Accounting Principles Volume 2 9th Canadian Edition Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak - Solutions

The adjusted trial balance for Sykes Ltd. at October 31, 2024, contained the following: Accounts payable .......................................................... $ 57,000 Income tax expense ..................................................... $ 11,800 Accounts
On January 1, 2024, Wolstenholme Corp. borrows $18,000 by signing a 3-year, 7% note payable. The note is repayable in three annual blended payments of $6,859 on December 31 of each year.Instructionsa. Prepare an instalment payment schedule for the note.b. Prepare journal entries to record the note
Three different lease transactions are presented below for Manitoba Enterprises. Assume that all lease transactions start on January 1, 2024. Manitoba does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of the leases is paid at the
Presented below are three different lease transactions that occurred for Klippert Inc., a private company that prepares its financial statements using ASPE. Assume that all lease contracts start on January 1, 2024. Klippert does not receive title to any of the properties, either during the lease
On January 1, 2024, Chilton Ltd. issued $500,000 of 5%, 5-year bonds. The bonds were issued to yield a market interest rate of 6%. Chilton’s year end is December 31. On January 1, 2026, immediately after making and recording the semi-annual interest payment, Chilton redeemed the bonds. A partial
Elite Electronics issues a $450,000, 10-year, 7.5% mortgage note payable on December 31, 2024. The terms of the note provide for semi-annual fixed principal payments of $22,500, plus interest, on June 30 and December 31. Elite Electronics’ year end is December 31. Instructions a.
Kinyae Electronics issues a $600,000, 10-year, 9% mortgage note payable on December 31, 2024, to help finance a plant expansion. The terms of the note provide for semi-annual blended payments of $46,126. Payments are due on June 30 and December 31. Kinyae Electronics’ year end is December
Western Inc. issues $800,000 of 5-year, 6% bonds on January 1, 2024. The bonds pay interest annually. Instructions a. Calculate the issue price of the bonds using a market rate of 5% and record the bond issue. b. Prepare an effective-interest amortization table for the bonds.c.
Elsworth Ltd. issued $1 million of 5-year, 4% bonds dated May 1, 2024, for $1,046,110 when the market interest rate was 3%. Interest is paid semi-annually on May 1 and November 1. Prepare an amortization schedule for the first three interest payments.
Villa Corporation issued $3 million of 7-year, 4% bonds dated January 1, 2024, for $2,661,118. The market interest rate when the bonds were issued was 6%. Interest is payable semi-annually on January 1 and July 1. Villa has a December 31 year end. a. Prepare an amortization schedule for the
The following instalment payment schedule is for an instalment note payable: Instructionsa. Is this a fixed principal or blended payment schedule?b. What is the interest rate on the note?c. Prepare the journal entry to record the first instalment payment.d. What are the non-current and current
Two independent situations follow: 1. Longbine Corporation redeemed $130,000 face value, 12% bonds on June 30, 2024, at 102. The bonds’ carrying amount at the redemption date was $117,500. The bonds pay annual interest, and the interest payment due on June 30, 2024, has been made and
The following instalment payment schedule is for an instalment note payable: Instructionsa. Is this a fixed principal or blended payment schedule?b. What is the interest rate on the note?c. What is the maturity date on the note?d. Prepare the journal entry to record the first instalment
Pavlina borrowed $15,000 from the bank and signed a 3-year, 6% instalment note payable with fixed annual principal payments. She wants to know how to calculate what the annual fixed principal payment will be. Explain.
The balance sheet for Miley Corporation reports the following information on July 1, 2024.Non-current liabilities Bonds payable, 4%, due 2027 ......................................... $940,000 The face value of these bonds is $1 million. Miley decides to redeem these bonds at 101 after
Cove Resort Corp. issued a 20-year, 7%, $240,000 mortgage note payable to finance the construction of a new building on December 31, 2024. The terms provide for semi-annual instalment payments on June 30 and December 31. Instructions Prepare the journal entries to record the mortgage note
The adjusted trial balance for Carey Corporation at December 31, 2024, contained Accounts payable ..................................................................$ 76,000 Interest expense ....................................................................$ 49,568Accounts
Prater Corporation issued $400,000 of 10-year bonds at a discount. Prior to maturity, when the bonds’ carrying amount was $390,000, the company redeemed the bonds at 97. Prepare the entry to record the redemption of the bonds.
