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intermediate accounting reporting
Intermediate Accounting 16th Edition Donald E. Kieso - Solutions
(L03) Harding Corporation has the following accounts included in its December 31, 2017, trial balance: Accounts Receivable $110,000, Inventory $290,000, Allowance for Doubtful Accounts $8,000, Patents $72,000, Prepaid Insurance $9,500, Accounts Payable $77,000, and Cash $30,000. Prepare the current
(L03) Koch Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2017: Cash$7,000, Land $40,000, Patents $12,500, Accounts Receivable $90,000, Prepaid Insurance $5,200, Inventory $30,000, Allowance for Doubtful Accounts $4,000, and Equity Investments
(L03) Included in Outkast Company’s December 31, 2017, trial balance are the following accounts: Prepaid Rent$5,200, Debt Investments (to be held to maturity until 2020) $56,000, Unearned Fees $17,000, Land (held for investment) $39,000, and Notes Receivable (long-term) $42,000. Prepare the
(L03) Lowell Company’s December 31, 2017, trial balance includes the following accounts: Inventory $120,000, Buildings$207,000, Accumulated Depreciation—Equipment $19,000, Equipment $190,000, Land (held for investment) $46,000, Accumulated Depreciation—Buildings $45,000, Land $71,000, and
(L03) Crane Corporation has the following accounts included in its December 31, 2017, trial balance: Equity Investments(trading) $21,000, Goodwill $150,000, Prepaid Insurance $12,000, Patents $220,000, and Franchises $130,000. Prepare the intangible assets section of the balance sheet.
(L03) Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2017: Prepaid Rent $12,000, Goodwill $50,000, Franchise Fees Receivable $2,000, Franchises $47,000, Patents $33,000, and Trademarks$10,000. Prepare the intangible assets section of the
(L03) Thomas Corporation’s adjusted trial balance contained the following liability accounts at December 31, 2017:Bonds Payable (due in 3 years) $100,000, Accounts Payable $72,000, Notes Payable (due in 90 days) $22,500, Salaries and Wages Payable $4,000, and Income Taxes Payable $7,000. Prepare
(L03) Use the information presented in
for Adams Company to prepare the long-term liabilities section of the balance sheet.
(L03) Hawthorn Corporation’s adjusted trial balance contained the following accounts at December 31, 2017:Retained Earnings $120,000, Common Stock $750,000, Bonds Payable $100,000, Paid-in Capital in Excess of Par—Common Stock$200,000, Goodwill $55,000, Accumulated Other Comprehensive Loss
(L03) Stowe Company’s December 31, 2017, trial balance includes the following accounts: Investment in Common Stock $70,000, Retained Earnings $114,000, Trademarks $31,000, Preferred Stock $152,000, Common Stock $55,000, Deferred Income Taxes $88,000, Paid-in Capital in Excess of Par—Common
(L05) Ames Company reported 2017 net income of $151,000. During 2017, accounts receivable increased by $13,000 and accounts payable increased by $9,500. Depreciation expense was $44,000. Prepare the cash flows from operating activities section of the statement of cash flows.
(L05) Use the information presented in
for Martinez Corporation to compute the net cash used (provided) by financing activities.
(L06) Using the information in BE5-14, determine Martinez’s free cash flow, assuming that it reported net cash provided by operating activities of $400,000.
(L02) Candice Willis will invest $30,000 today. She needs $150,000 in 21 years. What annual interest rate must she earn?
(L02) 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?
(L03) Steve Madison needs $250,000 in 10 years. How much must he invest at the end of each year, at 5% interest, to meet his needs?
(L02) Refer to the data in BE6-7. Assuming quarterly compounding of amounts invested at 8%, how much of John Fillmore’s inheritance must be invested to have enough at retirement to buy the boat?
(L03) Morgan Freeman is investing $9,069 at the end of each year in a fund that earns 5% interest. In how many years will the fund be at $100,000?
(L04) 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?
(L04) Maria Alvarez is investing $300,000 in a fund that earns 4% interest compounded annually. What equal amounts can Maria withdraw at the end of each of the next 20 years?
(L03) Adams Inc. will deposit $30,000 in a 6% fund at the end of each year for 8 years beginning December 31, 2017.What amount will be in the fund immediately after the last deposit?
(L04) Consider the loan in BE6-16. What payments must Zach Taylor make to settle the loan at the same interest rate but with the 6 payments beginning on the day the loan is signed?
