What is the value today of $3,500 per year, at a discount rate of 9 percent, if the first payment is received 6 years

What is the value today of $3,500 per year, at a discount rate of 9 percent, if the first payment is received 6 years from today and the last payment is received 20 years from today?

A 15-year annuity pays $1,340 per month, and payments are made at the end of each month

A 15-year annuity pays $1,340 per month, and payments are made at the end of each month. If the interest rate is 10 percent compounded monthly for the first seven years, and 6 percent compounded monthly thereafter, what is the present value of the annuity?

You have your choice of two investment accounts. Investment A is a 13-year annuity that features end-of-month $1,100 payments and has an interest

You have your choice of two investment accounts. Investment A is a 13-year annuity that features end-of-month $1,100 payments and has an interest rate of 7.5 percent compounded monthly. Investment B is a 7 percent continuously compounded lump sum investment, also good for 13 years. How much money would you need to invest in B today for it to be worth as much as Investment A 13 years from now?

Given an interest rate of 4.1 percent per year, what is the value at date t = 7 of a perpetual stream of $5,200 payments that begins

Given an interest rate of 4.1 percent per year, what is the value at date t = 7 of a perpetual stream of $5,200 payments that begins at date t = 15?

A local finance company quotes an interest rate of 16.5 percent on one-year loans. So, if you borrow

A local finance company quotes an interest rate of 16.5 percent on one-year loans. So, if you borrow $25,000, the interest for the year will be $4,125. Because you must repay a total of $29,125 in one year, the finance company requires you to pay $29,125/12, or $2,427.08, per month over the next 12 months. Is the interest rate on this loan 16.5 percent? What rate would legally have to be quoted? What is the effective annual rate?

A five-year annuity of ten $7,100 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the

A five-year annuity of ten $7,100 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 8 percent compounded monthly, what is the value of this annuity five years from now? What is the value three years from now? What is the current value of the annuity?

Suppose you are going to receive $15,800 per year for five years. The appropriate interest rate is 7.9 percent

Suppose you are going to receive $15,800 per year for five years. The appropriate interest rate is 7.9 percent. What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due? Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are an annuity due? Which has the highest present value, the ordinary annuity or annuity due? Which has the highest future value? Will this always be true?

You want to buy a new sports car from Muscle Motors for $68,000. The contract is in the form of a 60-month annuity due at an APR of 6.4 percent

  You want to buy a new sports car from Muscle Motors for $68,000. The contract is in the form of a 60-month annuity due at an APR of 6.4 percent. What will your monthly payment be?

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

Hemming Co. reported the following current-year purchases and sales for its only product. Required Hemming uses a periodic inventory system. Determine the costs assigned to ending inventory and to cost of goods sold using (a) FIFO and (b) LIFO. Compute the gross margin for each method. (Round amounts to cents.)

Refer to the opening feature about Chipotle. Chipotle has a small segment of its business devoted to merchandising shirts

Refer to the opening feature about Chipotle. Chipotle has a small segment of its business devoted to merchandising shirts, mugs, hats, and other related items tied to its branding strategy. Assume that its merchandising segment has current annual sales of approximately $1 million and it prepares the following income statement.This segment sells to individuals and retailers, ranging from small shops to large chains. Assume that it currently offers credit terms of 1/15, n/60, and ships FOB destination. To improve cash flow, it is considering changing credit terms to 3/10, n/30. In addition, it proposes to change shipping terms to FOB shipping point. The segment's manager expects that the increase in discount rate will increase net sales by 9%, but the gross margin ratio (and ratio of cost of sales divided by net sales) is expected to remain unchanged. The segment's manager also expects that delivery expenses will be zero under this proposal; thus, expenses other than cost of sales are expected to increase only 6%. Required Prepare a forecasted income statement for the year ended January 31, 2016, based on the proposal. Based on the forecasted income statement alone (from your part 1 solution), do you recommend that Chipotle implement the new sales policies? Explain. What else should Chipotle consider before deciding whether or not to implement the new policies? Explain.

Official Brands's general ledger and supplementary records at the end of its current period reveal the following

Official Brands's general ledger and supplementary records at the end of its current period reveal the following. Required Each member of the team is to assume responsibility for computing one of the following items. You are not to duplicate your teammates' work. Get any necessary amounts to compute your item from the appropriate teammate. Each member is to explain his or her computation to the team in preparation for reporting to the class. Net sales Total cost of merchandise purchases Cost of goods sold Gross profit Net income Check your net income with the instructor. If correct, proceed to step 3. Assume that a physical inventory count finds that actual ending inventory is $76,000. Discuss how this affects previously computed amounts in step 1. Point: In teams of four, assign the same student a and e. Rotate teams for reporting on a different computation and the analysis in step 3.

Access the SEC's EDGAR database (www.SEC.gov) and obtain the March 17, 2015, filing of its fiscal 2014 10-K report

Access the SEC's EDGAR database (www.SEC.gov) and obtain the March 17, 2015, filing of its fiscal 2014 10-K report (for year ended January 31, 2014) for J. Crew Group, Inc. (ticker: JCG). Required Prepare a table that reports the gross margin ratios for J. Crew using the revenues and cost of goods sold data from J. Crew's income statement for each of its most recent three years. Analyze and comment on the trend in its gross margin ratio.

