P7-4 (Bad-Debt Reporting) From inception of operations to December 31, 2012, Fortner Corporation
provided for uncollectible accounts receivable under the allowance method: provisions were made
monthly at 2% of credit sales; bad debts written off were char
P4-6 (Retained Earnings Statement, Prior Period Adjustment) Below is the Retained Earnings
account for the year 2012 for Acadian Corp.
Retained earnings, January 1, 2012
Gain on sale of investments (net of tax)
E10-7 (Capitalization of Interest) McPherson Furniture Company started construction of a combination office and
warehouse building for its own use at an estimated cost of $5,000,000 on January 1, 2012. McPherson expected to
complete the building by Decemb
E10-3 (Acquisition Costs of Trucks) Shabbona Corporation operates a retail computer store. To improve delivery
services to customers, the company purchases four new trucks on April 1, 2012. The terms of acquisition for each truck
are described below.
P8-4 (Compute FIFO, LIFO, and Average Cost) Hull Companys record of transactions
concerning part X for the month of April was as follows.
April 1 (balance on hand)
100 @ $5.00
400 @ 5.10
300 @ 5.30
P5-2 (Balance Sheet Preparation) Presented below are a number of balance sheet items for
Montoya, Inc., for the current year, 2012.
Payroll taxes payable
Discount on bonds payable
Notes payable (to banks)
E10-14 (Purchase of Equipment with Zero-Interest-Bearing Debt) Sterling Inc. has decided to
purchase equipment from Central Michigan Industries on January 2, 2012, to expand its production
capacity to meet customers demand for its product. Sterling issues
E5-4 (Preparation of a Classified Balance Sheet) Assume that Gulistan Inc. has the following
accounts at the end of the current year.
1. Common Stock.
2. Discount on Bonds Payable.
3. Treasury Stock (at cost).
4. Notes Payable (short-term).
5. Raw Materia
E8-3 (Inventoriable Costs) Assume that in an annual audit of Webber Inc. at December 31,
2012, you find the following transactions near the closing date.
1. A special machine, fabricated to order for a customer, was finished and specifically segregated in
E11-17 (Impairment) Assume the same information as E11-16, except that Pujols intends to dispose of the
equipment in the coming year. It is expected that the cost of disposal will be $20,000.
Prepare the journal entry (if any) to record t
Financial Accounting is the process of identifying, measuring, analyzing, and
communicating financial information needed by management to plan, evaluate, and
control an organizations operations.
F : Managerial Accounting is the process of identify
Ethical issues in financial accounting are governed by the AICPA.
Users of financial reports include all of the following except:
b. Government agencies
d. All of these are users
Accrual accounting is used because
a. Cash flows are considered less important
b. It provides a better indication of ability to generate cash flows than the cash basis.
c. It recognizes revenues when cash is received and expenses when cash is paid.
The role of the Securities and Exchange Commission in the formulation of accounting
principles can be best described as
a. Consistently primary.
b. Consistently secondary.
c. Sometimes primary and sometimes secondary.
Relevance and reliability are the two primary qualities that make accounting
information useful for decision making.
Revenues, gains and distributions to owners all increase equity.
Distribution to owners decrease equity
Which of the following is not an objective of financial reporting?
a. To provide information about economic resources, the claims to those resources,
and the changes in them.
b. To provide information that is helpful to investors and creditors and othe
The two primary qualities that make accounting information useful for decision
a. Comparability and consistency
b. Materiality and timeliness
c. Relevance and reliability
d. Reliability and comparability
Financial information exhib
Except for the respective Contra Accounts, liability and stockholders equity accounts
are increased on the credit side and decreased on the debit side.
The book value of any depreciable asset is the difference between its cost and its
Mune Company recorded journal entries for the payment of $50,000 of dividends, the
$32,000 increase in accounts receivable for services rendered, and the purchase of
equipment for $21,000. What net effect do these entries have Owners Equity?
E11-11 (DepreciationChange in Estimate) Machinery purchased for $52,000 by Carver Co. in 2008 was
originally estimated to have a life of 8 years with a salvage value of $4,000 at the end of that time. Depreciation
has been entered for 5 years on this basi
E11-9 (Composite Depreciation) Presented below is information related to Morrow Manufacturing
Estimated Salvage Value
Estimated Life (in years)
E6-4 (Computation of Future Values and Present Values) Using the appropriate interest
table, answer the following questions. (Each case is independent of the others).
(a) What is the future value of 20 periodic payments of $5,000 each made at the beginnin
E5-13 (Statement of Cash FlowsClassifications) The major classifications of activities
reported in the statement of cash flows are operating, investing, and financing. Classify each of the
transactions listed below as:
1. Operating activityadd to net inco
E5-12 (Preparation of a Balance Sheet) Presented below is the trial balance of Vivaldi
Corporation at December 31, 2012.
Debt Investments (trading) (cost, $145,000)
Cost of Goods Sold
Debt Investments (long-term)
Equity Investments (long
E5-2 (Classification of Balance Sheet Accounts) Presented below are the captions of Nikos
Companys balance sheet.
(a) Current assets.
(c) Property, plant, and equipment.
(d) Intangible assets.
(e) Other assets.
(f) Current liabilities.
P4-1 (Multiple-Step Income, Retained Earnings) Presented below is information related to
Dickinson Company for 2012.
Retained earnings balance, January 1, 2012
Cost of goods sold
E4-8 (Multiple-Step Statement with Retained Earnings) Presented below is information
related to Brokaw Corp. for the year 2012.
Cost of goods sold
P3-1 (Transactions, Financial StatementsService Company) Listed below are the transactions of
Yasunari Kawabata, D.D.S., for the month of September.
Kawabata begins practice as a dentist and invests $20,000 cash.
E3-5 (Adjusting Entries) The ledger of Chopin Rental Agency on March 31 of the current year
includes the following selected accounts before adjusting entries have been prepared.
E7-2 (Determine Cash Balance) Presented below are a number of independent situations.
For each individual situation, determine the amount that should be reported as cash. If the item(s) is
not reported as cash, explain the rationale.