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    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2

Levine Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases.
With the Suntrust Bank Card, Levine receives an immediate credit to its account when it deposits sales receipts.
Suntrust assesses a 4% service charge for credit card sales.
The second credit card that Levine accepts is the Continental Card.
Levine sends its accumulated receipts to Continental on a weekly basis and is paid by Continental about a week later.
Continental assesses a 2.5% charge on sales for using its card.
 
Apr. 8 Sold merchandise for $7,800 (that had cost $5,764) and accepted the customer's Suntrust Bank Card.
The Suntrust receipts are immediately deposited in Levine's bank account. 12 Sold merchandise for $9 ,1 00 (that had cost $5,897)
and accepted the customer's Continental Card. Transferred $9 ,1 00 of credit card receipts to Continental, requesting payment.
20 Received Continental's check for the April 12 billing, less the service charge.
 
Prepare journal entries to record the above selected credit card transactions of Levine Company.
 

   
Prepare journal entries for the following credit card sales transactions (the company uses the perpetual inventory system).
Sold $20,000 of merchandise, that cost $15,000, on MasterCard credit cards. The net cash receipts from sales are immediately
deposited in the seller's bank account. MasterCard charges a 5% fee.
 

 
Sold $5,000 of merchandise, that cost $3,000, on an assortment of credit cards. Net cash receipts are received 5 days later, and a 4% fee is charged.
 

   
Gomez Corp. uses the allowance method to account for uncollectibles. On January 31, it wrote off a
$800 account of a customer, C. Green. On March 9, it receives a $300 payment from Green.
 
Prepare the journal entry for January 31.
 

Prepare the entries for Marcl1 9; assume no additional money is expected from Green
 

   
Warn er Company's year-end unadjusted trial balance shows accounts receivable of $99,000,
allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to be 0.5% of sales.
Prepare the December 31 year-end adjusting entry for uncollectibles.
 

   
Liang Company began operations on January 1, 2012. During its first two years, the company completed a number of transactions
involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows:
2012
a. Sold $1,345,434 of merchandise (that had cost $975,000) on credit, terms n/30.
b. Wrote off$ 18,300 of uncollectible accounts receivable.
c. Rec ived $669,200 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible.
2013
e. Sold $ 1, 525,634 of merchandise (that had cost $1,250,000) on credit, terms n/30.
t. Wrote off $27,800 of uncollectible accounts receivable.
g. Received $ 1,204,600 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible.
 
Required:
Prepare journal entries to record Liang's 20 12 summarized transactions and its year-end adjustments to record bad debts expense.
(The company uses the perpetual inventor/system, and it applies the allowance method for its accounts receivable.)
(Round your intermediate calculations to the nearest dollar amount.)
 

 
Prepare journal entries to record Liang's 2013 summarized transactions and its year-end adjustments
to record bad debts expense. (The company uses the perpetual inventory system, and it applies the
allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest dollar amount.)
 

   
At year-end (December 31), Chan Company estimates its bad debts as 0.50% of its annual credit sales of $604,000.
Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $302 account of
P. Park is uncollectible and writes it off as a bad deb t. On June 5, Park unexpectedly pays the amount previously written off.
Prepare the journal entries of Chan to record these transactions and events of December 3 1, February 1, and June 5.
 

   
Following are selected transactions for Ridge Comp any. Mar. 21 Accepted a $3,400, 180-day, 8% note dated March 21 from
Tamara Jackson in granting a time extension on her past-due account receivable.
 
Sept 17 Jackson dishonors her note when it is presented for payment
Dec. 31 After exhausting all legal means of collection, Ridge Company write s off Jackson's account against the Allowance for Doubtful Accounts.
 
First, complete the table below to calculate the interest amounts at September 17. (Use 360 days a year.)
 

 
Use the calculated value to prepare y our journal entries.
 

   
Dextra Computing sells merchandise for $16,000 cash on September 30 (cost of merchandise is $11,200).
Dextra collects 9% sales tax. Record the entry for the $16,000 sale and its sales tax.
Also record the entry that shows Dextra sending the sales tax on this sale to the government on October 15.
 
