Use the above adjusted trial balance

1

1.

value: 2.35 points

Use the information in the following adjusted trial balance for the Webb Trucking Company.

Account Title

Debit

Credit

Cash

$

7,300

Accounts receivable

16,500

Office supplies

2,000

Trucks

197,000

Accumulated depreciation—Trucks

$

40,582

Land

75,000

Accounts payable

11,300

Interest payable

3,000

Long-term notes payable

52,000

K. Webb, Capital

183,638

K. Webb, Withdrawals

19,000

Trucking fees earned

134,500

Depreciation expense—Trucks

26,175

Salaries expense

63,080

Office supplies expense

7,398

Repairs expense—Trucks

11,567

Totals

$

425,020

$

425,020

(1)

Calculate the current ratio. (Assume that the industry average for the current ratio is 1.5.) (Round your answer to 2 decimal places.)

Current ratio

(2)

Compare Webb's current ratio with the industry average.

Webb's current ratio is above the industry average.

Webb's current ratio is below the industry average.

2.

value: 2.35 points

The following adjusted trial balance of Webb Trucking Company.

Account Title

Debit

Credit

Cash

$

8,100

Accounts receivable

16,500

Office supplies

2,000

Trucks

158,000

Accumulated depreciation—Trucks

$

32,548

Land

75,000

Accounts payable

12,100

Interest payable

3,000

Long-term notes payable

52,000

K. Webb, Capital

160,160

K. Webb, Withdrawals

19,000

Trucking fees earned

113,000

Depreciation expense—Trucks

20,993

Salaries expense

52,997

Office supplies expense

10,500

Repairs expense—Trucks

9,718

Totals

$

372,808

$

372,808

The K. Webb, Capital, account balance is $160,160 at December 31, 2010.

(1)

Prepare the income statement for the year ended December 31, 2011. (Input all amounts as positive values. Omit the "$" sign in your response.)

WEBB TRUCKING COMPANY Income Statement For Year Ended December 31, 2011

3.

value: 2.35 points

Account Title

Debit

Credit

Cash

$

5,000

Accounts receivable

29,000

Office supplies

6,958

Trucks

190,000

Accumulated depreciation—Trucks

$

39,140

Land

46,000

Accounts payable

9,000

Interest payable

20,000

Long-term notes payable

61,000

K. Webb, Capital

146,271

K. Webb, Withdrawals

17,000

Trucking fees earned

125,000

Depreciation expense—Trucks

25,245

Salaries expense

59,329

Office supplies expense

11,000

Repairs expense—Trucks

10,879

Totals

$

400,411

$

400,411

Using the above adjusted trial balance to prepare Webb Trucking Company’s classified balance sheet as of December 31, 2011. (Be sure to list the assets and liabilities in order of their liquidity. Negative amounts should be indicated by a minus sign. Omit the "$" sign in your response.)

WEBB TRUCKING COMPANY Balance Sheet December 31, 2011

4

4.

value: 2.35 points

The following unadjusted trial balance contains the accounts and balances of Dalton Delivery Company as of December 31, 2011, its first year of operations.

a.

Unrecorded depreciation on the trucks at the end of the year is $8,505.

b.

The total amount of accrued interest expense at year-end is $8,000.

c.

The cost of unused office supplies still available at the year-end is $600.

(1)

Use the above information about the company’s adjustments to complete a 10-column work sheet.(Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

DALTON DELIVERY COMPANY Work Sheet For Year Ended December 31, 2011

Unadjusted Trial Balance

Adjustments

Adjusted Trial Balance

Income Statement

Balance Sheet & Statement of Owner's Equity

Account Title

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Cash

$

15,500

$

$

$

$

$

$

$

$

Accounts receivable

18,500

Office supplies

1,600

Trucks

290,000

Accum. Depreciation–Trucks

$

80,000

Land

170,000

Accounts payable

24,335

Interest payable

4,000

Long-term notes payable

150,000

V. Dalton, Capital

151,838

V. Dalton, Withdrawals

35,000

Delivery fees earned

283,495

Depreciation expense—Trucks

20,000

Salaries expense

119,068

Office supplies expense

11,000

Interest expense

4,000

Repairs expense—Trucks

9,000

Totals

$

693,668

$

693,668

Net Income

Totals

$

$

$

$

(2.1)

Prepare the year-end closing entries for Dalton Delivery Company as of December 31, 2011. (Omit the "$" sign in your response.)

General Journal

Debit

Credit

(2.2)

Determine the capital amount to be reported on its year-end balance sheet. (Omit the "$" sign in your response.)

Ending balance

$

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5.

value: 2.35 points

The following adjusted trial balance contains the accounts and balances of Showers Company as of December 31, 2011, the end of its fiscal year.

