kimmel Wiley Plus questions and format

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Sheet1

Question 1
At January 1, 2017, Crane Company reported the following property, plant, and equipment accounts:
Accumulated depreciation—buildings $63,600,000
Accumulated depreciation—equipment 53,350,000
Buildings 97,400,000
Equipment 150,600,000
Land 23,900,000
The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjustments annually. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value.
During 2017, the following selected transactions occurred:
Apr. 1 Purchased land for $4.70 million. Paid $1.175 million cash and issued a 3-year, 6% note payable for the balance. Interest on the note is payable annually each April 1.
May-01 Sold equipment for $220,000 cash. The equipment cost $4.08 million when originally purchased on January 1, 2009.
Jun-01 Sold land for $4.98 million. Received $870,000 cash and accepted a 3-year, 5% note for the balance. The land cost $1.60 million when purchased on June 1, 2011. Interest on the note is due annually each June 1.
Jul-01 Purchased equipment for $2.20 million cash.
Dec. 31 Retired equipment that cost $1 million when purchased on December 31, 2007. No proceeds were received.
Prepare a tabular summary that includes the property, plant, and equipment balances as of January 1, 2017. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)
Assets = Liabilities + Stockholders' Equity
Retained Earnings
Cash + Notes Rec. + Interest Rec. + Land + Buildings - Accum. Depr. - Bldgs. + Equipment - Accum. Depr. - Equip. = Interest Payable + Notes Payable + Common Stock + Revenue - Expense - Dividend
Jan. 1 $ $ $ $ $ $ $ $ $ $ $ $ $ $
Record the above transactions in the tabular summary from part (a). (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)
Assets = Liabilities + Stockholders' Equity
Retained Earnings
Cash + Notes Rec. + Interest Rec. + Land + Buildings - Accum. Depr. - Bldgs. + Equipment - Accum. Depr. - Equip. = Interest Payable + Notes Payable + Common Stock + Revenue - Expense - Dividend
Jan. 1 $ $ $ $ $ $ $ $ $ $ $ $ $ $
Apr. 1
May-01
May-01
Jun-01
Jul-01
Dec. 31
Dec. 31
Record any adjustments required at December 31. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)
Assets = Liabilities + Stockholders' Equity
Retained Earnings
Cash + Notes Rec. + Interest Rec. + Land + Buildings - Accum. Depr. - Bldgs. + Equipment - Accum. Depr. - Equip. = Interest Payable + Notes Payable + Common Stock + Revenue - Expense - Dividend
Jan. 1 $ $ $ $ $ $ $ $ $ $ $ $ $ $
Apr. 1
May-01
May-01
Jun-01
Jul-01
Dec. 31
Dec. 31
Dec. 31 $ $ $ $
Dec. 31
Dec. 31
Dec. 31
Prepare the property, plant, and equipment section of the company’s statement of financial position at December 31. (List Property, Plant and Equipment in order of Land, Buildings and Equipment.)
CRANE COMPANY
Statement of Financial Position (Partial)
$
$
: 
: 
$
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Sheet2

