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Principles Of Financial Accounting 11th Edition Belverd E Needles, Marian Powers - Solutions
During 2010, Omega Company had net sales of $11,400,000. Most of the sales were on credit. At the end of 2010, the balance of Accounts Receivable was $1,400,000 and Allowance for Uncollectible Accounts had a debit balance of $48,000. Omega Company’s management uses two methods of estimating
Determine the interest on the following notes:a. $77,520 at 10 percent for 90 daysb. $54,400 at 12 percent for 60 daysc. $61,400 at 9 percent for 30 daysd. $102,000 at 15 percent for 120 dayse. $36,720 at 6 percent for 60 days
At the beginning of 2011, the balance for Accounts Receivable and Allowance for Uncollectible Accounts were $430,000 and $31,400 (credit), respectively. During the year, credit sales were $3,200,000 and collections on account were $2,950,000. In addition, $35,000 in uncollectible accounts was
The First Fence Company sells merchandise on credit. During the fiscal year ended July 31, the company had net sales of $1,150,000. At the end of the year, it had Accounts Receivable of $300,000 and a debit balance in Allowance for Uncollectible Accounts of $1,700. In the past, approximately 1.4
Colby Company, which uses the allowance method, has Accounts Receivable of $54,000 and an allowance for uncollectible accounts of $6,400 (credit). The company sold merchandise to Irma Hegerman for $7,200 and later received $2,400 from Hegerman. The rest of the amount due from Hegerman had to be
Determine the maturity date, interest at maturity, and maturity value for a 90-day, 10 percent, $36,000 note from Archer Corporation dated February 15.
Determine the maturity date, interest in 2010 and 2011, and maturity value for a 90-day, 12 percent, $30,000 note from a customer dated December 1, 2010 assuming a December 31 year end.
Determine the maturity date, interest at maturity, and maturity value for each of the following notes:a. A 60-day, 10 percent, $4,800 note dated January 5 received from A. Gal for granting a time extension on a past-due account.b. A 60-day, 12 percent, $3,000 note dated March 9 received from T.
The following information is available for Unique Globe, as of May 31, 2011:a. Cash on the books as of May 31 amounted to $43,784.16. Cash on the bank statement for the same date was $53,451.46.b. A deposit of $5,220.94, representing cash receipts of May 31, did not appear on the bank statement.c.
Moore Company had an Accounts Receivable balance of $640,000 and a credit balance in Allowance for Uncollectible Accounts of $33,400 at January 1, 2011. During the year, the company recorded the following transactions:a. Sales on accounts, $2,104,000b. Sales returns and allowances by credit
The Ciao Style Store uses the accounts receivable aging method to estimate uncollectible accounts. On February 1, 2010, the balance of the Accounts Receivable account was a debit of $442,341, and the balance of Allowance for Uncollectible Accounts was a credit if $43,700. During the year, the
Rich Importing Company engaged in the following transactions involving promissory notes:May 3 Sold engines to Kabel Company for $30,000 in exchange for a 90-day, 11 percent promissory note.16 Sold engines to Vu Company for $16,000 in exchange for a 60-day, 12 percent note.31 Sold engines to Vu
The following information is available for Prime Company as of April 30, 2011:a. Cash on the books as of April 30 amounted to $113,175.28. Cash on the bank statement for the same date was $140,717.08.b. A deposit of $14,349.84, representing cash receipts of April 30, did not appear on the bank
On December 31 of last year, the balance sheet of Korab Company had Accounts Receivable of $149,000 and a credit balance in Allowance for Uncollectible Accounts of $10,150. During the current year, Korab Company’s records included the following selected activities:(a) Sales on account,
Garcia Company uses the accounts receivable aging method to estimate uncollectible accounts. At the beginning of the year, the balance of the Accounts Receivable account was a debit of $90,430, and the balance of Allowance for uncollectible Accounts was a credit of $8,100. During the year, the
Abraham Importing Company engaged in the following transactions involving promissory notes:May 3 Sold engines to Anton Company for $60,000 in exchange for a 90-day, 12 percent promissory note.16 Sold engines to Yu Company for $32,000 in exchange for a 60-day, 13 percent note.31 Sold engines to Yu
Mitsubishi Corp., a broadly diversified Japanese corporation, instituted a credit plan called Three Diamonds for customers who buy its major electronic products, such as large-screen televisions and videotape recorders, from specified retail dealers. Under the plan, approved customers who make