You are the financial officer for Music Plus, a retailer that sells goods for home entertainment needs

You are the financial officer for Music Plus, a retailer that sells goods for home entertainment needs. The business owner, Vic Velakturi, recently reviewed the annual financial statements you prepared and sent you an e-mail stating that he thinks you overstated net income. He explains that although he has invested a great deal in security, he is sure shoplifting and other forms of inventory shrinkage have occurred, but he does not see any deduction for shrinkage on the income statement. The store uses a perpetual inventory system. Required Prepare a brief memorandum that responds to the owner's concerns.

Amy Martin is a student who plans to attend approximately four professional events a year at her college

Amy Martin is a student who plans to attend approximately four professional events a year at her college. Each event necessitates a financial outlay of $100 to $200 for a new suit and accessories. After incurring a major hit to her savings for the first event, Amy developed a different approach. She buys the suit on credit the week before the event, wears it to the event, and returns it the next week to the store for a full refund on her charge card. Required Comment on the ethics exhibited by Amy and possible consequences of her actions. How does the merchandising company account for the suits that Amy returns?

Key comparative figures for both Apple and Google follow

Key comparative figures for both Apple and Google follow. Required Compute the dollar amount of gross margin and the gross margin ratio for the two years shown for each of these companies. Which company earns more in gross margin for each dollar of net sales? How do they compare to the industry average of 45.0%? Did the gross margin ratio improve or decline for these companies?    

Refer to Apple's financial statements in Appendix A to answer the following

Refer to Apple's financial statements in Appendix A to answer the following. Required Assume that the amounts reported for inventories and cost of sales reflect items purchased in a form ready for resale. Compute the net cost of goods purchased for the year ended September 27, 2014. Compute the current ratio and acid-test ratio as of September 27, 2014, and September 28, 2013. Interpret and comment on the ratio results. How does Apple compare to the industry average of 1.5 for the current ratio and 1.25 for the acid-test ratio? Access Apple's financial statements (10-K report) for fiscal years ending after September 27, 2014, from its website (Apple.com) or the SEC's EDGAR database (www.SEC.gov). Recompute and interpret the current ratio and acid-test ratio for these current fiscal years.

Santana Rey created Business Solutions on October 1, 2016. The company has been successful