Question 2
On January 1, 2017, Sandhill Co.'s accounting records contained these liability accounts.
Accounts Payable $43,500
Sales Taxes Payable 7,100
Unearned Service Revenue 20,000
During January, the following selected transactions occurred.
Jan. 1 Borrowed $18,000 in cash from Apex Bank on a 4-month, 5%, $18,000 note.
5 Sold merchandise for cash totaling $5,300, which includes 6% sales taxes.
12 Performed services for customers who had made advance payments of $10,600. (Record Service Revenue.)
14 Paid state treasurer’s department for sales taxes collected in December 2016, $7,100.
20 Sold 600 units of a new product on credit at $46 per unit, plus 6% sales tax.
During January, the company’s employees earned wages of $72,900. Withholdings related to these wages were $5,577 for Social Security (FICA), $5,207 for federal income tax, and $1,562 for state income tax. The company owed no money related to these earnings for federal or state unemployment tax. Assume that wages earned during January will be paid during February. Wages or payroll tax expense have not been recorded as of January 31.
Prepare a tabular summary to record the January transactions and the adjustments on January 31 for the outstanding note payable and the salaries and wages expense and payroll tax expense. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced. Round answers to 0 decimal places, e.g. 5,275.)
Assets = Liabilities + Stockholders’ Equity
Paid-in-Capital Retained Earnings
Cash + Accts. Rec. = Notes Pay. + Acct. Pay. + Salaries & Wages Pay. + Unearned Serv. Rev. + Sales Taxes Pay. + Interest Pay. + FICA Taxes Pay. + Fed. Inc. Taxes Pay. + St. Inc. Taxes Pay. + State Unemp. Taxes Pay. + Common Stock + Revenue - Expense - Dividend
Bal. $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
Jan. 1
Jan. 5
Jan. 12
Jan. 14
Jan. 20
Adj.
Jan. 31
Jan. 31
Jan. 31
Bal.
Prepare the current liabilities section of the balance sheet at January 31, 2017. Assume no change in Accounts Payable. (Round answers to 0 decimal places, e.g. 5,275.)
SANDHILL CO.
Balance Sheet (Partial)
$
$
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Sheet3

Question 3
Blue Spruce Warehouse distributes hardback books to retail stores and extends credit to all of its customers. During the month of June, the following merchandising transactions occurred.
Jun-01 Purchased books on account for $2,265 from Catlin Publishers.
3 Sold books on account to Garfunkel Bookstore for $1,000. The cost of the merchandise sold was $800.
6 Received $65 credit for books returned to Catlin Publishers.
9 Paid Catlin Publishers in full.
15 Received payment in full from Garfunkel Bookstore.
17 Sold books on account to Bell Tower for $1,000. The cost of the merchandise sold was $850.
20 Purchased books on account for $800 from Priceless Book Publishers.
24 Received payment in full from Bell Tower.
26 Paid Priceless Book Publishers in full.
28 Sold books on account to General Bookstore for $2,950. The cost of the merchandise sold was $830.
30 Granted General Bookstore $120 credit for books returned costing $60.
Prepare a tabular summary to record the transactions for the month of June for Blue Spruce Warehouse using a perpetual inventory system. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Assets = Liabilities + Stockholders' Equity
Retained Earnings
Cash + Accts. Rec. + Inv. = Accts. Pay. + Common Stock + Rev. - Exp.
June 1 $ $ $ $ $ $ $
3
6
9
15
17
20
24
26
28
30
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Sheet4

Question 4
Nona Curry started her own consulting firm, Larkspur, Inc., on May 1, 2017. The following transactions occurred during the month of May.
May-01 Stockholders invested $18,150 cash in the business in exchange for common stock.
2 Paid $726 for office rent for the month.
3 Purchased $605 of supplies on account.
5 Paid $182 to advertise for the month in the County News.
9 Received $1,694 cash for services performed.
12 Paid $242 cash dividend.
15 Performed $5,082 of services on account.
17 Paid $3,025 for employee salaries.
20 Paid for the supplies purchased on account on May 3.
23 Received a cash payment of $1,452 for services performed on account on May 15.
26 Borrowed $6,050 from the bank on a note payable.
29 Purchased office equipment for $2,420 paying $242 in cash and the balance on account.
30 Paid $218 for utilities.
Show the effects of the above transactions on the accounting equation using the following format. Assume the note payable is to be repaid within the year. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)   
LARKSPUR, INC.
Assets =  Liabilities +  Stockholders’ Equity
Date  Cash +  Accounts Receivable +  Supplies +  Equipment =  Notes Payable +  Accounts Payable +  Common Stock +  Retained Earnings
Revenues –  Expenses –  Dividends
May-01 $ $ $
May-02  Rent Expense
May-03
May-05  Advertising Expense
May-09  Service Revenue
May-12  Dividends
May-15  Service Revenue
May-17  Salaries and Wages Expense
May-20
May-23
May-26
May-29
May-30  Utilities Expense
$ $ $ $ =  $ $ $ $ $ $
Prepare an income statement for the month of May 2017.
LARKSPUR, INC.
Income Statement
$
$
$
Prepare a retained earnings statement for the month of May 2017.
LARKSPUR, INC.
Retained Earnings Statement
$
: 
: 
$
Prepare a classified balance sheet at May 31, 2017. (List current assets in order of liquidity)
LARKSPUR, INC.
Balance Sheet
Assets
$
$
$
Liabilities and Stockholders' Equity
$
$
$
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Sheet5