CompuCredit is a credit card issuer in Atlanta. It prides itself on making credit cards available to almost anybody in a matter of seconds over the Internet. The cost to the consumer is an interest rate of 28 percent, about double that of companies that provide cards only to customers with good
Bernhardt Appliances, Inc., located in central Ohio, is a small manufacturer of washing machines and dryers. Bernhardt sells most of its appliances to large, established discount retail companies that market the appliances under their own names. Bernhardt sells the appliances on trade credit terms
Caldwell Interiors, a successful retail furniture company, is located in an affluent suburb where a major insurance company has just announced a restructuring that will lay off 4,000 employees. Caldwell Interiors sell quality furniture, usually on credit. Accounts Receivable is one of its major
Refer to CVS Corporation’s annual report in the Supplement to Chapter 5 to answer the following questions:1. What amount of cash and cash equivalents did CVS Corporation have in 2008? Do you suppose most of that amount is cash in the bank or cash equivalents?2. What customers represent the main
Refer to the CVS annual report in the Supplement to Chapter 5 and to the following data (in millions) for Walgreens: net sales, $59,034.0 and $53,762.0 for 2008 and 2007, respectively, accounts receivable, net, $2,527.0 and $2,236.5 for 2008 and 2007, respectively.1. Compute receivable turnover
Each of the items listed below is a quality of earnings issue. Indicate whether the items is(a) An accounting method,(b) An accounting estimate, or(c) A non-operating item.For any item for which the answer is (a) or (b), indicate which alternative is usually the more conservative choice.1. LIFO
Assume that Jefferson Corporation’s chief financial officer gave you the following information: net sales, $360,000; cost of goods sold, $175,000; loss from discontinued operations (net of income tax benefit of $35,000), $100,000; loss on disposal of discontinued operations (net of income tax
Using the corporate tax rate schedule in Table 14-1, compute the income tax liability for taxable income(1) $800,000 and(2)$40,000,000.
During 2010, Wells Corporation reported a net income of $1,338,400. On January 1, Wells had 720,000 shares of common stock outstanding. The company issued an additional 480,000 shares of common stock on August 1. In 2010, the company had a simple capital structure. During 2011, there were no
Refer to the statement of stockholders’ equity for Crisanti Corporation in Exhibit 14-4 to answer the following questions:(1) At what price per share were the 10,000 shares of common stock sold?(2) What was the conversion price per share of the common stock?(3) At what price was the common stock
Tell whether each of the following actions will increase, decrease, or have no effect on total assets, total liabilities, and total stockholders’ equity:1. Declaration of a stock dividend2. Declaration of a cash dividend3. Stock split4. Purchase of treasury stock
On February 15, Asher Corporation’s board of directors declared a 2 percent stock dividend applicable to the outstanding shares of its $10 par value common stock, of which 400,000 shares are authorized, 260,000 are issued 40,000 are held in the treasury. The stock dividend was distributed on
On August 10, 2010, the board of directors of Karton, Inc. declared a 3-for-1 stock split of its $ 9 par value common stock, of which 200,000 shares were authorized and 62,500 were issued and outstanding. The market value on that date was $60 per share. On the same date, the balance of additional
Using data from the stockholders’ equity section of Soong Corporation’s balance sheet shown below, compute the book value per share for both the preferred and the common stock.Contributed capitalpreferred stock, $100 par value, 8 percent cumulative,20,000 shares authorized, 1,000 shares issued
Develop brief answers to each of the following questions:1. In what way is selling an investment for a gain potentially a negative in evaluating quality of earnings?2. Is it unethical for new management to take an extra large write-off (a “big bath”) in order to reduce future costs? Why or why
Develop brief answers to each of the following questions:1. What is one way a company can improve its earnings per shares without improving its earnings or net income?2. Why is comprehensive income a part of stockholders’ equity?3. Upon receiving shares of stock dividend, why should the
At the end of its first year of operations, a company calculated its ending merchandise inventory according to three different accounting methods, as follows: FIFO, $95,000; average-cost, $90,000; LIFO, $86,000. If the company used the average-cost method, its net income for the would $34,000.1.
