The adjusted trial balance for Speedy Courier as of December 31, 2010 is shown below.

	Debit	Credit
Cash	$58,000
Accounts receivable	120,000
Office supplies	22,000
Trucks	134,000
Accumulated depreciation-Trucks		$ 58,000
Equipment	270,000
Accumulated depreciation-Equipment		200,000
Land	100,000
Accounts payable		276,000
Salaries payable		28,000
L. Horace, Capital		125,000
L. Horace, Withdrawals	50,000
Fees earned		611,800
Depreciation expense-Trucks	29,000
Depreciation expense-Equipment	48,000
Salaries expense	74,000
Wages expense	300,000
Office supplies expense.	31,000
Advertising expense	27,200
Repairs expense-Automobiles	35,600
Totals	$1,298,800	$1,298,800

Required
Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31, 2010; (b) the statement of owner's equity for the year ended December 31, 2010; and (c) the balance sheet as of December 31, 2010. The owner made no additional investments during the year.

On October 1, 2015, Santana Rey launched a computer services company, Business Solutions, that is organized as a proprietorship and provides consulting services, computer system installations, and custom program development. Rey adopts the calendar year for reporting purposes and expects to prepare the company's first set of financial statements on December 31, 2015.

Required Create a table like the one in Exhibit $1.9$ using the following headings for columns: Cash; Accounts Receivable; Computer Supplies; Computer System; Office Equipment; Accounts Payable; S. Rey, Capital; S. Rey, Withdrawals; Revenues; and Expenses. Then use additions and subtractions within the table created to show the dollar effects for each of the following October transactions for Business Solutions on the individual items of the accounting equation. Show new balances after each transaction.

Oct. 1 S. Rey invested $\$ 45,000$ cash, a $\$ 20,000$ computer system, and $\$ 8,000$ of office equipment in the company. $~~~$ 3 The company purchased $\$ 1,420$ of computer supplies on credit from Harris Office Products.

$~~~$ 6 The company billed Easy Leasing $\$ 4,800$ for services performed in installing a new web server.

$~~~$ 8 The company paid $\$ 1,420$ cash for the computer supplies purchased from Harris Office Products on October 3.

$~~~$ 10 The company hired Lyn Addie as a part-time assistant for $\$ 125$ per day, as needed.

$~~~$ 12 The company billed Easy Leasing another $\$ 1,400$ for services performed.

$~~~$ 15 The company received $\$ 4,800$ cash from Easy Leasing as partial payment toward its account.

$~~~$ 17 The company paid $\$ 805$ cash to repair computer equipment damaged when moving it.

$~~~$ 20 The company paid $\$ 1,728$ cash for advertisements published in the local newspaper.

$~~~$ 22 The company received $\$ 1,400$ cash from Easy Leasing toward its account.

$~~~$ 28 The company billed IFM Company $\$ 5,208$ for services performed.

$~~~$ 31 The company paid $\$ 875$ cash for Lyn Addie's wages for seven days of work this month.

$~~~$ 31 S. Rey withdrew $\$ 3,600$ cash from the company for personal use.

The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July: July 3. Charged 175 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $\$ 150$ per hour. 10. Reimbursed travel costs to employees for depositions related to the Obsidian case, $\$ 12,500$. 14. Charged 260 hours of professional time for the Obsidian trial at a rate of $\$ 185$ per hour. 18. Received invoice from consultants Wadsley and Harden for $\$ 30,000$ for expert testimony related to the Obsidian trial. 27. Applied office overhead at a rate of $\$ 62$ per professional hour charged to the Obsidian case. 31. Paid administrative and support salaries of $\$ 28,500$ for the month. 31. Used office supplies for the month, $\$ 4,000$. 31. Paid professional salaries of $\$ 74,350$ for the month. 31. Billed Obsidian $\$ 172,500$ for successful defense of the case.

a. Provide the journal entries for each of these transactions.

