Questions and Answers of Fundamental Accounting Principles 25th

On January 1, 2023, Canox Ltd. changed its inventory valuation method from weighted-average cost to FIFO for financial statement and income tax purposes, to make its reporting reliable and more
5-Star Adventures Inc. financed its $1,000,000 expansion by issuing on January 1, 2023, a 5%, 10-year bond dated the same day with annual interest payments to be made each December 31. The market
The following items include the 2023 and 2022 balance sheet information and the 2023 income statement of the Clear Water Corporation. Additional information about the company’s 2023 transactions is
On January 1, 2020, Vancouver Shipping Corporation (VSC) bought machinery for $800,000. They used double-declining-balance depreciation for this asset, with an estimated life of eight years and an
The following information for 2023 is extracted from Mountain Toys Limited, owner of a retail store:Calculate the cash inflow or outflow from operating activities. Profit $24,500 Accounts receivable
Zhang Systems Inc. began operations on January 1, 2022. Its post-closing trial balance at December 31, 2022 and 2023 is shown below along with some other information.Other information regarding Zhang
The following information for 2023 relates to Day Cycle Manufacturing Corp.:Calculate the cash inflow or outflow from operating activities. $49,000 3,000 6,000 900 Profit Inventory
Clear Strategy Corp., a strategic marketing consulting firm, began operations on January 1, 2022. Its post-closing trial balance at December 31, 2022 and 2023 is shown below along with some other
On November 30, 2023, Calla Resources Ltd. borrowed $100,000 from a bank by signing a four-year installment note bearing interest at 12%. The terms of the note require equal payments each year on
On September 1, 2023, Messner Corp. issued a $400,000, 15%, four-year bond. Interest is payable semiannually beginning March 1, 2024.Required1. Calculate the bond issue price assuming a market
Omni Film Corporation had a $1,250,000, 7% bond available for issue on April 1. Interest is to be paid on the last day of each month. On April 14 and 25, bonds with a face value of $890,000 and
Extra Gold Corporation had a $1,270,000, 6% bond available for issue on September 1, 2023. Interest is to be paid quarterly beginning November 30. All of the bonds were issued at par on October 1.
Curtis Ltd. issued $100,000 of 8% bonds at face value on October 1, 2023. Interest is paid each March 31 and September 30. If Curtis’s tax rate is 40%, what is the annual after-tax borrowing
On March 1, 2023, Jagger Metal Corp. issued 9% bonds dated January 1, 2023. The bonds have a $902,000 par value, mature in 20 years, and pay interest semiannually on June 30 and December 31. The
Wind-Electric Corp. issued $940,000 of bonds that pay 9.7% annual interest with two semiannual payments. The date of issuance was January 1, 2023, and the interest is paid on June 30 and December 31.
Queen Energy Inc. issued bonds on January 1, 2023, that pay interest semiannually on June 30 and December 31. The par value of the bonds is $270,000, the annual contract rate is 10%, and the bonds
On January 1, 2023, British Software Ltd. issued $466,000 of 20-year, 10.5% bonds that pay interest semiannually on June 30 and December 31. The bonds were sold to investors at their par value.A. How
A $15,000 bond with a contract interest rate of 6% was issued on March 1, 2023. Calculate the cash paid on the first interest payment date if interest is paid:a. Annuallyb. Semiannuallyc. Quarterlyd.
Part 1On April 1, 2023, Shelter Bay Inc. has available for issue $900,000 bonds due in four years. Interest at the rate of 10% is to be paid quarterly. Calculate the issue price if the market
On October 1, 2023, Eastern Timber Inc. has available for issue $840,000 bonds due in four years. Interest at the rate of 4% is to be paid quarterly. Calculate the issue price if the market interest
Part 1On April 1, 2023, ET Inc. has available for issue $820,000 bonds due in four years. Interest at the rate of 4.50% is to be paid quarterly. Calculate the issue price if the market interest rate
On March 1, 2023, JenStar Hydroponics Inc. issued at par an $80,000, 6%, three-year bond. Interest is to be paid quarterly beginning May 31, 2023. JenStar’s year-end is July 31. A partial payment
On June 1, 2023, Lake Arrowhead Investors Inc. issued a $570,000, 9%, three year bond. Interest is to be paid semiannually beginning December 1, 2023.Requireda. Calculate the issue price of the bond
On June 1, 2023, Shebandowan Investors Inc. issued a $4,900,000, 7%, three-year bond. Interest is to be paid semiannually beginning December 1, 2023.Requireda. Calculate the issue price of the bond
Refer to the annual report for Spin Master presented in Appendix II. Where are the details regarding the composition of the $59 million December 31, 2020 balance in long-term lease obligations?
