Acc 557 homework 1 5 complete solution

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ACC 557 Homework 1: Chapters 1, 2, and 3

Due Week 2 and worth 95 points

Directions: Answer the following questions in a separate Microsoft Word or Excel document.
Explain how you reached the answer or show your work if a mathematical calculation is needed,
or both. Submit your assignment using the assignment link in Blackboard.

Exercises

E1-11.Two items are omitted from each of the following summaries of balance sheet and income
statement data for two corporations for the year 2015, Plunkett Co. and Herring Enterprises.

Instructions
Determine the missing amounts.

E2-9.Selected transactions from the journal of Kati Tillman, investment broker, are presented
below.

Instructions
1. Post the transactions to T-accounts.
2. Prepare a trial balance at August 31, 2015.

E2-11.Presented below is the ledger for Higgs Co.

Instructions
1. Reproduce the journal entries for the transactions that occurred on October 1, 10, and 20,
and provide explanations for each.
2. Determine the October 31 balance for each of the accounts above, and prepare a trial
balance at October 31, 2015.

E3-7.The ledger of Perez Rental Agency on March 31 of the current year includes the selected
accounts, shown below, before quarterly adjusting entries have been prepared.

An analysis of the accounts shows the following.
1. The equipment depreciates $400 per month.
2. One-third of the unearned rent revenue was earned during the quarter.
3. Interest totaling $500 is accrued on the notes payable for the quarter.
4. Supplies on hand total $900.

5. Insurance expires at the rate of $200 per month.

Instructions
Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly.
Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, and
Supplies Expense.

E3-11.A partial adjusted trial balance of Gehring Company at January 31, 2015, shows the
following.

Instructions
Answer the following questions, assuming the year begins January 1.
1. If the amount in Supplies Expense is the January 31 adjusting entry, and $1,000 of
supplies was purchased in January, what was the balance in Supplies on January 1?
2. If the amount in Insurance Expense is the January 31 adjusting entry, and the original
insurance premium was for one year, what was the total premium and when was the
policy purchased?
3. If $3,500 of salaries was paid in January, what was the balance in Salaries and Wages
Payable at December 31, 2014?

Problems

P1-2A.On August 31, the balance sheet of La Brava Veterinary Clinic showed Cash $9,000,
Accounts Receivable $1,700, Supplies $600, Equipment $6,000, Accounts Payable $3,600,
Common Stock $13,000, and Retained Earnings $700. During September, the following
transactions occurred.
1. Paid $2,900 cash for accounts payable due.

2. Collected $1,300 of accounts receivable.
3. Purchased additional equipment for $2,100, paying $800 in cash and the balance on
account.
4. Recognized revenue of $7,300, of which $2,500 is collected in cash and the balance is
due in October.
5. Declared and paid a $400 cash dividend.
6. Paid salaries $1,700, rent for September $900, and advertising expense $200.
7. Incurred utilities expense for month on account $170.
8. Received $10,000 from Capital Bank on a 6-month note payable.

Instructions
1. Prepare a tabular analysis of the September transactions beginning with August 31
balances. The column headings should be as follows: Cash + Accounts Receivable +
Supplies + Equipment = Notes Payable + Accounts Payable + Common Stock + Retained
Earnings + Revenues – Expenses – Dividends.
2. Prepare an income statement for September, a retained earnings statement for September,
and a balance sheet at September 30.

P2-2A.Julia Dumars is a licensed CPA. During the ﬁrst month of operations of her business,
Julia Dumars, Inc., the following events and transactions occurred.

May 1 Stockholders invested $20,000 cash in exchange for common stock.
2 Hired a secretary-receptionist at a salary of $2,000 per month.
3 Purchased $1,500 of supplies on account from Vincent Supply Company.
7 Paid ofﬁce rent of $900 cash for the month.
11 Completed a tax assignment and billed client $2,800 for services performed.
12 Received $3,500 advance on a management consulting engagement.

17 Received cash of $1,200 for services performed for Orville Co.
31 Paid secretary-receptionist $2,000 salary for the month.
31 Paid 40% of balance due Vincent Supply Company.

Julia uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126
Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 311Common
Stock, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent
Expense.