 
On January 15, the end of the first pay period of the year, North Company’s employees earned $22,000 of sales salaries.
Withholdings from the employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at
the rate of 1.45%, $2,500 of federal income taxes, $455 of medical insurance deductions, and $120 of union dues.
No employee earned more than $7,000 in this first period.
 
Prepare the journal entry to record North Company’s January 15 salaries expense and related liabilities.
 

Date	Account	Dr	Cr
0001-01-15	Salaries & Wages Expense	$22,000
	FICA social security tax payable		$1,364
	FICA medicare tax payable		$319
	Federal income tax payable		$3,800
	Medical insurance payable		$429
	Union dues payable		$200
	Salaries & Wages Payable		$15,88

   
On September 1, Home Store sells a mower (that costs $310) for $610 cash with a one-year warranty that covers parts.
Warranty expense is estimated at 9% of sales. On January 24 of the following year, the mower is brought in for repairs covered
under the warranty requiring $43 in materials taken from the Repair Parts Inventory. Prepare the September 1 entry to record
the mower sale (and cost of sale) and the January 24 entry to record the warranty repairs.
(Round your answers to 2 decimal places.)
 
 
Sylvestor Systems borrows $170,000 cash on May 15, 2017, by signing a 60-day, 7% note.
 
1. On what date does this note mature?
July 13, 2017
July 14, 2017
July 15, 2017
July 16, 2017
July 17, 2017
 
2. Assume the face value of the note equals $170,000, the principal of the loan.
Prepare the journal entry to record issuance of the note.
 

   
Keesha Co. borrows $155,000 cash on November 1, 2017, by signing a 120-day, 10% note with a face value of $155,000.
On what date does this note mature? (Assume that February has 28 days)
March 27, 2018
March 287, 2018
March 29, 2018
March 30, 2018
March 01, 2018
 
2. & 3. What is the amount of interest expense in 2017 and 2018 from this note?
(Use 360 days a year. Round final answers to the nearest whole dollar.)
 
 
Handmade Soaps Company had other operating expenses of $52,000. At the beginning of the year,
Handmade Soaps owed $15,000 for Accrued Liabilities. At year-end, Accrued Liabilities were $5,000.
How much cash did Handmade Soaps pay for other operating expenses?
 
$62,000
 
52,000 + 15,000 − 5,000 = 62,000
   
Peaceful Resorts expects net cash provided by operating activities of $220,000, and the company plans purchases of
equipment of $83,000, cash dividends of $10,000, and loan repayments totaling $36,000.
What is Peaceful Resorts' free cash flow?
 
$127,000
 
Net cash provided by operating activities – Cash payments planned for investments in long-term assets - Cash dividends
 
220,000 − 83,000 − 10,000 = 127,000
   
Purses Direct had Accounts Receivable of $25,000 at the beginning of the year and $44,000 at year-end.
Sales revenue for the year totaled $170,000. How much cash did the business collect from customers?
 
$151,000
 
Net Sales Revenue + Beginning Accounts Receivable - Ending Accounts Receivable
 
170,000 + 25,000 − 44,000 = 151,000
   
Cooper's Hardware earned net income of $67,000 after deducting depreciation of $5,000 and all other expenses.
Current assets decreased by $2,000, and current liabilities increased by $6,000. Cooper paid $9,000 of dividends.
How much was Cooper's cash provided by operating activities?
 
80,000
 
 67,000 + 5,000 + 2,000 + 6,000 = 80,000
   
Wedding.com earned net income of $62,000 after deducting depreciation of $5,000 and all other expenses.
Current assets decreased by $4,000, and current liabilities increased by $7,000.
How much was Wedding.com's cash provided by operating activities (indirect method)?
 
