Ejercicio en la rehabilitación cardiovascular

a. What is the amount of the February 28 adjustment?

b. What account would most likely have been credited for the amount of the February transactions?

c. What account would most likely have been debited for the amount of the February 28 adjustment?

d. Why would this adjustment entry have been made?

Transaction analysis using T-accounts. This exercise provides practice in under- standing the operation of T-accounts and transaction analysis. For each situation, you must solve for a missing amount. Use a T-account for the balance sheet account, show in a horizontal model, or prepare journal entries for the information provides. In each case, there is only one debit entry and one credit entry in the account during the month.

Example:

Accounts Payable had a balance of $3,000 at the beginning of the month and $2,700 at the end of the month. During the month, payments to suppliers amounted to $8,000. Calculate the purchases on account during the month.

Solution:

a. Accounts Receivable had a balance of $1,200 at the beginning of the month and $900 at the end of the month. Credit sales totaled $12,000 during the month. Calculate the cash collected from customers during the month, assuming that all sales were made on account.

b. The Supplies account had a balance of $540 at the beginning of the month and $730 at the end of the month. The cost of supplies used during the month was $2,340. Calculate the cost of supplies purchased during the month.

c. Wages Payable had a balance of $410 at the beginning of the month. During the month, $3,800 of wages were paid to employees. Wages Expense accrued during the month totaled $4,100. Calculate the balance of Wages Payable at the end of the month.

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Interest Payable

February 1 balance 1,200 February transactions 1,500 February 28 adjustment ?

February 28 balance 2,100

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Accounts Payable

Beginning Dr. Accounts . . . Dr. Inventory . . . 7,700 balance 3,000 Payable . . . . 8,000 Cr. Accounts

Payment 8,000 Purchase ? 7,700 Cr. Cash . . . 8,000 Payable . . . 7,700 Ending Payments to suppliers. Purchases on account.

Problems

Record transactions. Use the horizontal model, or write the journal entry, for each of the following transactions that occurred during the first year of operations at Kissick Co. a. Issued 200,000 shares of $5-par-value common stock for $1,000,000 in cash. b. Borrowed $500,000 from the Oglesby National Bank and signed a 12% note

due in two years.

c. Incurred and paid $380,000 in salaries for the year.

d. Purchased $640,000 of merchandise inventory on account during the year. e. Sold inventory costing $580,000 for a total of $910,000, all on credit.

f. Paid rent of $110,000 on the sales facilities during the first 11 months of the year.

g. Purchased $150,000 of store equipment, paying $50,000 in cash and agreeing to pay the difference within 90 days.

h. Paid the entire $100,000 owed for store equipment, and $620,000 of the amount due to suppliers for credit purchases previously recorded. i. Incurred and paid utilities expense of $36,000 during the year.

j. Collected $825,000 in cash from customers during the year for credit sales previously recorded.

k. At year-end, accrued $60,000 of interest on the note due to Oglesby National Bank.

l. At year-end, accrued $10,000 of past-due December rent on the sales facilities. Prepare an income statement and balance sheet from transaction data.

a. Based on your answers to Problem 4.17, prepare an income statement (ignoring income taxes) for Kissick Co.’s first year of operations and a balance sheet as of the end of the year. (Hint: You may find it helpful to

prepare T-accounts for each account affected by the transactions.)

b. Provide a brief written evaluation of Kissick Co.’s results from operations for the year and its financial position at the end of the year. In your opinion, what are the likely explanations for the company’s net loss?

Calculate income from operations and net income. Selected information taken from the financial statements of Verbeke Co. for the year ended December 31, 2004, is presented below:

Gross profit . . . $412,000 General and administrative expenses . . . 83,000 Net cash used by investing activities . . . 106,000 Dividends paid . . . 51,000 Extraordinary loss from an earthquake, net of tax savings of $25,000 . . . 61,000 Net sales . . . 741,000 Advertising expense . . . 76,000 Accounts payable . . . 101,000 Income tax expense . . . 83,000 Other selling expenses . . . 42,000

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a. Calculate income from operations (operating income) for the year ended December 31, 2004. (Hint: You may wish to review Exhibit 2-2.)

b. Calculate net income for the year ended December 31, 2004.

Calculate income from operations and net income. Selected information taken from the financial statements of Graff Co. for the year ended December 31, 2004, is presented below:

Net cash provided by operations . . . $ 38,000 Cost of goods sold . . . 131,000 Selling, general, and administrative expenses . . . 45,000 Accounts payable . . . 36,000 Extraordinary gain from early retirement of bonds, net of tax

expense of $12,000 . . . 44,000 Research and development expenses . . . 27,000 Net loss from discontinued operations, net of tax savings of $20,000 . . . 63,000 Provision for income taxes . . . 17,000 Net sales . . . 367,000 Interest expense . . . 41,000

a. Calculate income from operations (operating income) for the year ended December 31, 2004. (Hint: You may wish to review Exhibit 2-2.)

b. Calculate net income for the year ended December 31, 2004.

