Questions and Answers of Fundamentals Of Advanced Accounting

Go online and find the City of Atlanta’s Comprehensive Annual Financial Report for the year ended June 30, 2020. Find the footnote related to ’Basis of Presentation’.Required:1. What
The partnership agreement of ABC Associates provides that income should be allocated in the following manner:1. Each partner receives interest of 20% of beginning capital.2. Sue receives a salary of
Bill and Jane share profits and losses in a 70:30 ratio. Mike is to be admitted into a partnership upon the investment of $14,000 for a one third capital interest. Account balances for Bill and Jane
An administrative section of the County Assessor’s Office of Mecklenburg County serves as the billing and collection agency for all property taxes assessed in Mecklenburg County. A charge of 1% of
Circus City issued an 8%, 10- year $2,000,000 bond to build a monorail mass transit system. The city received $1,754,217 cash from the bond issuance on January 1, 2025. The bond yield is 10%.
The following information was available about items that differed between the governmental funds and the government- wide statements. Assume that there are no internal service funds. The schedule of
The following information is available about items that differ between the governmental funds and the government-wide statements. Assume that there are no internal service funds. The schedule of
The following schedule of capital assets was prepared for Capital City.All capital acquisitions were made in a capital projects fund (and paid for with cash). An asset was sold by the general fund
On January 1, 2017, the city of Nashvegas issued an 8% annual, 10-year, $10,000 bond for $11,472 (an effective yield of 6%). The bonds become due on December 31, 2026. On June 30, 2025, the city of
On January 1, 2025, Metropolis City issued a 7%, 5-year, $100,000 general obligation bond for $96,007. The bond pays interest annually (on December 31) and was issued to yield 8%. The bond was issued
The town of Aberdeen authorized a fire station to be built at an estimated cost of $150,000. On January 1, 2025, 6% bonds with a par value of $150,000 were authorized and issued. Any difference
On June 1, 2025, the City of Cape May authorized the construction of a police station at an expected cost of $250,000. Financing will be provided through transfers from a Special Revenue Fund. The
The following transactions represent practical situations frequently encountered in accounting for municipal governments. Each transaction is independent of the others.1. The City Council of
The Village of Oakridge, which was incorporated recently, began financial operations on July 1, 2025, the beginning of its fiscal year. The following transactions occurred during this first fiscal
The City of Minden entered into the following transactions during the year 2026.1. A bond issue was authorized by vote to provide funds for the construction of a new municipal building, which it was
You have been engaged to examine the financial statements of the Town of Bridgeport for the year ended June 30, 2025. Your examination disclosed that, because of the inexperience of the town’s
The following events were recorded on the books of Mercy Hospital for the year ended December 31, 2025.1. Revenue from patient services totaled $16,000,000. The allowance for uncollectibles was
Preston Library, a nonprofit organization, presented the following statement of financial position and statement of activities for its fiscal year ended February 28, 2024.The following transactions
Jefferson Hospital received money from a donor to set up an endowment fund. The following information pertains to this contribution:During 20251. $2,000,000 was received to establish the fund. The
The following transactions of Beltville College transpired during 2025. The funds necessary are the Endowment Fund, the Annuity Fund, the Plant Fund— Unexpended, the Plant Fund— Investment in
A partial statement of financial position of Century University is shown below.During the fiscal year ended June 30, 2021, the following transactions occurred:1. A gift of $100,000 was received from
On January 1, 2025, a new Board of Directors was elected for Bradley Hospital. The new board switched to a different accountant. After reviewing the hospital’s books, the accountant decided that
A well- known celebrity sponsored a telethon for the Help for the Blind Foundation on November 1, 2025. Pledges in the amount of $1,000,000 were called in. Using similar telethon campaigns as a