(L01) Kraft Enterprises owns the following assets at December 31, 2017.Cash in bank—savings account 68,000 Checking account balance 17,000 Cash on hand 9,300 Postdated checks 750 Cash refund due from IRS 31,400 Certifi cates of deposit (180-day) 90,000 What amount should be reported as cash?
(L02) Restin Co. uses the gross method to record sales made on credit. On June 1, 2017, it made sales of $50,000 with terms 3/15, n/45. On June 12, 2017, Restin received full payment for the June 1 sale. Prepare the required journal entries for Restin Co.
(L02) Use the information from BE7-2, assuming Restin Co. uses the net method to account for cash discounts. Prepare the required journal entries for Restin Co.
(L03) Wilton, Inc. had net sales in 2017 of $1,400,000. At December 31, 2017, before adjusting entries, the balances in selected accounts were Accounts Receivable $250,000 debit, and Allowance for Doubtful Accounts $2,400 credit. If Wilton estimates that 8% of its receivables will prove to be
for Wilton, Inc.(a) Instead of an Allowance for Doubtful Accounts Balance of $2,400 credit, the balance was $1,900 debit. Assume that 10%of accounts receivable will prove to be uncollectible. Prepare the entry to record bad debt expense.(b) Instead of estimating uncollectibles based on a percentage
(L04) Milner Family Importers sold goods to Tung Decorators for $30,000 on November 1, 2017, accepting Tung’s$30,000, 6-month, 6% note. Prepare Milner’s November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest.
(L06) On October 1, 2017, Chung, Inc. assigns $1,000,000 of its accounts receivable to Seneca National Bank as collateral for a $750,000 note. The bank assesses a finance charge of 2% of the receivables assigned and interest on the note of 9%. Prepare the October 1 journal entries for both Chung
(L06) Use the information in
for Wood. Assume that the receivables are sold with recourse. Prepare the journal entry for Wood to record the sale, assuming that the recourse liability has a fair value of $7,500.
(L06) Arness Woodcrafters sells $250,000 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a finance charge of 5% and retains an amount equal to 4% of accounts receivable. Arness estimates the fair value of the recourse liability to be $8,000. Prepare the
(L06) Use the information presented in
for Arness Woodcrafters but assume that the recourse liability has a fair value of $4,000, instead of $8,000. Prepare the journal entry and discuss the effects of this change in the value of the recourse liability on Arness’s financial statements.
(L07) Recent financial statements of General Mills, Inc. report net sales of $12,442,000,000. Accounts receivable are$912,000,000 at the beginning of the year and $953,000,000 at the end of the year. Compute General Mills’ accounts receivable turnover. Compute General Mills’ average collection
(L08) Use the information presented in
for Horton Corporation. Prepare any entries necessary to make Horton’s accounting records correct and complete.
(L01) Included in the December 31 trial balance of Rivera Company are the following assets.Cash $ 190,000 Work in process $200,000 Equipment (net) 1,100,000 Accounts receivable (net) 400,000 Prepaid insurance 41,000 Patents 110,000 Raw materials 335,000 Finished goods 170,000 Prepare the current
(L03) Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available.Units Unit Cost Total Cost April 1 inventory 250 $10 $ 2,500 April 15 purchase 400 12 4,800 April 23 purchase 350 13 4,550 1,000 $11,850 Compute the April 30
(L03) Data for Amsterdam Company are presented in BE8-4. Compute the April 30 inventory and the April cost of goods sold using the FIFO method.
(L03) Data for Amsterdam Company are presented in BE8-4. Compute the April 30 inventory and the April cost of goods sold using the LIFO method.
