Brief Exercise 14-7
On January 1, 2017, Indigo Corporation issued $620,000 of 9%
bonds, due in 8 years. The bonds were issued for $656,123, and pay
interest each July 1 and January 1. The effective-interest rate is
8%.
Prepare the company’s journal entries for (a) the January 1
issuance, (b) the July 1 interest payment, and (c) the December 31
adjusting entry. Indigo uses the effective-interest method.
(Round intermediate calculations to 6 decimal places,
e.g. 1.251247 and final answer 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.)
| Accumulated Depreciation-Equipment Accumulated Depreciation-Machinery Allowance for Doubtful Accounts Bad Debt Expense Bond Issue Expense Bonds Payable Buildings Cash Common Stock Debt Investments Depreciation Expense Discount on Bonds Payable Discount on Notes Payable Discount on Notes Receivable Equipment Equity Investments Gain on Disposal of Machinery Gain on Disposal of Land Gain on Disposal of Plant Assets Gain on Redemption of Bonds Gain on Restructuring of Debt Gain on Sale of Machinery Interest Expense Interest Payable Interest Receivable Interest Revenue Land Loss on Disposal of Land Loss on Redemption of Bonds Machinery Mortgage Payable No Entry Notes Payable Notes Receivable Paid-in Capital in Excess of Par - Common Stock Paid-in Capital in Excess of Par - Preferred Stock Premium on Bonds Payable Sales Revenue Unamortized Bond Issue Costs Unearned Revenue Unearned Sales Revenue Unrealized Holding Gain or Loss - Income |
In: Accounting
The adjusted 12/31/22 Trial Balance for Sirius Corporation included these accounts and balances. All accounts have a normal balance. No other accounts existed.
|
Retained Earnings (1/1/22) |
$161 |
Salaries Expense |
$170 |
|
|
Accounts Payable |
$25 |
Common Stock |
$50 |
|
|
Cash |
$75 |
Accounts Receivable |
$28 |
|
|
Unearned Service Revenue |
$21 |
Salaries Payable |
$9 |
|
|
Dividends |
$25 |
Prepaid Rent |
$8 |
|
|
Depreciation Expense: Equip. |
$40 |
Cleaning Supplies |
$15 |
|
|
Service Revenue |
$350 |
Accumulated Depreciation: Equip. |
$120 |
|
|
Cleaning Supplies Expense |
$95 |
Equipment |
$280 |
Section 2: The Lerxst Company records these journal entries:
|
Depreciation |
$75 |
|
Accrued Expense |
$18 |
|
Earned portion of Unearned Revenue |
$95 |
| Dividends declared but not paid | $25 |
Indicate the net effect of these journal entries on the following items. Indicate the dollar amount of the effect and the direction of the effect. (Example: $13 Increase, or $8 Decrease, or No Effect.)
Section 3:
The Dirk Company fails to record these journal entries:
| Accrued revenue | $65 |
| Payment of previously declared dividend | $35 |
| Expiration of prepaid rent | $28 |
Determine the net effect of these errors on the following items. Indicate the dollar amount of the error and the direction of the error. (Example: $17 overstated, or $12 understated, or No Error.)
In: Accounting
Create a new spreadsheet in which total fixed cost increases to $5,000. What price should the manager charge? How many papers should be sold in the short run?