The following instalment payment schedule is for an instalment note payable: a. What current and non-current amounts, related to the note, should be presented on the balance sheet at December 31, 2024? b. What current and non-current amounts, related to the note, should be presented on
You qualify for a $10,000 loan from the Canada Student Loans Program to help finance your education. Once you graduate, you start repaying this note payable at an interest rate of 4.8%. The monthly cash payment is $105.09, principal and interest, for 120 payments (10 years). Prepare an instalment
On November 30, 2024, Eyre Inc. financed the purchase of a building by signing a $360,000, 10-year, 6% mortgage note payable. The terms provide for monthly instalment payments. Prepare the journal entries to record the receipt of the mortgage loan on November 30, 2024, and the first two
Lally Co. issues a $500,000, 25-year, 3% note payable on April 30, 2024, for cash. The terms provide for monthly instalment payments. Prepare the journal entries to record the mortgage loan on April 30, 2024, and the first two payments on May 31, 2024, and June 30, 2024, assuming the payment
On January 1, 2024, Jarvis Corp. borrows $8,400 by signing a 3-year, 3% note payable. The note is repayable in three annual fixed principal payments on December 31 of each year.Instructionsa. Calculate the annual principal payment.b. Prepare an instalment payment schedule for the note.c. Prepare
Elbow Lake Corp. issues a $600,000, 4-year, 4% note payable on March 31, 2024. The terms provide for fixed principal payments annually of $150,000. a. Prepare the journal entries to record the note on March 31, 2024, and the first payment on March 31, 2025. b. Show the balance sheet
Norman Corporation reports under IFRS and has a December year end. Norman leases equipment on January 3, 2024. It agrees to make annual lease payments of $17,500 over five years at an interest rate of 3.5% with the first payment made at the start of the lease. Norman expects to return the asset at
Prepare the journal entries that the lessee should make to record the following transactions assuming the entities report under ASPE. a. The lessee makes a lease payment of $80,000 to the lessor for equipment in an operating lease transaction. b. Imhoff Company leases equipment from Noble
Two independent situations follow: 1. Ready Car Rental leased a car to Dumfries Company for three months. Terms of the lease agreement call for monthly payments of $750, beginning on May 21, 2024. Dumfries reports using ASPE. 2. On January 1, 2024, InSynch Ltd. entered into an agreement
Pierre Paquin leases office space for $3,000 per month from Privateer Commercial Realty Ltd. for a short period of time. The lease agreement is for six months. Prepare the journal entry to record the monthly lease payment by the lessee.