Assume that the Cetnar Corporation’s chief financial officer gave you the following information: net sales, $1,900,000; cost of goods sold, $1,050,000; extraordinary gain (net of income taxes of $3,500), $12,500; loss from discontinued operations (net of income tax benefits of $30,000), $50,000;
The items below are components of Patel Corporation’s income statement for the year ended December 31, 2011. Recast the income statement in proper multistep form, including allocation income taxes to appropriate items (assume a 30 percent income tax rate) and showing earnings per share figures
Using the corporate tax rate schedule in Table 14-1, compute the income tax liability for the following situations:Situation Taxable IncomeA ………………. $70,000B ………………... 85,000C ……………….
The Danner Corporation reported the following accounting income before income taxes, income taxes expense, and net income for 2011 and 2012:On the balance sheet, differed income increased by $38,400 in 2011 and decreased by $18,800 in 2012.1. How much did Danner actually pay in income taxes for
During 2011, Arthur Corporation reported a net income of $3,059,000. On January 1, Arthur had 2,800,000 shares of common stock outstanding. the company issued an additional 1,680,000 shares of common stock on October 1. In 2011, the company had a simple capital structure. During 2012, there were no
Stockholders’ equity section of Erich Corporation’s balance sheet on December 31, 2010, follow.Contributed capitalCommon stock, $2 par value, 500,000 sharesauthorized, 400,000 shares issuedand outstanding ........... $ 800,000Additional paid-in-capital ........ 1,200,000Total contributed
Snols Corporation has 30,000 shares of its $1 par value common stock outstanding. Record in journal form the following transactions as they relate to the company’s common stock:July17Declared a 10 percent stock dividend on common stock to be distributed on August 10 to stockholders of record on
Fernandez Corporation currently has 500,000 shares $1 par value common stock authorized with 200,000 shares outstanding. The board of directors declared a 2-for-1 split on May 15, 2010, when the market value of the common stock was $2.50 per share. The retained earnings balance on May 15 was
On January 15, 2010, the board of directors of Tower International declared a 3-for-1 stock split of its $12 per value common stock, of which 3,200,000 shares were authorized and 800,000 were issued and outstanding. The market value of that date was $45 per share. On the same date, the balance of
Below is the stockholders’ equity section of Hegel Corporation’s balance sheet. Determine the book value per share for both the preferred and the common stockContributed capitalPreferred stock, $100 par value, 6 percent Cumulative,10,000 shares authorized, 200 shares issuedand outstanding
Matka Corporation began operations in 2011. At the beginning of the year, the company purchased plant assets of $450,000, with an estimated useful life of 10 years and no residual value. during the year, the company had net sales of $650,000, salaries expense of $100,000, and other expenses of
Information concerning operations of Camping Gear Corporation during 2011 is as follows:(a) Administrative expenses, $90,000(b) Cost of goods sold, $420,000(c) Extraordinary loss from an earthquake (net of taxes, $36,000), $ 60,000(d) Sales (net) , $900,000(e) Selling expenses, $80,000(f) Income
During 2012, Vitos Corporation engaged in two complex transactions to improve the business-selling off a division and retiring bonds. The company has always issued a simple, single-step income statement, and the accountant has accordingly prepared the December 31 year-end income statements for 2011
The Stockholders’ equity section of the balance of Lim Mills, Inc., as of December 31, 2010, was as follows:Contributed capitalCommon stock, $3 par value, 1,000,000 sharesauthorized, 80,000 shares issuedand outstanding ........... $ 240,000Additional paid-in-capital ........ 75,000Total
the stockholders’ equity section of Acerin Moving and Storage Corporation’s balances sheet as of December 31, 2010, appears below.Contributed capitalCommon stock, $2 par value, 6,000,000 sharesauthorized, 1,000,000 shares issuedand outstanding ........... $ 2,000,000Additional paid-in-capital
On December 31, 2011, the stockholders’ equity section of Koval Corporation’s balance sheets appeared as follows:Contributed capitalCommon stock, $8 par value, 400,000 sharesauthorized, 120,000 shares issued and outstanding .... $ 960,000Additional paid-in capital ...............
