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Intermediate Accounting 14th Edition Kieso, weygandt and warfield. - Solutions
Riegel Company uses the lower-of-cost-or-market method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2013, consists of products D, E, F, G, H, and I. Relevant per-unit data for these products appear below. InstructionsUsing the lower-of-cost-or-market
Garcia Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes in northern New Jersey and southern New York. The company is in the process of preparing its annual financial statements for the fiscal year ended May
Malone Company determined its ending inventory at cost and at lower-of-cost-or-market at December 31, 2011, December 31, 2012, and December 31, 2013, as shown below. ending inventory at cost and at"> Instructions(a) Prepare the journal entries required at December 31, 2012, and at December 31,
Englehart Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The following inventory data is available for the month of March. In addition to the above information, due to a downturn in the economy that has hit
Jones Co. is in a technology-intensive industry. Recently, one of its competitors introduced a new product with technology that might render obsolete some of Jones’s inventory. The accounting staff wants to follow the appropriate authoritative literature in determining the accounting for this
The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso.InstructionsRefer to P&G’s financial statements and the accompanying notes to answer the following questions.(a) How does P&G value its inventories?
Prab Robots, Inc., reported the following information regarding 2011??2012 inventory. Instructions(a) Why might Prab Robots, Inc., use two different methods for valuing inventory?(b) Comment on why Prab Robots, Inc., might disclose how its LIFO inventories would be valuedunder FIFO.(c) Why does
In this simulation, you will address questions related to inventory valuation andmeasurement.
Barrick Gold Corporation, with headquarters in Toronto, Canada, is the world??s most profitable and largest gold mining company outside South Africa. Part of the key to Barrick??s success has been due to its ability to maintain cash flow while improving production and increasing its reserves of
LaTour Inc. is based in France and prepares its financial statements in accordance with IFRS. In 2012, it reported cost of goods sold of $578 million and average inventory of $154 million. Briefly discuss how analysis of LaTour’s inventory turnover ratio (and comparisons to a company using GAAP)
Reed Pentak, a finance major, has been following globalization and made the following observation concerning accounting convergence: “I do not see many obstacles concerning development of a single accounting standard for inventories.” Prepare a response to Reed to explain the main obstacle to
Briefly describe the valuation of (a) Biological assets and (b) Agricultural produce.
In some instances, accounting principles require a departure from valuing inventories at cost alone. Determine the proper unit inventory price in the followingcases.
Riegel Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2012, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Using the LCNRV rule, determine the proper unit value for
Dover Company began operations in 2012 and determined its ending inventory at cost and at LCNRV at December 31, 2012, and December 31, 2013. This information is presented below. (a) Prepare the journal entries required at December 31, 2012, and December 31, 2013, assuming that the inventory is
Keyser??s Fleece Inc. holds a drove of sheep. Keyser shears the sheep on a semiannual basis and then sells the harvested wool into the specialty knitting market. Keyser has the following information related to the shearing sheep at January 1, 2012, and during the first six months of 2012. Prepare
Refer to the data in IFRS9-8 for Keyser’s Fleece Inc. Prepare the journal entries for (a) The wool harvested in the first six months of 2012, and (b) The wool harvested is sold for $10,500 in July 2012.
Jones Co. is in a technology-intensive industry. Recently, one of its competitors introduced a new product with technology that might render obsolete some of Jones’s inventory. The accounting staff wants to follow the appropriate authoritative literature in determining the accounting for this
The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at corporate.marksandspencer. com/documents/publications/2010/Annual_Report_2010.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the
Presented below are a number of values taken from compound interest tables involving the same number of periods and the same rate of interest? Indicate what each of these four values represents.(a) 6.71008. (b) 2.15892. (c) .46319.(d) 14.48656.
Jose Oliva is considering two investment options for a $1,500 gift he received for graduation. Both investments have 8% annual interest rates. One offers quarterly compounding; the other compounds on a semiannual basis. Which investment should he choose? Why?