Instructions
1. Journalize the transactions.
2. Post to the ledger accounts.
3. Prepare a trial balance on May 31, 2015.

P3-1A.Deanna Nardelli started her own consulting ﬁrm, Nardelli Consulting, on May 1, 2015.
The trial balance at May 31 is as follows.
In addition to those accounts listed on the trial balance, the chart of accounts for Nardelli
Consulting also contains the following accounts and account numbers: No. 150 Accumulated
Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, No.
717 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense.

Other data:
1. $900 of supplies have been used during the month.
2. Utilities expense incurred but not paid on May 31, 2015, $250.
3. The insurance policy is for 2 years.

4. $400 of the balance in the unearned service revenue account remains unearned at the end
of the month.
5. May 31 is a Wednesday, and employees are paid on Fridays. Nardelli Consulting has two
employees, who are paid $900 each for a 5-day work week.
6. The equipment has a 5-year life with no salvage value. It is being depreciated at $190 per
month for 60 months.
7. Invoices representing $1,700 of services performed during the month have not been
recorded as of May 31.

Instructions
1. Prepare the adjusting entries for the month of May. Use J4 as the page number for your
journal.
2. Enter the totals from the trial balance as beginning account balances and place a check
mark in the posting reference column. Post the adjusting entries to the ledger accounts.
3. Prepare an adjusted trial balance at May 31, 2015.

ACC 557 Homework 2 Chapter , 4, 5 and 6


Directions: Answer the following questions on a separate Microsoft Word or Excel document.

Exercises

E4-7. Kay Magill Company had the following adjusted trial balance.

Instructions
1. Prepare closing entries at June 30, 2015.
2. Prepare a post-closing trial balance.

E4-13. Keenan Company has an inexperienced accountant. During the ﬁrst 2 weeks on the job,
the accountant made the following errors in journalizing transactions. All entries were posted as
made.
1. A payment on account of $840 to a creditor was debited to Accounts Payable $480 and
credited to Cash $480.
2. The purchase of supplies on account for $560 was debited to Equipment $56 and credited
to Accounts Payable $56.
3. A $500 cash dividend was debited to Salaries and Wages Expense $500 and credited to
Cash $500.

Instructions
Prepare the correcting entries.

E5-4. On June 10, Tuzun Company purchased $8,000 of merchandise from Epps Company, FOB
shipping point, terms 2/10, n/30. Tuzun pays the freight costs of $400 on June 11. Damaged
goods totaling $300 are returned to Epps for credit on June 12. The fair value of these goods is
$70. On June 19, Tuzun pays Epps Company in full, less the purchase discount. Both companies
use a perpetual inventory system.

Instructions
1. Prepare separate entries for each transaction on the books of Tuzun Company.
2. Prepare separate entries for each transaction for Epps Company. The merchandise
purchased by Tuzun on June 10 had cost Epps $4,800.

E5-7.Juan Morales Company had the following account balances at year-end: Cost of Goods
Sold $60,000, Inventory $15,000, Operating Expenses $29,000, Sales Revenue $115,000, Sales
Discounts $1,200, and Sales Returns and Allowances $1,700. A physical count of inventory
determines that merchandise inventory on hand is $13,900.

Instructions
1. Prepare the adjusting entry necessary as a result of the physical count.
2. Prepare closing entries.

E6-1. Tri-State Bank and Trust is considering giving Josef Company a loan. Before doing so,
management decides that further discussions with Josef’s accountant may be desirable. One area
of particular concern is the inventory account, which has a year-end balance of $297,000.
Discussions with the accountant reveal the following.
1. Josef sold goods costing $38,000 to Sorci Company, FOB shipping point, on December
28. The goods are not expected to arrive at Sorci until January 12. The goods were not
included in the physical inventory because they were not in the warehouse.
2. The physical count of the inventory did not include goods costing $95,000 that were
shipped to Josef FOB destination on December 27 and were still in transit at year-end.
3. Josef received goods costing $22,000 on January 2. The goods were shipped FOB
shipping point on December 26 by Solita Co. The goods were not included in the
physical count.
4. Josef sold goods costing $35,000 to Natali Co., FOB destination, on December 30. The
goods were received at Natali on January 8. They were not included in Josef’s physical
inventory.