(L04) Midori Company had ending inventory at end-of-year prices of $100,000 at December 31, 2016; $119,900 at December 31, 2017; and $134,560 at December 31, 2018. The year-end price indexes were 100 at 12/31/16, 110 at 12/31/17, and 116 at 12/31/18. Compute the ending inventory for Midori Company
(L04) Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow.Year Ended December 31 Inventory at Current-Year Cost Price Index 2016 $19,750 100 2017 22,140 108 2018 25,935 114 Compute the value of the 2017 and 2018 inventories using the
(L05) Bienvenu Enterprises reported cost of goods sold for 2017 of $1,400,000 and retained earnings of $5,200,000 at December 31, 2017. Bienvenu later discovered that its ending inventories at December 31, 2016 and 2017, were overstated by$110,000 and $35,000, respectively. Determine the corrected
(L01) Presented below is information related to Rembrandt Inc.’s inventory.(per unit) Skis Boots Parkas Historical cost $190.00 $106.00 $53.00 Selling price 212.00 145.00 73.75 Cost to sell 19.00 8.00 2.50 Cost to complete 32.00 29.00 21.25 Determine the following: (a) the net realizable value
(L01) Floyd Corporation has the following four items in its ending inventory.Item Cost Net Realizable Value (NRV)Jokers $2,000 $2,100 Penguins 5,000 4,950 Riddlers 4,400 4,625 Scarecrows 3,200 3,830 Determine the following: (a) the LCNRV for each item, and (b) the amount of write-down, if any,
(L01) Kumar Inc. uses a perpetual inventory system. At January 1, 2017, inventory was $214,000,000 at both cost and net realizable value. At December 31, 2017, the inventory was $286,000,000 at cost and $265,000,000 at net realizable value. Prepare the entry under (a) the cost-of-goods-sold method
(L02) Presented below is information related to Rembrandt Inc.’s inventory, assuming Rembrandt uses lower-of-LIFO cost-or-market.(per unit) Skis Boots Parkas Historical cost $190.00 $106.00 $53.00 Selling price 212.00 145.00 73.75 Cost to distribute 19.00 8.00 2.50 Current replacement cost 203.00
(L02) Kumar Inc. uses LIFO inventory costing. At January 1, 2017, inventory was $214,000 at both cost and market value. At December 31, 2017, the inventory was $286,000 at cost and $265,000 at market value. Prepare the necessary December 31 entry under (a) the cost-of-goods-sold method and (b) the
(L03) Bell, Inc. buys 1,000 computer game CDs from a distributor who is discontinuing those games. The purchase price for the lot is $8,000. Bell will group the CDs into three price categories for resale, as indicated below.Group No. of CDs Price per CD 1 100 $ 5 2 800 10 3 100 15 Determine the
(L03) Kemper Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2018 at a cost of $1,000,000. At December 31, 2017, the raw materials to be purchased have a market value of$950,000. Prepare any necessary December 31, 2017, entry.
(L03) Use the information for Kemper Company from BE9-7. In 2018, Kemper paid $1,000,000 to obtain the raw materials which were worth $950,000. Prepare the entry to record the purchase.
(L04) Fosbre Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $150,000, and purchases for January through April totaled $500,000. Sales revenue for the same period was $700,000. Fosbre’s normal gross profit percentage is 35% on sales. Using the gross profit
(L05) Boyne Inc. had beginning inventory of $12,000 at cost and $20,000 at retail. Net purchases were $120,000 at cost and $170,000 at retail. Net markups were $10,000, net markdowns were $7,000, and sales revenue was $147,000. Compute ending inventory at cost using the conventional retail method.
(L06) In its 2015 annual report, Gap Inc. reported inventory of $1,889 million on January 31, 2015, and $1,928 million on February 1, 2014, cost of goods sold of $10,146 million for 2015, and net sales of $16,435 million. Compute Gap’s inventory turnover and the average days to sell inventory for
(L07) Use the information for Boyne Inc. from BE9-10. Compute ending inventory at cost using the LIFO retail method.B E9-13 (L07) Use the information for Boyne Inc. from BE9-10, and assume the price level increased from 100 at the beginning of the year to 115 at year-end. Compute ending inventory
(L01) Previn Brothers Inc. purchased land at a price of $27,000. Closing costs were $1,400. An old building was removed at a cost of $10,200. What amount should be recorded as the cost of the land?
(L03) Use the information for Hanson Company from
and BE10-3. Compute avoidable interest for Hanson Company.
(L04) Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero-interest-bearing note to Equinox Inc.The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck.
(L04) Navajo Corporation traded a used truck (cost $20,000, accumulated depreciation $18,000) for a small computer with a fair value of $3,300. Navajo also paid $500 in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)
(L04) Use the information for Navajo Corporation from BE10-8. Prepare the journal entry to record the exchange, assuming the exchange lacks commercial substance.