Kehoe, Inc. owes $40,000 to Ritter Company. How much would Kehoe have to pay each year if the debt is retired through four equal payments (made at the end of the year), given an interest rate on the debt of 12%? (Round to two decimal places)
The Kellys are planning for a retirement home. They estimate they will need $200,000 4 years from now to purchase this home. Assuming an interest rate of 10%, what amount must be deposited at the end of each of the 4 years to fund the home price? (Round to two decimal places)
Alexander Enterprises leases property to Hamilton, Inc. Because Hamilton, Inc. is experiencing financial difficulty, Alexander agrees to receive five rents of $20,000 at the end of each year, with the rents deferred 3 years. What is the present value of the five rents discounted at 12%?
Answer the following questions.(a) On May 1, 2012, Goldberg Company sold some machinery to Newlin Company on an installment contract basis. The contract required five equal annual payments, with the first payment due on May 1, 2012. What present value concept is appropriate for this situation?(b)
Recently, Glenda Estes was interested in purchasing a Honda Acura. The salesperson indicated that the price of the car was either $27,600 cash or $6,900 at the end of each of 5 years. Compute the effective-interest rate to the nearest percent that Glenda would pay if she chooses to make the five
Chris Spear invested $15,000 today in a fund that earns 8% compounded annually. To what amount will the investment grow in 3 years? To what amount would the investment grow in 3 years if the fund earns 8% annual interest compounded semiannually?
Tony Bautista needs $25,000 in 4 years. What amount must he invest today if his investment earns 12% compounded annually? What amount must he invest if his investment earns 12% annual interest compounded quarterly?
Candice Willis will invest $30,000 today. She needs $150,000 in 21 years. What annual interest rate must she earn?
Bo Newman will invest $10,000 today in a fund that earns 5% annual interest. How many years will it take for the fund to grow to $17,100?
Sally Medavoy will invest $8,000 a year for 20 years in a fund that will earn 12% annual interest. If the first payment into the fund occurs today, what amount will be in the fund in 20 years? If the first payment occurs at year-end, what amount will be in the fund in 20 years?
Steve Madison needs $250,000 in 10 years. How much must he invest at the end of each year, at 11% interest, to meet his needs?
John Fillmore’s lifelong dream is to own his own fishing boat to use in his retirement. John has recently come into an inheritance of $400,000. He estimates that the boat he wants will cost $300,000 when he retires in 5 years. How much of his inheritance must he invest at an annual rate of 12%
Morgan Freeman is investing $16,380 at the end of each year in a fund that earns 10% interest. In how many years will the fund be at $100,000?
Henry Quincy wants to withdraw $30,000 each year for 10 years from a fund that earns 8% interest. How much must he invest today if the first withdrawal is at year-end? How much must he invest today if the first withdrawal takes place immediately?
Leon Tyler’s VISA balance is $793.15. He may pay it off in 12 equal end-of-month payments of $75 each. What interest rate is Leon paying?
Maria Alvarez is investing $300,000 in a fund that earns 8% interest compounded annually. What equal amounts can Maria withdraw at the end of each of the next 20 years?
Adams Inc. will deposit $30,000 in a 12% fund at the end of each year for 8 years beginning December 31, 2012. What amount will be in the fund immediately after the last deposit?
Amy Monroe wants to create a fund today that will enable her to withdraw $25,000 per year for 8 years, with the first withdrawal to take place 5 years from today. If the fund earns 8% interest, how much must Amy invest today?
Clancey Inc. issues $2,000,000 of 7% bonds due in 10 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 8%. What amount will Clancey receive when it issues the bonds?
Zach Taylor is settling a $20,000 loan due today by making 6 equal annual payments of $4,727.53. Determine the interest rate on this loan, if the payments begin one year after the loan is signed.