Question 5
Ayayai Distribution markets CDs of numerous performing artists. At the beginning of March, Ayayai had in beginning inventory 2,490 CDs with a unit cost of $7. During March, Ayayai made the following purchases of CDs.
Mar-05 1,910  @  $8 Mar-21 4,880  @  $10
Mar-13 3,760  @  $9 Mar-26 2,050  @  $11
During March 12,560 units were sold. Ayayai uses a periodic inventory system.
Determine the cost of goods available for sale.
The cost of goods available for sale $
Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (For calculation purposes, round average cost to 3 decimal places, e.g. 5.275. Round answers to 0 decimal places, e.g. 125.)
FIFO LIFO AVERAGE-COST
The ending inventory $ $ $
The cost of goods sold $ $ $
Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?
-1
 produces the highest inventory amount.
-2
 produces the highest cost of goods sold.
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Sheet6

Question 6
The comparative statements of Oriole Company are presented here.
ORIOLE COMPANY
Income Statements
For the Years Ended December 31
2017 2016
Net sales $1,897,940 $1,757,900
Cost of goods sold 1,065,940 1,013,400
Gross profit 832,000 744,500
Selling and administrative expenses 507,400 486,400
Income from operations 324,600 258,100
Other expenses and losses
   Interest expense 23,700 21,700
Income before income taxes 300,900 236,400
Income tax expense 93,700 74,700
Net income $ 207,200 $ 161,700
ORIOLE COMPANY
Balance Sheets
Dec-31
Assets 2017 2016
Current assets
   Cash $ 60,100 $ 64,200
   Debt investments (short-term) 74,000 50,000
   Accounts receivable 125,200 110,200
   Inventory 127,700 117,200
     Total current assets 387,000 341,600
Plant assets (net) 659,000 530,300
Total assets $1,046,000 $871,900
Liabilities and Stockholders’ Equity
Current liabilities
   Accounts payable $ 167,400 $152,800
   Income taxes payable 45,200 43,700
     Total current liabilities 212,600 196,500
Bonds payable 230,000 210,000
     Total liabilities 442,600 406,500
Stockholders’ equity
   Common stock ($5 par) 290,000 300,000
   Retained earnings 313,400 165,400
     Total stockholders’ equity 603,400 465,400
Total liabilities and stockholders’ equity $1,046,000 $871,900
All sales were on account. Net cash provided by operating activities for 2017 was $245,000. Capital expenditures were $136,000, and cash dividends were $59,200.
Compute the following ratios for 2017. (Round current ratio, earnings per share and asset turnover to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 2.5%. Use 365 days in calculation.)
(a) Earnings per share $
(b) Return on common stockholders’ equity  %
(c) Return on assets  %
(d) Current ratio  :1
(e) Accounts receivable turnover  times
(f) Average collection period  days
(g) Inventory turnover  times
(h) Days in inventory  days
(i) Times interest earned  times
(j) Asset turnover  times
(k) Debt to assets ratio  %
(l) Free cash flow $
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Sheet7