Santana Rey created Business Solutions on October 1, 2016. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer. The following chart of accounts includes the account number used for each account and any balance as of December 31, 2016. Santana Rey decided to add a fourth digit with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts. In response to requests from customers, S. Rey will begin selling computer software. The company will extend credit terms of 1/10, n/30, FOB shipping point, to all customers who purchase this merchandise; and it applies perpetual inventory and the gross method. However, no cash discount is available on consulting fees. Additional accounts (Nos. 108, 119, 121, 227, 413, 414, 415, and 502) are added to its general ledger to accommodate the company's new merchandising activities. Business Solutions does not use reversing entries and, therefore, all revenue and expense accounts have zero beginning balances as of January 1, 2017. Its transactions for January through March follow: Jan. 4 The company paid cash to Lyn Addie for five days' work at the rate of $125 per day. Four of the five days relate to wages payable that were accrued in the prior year. 5 Santana Rey invested an additional $25,000 cash in the company in exchange for more common stock. 7 The company purchased $5,800 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB shipping point, invoice dated January 7. 9 The company received $2,668 cash from Gomez Co. as full payment on its account. 11 The company completed a five-day project for Alex's Engineering Co. and billed it $5,500, which is the total price of $7,000 less the advance payment of $1,500. 13 The company sold merchandise with a retail value of $5,200 and a cost of $3,560 to Liu Corp., invoice dated January 13. 15 The company paid $600 cash for freight charges on the merchandise purchased on January 7. 16 The company received $4,000 cash from Delta Co. for computer services provided. 17 The company paid Kansas Corp. for the invoice dated January 7, net of the discount. 20 Liu Corp. returned $500 of defective merchandise from its invoice dated January 13. The returned merchandise, which had a $320 cost, is discarded. (For materiality reasons, this company's policy is to leave the cost of defective products in Cost of Goods Sold.) 22 The company received the balance due from Liu Corp., net of both the discount and the credit for the returned merchandise. 24 The company returned defective merchandise to Kansas Corp. and accepted a credit against future purchases. The defective merchandise invoice amount was $496, which is the price net of the discount. 26 The company purchased $9,000 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB destination, invoice dated January 26. 26 The company sold merchandise with a $4,640 cost for $5,800 on credit to KC, Inc., invoice dated January 26. 31 The company paid cash to Lyn Addie for 10 days' work at $125 per day. Feb. 1 The company paid $2,475 cash to Hillside Mall for another three months' rent in advance. 3 The company paid Kansas Corp. for the balance due, net of the cash discount, less the $496 in the credit memorandum of January 24. 5 The company paid $600 cash to the local newspaper for an advertising insert in today's paper. 11 The company received the balance due from Alex's Engineering Co. for fees billed on January 11. 15 The company paid $4,800 cash for dividends. 23 The company sold merchandise with a $2,660 cost for $3,220 on credit to Delta Co., invoice dated February 23. 26 The company paid cash to Lyn Addie for eight days' work at $125 per day. 27 The company reimbursed Santana Rey for business automobile mileage (600 miles at $0.32 per mile). Mar. 8 The company purchased $2,730 of computer supplies from Harris Office Products on credit with terms n/15, invoice dated March 8. 9 The company received the balance due from Delta Co. for merchandise sold on February 23. 11 The company paid $960 cash for minor repair costs on the company's computer. 16 The company received $5,260 cash from Dream, Inc., for computing services provided. 19 The company paid the full amount due to Harris Office Products, consisting of amounts created on December 15 (of $1,100) and March 8. 24 The company billed Easy Leasing for $9,047 of computing services provided. 25 The company sold merchandise with a $2,002 cost for $2,800 on credit to Wildcat Services, invoice dated March 25. 30 The company sold merchandise with a $1,048 cost for $2,220 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Santana Rey for business automobile mileage (400 miles at $0.32 per mile). Check Jan. 11, Dr. Unearned Computer Services Revenue $1,500 Check Jan. 20, No entry to Cost of Goods Sold The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation: The March 31 amount of computer supplies still available totals $2,005. Three more months have expired since the company purchased its annual insurance policy at a $2,220 cost for 12 months of coverage. Lyn Addie has not been paid for seven days of work at the rate of $125 per day. Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $825. Depreciation on the computer equipment for January 1 through March 31 is $1,250. Depreciation on the office equipment for January 1 through March 31 is $400. After a March 31 physical count of inventory, it is determined that shrinkage occurred and the amount of merchandise inventory still available totals $704. On March 31, Rey estimates future-period returns and allowances will be a small percent of sales, or roughly $1,100, and similarly a small percent of cost of sales, or roughly $400. On March 31, Rey estimates future-period discounts arising from this period's sales to be roughly $0. Required Prepare journal entries to record each of the January through March transactions. Post the journal entries in part 1 to the accounts in the company's general ledger. (Note: Begin with the ledger's post-closing adjusted balances as of December 31, 2016.) Prepare a partial work sheet consisting of the first six columns (similar to the one shown in Exhibit 4B.1) that includes the unadjusted trial balance, the March 31 adjustments (a) through (h), and the adjusted trial balance. To make it easier, do not prepare closing entries and do not journalize the adjustments or post them to the ledger.3) Unadj. TB totals, $151,557; Adj. TB totals, $154,082 Page 217 Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended March 31, 2017. Use a single-step format. List all expenses without differentiating between selling expenses and general and administrative expenses. Prepare a statement of retained earnings (from the adjusted trial balance in part 3) for the three months ended March 31, 2017. Prepare a classified balance sheet (from the adjusted trial balance) as of March 31, 2017.

The following unadjusted trial balance is prepared at fiscal year-end for Foster Products Company

The following unadjusted trial balance is prepared at fiscal year-end for Foster Products Company. Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Foster Products Company uses a perpetual inventory system. Required Prepare adjusting journal entries to reflect each of the following: Store supplies still available at fiscal year-end amount to $3,700. Expired insurance, an administrative expense, for the fiscal year is $2,800. Depreciation expense on store equipment, a selling expense, is $3,000 for the fiscal year. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $21,300 of inventory is still available at fiscal year-end. Prepare a multiple-step income statement for fiscal year 2016 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.   Prepare a single-step income statement for fiscal year 2016.   Compute the current ratio, acid-test ratio, and gross margin ratio as of October 31, 2016. (Round ratios to two decimals.)

Use the data for Barkley Company in Problem 4-3B to complete the following requirements

Use the data for Barkley Company in Problem 4-3B to complete the following requirements. Required Prepare closing entries as of March 31, 2016 (the perpetual inventory system is used).   In prior years, the company experienced a 5% returns and allowance rate on its sales, which means approximately 5% of its gross sales were eventually returned outright or caused the company to grant allowances to customers. Compute the ratio of sales returns and allowances divided by gross sales. How does this year's ratio compare to the 5% ratio in prior years? (2) Current-year ratio, 6.0%

Prepare journal entries to record the following merchandising transactions of Menards, which applies the perpetual inventory system and gross