Purity Vegetable Corp. issued $200,000 of 6% bonds on November 1, 2023, at par value. The bonds were dated October 1, 2023, and pay interest each April 1 and October 1. Record the issue of the bonds
Mindsetta Music Inc. issued bonds on March 1, 2023, with a par value of $300,000. The bonds mature in 15 years and pay 8% annual interest in two semiannual payments. On the issue date, the annual
On February 1, 2023, Swiss Travel Corp. issued $750,000 of 11%, eight-year bonds. Interest is to be paid quarterly. Using the table below, calculate the issue price of the bonds if the market
Westgate Motor Homes Inc. issued bonds with a par value of $680,000 and a five-year life on January 1, 2023. The bonds pay interest on June 30 and December 31. The contract interest rate is 8%. The
Huskey Mining Corporation issued bonds with a par value of $105,000 on January 1, 2023. The annual contract rate on the bonds is 9%, and the interest is paid semiannually. The bonds mature after
SweetFish Corp. issued bonds with a par value of $820,000 and a five-year life on May 1, 2023. The contract interest rate is 7%. The bonds pay interest on October 31 and April 30. They were issued at
On March 1, 2023, Quinto Mining Inc. issued a $600,000, 8%, three-year bond. Interest is payable semiannually beginning September 1, 2023.RequiredPart 1a. Calculate the bond issue price assuming a
On October 1, 2023, Dejour Energy Inc. issued a $680,000, 7%, seven-year bond. Interest is to be paid annually each October 1.Required1. Calculate the issue price of the bond assuming a market
On May 31, 2023, Iceflow Technologies Inc. borrowed $400,000 from a bank by signing a four-year installment note bearing interest at 14%. The terms of the note require equal semiannual payments each
On February 1, 2023, Fireside Corp. issued a $900,000, 5%, two-year bond. Interest is payable quarterly each May 1, August 1, November 1, and February 1.RequiredPart 1a. Calculate the bond issue
Calculations Marketing Inc. issued 8.5% bonds with a par value of $450,000 and a five-year life on January 1, 2023, for $459,125. The bonds pay interest on June 30 and December 31. The market
Bellevue Marketing Corp. issued $600,000 of 6%, four-year bonds for $579,224 on July 1, 2023, the day the bonds were dated. The market interest rate on this date was 7%. Interest is paid quarterly
On November 1, 2023, Yardley Distributors Inc. issued a $740,000, 5%, two-year bond. Interest is to be paid semiannually each May 1 and November 1.Requireda. Calculate the issue price of the bond
Alberta Industries Ltd. issued 10%, 10-year bonds with a par value of $200,000 and semiannual interest payments. On the issue date, the annual market rate of interest for the bonds was 12%, and the
Assume that on January 1, 2023, Barb’s Wildlife Rescue issues a $1,000, five-year, 5% (coupon rate) bond with semiannual interest payments that yields a market adjusted interest rate of 6%. Use the
What is the cash price of a $2,000 bond that is sold at 98¼? What is the cash price of a $6,000 bond that is sold at 101½?
Maier Investment Corporation issued $700,000 of 6%, six-year bonds for $735,902 on July 1, 2023, the day the bonds were dated. The market interest rate was 5%. Interest is paid semiannually beginning
Kangaroo Media Inc. has issued and outstanding a total of 40,000 shares of $7.20 preferred shares and 120,000 of common shares. The company began operations and issued both classes of shares on
Mainland Resources Inc. began operations on June 5, 2023. Journalize the following equity transactions that occurred during the first month of operations: June 5 15 16 17 18 30 July 1 Gave 4,000
Les Waruck, Kim Chau, and Leena Manta formed a partnership, WCM Sales, on January 11, 2023, by investing $68,250, $109,200, and $95,550, respectively. The partnership agreement states that profits
Selected information taken from the December 31, 2023, financial statements for Mesa Company is shown below for the year just ended:The accountant was not sure about how to handle a few transactions
Garda World Security Corporation has the following shares, taken from the equity section of its balance sheet dated December 31, 2023.During its first three years of operations, Garda World Security
Jenkins, Willis, and Trent invested $100,000, $175,000, and $225,000, arespectively, in a partnership. During its first year, the firm recorded profit of $300,000.RequiredPrepare entries to close the
On December 20, 2023, The Net Department Store sold a computer for $3,500 with a one-year warranty that covers parts and labour. Warranty expense was estimated at 2% of sales dollars. On March 2,
Jake, Sacha, and Brianne own a tour company called Adventure Sports. The partners share profit and losses in a 1:3:4 ratio. After lengthy disagreements among the partners and several unprofitable
Hammond Manufacturing Inc. was legally incorporated on January 2, 2023. Its articles of incorporation granted it the right to issue an unlimited number of common shares and 100,000 shares of $14.40
The balance sheet for QuickStream Inc. reported the following components of equity on December 31, 2023:The company completed these transactions during 2024:Required1. Prepare general journal entries
The balance sheet for Umi Sustainable Seafood Inc. reported the following components of equity on December 31, 2022:Required1. Prepare journal entries to record the transactions and closings for
Determine whether each characteristic describes a general partnership (GP), limited liability company (LLC), both, or neither.1. Must pay a business (corporate) income tax.2. When the business cannot
Amie and Lacey are partners. Lacey dies, and her son claims the right to take his mother’s place in the partnership. Does he have this right? Why?