Chang Corp. leases new manufacturing equipment from Bracer Construction Inc. The present value of the lease payments is $300,000 and the fair value of the equipment is $320,000. Both companies prepare their financial statements under IFRS. a. Which company is the lessor and which company is
Plankton Corporation’s trial balance at December 31, 2024, is presented below: All transactions and adjustments for 2024 have been recorded and reported in the trial balance except for the items described below. Jan. 7 Issued 1,000 preferred shares for $25,000. In total, 100,000, $2,
The adjusted trial balance for Ray Corporation at July 31, 2024, the corporation’s fiscal year end, contained the following: Accounts payable ........................................................$ 96,000 Lease liability
Selected liability items for Waugh Corporation at December 31, 2024, follow. Prepare the liabilities section of Waugh’s balance sheet. Accounts payable .................................................................................$ 48,000 Income tax payable
AN Empire Company Limited reported the following selected year-end data at May 2, 2020 (in CDN$ millions): Total assets ...................................................................... $14,632.9 Total liabilities
Lannan Corp. had the following debt instrument transactions during the year ended December 31, 2024. The debt instruments were purchased to earn interest. Feb. 1 Purchased six-month term deposit for $50,000. Aug. 1 Term deposit matured and $51,250 cash was received. 1 Purchased a
Liu Corporation had the following transactions in debt instruments purchased to earn interest during the year ended December 31, 2024: Jan. 1 Purchased a 180-day (six-month) Government of Canada treasury bill for $98,039. June 30 Received $100,000 cash when the treasury bill
The Canada Life Assurance Company provides insurance, wealth management, and health care benefits in Canada. Access the 2020 annual report for The Canada Life Assurance Company from the company’s website. InstructionsRefer to the consolidated financial statements when answering the
The following terms were introduced in this chapter: 1. Strategic investments 2. Non-strategic investments 3. Investments at fair value through profit or loss (FVTPL) 4. Investments at amortized cost (AC) Match each term with the following definitions: a. _________
On July 1, 2024, Givarz Corporation, a public company, purchased $300,000 of Schuett Corp. 10-year, 3% bonds at 91.8 when the market rate of interest was 4%. Interest is received semi-annually on July 1 and January 1. Givarz’s year end is December 31. Givarz intends to hold the bonds until July
Kroshka Holdings Corporation has several investments in the debt and equity securities of other companies: 1. 10-year BCE bonds, purchased to earn interest. 2. 10-year GE bonds, intended to be sold if interest rates go down. 3. One-year Government of Canada bonds, purchased to earn
On January 1, 2024, Morrison Inc., a public company, purchased $600,000 of Pearl Corporation’s five-year, 4% bonds for $627,660 when the market interest rate was 3%. Interest is received semi-annually on July 1 and January 1. Morrison’s year end is December 31. Morrison intends to hold
Royal Bank of Canada is one of the largest banks in Canada. According to its 2020 annual report, it had more than 86,000 employees serving 17 million customers throughout the world. The bank’s business largely involves borrowing money and lending it to others, but at any given time it will have a
For each of the following investments, identify the (a) Reason for the investment (non-strategic or strategic) (b) Balance sheet classification (current or non-current asset) (c) Measurement reported on the balance sheet. Assume that the investor is a public company. The first one
What are the differences between non-strategic and strategic investments?
Under International Financial Reporting Standards, investments in debt instruments are reported at either amortized cost or fair value through profit or loss. The president of Lunn Financial Enterprises does not understand why there are two methods and wonders why all debt investments are not
On January 1, 2024, Surge Ltd. issued bonds with a maturity value of $6 million at 104 when the market rate of interest was 4.5%. The bonds have a contractual interest rate of 5% and mature on January 1, 2034. Interest on the bonds is payable semi-annually on July 1 and January 1 of each year. On
Stevens Corporation, during the year ended October 31, 2024, had the following transactions for money-market instruments purchased to earn interest: Jan. 2 Purchased a 120-day, $40,000 treasury bill maturing on May 1 for $39,760. May 1 The treasury bill matured. Aug. 1 Invested
On November 15, 2024, Uram Mining Ltd. announced that it will be purchasing a 32% share in the newly incorporated White Shell Supplies Company. Uram Mining Ltd. owns and operates a mining operation focused on uranium extraction. White Shell Supplies is located in Northern Saskatchewan and