Prepare journal entries to record the following merchandising transactions of Menards, which applies the perpetual inventory system and gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 3 in Accounts Payable—OLB.) July 3 Purchased merchandise from OLB Corp. for $15,000 under credit terms of 1/10, n/30, FOB destination, invoice dated July 3. 7 Sold merchandise to Brill Co. for $11,500 under credit terms of 2/10, n/60, FOB destination, invoice dated July 7. The merchandise had cost $7,750. 10 Purchased merchandise from Rupert Co. for $14,200 under credit terms of 1/10, n/45, FOB shipping point, invoice dated July 10. 11 Paid $300 cash for shipping charges related to the July 7 sale to Brill Co. 12 Brill returned merchandise from the July 7 sale that had cost Menards $1,450 and been sold for $2,000. The merchandise was restored to inventory. 14 After negotiations with Rupert Co. concerning problems with the merchandise purchased on July 10, Menards received a credit memorandum from Rupert granting a price reduction of $1,200. 15 At OLB's request, Menards paid $200 cash for freight charges on the July 3 purchase, reducing the amount owed to OLB. 17 Received balance due from Brill Co. for the July 7 sale less the return on July 12. 20 Paid the amount due Rupert Co. for the July 10 purchase less the price reduction granted on July 14. 21 Sold merchandise to Brown for $11,000 under credit terms of 1/10, n/30, FOB shipping point, invoice dated July 21. The merchandise had cost $7,000. 24 Brown requested a price reduction on the July 21 sale because the merchandise did not meet specifications. Menards sent Brown a credit memorandum for $1,000 toward the $11,000 invoice to resolve the issue. 30 Received Brown's cash payment for the amount due from the July 21 sale less the price allowance from August 24. 31 Paid OLB Corp. the amount due from the July 3 purchase.

Prepare journal entries to record the following merchandising transactions of IKEA, which uses the perpetual inventory system and gross method

Prepare journal entries to record the following merchandising transactions of IKEA, which uses the perpetual inventory system and gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on May 2 in Accounts Payable—Havel.) May 2 Purchased merchandise from Havel Co. for $10,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated May 2. 4 Sold merchandise to Rath Co. for $11,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated May 4. The merchandise had cost $5,600. 5 Paid $250 cash for freight charges on the purchase of May 2. 9 Sold merchandise that had cost $2,000 for $2,500 cash. 10 Purchased merchandise from Duke Co. for $3,650 under credit terms of 2/15, n/60, FOB destination, invoice dated May 10. 12 Received a $650 credit memorandum from Duke Co. for the return of a portion of the merchandise purchased on May 10. 14 Received the balance due from Rath Co. for the invoice dated May 4, net of the discount. 17 Paid the balance due to Havel Co. within the discount period. 20 Sold merchandise that cost $1,450 to Tamer Co. for $2,800 under credit terms of 2/15, n/60, FOB shipping point, invoice dated May 20. 22 Issued a $300 credit memorandum to Tamer Co. for an allowance on goods sold on May 20. 25 Paid Duke Co. the balance due, net of the discount. 30 Received the balance due from Tamer Co. for the invoice dated May 20, net of discount and allowance. 31 Sold merchandise that cost $3,600 to Rath Co. for $7,200 under credit terms of 2/10, n/60, FOB shipping point, invoice dated May 31.

The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company.Rent expense and salaries expense are equally divided

The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company.Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system. Required Prepare adjusting journal entries to reflect each of the following: Store supplies still available at fiscal year-end amount to $1,750. Expired insurance, an administrative expense, for the fiscal year is $1,400. Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end. Prepare a multiple-step income statement for fiscal year 2016 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. Prepare a single-step income statement for fiscal year 2016. (3) Total expenses, $106,775; Net income, $975 Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2016. (Round ratios to two decimals.)

Valley Company's adjusted trial balance on August 31, 2016, its fiscal year-end, follows.On August 31, 2015

Valley Company's adjusted trial balance on August 31, 2016, its fiscal year-end, follows.On August 31, 2015, merchandise inventory was $25,400. Supplementary records of merchandising activities for the year ended August 31, 2016, reveal the following itemized costs. Required Compute the company's net sales for the year. Compute the company's total cost of merchandise purchased for the year. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. (3) Gross profit, $136,850; Net income, $49,850 Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses. (4) Total expenses, $161,500

Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory

Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Aron.) Aug. 1 Purchased merchandise from Aron Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. 5 Sold merchandise to Baird Corp. for $5,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000. 8 Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. 9 Paid $125 cash for shipping charges related to the August 5 sale to Baird Corp. 10 Baird returned merchandise from the August 5 sale that had cost Lowe's $400 and was sold for $600. The merchandise was restored to inventory. 12 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe's received a credit memorandum from Waters granting a price reduction of $400 off the $5,400 of goods purchased. 14 At Aron's request, Lowe's paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed to Aron. 15 Received balance due from Baird Corp. for the August 5 sale less the return on August 10. 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. 19 Sold merchandise to Tux Co. for $4,800 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400. 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe's sent Tux a $500 credit memorandum toward the $4,800 invoice to resolve the issue. 29 Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August 22. 30 Paid Aron Company the amount due from the August 1 purchase.

Prepare journal entries to record the following merchandising transactions of Cabela's, which uses the perpetual inventory

Prepare journal entries to record the following merchandising transactions of Cabela's, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Boden.) July 1 Purchased merchandise from Boden Company for $6,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. 2 Sold merchandise to Creek Co. for $900 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $500. 3 Paid $125 cash for freight charges on the purchase of July 1. 8 Sold merchandise that had cost $1,300 for $1,700 cash. 9 Purchased merchandise from Leight Co. for $2,200 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. 11 Received a $200 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9.

