Question 1

On August 1, Genuine Services accepted a $6,000 advance payment from a customer for services to be provided in the future. The contract requires the company to review operations at each of the customer's six locations over the next 6 months. What is the impact on the accounting equation of recording this transaction on August 1st?

Accepted Answer

When Genuine Services accepted the advance payment, there was an increase in assets (cash) and liabilities (unearned revenue). The increase in assets reflects the receipt of cash, while the increase in liabilities reflects the obligation to provide services to the customer. Therefore, the accounting equation would be impacted by an increase in both assets and liabilities.

Question 2

Graphic Designs, Inc. engaged in the following transactions during the current year:  Prepare journal entries for each of these transactions.

Accepted Answer

The answer of Graphic Designs, Inc. engaged in the following...

Question 3

Grand Strand Power & Light provides utilities to a gulf coast community. On November 30 of the current year, the utility billed 1,500 residential customers a total of $118,500 for electricity. In addition, the company is required to collect state taxes of 1.5% and Federal excise taxes of 0.95%. Both of these taxes are used to fund the energy commission.
A)What total amount should be billed to customers for the month ending November 30?
B)Provide the journal entry to record the November billings.
C)Record the remittance of the taxes to the appropriate governmental units on December 31.

Accepted Answer

The answer of Grand Strand Power & Light provides utilities...

Question 4

Selected information from the firm's consolidated balance sheet is provided below. Assume that all of the account balances on the balance sheet are normal balances. 
-Refer to the partial balance sheet presented above for Glass Doctor. Compute the following liquidity ratios for 2020 and 2019:
Current Ratio
Quick Ratio
Cash Ratio
Operating Cash Flow Ratio
​
Assume that Glass Doctor's statement of cash flows presented cash flows from operating activities of $204.6 million and $201.1 million for the years ended December 31, 2020 and 2019, respectively. Comment on the direction and significance of the change in the ratios from 2019 to 2020.

Accepted Answer

The answer of Selected information from the firm's consolidated balance...

Question 5

Grady Company's hourly employees earned $55,600 in the pay period ending March 31. Assume further that federal and state income taxes withheld are $9,452 and $2,224, respectively. In addition, social security and medicare taxes are applicable at rates of 6.2% and 1.45%, respectively, and federal and state unemployment taxes are applicable at rates of 4.5% and 3%, respectively. All wages are subject to these taxes.
A)Prepare the journal entry related to the $55,600 gross pay earned by the company's employees. Round all amounts to the nearest dollar, if necessary.
B)Prepare the journal entry for the company's payroll taxes over and above gross pay. Round all amounts to the nearest dollar, if necessary.

Accepted Answer

The answer of Grady Company's hourly employees earned $55,600 in...

Question 6

Great Dane Trailers has the following data available for its March 31 payroll:  Federal unemployment tax and state unemployment tax are also applicable at rates of 0.8% and 3.5%, respectively. All wages are subject to these taxes.
Prepare the journal entries to record the wages earned and payroll taxes.

Accepted Answer

The answer of Great Dane Trailers has the following data...

Question 7

A company borrowed $50,000 on November 1, 2019, at 9% interest. The interest and principal are due on October 31, 2020.
​
Prepare the company's journal entries on November 1, 2019, December 31, 2020, and October 31, 2020.

Accepted Answer

The answer of A company borrowed $50,000 on November 1,...

Question 8

Every month, Glacier Distributors orders shipping supplies from a particular vendor. On February 13, 2019, the company orders supplies amounting to $21,000 on account, payable on March 15, 2019. Due to an unexpected decline in business, the company is unable to pay its vendor on March 15th, and so asked for a payment extension. The vendor granted the extension but requires the company to sign a note that specifies 7.5% interest beginning March 15, 2019, with a due date of July 15, 2019. The company pays the amount in full on July 15, 2019.
​
Prepare the necessary journal entries for Glacier Distributors on February 13th, March 15th, and July 15th.

Accepted Answer

The answer of Every month, Glacier Distributors orders shipping supplies...

Question 9

A partial balance sheet for the company is provided below. Assume that all of the account balances on the balance sheet are normal balances. 
-Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute the total current liabilities for December 31, 2020, and December 31, 2019.

Accepted Answer

The answer of A partial balance sheet for the company...

Question 10

Groovy Swing is a retail store specializing in golf equipment and apparel. On February 1 of the current year, the company borrows $250,000 cash from the bank with a six-month, 6% note payable. The note is used to finance the acquisition of inventory for the spring selling season.
​
Prepare the company's necessary journal entries on February 1st and the note's maturity date.

Accepted Answer

The answer of Groovy Swing is a retail store specializing...

Question 11

During January, Gaston Wholesalers experienced some difficulties with cash flow so it approached one of its vendors about a payment extension. The vendor agreed to the extension on the condition that the company sign a 30-day note that includes 9% interest. What journal entry is needed to record the retirement of the note on the maturity date?

Accepted Answer

This journal entry accounts for both the principal balance of the note and the interest accrued. The debit to notes payable reduces the liability and the debit to interest expense reflects the cost of borrowing. The credit to cash represents the amount paid to retire the note.

Question 12

During May of the current year, Grant Park Refinery sold, on credit, 1,200,000 gallons of motor fuel at $1.89 each plus Georgia sales tax of 6%. Included in the price per gallon was a $0.42 federal excise tax. All taxes collected are paid to the appropriate taxing authority at the end of the quarter.
​
Prepare the appropriate journal entries on May 31 and June 30.

