Questions and Answers of Fundamental Accounting Principles 25th

Interior Design Company specializes in home staging consulting services and sells furniture built by European craftsmen. The following six-column table contains the company’s unadjusted trial
LR Enterprises Inc. had the following equity account balances at December 31, 2022:Sales during 2023 totalled $1,560,000 and operating expenses were $998,000. Assume that income tax is accrued at
AIM Inc. showed the following equity account balances on the December 31, 2022, balance sheet:During 2023, the following selected transactions occurred:Requireda. Journalize the transactions above
Spicer Inc. showed the following alphabetized list of adjusted account balances at December 31, 2023:RequiredAssuming normal balances, prepare the closing entries at December 31, 2023, the
Arcus Development Inc.’s equity section on the December 31, 2022, balance sheet showed the following information:On January 15, 2023, the company’s board of directors declared a 15% share
Range Energy Corp.’s financial statements for the current year ended December 31, 2023, have been completed and submitted to you for review. The equity account balances a year ago, at December 31,
David Wallace, Olena Dunn, and Danny Lin were partners in a commercial architect firm and showed the following account balances as of December 31, 2023:Due to several unprofitable periods, the
Tropical Vacation Inc. has tentatively prepared its financial statements for the year ended December 31, 2023, and has submitted them to you for review. The equity account balances at December 31,
CanaCo showed the following equity on its December 31, 2023, balance sheet:Contributed capitalThe shareholders of CanaCo expressed concerns to the board of directors at the recent annual meeting that
Ozzi Development Inc. showed the following equity account balances on the December 31, 2022, balance sheet:During 2023, the following selected transactions occurred:Requireda. Journalize the
Zen Aerospace Corporation reported the following equity account balances on December 31, 2022:In 2023, the company had the following transactions affecting shareholders and the shareholders’ equity
Information taken from Jamestown Corp.’s balance sheet as of April 1, 2023, follows:Common shares, 375,000 shares authorized,150,000 shares issued and outstanding ..................................
Vector Gaming Ltd. showed the following equity account balances on December 31, 2023:On January 2, 2024, Vector declared and distributed a 3:1 share split. Prepare a comparative equity section
The equity accounts for Kalimantan Corp. showed the following balances on December 31, 2022:The company completed these transactions during 2023:Required1. Prepare general journal entries to record
What effects does declaring a share dividend have on the corporation’s assets, liabilities, and total equity? What effects does the distribution of the shares have?
Pacifica Papers Inc. needed to conserve cash, so instead of a cash dividend the board of directors declared a 15% common share dividend on June 30, 2023, distributable on July 15, 2023. Because
The following table shows the balances from various accounts in the adjusted trial balance for Decoma International Corp. as of December 31, 2023:Required1. Assuming that the company’s income tax
Bandara Gold Inc.’s equity section on the October 31, 2023, balance sheet showed the following information:On November 15, 2023, Bandara’s board of directors declared a 3:1 share split to the
Refer to the financial statements for Indigo in Appendix II. The balance in share capital at March 30, 2019, was 27,136,386 shares. What is the balance as of March 31, 2020? What caused the change in
On March 1, 2023, VisionTech Inc.’s board of directors declared a 5% share dividend when the market price per share was $10.00. On November 15, 2023, the board of directors declared a 4:1 share
The following table shows the balances from various accounts in the adjusted trial balance for UniLink Telecom Corp. as of December 31, 2023:Required1. Assuming that the company’s income tax rate
The equity section from the December 31, 2023 balance sheet of Kentucky Corporation appeared as follows:The following transactions occurred during 2024 (assume the retirements were the first ever
The equity section from the December 31, 2023, balance sheet of Candace Candy Corporation appeared as follows:The following transactions occurred during 2024 (assume the retirements were the first
CarFind Inc. showed the following equity information at December 31, 2022.On April 1, 2023, 200,000 common shares were issued at $0.60 per share. On June 1, the board of directors declared a 15%
Information taken from Nanotec Security Inc.’s January 31, 2023, balance sheet follows:On February 1, 2023, the company repurchased and retired 500 common shares (the first retirement the company
The Data Group Inc. had the following balances in its equity accounts at December 31, 2022:During 2023, the following equity transactions occurred:Required1. Prepare journal entries to account for
Pet Boutique Corp. reported $2,952,010 of profit for 2023. On November 2, 2023, it declared and paid the annual preferred dividends of $203,000. On January 1, 2023, Pet a Boutique had 104,000 and
The income statement for Weatherford International Inc.’s year ended December 31, 2023, was prepared by an inexperienced bookkeeper. As the new accountant, your immediate priority is to correct the
Mady Entertainment Inc. showed the following equity account balances on the December 31, 2022, balance sheet:During 2023, the following selected transactions occurred:Requireda. Journalize the
Bellevue Ltd. reported profit of $860,000 for its year ended December 31, 2023. Calculate earnings per share given the following additional information at December 31, 2023:*There was no change in
The equity section from the December 31, 2023 and 2024 balance sheets of Westburne Corporation appeared as follows:The following transactions occurred during 2024 (assume the retirements were the
How are earnings per share results calculated for a corporation with a simple capital structure?