Question 7
Skysong, Inc. was started on May 1. A summary of May transactions is presented below.
1 Stockholders invested $23,500 cash in the business in exchange for common stock.
2 Purchased equipment for $4,000 cash.
3 Paid $200 cash for May office rent.
4 Paid $600 cash for supplies.
5 Incurred $150 of advertising costs in the Beacon News on account.
6 Received $4,900 in cash from customers for performing repair service.
7 Paid a $1,400 cash dividend.
8 Paid part-time employee salaries $1,200.
9 Paid utility bills $140.
10 Performed repair services worth $1,020 on account.
11 Collected cash of $110 for services billed in transaction (10).
Prepare a tabular analysis of the transactions. Revenue is called Service Revenue. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)
SKYSONG, INC.
Assets Liabilities Stockholders' Equity
Accounts Accounts Common Retained Earnings
    Cash  +  Receivable  +  Supplies  +  Equipment  =  Payable  +  Stock  +   –   – 
Revenues Expenses Dividends
1 $ $ $ $ $ $ $ $ $
2
3  Rent expense
4
5  Advertising expense
6  Service revenue
7  Dividends
8  Salaries and wages expense
9  Utilities expense
10  Service revenue
11
$ $ $ $  =  $ $ $ $ $
From an analysis of the Retained Earnings columns, compute the net income or net loss for May.
SKYSONG, INC.
Income Statement
$
$
$
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Sheet8

Question 8
Ayayai Company manufactures backpacks. During 2017, Ayayai issued bonds at 10% interest and used the cash proceeds to purchase treasury stock. The following financial information is available for Ayayai Company for the years 2017 and 2016.
2017 2016
Sales revenue $9,450,000 $9,450,000
Net income 2,352,000 2,625,000
Interest expense 550,000 154,000
Tax expense 703,500 787,500
Dividends paid on common stock 979,000 1,128,600
Dividends paid on preferred stock 330,000 330,000
Total assets (year-end) 15,225,000 17,718,750
Average total assets 17,256,250 19,539,300
Total liabilities (year-end) 6,600,000 3,300,000
Avg. total common stockholders’ equity 10,340,000 15,510,000
(a)
Use the information above to calculate the following ratios for both years: (Round answers to 1 decimal place, e.g. 12.5%.)
2017 2016
-1 Return on assets % %
-2 Return on common stockholders’ equity % %
-3 Payout ratio % %
-4 Debt to assets ratio % %
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Sheet9

Question 9
The management of Windsor Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2017, the accounting records show these data.
Inventory, January 1 (10,970 units) $ 35,104
Cost of 111,970 units purchased 401,230
Selling price of 100,530 units sold 780,800
Operating expenses 116,630
Units purchased consisted of 34,600 units at $3.40 on May 10; 60,510 units at $3.60 on August 15; and 16,860 units at $3.90 on November 20. Income taxes are 29%.
(a)
Prepare comparative condensed income statements for 2017 under FIFO and LIFO. (Round answers to 0 decimal places, e.g. 5,125.)
Windsor Inc.
Condensed Income Statements
FIFO LIFO
$ $
: 
$ $
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Sheet10

Question 10
Bridgeport Corporation and Flint Corporation, two companies of roughly the same size, are both involved in the manufacture of shoe-tracing devices. Each company depreciates its plant assets using the straight-line approach. An investigation of their financial statements reveals the information shown below.
Bridgeport Corp. Flint Corp.
Net income $ 171,720 $ 233,650
Sales revenue 858,600 934,600
Total assets (average) 3,240,000 2,289,770
Plant assets (average) 273,000 1,858,000
Intangible assets (goodwill) 321,100 0
(a)
For each company, calculate these values: (Round answers to 3 decimal places, e.g. 6.250% or 17.540.)
Bridgeport Corp. Flint Corp.
-1 Return on assets % %
-2 Profit margin % %
-3 Asset turnover  times  times
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Sheet11