5. Josef received goods costing $44,000 on January 2 that were shipped FOB destination on
December 29. The shipment was a rush order that was supposed to arrive December 31.
This purchase was included in the ending inventory of $297,000.

Instructions
Determine the correct inventory amount on December 31.
E6-6. Kaleta Company reports the following for the month of June.
Instructions
1. Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and
(2) LIFO.
2. Which costing method gives the higher ending inventory? Why?
3. Which method results in the higher cost of goods sold? Why?

Problems

P4-3A.The completed ﬁnancial statement columns of the worksheet for Fleming Company are
shown on below.

Instructions
1. Prepare an income statement, a retained earnings statement, and a classiﬁed balance
sheet.
2. Prepare the closing entries.
3. Post the closing entries and underline and balance the accounts. (Use T-accounts.)
Income Summary is account No. 350.
4. Prepare a post-closing trial balance.

P5-2A.Latona Hardware Store completed the following merchandising transactions in the month
of May. At the beginning of May, the ledger of Latona showed Cash of $5,000 and Common
Stock of $5,000.

May 1 Purchased merchandise on account from Gray’s Wholesale Supply $4,200, terms
2/10, n/30.
2 Sold merchandise on account $2,100, terms 1/10, n/30. The cost of the merchandise sold was
$1,300.
5 Received credit from Gray’s Wholesale Supply for merchandise returned $300.
9 Received collections in full, less discounts, from customers billed on sales of$2,100 on May 2.
10 Paid Gray’s Wholesale Supply in full, less discount.
11 Purchased supplies for cash $400.
12 Purchased merchandise for cash $1,400.
15 Received refund for poor quality merchandise from supplier on cash purchase $150.
17 Purchased merchandise from Amland Distributors $1,300, FOB shipping point, terms 2/10,
n/30.
19 Paid freight on May 17 purchase $130.
24 Sold merchandise for cash $3,200. The merchandise sold had a cost of $2,000.
25 Purchased merchandise from Horvath, Inc. $620, FOB destination, terms 2/10, n/30.
27 Paid Amland Distributors in full, less discount.
29 Made refunds to cash customers for defective merchandise $70. The returned merchandise
had a fair value of $30.
31 Sold merchandise on account $1,000 terms n/30. The cost of the merchandise sold was $560.

Latona Hardware’s chart of accounts includes the following: No. 101 Cash, No. 112 Accounts
Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts Payable, No. 311 Common

Stock, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts,
and No. 505 Cost of Goods Sold.

Instructions
1. Journalize the transactions using a perpetual inventory system.
2. Enter the beginning cash and common stock balances and post the transactions. (Use J1
for the journal reference.)
3. Prepare an income statement through gross profit for the month of May 2015.
P6-3A.Ziad Company had a beginning inventory on January 1 of 150 units of Product 4-18-15 at
a cost of $20 per unit. During the year, the following purchases were made.

Mar. 15 400 units at $23 Sept. 4 350 units at $26
July 20 250 units at $24 Dec. 2 100 units at $29

1,000 units were sold. Ziad Company uses a periodic inventory system.

Instructions
1. Determine the cost of goods available for sale.
2. 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). Prove the accuracy of the
cost of goods sold under the FIFO and LIFO methods.
3. 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?

ACC 557 Homework 3: Chapters 9 and 10



Exercises

E9-9. Presented below are selected transactions at Ridge Company for 2015.

Jan. 1 Retired a piece of machinery that was purchased on January 1, 2005. The
machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2012. The computer cost
$45,000. It had a useful life of 5 years with no salvage value. The computer was sold for
$14,000.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2011. The truck cost
$33,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.

Instructions
Journalize all entries required on the above dates, including entries to update depreciation, where
applicable, on assets disposed of. Ridge Company uses straight-line depreciation. (Assume
depreciation is up to date as of December 31, 2014.)

E9-11. On July 1, 2015, Friedman Inc. invested $720,000 in a mine estimated to have 900,000
tons of ore of uniform grade. During the last 6 months of 2015, 100,000 tons of ore were mined
and sold.