Piere Imports uses the perpetual system in accounting for merchandise inventory and had the following transactions

Piere Imports uses the perpetual system in accounting for merchandise inventory and had the following transactions during the month of October. Prepare entries to record these transactions assuming that Piere Imports records invoices (a) at gross amounts and (b) at net amounts. Oct. 2 Purchased merchandise at a $3,000 price ($2,940 net), invoice dated October 2, terms 2/10, n/30. 10 Received a credit memorandum toward the return of $500 ($490 net) of merchandise that it purchased on October 2. 17 Purchased merchandise at a $5,400 price ($5,292 net), invoice dated October 17, terms 2/10, n/30. 27 Paid for the merchandise purchased on October 17, less the discount. 31 Paid for the merchandise purchased on October 2. (Payment was mistakenly delayed, which caused the discount to be lost.)

L'Oréal reports the following income statement accounts for the year ended December 31, 2014 (euros in millions)

L'Oréal reports the following income statement accounts for the year ended December 31, 2014 (euros in millions). Prepare the income statement for this company for the year ended December 31, 2014, following usual IFRS practices.

Refer to the information in Exercise 4-15 and indicate whether the failure to include in-transit inventory as part of the physical

Refer to the information in Exercise 4-15 and indicate whether the failure to include in-transit inventory as part of the physical count results in an overstatement, understatement, or no effect on the following separate ratios: (a) gross margin ratio and (b) profit margin ratio.

A retail company recently completed a physical count of ending merchandise inventory to use in preparing adjusting entries

A retail company recently completed a physical count of ending merchandise inventory to use in preparing adjusting entries. In determining the cost of the counted inventory, company employees failed to consider that $3,000 of incoming goods had been shipped by a supplier on December 31 under an FOB shipping point agreement. These goods had been recorded in Merchandise Inventory as a purchase, but they were not included in the physical count because they were in transit. Explain how this overlooked fact impacts its balance sheet and income statement. Indicate whether this overlooked fact results in an overstatement, understatement, or no effect on the following separate ratios: return on assets, debt ratio, current ratio, and acid-test ratio.

The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2016

The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2016, unadjusted trial balance of Emiko Co., a business owned by Kumi Emiko. Use these account balances along with the additional information to journalize (a) adjusting entries and (b) closing entries. Emiko Co. uses a perpetual inventory system. Additional Information Accrued sales salaries amount to $1,700. Prepaid selling expenses of $3,000 have expired. A physical count of year-end merchandise inventory shows $28,700 of goods still available.

Lopez Company reports unadjusted first-year merchandise sales of $100,000 and cost of merchandise sales of $30,000

Lopez Company reports unadjusted first-year merchandise sales of $100,000 and cost of merchandise sales of $30,000. Compute gross profit (using the unadjusted numbers above). The company expects future returns and allowances equal to 5% of sales and 5% of cost of sales. Prepare the year-end adjusting entry to record the sales expected to be refunded. Prepare the year-end adjusting entry to record the cost side of sales returns and allowances. Recompute gross profit (using the adjusted numbers from parts 1 and 2). Is the Sales Refund Payable an asset, liability, or equity account? Is the Inventory Returns Estimated an asset, liability, or equity account?

Chico Company allows its customers to return merchandise within 30 days of purchase

Chico Company allows its customers to return merchandise within 30 days of purchase. At December 31, 2016, the end of its first year of operations, Chico estimates future period merchandise returns of $60,000 (cost of $22,500) related to its 2016 sales. On January 3, 2017, a customer returns merchandise with a selling price of $2,000 for a cash refund; the returned merchandise cost $750 and is returned to inventory as it is not defective. Prepare the December 31, 2016, year-end adjusting journal entry for estimated future sales returns and allowances (revenue side). Prepare the December 31, 2016, year-end adjusting journal entry for estimated future inventory returns and allowances (cost side). Prepare the January 3, 2017, journal entry(ies) to record the merchandise returned.

Med Labs has the following December 31, 2016, year-end unadjusted balances: Allowance for Sales Discounts

Med Labs has the following December 31, 2016, year-end unadjusted balances: Allowance for Sales Discounts, $0; and Accounts Receivable, $5,000. Of the $5,000 of receivables, $1,000 are within a 2% discount period, meaning that it expects buyers to take $20 in future-period discounts arising from this period's sales. Prepare the December 31, 2016, year-end adjusting journal entry for future sales discounts. Assume the same facts above and that there is a $5 year-end unadjusted credit balance in the Allowance for Sales Discounts. Prepare the December 31, 2016, year-end adjusting journal entry for future sales discounts. Is the Allowance for Sales Discounts a contra asset or a contra liability account?

Prepare journal entries for the following merchandising transactions of the Dollar Store assuming it uses a perpetual inventory

Prepare journal entries for the following merchandising transactions of the Dollar Store assuming it uses a perpetual inventory system and the gross method. Nov. 1 Dollar Store purchases merchandise for $1,500 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1. 5 Dollar Store pays cash for the November 1 purchase. 7 Dollar Store discovers and returns $200 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund. 10 Dollar Store pays $90 cash for transportation costs for the November 1 purchase. 13 Dollar Store sells merchandise for $1,600 with terms n/30. The cost of the merchandise is $800. 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $160 and cost $80; the items were not damaged and were returned to inventory.