Income statement information for Nguyen Corporation in 2011 is as follows:a. Administrative expenses, $110,000b. Cost of goods sold, $440,000c. Extraordinary loss from a storm (net of taxes, $10,000), $20,000d. Income taxes expense, continuing operations, $42,000e. Net sales, $890,000f. Selling
The stockholders’ equity section of the balance sheet of Rago Corporation as of December 31, 2010, was as follows:Contributed capitalCommon stock, $4 par value, 250,000 sharesauthorized, 100,000 shares issuedand outstanding ........... $ 400,000Additional paid-in-capital ........ 500,000Total
On December 31, 2010, the stockholders’ equity section of Tsang Corporation’s balance sheet appeared as follows:Contributed capitalCommon stock, $8 par value, 200,000 sharesauthorized, 60,000 shares issuedand outstanding ........... $ 480,000Additional paid-in-capital ........ 1,280,000Total
Zeigler Corporation began operations in 2010. At the beginning of the year, the company purchased plant assets of $900,000, with an estimated useful life of 10 years and no residual value. During the year, the company had net sales of $1,300,000 salaries expense of $200,000, and other expenses of
When Crocs, the shoe company, reported in early 2007 that its first-quarter earning had increased from the pervious year, its stock price jumped to over $80 per share. At the same time, the company announced a 2-for 1 stock split.18 What is a stock split and what effect does it have on the
On Tuesday, January 19, 1988, IBM reported greatly increased earnings for the fourth quarter of 1987. Despite this reported gain in earnings, the price of IBMs stock on the New York Stock Exchange declined by $6 per share to $111.75. In sympathy with this move, most other technology
The consolidated statement of stockholders’ equity for Jackson Electronics, Inc., a manufacturer of a board line of electrical components, is presented on the previous page. It has nine summary transactions.1. Prepare an entry in journal form with an explanation for each transaction. In each
In its 2008 annual report, Nike, Inc., the athletic sportswear company, provided the following data about its current and deferred income tax provisions (in millions):2008Current income taxes due ................... $ 920.1Deferred income taxes ......................... (300.6)Total provision for
Refer to CVS Corporation’s annual report in the Supplement to Chapter 5 to answer the following Questions:1. Does CVS have discontinued operations or extraordinary items? Are there any items that would lead you to question the quality of CVS’s earnings? Would you say the income statement for
Refer tot the annual report for CVS Corporation and the financial statements for Southwest Airline Co. in the Supplement to Chapter 5. Compute the 2008 and 2007 book value per share for both companies and compare the results to the average stock price of each in the fourth quarter of 2008 as shown
Indicate whether each of the following actions is primarily related to(a) Acquisition of long-term assets,(b) Evaluating the adequacy of financing of long-term assets,(c) Applying the matching rule to long-term assets.1. Deciding between common stock and long-term notes for the raising of funds2.
Rak Corporation had cash flows from operating activities during the past year of $97,000. During the year, the company expended $12,500 for dividends; expended $79,000 for property, plant, and equipment; and sold property, plant, and equipment for $6000. Calculate the company’s free cash flow.
Smith Auto purchased a neighboring lot for a new building and parking lot. Indicate whether each of the following expenditures is properly charged to;(a) Land(b) Land Improvement, or(c) Building1. Paving costs2. Architects’ fee for building design3. Cost of clearing the property4. Cost of the
Lian Company purchased property with a warehouse and parking lot for $1,500,000. An appraiser valued the components of the property if purchased separately as follows:Land .......... $ 400,000Land improvements .... 200,000Building ........ 1,000,000Total ......... $1,600,000Determine the costs to
Kelly’s Fitness Center purchased a new step machine for $16,500. The apparatus is expected to last four years and have a residual valued of $1,500. What will the depreciation expense be for each year under the straight-line method?
Assume that the step machine in SE 5 has an estimated useful life of 10,000 hours and was used for 2,400 hours in year 1, 2,000 hours in year 2, 2,200 hours in year 3, and 1,400 hours in year 4. How much depreciation expense be in each year?