Hastings College pooled the individual investments of three of its funds on December 31, 2024. The recorded value and the fair market value of the investments on December 31, 2024, are presented
The Franklin Public Library received a restricted contribution of $300,000 in 2025. The donor specified that the money must be used to acquire books of poetry written in the sixteenth century. As of
The December 31, 2025, statement of financial position for the Blood Donors of America Foundation is presented below.Additional information concerning the statement of financial position is as
Select the best answer choice for each of the following items:1. Which of the following receipts is properly recorded as unrestricted current funds on the books of a university?(a) Tuition.(b)
Three funds of the Leukemia Foundation, a nonprofit welfare organization, began an investment pool on January 1, 2026. The costs and fair market values on this date were as follows:During 2026, the
Select the best answer for each of the following items:1. An unrestricted pledge from an annual contributor to a NFP hospital made in December 2024 and paid in cash in March 2025 would generally be
Select the best answer for each of the following items:1. Which NNOs must record depreciation on exhaustible assets?(a) Hospitals.(b) VHWOs.(c) ONNOs.(d) All of the above.2. Which statement relating
Select the best answer for each of the following items:1. Cura Foundation, a voluntary health and welfare organization, supported by contributions from the general public, included the following
Consider the following information:1. On December 1, 2024, a U.S. firm plans to purchase a piece of equipment (with an asking price of 100,000 francs) in Switzerland during January of 2025. The
On November 15, 2024, Solanski Inc. imported 500,000 barrels of oil from an oil company in Venezuela. Solanski agreed to pay 50,000,000 bolivars on January 15, 2025. To ensure that the dollar outlay
Roland Brothers, Inc. purchased equipment from a British firm for £120,000 on April 1, 2024. To finance the purchase of the equipment, the president of the company signed a note for £120,000 with a
Journal Entries— Speculation Using a Forward Contract LO 5 Use the data given in Exercise 11- 9, except assume that on November 1, Sitco Products entered into a 90- day forward contract to buy
On October 1, 2024, Fairchange Corporation ordered some equipment from a supplier for 300,000 euros. Delivery and payment are to occur on November 15, 2024. The spot rates on October 1 and November
Sharon Myers, chief finance officer for Sitco Products, convinced the president of the company to enter into a 90- day forward contract to sell 900,000 Swedish kronas as a speculative venture. When
On December 1, 2024, Tuscano Corp. entered into a transaction to import raw materials from a foreign company. The account is to be settled on February 1 with the payment of 60,000 foreign currency
On December 1, 2024, King Company exported equipment that had cost $210,000 to a Brazilian company for 1,000,000 real. The account is to be settled on January 31, 2025. King Company is a calendar-
During December of the current year, Teletex Systems, Inc., a company based in Seattle, Washington, entered into the following transactions:Required:A. Prepare journal entries to record the
Crystal Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business dealings. The company uses a periodic inventory system and is on a
Pinta Company, a forklift manufacturer, owns 80% of the voting stock of Standard Company. On January 1, 2024, Pinta Company sold forklifts to Standard Company for $400,000. The forklifts, which
Pomeroy Corporation owns an 80% interest in Sherer Company and a 90% interest in Tampa Company. On January 2, 2024, Tampa Company sold equipment with a book value of $600,000 to Sherer Company for
Padilla Company acquired 90% of the outstanding common stock of Sanchez Company on June 30, 2024, for $426,000. On that date, Sanchez Company had retained earnings in the amount of $60,000, and the
Prather Company owns 80% of the common stock of Stone Company. The stock was purchased for $960,000 on January 1, 2022, when Stone Company’s retained earnings were $675,000. On January 1, 2024,
Platt Company acquired an 80% interest in Sloane Company when the retained earnings of Sloane Company were $300,000. On January 1, 2024, Sloane Company recorded a $250,000 gain on the sale to Platt