After returning from vacation, the accountant of Online Hearing Inc. was dismayed to discover that the income statement for the year ended December 31, 2023, was prepared incorrectly. All amounts
Fitz Products Inc. reported $1,075,049 profit in 2023 and declared preferred dividends of $75,100. The following changes in common shares outstanding occurred during the year.Jan. 1 78,000 common
Outdoor Equipment Inc. had 180,000 common shares issued and outstanding as at December 31, 2023. The shares had been issued for $9.80 each. On September 12, 2024, Outdoor repurchased and retired
Venir Exchange Corp. had the following equity account balances at December 31, 2022:On November 1, 2023, the board of directors declared and paid the current year’s cash dividend on the preferred
The equity sections from the December 31, 2022 and 2023 balance sheets of Synergy Acquisition Corporation appeared as follows:The following occurred during 2023:Required1. How many shares were
Nelson Corp. earned profit of $450,000. The number of common shares outstanding all year long was 200,000 and preferred shareholders received a dividend totalling $10,000. Calculate the earnings per
Refer to the financial statements for Recipe Unlimited Corporation in Appendix II. In both 2019 and 2020 the balance of shares issued and outstanding was reduced. What caused the balance of the
Liberty Ventures Inc. reported $209,840 profit in 2023 and declared preferred dividends of $34,400. The following changes in common shares outstanding occurred during the year:Calculate the
Earlyrain Inc.’s 2023 income statement, excluding the earnings per share portion of the statement, was as follows:The weighted-average number of common shares outstanding during the year was
The chapter-opening vignette highlighted Apple Inc.’s 4:1 stock split. What is the key reason executives at Apple would decide to provide shareholders with seven shares of stock for each common
Kiwi Charter Corp. reported $1,445,710 of profit for 2023. On November 2, 2023, it declared and paid the annual preferred dividends of $155,000. On January 1, 2023, Kiwi had 80,000 and 240,000
Horticultural Products Inc. reported $928,470 profit in 2023 and declared preferred dividends of $74,600. The following changes in common shares outstanding occurred during the year.Calculate the
Bonanza Graphics Inc. issued a $200,000, 8%, three-year bond on November 1, 2023, for cash of $194,792. Interest is to be paid quarterly. The annual market rate of interest is 9%. Assume a year-end
On June 1, 2023, JetCom Inventors Inc. issued a $540,000, 12%, three-year bond. Interest is to be paid semiannually beginning December 1, 2023.Requireda. Calculate the issue price of the bond
Henderson Armour Inc. issued a $652,000, 14%, 10-year bond on October 1, 2023, for cash of $697,701. Interest is to be paid quarterly. The annual market rate of interest is 12.75%. Assume a year-end
On December 31, 2023, Sack Port Ventures Inc. borrowed $90,000 by signing a four-year, 5% installment note. The note requires annual payments of accrued interest and equal amounts of principal on
On January 1, 2023, Winston Mining Corp. had 580,000 common shares issued and outstanding. On April 30, it issued an additional 220,000 shares, and on October 1 it repurchased and cancelled 100,000
Banjo Education Corp. issued a 4%, $150,000 bond that pays interest semiannually each June 30 and December 31. The date of issuance was January 1, 2023. The bonds mature after four years. The market
Goth Inc. issued a group of bonds on January 1, 2023, that pay interest semiannually on June 30 and December 31. The par value of the bonds is $100,000, the annual contract rate is 10%, and the bonds
Barton Inc. changed the method of calculating depreciation on its equipment from straight-line to double-declining-balance during 2023. The cumulative effect of the change is an additional expense of
On August 1, 2023, Billboard Inc. issued $520,000 of 10%, seven-year bonds. Interest is to be paid semiannually. Using the table below, calculate the issue price of the bonds if the market interest
On January 1, 2023, Ultra Vision Corp. issued $1,200,000 of 20-year 8% bonds that pay interest semiannually on June 30 and December 31. Assume the bonds were sold at (1) 98; (2)
Tahoe Tent Ltd. issued bonds with a par value of $800,000 on January 1, 2023. The annual contract rate on the bonds was 12%, and the interest is paid semiannually. The bonds mature after three years.
