The following accounting events apply to Mary's Designs for the year 2016:

Asset Source Transactions

1. Began operations by acquiring $90,000 of cash from the issue of common stock.

2. Performed services and collected cash of$9,000.

3. Collected $36,000 of cash in advance for services to be provided over the next 12 months.

4. Provided$58,000 of services on account.

5. Purchased supplies of $5,200 on account.

Asset Exchange Transactions

6. Purchased$21,000 of land for cash.

7. Collected $49,000 of cash from accounts receivable.

8. Purchased$3,150 of supplies with cash.

9. Paid $12,000 for one year's rent in advance.

Asset Use Transactions

10. Paid$24,000 cash for salaries of employees.

11. Paid a cash dividend of $5,000 to the stockholders.

12. Paid off$3,600 of the accounts payable with cash.

Claims Exchange Transactions

13. Placed an advertisement in the local newspaper for $2,600 on account.

14. Incurred utility expense of$1,800 on account.

Adjusting Entries

15. Recognized $12,000 of revenue for performing services. The collection of cash for these services occurred in a prior transaction. (See Event 3.)

16. Recorded$8,000 of accrued salary expense at the end of 2016.

17. Recorded supplies expense. Had $1,900 of supplies on hand at the end of the accounting period.

18. Recognized four months of expense for prepaid rent that had been used up during the accounting period.

19. Recognized$500 of accrued interest revenue.

Required

Record each of the preceding events in T-accounts.

The following transactions pertain to Smith Training Company for 2016:

Jan. 30 - Established the business when it acquired $45,000 cash from the issue of common stock.

Feb. 1 - Paid rent for office space for two years,$24,000 cash.

Apr. 10 - Purchased $3,200 of supplies on account.

July 1 - Received$24,000 cash in advance for services to be provided over the next year.

July 20 - Paid $1,500 of the accounts payable from April 10.

Aug. 5 - Billed a customer$18,000 for services provided during August.

Sept. 15 - Completed a job and received $8,400 cash for services rendered.

Oct. 1 - Paid employee salaries of$12,000 cash.

Oct. 15 - Received $15,000 cash from accounts receivable.

Nov. 16 - Billed customers$42,000 for services rendered on account.

Dec. 1 - Paid a dividend of $15,000 cash to the stockholders.

Dec. 31 - Adjusted records to recognize the services provided on the contract of July 1.

Dec. 31 - Recorded$3,600 of accrued salaries as of December 31.

Dec. 31 - Recorded the rent expense for the year. (See February 1.)

Dec. 31 - Physically counted supplies; $280 was on hand at the end of the period.

Required

Record the preceding transactions in the general journal.

The following events apply to Kate Enterprises:

1. Collected $16,200 cash for services to be performed in the future.

2. Acquired$50,000 cash from the issue of common stock.

3. Paid salaries to employees, $3,500 cash.

4. Paid cash to rent office space for the next 12 months,$12,000.

5. Paid cash of $17,500 for other operating expenses.

6. Paid on account payable,$1,752.

7. Paid cash for utilities expense, $804.

8. Recognized$45,000 of service revenue on account.

9. Paid a $2,500 cash dividend to the stockholders.

10. Purchased$3,200 of supplies on account.

11. Received $12,500 cash for services rendered.

12. Recognized$5,200 of accrued salaries expense.

13. Recognized $1,300 of accrued interest revenue.

14. Recognized$3,000 of rent expense. Cash had been paid in a prior transaction (see Event 4).

15. Recognized $5,000 of revenue for services performed. Cash had been previously collected (see Event 1).

Required

Identify each event as an asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also identify the account that is to be debited and the account that is to be credited when the transaction is recorded. The first event is recorded as an example.

$$\begin{array}{rr} \text{Event No.} \hspace{10pt} \text{Type of Event} \hspace{10pt} \text{Account Debited} \hspace{10pt} \text{Account Credited} \hspace{2pt}\\ \text{ 1} \hspace{50pt} \text{AS} \hspace{60pt} \text{Cash} \hspace{35pt} \text{Unearned Revenue}\\ \end{array}$$

Indicate whether each of the following accounts has a normal debit or credit balance.