| Number of newspapers per day (Q) | Total revenue (including advertising revenues) per day (TR) | Total cost per day (TC) | Marginal Revenue (MR) | Marginal Cost (MC) | Total Profit | profit mar | price | TFC |
| 0 | 0 | 2500 | -2,500.00 | 0 | 0 | - | ||
| 1000 | 4000 | 2600 | 4.00 | 0.10 | 1,400.00 | (2,596.00) | 4.00 | 2,500.00 |
| 2000 | 5000 | 2700 | 1.00 | 0.10 | 2,300.00 | (2,698.00) | 2.50 | 2,500.00 |
| 3000 | 5500 | 2860 | 0.50 | 0.16 | 2,640.00 | (2,858.00) | 1.83 | 2,500.00 |
| 4000 | 5750 | 3020 | 0.25 | 0.16 | 2,730.00 | (3,019.00) | 1.44 | 2,500.00 |
| 5000 | 5950 | 3200 | 0.20 | 0.18 | 2,750.00 | (3,198.00) | 1.19 | 2,500.00 |
| 6000 | 6125 | 3390 | 0.18 | 0.19 | 2,735.00 | (3,389.00) | 1.02 | 2,500.00 |
| 7000 | 6225 | 3590 | 0.10 | 0.20 | 2,635.00 | (3,589.00) | 0.89 | 2,500.00 |
| 8000 | 6125 | 3810 | -0.10 | 0.22 | 2,315.00 | (3,809.00) | 0.77 | 2,500.00 |
| 9000 | 5975 | 4050 | 0.24 | 0.24 | 1,925.00 | (4,049.00) | 0.66 | 2,500.00 |
| Number of newspapers per day (Q) | Total revenue (including advertising revenues) per day (TR) | Total cost per day (TC) | Marginal Revenue (MR) | Marginal Cost (MC) | Total Profit |
| 0 | 0 | 7500 | |||
| 1000 | 4000 | ||||
| 2000 | 5000 | ||||
| 3000 | 5500 | ||||
| 4000 | 5750 | ||||
| 5000 | 5950 | ||||
| 6000 | 6125 | ||||
| 7000 | 6225 | ||||
| 8000 | 6125 | ||||
| 9000 | 5975 |
In: Accounting
how do I prepare a classified balance sheet, multiple step income statement, and retained earnings please help
|
Accounts payable |
$ 40,000 |
Gain on sale of equipment X |
$ 2,000 |
|
|
Accounts receivable |
50,000 |
Income tax expense X |
5,000 |
|
|
Accumulated depreciation - building |
10,000 |
Inventory |
100,000 |
|
|
Additional paid-in capital |
800,000 |
Interest expense X |
4,000 |
|
|
Allowance for uncollectible accounts |
5,000 |
Land |
200,000 |
|
|
Bonds payable, due in 2029 |
800,000 |
Note payable, due 10/1/20 |
100,000 |
|
|
Building |
641,000 |
Preferred stock |
300,000 |
|
|
Cash |
1,500,000 |
Prepaid insurance |
5,000 |
|
|
Common stock |
500,000 |
Rent expense X |
10,000 |
|
|
Cost of goods sold X |
50,000 |
Retained earnings, 1/1/19 X |
75,000 |
|
|
Current maturities of long-term debt |
40,000 |
Sales revenue X |
120,000 |
|
|
Deferred revenue |
50,000 |
Short-term investments X |
112,000 |
|
|
Depreciation expense X |
5,000 |
Supplies expense X |
15,000 |
|
|
Discount on bonds payable |
30,000 |
Treasury stock |
100,000 |
|
|
Dividends X |
15,000 |
Accounts payable
Accounts receivable
Accumulated depreciation - building
Allowance for uncollectible accounts
Bonds payable, due in 2029
Building
Cash
Common Stock
Cost of goods sold
current marries of long-term debt
deferred revenue
depreciation expense
discount on bonds payable
dividends
gains on sale of equipment
income tax expense
inventory
interest expense
land
note payable due 10/20
preferred stock
prepaid insurance
rent expense
sales revenue
retained earnings
treasury stock
supplies expense
short-term investments
In: Accounting
1. The movie distributor charges a movie theatre $4 per ticket to rent a movie. Suppose the theatre can seat a maximum of 200 people. The demand for the movie is different for the afternoon showing and for the evening showing. Based on the demand function P = 10 – Q/10 for the afternoon showing and P = 20 – Q/10 for the evening showing, the marginal-revenue function for the afternoon is MR = 10 – Q/5 and for the evening is MR = 20 – Q/5.
a. Calculate the profit-maximizing price in the evening and the afternoon; also calculate how many tickets will be sold for each show.
b. Suppose that the movie distributor now charges a flat fee of $1000 to show the movie regardless of the number of tickets sold. Will the movie theatre owner prefer this arrangement?
2. Assume that a monopolist decides to maximize revenue rather than profit. How does this operating objective change the size of the deadweight loss? If you are a “benevolent” manager of a monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximize profits or maximize revenue? Explain.