On December 2, 2024, Nudesign Furniture Ltd. purchased a $150,000, Canadian government 120-day treasury bill for $148,900. On December 31, $275 of interest had accrued on the treasury bill. On April 1, 2025, the treasury bill matured. Prepare the journal entries to record the (a) Purchase of
On January 1, 2024, Power Ltd. issued bonds with a maturity value of $5 million for $4,797,000, when the market rate of interest was 8%. The bonds have a contractual interest rate of 7% and mature on January 1, 2029. Interest on the bonds is payable semi-annually on July 1 and January 1 of each
On April 1, 2024, Bight Corporation issued $400,000, five-year bonds. On this date, Shoreline Corporation purchased the bonds from Bight to earn interest. Interest is received semi-annually on April 1 and October 1 and Shoreline’s year end is March 31. Below is a partial amortization schedule for
During the year ended December 31, 2024, Mead Investment Corporation, a public company, had the following transactions related to investments held for trading: Feb. 1 Purchased 2,400 Lemelin common shares for $63,600. Mar. 1 Purchased 600 RSD common shares for $7,500. Apr. 1
During 2023, Commercial Inc., a public company, purchased equity securities held for trading purposes. At December 31, 2023, the securities for Commercial Inc. were as follows: The following transactions with respect to Commercial Inc.’s investments occurred during 2024: Apr. 15 Sold
On July 1, 2024, Imperial Inc., a public company, purchased $500,000 of Acme Corp. 10-year, 4% bonds for $461,000 to earn interest. The bonds had a market interest rate of 5%. The bonds pay interest semi-annually on January 1 and July 1. Imperial Inc. has a December 31 year end. At December 31,
During the year ended December 31, 2024, Rakai Corporation, a public company, had the following transactions related to investments held for trading purposes: Feb. 1 Purchased 575 IBF common shares for $25,300. Mar. 1 Purchased 1,500 Raimundo common shares for $48,000. Apr. 1
During 2023, Financial Holdings, a public company, purchased equity securities for trading purposes. At December 31, 2023, the securities for Financial Holdings were as follows: The following transactions with respect to Financial Holdings’ investments occurred during 2024: Jan. 15
On January 1, 2024, Chan Ltd., a public company, purchased $600,000 of five-year, 4% bonds at par from Pullen Corporation. Interest is received semi-annually on July 1 and January 1. Chan purchased the bonds to earn interest. At December 31, 2024, the bonds were trading at 101. Prepare the journal
As indicated in the “All About You” feature in this chapter, any Canadian aged 18 or older can save up to $6,000 every year in a tax-free savings account (TFSA). TFSA savings can be used for any purpose, including for a vacation, to buy a car, or to start a small business. The goal of TFSAs is
It is now the end of January 2026 and Santé Smoothies & Sweets Ltd. has been so successful, it has excess cash and would like to invest it. The Koebels also wish to expand their operation by diversifying into a deli business. They feel that there are many synergies between baked goods,
Strand Corp. purchased $300,000 of five-year, 4% Hydrocor bonds at 99 on June 30, 2024. Strand Corp. purchased the bonds to earn interest. Interest is paid semi-annually each June 30 and December 31. The semi-annual amortization amount for the first interest period is $273 determined using the
The following transactions relate to Portland Cement Ltd.’s investment in the debt securities of Widget Makers Inc. during 2024 and 2025. Portland is a public company and purchased the investment to earn interest income. 2024Jan. 1 Purchased $120,000 of Widget Makers Inc. eight-year, 7%
On July 1, 2024, Moon Corporation, a private company, purchased $400,000 of sixyear, 6% Star Corporation bonds for $420,000. The bonds pay interest each June 30. The bonds were purchased to earn interest and the market interest rate at the time of purchase was 5%. The company uses the
On January 2, 2024, Hadley Inc., which reports under IFRS, purchased shares of Letourneau Corp. for $10 a share. Hadley intends to hold these shares as a long-term investment. During 2024, Letourneau reported profit of $1 million and paid cash dividends of $200,000. The investment’s fair value at
On August 1, 2024, Chen Corporation, a public company, purchased $100,000 of Alaska Ltd. five-year, 7% bonds at par. The bonds were purchased for trading purposes and pay interest semi-annually on January 31 and July 31 of each year. On December 31, 2024, Chen’s year end, the bonds’ fair value
Under what circumstances would an investor record a gain on the sale of a bond investment? When would a loss on the sale of a bond investment be recorded?
