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P9-30A

P9-30A
Record the transactions in the journal of Quality Recliner Chairs. Explanations are not required. (For notes stated in days, use a 360-day year. Round to the nearest dollar.)
Solution:
Date Accounts and Explanation Debit Credit
Date Accounts and Explanation Debit Credit
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N

P9-32A

P9-32A
Journalize all transactions for Jo Jo Music. Round all amounts to the nearest dollar.
(For notes stated in days, use a 360-day year.)
Solution:
Date Accounts and Explanation Debit Credit
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N

P9-33A

P9-33A
Requirements
1. Compute these ratios for 2016 and 2015:
a. Acid-test ratio (Round to two decimals.)
b. Accounts receivable turnover (Round to two decimals.)
c. Days’ sales in receivables (Round to the nearest whole day.)
2. Considering each ratio individually, which ratios improved from 2015 to 2016 and which ratios deteriorated? Is the trend favorable or unfavorable for the company?
Solution:
Requirement 1
Requirement 2
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N

P9-34B

P9-34B
Requirements
1. Journalize all September entries using the allowance method. Bad debts expense was estimated at 2% of credit sales. Show all September activity in Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense (post to these T-accounts).
2. Using the same facts, assume that Bouquet used the direct write-off method to account for uncollectible receivables. Journalize all September entries using the direct write-off method. Post to Accounts Receivable and Bad Debts Expense and show their balances at September 30, 2016.
3. What amount of Bad Debts Expense would Bouquet report on its September income statement under each of the two methods? Which amount better matches expense with revenue? Give your reason.
4. What amount of net accounts receivable would Bouquet report on its September 30, 2016, balance sheet under each of the two methods? Which amount is more realistic? Give your reason.
Solution:
Requirement 1
Date Accounts and Explanation Debit Credit
Accounts Receivable Allowance for Bad Debts
Bad Debts Expense
Requirement 2
Date Accounts and Explanation Debit Credit
Accounts Receivable Bad Debts Expense
Requirement 3
Income Statement Allowance Method Direct Write- Off Method
Requirement 4
Balance Sheet Allowance Method Direct Write- Off Method
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N

P9-35B

P9-35B
Requirements
1. Journalize the transactions.
2. Open the Allowance for Bad Debts T-account, and post entries affecting that account. Keep a running balance.
3. Show how Spring Heights Medical Center should report net accounts receivable on its December 31, 2016, balance sheet.
Solution:
Requirement 1
Date Accounts and Explanation Debit Credit
Age of Accounts Receivable
1 – 30 Days 31 – 60 Days 61 – 90 Days Over 90 Days Total Receivables
Requirement 2
Allowance for Bad Debts
Requirement 3
SPRING HEIGHTS MEDICAL CENTER
Balance Sheet—Partial
December 31, 2016
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N

P9-37B

P9-37B
Record the transactions in the journal of Comfy Recliner Chairs. Explanations are not required. (For notes stated in days, use a 360-day year. Round to the nearest dollar.)
Solution:
Date Accounts and Explanation Debit Credit
Date Accounts and Explanation Debit Credit
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N

P9-40B

P9-40B
Requirements
1. Compute these ratios for 2016 and 2015:
a. Acid-test ratio (Round to two decimals.)
b. Accounts receivable turnover (Round to two decimals.)
c. Days’ sales in receivables (Round to the nearest whole dollar.)
2. Considering each ratio individually, which ratios improved from 2015 to 2016 and which ratios deteriorated? Is the trend favorable or unfavorable for the company?
Solution:
Requirement 1
Requirement 2
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N

Fraud Case 9-1

Fraud Case 9-1
Requirements
1. What can a business like this do to prevent employee fraud of this kind?
2. What effect would Dylan’s actions have on the balance sheet? The income statement?
3. How much discretion does a business have with regard to accommodating hardship situations?
Solution:
Requirement 1
Requirement 2
Requirement 3
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 9: Receivables&R&"Arial,Bold"Page &P of &N