3. Suppose that you are a producer of anti-aging cream in a monopolistically competitive industry. This industry is monopolistically competitive because each producer uses a unique formula and protects it as a top secret; further, each product has its own brand name. The demand for your brand of cream is described by equation P = 200 - 2Q and the marginal revenue function is MR = 200 - 4Q. Assume the marginal cost of producing each unit of output is $4, and fixed costs are $1,000. In the short run, how many bottles of cream should you produce to maximize profits? What price should you charge? Calculate economic profits.
In: Economics
IV. The following balances are stated below:
Cash $1,170
Supplies 1,930
Prepaid Insurance 600
Equipment 20,600
Accumulated depreciation 5,400
Accounts Payable 500
Unearned Revenue 700
Capital 13,925
Withdrawal 4,800
Revenue-Fees Earned 21,700
Salary Expense 6,900
Depreciation Expense 2,000
Supplies Expense 800
Insurance Expense 400
Using this information for questions 16-20 answer the
following questions as they relate to closing entries
16. Which answer would best represent the closing entry for a
revenue type account?
a. debit to income summary for $22,400
b. credit to income summary for $21,700
c. credit to revenue for $21,700
d. debit to income summary for $21,700
17. Which answer would represent the closing entry for
expense type account?
a. debit income summary for $10,100
b. debit income summary for $15,500
c. debit accumulated depreciation $5,400
d. credit depreciation expense $2,000
-5-
18. Which answer would represent the proper closing out of
profit or loss for the period?
a. debit income summary for $11,600
b. debit capital for $11,600
c. credit income summary for $12,300
d. credit capital $12,300
19. Which answer would represent the proper entry for
closing out the withdrawals?
a. debit withdrawals for $4,800
b. debit capital for $4,800
c. credit income summary for $4,800
d. none of the above are correct
20. After recording the proper closing entries what is the
Capital account balance at the end of the period?
a. $20,725
b. $13,925
c. $20,600
d. $15,500
In: Accounting
The following is a list of the accounts and balances taken from
the adjusted trial balance at December 31, 2021 for, Meilleur
Merchants. The list of accounts is in alphabetical order. All
accounts have normal balances.
Meilleur uses a periodic inventory system and the earnings approach
to recognize revenue.
| Account | Balance Dec. 31 |
||||
| 1 | Accounts payable | $15,000 | |||
| 2 | Accounts receivable | 30,000 | |||
| 3 | Accumulated depreciation—building | 15,500 | |||
| 4 | Accumulated depreciation—equipment | 10,000 | |||
| 5 | Advertising expense | 4,500 | |||
| 6 | Building | 84,600 | |||
| 7 | S. Meilleur, capital | 75,000 | |||
| 8 | S. Meilleur, drawings | 28,300 | |||
| 9 | Cash | 10,480 | |||
| 10 | Depreciation expense | 6,200 | |||
| 11 | Equipment | 24,500 | |||
| 12 | Freight in | 3,200 | |||
| 13 | Freight out | 640 | |||
| 14 | Insurance expense | 1,250 | |||
| 15 | Interest expense | 1,720 | |||
| 16 | Interest revenue | 1,440 | |||
| 17 | Land | 12,000 | |||
| 18 | Merchandise inventory, beginning | 90,200 | |||
| 19 | Mortgage payable | 57,600 | |||
| 20 | Prepaid insurance | 2,100 | |||
| 21 | Property tax expense | 1,100 | |||
| 22 | Property taxes payable | 600 | |||
| 23 | Purchase discounts | 6,300 | |||
| 24 | Purchase returns and allowances | 14,600 | |||
| 25 | Purchases | 268,100 | |||
| 26 | Rent revenue | 1,500 | |||
| 27 | Salaries expense | 40,400 | |||
| 28 | Salaries payable | 650 | |||
| 29 | Sales | 423,100 | |||
| 30 | Sales discounts | 15,400 | |||
| 31 | Sales returns and allowances | 17,800 | |||
| 32 | Unearned revenue | 23,000 | |||
| 33 | Utilities expense | 1,800 |
Additional information: According to the year-end physical count,
the merchandise inventory had a balance of $104,700.
Prepare a multiple-step income statement for Meilleur Merchants for
the year ended December 31, 2021.