For each of the following cases, indicate(a) To what rate columns, and(b) To what number of periods you would refer in looking up the interest factor.1. In a future value of 1 table: 2. In a present value of an annuity of 1table:
Lyle O’Keefe invests $30,000 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 years. At the end of the 8 years, Lyle withdrew the accumulated amount of money.Instructions(a) Compute the amount Lyle would withdraw assuming the investment earns simple
Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.)(a) What is the future value of $9,000 at the end of 5 periods at 8% compounded interest?(b) What is the present value of $9,000 due 8 periods hence, discounted at 11%?(c) What is
Using the appropriate interest table, answer the following questions. (Each case is independent of the others).(a) What is the future value of 20 periodic payments of $5,000 each made at the beginning of each period and compounded at 8%?(b) What is the present value of $2,500 to be received at the
Using the appropriate interest table, compute the present values of the periodic amounts, shown on page 344, due at the end of the designated periods.(a) $50,000 receivable at the end of each period for 8 periods compounded at 12%.(b) $50,000 payments to be made at the end of each period for 16
Presented below are three unrelated situations. (a) Ron Stein Company recently signed a lease for a new office building, for a lease period of 10 years. Under the lease agreement, a security deposit of $12,000 is made, with the deposit to be returned at the expiration of the lease, with interest
What would you pay for a $100,000 debenture bond that matures in 15 years and pays $10,000 a year in interest if you wanted to earn a yield of?(a) 8%? (b) 10%?(c) 12%?
Stephen Bosworth, a super salesman contemplating retirement on his fifty-fifth birthday, decides to create a fund on an 8% basis that will enable him to withdraw $25,000 per year on June 30, beginning in 2016 and continuing through 2019. To develop this fund, Stephen intends to make equal
Kross Company purchased a machine at a price of $100,000 by signing a note payable, which requires a single payment of $118,810 in 2 years. Assuming annual compounding of interest, what rate of interest is being paid on the loan?
Consider the following independent situations.(a) Mark Yoders wishes to become a millionaire. His money market fund has a balance of $148,644 and has a guaranteed interest rate of 10%. How many years must Mark leave that balance in the fund in order to get his desired $1,000,000?(b) Assume that
Amos Excavating Inc. is purchasing a bulldozer. The equipment has a price of $100,000. The manufacturer has offered a payment plan that would allow Amos to make 10 equal annual payments of $15,582, with the first payment due one year after the purchase.Instructions(a) How much total interest will
Brubaker Inc., a manufacturer of high-sugar, low-sodium, low-cholesterol frozen dinners, would like to increase its market share in the Sunbelt. In order to do so, Brubaker has decided to locate a new factory in the Panama City, Florida, area. Brubaker will either buy or lease a site depending upon
Messier Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company’s bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for
Calder, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2012. Each employee covered by the plan is
Derek Lee just received a signing bonus of $1,000,000. His plan is to invest this payment in a fund that will earn 6%, compounded annually.Instructions(a) If Lee plans to establish the DL Foundation once the fund grows to $1,898,000, how many years until he can establish the foundation?(b) Instead
Alex Hardaway borrowed $90,000 on March 1, 2010. This amount plus accrued interest at 12% compounded semiannually is to be repaid March 1, 2020. To retire this debt, Alex plans to contribute to a debt retirement fund five equal amounts starting on March 1, 2015, and for the next 4 years. The fund
Your client, Wyeth Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Wyeth has an investment cost of $421,087 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is interested in
Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement: It can either make immediate payment of $3,500,000, or it can make annual payments of $400,000 for 15 years, each payment due on the last day of the year.InstructionsWhich method
Assuming the same facts as those in E6-18 except that the payments must begin now and be made on the first day of each of the 15 years, what payment method would you recommend?
For each of the following, determine the expected cashflows.