Assume that the step machine in SE 5 is depreciated using the double-declining-balance method. How much depreciation expense be in each year?
Alarico Printing owned a piece of equipment that cost $16,200 and on which it had recorded $9,000 of accumulated depreciation. The company disposed of the equipment on January 2, the first day of business of the current year.1. Calculate the carrying value of the equipment.2. Calculate the gain or
Narda Company purchased land containing an estimate 4,000,000 tons of ore for $16,000,000. The land will be worth $2,400,000 without the ore after 8 years of active mining. Although the equipment needed for the mining will have a useful life of 20 years, it is not expected to be usable and will
Danya company has created a new software application for PCs. Its costs during research and development were $250,000. Its costs after the working program was developed were $175,000. Although the company’s copyright may be amortized over 40 years, management believes that the product will be
Develop a brief answer for each of the following questions.1. Is carrying value ever the same as market value?2. What major advantage does a company that has positive free cash flow have over a company that has negative free cash flow?3. What incentive does a company have to allocate more of a
Develop a brief answer for each of the following questions:1. When would the disposal of a long-term asset result in no gain or loss?2. When would annual depletion not equal depletion expense?3. Why would a firm amortize a patent over fewer years than the patent’s life?4. Why would a company
Indicate whether each of the following actions is primarily related to(a) Acquisition of long-term assets,(b) Evaluating the financing of long-term assets, or(c) Applying the matching rule to long-term assets.1. Deciding to use the production method of depreciation.2. Allocating costs on a group
Management is considering the purchase of a new machine for a cost of $12,000. It is estimated that the machine will generate positive net cash flows of $3,000 per year for five years and will have a disposal price at the end of that time of $1,000. Assuming an interest rate of 9 percent,
Zedek Corporation had net cash flows from operating activities during the past year of $216,000. During the year, the company expended $462,000 for property, plant, and equipment; sold property, plant and Equipment for $54,000; and paid dividends of $50,000. Calculate the company’s free cash
Tell whether each of the following transactions related to an office building is a revenue expenditure (RE) or a capital expenditure (CE). In addition, indicate whether each transaction is an ordinary repair (OR), an extraordinary repair (ER), an addition (A), a betterments (B), or none of these
Colletta Manufacturing purchased land next to its factory to be used as a parking lot. The expenditures incurred by company were as follows: purchased price, $600,000; broker’s fees, $48,000; titles search and other fees, $4,400; demolition of a cottage on the property, $16,000; general grading
Joanna Mak Purchased a car wash for $480,000. If purchased separately, the land would have cost $120,000, the building $270,000, and the equipment $210,000. Determine the amount that should be recorded in the new business’s records for land, building, and equipment.
Nick Santiago purchased a used for $35,000. Before the tractor could be used, it required new tires, which costs $2,200, and an overhaul, which cost $2,800. Its first tank of fuel cost $150. The tractor is expected to last six years and have a residual value of $4,000. Determine the cost and
On January 13, 2010, Silverio Oil Company purchased a drilling truck for $45,000. Silverio expects the truck to last five years or 200,000 miles with an estimated residual value of $7,500 at the end is December 31. Compute the depreciation of 2011 under each of the following methods:(1)
Stop Burglar Alarm Systems Company purchased a computer for $2,240. It has an estimated useful life of four years and an estimated residual value of $240. Compute the depreciation charge for each of the four years using the double-declining-balance method.