The following supplementary records summarize Tesla Company's merchandising activities for year 2016

The following supplementary records summarize Tesla Company's merchandising activities for year 2016 (it uses a perpetual inventory system). Set up T-accounts for Merchandise Inventory and Cost of Goods Sold. Then record the summarized activities in those T-accounts and compute account balances.

Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions. Both Sydney and Troy use a perpetual inventory

Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions. Both Sydney and Troy use a perpetual inventory system and the gross method. May 11 Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. May 12 Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $1,050. May 20 Sydney pays Troy for the amount owed. Troy receives the cash immediately. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.

Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms of 3/10

Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period.

Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products

Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products. Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. (Allied estimates returns using an adjusting entry at each year-end.) May 3 Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $10 cash per unit (for a total cost of $20,000). 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost $15,000 to Allied. 7 Macy returns 125 units because they did not fit the customer's needs (invoice amount: $1,750). Allied restores the units, which cost $1,250, to its inventory. 8 Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $300 toward the original invoice amount to compensate for the damage. 15 Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.

Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross

Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method. Apr. 2 Purchased $4,600 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point. 3 Paid $300 cash for shipping charges on the April 2 purchase. 4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $600. 17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise. 18 Purchased $8,500 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination. 21 After negotiations, received from Frist a $500 allowance toward the $8,500 owed on the April 18 purchase. 28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

The operating cycle of a merchandiser with credit sales includes the following five activities

The operating cycle of a merchandiser with credit sales includes the following five activities. Starting with merchandise acquisition, identify the chronological order of these five activities. a. Prepare merchandise for sale. b. Collect cash from customers on account. c. Make credit sales to customers. d. Purchase merchandise. e. Monitor and service accounts receivable.

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank. Current assets Long-term investments Plant assets Intangible assets Current liabilities Long-term liabilities Equity 1. Commissions earned 2. Interest receivable 3. Long-term investment in stock 4. Prepaid insurance 5. Machinery 6. Notes payable (due in 15 years) 7. Copyrights 8. Current portion of long-term note payable 9. Accumulated depreciation—Trucks 10 Office equipment 11. Rent receivable 12. Salaries payable 13. Income taxes payable 14. Common stock 15. Office supplies 16. Interest payable 17. Rent revenue 18. Notes receivable (due in 120 days) 19. Land (used in operations) 20. Depreciation expense—Trucks

On July 1, 2016, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during

On July 1, 2016, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company's first month. July 1 Plume invested $30,000 cash and buildings worth $150,000 in the company in exchange for common stock. 2 The company rented equipment by paying $2,000 cash for the first month's (July) rent. 5 The company purchased $2,400 of office supplies for cash. 10 The company paid $7,200 cash for the premium on a 12-month insurance policy. Coverage begins on July 11. 14 The company paid an employee $1,000 cash for two weeks' salary earned. 24 The company collected $9,800 cash for storage fees from customers. 28 The company paid $1,000 cash for two weeks' salary earned by an employee. 29 The company paid $950 cash for minor repairs to a leaking roof. 30 The company paid $400 cash for this month's telephone bill. 31 The company paid $2,000 cash in dividends. Required Use the balance column format to set up each ledger account listed in its chart of accounts. Prepare journal entries to record the transactions for July and post them to the ledger accounts. Record prepaid and unearned items in balance sheet accounts. Prepare an unadjusted trial balance as of July 31. Use the following information to journalize and post adjusting entries for the month: Two-thirds of one month's insurance coverage has expired. At the end of the month, $1,525 of office supplies are still available. This month's depreciation on the buildings is $1,500. An employee earned $100 of unpaid and unrecorded salary as of month-end. The company earned $1,150 of storage fees that are not yet billed at month-end. Prepare the adjusted trial balance as of July 31. Prepare the income statement and the statement of retained earnings for the month of July and the balance sheet at July 31, 2016. Prepare journal entries to close the temporary accounts and post these entries to the ledger. Prepare a post-closing trial balance.

A six-column table for Yan Consulting Company follows. The first two columns contain the unadjusted trial balance

A six-column table for Yan Consulting Company follows. The first two columns contain the unadjusted trial balance for the company as of December 31, 2016, and the last two columns contain the adjusted trial balance as of the same date. Required Analysis Component Analyze the differences between the unadjusted and adjusted trial balances to determine the eight adjustments that likely were made. Show the results of your analysis by inserting these adjustment amounts in the table's two middle columns. Label each adjustment with a letter a through h and provide a short description of it at the bottom of the table. Preparation Component Use the information in the adjusted trial balance to prepare this company's (a) income statement and its statement of retained earnings for the year ended December 31, 2016 (Note: Retained earnings at December 31, 2015, was $76,200, and the current-year dividends were $20,000), and (b) the balance sheet as of December 31, 2016.