H. accounts payable

The trial balance of Pacilio Security Services Inc. as of January 1, 2015, had the following normal balances:

$$\begin{array}{lrr} \text{Cash}&&\$62,860\\ \text{Accounts receivable}&&\text{20,500}\\ \text{Supplies}&&\text{150}\\ \text{Prepaid rent}&&\text{2,000}\\ \text{Merchandise inventory (9 @ \$240)}&&\text{2,160}\\ \text{Land}&&\text{4,000}\\ \text{Accounts payable}&&\text{980}\\ \text{Salaries payable}&&\text{1,500}\\ \text{Common stock}&&\text{50,000}\\ \text{Retained earnings}&&\text{39,190}\\ \end{array}$$

During 2015, Pacilio Security Services experienced the following transactions:

1. Paid the salaries payable from 2014.

2. On January 15, purchased 20 standard alarm systems for cash at a cost of $250 each.

3. On February 1, paid the accounts payable of$980, but not within the discount period. (The company uses the gross method.)

4. On March 1, leased a business van. Paid $4,800 for one year's lease in advance.

5. Paid$7,200 on May 1 for one year's rent on the office in advance.

6. Purchased with cash $500 of supplies to be used over the next several months by the business.

7. Purchased with cash another 25 alarm systems on August 1 for resale at a cost of$260 each.

8. On September 5, purchased on account 30 standard alarm systems at a cost of $265.

9. Installed 60 standard alarm systems for$33,000. $22,000 of the sales were on account and$11,000 were cash sales. (Note:* Be sure to record cost of goods sold using the perpetual FIFO method.)

10. Made a full refund to a dissatisfied customer who returned her alarm system. The sale had been a cash sale for $550 with a cost of$260.

11. Paid installers and other employees a total of $21,000 cash for salaries.

12. Sold$45,000 of monitoring services during the year. The services are billed to the customers each month.

13. Sold an additional monitoring service for $1,200 for one year's service. The customer paid the full amount of$1,200 on October 1.

14. Collected $74,000 of accounts receivable during the year.

15. Paid an additional$6,000 to settle some of the accounts payable.

16. Paid $3,500 of advertising expense during the year.

17. Paid$2,320 of utilities expense for the year.

18. Paid a dividend of $15,000 to the shareholders.

Adjustments

19. There was$200 of supplies on hand at the end of the year.

20. Recognized the expired rent for both the van and the office building for the year.

21. Recognized the revenue earned from transaction 13.

22. Accrued salaries at December 31, 2015, were $1,000.

Required

Close the temporary accounts to retained earnings.

The following events apply to Montgomery Company for 2016, its first year of operation:

1. Received cash of $36,000 from the issue of common stock.

2. Performed$48,000 of services on account.

3. Incurred $6,500 of other operating expenses on account.

4. Paid$21,000 cash for salaries expense.

5. Collected $34,500 of accounts receivable.

6. Paid a$3,000 dividend to the stockholders.

7. Performed $9,500 of services for cash.

8. Paid$5,500 of the accounts payable.

Required

Record the preceding transactions in general journal form.

Record the Fred Co. event in T-accounts, and then explain how the event affects the accounting equation:

• Received $20,000 cash by issuing common stock.

The trial balance of Pacilio Security Services Inc. as of January 1, 2015, had the following normal balances:

$$\begin{array}{lrr} \text{Cash}&&\$62,860\\ \text{Accounts receivable}&&\text{20,500}\\ \text{Supplies}&&\text{150}\\ \text{Prepaid rent}&&\text{2,000}\\ \text{Merchandise inventory (9 @ \$240)}&&\text{2,160}\\ \text{Land}&&\text{4,000}\\ \text{Accounts payable}&&\text{980}\\ \text{Salaries payable}&&\text{1,500}\\ \text{Common stock}&&\text{50,000}\\ \text{Retained earnings}&&\text{39,190}\\ \end{array}$$

During 2015, Pacilio Security Services experienced the following transactions:

1. Paid the salaries payable from 2014.

2. On January 15, purchased 20 standard alarm systems for cash at a cost of $250 each.

3. On February 1, paid the accounts payable of$980, but not within the discount period. (The company uses the gross method.)