Hope Hospital purchased a special X-ray machine. The machine, which cost $311,560, was expected to last ten years, with an estimated residual value of $31,560. After two years of operation (and depreciation charge using the straight-line method), it became evident that the X-ray machine would last
A piece of equipment that cost $32,400 and on which $18,000 of accumulated depreciation had been recorded was disposed of on January 2, the first day of business of the current year. For each of the following assumptions, compute the gain or loss on the disposal.(1) The equipment was discarded as
Samson Company purchased a compute on January 2, 2009, at a cost of $1,250. The computer is expected to have a useful life of five years and a residual value of $125. Assume that the computer is disposed of on July 1, 2012. Record value of $125. Assume that the computer is disposed of on July 1,
Nelson Company purchased land containing an estimated 2.5 million tons of ore for a cost of $4,400,000. The land without the ore is estimated to be worth $250,000. During its first year of operation, the company mined and sold 375,000 tons of ore. Compute the depletion charge per ton. Compute the
The following exercise is about amortizing copyrights and trademarks.1. Fulton Publishing Company purchased the copyright to a basic computer textbook for $80,000. The usual life of a textbook is about four years. However, the copyright will remain in effect for another 50 years. Calculate the
At the beginning of the fiscal year, Andy Company purchased for $2,060,000 a patent that applies to the manufacture of a unique tamper-proof lid for medicine bottles. Andy incurred legal costs of $900,000 in successfully defending use of the lid by a competitor. Andy estimated that the patent would
Listed below are common terms associated with long-term assets:(a) Tangible assets(b) Natural resources(c) Intangible assets(d) Additions(e) Betterments(f) Extraordinary repair(g) Depreciation(h) Depletion(i) Amortization(j) Revenue expenditure(k) Free cash flowRequired1. For each of the following
Siber computers construed a new training center in 2010. You have been hired to manage the training center. A review of the accounting records shows the following expenditures debited to an asset account called Training Center:Attorney’s fee, land acquisition ...... $ 35,200Cost of land
Ivan Manufacturing Company purchased a robot for $360,000 at the beginning of year 1. The robot has an estimated useful life of four years and an estimated residual value of $30,000. The robot, which should last 20,000 hours, was operated 6,000 hours in year 1; 8,000 hours in year 2; 4,000 hours in
Roman’s Construction Company purchased a new crane for $721,000 at the beginning of year 1. The crane has an estimated residual value of $70,000 and an estimated useful life of six years. The crane is expected to last 20,000 hours. It was used 3,600 hours in year 1; 4,000 hours in year 2; 5,000
Kulig Company purchased land containing an estimated 10 million tons of ore for a cost of $3,300,000. The land without the ore is estimated to be worth $600,000. The company expects that all the usable ore can be mined in 10 years were erected on the site. Equipment costing $360,000 with an
Global company was formed on January 1, 2010, and began constructing a new plant. At the end of 2010, its auditor discovered that all expenditures involving long-term assets had been debited to an account called Fixed Assets. And analysis of the Fixed Assets account, which had a year-end balance of
Relax Designs, Inc. purchased a computerized blueprint printer that will assist in the design and display of plans for factory layouts. The cost of the printer was $45,000 and its expected useful life is four years. The company can probably sell the printer for $5,000 at the end of four years. The
Fuentez Mining Company purchased land containing an estimated 20 million tons of ore for a cost of $8,800,000. The land without the ore is estimated to be worth $1,600,000. The company expects that all the usable ore can be mined in 10 years. Building costing $800,000 with an estimated useful life
Myles Construction Company purchased a new crane for $360,500 at the beginning of year 1. The crane has an estimated residual value of $35,000 and an estimated useful life of six years. The crane is expected to last 10,000 hours. It was used 1,800 hours in year 1; 2,000 hours in year 2; 2,500 hours
The airline industry was hit particularly hard after the 9/11 attacks on the World Trade Center in 2001. In 2002, Southwest Airlines, one of the healthier airline companies, made a decision to lengthen the useful lives of its aircraft from 22 to 27 years. Shortly thereafter, following Southwest’s
The annual report for Costco Wholesale Corporation, the large discount company, contains the following statement:The company periodically evaluates the realizability of long-lived assets for impairment when [circumstances] may indicate the carrying amount of the asset may not be recoverable.What
Hilton Hotels Corporation and Marriott International provide hospitality services. Hilton Hotels’ well-known brands include Hilton, Doubletree, Hampton Inn, Embassy Suites, Red Lion Hotels and Inns, and Homewood Suites. Marriott also owns or manages properties with recognizable brand names, such
Raintree Company has purchased land and a warehouse for $18,000,000. The warehouse is expected to last 20 years and to have a residual value equal to 10 percent of its cost. The chief financial officer (CFO) and the controller are discussing the allocation of the purchase price. The CFO believes
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