Questions and Answers of Fundamentals Of Advanced Accounting

Selected published financial information for Costco Wholesale Corporation is reproduced in Appendix B of this textbook. Like many companies, Costco rounds dollar amounts when reporting financial data
Write the answers for the following problem in the Working Papers.Instructions:Do the following for each account. The Sales—Video account is given above as an example.1. Write the account title in
Zenix Communications has two departments: Cellular Phones and Pagers. A purchases journal, general journal, partial general ledger, and accounts payable ledger are provided in the Working Papers. The
CraftMart has two departments: Crafts and Plants. A partial general ledger and accounts payable ledger are given in the Working Papers. The balances are recorded as of November 1 of the current year.
Outdoor Sport has two departments: Backpacks and Accessories. Source documents are abbreviated as follows: check, C; debit memorandum, DM; purchase invoice, P.Instructions:1. Journalize the
Introductory remarks: Some businesses record purchases at the net amount to be paid when the cash discount is taken. For example, merchandise is purchased for $$1,000.00$ with a 2% discount allowed
A citizen of the City of Townsend gives it a gift of $22,000 in investments. The citizen requires that the investments be held but any resulting income must be used to help maintain the city’s
Following are descriptions of transactions and other financial events for the City of Tetris for the year ending December 2010. Not all transactions have been included here. Only the General Fund
During 2010, the City of Coyote contracted to build a sidewalk costing $$10,000$ as a special assessments project for which it collected $$10,000$ from affected citizens. The government had no
On December 30, 2010, the City of Coyote borrowed $$20,000$ for the General Fund on a 60-day note. In that fund, both Cash and Other Financing Sources were recorded. In the general information, a
An art display set up for the community was recorded within the General Fund and generated revenues of $$9,000$ but had expenditures of $$45,000$ ($$15,000$ in expenses and $$30,000$ to buy
The City of Coyote mailed property tax bills for 2011 to its citizens during August 2010. Payments could be made early to receive a discount. The levy becomes legally enforceable on February 15,
The City of Coyote mailed property tax bills for 2011 to its citizens during August 2010. Payments could be made early to receive a discount. The levy becomes legally enforceable on February 15,
In 2010, the City of Coyote received a $$320,000$ cash grant from the state to stop air pollution. Assume that although a special revenue fund could have been set up, the money remained in the
During 2010, the City of Coyote’s General Fund received $$10,000,$ which was recorded as a general revenue when it was actually a program revenue earned by its park program.a. What was the
A city government has obtained an asset through a capital lease. Which of the following is true for the government-wide financial statements?a. The accounting parallels that used in for-profit
A city government has a six-year capital lease for property being used within the General Fund.Minimum lease payments total $70,000 starting next year but have a current present value of$49,000. What
A city government holds a six-year capital lease for property being used within the General Fund.Minimum lease payments total $70,000 starting next year but have a current present value of$49,000.