On April 1, 2024, Perfect Plastics Company purchased 40,000 common shares in Ecotown Ltd. for $15 per share. Management has designated the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $17 per share on December 31. Prepare the required
Sandhu Ltd. has 400,000 common shares authorized and 120,000 shares issued on December 31, 2023. On January 2, 2024, Kang Inc., which reports under IFRS, purchased shares of Sandhu for $40 per share on the stock market from another investor. Kang intends to hold these shares as a long-term
Using the data presented in BE16.5, assume Strand Corp. is a public company and that it purchased Hydrocor’s bonds at par for trading purposes. Prepare the journal entries to record (a) The purchase of the bonds on June 30, 2024(b) The receipt of the first interest payment on December 31,
On March 1, 2024, Carnegie Inc., a public company, purchased 15% of the common shares of Aquinas Auto Inc. for $225,000. The remaining shares (85%) are widely dispersed. Carnegie Inc. considers this a strategic investment and a critical step into a developing consumer market. Carnegie has placed
Following is information for Marcel Ltée’s investments held for trading. Marcel is a public company and has a December 31 year end. 2024 Sept. 28 Purchased 3,500 shares of Cygman Limited for $40 per share. Oct. 1 Purchased $300,000 of Rauk Inc. 4% bonds at face value. The bonds
What are the differences between the fair value through profit or loss and fair value through other comprehensive income investment classifications?
On January 1, 2024, Neitzche Company, a public company, purchased 35% of the common shares of Triple Titanium Inc. for $525,000. The remaining shares (65%) are held by the family members of the company’s founder. Neitzche considers this a strategic investment and a critical step into developing
On August 1, McLain Finance Inc. buys 3,000 Datawave common shares for trading purposes for $114,000 cash. On October 15, McLain receives a cash dividend of $2.75 per share from Datawave. On December 1, McLain sells the shares for $120,000 cash. Prepare the journal entries to record the (a)
Selected condensed information (in millions) for Investments R Us Company, a public company, follows for the year ended November 30, 2024. Income from investment in associate ........................$ 4 Gain on sale of land
The following was reported by Church Financial in its December 31, 2024, financial statements: Investments at FVTPL, December 31, 2023.................................. $11,000 Investments at FVTPL, December 31, 2024 ....................................15,000 Investment income or
Silver Lining Corporation, a public company, is a large silver producer. Selected condensed information (in millions) for Silver Lining Corporation follows for the year ended September 30, 2024:Cost of sales................................................................ $2,214 Loss from
Presented in alphabetical order, the following data are from the accounting records of Vladimir Corporation at December 31, 2024:Accounts payable ............................................................................................. $ 85,000 Accounts receivable
Using the data presented in BE16.9, assume that the investment in Ecotown’s common shares is sold on January 15, 2025, for $690,000. Prepare the journal entry to record the sale of the investment.Data from BE16.9On April 1, 2024, Perfect Plastics Company purchased 40,000 common shares in Ecotown
Visage Cosmetics, a public company, acquires 40% of Image Fashion Inc.’s 30,000 common shares for $18 per share on January 2, 2024. On June 15, Image Fashion pays a cash dividend of $30,000. On December 31, Image Fashion reports profit of $380,000 for the year. At December 31, Image Fashion
On January 1, 2024, Studio27 Ltd., a private company, buys 25% of Sugar Maple Candy Company’s 200,000 common shares for $480,000. On December 31, 2024, Sugar Maple pays a $35,000 cash dividend and reports profit of $280,000. At December 31, 2024, Sugar Maple’s shares are trading at $12.50 per
On January 1, 2024, McAdam Ltd., a private company reporting under ASPE, purchased 25% of the common shares of Tomecek Corporation for $175,000. Tomecek reported profit of $85,000 for 2024 and paid dividends of $12,000 on December 31, 2024. McAdam’s year end is December 31. Assuming that there is
You are provided with the following balance sheet accounts of New Bay Inc., a public company, as at December 31, 2024: Accounts payable ..........................................................................................$ 35,000 Accounts receivable
Wren Inc., a public company, owns 20% of Dong Ltd.’s common shares for strategic purposes. The investment’s carrying amount at January 1, 2024, is $300,000. During the year, Dong reported profit of $250,000 and paid a dividend of $20,000. The investment’s fair value on December 31, 2024,
Atwater Corporation, a public corporation, reported a holding gain of $46,000 net of tax on an investment reported at fair value through other comprehensive income, and a holding loss of $50,000 before tax on an investment held for trading purposes for the year ended April 30, 2024. The company’s
You are provided with the following income accounts of Oakridge Ltd. for the year ended December 31, 2024. Oakridge reported profit from operations of $125,000 for the year ended December 31, 2024. Oakridge’s income tax rate is 30%. Interest revenue
Refer to question #13. After you explain the appropriate accounting to the student, she comes to you with questions. She is confused about the equity method. Explain how the equity method of accounting for investments is different from other investment measurement methods. What information will the
Indicate on which financial statement (balance sheet, income statement, or statement of comprehensive income) each of the following accounts would be reported if the investor is a public company. The company presents the statement of comprehensive income separately from the income statement. Also
Identify what is included in the carrying amount of a strategic investment using the(a) Equity method(b) Cost method.