Prather Company owns 80% of the common stock of Stone Company. The stock was purchased for $960,000 on January 1, 2022, when Stone Company’s retained earnings were $675,000. On January 1, 2024,
Peck Company purchased Sanno Company common stock in a series of open- market cash purchases from 2022 through 2024 as follows:Sanno Company had 18,000 shares of $20 par value common stock
Sarko Company had 300,000 shares of $10 par value common stock outstanding from 2023 through 2026 and retained earnings balances as indicated below:Sarko Company declared no dividends during this
Papke Company acquired 85% of the common stock of Serbin Company in two separate cash transactions. The first purchase of 72,000 shares (60%) on January 1, 2023, cost $490,000. The second purchase,
Trial balances for Porter Company and its subsidiary, Spitz Company, as of December 31, 2024, follow:Porter Company made the following open- market purchase and sale of Spitz Company common stock:
The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as of December 31, 2024:Pyle Company made the following open- market purchase and sale of Stern Company common
The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as of December 31, 2024:The book value of Stern Company’s net assets on January 2, 2022, $600,000, approximated
On January 1, 2023, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At that time, Salem Company had capital stock of $550,000 and retained earnings of
On January 1, 2024, P Company purchased an 80% interest in S Company for $600,000, at which time S Company had retained earnings of $300,000 and capital stock of $350,000. Any difference between book
On January 1, 2024, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company’s stockholders’ equity consisted of the following:An
Pearson Company purchased a 100% interest in Sanders Company and a 90% interest in Taylor Company on January 2, 2024, for $800,000 and $1,300,000, respectively. The account balances and fair values
On January 1, 2024, Pump Company acquired all the outstanding common stock of Sound Company for $556,000 in cash. Financial data relating to Sound Company on January 1, 2024, are presented here:Sound
On January 2, 2023, Page Corporation acquired a 90% interest in Salcedo Company for $3,500,000. At that time Salcedo Company had capital stock of $2,250,000 and retained earnings of $1,250,000. The
Patten Corporation acquired an 85% interest in Savage Company for $3,100,000 on January 1, 2024. On this date, the balances in Savage Company’s capital stock and retained earnings accounts were
On January 1, 2023, Point Corporation acquired an 80% interest in Sharp Company for $2,000,000. At that time Sharp Company had capital stock of $1,500,000 and retained earnings of $700,000. The book
Padilla Company purchased 80% of the common stock of Sanoma Company in the open market on January 1, 2023, paying $31,000 more than the book value of the interest acquired. The difference between
On January 1, 2024, Perini Company purchased an 85% interest in Silvas Company for $400,000. On this date, Silvas Company had common stock of $90,000 and retained earnings of $210,000. An examination
On January 1, 2023, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At that time, Salem Company had capital stock of $550,000 and retained earnings of
A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2024. The capital stock balance of Saxton Corporation was $3,000,000 on this date, and the balance in retained
A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2024. The capital stock balance of Saxton Corporation was $3,000,000 on this date, and the balance in retained
On January 1, 2024, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company’s stockholders’ equity consisted of the following:An
On January 2, 2024, Press Company purchased on the open market 90% of the outstanding common stock of Sensor Company for $800,000 cash. Balance sheets for Press Company and Sensor Company on January
On January 1, 2022, Parker Company purchased 90% of the outstanding common stock of Sid Company for $180,000. At that time, Sid’s stockholders’ equity consisted of common stock, $120,000; other
December 31, 2024, trial balances for Pledge Company and its subsidiary Stom Company follow:Pledge Company purchased 72,000 shares of Stom Company’s common stock on January 1, 2021, for $300,000.
The consolidated income statement for the year December 31, 2024, and comparative balance sheets for 2023 and 2024 for Parks Company and its 90% owned subsidiary SCR, Inc. are as follows:SCR, Inc.
