You are called by Tim Duncan of Waterway Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available. Inventory, July 1 $ 38,200 Purchases—goods placed in stock July 1–15 80,300 Sales revenue—goods delivered to customers (gross) 124,800 Sales returns—goods returned to stock 4,400 Your client reports that the goods on hand on July 16 cost $29,400, but you determine that this figure includes goods of $5,500 received on a consignment basis. Your past records show that sales are made at approximately 30% over cost. Duncan’s insurance covers only goods owned. Compute the claim against the insurance company. (Round ratios for computational purposes to 2 decimal places, e.g. 78.73% and final answer to 0 decimal places, e.g. 28,987.)

On January 1, 2017, Loud Company enters into a 2-year contract with a customer for an unlimited talk and 5 GB data wireless plan for $65 per month. The contract includes a smartphone for which the customer pays $299. Loud also sells the smartphone and monthly service plan separately, charging $649 for the smartphone and $65 for the monthly service for the unlimited talk and 5 GB data wireless plan. On July 1, 2017, the customer realizes that she needs less data in her wireless plan and downgrades to the unlimited talk and 2 GB data plan for the remaining term of the contract (18 months). The unlimited talk and 2 GB data plan is priced at $55 per month. The $55 per month is Loud’s current stand-alone price for this plan that is available to all customers.

Required:

1. How should Loud account for this contract modification?

2. Provide Loud’s new monthly revenue recognition journal entry.

TRUE OR FALSE

1. Sales to customers who use nonbank credit cards, such as American Express, are generally treated as credit sales.
2. Retailers record all credit card sales as charge sales.
3. The service fee that credit card companies charge retailers varies and is the primary reason why some businesses do not accept all credit cards.
4. The document issued by the seller that informs the buyer of the details of sales returns is called a credit memorandum.
5. A seller may grant a buyer a reduction in selling price and this is called a sales allowance.
6. The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable.
7. Merchandise Inventory normally has a debit balance
8. A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30 days after the invoice date to take advantage of the cash discount.
9. Discounts taken by the buyer for early payment of an invoice are called Cash Discounts by the buyer.

the sunland recreation center is considering adding a miniature golf course to its facility. the course would cost $150000, would be depreciated on a straight line basis over its 6 years life, and would have a zero salvage value. the estimated income from the golfing fees would be 95000 a year. variable costs would be 32000 per year and fixed cost would be 25000 per year. since the miniature golf course would attract more customers to the center, the firm anticipates an additional 24000 in revenue from its existing facilities every year if the course is added.the project will require an initial investment in net working capital of $18000,which would be recovered at the end of the project’s life. what is the net present value of this project if discount rate is 16% and the tac rate is 21%? what is the internal rate of return? what is the payback period? should the company proceed with the project? why or why not?

Classify each of the following tasks as belonging in the revenue, expenditure, human resources/payroll, production, or financing cycle

a. Selling bonds to raise capital-

b. Purchasing electronic components to manufacture DVD players-

c. Moving electronic components from the stockroom to the production floor to begin making DVD players–

d. Send employees for an annual training-  

e. Receiving cash payments from customers-  

f. Decide how many goods to manufacture –

g. Acquiring new equipment for our manufacturing facility-

h. Picking DVD players from the warehouse to prepare them for shipping to fill orders –

i. Estimate the allowance for bad debt –

j. Receiving timecards from employees –

k. Sell 20% interest in the company to a venture capital firm –

l. Verifying a customer’s credit limit –

m. Pay federal payroll taxes –

n. Receive purchased goods in the receiving department –

Analyzing, Forecasting, and Interpreting Both Income Statement and Balance Sheet
Following are the income statements and balance sheets of Best Buy Co., Inc.

Forecast Best Buy's fiscal 2012 income statement using the following relations (assume "no change" for accounts not listed).  

Round all answers to the nearest whole number.

Do not use negative signs with your answers in the income statement.

Forecast Best Buy's fiscal 2012 balance sheet using the following relations (assume "no change" for accounts not listed). Assume that all capital expenditures are purchases of property and equipment.

Round answers to the nearest whole number.

Do not use negative signs with your answers in the balance sheet.

The adjusted trial balance of Jacks Financial Planners appears below and using the information from the adjusted trial balance, you are to prepare for the year ending December 31:

         1.   an income statement;

         2.   a statement of owner’s equity; and

         3.   a balance sheet.

JACKS FINANCIAL PLANNERS

Adjusted Trial Balance

December 31, 2010

_____________________________________________________________________________

                                                                                                                          Debit         Credit

Cash ........................................................................................................     $ 15,200

Accounts Receivable ..............................................................................          2,200

Office Supplies .......................................................................................          1,800

Office Equipment ...................................................................................        15,000

Accumulated Depreciation—Office Equipment ....................................                           $ 4,000

Accounts Payable ...................................................................................                               4,000

Unearned Service Revenue ....................................................................                               5,000

S. Jacks, Capital.......................................................................................                             24,400

S. Jacks, Drawings ..................................................................................          2,500

Service Revenue .....................................................................................                               6,500

Office Supplies Expense ........................................................................             600

Depreciation Expense .............................................................................          2,500

Telephone Expense..................................................................................             400

Wages Expense........................................................................................          1,800

Rent Expense ..........................................................................................          1,900                    

                                                                                                                       $43,900        $43,900

17.       (Chapter 3)

Chris’s Florist Shop records all prepaid costs as assets and all revenue collected in advance as liabilities, and makes adjustments only at its fiscal year end, which is June 30^th. All of Chris’s purchases are for cash unless stated otherwise. The following information relates to Chris’s June 30, 2011 year end, its first year of operations.

1.         On July 2^nd, 2010, Chris purchased equipment for $12,000. The equipment is expected to have a useful life of 8 years.

2.         On August 1, 2010 a one-year insurance policy was purchased for $1,740.

3.         On February 1, 2011 a corporate customer paid $2,080 as full payment for a one year contract for fresh flowers to be delivered to its offices every Monday morning. At June 30, 21 of the required 52 deliveries had been completed.

4.         On July 2, 2010 Chris purchased enough supplies to last the entire first year of operations for $4,400. At June 30, 2011, Chris counted the supplies on hand and calculated the cost, which amounted to $1,035.

5.         On May 31, Chris borrows $20,000 from the bank to increase the amount of inventory and expand the business. The interest rate on the loan is 6% and requires monthly payments of interest on the first of each month. The principal is due in one year’s time. The first interest payment is due July 1.

6          Chris pays her store assistant on alternate Fridays. The last pay day in June was June 20^th and the first pay day after year end July is July 4^th. The assistant worked 30 hours during this period, of which 20 were in July, and the rest in June. The assistant earns $9.50 an hour.

7.         June 28^th is a busy day and Chris has to make deliveries to numerous customers. On July 5^th she reviews her June billings, and realizes that she made one large sale for $325 on June 30^th for flowers that were delivered, but for which no invoice was issued. The sale was to a regular customer who will pay promptly when the invoice is sent.

8.         Chris offers customers a coupon valued at $20 every ten floral arrangements that a customer buys. At June 30^th, she reviews her records and finds that 18 customers have purchased enough flowers to claim coupons. Chris records the cost of these coupons as “Coupon Expense” when the customer becomes entitled to them.

Instructions:

(a)        For each transaction, prepare any adjusting entries required at June 30, 2011.