Sabre Corporation, a public company, has the following investments at November 30, 2024: 1. Investments held for trading purposes: common shares of National Bank, carrying amount $25,000, fair value $26,000, and five-year, 5% bonds of Turbo Corp., carrying amount $50,000, fair value
In the chapter, we discussed five types of investments. Describe each type and include the measurement method used for both IFRS and ASPE.
Identify the proper statement presentation of the following investments: (a) Investments held for trading purposes (b) Short term debt investments purchased to earn interest (c) Debt investments purchased to earn interest with maturities longer than 12 months(d) Strategic investments
When may a company report holding gains or losses on fair value adjustments through other comprehensive income? Why might a company choose to report these gains and losses in other comprehensive income?
In the “All About You” feature, we learned about some successful partnerships. The Beatles and the Rolling Stones were popular music bands that started in the early 1960s. However, the Beatles broke up in 1970 after disagreements, including about who should be their financial advisor. In
Hyperchip Limited is a private corporation reporting under ASPE. At December 31, 2024, its general ledger contained the following summary data: Cost of goods sold ......................................................................... $ 950,000 Net sales
Beauce Incorporated had 45,000, $2.50 preferred shares issued. It did not pay a dividend to the preferred shareholders in 2023 and 2024. (a) What are the dividends in arrears, if any, at December 31, 2024, if the shares are cumulative and if they are noncumulative? (b) How are dividends
Zurich Limited is a private corporation reporting under ASPE. At December 31, 2024, its general ledger contained the following summary data: Cost of goods sold ..................................................................................... $1,225,000 Interest expense
Highland Corporation, a private corporation, was organized on January 1, 2024. It is authorized to issue 50,000, $3 noncumulative preferred shares, and an unlimited number of common shares. The following transactions were completed during the first year: Jan. 10 Issued 100,000 common shares at
Triple A Accountants is a partnership with three partners. On February 29, 2024, the three partners, M. Kumar, H. Deol, and A. Kassam, have capital balances of $85,000, $72,000, and $43,000, respectively. The profit and loss ratio is 4:3:1. On March 1, 2024, Deol withdraws from the partnership and
Tango Treasures Company sells home furnishings. On February 1, Tango Treasures entered into a contract with Simon Development Ltd. for home furnishings with a selling price of $40,000 and terms of n/30. The goods cost Tango $28,000. Tango Treasures has a stated return policy of 20 days from the
All Care Inc. reported the following selected information for the past three years (in millions, except for per share amounts): Instructions a. Calculate All Care’s return on equity, earnings per share, and price-earnings ratios before and after discontinued operations for 2024, 2023,
If all other factors stay the same, indicate whether each of the following is generally considered favorable or unfavorable by a potential investor: (a) A decrease in return on equity(b) An increase in earnings per share(c) A decrease in the price-earnings ratio, and (d) An increase in

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Accounting Principles Volume 2 9th Canadian Edition Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak - Solutions

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