4. On March 1, leased a business van. Paid $4,800 for one year's lease in advance.

5. Paid$7,200 on May 1 for one year's rent on the office in advance.

6. Purchased with cash $500 of supplies to be used over the next several months by the business.

7. Purchased with cash another 25 alarm systems on August 1 for resale at a cost of$260 each.

8. On September 5, purchased on account 30 standard alarm systems at a cost of $265.

9. Installed 60 standard alarm systems for$33,000. $22,000 of the sales were on account and$11,000 were cash sales. (Note:* Be sure to record cost of goods sold using the perpetual FIFO method.)

10. Made a full refund to a dissatisfied customer who returned her alarm system. The sale had been a cash sale for $550 with a cost of$260.

11. Paid installers and other employees a total of $21,000 cash for salaries.

12. Sold$45,000 of monitoring services during the year. The services are billed to the customers each month.

13. Sold an additional monitoring service for $1,200 for one year's service. The customer paid the full amount of$1,200 on October 1.

14. Collected $74,000 of accounts receivable during the year.

15. Paid an additional$6,000 to settle some of the accounts payable.

16. Paid $3,500 of advertising expense during the year.

17. Paid$2,320 of utilities expense for the year.

18. Paid a dividend of $15,000 to the shareholders.

Adjustments

19. There was$200 of supplies on hand at the end of the year.

20. Recognized the expired rent for both the van and the office building for the year.

21. Recognized the revenue earned from transaction 13.

22. Accrued salaries at December 31, 2015, were $1,000.

Required

Prepare an income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows.

The trial balance of Pacilio Security Services Inc. as of January 1, 2015, had the following normal balances:

$$\begin{array}{lrr} \text{Cash}&&\$62,860\\ \text{Accounts receivable}&&\text{20,500}\\ \text{Supplies}&&\text{150}\\ \text{Prepaid rent}&&\text{2,000}\\ \text{Merchandise inventory (9 @ \$240)}&&\text{2,160}\\ \text{Land}&&\text{4,000}\\ \text{Accounts payable}&&\text{980}\\ \text{Salaries payable}&&\text{1,500}\\ \text{Common stock}&&\text{50,000}\\ \text{Retained earnings}&&\text{39,190}\\ \end{array}$$

During 2015, Pacilio Security Services experienced the following transactions:

1. Paid the salaries payable from 2014.

2. On January 15, purchased 20 standard alarm systems for cash at a cost of $250 each.

3. On February 1, paid the accounts payable of$980, but not within the discount period. (The company uses the gross method.)

4. On March 1, leased a business van. Paid $4,800 for one year's lease in advance.

5. Paid$7,200 on May 1 for one year's rent on the office in advance.

6. Purchased with cash $500 of supplies to be used over the next several months by the business.

7. Purchased with cash another 25 alarm systems on August 1 for resale at a cost of$260 each.

8. On September 5, purchased on account 30 standard alarm systems at a cost of $265.

9. Installed 60 standard alarm systems for$33,000. $22,000 of the sales were on account and$11,000 were cash sales. (Note:* Be sure to record cost of goods sold using the perpetual FIFO method.)

10. Made a full refund to a dissatisfied customer who returned her alarm system. The sale had been a cash sale for $550 with a cost of$260.

11. Paid installers and other employees a total of $21,000 cash for salaries.

12. Sold$45,000 of monitoring services during the year. The services are billed to the customers each month.

13. Sold an additional monitoring service for $1,200 for one year's service. The customer paid the full amount of$1,200 on October 1.

14. Collected $74,000 of accounts receivable during the year.

15. Paid an additional$6,000 to settle some of the accounts payable.

16. Paid $3,500 of advertising expense during the year.

17. Paid$2,320 of utilities expense for the year.

18. Paid a dividend of $15,000 to the shareholders.

Adjustments

19. There was$200 of supplies on hand at the end of the year.

20. Recognized the expired rent for both the van and the office building for the year.

21. Recognized the revenue earned from transaction 13.

22. Accrued salaries at December 31, 2015, were $1,000.

Required

Post the closing entries to the T-accounts and prepare an after-closing trial balance.