Westby Corp., a high school uniform manufacturer, was authorized to issue an unlimited number of common shares. During January 2023, its first month of operations, the following selected transactions
Assume that the Jake, Sacha, and Brianne partnership of A & R Problem 11-1 is a limited partnership. Jake and Sacha are general partners and Brianne is a limited partner. How much of the
Jobs, Alford, and Norris formed the JAN Partnership to provide landscape design services in Edmonton, by making capital contributions of $150,000, $100,000, and $250,000, respectively, on January 7,
The balance sheet for Tactex Controls Inc., provincially incorporated in 2021, reported the following components of equity on December 31, 2022.Required1. Prepare journal entries to record the
Fast Cars Inc. was authorized to issue 50,000 $1.50 preferred shares and 300,000 common shares. During 2023, its first year of operations, the following selected transactions occurred:Jan. 1 5,500 of
Len Peters and Beau Silver form a partnership to operate a catering business, called A Catered Affair. Peters invests $20,000 cash and Silver invests $30,000 cash on March 1, 2023. Prepare the
Benson Inc. had a credit balance in Retained Earnings on December 31, 2023, of $48,000. During 2024, Benson recorded profit of $146,000 and declared and paid dividends of $47,000. During 2025, the
The December 31, 2023, equity section of ZoomZoom Inc.’s balance sheet appears below.RequiredAll the shares were issued on January 1, 2021 (when the corporation began operations). No dividends had
Pace Oil & Gas Corp. began operations in 2021. Its balance sheet reported the following components of equity on December 31, 2021.Required1. Prepare journal entries to record the transactions and
White Pear Inc., an organic soap manufacturer, showed the following equity information as at December 31, 2023:1. The preferred shares had sold for an average price of $36.00.2. The common shares had
Morris Inc. showed the following adjusted information on November 30, 2023, its second year-end:a. Prepare the appropriate closing entries.b. Prepare a statement of changes in equity for the year
Swift Current Company Equity Section of the Balance Sheet October 31, 2023RequiredAssume that the preferred are convertible into common at a rate of eight common shares for each share of preferred.