A city government has a nine-year capital lease for property being used within the General Fund.The lease was signed on January 1, 2010. Minimum lease payments total $$90,000$ starting at the end
A city government has a nine-year capital lease for property being used within the General Fund.The lease was signed on January 1, 2010. Minimum lease payments total $$90,000$ starting at the end
What liability should the city report on government-wide f inancial statements at the end of Year 1?a. It depends on whether the employees work at governmental activities or business-type
What amount of liability should the city recognize on fund-based financial statements at December 31, Year 1? Assume that all remaining vacations will be taken in July.a. It depends on whether the
The City of Bacon holds cash of $$820,000$ that was received from the issuance of a bond and, according to the contract, must be spent for the construction of a new elementary school. The city also
A government reports that its public safety function had expenses of $$900,000$ last year and program revenues of $$200,000$ so that its net expenses were $$700,000$. On which financial
Which of the following is most likely to be true about the financial reporting of a public college or university?a. It resembles the financial reporting of private colleges and universities.b. It
The County of Maxnell decides to create a sanitation department and offer its services to the public for a fee. As a result, county officials plan to account for this activity within the enterprise
The following information pertains to the City of Williamson for 2010, its first year of legal existence.For convenience, assume that all transactions are for the General Fund, which has three
The City of Bernard starts the year of 2010 with the following unrestricted amounts in its General Fund: cash of $$20,000$ and investments of $$70,000$. In addition, it holds a building bought on
Use the information in problem 40 to prepare the 2010 fund-based financial statements for the governmental funds and the proprietary funds. A statement of cash flows is not required. Assume
On the first day of Year 4, the city receives a painting as a gift that qualifies as a work of art. It has a 30-year life, is worth $15,000, and is being displayed at one of the local parks. The
On January 1, Year 4, the government leased a police car for five years at $$20,000$ per year with the first payment being made on December 31, Year 4. This is a capitalized lease. Assume that, at
Assume that the one component unit had program revenues of $$30,000$ and expenses of $$42,000$ and spent $$10,000$ for land during Year 4. However, it should have been handled as a blended
At the end of Year 4, the city owed teachers $60,000 in vacation pay that had not been recorded. The assumption is that these vacations will be taken evenly over the next year. A 60-day period is
The city maintains a landfill that has been recorded within its parks. The landfill generated program revenues of $$4,000$ in Year 4 and cash expenses of $$15,000$. It also paid $$3,000$ cash
On the first day of the year, the City of Wolfe bought $20,000 of equipment with a five-year life and no salvage value for its school system. It was capitalized but no other entries were ever made.
On January 1, the partners of Van, Bakel, and Cox (who share profits and losses in the ratio of 5:3:2, respectively) decide to liquidate their partnership. The trial balance at this date follows:The
What is a subsidiary’s functional currency?a. The parent’s reporting currency.b. The currency in which transactions are denominated.c. The currency in which the entity primarily generates and
In comparing the translation and the re measurement process, which of the following is true?a. The reported balance of inventory is normally the same under both methods.b. The reported balance of
Which of the following statements is true for the translation process (as opposed to remeasurement)?a. A translation adjustment can affect consolidated net income.b. Equipment is translated at the
A subsidiary of Byner Corporation has one asset (inventory) and no liabilities. The functional currency for this subsidiary is the peso. The inventory was acquired for 100,000 pesos when the exchange
At what rates should the following balance sheet accounts in foreign statements be translated (rather than remeasured) into U.S. dollars? Accumulated Depreciation-Equipment Equipment Current a.
This subsidiary’s functional currency is a foreign currency. What total should Rose’s balance sheet include for the preceding items?a. $430,000.b. $435,000.c. $440,000.d. $450,000.Certain balance
What amount does Salisbury’s consolidated balance sheet report for this inventory at December 31, 2010?a. $16,000.b. $17,000.c. $18,000.d. $19,000.A subsidiary of Salisbury, Inc., is located in a
What amount does Salisbury’s consolidated income statement report for cost of goods sold for the year ending December 31, 2011?a. $16,000.b. $17,000.c. $18,000.d. $19,000.A subsidiary of Salisbury,
Assume that the peso is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2011?a. Marketable equity securities $16,000 and Inventory
Assume that the U.S. dollar is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2011?a. Marketable equity securities $16,000 and
A U.S. company’s foreign subsidiary had these amounts in foreign currency units (FCU) in 2011:The average exchange rate during 2011 was $0.80 FCU 1. The beginning inventory was acquired when the
Which of the following items is not remeasured using historical exchange rates under the temporal method?a. Accumulated depreciation on equipment.b. Cost of goods sold.c. Marketable equity
The functional currency of DeZoort, Inc.’s British subsidiary is the British pound. DeZoort borrowed pounds as a partial hedge of its investment in the subsidiary. In preparing consolidated