Green Brands, Inc. (GBI), presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from GBI's 2017 and 2016 year-end balance sheets:

$$\begin{array}{lrr} \textbf{Account Title} & \textbf{2017} & \textbf{2016}\\ \\ \text{Accounts receivable} & \$48,000 & \$52,000\\ \text{Merchandise inventory} & \text{78,000} & \text{72,000}\\ \text{Prepaid insurance} & \text{24,000} & \text{32,000}\\ \text{Accounts payable} & \text{31,000} & \text{28,000}\\ \text{Salaries payable} & \text{8,200} & \text{7,800}\\ \text{Unearned service revenue} & \text{2,400} & \text{3,600}\\ \end{array}$$

The 2017 income statement is shown below:

$$\begin{array}{c} \textbf{Income Statement}\\ \end{array}$$

$$\begin{array}{lrr} \text{Sales}&&\$ \hspace{5pt}720,000\\ \text{Cost of goods sold}&& \underline{\text{(398,000)}}\\ \text{Gross margin}&&\text{322,000}\\ \text{Service revenue}&&\text{6,000}\\ \text{Insurance expense}&&\text{(36,000)}\\ \text{Salaries expense}&&\text{(195,000)}\\ \text{Depreciation expense}&& \underline{\text{(12,000)}}\\ \text{Operating income}&&\text{85,000}\\ \text{Gain on sale of equipment}&&\underline{\text{4,500}}\\ \text{Net Income}&& \underline{\underline{\$ \hspace{10pt} \text{89,500}}}\\ \end{array}$$

Required

Prepare the operating activities section of the statement of cash flows using the direct method.

The following events pertain to Super Cleaning Company:

1. Acquired $10,000 cash from the issue of common stock.

2. Provided$15,000 of services on account.

3. Provided services for $5,000 cash.

4. Received$2,800 cash in advance for services to be performed in the future.

5. Collected $12,200 cash from the account receivable created in Event 2.

6. Paid$1,900 for cash expenses.

7. Performed $1,400 of the services agreed to in Event 4.

8. Incurred$3,600 of expenses on account.

9. Paid $4,800 cash in advance for one-year contract to rent office space.

10. Paid$2,800 cash on the account payable created in Event 8.

11. Paid a $1,500 cash dividend to the stockholders.

12. Recognized rent expense for nine months' use of office space acquired in Event 9.

Required

Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flows column, use the letters OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. Use NA to indicate accounts not affected by the event. The first event is recorded as an example.

$$\begin{array}{cccccccccccccc|ccccc|c} &&& \textbf{Assets} &&& =&& \textbf{Liab.}&& + && \textbf{Equity}& & \textbf{Rev.} &- & \textbf{Exp.}&=& \textbf{Net. Inc.} & \textbf{Cash Flows}\\ \textbf{Event}& \textbf{Cash} &+ & \textbf{Accts.}&+& \textbf{Prepaid} &= & \textbf{Accts.} &+ &\textbf{Unearn.} & +&\textbf{Common}&+& \textbf{Ret.} \\ \textbf{No.}&&& \textbf{Rec.} &&\textbf{Rent}&&\textbf{Pay.} & &\textbf{Rev.}&&\textbf{Stock} && \textbf{Earn.}\\ \hline 1&\text{10,000}&+&\text{NA}&+&\text{NA}&=&\text{NA}&+& \text{NA} &+&10,000&+& \text{NA}&\text{NA}&- &\text{NA}&= &\text{NA} & \text{10,000 $\quad$FA}\\ \end{array}$$

What is the main force involved in the stability of slopes?

A. water pressure

B. sunlight

C. wind

D. gravity

E. radioactivity decay

Which two uses consume most freshwater in the United States?

A. drinking water and showering

B. mining and raising livestock

D. mining and industrial use

E. thermoelectric power and irrigation

The following information pertains to Mason Company for 2016:

$$\begin{array}{lrr} \text{Beginning inventory}&&\text{90 units @ \$40}\\ \text{Units purchased}&&\text{310 units @ \$45}\\ \end{array}$$

Ending inventory consisted of 30 units. Mason sold 370 units at $90 each. All purchases and sales were made with cash. Operating expenses amounted to$4,100.

Required

Compute the gross margin for Mason Company using the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average.