On January 1, 2023, Pam Company purchased an 85% interest in Shaw Company for $540,000. On this date, Shaw Company had common stock of $400,000 and retained earnings of $140,000. An examination of
A consolidated income statement for 2023 and comparative consolidated balance sheets for 2022 and 2023 for P Company and its 80% owned subsidiary follow:Other information:1. Equipment depreciation
Badco Inc. purchased a 90% interest in Lazytoo Company for $600,000 cash on January 1, 2026. Any excess of implied over book value was attributed to depreciable assets with a 15- year remaining life
On January 1, 2024, Palmero Company purchased an 80% interest in Santos Company for $2,800,000, at which time Santos Company had retained earnings of $1,000,000 and capital stock of $500,000. On the
On January 1, 2024, Paxton Company purchased a 70% interest in Sagon Company for $1,300,000, at which time Sagon Company had retained earnings of $500,000 and capital stock of $1,000,000. On January
On January 1, 2025, Payne Corporation purchased a 75% interest in Salmon Company for $585,000. A summary of Salmon Company’s balance sheet on that date revealed the following:The equipment had an
On January 1, 2025, P Company purchased equipment from its 80% owned subsidiary for $600,000. The carrying value of the equipment on the books of S Company was $450,000. The equipment had a remaining
Pearson Company owns 90% of the outstanding common stock of Spring Company. On January 1, 2024, Spring Company sold equipment to Pearson Company for $200,000. Spring Company had purchased the
Pico Company, a truck manufacturer, owns 90% of the voting stock of Seward Company. On January 1, 2024, Pico Company sold trucks to Seward Company for $350,000. The trucks, which represented
On January 1, 2024, Polar Company, which owns an 80% interest in Superior Company, sold Superior Company equipment with a book value of $400,000 for $560,000. The equipment had an estimated remaining
On January 1, 2024, Sherwood Company, an 80% owned subsidiary of Paradise Company, sold to Paradise Company equipment with a book value of $600,000 for $840,000. The equipment had an estimated
Paque Corporation owns 90% of the common stock of Segal Company. The stock was purchased for $810,000 on January 1, 2022, when Segal Company’s retained earnings were $150,000. Financial data for
Pruitt Corporation owns 90% of the common stock of Sedbrook Company. The stock was purchased for $540,000 on January 1, 2022, when Sedbrook Company’s retained earnings were $100,000. Preclosing
On January 1, 2022, Paul Company purchased 80% of the voting stock of Simon Company for $1,360,000 when Simon Company had retained earnings and capital stock in the amounts of $450,000 and
Selby had capital stock outstanding of $400,000 and retained earnings of $400,000. The fair value of Selby Company’s assets and liabilities is equal to their book value except for the
On January 1, 2024, Pearce Company purchased an 80% interest in the capital stock of Searl Company for $2,460,000. At that time, Searl Company had capital stock of $1,500,000 and retained earnings of
Pruitt Corporation owns 90% of the common stock of Sedbrook Company. The stock was purchased for $625,500 on January 1, 2022, when Sedbrook Company’s retained earnings were $95,000. Preclosing
On January 1, 2022, Perry Company purchased 80% of Selby Company for $990,000. At that time Selby had capital stock outstanding of $350,000 and retained earnings of $375,000. The fair value of Selby
Paque Corporation owns 90% of the common stock of Segal Company. The stock was purchased for $810,000 on January 1, 2022, when Segal Company’s retained earnings were $150,000. Financial data for
Shell Company, an 85% owned subsidiary of Plaster Company, sells merchandise to Plaster Company at a markup of 20% of selling price. During 2024 and 2025, intercompany sales amounted to $442,500 and
Pace Company owns 85% of the outstanding common stock of Sand Company and all the outstanding common stock of Star Company. During 2025, the affiliates engaged in intercompany sales as follows:The
Peer Company owns 80% of the common stock of Seacrest Company. Peer Company sells merchandise to Seacrest Company at 25% above its cost. During 2024 and 2025 such sales amounted to $265,000 and
Payne Company owns all the outstanding common stock of Sierra Company and 80% of the outstanding common stock of Santa Fe Company. The amount of intercompany profit included in the inventories of
On January 2, 2024, Patten Company purchased a 90% interest in Sterling Company for $1,400,000. At that time Sterling Company had capital stock outstanding of $800,000 and retained earnings of
ton Company at 20% above cost. During 2024 and 2025, such sales amounted to $450,000 and $486,000, respectively. At the end of each year, Sheraton Company had in its inventory one- third of the
Penn Company owns a 90% interest in Salvador Company and an 80% interest in Sencal Company. Profit remaining in ending inventories from intercompany sales for 2024 and 2025 is indicated
Peabody Company owns 90% of the outstanding capital stock of Sloane Company. During 2024 and 2025 Sloane Company sold merchandise to Peabody Company at a markup of 25% of selling price. The selling
On January 1, 2025, Pruitt Company issued 25,500 shares of its common stock ($2 par) in exchange for 85% of the outstanding common stock of Shah Company. Pruitt’s common stock had a fair value of
On January 1, 2024, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company’s stockholders’ equity consisted of the following:An

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