Following is the unadjusted trial balance for Alonzo Institute as of December 31, 2016, which initially records prepaid

Following is the unadjusted trial balance for Alonzo Institute as of December 31, 2016, which initially records prepaid expenses and unearned revenues in balance sheet accounts. The Institute provides one-on-one training to individuals who pay tuition directly to the business and offers extension training to groups in off-site locations. Shown after the trial balance are items a through h that require adjusting entries as of December 31, 2016. Additional Information Items An analysis of the Institute's insurance policies shows that $9,500 of coverage has expired. An inventory count shows that teaching supplies costing $20,000 are available at year-end 2016. Annual depreciation on the equipment is $5,000. Annual depreciation on the professional library is $2,400. On November 1, the Institute agreed to do a special five-month course (starting immediately) for a client. The contract calls for a $14,300 monthly fee, and the client paid the first two months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The last two months' fees will be recorded when collected in 2017. On October 15, the Institute agreed to teach a four-month class (beginning immediately) to an individual for $2,300 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (The Institute's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.) The Institute's only employee is paid weekly. As of the end of the year, three days' salaries have accrued at the rate of $150 per day. The balance in the Prepaid Rent account represents rent for December. Required Prepare T-accounts (representing the ledger) with balances from the unadjusted trial balance. Prepare the necessary adjusting journal entries for items a through h, and post them to the T-accounts. Assume that adjusting entries are made only at year-end. Update balances in the T-accounts for the adjusting entries and prepare an adjusted trial balance. Prepare the company's income statement and statement of retained earnings for the year 2016, and prepare its balance sheet as of December 31, 2016.

Natsu Co. follows the practice of recording prepaid expenses and unearned revenues in balance sheet accounts

Natsu Co. follows the practice of recording prepaid expenses and unearned revenues in balance sheet accounts. The company's annual accounting period ends on October 31, 2016. The following information concerns the adjusting entries that need to be recorded as of that date. The Office Supplies account started the fiscal year with a $600 balance. During the fiscal year, the company purchased supplies for $4,570, which was added to the Office Supplies account. The supplies available at October 31, 2016, totaled $800. An analysis of the company's insurance policies provided the following facts. The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior fiscal years.) The company has four employees, who earn a total of $1,000 for each workday. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that October 31, 2016, is a Monday, and all four employees worked the first day of that week. They will be paid salaries for five full days on Monday, November 7, 2016.
The company purchased a building on November 1, 2013, that cost $175,000 and is expected to have a $40,000 salvage value at the end of its predicted 25-year life. Annual depreciation is $5,400. Since the company does not occupy the entire building it owns, it rented space to a tenant at $1,000 per month, starting on September 1, 2016. The rent was paid on time on September 1, and the amount received was credited to the Rent Earned account. However, the October rent has not been paid. The company has worked out an agreement with the tenant, who has promised to pay both October and November rent in full on November 15. The tenant has agreed not to fall behind again.
On September 1, the company rented space to another tenant for $725 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account.

For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry

For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. To record payment of a prepaid expense. To record this period's use of a prepaid expense. To record this period's depreciation expense. To record receipt of unearned revenue.
To record this period's earning of prior unearned revenue. To record an accrued expense. To record payment of an accrued expense. To record an accrued revenue. To record receipt of an accrued revenue.

The adjusted trial balance for Tybalt Construction as of December 31, 2016, follows

The adjusted trial balance for Tybalt Construction as of December 31, 2016, follows. The December 31, 2015, credit balance of the Retained Earnings account was $121,400. Tybalt Construction is required to make a $7,000 payment on its long-term notes payable during 2017.
Required Prepare the income statement and the statement of retained earnings for the calendar year 2016 and the classified balance sheet at December 31, 2016. Check (1) Total assets (12/31/2016), $218,100; Net income, $4,300 Prepare the necessary closing entries at December 31, 2016. Use the information in the financial statements to compute these ratios: (a) return on assets (total assets at December 31, 2015, was $200,000), (b) debt ratio, (c) profit margin ratio (use total revenues as the denominator), and (d) current ratio. Round ratios to three decimals for parts a and c, and to two decimals for parts b and d.

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank. Current assets Long-term investments Plant assets Intangible assets Current liabilities Long-term liabilities Equity 1. Long-term investment in stock 2. Depreciation expense—Building 3. Prepaid rent 4. Interest receivable 5. Taxes payable 6. Automobiles 7. Notes payable (due in 3 years) 8. Accounts payable 9. Prepaid insurance 10. Common stock 11. Unearned services revenue 12. Accumulated depreciation—Trucks 13. Cash 14. Buildings 15. Store supplies 16. Office equipment 17. Land (used in operations) 18. Repairs expense 19. Office supplies 20. Current portion of long-term note payable

On April 1, 2016, Jiro Nozomi created a new travel agency, Adventure Travel

On April 1, 2016, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company's first month. April 1 Nozomi invested $30,000 cash and computer equipment worth $20,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $1,800 cash for the first month's (April) rent. 3 The company purchased $1,000 of office supplies for cash. 10 The company paid $2,400 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. 14 The company paid $1,600 cash for two weeks' salaries earned by employees. 24 The company collected $8,000 cash on commissions from airlines on tickets obtained for customers. 28 The company paid $1,600 cash for two weeks' salaries earned by employees. 29 The company paid $350 cash for minor repairs to the company's computer. 30 The company paid $750 cash for this month's telephone bill. 30 The company paid $1,500 cash in dividends.
The company's chart of accounts follows: Required Use the balance column format to set up each ledger account listed in its chart of accounts.