E10-20

E10-20
Requirements
1. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods. Show your computations. Note: Three depreciation schedules must be prepared.
2. Which method tracks the wear and tear on the equipment most closely?
Solution:
Requirement 1
Straight-Line Depreciation Schedule
Depreciation for the Year
Asset Depreciable Depreciation Depreciation Accumulated Book
Date Cost Cost Rate Expense Depreciation Value
Units-of-Production Depreciation Schedule
Depreciation for the Year
Asset Depreciation Number Depreciation Accumulated Book
Date Cost per Unit of Units Expense Depreciation Value
Double-Declining-Balance Depreciation Schedule
Depreciation for the Year
Asset Book Value DDB Depreciation Accumulated Book
Date Cost Rate Expense Depreciation Value
Requirement 2
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"&10Chapter 10: Plant Assets, Natural Resources, and Intangibles&R&"Arial,Bold"&10Page &P of &N

E10-24

E10-24
Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year.
Solution:
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"&10Chapter 10: Plant Assets, Natural Resources, and Intangibles&R&"Arial,Bold"&10Page &P of &N

E10-26

E10-26
Requirements
1. Compute the cost of the goodwill purchased by Princess.
2. Record the purchase of Kettle by Princess.
Solution:
Requirement 1
Requirement 2
Date Accounts and Explanation Debit Credit
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"&10Chapter 10: Plant Assets, Natural Resources, and Intangibles&R&"Arial,Bold"&10Page &P of &N

P10-32A

P10-32A
Record the transactions in the journal of Grace Carol Associates.
Solution:
Date Accounts and Explanation Debit Credit
Date Accounts and Explanation Debit Credit
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"&10Chapter 10: Plant Assets, Natural Resources, and Intangibles&R&"Arial,Bold"&10Page &P of &N

Ethical Issue 10-1

Ethical Issue 10-1
Requirements
1. Explain the tax advantage of allocating too much to the building and too little to the land.
2. Was Western’s allocation ethical? If so, state why. If not, why not? Identify who was harmed.
Solution:
Requirement 1
Requirement 2
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"&10Chapter 10: Plant Assets, Natural Resources, and Intangibles&R&"Arial,Bold"&10Page &P of &N

P11-25A

P11-25A
Requirements
1. Using T-accounts, open the listed accounts and insert the unadjusted June 30 balances.
2. Journalize and post the June 30 adjusting entries to the accounts that you opened. Identify each adjusting entry by letter.
3. Prepare the current liabilities section of the balance sheet at June 30, 2016.
Solution:
Requirements 1 and 2
Date Accounts and Explanation Debit Credit
Accounts Payable Interest Payable
Salaries Payable Employee Payroll Taxes Payable
FICA -- OASDI Taxes Payable FICA -- Medicare Taxes Payable
Long-Term Notes Payable Unearned Rent Revenue
Requirement 3
QUICK SHIP
Balance Sheet (Partial)
June 30, 2016
Liabilities
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 11: Current Liabilities and Payroll&R&"Arial,Bold"Page &P of &N

P11-27A

P11-27A
Journalize the transactions in Houston’s general journal. Explanations are not required.
Solution:
Date Accounts and Explanation Debit Credit
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 11: Current Liabilities and Payroll&R&"Arial,Bold"Page &P of &N

P11-29A

P11-29A
Requirements
1. Fill in the missing information for Utah’s year ended July 31, 2016, income statement.
2. Compute the times-interest-earned ratio for the company.
Solution:
Requirement 1
UTAH COMMUNICATIONS
Income Statement
Year Ended July 31, 2016
Requirement 2
Times-interest-earned ratio
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 11: Current Liabilities and Payroll&R&"Arial,Bold"Page &P of &N

Ethical Issue 11-1

Ethical Issue 11-1
Requirements
1. When a business abuses this issue, how is the independent contractor hurt?
2. If a business takes an aggressive position—that is, interprets the law in a very slanted way—is there an ethical issue involved? Who is hurt?
Solution:
Requirement 1
Requirement 2
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 11: Current Liabilities and Payroll&R&"Arial,Bold"Page &P of &N