Alternative adjustments—supplies. On January 10, 2004, the first day of the spring semester, the cafeteria of The Defiance College purchased for cash enough paper nap- kins to last the entire 16-week semester. The total cost was $4,800.

Required:

Use the horizontal model to show the effects of recording:

a. The purchase of the paper napkins, assuming that the purchase was initially recorded as an expense.

b. At January 31, it was estimated that the cost of the paper napkins used dur- ing the first three weeks of the semester totaled $950. Use the horizontal model to show the effects that should occur as of January 31 so that the ap- propriate amount of expense will be shown in the income statement for the month of January.

c. Use the horizontal model to show the effects of the alternative way of recording the initial purchase of napkins.

d. Use the horizontal model to show the effects of the adjustment that should occur at January 31 if the initial purchase had been recorded as in c. e. Consider the effects that entries aandbwould have on the financial state-

ments of The Defiance College. Compare these effects to those that would be caused by entries candd.Are there any differences between these alter- native sets of entries on the:

1. Income statement for the month of January? 2. Balance sheet at January 31?

(Note: As an alternative to using the horizontal model, write the journal entries to show each of these transactions and adjustments.)

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P4.21.

Alternative adjustments—rent. Calco, Inc., rents its store location. Rent is $950 per month, payable quarterly in advance. On July 1, a check for $2,850 was issued to the landlord for the July–September quarter.

Required:

Use the horizontal model to show the effects on the financial statements of Calco, Inc.: a. To record the payment, assuming that all $2,850 is initially recorded as Rent

Expense.

b. To record the adjustment that would be appropriate at July 31 if your entry inahad been made.

c. To record the initial payment as Prepaid Rent.

d. To record the adjustment would be appropriate at July 31 if your entry in c had been made.

e. To record the adjustment that would be appropriate at August 31 and September 30, regardless of how the initial payment had been recorded. f. If you were supervising the bookkeeper, how would you suggest that the

July 1 payment be recorded? Explain your answer.

(Note: As an alternative to using the horizontal model, write the journal entries to show each of these transactions and adjustments.)

Analyze several accounts using Intel Corporation annual report data. Set up a hor- izontal model in the following format:

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P4.23.

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Required:

a. Enter the beginning (December 30, 2000) and ending (December 29, 2001) account balances for Accounts Receivable, Inventories, and Accounts Payable. Find these amounts on the balance sheet for Intel Corporation in the Appendix. b. From the income statement for Intel Corporation for the year ended December

29, 2001, in the Appendix, record the following transactions in the model: 1. Net Revenues, assuming all revenues were made on account.

2. Cost of Sales, assuming all costs were transferred from inventories.

Assets Liabilities Revenues Expenses

Marketing, General, and

Cash and Cash Accounts Accounts Net Cost of Administrative

Equivalents Receivable, Net Inventories Payable Revenues Sales Expenses Beginning balance Net revenues Cost of sales Marketing, general, and administrative expenses Purchases on account Collections of accounts receivable Payments of accounts payable Ending balance

3. Marketing, General, and Administrative Expenses, assuming all of these expenses were accrued in the Accounts Payable liability account as they were incurred.

c. Assuming that the only other transactions affecting these balance sheet

accounts were those described below, calculate the amount of each transaction: 1. Purchases of inventories on account.

2. Collections of accounts receivable. 3. Payments of accounts payable.

Make corrections and adjustments to income statement and balance sheet. Big Blue Rental Corp. provides rental agent services to apartment building owners. Big Blue Rental Corp.’s preliminary income statement for August 2004, and its August 31, 2004, preliminary balance sheet, did not reflect the following:

a. Rental commissions of $200 had been earned in August but had not yet been received from or billed to building owners.

b. When supplies are purchased, their cost is recorded as an asset. As supplies are used, a record of those used is kept. The record sheet shows that $180 of supplies were used in August.

c. Interest on the note payable is to be paid on May 31 and November 30. Interest for August has not been accrued—that is, it has not yet been recorded. (The Interest Payable of $40 on the balance sheet is the amount of the accrued liability at July 31.) The interest rate on this note is 10%. d. Wages of $130 for the last week of August have not been recorded. e. The Rent Expense of $510 represents rent for August, September, and

October, which was paid early in August.

f. Interest of $140 has been earned on notes receivable but has not yet been received.

g. Late in August, the board of directors met and declared a cash dividend of $1,400, payable September 10. Once declared, the dividend is a liability of the corporation until it is paid.

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BIG BLUE RENTAL CORP.