The adjusted trial balance for Chiara Company as of December 31, 2016, follows

The adjusted trial balance for Chiara Company as of December 31, 2016, follows. Required Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31, 2016; (b) the statement of retained earnings for the year ended December 31, 2016; and (c) the balance sheet as of December 31, 2016.
Compute the profit margin for year 2016 (use total revenues as the denominator).

A six-column table for JKL Company follows. The first two columns contain the unadjusted trial balance

A six-column table for JKL Company follows. The first two columns contain the unadjusted trial balance for the company as of July 31, 2016. The last two columns contain the adjusted trial balance as of the same date. Required Analysis Component Analyze the differences between the unadjusted and adjusted trial balances to determine the eight adjustments that likely were made. Show the results of your analysis by inserting these adjustment amounts in the table's two middle columns. Label each adjustment with a letter a through h and provide a short description of it at the bottom of the table.
Preparation Component Use the information in the adjusted trial balance to prepare the company's (a) income statement and its statement of retained earnings for the year ended July 31, 2016 (Note: Retained earnings at July 31, 2015, was $25,000, and the current-year dividends were $5,000), and (b) the balance sheet as of July 31, 2016.

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2016, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2016, follow. Additional Information Items An analysis of WTI's insurance policies shows that $2,400 of coverage has expired. An inventory count shows that teaching supplies costing $2,800 are available at year-end 2016. Annual depreciation on the equipment is $13,200. Annual depreciation on the professional library is $7,200.
On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,500, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2017. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,000 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.) Page 149 WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee. The balance in the Prepaid Rent account represents rent for December.
Required Prepare T-accounts (representing the ledger) with balances from the unadjusted trial balance. Prepare the necessary adjusting journal entries for items a through h and post them to the T-accounts. Assume that adjusting entries are made only at year-end. Update balances in the T-accounts for the adjusting entries and prepare an adjusted trial balance. Prepare Wells Technical Institute's income statement and statement of retained earnings for the year 2016 and prepare its balance sheet as of December 31, 2016.

Ricardo Construction began operations on December 1. In setting up its accounting procedures

Ricardo Construction began operations on December 1. In setting up its accounting procedures, the company decided to debit expense accounts when it prepays its expenses and to credit revenue accounts when customers pay for services in advance. Prepare journal entries for items a through d and the adjusting entries as of its December 31 period-end for items e through g. Supplies are purchased on December 1 for $2,000 cash. The company prepays its insurance premiums for $1,540 cash on December 2. On December 15, the company receives an advance payment of $13,000 cash from a customer for remodeling work. On December 28, the company receives $3,700 cash from another customer for remodeling work to be performed in January.
A physical count on December 31 indicates that the Company has $1,840 of supplies available. An analysis of the insurance policies in effect on December 31 shows that $340 of insurance coverage has expired.

Use the following information to compute profit margin for each separate company

Use the following information to compute profit margin for each separate company a through e. Net Income Net Sales a. $    4,361 $     44,500 b. 97,706 398,800 c. 111,281 257,000 d. 65,646 1,458,800 e. 80,132 435,500
Which of the five companies is the most profitable according to the profit margin ratio? Interpret that company's profit margin rat

Use the following adjusted trial balance of Wilson Trucking Company to prepare the (1) income statement and

Use the following adjusted trial balance of Wilson Trucking Company to prepare the (1) income statement and (2) statement of retained earnings for the year ended December 31, 2016. The Retained Earnings account balance is $155,000 at December 31, 2015.

adidas Group reports the following balance sheet accounts for the year ended December 31, 2014

adidas Group reports the following balance sheet accounts for the year ended December 31, 2014 (euros in millions). Prepare the balance sheet for this company as of December 31, 2014, following usual IFRS practices.

Following are two income statements for Alexis Co. for the year ended December 31

Following are two income statements for Alexis Co. for the year ended December 31. The left column is prepared before any adjusting entries are recorded and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. Analyze the statements and prepare the eight adjusting entries that likely were recorded.

The following three separate situations require adjusting journal entries to prepare financial

The following three separate situations require adjusting journal entries to prepare financial statements as of April 30. For each situation, present both the April 30 adjusting entry and the subsequent entry during May to record the payment of the accrued expenses. On April 1, the company retained an attorney for a flat monthly fee of $3,500. Payment for April legal services was made by the company on May 12.
A $900,000 note payable requires 12% annual interest, or $9,000, to be paid at the 20th day of each month. The interest was last paid on April 20 and the next payment is due on May 20. As of April 30, $3,000 of interest expense has accrued. Total weekly salaries expense for all employees is $10,000. This amount is paid at the end of the day on Friday of each five-day workweek. April 30 falls on a Tuesday, which means that the employees had worked two days since the last payday. The next payday is May 3.