Peter Puck Inc. showed the following adjusted information on May 31, 2023, its second year-end:a. Prepare the appropriate closing entries.b. Prepare a statement of changes in equity for the year
Using the information in Exercise 12-16, prepare a classified balance sheet at December 31, 2023, and then answer each of the following questions (assume that the preferred shares are non-cumulative;
Refer to the financial statements for Recipe Unlimited Corporation (Recipe) in Appendix II, looking at the consolidated statements of changes in equity. What were the total cash dividends declared
Selected T-accounts for Jade Mineral Corporation at December 31, 2023, are duplicated below.Dividends were not paid during 2021 or 2022. Dividends of $4.80 per common share were declared and paid for
Velor Ltd., a patio gas heater company, showed the following adjusted information on August 31, 2023, its second year-end:a. Prepare the appropriate closing entries.b. Prepare a statement of changes
The equity section of the December 31, 2022, balance sheet for Delicious Alternative Desserts Inc. showed the following:The board of directors had not declared dividends for the past two years (2022
Fisher Inc. began operations on January 1, 2023. During its first year, $750,000 of common shares were issued and a loss of $28,000 was realized. In 2024, Fisher’s second year of operations, an
Earth Star Diamonds Inc. began a potentially lucrative mining operation on October 1, 2023. It is authorized to issue 100,000 shares of $0.60 cumulative preferred shares and 500,000 common
Turnbull Company had the following information for 2022 and 2023.What is Turnbull’s rate of return on common shareholders’ equity for 2023? Dec. 31, 2023 Dec. 31, 2022 Common shares $ 70,000 $
On October 3, 2023, Synthetic Inc, a cellphone protector company, issued 4,000 of its preferred shares for cash of $15 each. On November 19 the company issued 3,400 preferred shares in exchange for
Shareholders’ equity of Ernst Company consists of 80,000 shares of $5 par value, 8% cumulative preferred stock, and 250,000 shares of $1 par value common stock. Both classes of stock have been
The following adjusted trial balance information (with accounts in alphabetical order) for Willis Tour Co. Inc. as at December 31, 2023, was made available after its second year of
Cableserve Inc. has the following outstanding shares:15,000 shares, $5.40 cumulative preferred 35,000 shares, common During 2023, the company declared and paid $180,000 in dividends. Dividends were
The original income statements for ZoomMed Inc. presented the following information when they were first published in 2022, 2023, and 2024:The company also experienced some changes in the number of
Except for the earnings per share statistics, the 2024, 2023, and 2022 income statements for Ace Group Inc. were originally presented as follows:*No preferred shares have been issued.Required1.
SW Company provides the Equity & Liability information below for analysis. SW Company had net income of $389,050 in 2023 and $342,650 in 2022.Required1. Calculate the return on common share
Invisible Marketing Ventures had 186,000 shares outstanding on January 1, 2023, and issued an additional 24,000 shares during the year. The common shareholders’ equity was $5,841,000 at the end of
Sunray Solar Ltd. is a growing company with a hot new marketing plan. On January 1, 2023, it had 127,650 shares outstanding, and it issued an additional 44,500 shares during the year. The company
Foxburo Company expects to pay a $2.34 per share cash dividend this year on its common stock. The current market value of Foxburo stock is $32.50 per share. Compute the expected dividend yield. If a
Identify whether shareholders’ equity would increase, decrease, or be unaffected as a result of each separate transaction listed below.1. A stock dividend equal to 30% of the previously outstanding
On October 6, 2017, Western Farms Co. traded in an old tractor for a new one, receiving a $56,000 trade-in allowance and paying the remaining $164,000 in cash. The old tractor cost $190,000, and
Dynamic Express Inc. prepared the summary shown below regarding its investments on December 31, 2017, its year-end. Prepare the appropriate entry on December 31, 2017, to record the fair value
In 2017, DelCano Properties paid $540,000 for a tract of land on which two buildings were located. The plan was to demolish Building A and build a new factory (Building C) in its place. Building B
On April 14, 2017, Orchid Company, a new Thai Restaurant, purchased land and a building for a total price of $540,000, paying cash of $85,000 and borrowing the balance from the bank. The bank
At April 30, 2017, Hackney Building Products’ year-end, the balance sheet showed PPE information as detailed in the schedule below. The company calculates depreciation for partial periods using the
TechCom has provided the following selected account information, in alphabetical order, from its adjusted trial balance at October 31, 2017 (assume normal balances):Prepare the asset section of the
Kane Biotech was preparing the annual financial statements and, as part of the year-end procedures, assessed the assets and prepared the following alphabetized schedule based on adjusted values at
Macho Taco sold a food truck on March 1, 2017. The accounts showed adjusted balances on February 28, 2017, as follows:Required Record the sale of the food truck assuming the cash proceeds were:a.
On January 1, 2017, Bona Vista Co. purchased land, a building, equipment, and tools for a total price of $4,320,000, paying cash of $1,104,000 and borrowing the balance from the bank. The bank
Tundra Tours runs tundra buggy expeditions in northern Manitoba for tourists to catch a glimpse of the abundant caribou, polar bears, and other wildlife. Tundra purchased a tundra buggy on October
On January 1, 2017, Land’s End Construction purchased a used truck for $37,500. A new motor had to be installed to get the truck in good working order; the costs were $13,500 for the motor and
Patty’s Pies acquired a delivery truck on January 1, 2017, for $86,000. It is expected to last five years and then sell for about $16,000. Calculate depreciation for each year of the truck’s life
AbeCo, a luggage manufacturing company, borrowed $75,000 from the bank to purchase a machine that was estimated to produce 120,000 suitcases; its expected residual value is $15,000. During 2017 and

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