Refer to the information in QS 15-5. Show how the investments will be presented on the December 31, 2023, balance sheet.Data From Exercise QS 15-5Wind Industries had selected unadjusted balances as
On January 1, 2023, the Pareto Company borrowed $80,000 in exchange for an interest-bearing note. The note plus interest compounded at an annual rate of 8% is due on December 31, 2025. Calculate the
Use the data in Exercise 14-25 to prepare journal entries that KEC Environmental Corp. would make to record the loan on December 31, 2023, and the four payments starting on December 31, 2024, through
On December 31, 2023, a day when the available interest rate was 9%, Valcent Products Inc. leased equipment with an eight-year life. The contract called for an $8,400 annual lease payment at the end
The initial ZooShare community bond offering highlighted in the chapter opening vignette offered investors an 11.5–12.5% return. Why would the initial ZooShare bond offering provide investors with
River Outdoor Supply Corporation (River Corp.) was organized on January 2, 2023. River Corp. issued 50,000 common shares for $250,000 on that date. The following investment transactions and events
Peerless Carpet Corp. leased a machine on January 1, 2023, under a contract calling for six annual payments of $60,000 on December 31, 2023 through 2028. The machine becomes the property of the
Laporte Engineering Company leased a machine on January 1, 2023, under a contract calling for four annual payments of $30,000 on December 31, 2023 through 2026. The machine becomes the property of
Point North Inc. issued bonds on September 1, 2023, with a par value of $150,000. The bonds mature in 15 years and pay 8% annual interest in two semiannual payments. On the issue date, the annual
On July 1, 2023, Lester Shoes Ltd. exercises a $4,000 call option on its outstanding bonds, which have a carrying value of $206,000 and par value of $200,000. Lester exercises the call option
On October 1, 2023, Ross Wind Energy Inc. issued a $1,500,000, 7%, seven-year bond. Interest is to be paid annually each October 1.Requireda. Calculate the issue price of the bond assuming a market
On October 1, 2023, Best Biopharma Inc. issued an $850,000, 11%, seven-year bond. Interest is to be paid annually each October 1.Requireda. Calculate the issue price of the bond assuming a market
On January 1, 2023, the $1,000,000 par value bonds of Sinclair Corporationc with a carrying value of $950,000 are converted to 500,000 common shares. Journalize the conversion of the bonds.
Solar Energy Inc. issued a $900,000, 5%, five-year bond on October 1, 2023. Interest is paid annually each October 1. Solar’s year-end is December 31.RequiredUsing the amortization schedule
a. Calculate the debt to equity ratio for 2022 and 2023 for the following three separate companies.b. Comment on whether the ratio for each has improved or weakened from a risk perspective. Fab Form
Computalog Inc. showed the following on its December 31, 2023, balance sheet:Required1. Assuming the bonds are convertible into 400,000 common shares, journalize the conversion on January 1, 2024,
For Solar Industries and its related but separate financing company Solar Financing Corp, calculate the debt to equity ratio for 2022 and 2023. Explain why there are such significant differences in
Trilium Gold Inc.’s December 31, 2023, adjusted trial balance shows the following:Required1. What is the carrying value of the bonds on December 31, 2023?2. The bonds were converted into 105,000
Use the data in Exercise 14-23 to prepare journal entries that Sack Port Ventures Inc. would make to record the loan on December 31, 2023, and the four payments starting on December 31, 2024, through
On December 31, 2023, KEC Environmental Corp. borrowed $100,000 by signing a four-year, 5% installment note. The note requires four equal payments of accrued interest and principal on December 31 of
Wong Corporation began operations on January 1, 2022. Its adjusted trial balance at December 31, 2022 and 2023, is shown below along with some other information.1$2,000 of the notes payable will be
Jacobson Manufacturing Corporation earned $84,000 in profit during 2023. Machinery was sold for $116,000 and a $24,000 loss on the sale was recorded. Machinery purchases totalled $330,000 including a
MED Supplies Inc., a software retailer, recently completed its 2023 operations. The following information is available:Additional information regarding MED Supplies Inc.’s activities during 2023:1.
