Brief Exercise 7-15

Grouper Company       designated Jill Holland as petty cash custodian and established a petty       cash fund of $260. The fund is reimbursed when the cash in the fund is at       $23, which it is. Petty cash receipts indicate funds were disbursed for       office supplies $98 and miscellaneous expense $136.
 

      Prepare journal entries for the establishment of the fund and the       reimbursement. (If no entry is required, select “No       Entry” for the account titles and enter 0 for the amounts. Credit       account titles are automatically indented when the amount is entered. Do       not indent manually.)

  

Account Titles         and Explanation

Debit

Credit

 

 

 

(To record         establishment of the fund.)

 

 

 

 

 

(To record         reimbursement.)

  

  

      

Exercise 9-4

Teal Company began       operations in 2017 and determined its ending inventory at cost and at       LCNRV at December 31, 2017, and December 31, 2018. This information is       presented below.

    

Cost

Net         Realizable Value

 

12/31/17

$315,690

$293,860

 

12/31/18

437,360

419,880

 (a) Prepare the journal entries required at December 31, 2017, and       December 31, 2018, assuming inventory is recorded at LCNRV and a       perpetual inventory system using the cost-of-goods-sold method. (Credit account titles       are automatically indented when amount is entered. Do not indent       manually. If no entry is required, select “No entry” for the       account titles and enter 0 for the amounts.)

  

Date

Account Titles         and Explanation

Debit

Credit

 

12/31/17

  

 

12/31/18

  

 (b) Prepare journal entries required at December 31, 2017, and       December 31, 2018, assuming inventory is recorded at cost and a perpetual       system using the loss method. (Use Recovery of Loss Inventory account.) (Credit account titles       are automatically indented when amount is entered. Do not indent       manually. If no entry is required, select “No entry” for the       account titles and enter 0 for the amounts.)

  

Date

Account Titles         and Explanation

Debit

Credit

 

12/31/17

  

 

12/31/18

  

 (c) Which of the two methods above provides the higher net income       in each year?

  

 

  

      

Brief Exercise 13-5

Kingbird Corporation made credit sales of       $43,800 which are subject to 7% sales tax. The corporation also       made cash sales which totaled $18,618 including the 7% sales       tax.

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Prepare the entry to record       Kingbird’s credit sales. (If no entry is       required, select “No Entry” for the account titles and enter 0       for the amounts. Credit account titles are automatically indented when       amount is entered. Do not indent manually.)

  

Account         Titles and Explanation

Debit

Credit

 

 

 

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Prepare the entry to record       Kingbird’s cash sales. (If no entry is       required, select “No Entry” for the account titles and enter 0       for the amounts. Credit account titles are automatically indented when       amount is entered. Do not indent manually.)

  

Account         Titles and Explanation

Debit

Credit

 

 

 

        

Brief Exercise 13-10

Sheridan Inc. is involved in a lawsuit at December       31, 2017.

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Prepare the December 31 entry       assuming it is probable that Sheridan will be liable for $896,500 as       a result of this suit. (If no entry is       required, select “No Entry” for the account titles and enter 0       for the amounts. Credit account titles are automatically indented when       amount is entered. Do not indent manually.)

  

Date

Account Titles and Explanation

Debit

Credit

 

December 31, 2017

  

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Prepare the December 31       entry, if any, assuming it is not probable that Sheridan will be       liable for any payment as a result of this suit. (If no entry is required, select “No Entry” for       the account titles and enter 0 for the amounts. Credit account titles are       automatically indented when amount is entered. Do not indent manually.)

  

Date

Account Titles and Explanation

Debit

Credit

 

December 31, 2017

  

Brief Exercise 13-13

Vaughn Factory provides a 2-year warranty with one of its products which was first sold in 2017. Vaughn sold $986,900 of products subject to the warranty. Vaughn expects $117,650 of warranty costs over the next 2 years. In that year, Vaughn spent $65,190 servicing warranty claims. Prepare Vaughn’s journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

  

Date

Account Titles and Explanation

Debit

Credit

 

2017

  

  

(To record sales)

 

During 2017

  

  

(To record warranty claims)

 

12/31/17

  

  

  

      

Brief Exercise 14-3

The Splish Company       issued $370,000 of 7% bonds on January 1, 2017. The bonds are       due January 1, 2022, with interest payable each July 1 and January 1. The       bonds were issued at 96.
 

