($ millions)		2006		2005
Retained earnings		9,664.7		8,965.1

+	Supplies (A)			-		+	Supplies Expense (E)			-
Jan. 31 Bal.	800					Jan. 31 Bal.	990
+	Prepaid Insurance (A)			-		+	Insurance Expense (E)			-
Jan. 31 Bal.	497					Jan. 31 Bal.	71
-	Wages Payable (L)			+		+	Wages Expense (E)			-
			500	Jan. 31 Bal.		Jan. 31 Bal.	3,700
+	Truck (A)			-		-	Accumulated Depreciation Truck (XA)			+
Jan. 31. Bal.	9,300								3,720	Jan. 31 Bal.

(a) If the amount in supplies Expense represents the January 31 adjustment for the supplies used in January, and $670 worth of supplies were purchased during January, what was the January 1 beginning balance of Supplies?
$

Enter an exact number.

1

(b) The amount in the Insurance Expense account represents the adjustment made at January 31 for January insurance expense. If the original insurance premium was for one year, what was the amount of the premium and on what date did the insurance policy start?
$

Enter an exact number.

2


(c) If we assume that no beginning balance existed in Wages Payable or Wages Expense on January 1, how much cash was paid as wages during January?
$

Enter an exact number.

4

(d) If the truck has a useful life of five years, what is the monthly amount of depreciation expense?
$

Enter an exact number.

5
How many months has Fields owned the truck?

Enter an exact number.

6 months

Lowe's Companies, Inc. ($ millions)
Selected Balance Sheet Data				Selected Income Statement Data
	2004	2003			2004
Merchandise inventories	$5,995	$4,584		Cost of merchandise sold	$24,165
Property, net of depreciation	13,890	11,819		Depreciation expense	902
Accounts payable	2,687	2,212		Net income	2,195
Retained earnings	9,634	7,574

(a) Compute the cash paid for merchandise inventories in 2004. Assume all merchandise was purchased on account and that accounts payable come entirely from inventory purchases.
$

Enter an exact number.

1

(b) Compute the net cost of property acquired in 2004.
$

Enter an exact number.

2

(c) Compute the cash dividends paid in 2004.
$

Enter an exact number.

3

Year	Number of employees	Training costs incurred
2007	125	$60,000
2008	200	75,000
2009	75	40,000
Total	400	$175,000

(a) For each year, compute the following assuming revenue is recognized by percentage-of-completion method determined by the number of employees trained.

Year	2007	2008	2009
Revenue	Enter an exact number. 1	Enter an exact number. 2	Enter an exact number. 3
Expenses	Enter a number. 4	Enter an exact number. 5	Enter a number. 6
Gross profit	Enter a number. 7	Enter an exact number. 8	Enter a number. 9

(b) For each year, compute the following assuming revenue is recognized by percentage-of-completion method determined by the costs incurred.

Year	2007	2008	2009
Revenue	Enter a number. 10	Enter a number. 11	Enter a number. 12
Expenses	Enter an exact number. 13	Enter an exact number. 14	Enter an exact number. 15
Gross profit	Enter a number. 16	Enter a number. 17	Enter a number. 18

(c) For each year, compute the following assuming revenue is recognized by completed contract method.

Year	2007	2008	2009
Revenue	Enter an exact number. 19	Enter an exact number. 20	Enter an exact number. 21
Expenses	Enter an exact number. 22	Enter an exact number. 23	Enter an exact number. 24
Gross profit	Enter an exact number. 25	Enter an exact number. 26	Enter an exact number. 27

(d) Which method do you believe is most important in this situation? Explain.

The percentage-of-completion method based on costs incurred, because the costs cannot be estimated accurately.

The percentage-of-completion method based on the number of employees trained, because the number of employees can be estimated accurately.

The completed contract method, because Philbrick has a non-cancelable contract.