No.

Account Title

Debit

Credit

101

Cash

$

18,000

126

Supplies

9,600

128

Prepaid insurance

2,000

167

Equipment

23,000

168

Accumulated depreciation—Equipment

$

6,500

301

R. Showers, Capital

42,165

302

R. Showers, Withdrawals

6,000

404

Services revenue

43,400

612

Depreciation expense—Equipment

2,000

622

Salaries expense

25,302

637

Insurance expense

1,823

640

Rent expense

2,908

652

Supplies expense

1,432

Totals

$

92,065

$

92,065

(1)

Prepare the December 31, 2011, closing entries for Showers Company. (Omit the "$" sign in your response.)

Date

General Journal

Debit

Credit

Dec. 31

(2)

Prepare the December 31, 2011, post-closing trial balance for Showers Company. (The items in the Trial Balance should be grouped as follows: Assets, Liabilities and Equity. Be sure to list the asset in order of liquidity. Omit the "$" sign in your response.)

SHOWERS COMPANY Post-Closing Trial Balance December 31, 2011

Debit

Credit

$

$

Totals

$

$

5

6.

value: 2.35 points

The following two events occurred for Tanger Co. on October 31, 2011, the end of its fiscal year.

a.

Tanger rents a building from its owner for $3,300 per month. By a prearrangement, the company delayed paying October's rent until November 5. On this date, the company paid the rent for both October and November.

b.

Tanger rents space in a building it owns to a tenant for $700 per month. By prearrangement, the tenant delayed paying the October rent until November 8. On this date, the tenant paid the rent for both October and November.

Required:

1.

Prepare adjusting entries that the company must record for these events as of October 31. (Omit the "$" sign in your response.)

Date

General Journal

Debit

Credit

Oct. 31

2.

Assuming Tanger does not use reversing entries, prepare journal entries to record Tanger's payment of rent on November 5 and the collection of rent on November 8 from Tanger's tenant. (Omit the "$" sign in your response.)

Date

General Journal

Debit

Credit

Nov. 5

8

3.

Assuming that the company uses reversing entries, prepare reversing entries on November 1 and the journal entries to record Tanger's payment of rent on November 5 and the collection of rent on November 8 from Tanger's tenant. (Omit the "$" sign in your response.)

Date

General Journal

Debit

Credit

Nov. 1

5

8

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7.

value: 2.35 points

Case A

Case B

Case C

Cash

$

760

$

865

$

1,060

Short-term investments

0

0

500

Current receivables

0

945

660

Inventory

1,900

955

3,800

Prepaid expenses

1,200

562

900

Total current assets

$

3,860

$

3,327

$

6,920

Current liabilities

$

2,239

$

1,120

$

1,730

Compute the current ratio and acid-test ratio for each of the above separate cases. (Round your answers to 2 decimal places.)

Case A

Case B

Case C

Current ratio

Acid-test ratio

Which company case is in the best position to meet short-term obligations?

Case A

Case B

Case C

8.

value: 2.35 points

Using your accounting knowledge, find the missing amounts in the following separate income statements athrough e. (Amounts in parentheses do not require a minus sign in front of them. Input all amounts as positive values. Omit the "$" sign in your response.)

a

b

c

d

e

Sales

$

51,200

$

36,250

$

33,280

$

$

20,122

Cost of goods sold

Merchandise inventory (beginning)

4,864

2,936

6,989

6,124

2,073

Total cost of merchandise purchases

29,184

27,987

7,256

Merchandise inventory (ending)

()

(3,736

)

(8,489

)

(5,749

)

()

Cost of goods sold

28,684

11,241

7,056

Gross profit

5,826

38,198

Expenses

9,000

10,650

13,050

2,600

6,100

Net income (loss)

$

$

14,359

$

(7,224

)

$

35,598

$

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9.

value: 2.35 points

Taos Company purchased merchandise for resale from Tuscon Company with an invoice price of $16,300 and credit terms of 3/10, n/60. The merchandise had cost Tuscon $11,117. Taos paid within the discount period. Assume that both buyer and seller use a perpetual inventory system.

1(a)

Prepare entries that the buyer should record for the purchase. (Omit the "$" sign in your response.)

General Journal

Debit

Credit

1(b)

Prepare entries that the buyer should record for the cash payment. (Omit the "$" sign in your response.)

General Journal

Debit

Credit

2(a)

Prepare entries that the seller should record for the sale. (Omit the "$" sign in your response.)

General Journal

Debit

Credit

2(b)

Prepare entries that the seller should record for the cash collection. (Omit the "$" sign in your response.)

General Journal

Debit

Credit

3.

Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 11% and paid it back on the last day of the credit period. Compute how much the buyer saved by following this strategy. (Use 365 days a year. Round your intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.)