Esme Company’s management is trying to decide whether to eliminate Department Z, which has produced low profits or losses for several years. The company’s departmental income statements show the following.

$$\begin{array}{c} \textbf{Department Income Statements} \end{array}$$

$$\begin{array}{lc} \textbf{For Year Ended December 31,2019}&\textbf{Dept. A}&\textbf{Dept. Z}&\textbf{Combined}\\[5pt] \text{Sales}&\text{\$700,000}&\text{\$175,000}&\text{\$875,000}\\ \text{Cost of goods sold}&\underline{\text{\hspace{5pt}461,300}}&\underline{\text{\hspace{5pt}125,100}}&\underline{\text{\hspace{5pt}586,400}}\\ \text{Gross profit}&\text{\hspace{5pt}238,700}&\text{\hspace{10pt}49,900}&\text{\hspace{5pt}288,600}\\ \text{Operating expenses}\\ \qquad\text{Direct expenses}\\ \qquad\qquad\text{Advertising}&\text{\hspace{15pt}27,000}&\text{\hspace{15pt}3,000}&\text{\hspace{10pt}30,000}\\ \qquad\qquad\text{Store supplies used}&\text{\hspace{20pt}5,600}&\text{\hspace{15pt}1,400}&\text{\hspace{15pt}7,000}\\ \qquad\qquad\text{Depreciation-Store equipment}&\underline{\text{\hspace{15pt}14,000}}&\underline{\text{\hspace{15pt}7,000}}&\underline{\text{\hspace{10pt}21,000}}\\ \qquad\qquad\text{Total direct expenses}&\text{\hspace{15pt}46,600}&\text{\hspace{10pt}11,400}&\text{\hspace{10pt}58,000}\\ \qquad\text{Allocated expenses}\\ \qquad\qquad\text{Sales salaries}&\text{\hspace{15pt}70,200}&\text{\hspace{10pt}23,400}&\text{\hspace{10pt}93,600}\\ \qquad\qquad\text{Rent expense}&\text{\hspace{15pt}22,080}&\text{\hspace{15pt}5,520}&\text{\hspace{10pt}27,600}\\ \qquad\qquad\text{Bad debts expense}&\text{\hspace{15pt}21,000}&\text{\hspace{15pt}4,000}&\text{\hspace{10pt}25,000}\\ \qquad\qquad\text{Office salary}&\text{\hspace{15pt}20,800}&\text{\hspace{15pt}5,200}&\text{\hspace{10pt}26,000}\\ \qquad\qquad\text{Insurance expense}&\text{\hspace{20pt}4,200}&\text{\hspace{15pt}1,400}&\text{\hspace{15pt}5,600}\\ \qquad\qquad\text{Miscellaneous office expenses}&\underline{\text{\hspace{20pt}1,700}}&\underline{\text{\hspace{15pt}2,500}}&\underline{\text{\hspace{15pt}4,200}}\\ \qquad\qquad\text{Total allocated expenses}&\underline{\text{\hspace{10pt}139,980}}&\underline{\text{\hspace{10pt}42,020}}&\underline{\text{\hspace{5pt}182,000}}\\ \text{Total expense}&\underline{\text{\hspace{10pt}186,580}}&\underline{\text{\hspace{11pt}53,420}}&\underline{\text{\hspace{5pt}240,000}}\\ \text{Net income(loss)}&\underline{\underline{\text{\$\hspace{10pt}52,120}}}&\underline{\underline{\text{\$\hspace{5pt}(3,520)}}}&\underline{\underline{\text{\$\hspace{5pt}48,600}}}\\ \end{array}$$

In analyzing whether to eliminate Department Z, management considers the following items:

a. The company has one office worker who earns $500 per week, or$26,000 per year, and four salesclerks who each earns $450 per week, or$23,400 per year for each salesclerk.

b. The full salaries of three salesclerks are charged to Department A. The full salary of one sales-clerk is charged to Department Z.

c. Eliminating Department Z would avoid the sales salaries and the office salary currently allocated to it. However, management prefers another plan. Two salesclerks have indicated that they will be quitting soon. Management believes that their work can be done by the two remaining clerks if the one office worker works in sales half-time. Eliminating Department Z will allow this shift of duties. If this change is implemented, half the office worker’s salary would be reported as sales salaries and half would be reported as office salary.

d. The store building is rented under a long-term lease that cannot be changed. Therefore, Department A will use the space and equipment currently used by Department Z.

e. Closing Department Z will eliminate its expenses for advertising, bad debts, and store supplies; 65% of the insurance expense allocated to it to cover its merchandise inventory; and 30% of the miscellaneous office expenses presently allocated to it.

Required

1. Prepare a three-column report that lists items and amounts for (a) the company’s total expenses (including cost of goods sold)—in column 1, (b) the expenses that would be eliminated by closing Department Z—in column 2, and (c) the expenses that will continue—in column 3.
2. Prepare a forecasted annual income statement for the company reflecting the elimination of Department Z assuming that it will not affect Department A’s sales and gross profit. The statement should reflect the reassignment of the office worker to one-half time as a salesclerk.