$78,000
 
Net Income + Depr. + Decrease in current assets + increase in current liabilities = cash provided by operations
 
62,000 + 5,000 + 4,000 + 7,000 = 78,000
   
Salem Nursery earned net income of $66,000 after deducting depreciation of $8,000 and all other expenses.
Current assets decreased by $7,000, and current liabilities increased by $9,000.
How much was Salem Nursery's cash provided by operating activities (indirect method)?
 
$90,000
 
Net Income + Depr. + Decrease in current assets + increase in current liabilities = cash provided by operations
66,000 + 8,000 + 7,000 + 9,000 = 90,000
   
Employees at Tengo Corporation are paid $15,000 cash every Friday for working Monday through Friday.
The calendar year accounting period ends on Wednesday, December 31.
How much salaries and wages expense should be recorded two days later on January 2?
 
$6,000
 
15,000 × 2 / 5 = 6,000
   
Mary Chain Investments purchased an 18-month insurance policy on May 31, 2015 for $3,600.
The December 31, 2015 balance sheet would report Prepaid Insurance of:
 
$2,200.
 
(3,600 ÷ 18) × (18 - 7) = 2,200
   
Buffalo Tom Cruises purchased a five-year insurance policy for its ships on April 1, 2015 for $60,000.
Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2015 is
 
Insurance Expense                          9,000
Prepaid Insurance                           9,000
 
(60,000 ÷ 5) × 9/12 = 9,000
   
Income Summary has a credit balance of $17,000 in S. Sufjan Co. after closing revenues and expenses.
The entry to close Income Summary is
 
Debit Income Summary $17,000
Credit Retained Earnings $17,000.
 
The income statement for the month of June, 2015 of Camera Obscura Enterprises contains the following information:
 
Revenues                                            $              7,000
Expenses:
Salries and Wages Expense         $              3,000
Rent Expense                                                    1,500
Advertising Expense                                       800
Supplies Expense                                             300
Insurance Expense                                          100
Total expenses                                                 5,700
Net income                                        $              1,300
   
At June 1, 2015, Camera Obscura reported retained earnings of $35,000.
The company had no dividends during June. At June 30, 2015, the company will report retained earnings of:
 
$36,300.
 
35,000 + 1,300 = 36,300
   
The income statement for the year 2015 of Fugazi Co. contains the following information:
 
Revenues                                            $              70,000
Expenses:
Salaries and Wages Expense        $              45,000
Rent Expense                                                     12,000
Advertising Expense                                       10,000
Supplies Expense                                             6,000
Utilities Expense                                               2,500
Insurance Expense                                          2,000
Total expenses                                                  77,500
Net income (loss)                             $              (7,500)
 
The entry to close Income Summary to Retained Earnings includes a
 
Credit to Income Summary for $7,500.
   
The income statement for the month of June, 2015 of Camera Obscura
Enterprises contains the following information:
 
Revenues $7,000
Expenses:
Salaries and Wages Expense $3,000
Rent Expense 1,500
Advertising Expense 800
Supplies Expense 300
Insurance Expense 100
Total expenses 5,700
Net income $1,300
The entry to close the revenue account includes a
credit to Income Summary for $7,000.
   
Jawbreaker Company paid $940 on account to a creditor.
The transaction was erroneously recorded as a debit to Cash of $490 and a credit to Accounts Receivable, $490.
The correcting entry is
 
Accounts Receivable      490
Accounts Payable            940
Cash                                      1,430
 
940 + 490 = 1,430
An error has occurred in the closing entry process if the balance sheet accounts have zero balances.
   
Misra Company compiled the following financial information as of December 31, 2015:
 
Revenues                                            $              340,000
Retained earnings (1/1/15)                          60,000
Equipment                                                          80,000
Expenses                                                             250,000
Cash                                                                      90,000
Dividends                                                            20,000
Supplies                                                               10,000
Accounts payable                                             40,000
Accounts receivable                                        70,000
Common stock                                                  80,000
 
Misra's stockholders' equity on December 31, 2015 is:
 
$210,000.
 
140,000 + (340,000 - 250,000) - 20,000 = 210,000

    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2