Buyer's net savings

$

10.

value: 2.35 points

The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2011, unadjusted trial balance of Deacon Co., a business owned by Julie Deacon. Use these account balances along with the additional information to journalize (a) adjusting entries and (b) closing entries. Deacon Co. uses a perpetual inventory system.

Debit

Credit

Merchandise inventory

$

32,800

Prepaid selling expenses

6,000

J.Deacon, Withdrawals

2,400

Sales

$

590,400

Sales returns and allowances

22,435

Sales discounts

6,282

Cost of goods sold

290,477

Sales salaries expense

64,944

Utilities expense

18,893

Selling expenses

50,774

Administrative expenses

130,478

Additional Information

Accrued sales salaries amount to $1,700. Prepaid selling expenses of $2,400 have expired. A physical count of year-end merchandise inventory shows $32,177 of goods still available.

Deacon Co. uses a perpetual inventory system.

Using the above account balances and the additional information prepare adjusting entries. (Omit the "$" sign in your response.)

Date

General Journal

Debit

Credit

Dec. 31

Using the above account balances and the additional information prepare closing entries. (Omit the "$" sign in your response.)

Date

General Journal

Debit

Credit

Dec. 31

11.

value: 2.35 points

A company reports the following sales related information: Sales (gross) of $109,000; Sales discounts of $2,800; Sales returns and allowances of $8,000; Sales salaries expense of $5,100.

Prepare the net sales portion of the company’s multiple-step income statement. (Input all amounts as positive values. Omit the "$" sign in your response.)

Multiple-Step Income Statement

$

$

Net sales

12.

value: 2.35 points

Chess Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of goods sold using FIFO for comparison purposes.

2011

2010

LIFO inventory

$

290

$

240

LIFO cost of goods sold

870

810

FIFO inventory

360

265

FIFO cost of goods sold

825

—

Current assets (using LIFO)

350

320

Current liabilities

170

150

1.

Compute its current ratio, inventory turnover, and days' sales in inventory for 2011 using (a) LIFO numbers and (b) FIFO numbers. (Use 365 days a year. Do not round intermediate calculations and round your final answers to 1 decimal place.)

Current ratio

Inventory turnover

Days' sales in inventory

LIFO

times

days

FIFO

times

days

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Top of Form

Ringo Company had $940,000 of sales in each of three consecutive years 2010–2012, and it purchased merchandise costing $520,000 in each of those years. It also maintained a $240,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2010 that caused its year-end 2010 inventory to appear on its statements as $220,000 rather than the correct $240,000.

13.

value: 2.36 points

1.

Determine the correct amount of the company's gross profit in each of the years 2010 – 2012. (Omit the "$" sign in your response.)

2010

2011

2012

Gross profit

$

$

$

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14.

value: 2.36 points

2.

Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit for each of the years 2010−2012. (Input all amounts as positive values. Omit the "$" sign in your response.)

RINGO COMPANY Comparative Income Statements

Year 2010

Year 2011

Year 2012

$

$

$

Cost of goods sold

$

$

$

Cost of goods sold

Gross profit

$

$

$

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Bottom of Form

16. 15.

value: 2.36 points

Duke Associates, antique dealers, purchased the contents of an estate for $37,600. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Duke Associates’ warehouse was $1,250. Duke Associates insured the shipment at a cost of $160. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $500.

Determine the cost of the inventory acquired from the estate. (Omit the "$" sign in your response.)

Cost of inventory

$

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value: 2.36 points

Harold Co. reported the following current-year purchases and sales data for its only product.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

135

units

@ $11.40

=

$

1,539

Jan.

10

Sales

125

units

@$41.40

Mar.

14

Purchase

285

units

@ $16.40

=

4,674

Mar.

15

Sales

175

units

@$41.40

July

30

Purchase

435

units

@ $21.40

=

9,309

Oct.

5

Sales

265

units

@$41.40

Oct.

26

Purchase

635

units

@ $26.40

=

16,764

Totals

1,490

units

$

32,286

565

units

Assume that ending inventory is made up of 120 units from the March 14 purchase, 170 units from the July 30 purchase, and all 635 units from the October 26 purchase. Using the specific identification method, calculate the following. (Omit the "$" sign in your response.)

(a) Cost of goods sold

$

(b) Gross profit

$

17.

value: 2.36 points

Ripken Company's ending inventory includes the following items.

Per Unit

Product

Units

Cost

Market

Helmets

33

$

55

$

51

Bats

26

73

79

Shoes

47

92

96

Uniforms

51

37

37

Compute the lower of cost or market for ending inventory applied separately to each product. (Omit the "$" sign in your response.)

Product

LCM applied to products

Helmets

$

Bats

Shoes

Uniforms