Gains from remeasuring a foreign subsidiary’s financial statements from the local currency, which is not the functional currency, into the parent’s currency should be reported as a(n)a. Deferred
The following accounts are denominated in pesos as of December 31, 2011. For reporting purposes, these amounts need to be stated in U.S. dollars. For each balance, indicate the exchange rate that
On December 18, 2011, Stephanie Corporation acquired 100 percent of a Swiss company for 3.7 million Swiss francs (CHF), which is indicative of fair value. At the acquisition date, the exchange rate
Fenwicke Company began operating a subsidiary in a foreign country on January 1, 2011, by acquiring all of its common stock for LCU 40,000, which was equal to fair value. This subsidiary immediately
Watson Company has a subsidiary in the country of Alonza where the local currency unit is the kamel (KM). On December 31, 2010, the subsidiary has the following balance sheet:The subsidiary acquired
Aerkion Company starts 2011 with two assets: cash of 22,000 LCU (local currency units) and land that originally cost 60,000 LCU when acquired on April 4, 2005. On May 1, 2011, Aerkion rendered
Lancer, Inc., starts a subsidiary in a foreign country on January 1, 2010. The following account balances for the year ending December 31, 2011, are stated in kanquo (KQ), the local currency: Lancer
Board Company has a foreign subsidiary that began operations at the start of 2011 with assets of 132,000 kites (the local currency unit) and liabilities of 54,000 kites. During this initial year of
Kingsfield starts a subsidiary operation in a foreign country on January 1, 2011. The country’s currency is the kumquat (KQ). To start this business, Kingsfield invests 10,000 kumquats. Of this
Livingston Company is a wholly owned subsidiary of Rose Corporation. Livingston operates in a foreign country with financial statements recorded in goghs (GH), the company’s functional
The following account balances are for the Agee Company as of January 1, 2011, and December 31, 2011. All figures are denominated in kroner (Kr). January 1, 2011 Accounts payable (18,000) December
Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in
On January 1, 2010, Cayce Corporation acquired 100 percent of Simbel Company for consideration paid of $126,000, which was equal to fair value. Cayce is a U.S.-based company headquartered in Buffalo,
Diekmann Company, a U.S.-based company, acquired a 100 percent interest in Rakona A.S. in the Czech Republic on January 1, 2010, when the exchange rate for the Czech koruna (Kc˘ s) was
The C-P partnership has the following capital account balances on January 1, 2011:Com is allocated 60 percent of all profits and losses with the remaining 40 percent assigned to Pack after interest
The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business’s profit or loss in the following sequence:• Jones, the managing partner, receives a bonus
On January 1, 2010, the dental partnership of Left, Center, and Right was formed when the partners contributed $20,000, $60,000, and $50,000, respectively. Over the next three years, the business
Boswell and Johnson form a partnership on May 1, 2009. Boswell contributes cash of $50,000;Johnson conveys title to the following properties to the partnership:The partners agree to start their
Gray, Stone, and Lawson open an accounting practice on January 1, 2009, in San Diego, California, to be operated as a partnership. Gray and Stone will serve as the senior partners because of their
Steve Reese is a well-known interior designer in Fort Worth, Texas. He wants to start his own business and convinces Rob O’Donnell, a local merchant, to contribute the capital to form a
On October 1, 2011, Mud Co., a U.S. company, purchased parts from Terra, a Portuguese company, with payment due on December 1, 2011. If Mud’s 2011 operating income included no foreign exchange gain
Post, Inc., had a receivable from a foreign customer that is payable in the customer’s local currency.On December 31, 2011, Post correctly included this receivable for 200,000 local currency
On July 1, 2011, Houghton Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2012. The note is denominated in euros. The U.S. dollar equivalent
Slick Co. had a Swiss franc receivable resulting from exports to Switzerland and a Mexican peso payable resulting from imports from Mexico. Slick recorded foreign exchange gains related to both its
Grete Corp. had the following foreign currency transactions during 2011:• Purchased merchandise from a foreign supplier on January 20, 2011, for the U.S. dollar equivalent of $60,000 and paid the
A U.S. exporter has a Thai baht account receivable resulting from an export sale on April 1 to a customer in Thailand. The exporter signed a forward contract on April 1 to sell Thai baht and
Lawrence Company ordered parts costing FC100,000 from a foreign supplier on May 12 when the spot rate was $0.20 per FC. A one-month forward contract was signed on that date to purchase FC100,000 at a
Assuming that MNC did not enter into a forward contract, how much foreign exchange gain or loss should it report on its 2011 income statement with regard to this transaction?a. $5,000 gain.b. $3,000
Assuming that MNC entered into a forward contract to sell 10 million South Korean won on December 1, 2011, as a fair value hedge of a foreign currency receivable, what is the net impact on its net
Palmer Corporation, operating as a U.S. corporation, expects to order goods from a foreign supplier at a price of 200,000 pounds, with delivery and payment to be made on April 15. On January 15,
What was the net impact on Jensen Company’s 2011 income as a result of this fair value hedge of a firm commitment?a. $–0–.b. $680.30 decrease in income.c. $300 increase in income.d. $980.30
What was the net impact on Jensen Company’s 2012 income as a result of this fair value hedge of a firm commitment?a. $–0–.b. $1,319.70 decrease in income.c. $77,980.30 increase in income.d.