Question 11
An inexperienced accountant prepared this condensed income statement for Cullumber Company, a retail firm that has been in business for a number of years.
CULLUMBER COMPANY
Income Statement
For the Year Ended December 31, 2017
Revenues
  Net sales $1,088,000
  Other revenues 28,160
1,116,160
Cost of goods sold 710,400
Gross profit 405,760
Operating expenses
  Selling expenses 139,520
  Administrative expenses 131,840
271,360
Net earnings $134,400
As an experienced, knowledgeable accountant, you review the statement and determine the following facts.
1 Net sales consist of sales $1,166,080, less freight-out on merchandise sold $42,240, and sales returns and allowances $35,840.
2 Other revenues consist of sales discounts $23,040 and rent revenue $5,120.
3 Selling expenses consist of salespersons’ salaries $102,400, depreciation on equipment $12,800, advertising $16,640, and sales commissions $7,680. The commissions represent commissions paid. At December 31, $3,840 of commissions have been earned by salespersons but have not been paid. All compensation should be recorded as Salaries and Wages Expense.
4 Administrative expenses consist of office salaries $60,160, dividends $23,040, utilities $15,360, interest expense $2,560, and rent expense $30,720, which includes prepayments totaling $7,680 for the first quarter of 2018.
Prepare a correct detailed multiple-step income statement. Assume a 25% tax rate. (List other revenues before other expenses. Round answers to 0 decimal places, e.g. 5,125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
CULLUMBER COMPANY
Income Statement
$
:
$
$
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Sheet12

Question 12
The bank portion of the bank reconciliation for Crane Company at October 31, 2017, is as follows.
CRANE COMPANY
Bank Reconciliation
October 31, 2017
Cash balance per bank $12,587.90
Add: Deposits in transit 1,530.20
14,118.10
Less: Outstanding checks
Check Number Check Amount
2451 $ 1,260.40
2470 684.2
2471 844.5
2472 429.45
2474 1,050.00 4,268.55
Adjusted cash balance per bank $9,849.55
The adjusted cash balance per bank agreed with the cash balance per books at October 31. The November bank statement showed the following checks and deposits.
Bank Statement
Checks Deposits
Date Number Amount Date Amount
11-Jan 2470 $ 684.20 11-Jan $ 1,530.20
11-Feb 2471 844.5 11-Apr 1,211.60
11-May 2474 1,050.00 11-Aug 990.1
11-Apr 2475 1,640.70 Nov-13 2,575.00
11-Aug 2476 2,830.00 Nov-18 1,472.70
11-Oct 2477 600 Nov-21 2,945.00
Nov-15 2479 1,720.00 Nov-25 2,567.30
Nov-18 2480 1,330.00 Nov-28 1,650.00
Nov-27 2481 695.4 Nov-30 1,186.00
Nov-30 2483 575.5 Total 16,127.90
Nov-29 2486 940
Total $12,910.30
The cash records per books for November showed the following.
Cash Payments Journal Cash Receipts Journal
Date Number Amount Date Number Amount Date Amount
11-Jan 2475 $1,640.70 Nov-20 2483 $ 575.50 11-Mar $ 1,211.60
11-Feb 2476 2,830.00 Nov-22 2484 826.85 11-Jul 990.1
11-Feb 2477 600 Nov-23 2485 974.8 11-Dec 2,575.00
11-Apr 2478 538.2 Nov-24 2486 940 Nov-17 1,472.70
11-Aug 2479 1,702.00 Nov-29 2487 398 Nov-20 2,954.00
11-Oct 2480 1,330.00 Nov-30 2488 800 Nov-24 2,567.30
Nov-15 2481 695.4 Total $14,463.45 Nov-27 1,650.00
Nov-18 2482 612 Nov-29 1,186.00
Nov-30 1,524.00
Total $16,130.70
The bank statement contained two bank memoranda:
1 A credit of $2,402.00 for the collection for Crane Company of an electronic funds transfer.
2 A debit for the printing of additional company checks $87.65.
At November 30, the cash balance per books was $11,516.80 and the cash balance per bank statement was $18,119.85. The bank did not make any errors, but Crane Company made two errors.
Using the steps in the reconciliation procedure, prepare a bank reconciliation at November 30, 2017. (List items that increase balance as per bank & books first. Round answers to 2 decimal places, e.g. 52.75.)
CRANE COMPANY
Bank Reconciliation
$
:
:
$
$
$
:
:
$
$
Prepare a tabular analysis for the adjustments based on the reconciliation. Include margin explanations for the changes in revenues and expenses. (Note: The correction of any errors pertaining to recording checks should be made to Accounts Payable. The correction of any errors relating to recording cash receipts should be made to Accounts Receivable.) (If a transaction results in a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced. Round answers to 2 decimal places, e.g. 52.75.)
Assets = Liabilities + Stockholders’ Equity
Cash Accts. Accts.
+ Rec. = Pay. + Rev. - Exp.
Nov. 30
30
30
30
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Sheet13