Instructions
1. Prepare the journal entry to record depletion expense.
2. Assume that the 100,000 tons of ore were mined, but only 80,000 units were sold. How
are the costs applicable to the 20,000 unsold units reported?

E10-12. Whitmore Company issued $500,000 of 5-year, 8% bonds at 97 on January 1, 2015. The
bonds pay interest twice a year.

Instructions
1. (1) Prepare the journal entry to record the issuance of the bonds.
(2) Compute the total cost of borrowing for these bonds.
1. Repeat the requirements from part (a), assuming the bonds were issued at 105.

E10-15.Jernigan Co. receives $300,000 when it issues a $300,000, 10%, mortgage note payable
to ﬁnance the construction of a building at December 31, 2015. The terms provide for
semiannual installment payments of $25,000 on June 30 and December 31.

Instructions
Prepare the journal entries to record the mortgage loan and the ﬁrst two installment payments.

Problems

P9-7A.The intangible assets section of Sappelt Company at December 31, 2015, is presented
below.
The patent was acquired in January 2015 and has a useful life of 10 years. The franchise was
acquired in January 2012 and also has a useful life of 10 years. The following cash transactions
may have affected intangible assets during 2016.

Jan. 2 Paid $27,000 legal costs to successfully defend the patent against infringement by
another company.
Jan.–June Developed a new product, incurring $140,000 in research and development costs.
A patent was granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1 Paid $50,000 to an extremely large defensive lineman to appear in commercials
advertising the company’s products. The commercials will air in September and October.
Oct. 1 Acquired a franchise for $140,000. The franchise has a useful life of 50 years.

Instructions
1. Prepare journal entries to record the transactions above.
2. Prepare journal entries to record the 2016 amortization expense.
3. Prepare the intangible assets section of the balance sheet at December 31, 2016.

P10-1A.On January 1, 2015, the ledger of Accardo Company contains the following liability
accounts.
Accounts Payable $52,000
Sales Taxes Payable 7,700
Unearned Service Revenue 16,000

During January, the following selected transactions occurred.
Jan. 5 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes.
12Performed services for customers who had made advance payments of $10,000. (Credit
Service Revenue.)
14Paid state revenue department for sales taxes collected in December 2014 ($7,700).
20Sold 900 units of a new product on credit at $50 per unit, plus 8% sales tax.
21Borrowed $27,000 from Girard Bank on a 3-month, 8%, $27,000 note.

25Sold merchandise for cash totaling $12,420, which includes 8% sales taxes.

Instructions
1. Journalize the January transactions.
2. Journalize the adjusting entry at January 31 for the outstanding note payable. (Hint: Use
one-third of a month for the Girard Bank note.)
3. Prepare the current liabilities section of the balance sheet at January 31, 2015. Assume no
change in accounts payable.

ACC 557 Homework 4: Chapters 11 and 12



Exercises

E11-7. Quay Co. had the following transactions during the current period.

Mar. 2 Issued 5,000 shares of $5 par value common stock to attorneys in payment of a
bill for $30,000 for services performed in helping the company to incorporate.
June 12 Issued 60,000 shares of $5 par value common stock for cash of $375,000.
July 11 Issued 1,000 shares of $100 par value preferred stock for cash at $110 per share.

Nov. 28 Purchased 2,000 shares of treasury stock for $80,000.

Instructions
Journalize the transactions.

E11-13. On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued
and outstanding. The stock has a stated value of $5 per share. During the year, the following
occurred.

Apr. 1 Issued 25,000 additional shares of common stock for $17 per share.
June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30.
July 10 Paid the $1 cash dividend.
Dec. 1 Issued 2,000 additional shares of common stock for $19 per share.
15 Declared a cash dividend on outstanding shares of $1.20 per share to
stockholders of record on December 31.

Instructions
1. Prepare the entries, if any, on each of the three dividend dates.
2. How are dividends and dividends payable reported in the ﬁnancial statements prepared at
December 31?

E12-8. Presented below are two independent situations.

1. Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins
Fashion at a total cost of $13 per share on March 18, 2015. On June 30, Nevins declared

and paid a $60,000 dividend. On December 31, Nevins reported net income of $122,000
for the year. At December 31, the market price of Nevins Fashion was $15 per share. The
stock is classified as available-for-sale.
2. Kanza, Inc., obtained significant influence over Rogan Corporation by buying 40% of
Rogan’s 30,000 outstanding shares of common stock at a total cost of $9 per share on
January 1, 2015. On June 15, Rogan declared and paid a cash dividend of $30,000. On
December 31, Rogan reported a net income of $80,000 for the year.

Instructions
Prepare all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza, Inc.

E12-12.Uttinger Company has the following data at December 31, 2015.

The available-for-sale securities are held as a long-term investment.

Instructions
1. Prepare the adjusting entries to report each class of securities at fair value.
2. Indicate the statement presentation of each class of securities and the related unrealized
gain (loss) accounts.

Problems

P11-3A.The stockholders’ equity accounts of Castle Corporation on January 1, 2015, were as
follows.
Preferred Stock (8%, $50 par, cumulative, 10,000 shares authorized) $ 400,000
Common Stock ($1 stated value, 2,000,000 shares authorized) 1,000,000

Paid-in Capital in Excess of Par—Preferred Stock 100,000
Paid-in Capital in Excess of Stated Value—Common Stock 1,450,000
Retained Earnings 1,816,000
Treasury Stock (10,000 common shares) 50,000

During 2015, the corporation had the following transactions and events pertaining to its
stockholders’ equity.

Feb. 1 Issued 25,000 shares of common stock for $120,000.
Apr. 14 Sold 6,000 shares of treasury stock—common for $33,000.
Sept. 3 Issued 5,000 shares of common stock for a patent valued at $35,000.
Nov. 10 Purchased 1,000 shares of common stock for the treasury at a cost of $6,000.
Dec. 31 Determined that net income for the year was $452,000.
No dividends were declared during the year.

Instructions
1. Journalize the transactions and the closing entry for net income.
2. Enter the beginning balances in the accounts, and post the journal entries to the
stockholders’ equity accounts. (Use J5 for the posting reference.)
3. Prepare a stockholders’ equity section at December 31, 2015, including the disclosure of
the preferred dividends in arrears.

P12-6A.The following data, presented in alphabetical order, are taken from the records of Nieto
Corporation.

The investment in Sasse common stock is considered to be a long-term available-for-sale
security.

Instructions
Prepare a classiﬁed balance sheet at December 31, 2015.

ACC 557 Homework 5: Chapter 13



Exercises

E13-3.Cushenberry Corporation had the following transactions.

1. Sold land (cost $12,000) for $15,000.
2. Issued common stock at par for $20,000.
3. Recorded depreciation on buildings for $17,000.
4. Paid salaries of $9,000.
5. Issued 1,000 shares of $1 par value common stock for equipment worth $8,000.

6. Sold equipment (cost $10,000, accumulated depreciation $7,000) for $1,200.

Instructions
For each transaction above, (a) prepare the journal entry, and (b) indicate how it would affect the
statement of cash ﬂows using the indirect method.

E13-4.Gutierrez Company reported net income of $225,000 for 2015. Gutierrez also reported
depreciation expense of $45,000 and a loss of $5,000 on the disposal of equipment. The
comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a
$17,000 increase in accounts payable, and a $4,000 decrease in prepaid expenses.

Instructions
Prepare the operating activities section of the statement of cash ﬂows for 2015. Use the indirect
method.

Problems

P13-3A.The income statement of Whitlock Company is presented here.
Additional information:
1. Accounts receivable increased $200,000 during the year, and inventory decreased
$500,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Operating expenses include depreciation expense of $70,000.

Instructions
Prepare the operating activities section of the statement of cash flows for the year ended
November 30, 2015, for Whitlock Company, using the indirect method.

P13-7A.Presented below are the financial statements of Nosker Company.

Additional data:
1. Dividends declared and paid were $20,000.
2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000
originally and had a book value of $8,500 at the time of sale.
3. All depreciation expense, $14,500, is in the operating expenses.
4. All sales and purchases are on account.

Instructions
1. Prepare a statement of cash flows using the indirect method.
2. Compute free cash flow.

Acc 557 homework 1 5 complete solution

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