Accepted Answer

The answer of During May of the current year, Grant...

Question 13

Gottlieb Pool n' Pub, Inc. sold $25,000 in gift cards during December 2019. The expiration date on these gift cards is December 31, 2020. During 2020, $23,940 of the gift cards were redeemed by customers.
A)Record the sale of the gift cards.
B)Record the redemption of the gift cards.
C)Record the expiration of the remaining gift cards.

Accepted Answer

The answer of Gottlieb Pool n' Pub, Inc. sold $25,000...

Question 14

During January, a travel company sold forty cruise vacation packages for $147,960. Customers are required to pay in advance, but the package price is refundable until the date the cruise departs. The cruises begin in February.
A)Record the entry on January 31 to book the amounts collected from customers.
B)What entry is needed to record each time one of its customers departs on the cruise vacation?

Accepted Answer

The answer of During January, a travel company sold forty...

Question 15

On August 3, 2019, Grace Electric Supply agreed to manufacture and supply 650 electrical control units for a particular customer who deposited $136,500 toward the purchase price upon signing the one-year purchase agreement, which set the selling price of each control unit at $1,050. In December 2019, 125 units were delivered to the customer and the remaining units were delivered in January 2020. The customer pays in cash upon delivery for any units not covered by the deposit.
A)Record the journal entry to record the receipt of the customer deposit during 2019.
B)Record the journal entry for the delivery of 125 units to the customer in 2019. How would the customer's deposit be reported in the financial statements at the end of 2019?
C)Record the entry for the delivery of the remaining units to the customer in 2020.

Accepted Answer

The answer of On August 3, 2019, Grace Electric Supply...

Question 16

Gospel Ministries purchased on account two pianos on April 3, 2019 for $6,600. The company agreed to pay an extra $100 to have the seller deliver the pianos. Unfortunately, one of the pianos was damaged during transit. The seller agreed to deduct $200 from the amount owed. Gospel Ministries paid for the pianos in full on May 3, 2019.
​
Prepare the journal entries that Gospel Ministries should make on April 3 and May 3.

Accepted Answer

The answer of Gospel Ministries purchased on account two pianos...

Question 17

Grayson Flowers borrowed $400,000 from the bank on a six-month, 7% interest-bearing note on October 1, 2019. The company's year-end is December 31st. The note and all related interest was repaid to the bank on April 1, 2020.
A)Prepare the company's entry for this note on October 1, 2019.
B)Record the adjusting entry for this note on December 31, 2019.
C)Indicate how the note and the accrued interest would be reported on the balance sheet on December 31, 2019.
D)Prepare the entry to record the repayment of the note on April 1, 2020.

Accepted Answer

The answer of Grayson Flowers borrowed $400,000 from the bank...

Question 18

A partial balance sheet for the company is provided below. Assume that all of the account balances on the balance sheet are normal balances. 
-Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute the following liquidity ratios for 2020 and 2019:
Current Ratio
Quick Ratio
Cash Ratio
​
Comment on the direction and significance of the change in the ratios from 2019 to 2020.

Accepted Answer

The answer of A partial balance sheet for the company...

Question 19

A company pays wages of $12,500 at the end of each 5-day work week.
A)What is the standard entry for wages paid on each pay date?
B)Assuming the company's year-end falls on a Wednesday, prepare the necessary journal entries on December 31st and on the January 2nd pay date.

Accepted Answer

The answer of A company pays wages of $12,500 at...

Question 20

Selected information from the firm's consolidated balance sheet is provided below. Assume that all of the account balances on the balance sheet are normal balances. 
-Refer to the partial balance sheet presented above for Glass Doctor. Compute the total current liabilities for December 31, 2020, and December 31, 2019.

Accepted Answer

The answer of Selected information from the firm's consolidated balance...

Quiz 8: Current and Contingent Liabilities

Graphic Designs, Inc. engaged in the following transactions during the current year: Prepare journal entries for each of these transactions.

A company borrowed $50,000 on November 1, 2019, at 9% interest. The interest and principal are due on October 31, 2020. Prepare the company's journal entries on November 1, 2019, December 31, 2020, and October 31, 2020.

A partial balance sheet for the company is provided below. Assume that all of the account balances on the balance sheet are normal balances. -Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute the total current liabilities for December 31, 2020, and December 31, 2019.

A company pays wages of $12,500 at the end of each 5-day work week. A)What is the standard entry for wages paid on each pay date? B)Assuming the company's year-end falls on a Wednesday, prepare the necessary journal entries on December 31st and on the January 2nd pay date.

Quiz 8: Current and Contingent Liabilities

Graphic Designs, Inc. engaged in the following transactions during the current year: Prepare journal entries for each of these transactions.

A company borrowed $50,000 on November 1, 2019, at 9% interest. The interest and principal are due on October 31, 2020. ​ Prepare the company's journal entries on November 1, 2019, December 31, 2020, and October 31, 2020.

A partial balance sheet for the company is provided below. Assume that all of the account balances on the balance sheet are normal balances. -Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute the total current liabilities for December 31, 2020, and December 31, 2019.

A company pays wages of $12,500 at the end of each 5-day work week. A)What is the standard entry for wages paid on each pay date? B)Assuming the company's year-end falls on a Wednesday, prepare the necessary journal entries on December 31st and on the January 2nd pay date.

A company borrowed $50,000 on November 1, 2019, at 9% interest. The interest and principal are due on October 31, 2020. Prepare the company's journal entries on November 1, 2019, December 31, 2020, and October 31, 2020.