Question 13
Comparative financial statement data for Sunland Company and Pharoah Company, two competitors, appear below. All balance sheet data are as of December 31, 2017.
Sunland Company Pharoah Company
2017 2017
Net sales $2,520,000 $868,000
Cost of goods sold 1,645,000 476,000
Operating expenses 396,200 137,200
Interest expense 12,600 5,320
Income tax expense 119,000 50,400
Current assets 442,600 200,036
Plant assets (net) 744,800 195,619
Current liabilities 92,855 47,202
Long-term liabilities 151,900 56,958
Net cash provided by operating activities 193,200 50,400
Capital expenditures 126,000 28,000
Dividends paid on common stock 50,400 21,000
Weighted-average number of shares outstanding 80,000 50,000
(a)
Compute the net income and earnings per share for each company for 2017. (Round Earnings per share to 2 decimal places, e.g. $2.78.)
Net Income Earnings per share
Sunland Company $ $
Pharoah Company $ $
(b)
Compute working capital and the current ratios for each company for 2017. (Round current ratio to 1 decimal place, e.g. 0.7 : 1.)
Working Capital Current Ratios
Sunland Company $ :1
Pharoah Company $ :1
(c)
Compute the debt to assets ratio and the free cash flow for each company for 2017. (Round debt to assets to 1 decimal place, e.g. 78.9%. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Debt to Assets Free Cash Flow
Sunland Company $
%
Pharoah Company $
%
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Sheet14

Question 14
Novak Corp. was formed on January 1, 2017. At December 31, 2017, Miko Liu, the president and sole stockholder, decided to prepare a balance sheet, which appeared as follows.
Novak Corp.
Balance Sheet
December 31, 2017
                      Assets                       Liabilities and Stockholders’ Equity
Cash $29,600 Accounts payable $44,400
Accounts receivable 74,000 Notes payable 22,200
Inventory 53,280 Boat loan 32,560
Boat 35,520 Stockholders’ equity 94,720
Miko willingly admits that she is not an accountant by training. She is concerned that her balance sheet might not be correct. She has provided you with the following additional information.
1 The boat actually belongs to Miko, not to Novak Corp.. However, because she thinks she might take customers out on the boat occasionally, she decided to list it as an asset of the company. To be consistent, she also listed as a liability of the corporation her personal loan that she took out at the bank to buy the boat.
2 The inventory was originally purchased for $37,000, but due to a surge in demand Miko now thinks she could sell it for $53,280. She thought it would be best to record it at $53,280.
3 Included in the accounts receivable balance is $14,800 that Miko loaned to her brother 5 years ago. Miko included this in the receivables of Novak Corp. so she wouldn’t forget that her brother owes her money.
(b) Provide a corrected balance sheet for Novak Corp.. (Hint: To get the balance sheet to balance, adjust stockholders’ equity.) (List assets in order of liquidity.)
Novak Corp.
Balance Sheet
Assets
$
$
Liabilities and Stockholders' Equity
$
$
$
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Sheet15