In: Accounting
Splish, Inc. began work on a $6,312,000 contract in 2020 to
construct an office building. During 2020, Splish, Inc. incurred
costs of $1,589,940, billed its customers for $1,156,000, and
collected $894,000. At December 31, 2020, the estimated additional
costs to complete the project total $3,228,060.
Prepare Splish’s 2020 journal entries using the
percentage-of-completion method. (Credit account titles
are automatically indented when amount is entered. Do not indent
manually. For costs incurred use account Materials, Cash, Payables.
If no entry is required, select "No entry" for the account titles
and enter 0 for the amounts.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
| enter an account title to record costs incurred | enter a debit amount | enter a credit amount |
| enter an account title to record costs incurred | enter a debit amount | enter a credit amount |
|
(To record costs incurred.) |
||
| enter an account title to record billings | enter a debit amount | enter a credit amount |
| enter an account title to record billings | enter a debit amount | enter a credit amount |
|
(To record billings.) |
||
| enter an account title to record collections | enter a debit amount | enter a credit amount |
| enter an account title to record collections | enter a debit amount | enter a credit amount |
|
(To record collections.) |
||
| enter an account title to recognize revenue | enter a debit amount | enter a credit amount |
| enter an account title to recognize revenue | enter a debit amount | enter a credit amount |
| enter an account title to recognize revenue | enter a debit amount | enter a credit amount |
|
(To recognize revenue.) |
In: Accounting
Crane, Inc. began work on a $7,016,000 contract in 2020 to
construct an office building. During 2020, Crane, Inc. incurred
costs of $1,798,560, billed its customers for $1,125,000, and
collected $910,000. At December 31, 2020, the estimated additional
costs to complete the project total $3,197,440.
Prepare Crane’s 2020 journal entries using the
percentage-of-completion method. (Credit account titles
are automatically indented when amount is entered. Do not indent
manually. For costs incurred use account Materials, Cash, Payables.
If no entry is required, select "No entry" for the account titles
and enter 0 for the amounts.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
|
enter an account title to record costs incurred |
enter a debit amount |
enter a credit amount |
|
enter an account title to record costs incurred |
enter a debit amount |
enter a credit amount |
|
(To record costs incurred.) |
||
|
enter an account title to record billings |
enter a debit amount |
enter a credit amount |
|
enter an account title to record billings |
enter a debit amount |
enter a credit amount |
|
(To record billings.) |
||
|
enter an account title to record collections |
enter a debit amount |
enter a credit amount |
|
enter an account title to record collections |
enter a debit amount |
enter a credit amount |
|
(To record collections.) |
||
|
enter an account title to recognize revenue |
enter a debit amount |
enter a credit amount |
|
enter an account title to recognize revenue |
enter a debit amount |
enter a credit amount |
|
enter an account title to recognize revenue |
enter a debit amount |
enter a credit amount |
|
(To recognize revenue.) |
In: Accounting
ABC Electronics wants to hire the optimal number of security guards to prevent thefts from its large superstore. The following table shows how the number of guards will affect the volume of thefts per week.
# guards Total Revenue Product MRP MC
0 $0 -- --
1 $1600 $1600
2 $2400
3 $3050
4 $3560
5 $3900
# guards Total Revenue Product MRP MC
0 $0 -- --
1 $2400
2 $3600
3 $3975
QUESTION 1
1. If you hire guards from the first company, shown in part a, how many should you hire to maximize profits?
ENTER ONLY THE NUMBER ANSWER AND NOTHING ELSE
2.5 points
QUESTION 2
2. If you use the second firm, the premium firm shown in part b, how many guards should you hire to maximize profits?
2.5 points
QUESTION 3
3. Which is the better option:
A hiring the guards from the first firm as you calculated for question 1
B hiring the guards from the premier firm as you calculated for question 2
ENTER ONLY A or B. NOTHING ELSE.
2.5 points
QUESTION 4
Select the answer that best explains the reason you chose the firm you did. ENTER THE LETTER OF YOUR CHOICE, A B C or D
A I picked the one with the greatest Total Revenue Product, because either option will have the same total cost.
B I picked the option with the greatest Marginal Revenue Product
C I picked the option with the lowest total cost
D I picked the option that will allow me to hire the most guards
In: Economics