A major shareholder of Systems Unlimited Inc., Phil Wang, is perplexed. The 2023 income statement showed a healthy profit of $280 thousand. Yet, when Linda Lewis, the bank manager and a friend of
Swiss Farm Inc.’s 2023 statement of cash flows appeared as follows:An examination of the company’s statements and accounts showed:1. All accounts have normal balances.2. All sales were made on
Burrow Mining Inc.’s comparative balance sheet information at December 31, 2023 and 2022, and its income statement for the year ended December 31, 2023, are as follows:During 2023, the following
The data below refer to Money Ltd. for the year ended December 31, 2023.RequiredFor each item, identify both the dollar amount and its classification—that is, whether it would appear as a positive
What is the purpose and importance of a statement of cash flows to business decision making?
Green Forest Corp.’s 2023 income statement showed the following: profit, $292,600; depreciation expense, building, $43,000; depreciation expense, equipment, $6,630; and gain on sale of equipment,
Laura’s Fresh Cooking Inc. began operations on January 1, 2022. Laura’s prepares gourmet dinners and delivers to customers in fresh coolers; customers put them in the oven and have a meal within
Country Feed Inc., a Saskatchewan-based farm and ranch livestock feed distributor, began operations on January 1, 2022. Its post-closing trial balance at December 31, 2022 and 2023 is shown below
Refer to the information below for Morningside Environmental Inc. Calculate the:a. Cash paid for the purchase of the franchise during 2023.b. Cash proceeds for equipment sold during 2023.c. Change in
The following list of items was extracted from the December 31, 2023, trial balance of Future Products Corp. Using the information contained in this listing, prepare the company’s multiple-step
Use the data for GlenTel Inc. in Exercise 13-17 to present a multiple-step income statement for 2023. You need not complete the earnings per share calculations.Data From Exercise 13-17During 2023,
Ice Industries Inc. showed the following equity account balances at December 31, 2022:The company issued long-term debt during 2023 that requires a retained earnings restriction of $72,000. Share
During 2023, GlenTel Inc. sold its interest in a chain of wholesale outlets. This sale took the company out of the wholesaling business completely. The company still operates its retail outlets.
Galliger Corp.’s adjusted trial balance at December 31, 2023, included the following:The perpetual inventory system is used and the income tax rate is 30%. What is Galliger Corp.’s after-tax
Farhad is an accountant at Belamy Manufacturing Limited (BML). BML began operations on January 1, 2022, and uses FIFO to cost its inventory. Management is contemplating a change to the average cost
A company reported $237,110 of profit for 2023. It also declared $36,000 of dividends on preferred shares for the same year. At the beginning of 2023, the company had 52,000 outstanding common
On January 1, 2019, Plover Brothers Ltd. purchased a machine for $495,000 and depreciated it using the straight-line method with an estimated useful life of eight years with no residual value. On
Refer to Indigo’s statement of cash flows shown in Appendix II. What activity comprised Indigo’s cash outflows from financing activities for the fiscal year ended 2019?
Refer to the financial statements in Appendix II for Recipe and calculate the percentage change in cost of inventories sold from 2019 to 2020.
Refer to the financial statements in Appendix II for Recipe Unlimited Corporation (Recipe) and calculate the percentage change in total revenues from 2019 to 2020.
Triple Flip Inc., a sporting goods retailer, recently completed its 2023 operations. Triple Flip Inc.’s balance sheet information and income statement follow.Additional information regarding Triple
Holt Developments Ltd. put an asset in service on January 1, 2021. Its cost was $270,000, its predicted service life was six years, and its expected residual value was $27,000. The company decided to

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