Exam 3: Transactions, Adjustments, and Financial Statements

On January 1, Fey Properties paid $12,600 for a three-year insurance premium, with coverage beginning immediately. Fey Company prepares monthly financial statements. Which of the following describes the required adjusting entry on January 31?

Graham Holdings Company (formerly The Washington Post Company) has the following account balances as of December 31, 2016, the end of its fiscal year. Prepare the company's income statement and balance sheet for 2016.

The 2016 income statement of The Coca-Cola Company is as follows. Prepare the closing entries for 2016 for the income statement temporary accounts.

Craft Corner began operations in March with cash and common stock of $36,000. The company made $582,000 in net income its first month. It performed print jobs for customers and billed these customers $900,000. The company collected half of its receivables by the end of the month. The company had cost of goods sold of $162,000 paid for in cash and $6,000 inventory left over at the end of the month. Craft Corner employees earned wages but those are not paid until the first of April. This was the company's only liability. Complete the following statements for the end of March.

A company records an adjusting journal entry to record $10,000 depreciation expense. Which of the following describes the entry?

Describe the closing process and explain why firms engage in this process.

You have been hired by Peters CAD, a small engineering and drafting firm, to help prepare a set of financial statements for the bank for the fiscal year ending October 31. You have reviewed all the transactions for the year and find the following information that has not been recorded in the company's books. 1) During October, Peters CAD provided $11,400 of CAD services to clients who will be billed in early November. The firm uses the account Fees Receivable to reflect amounts due but not yet billed. 2) The firm paid $14,400 cash on October 15 for a series of radio commercials to run during October and November. One-third of the commercials have aired by October 31st. The $14,400 payment was recorded in the Prepaid advertising account. 3) Starting October 1, all maintenance work on Peters CAD's computer and printing equipment is handled by PC Guru under an agreement whereby Peters CAD pays a fixed monthly charge of $4,800. Peters CAD paid six months' service charges of $28,800 cash in advance on October 1, and increased its Prepaid expenses account by $28,800. 4) Starting October 16, Peters CAD rented 800 square feet of storage space from a neighboring business. The monthly rent of $4.80 per square foot is due in advance on the first of each month. Nothing was paid in October, as the neighbor agreed that Peters CAD could pay the rent for October with the November 1 rent payment. 5) Peters CAD invested $60,000 cash in securities on October 1 (this part of the transaction was already properly recorded) and earned interest of $1,200 on these securities by October 31. No interest will be received until January. 6) Monthly depreciation on the equipment is $870. No depreciation has been recorded yet for the year. 7) Weekly salaries for a five-day week total $37,500, payable on Fridays. October 31 of the current year is a Tuesday. 8) A bill for work done during August and September has not yet been sent because the client is out of the country. The bill totals $12,450. 9) Peters CAD has $240,000 of notes payable outstanding at October 31(already recorded on the books). Interest of $2,400 has accrued on these notes by October 31, and will be paid when the notes mature in 2020. 10) Peters CAD received a $12,000 deposit in June from a client for a job to be completed by the end of the fiscal year (this part of the transaction was already properly recorded). Peters CAD completed the job on October 31. Required: Prepare accounting adjustments required at October 31 using the financial statement effects template that follows

During fiscal 2016, Shoe Productions recorded inventory purchases on credit of $337.8 million. Inventory at the start of the year was $38.2 million and at the end of the year was $53.0 million. Which of the following describes how these transactions would be entered on the financial statement effects template?

Which of the following accounts would not be involved in preparing the income statement?

Record the following transactions in the financial statements effects template below. a) Company receives $6,000 from the sale of gift certificates. b) Customers used $5,700 gift certificates. The cost of the inventory sold is $3,900. c) The balance of the gift certificates expire unused

Expenses that are paid in advance are held on the balance sheet until the end of the accounting period when they are transferred to the income statement with accounting adjustments.

Examine the financial statements effects template below. Then select the answer that best describes the transaction.

During the year ended December 31, 2016, Cabela's, Inc., a retailer of outdoor equipment and apparel, purchased merchandise inventory at a cost of $2,413,850 (in thousands). Assume that all inventory purchases were on account (on credit) and that accounts payable is only used for inventory purchases. The following T-account reflects information contained in the company's 2015 and 2016 balance sheets (in thousands). Calculate the amount Cabela's paid in cash to its suppliers during 2016 and complete the T-account.

During the year ended December 31, 2016, Cabela's, Inc., a retailer of outdoor equipment and apparel, purchased merchandise inventory at a cost of $2,413,850 (in thousands). The following T-account reflects information contained in the company's 2015 and 2016 balance sheets (in thousands). Calculate Cabela's cost of sales for 2016 and complete the T-account.

The January 28, 2017 income statement and balance sheet for Kohl's Corporation shows the following items (in millions): Required: Prepare the journal entries to record Net sales and Cost of goods sold for Kohl's for the fiscal year ended January 28, 2017. Assume all sales are for cash.

Maibrit's Bike's began operations in April 2017 and had the following transactions. a) Owner invested $120,000 cash and a truck worth $36,000 in exchange for stock. b) Paid $84,000 cash for 6 months' rent. c) Purchased $300,000 of bicycle inventory on credit. d) Sold bicycles for cash of $507,000. The cost of the bikes sold was $180,000. e) Sold and invoiced bicycles to a client for $95,400. The cost of the bikes sold was $48,000. f) Paid $90,000 cash for an advertising campaign in connection with Tour de France. The campaign will run over the next two of months. g) Paid $24,000 in cash for supplies to have on hand for bike repairs. h) Collected $60,000 from accounts receivable. i) Paid for bikes purchased on credit in Transaction c above. j) Paid cash dividends of $3,000. k) Received $6,000 cash from a customer as a deposit for a custom bicycle to be built. At the end of April, the following information is available: i. At the end of April, $19,200 supplies remained on hand. ii. Rent paid inTransaction b is for a lease that began on April 1. iii. At the end of April, one-third of the advertising campaign in Transaction f was completed. iv. The truck is expected to be used for five years (60 months). v. The custom bicycle in Transaction k was built and delivered to the customer on April 30. Required: Prepare journal entries for any accounting adjustments required for items i. through v.

Revenues and expenses affect the income statement but not the balance sheet.

Which of the following accounts would not appear in a closing entry?

Prepare journal entries to record the following transactions for Mouser Pet Foods, Inc. (in thousands). a. Sell stock in company for $78,000 b. Obtain long-term bank loan of $30,000. c. Purchase manufacturing equipment for $20,400 cash. d. Rent manufacturing and warehousing space and pay $34,800 in advance for the year. e. Purchase $30,000 of inventory, paying $6,000 in cash and the remaining amount on credit. f. Sell half of the inventory purchased in transaction e., for $33,900 on account. g. Pay $24,000 to creditors. h. Make loan payment of $4,800 of which interest is $480 and the rest is principal.

The December 28, 2016 income statement of Snap-On Incorporated includes the amounts shown below. The company paid dividends of $147.5 (in millions). Prepare the closing entries for the company for 2016.