Question 15
You are provided with the following information for Skysong, Inc., effective as of its April 30, 2017, year-end.
Accounts payable $ 864
Accounts receivable 930
Accumulated depreciation—equipment 670
Cash 1,390
Common stock 1,260
Cost of goods sold 1,090
Depreciation expense 305
Dividends 355
Equipment 2,540
Income tax expense 195
Income taxes payable 165
Insurance expense 240
Interest expense 430
Inventory 1,087
Land 3,220
Mortgage payable 3,620
Notes payable 181
Prepaid insurance 90
Retained earnings (beginning) 1,600
Salaries and wages expense 670
Salaries and wages payable 252
Sales revenue 5,220
Stock investments (short-term) 1,290
Prepare an income statement for Skysong, Inc. for the year ended April 30, 2017. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Skysong, Inc.
Income Statement
$
$
$
Prepare a retained earnings statement for Skysong, Inc. for the year ended April 30, 2017. (List items that increase retained earnings first.)
Skysong, Inc.
Retained Earnings Statement
$
: 
: 
$
Prepare a classified balance sheet for Skysong, Inc. as of April 30, 2017. (List current assets in order of liquidity.)
Skysong, Inc.
Balance Sheet
Assets
$
$
$
:
$
Liabilities and Stockholders' Equity
$
$
$
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Sheet16

Question 16
Operating data for Pina Colada Corp. are presented below.
2017 2016
Sales revenue $850,900 $622,200
Cost of goods sold 527,000 414,200
Selling expenses 125,300 73,200
Administrative expenses 73,100 50,300
Income tax expense 37,100 23,000
Net income 88,400 61,500
Prepare a schedule showing a vertical analysis for 2017 and 2016. (Round percentages to 1 decimal place, e.g. 12.1%.)
PINA COLADA CORP.
Condensed Income Statement
2017 2016
Amount Percent Amount Percent
Sales $850,900 % $622,200 %
Cost of goods sold 527,000 % 414,200 %
Gross profit 323,900 % 208,000 %
Selling expenses 125,300 % 73,200 %
Administrative expenses 73,100 % 50,300 %
Total operating expenses 198,400 % 123,500 %
Income before income taxes 125,500 % 84,500 %
Income tax expense 37,100 % 23,000 %
Net income $ 88,400 % $ 61,500 %
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Sheet17

Question 17
Marin Inc.’s bank statement from Main Street Bank at August 31, 2017, gives the following information.
Balance, August 1 $18,580 Bank debit memorandum:
August deposits 71,180 Safety deposit box fee $ 90
Checks cleared in August 68,613 Service charge 115
Bank credit memorandum: Balance, August 31 21,052
  Interest earned 110
A summary of the Cash account for August shows the following: balance, August 1, $18,880; receipts $74,180; disbursements $73,505; and balance, August 31, $19,555. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $4,865 and outstanding checks of $4,565. In addition, you determine that there was an error involving a company check drawn in August: A check for $400 to a creditor on account that cleared the bank in August was recorded for $40.
Determine deposits in transit.
Deposits in transit $
Determine outstanding checks. (Hint: You need to correct disbursements for the check error.)
Outstanding checks $
Prepare a bank reconciliation at August 31. (List items that increase balance as per bank & books first.)
MARIN INC.
Bank Reconciliation
$
:
:
$
$
:
:
$
$
Prepare a tabular analysis for the adjustments to be made by Marin Inc. at August 31. Include margin explanations for the changes in revenues and expenses. (If a transaction results in a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)
Assets = Liabilities + Stockholders’ Equity
Cash Accts.
= Pay. + Rev. - Exp.
Aug. 31
31
31
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Sheet18