What was the net increase or decrease in cash flow from having purchased the foreign currency option to hedge this exposure to foreign exchange risk?a. $–0–.b. $1,000 increase in cash flow.c.
What is the net impact on Werner’s net income for the quarter ended March 31, 2011, as a result of this forward contract hedge of a firm commitment?a. $–0–.b. $1,250 increase in net income.c.
What is the net impact on Werner’s net income for the quarter ended June 30, 2011, as a result of this forward contract hedge of a firm commitment?a. $–0–.b. $59,000 increase in net income.c.
What is the net increase or decrease in cash flow from having entered into this forward contract hedge?a. $–0–.b. $1,000 increase in cash flow.c. $1,500 decrease in cash flow.d. $2,500 increase
What is the net impact on Dos Santos Company’s 2011 net income as a result of this hedge of a forecasted foreign currency transaction?a. $–0–.b. $400 decrease in net income.c. $1,000 decrease
What is the net impact on Dos Santos Company’s 2012 net income as a result of this hedge of a forecasted foreign currency transaction? Assume that the raw materials are consumed and become a part
Rabato Corporation acquired merchandise on account from a foreign supplier on November 1, 2011, for 60,000 LCU (local currency units). It paid the foreign currency account payable on January 15,
On December 20, 2011, Butanta Company (a U.S. company headquartered in Miami, Florida) sold parts to a foreign customer at a price of 50,000 ostras. Payment is received on January 10, 2012.Currency
New Colony Corporation (a U.S. company) made a sale to a foreign customer on September 15, 2011, for 100,000 foreign currency units (FCU). It received payment on October 15, 2011. The following
On December 1, 2011, Dresden Company (a U.S. company located in Albany, New York) purchases inventory from a foreign supplier for 60,000 local currency units (LCU). Dresden will pay in 90 days after
Acme Corporation (a U.S. company located in Sarasota, Florida) has the following import/export transactions in 2011:For each of the following accounts, how much will Acme report on its 2011 financial
Bartlett Company, headquartered in Cincinnati, Ohio, has occasional transactions with companies in a foreign country whose currency is the lira. Prepare journal entries for the following transactions
Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camerrand. The denomination of all transactions with these companies is
On September 30, 2011, Ericson Company negotiated a two-year, 1,000,000 dudek loan from a foreign bank at an interest rate of 2 percent per year. It makes interest payments annually on September 30
On October 1, 2011, Hanks Company entered into a forward contract to sell 100,000 LCUs in four months (on January 31, 2012) and receive $65,000 in U.S. dollars. Exchange rates for the LCU
Warrenton, Inc., owns 80 percent of Aminable Corporation. On a consolidated income statement, the Noncontrolling Interest in the Subsidiary’s Income is reported as $$37,000.$ Aminable paid a
Net cash flows from operating activities werea. $$12,000$.b. $$20,000$.c. $$24,000$.d. $$25,000$.Comparative consolidated balance sheet data for Iverson, Inc., and its 80 percent–owned
Using the same information presented in problem 12, what is the noncontrolling interest’s share of the subsidiary’s net income?a. $27,000.b. $28,290.c. $28,620.d. $30,000.Problem 12Net cash
On January 1, Morgan Company has a net book value of $$1,460,000$ as follows:Leinen Company acquires all outstanding preferred shares for $$106,000$ and 60 percent of the common stock for

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