(L06) Ottawa Corporation owns machinery that cost $20,000 when purchased on July 1, 2014. Depreciation has been recorded at a rate of $2,400 per year, resulting in a balance in accumulated depreciation of $8,400 at December 31, 2017. The machinery is sold on September 1, 2018, for $10,500. Prepare
(L06) Use the information presented for Ottawa Corporation in BE10-14, but assume the machinery is sold for$5,200 instead of $10,500. Prepare journal entries to (a) update depreciation for 2018 and (b) record the sale.
(L01) Fernandez Corporation purchased a truck at the beginning of 2017 for $50,000. The truck is estimated to have a salvage value of $2,000 and a useful life of 160,000 miles. It was driven 23,000 miles in 2017 and 31,000 miles in 2018. Compute depreciation expense for 2017 and 2018.
(L01) Lockard Company purchased machinery on January 1, 2017, for $80,000. The machinery is estimated to have a salvage value of $8,000 after a useful life of 8 years. (a) Compute 2017 depreciation expense using the straight-line method.(b) Compute 2017 depreciation expense using the straight-line
(L01) Use the information for Lockard Company given in BE11-2. (a) Compute 2017 depreciation expense using the sum-of-the-years’-digits method. (b) Compute 2017 depreciation expense using the sum-of-the-years’-digits method, assuming the machinery was purchased on April 1, 2017.
(L01) Use the information for Lockard Company given in BE11-2. (a) Compute 2017 depreciation expense using the double-declining-balance method. (b) Compute 2017 depreciation expense using the double-declining-balance method, assuming the machinery was purchased on October 1, 2017.
(L02) Dickinson Inc. owns the following assets.Asset Cost Salvage Estimated Useful Life A $70,000 $7,000 10 years B 50,000 5,000 5 years C 82,000 4,000 12 years Compute the composite depreciation rate and the composite life of Dickinson’s assets.
(L02) Holt Company purchased a computer for $8,000 on January 1, 2016. Straight-line depreciation is used, based on a 5-year life and a $1,000 salvage value. In 2018, the estimates are revised. Holt now feels the computer will be used until December 31, 2019, when it can be sold for $500. Compute
(L05) In its 2014 annual report, Campbell Soup Company reports beginning-of-the-year total assets of $8,113 million, end-of-the-year total assets of $8,323 million, total sales of $8,268 million, and net income of $807 million. (a) Compute Campbell’s asset turnover. (b) Compute Campbell’s
(L01,2) Use the information provided in BE12-1. Assume that at January 1, 2019, the carrying amount of the patent on Taylor Swift’s books is $43,200. In January, Taylor Swift spends $24,000 successfully defending a patent suit. Taylor Swift still feels the patent will be useful until the end of
(L01,2) Stephan Curry, Inc., spent $68,000 in attorney fees while developing the trade name of its new product, the Mean Bean Machine. Prepare the journal entries to record the $68,000 expenditure and the first year’s amortization, using an 8-year life.
(L01,2) Gershwin Corporation obtained a franchise from Sonic Hedgehog Inc. for a cash payment of $120,000 on April 1, 2017. The franchise grants Gershwin the right to sell certain products and services for a period of 8 years. Prepare Gershwin’s April 1 journal entry and December 31 adjusting
(L01,2,5) Nieland Industries had one patent recorded on its books as of January 1, 2017. This patent had a book value of $288,000 and a remaining useful life of 8 years. During 2017, Nieland incurred research and development costs of$96,000 and brought a patent infringement suit against a
(L01,2,5) Sinise Industries acquired two copyrights during 2017. One copyright related to a textbook that was developed internally at a cost of $9,900. This textbook is estimated to have a useful life of 3 years from September 1, 2017, the date it was published. The second copyright (a history
(L05) R. Wilson Corporation commenced operations in early 2017. The corporation incurred $60,000 of costs such as fees to underwriters, legal fees, state fees, and promotional expenditures during its formation. Prepare journal entries to record the $60,000 expenditure and 2017 amortization, if any.
(L05) Treasure Land Corporation incurred the following costs in 2017.Cost of laboratory research aimed at discovery of new knowledge $120,000 Cost of testing in search for product alternatives 100,000 Cost of engineering activity required to advance the design of a product to the manufacturing
(L05) Indicate whether the following items are capitalized or expensed in the current year.(a) Purchase cost of a patent from a competitor. (c) Organizational costs.(b) Research and development costs. (d) Costs incurred internally to create goodwill.