Analysis Component

3. Reconcile the company’s combined net income with the forecasted net income assuming that Department Z is eliminated (list both items and amounts). Analyze the reconciliation and explain why you think the department should or should not be eliminated.

Review Francis Nangle Travel Design’s trial balance. Assume that Nangle accidentally listed drawing as $300 instead of the correct amount of$3,000.

$$\begin{array}{c} \textbf{FRANCIS NANGLE TRAVEL DESIGN}\\ \textbf{Trial Balance}\\ \textbf{January 31, 2012}\\ \end{array}$$

$$\begin{array}{lrr} &\text { Balance }\\ \text { Account Title } & \text { Debit } & \text { Credit } \\ \hline \text { Cash } & \$ 20,000 & \\ \text { Accounts receivable } & 1,000 & \\ \text { Office supplies } & 500 & \\ \text { Land } & 12,000 & \\ \text { Accounts payable } & & \$100 \\ \text { Nangle, capital } & & 31,000\\ \text { Nangle, drawing } & 300 & \\ \text { Service revenue } & & 8,700 \\ \text { Rent expense, computer } & 700 & \\ \text { Rent expense, office } & 1,200\\ \text { Salary expense } & 1,200& \\ \hline \text { Utilities expense } & 200 \\ \text { Total } & \\ \hline \end{array}$$

Requirement

1. Compute the incorrect trial balance totals for debits and credits. Then show how to correct this error, which is called a slide.

Neva Nadal started a new business, Nadal Computing, and completed the following transactions during its first year of operations.

e. The company paid a local newspaper $\$750$ cash for printing an announcement of the office’s opening.

Required

1. Create the following table similar to the one in the previous Exhibit, that is, "Summary of Transactions Using the Accounting Equation".

Use additions and subtractions within the table to show the dollar effects of each transaction on individual items of the accounting equation. Show new balances after each transaction.

2. Determine the company’s net income.

Neva Nadal started a new business, Nadal Computing, and completed the following transactions during its first year of operations.

h. Neva Nadal withdrew $\$11,500$ cash from the company for personal use.

Required

1. Create the following table similar to the one in the previous Exhibit, that is, "Summary of Transactions Using the Accounting Equation".

Use additions and subtractions within the table to show the dollar effects of each transaction on individual items of the accounting equation. Show new balances after each transaction.

2. Determine the company’s net income.

A project has field trailers for the Resident Project Representative at the construction site and an off-site home office for the project manager. It is a traditional contract with an outside engineer/architect and a general contractor with three subcontractors executing the work. From the following list, specify, in numerical order, the routing of submittals from a subcontractor to the engineer/architect.

a. _______________ A/E project manager

b. ______________ Design reviewers

c. ______________ General contractor

d. ______________ Resident Project Representative

e. _______________ Subcontractors

Gabi Gram started The Gram Co., a new business that began operations on May 1. The Gram Co. completed the following transactions during its first month of operations.

May 1 G. Gram invested $40,000 cash in the company.$~~~~~~~$1 The company rented a furnished office and paid$2,200 cash for May’s rent.

$~~~~~~~$ 3 The company purchased $1,890 of office equipment on credit.$~~~~~~~$5 The company paid$750 cash for this month’s cleaning services.

$~~~~~~~$ 8 The company provided consulting services for a client and immediately collected $5,400 cash.$~~~~~~~$12 The company provided$2,500 of consulting services for a client on credit.

$~~~~~~~$ 15 The company paid $750 cash for an assistant’s salary for the first half of this month.$~~~~~~~$20 The company received$2,500 cash payment for the services provided on May 12.

$~~~~~~~$ 22 The company provided $3,200 of consulting services on credit.$~~~~~~~$25 The company received$3,200 cash payment for the services provided on May 22.

$~~~~~~~$ 26 The company paid $1,890 cash for the office equipment purchased on May 3.$~~~~~~~$27 The company purchased$80 of advertising in this month’s (May) local paper on credit; cash payment is due June 1.

$~~~~~~~$ 28 The company paid $750 cash for an assistant’s salary for the second half of this month.$~~~~~~~$30 The company paid$300 cash for this month’s telephone bill.