Question 18
Here are comparative statement data for Sandhill Company and Carla Vista Company, two competitors. All balance sheet data are as of December 31, 2017, and December 31, 2016.
Sandhill Company Carla Vista Company
2017 2016 2017 2016
Net sales $1,906,000 $581,000
Cost of goods sold 1,072,000 295,000
Operating expenses 271,000 93,000
Interest expense 7,200 2,000
Income tax expense 73,300 29,000
Current assets 697,587 $668,557 178,339 $ 170,059
Plant assets (net) 1,127,352 1,070,000 299,018 269,238
Current liabilities 141,936 162,244 75,645 64,801
Long-term liabilities 243,939 192,600 63,387 53,500
Common stock, $10 par 1,070,000 1,070,000 256,800 256,800
Retained earnings 369,064 313,713 81,525 64,196
Prepare a vertical analysis of the 2017 income statement data for Sandhill Company and Carla Vista Company. (Round all ratios to 1 decimal place, e.g. 2.5%.)
Condensed Income Statement
For the Year Ended December 31, 2017
Sandhill Company Carla Vista Company
Dollars Percent Dollars Percent
$1,906,000 % $581,000 %
1,072,000 % 295,000 %
834,000 % 286,000 %
271,000 % 93,000 %
563,000 % 193,000 %
7,200 % 2,000 %
555,800 % 191,000 %
73,300 % 29,000 %
$482,500 % $162,000 %
Compute the 2017 return on assets and the return on common stockholders’ equity for both companies. (Round all ratios to 1 decimal place, e.g. 2.5%.)
Sandhill Company Carla Vista Company
Return on assets % %
Return on common stockholders’ equity % %
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Sheet19

Question 19
At December 31, 2016, Ayayai Imports reported this information on its balance sheet.
Accounts receivable $639,500
Less: Allowance for doubtful accounts 40,180
During 2017, the company had the following transactions related to receivables.
1 Sales on account $2,910,800
2 Sales returns and allowances 55,300
3 Collections of accounts receivable 2,517,800
4 Write-offs of accounts receivable deemed uncollectible 40,050
Prepare a tabular summary that includes the following accounts: Cash, Accounts Receivable, Allowance for Doubtful Accounts, Revenue, and Expense. Enter the January 1, 2017, balances in Accounts Receivable and Allowance for Doubtful Accounts. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Assets = Liabilities + Stockholders' Equity
Allow. For Retained Earnings
Cash + Accts. Rec. - Doubtful Accts. = + Common Stock + Rev. - Exp.
Beg. Bal. $ $ $ $ $ $
Record transactions 1 through 4. (Omit recording cost of goods sold.) (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Assets = Liabilities + Stockholders' Equity
Allow. For Retained Earnings
Cash + Accts. Rec. - Doubtful Accts. = + Common Stock + Rev. - Exp.
Beg. Bal. $ $ $ $ $ $
1
2
3
4
Record bad debt expense for 2017, assuming that aging the accounts receivable indicates that estimated bad debts are $86,850. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Assets = Liabilities + Stockholders' Equity
Allow. For Retained Earnings
Cash + Accts. Rec. - Doubtful Accts. = + Common Stock + Rev. - Exp.
(c)
Indicate how accounts receivable and the allowance for doubtful accounts will be reported on the December 31, 2017, balance sheet.
AYAYAI IMPORTS
Balance Sheet
Assets
$
$
: 
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Sheet20

Question 20
On October 1, 2016, Blue Corp. issued $744,000, 7%, 10-year bonds at face value. The bonds were dated October 1, 2016, and pay interest annually on October 1. Financial statements are prepared annually on December 31.
(a) Prepare a tabular summary to record the issuance of the bonds and the adjustments to record the accrual of interest on December 31, 2016.
(c) Prepare a tabular summary to record the payment of interest on October 1, 2017.
(d) Prepare a tabular summary to record redemption of the bonds on October 1, 2026, their maturity date.
(If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)
Assets = Liabilities + Stockholders’ Equity
Retained Earnings
Cash = Bonds. Pay. + Interest Pay. + Common Stock + Revenue - Expense - Dividend
(a) Oct. 1, 2016 $ $ $ $ $ $ $
Dec. 31, 2016 Interest expense
(c) Oct. 1, 2017 Interest expense
(d) Oct. 1, 2026
Show the balance sheet presentation of bonds payable and bond interest payable on December 31, 2016.
BLUE CORP.
Balance Sheet (Partial)
$
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870000

870000

220000

220000

3525000

3525000

70500

70500

4700000

4700000

1175000

1175000

53350000

53350000

150600000

150600000

63600000

63600000

97400000

97400000

23900000

23900000

53350000

53350000

150600000

150600000

63600000

63600000

97400000

97400000

23900000

23900000