Keith Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 2 years to overhaul the engine on his vintage used car. While there is some uncertainty about the cost of engine overhauls in 2 years, by conducting some research online, Keith has developed the
Killroy Company owns a trade name that was purchased in an acquisition of McClellan Company. The trade name has a book value of $3,500,000, but according to GAAP, it is assessed for impairment on an annual basis. To perform this impairment test, Killroy must estimate the fair value of the trade
(a) On January 1, 2012, Fishbone Corporation sold a building that cost $250,000 and that had accumulated depreciation of $100,000 on the date of sale. Fishbone received as consideration a $240,000 non-interest-bearing note due on January 1, 2015. There was no established exchange price for the
Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns.(a) What is the amount of the payments that Ned Winslow must make at the end of each of 8 years to accumulate a fund of $90,000 by the end of the eighth year, if the fund
Assume that Wal-Mart Stores, Inc. has decided to surface and maintain for 10 years a vacant lot next to one of its stores to serve as a parking lot for customers. Management is considering the following bids involving two different qualities of surfacing for a parking area of 12,000 square
Howie Long has just learned he has won a $500,000 prize in the lottery. The lottery has given him two options for receiving the payments: (1) If Howie takes all the money today, the state and federal governments will deduct taxes at a rate of 46% immediately. (2) Alternatively, the lottery offers
Julia Baker died, leaving to her husband Brent an insurance policy contract that provides that the beneficiary (Brent) can choose any one of the following four options.(a) $55,000 immediate cash.(b) $4,000 every 3 months payable at the end of each quarter for 5 years.(c) $18,000 immediate cash and
During the past year, Stacy McGill planted a new vineyard on 150 acres of land that she leases for $30,000 a year. She has asked you, as her accountant, to assist her in determining the value of her vineyard operation. The vineyard will bear no grapes for the first 5 years (1–5). In the next 5
Answer the following questions related to Dubois Inc.(a) Dubois Inc. has $600,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump-sum payment of
Ellison Inc., a manufacturer of steel school lockers, plans to purchase a new punch press for use in its manufacturing process. After contacting the appropriate vendors, the purchasing department received differing terms and options from each vendor. The Engineering Department has determined that
James Kirk is a financial executive with McDowell Enterprises. Although James Kirk has not had any formal training in finance or accounting, he has a “good sense” for numbers and has helped the company grow from a very small company ($500,000 sales) to a large operation ($45 million in sales).
Dunn Inc. owns and operates a number of hardware stores in the New England region. Recently, the company has decided to locate another store in a rapidly growing area of Maryland. The company is trying to decide whether to purchase or lease the building and related facilities. Purchase: The Company
You have been hired as a benefit consultant by Jean Honore, the owner of Attic Angels. She wants to establish a retirement plan for herself and her three employees. Jean has provided the following information: The retirement plan is to be based upon annual salary for the last year before retirement
Craig Brokaw, newly appointed controller of STL, is considering ways to reduce his company’s expenditures on annual pension costs. One way to do this is to switch STL’s pension fund assets from First Security to NET Life. STL is a very well-respected computer manufacturer that recently has
Danny??s Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2012, Danny sold $300,000 of new specialty mowers for golf greens for which Danny??s service department does not have the equipment to do the service. Danny has entered into an
At the end of 2012, Sawyer Company is conducting an impairment test and needs to develop a fair value estimate for machinery used in its manufacturing operations. Given the nature of Sawyer??s production process, the equipment is for special use. (No secondhand market values are available.) The
Murphy Mining Company recently purchased a quartz mine that it intends to work for the next 10 years. According to state environmental laws, Murphy must restore the mine site to its original natural prairie state after it ceases mining operations at the site. To properly account for the mine,
In an examination of Arenes Corporation as of December 31, 2012, you have learned that the following situations exist. No entries have been made in the accounting records for these items.1. The corporation erected its present factory building in 1997. Depreciation was calculated by the
Below are the titles of a number of debit and credit accounts as they might appear on the balance sheet of Hayduke Corporation as of October 31, 2012. Instructions Select the current asset and current liability items from among these debits and credits. If there appear to be certain borderline
The assets of Fonzarelli Corporation are presented on the next page (000s omitted).InstructionsIndicate the deficiencies, if any, in the foregoing presentation of Fonzarelli Corporation??sassets.