      Prepare the journal entries for (a) January 1, (b) July 1, and (c)       December 31. Assume The Splish Company records straight-line amortization       semiannually. (If no entry is required, select “No Entry” for the       account titles and enter 0 for the amounts. Credit account titles are       automatically indented when amount is entered. Do not indent manually.       Round intermediate calculations to 6 decimal places, e.g. 1.251247 and       final answer to 0 decimal places, e.g. 38,548.)

  

No.

Date

Account Titles         and Explanation

Debit

Credit

 

(a)

January 1, 2017

   

   

 

(b)

   

   

 

(c)

   

   

Brief Exercise 14-12

Sheffield Corporation issued a 4-year, $53,000, 5% note to Greenbush Company on January 1, 2017, and received a computer that normally sells for $41,732. The note requires annual interest payments each December 31. The market rate of interest for a note of similar risk is 12%.
 

Prepare Sheffield’s journal entries for (a) the January 1 issuance and (b) the December 31 interest. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

  

No.

Date

Account Titles and Explanation

Debit

Credit

 

(a)

January   1, 2017

   

   

 

(b)

December   31, 2017

   

   

        

Brief Exercise 14-14

Sweet Corporation has elected to use the fair       value option for one of its notes payable. The note was issued at an       effective rate of 12% and has a carrying value of $19,000. At       year-end, Sweet’s borrowing rate (credit risk) has declined; the fair       value of the note payable is now $21,000.

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Determine the unrealized       holding gain or loss on the note. (Enter       loss using either a negative sign preceding the number e.g. -2,945 or       parentheses e.g. (2,945).)

  

Unrealized         Holding Gain or Loss

$

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Prepare the entry to record       any unrealized holding gain or loss. (If no       entry is required, select “No Entry” for the account titles and       enter 0 for the amounts. Credit account titles are automatically indented       when amount is entered. Do not indent manually.)

  

Account         Titles and Explanation

Debit

Credit

 

 

Brief Exercise 21-11

Sarasota Corporation manufactures replicators. On January 1, 2017, it leased to Althaus Company a replicator that had cost $105,300 to manufacture. The lease agreement covers the 5-year useful life of the replicator and requires 5 equal annual rentals of $43,200 payable each January 1, beginning January 1, 2017. An interest rate of 12% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs.
 

Prepare Sarasota’s January 1, 2017, journal entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)
 

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Date

Account Titles and Explanation

Debit

Credit

 

January   1, 2017

  

  

(To record the lease.)

 

January   1, 2017

  

  

(To record cost.)

 

January   1, 2017

  

  

(To record first lease payment.)

  

  

      

Exercise 21-1

On January 1, 2017, Waterway Corporation signed       a 5-year noncancelable lease for a machine. The terms of the lease       called for Waterway to make annual payments of $8,634 at the       beginning of each year, starting January 1, 2017. The machine has an       estimated useful life of 6 years and a $4,900 unguaranteed residual       value. The machine reverts back to the lessor at the end of the lease       term. Waterway uses the straight-line method of depreciation for all of       its plant assets. Waterway’s incremental borrowing rate is 10%, and the       lessor’s implicit rate is unknown.
 

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Compute the present value of       the minimum lease payments. (Round present       value factor calculations to 5 decimal places, e.g. 1.25124 and the final       answer to 0 decimal places e.g. 58,971.)

  

The         present value of the minimum lease payments

$

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Prepare all necessary journal       entries for Waterway for this lease through January 1, 2018. (Credit account titles are automatically indented when       amount is entered. Do not indent manually. If no entry is required,       select “No Entry” for the account titles and enter 0 for the       amounts. Round answers to 0 decimal places e.g. 58,971.)

  

Date

Account Titles and Explanation

Debit

Credit

 

  

  

(To record the lease.)

  

  

  

(To record first payment.)

 

  

  

(To record depreciation.)

  

  

  

(To record interest.)

 

1/1/18

  

  

  

(To record second payament.)