$~~~~~~~$ 30 The company paid $280 cash for this month’s utilities.$~~~~~~~$31 G. Gram withdrew$1,400 cash from the company for personal use.

Required

1. Arrange the following asset, liability, and equity titles in a table like Exhibit 1.9: Cash; Accounts Receivable; Office Equipment; Accounts Payable; G. Gram, Capital; G. Gram, Withdrawals; Revenues; and Expenses.

2. Show effects of the transactions on the accounts of the accounting equation by recording increases and decreases in the appropriate columns. Do not determine new account balances after each transaction. Determine the final total for each account and verify that the equation is in balance.

3. Prepare an income statement for May, a statement of owner’s equity for May, a May 31 balance sheet, and a statement of cash flows for May.

DM Office Products (DMOP) is a wholesale supplier of office products with one facility in Pennsylvania. It has decided to build a new distribution warehouse in the state of New York to help serve the growing demand in that market. It has four major customers located in Buffalo, Syracuse, Albany, and New York City. Though New York City is the largest market, it also has the greatest competition, and DMOP is not a major player there. When DMOP ships an order to a customer, it uses its own small fleet of two trucks to deliver, so the cost of delivery is essentially the same for a full or partially full truck. The expected number of annual shipments to each city and their coordinates on an x, y grid is shown in the following table. Use the centroid method to recommend a location for the new warehouse for DMOP. Round your coordinates to one decimal place.

Not all the items in your office supply store are evenly distributed as far as demand is concerned, so you decide to forecast demand to help plan your stock. Past data for legal-sized yellow tablets for the month of August are as follows. Using a three-week moving average, what would you forecast the next week to be?

Jason Hilton, M.D., reported the following trial balance as of September 30, 2016:

$$\begin{array}{c} \textbf{JASON HILTON, M.D.}\\ \text{Trial Balance}\\ \text{September 30, 2016}\\ \end{array}$$

$$\begin{array}{lrr} &\textbf{Balance}\\ \textbf{Account Title}&\textbf{Debit}&\textbf{Credit}\\ \text{Cash}&\$37,000\\ \text{Accounts Receivable}&7,200\\ \text{Office Supplies}&2,600\\ \text{Office Equipment}&22,000\\ \text{Building}&85,000\\ \text{Land}&24,000\\ \text{Accounts Payable}&&\$1,800\\ \text{Utilities Payable}&&700\\ \text{Unearned Revenue}&&18,290\\ \text{Notes Payable}&&77,000\\ \text{Common Stock}&&100,000\\ \text{Dividends}&50,000\\ \text{Service Revenue}&&54,810\\ \text{Salaries Expense}&23,100\\ \text{Utilities Expense}&900\\ \text{Advertising Expense}&800\\ \text{Total}&\underline{\underline{\$252,600}}&\underline{\underline{\$252,600}}\\ \end{array}$$

Calculate the debt ratio for Jason Hilton, M.D.

The cash payments and purchases journals for Out of Eden Landscaping Co. are shown below. The accounts payable control account has a June 1, 2012, balance of $2,450, consisting of an amount owed to Augusta Sod Co

$$\begin{array}{rlcrrrccr} \textbf{Date}&\textbf{Account Credited}&\textbf{Ref.}&\textbf{AP Cr.}&\textbf{Cleaning Sup. Dr.}&\textbf{Accounts Dr.}&\textbf{Ref.}&\textbf{Amount}\\ \text{Jan.4}&\text{Kleen-Mate Supplies Inc.}&&570&570\\ 15&\text{Little Co.}&&250&250&\text{}&\\ 19&\text{Office Mate Inc.}&&2,700&&\text{Office Equipment}&&2,700\\ 26&\text{Kleen-Mate Supplies Inc.}&&330&330&\text{}&\\\hline 31&\text{}&&3,850&1,150&\text{}&&2,700\\ \hline\hline \end{array}$$

Prepare a schedule of the accounts payable subsidiary ledger balances, and determine that the total agrees with the ending balance of the accounts payable account.

Neva Nadal started a new business, Nadal Computing, and completed the following transactions during its first year of operations.

j. The company made a payment of $\$700$ cash on the equipment purchased in transaction $d$.

Required

1. Create the following table similar to the one in the previous Exhibit, that is, "Summary of Transactions Using the Accounting Equation".

Use additions and subtractions within the table to show the dollar effects of each transaction on individual items of the accounting equation. Show new balances after each transaction.

2. Determine the company’s net income.