Presented below and on the next page is the balance sheet of Rasheed Brothers Corporation (000s omitted). InstructionsEvaluate the balance sheet presented. State briefly the proper treatment of any itemcriticized.
(Presentation of Property, Plant, and Equipment) Carol Keene, corporate comptroller for Dumaine Industries, is trying to decide how to present “Property, plant, and equipment” in the balance sheet. She realizes that the statement of cash flows will show that the company made a significant
The partner in charge of the Kappeler Corporation audit comes by your desk and leaves a letter he has started to the CEO and a copy of the cash flow statement for the year ended December 31, 2012. Because he must leave on an emergency, he asks you to finish the letter by explaining: (1) the
Johnson Co. accepts a note receivable from a customer in exchange for some damaged inventory.The note requires the customer make semiannual installments of $50,000 each for 10 years. The first installment begins six months from the date the customer took delivery of the damaged inventory.
At a recent meeting of the accounting staff in your company, the controller raised the issue of using present value techniques to conduct impairment tests for some of the company’s fixed assets. Some of the more senior members of the staff admitted having little knowledge of present value
The financial statements and accompanying notes of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso.Instructions(a) Examining each item in P&G’s balance sheet, identify those items that require present value, discounting, or
Consolidated Natural Gas Company (CNG), with corporate headquarters in Pittsburgh, Pennsylvania, is one of the largest producers, transporters, distributors, and marketers of natural gas in North America. Periodically, the company experiences a decrease in the value of its gas and oil producing
In this simulation, you are asked to address questions concerning the application of time value of money concepts to accounting problems. Prepare responses to all parts.
Indicate whether each of the items below is a real or nominal account and whether it appears in the balance sheet or the income statement.(a) Prepaid Rent.(b) Salaries and Wages Payable.(c) Inventory.(d) Accumulated Depreciation—Equipment.(e) Equipment.(f) Service Revenue.(g) Salaries and Wages
(a) How are the components of revenues and expenses different for a merchandising company?(b) Explain the income measurement process of a merchandising company.
Midwest Enterprises made the following entry on December 31, 2012.Interest Expense 10,000Interest Payable 10,000(To record interest expense due on loan from Anaheim National Bank)What entry would Anaheim National Bank make regarding its outstanding loan to Midwest Enterprises? Explain why this
Distinguish between cash-basis accounting and accrual-basis accounting. Why is accrual-basis accounting acceptable for most business enterprises and the cash-basis unacceptable in the preparation of an income statement and a balance sheet?
When salaries and wages expense for the year is computed, why are beginning accrued salaries and wages subtracted from, and ending accrued salaries and wages added to, salaries and wages paid during the year?
A worksheet is a permanent accounting record, and its use is required in the accounting cycle. Do you agree? Explain.
Transactions for Mehta Company for the month of May are presented below. Prepare journal entries for each of these transactions. (You may omit explanations.)May 1 B.D. Mehta invests $4,000 cash in exchange for common stock in a small welding corporation.3 Buys equipment on account for $1,100.13
Agazzi Repair Shop had the following transactions during the first month of business as a proprietorship. Journalize the transactions. (Omit explanations.)Aug. 2 Invested $12,000 cash and $2,500 of equipment in the business.7 Purchased supplies on account for $500. (Debit asset account.)12
On July 1, 2012, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Crowe Co., journalize the entry on July 1 and the adjusting entry on December 31.
Assume that on February 1, Procter & Gamble (P&G) paid $720,000 in advance for 2 years’ insurance coverage. Prepare P&G’s February 1 journal entry and the annual adjusting entry on June 30.
LaBouche Corporation owns a warehouse. On November 1, it rented storage space to a lessee (tenant) for 3 months for a total cash payment of $2,400 received in advance. Prepare LaBouche’s November 1 journal entry and the December 31 annual adjusting entry.
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