(L01) Upland Company borrowed $40,000 on November 1, 2017, by signing a $40,000, 9%, 3-month note. Prepare Upland’s November 1, 2017, entry; the December 31, 2017, annual adjusting entry; and the February 1, 2018, entry.
(L01) Takemoto Corporation borrowed $60,000 on November 1, 2017, by signing a $61,350, 3-month, zero-interestbearing note. Prepare Takemoto’s November 1, 2017, entry; the December 31, 2017, annual adjusting entry; and the February 1, 2018, entry.
(L01) Kasten Inc. provides paid vacations to its employees. At December 31, 2017, 30 employees have each earned 2 weeks of vacation time. The employees’ average salary is $500 per week. Prepare Kasten’s December 31, 2017, adjusting entry.
(L01) Mayaguez Corporation provides its officers with bonuses based on net income. For 2017, the bonuses total$350,000 and are paid on February 15, 2018. Prepare Mayaguez’s December 31, 2017, adjusting entry and the February 15, 2018, entry.
(L02) At December 31, 2017, Burr Corporation owes $500,000 on a note payable due February 15, 2018. (a) If Burr refinances the obligation by issuing a long-term note on February 14 and using the proceeds to pay off the note due February 15, how much of the $500,000 should be reported as a current
(L03) Leppard Corporation sells DVD players. The corporation also offers its customers a 4-year warranty contract.During 2017, Leppard sold 20,000 warranty contracts at $99 each. The corporation spent $180,000 servicing warranties during 2017. Prepare Leppard’s journal entries for (a) the sale of
(L03) Wynn Company offers a set of building blocks to customers who send in 3 UPC codes from Wynn cereal, along with 50¢. The block sets cost Wynn $1.10 each to purchase and 60¢ each to mail to customers. During 2017, Wynn sold 1,200,000 boxes of cereal. The company expects 30% of the UPC codes
(L01) The Colson Company issued $300,000 of 10% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds are issued at face value. Prepare Colson’s journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c)
(L01) Assume the bonds in
were issued at 98. Prepare the journal entries for (a) January 1, (b) July 1, and(c) December 31. Assume The Colson Company records straight-line amortization semiannually.
were issued at 103. Prepare the journal entries for (a) January 1, (b) July 1, and(c) December 31. Assume The Colson Company records straight-line amortization semiannually.
(L01) Devers Corporation issued $400,000 of 6% bonds on May 1, 2017. The bonds were dated January 1, 2017, and mature January 1, 2020, with interest payable July 1 and January 1. The bonds were issued at face value plus accrued interest. Prepare Devers’s journal entries for (a) the May 1
were issued for $644,636 and the effective-interest rate is 6%. Prepare the company’s journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.
(L01) Teton Corporation issued $600,000 of 7% bonds on November 1, 2017, for $644,636. The bonds were dated November 1, 2017, and mature in 10 years, with interest payable each May 1 and November 1. Teton uses the effective-interest method with an effective rate of 6%. Prepare Teton’s December
(L02) On January 1, 2017, Henderson Corporation redeemed $500,000 of bonds at 99. At the time of redemption, the unamortized premium was $15,000. Prepare the corporation’s journal entry to record the reacquisition of the bonds.
(L03) Coldwell, Inc. issued a $100,000, 4-year, 10% note at face value to Flint Hills Bank on January 1, 2017, and received $100,000 cash. The note requires annual interest payments each December 31. Prepare Coldwell’s journal entries to record (a) the issuance of the note and (b) the December 31
(L03) Samson Corporation issued a 4-year, $75,000, zero-interest-bearing note to Brown Company on January 1, 2017, and received cash of $47,664. The implicit interest rate is 12%. Prepare Samson’s journal entries for (a) the January 1 issuance and (b) the December 31 recognition of interest.
(L04) Shonen Knife Corporation has elected to use the fair value option for one of its notes payable. The note was issued at an effective rate of 11% and has a carrying value of $16,000. At year-end, Shonen Knife’s borrowing rate (credit risk)has declined; the fair value of the note payable is
(L05) At December 31, 2017, Hyasaki Corporation has the following account balances:Bonds payable, due January 1, 2026 $2,000,000 Discount on bonds payable 88,000 Interest payable 80,000 Show how the above accounts should be presented on the December 31, 2017, balance sheet, including the proper
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