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intermediate accounting reporting
Intermediate Accounting 16th Edition Donald E. Kieso - Solutions
(L01) Buttercup Corporation issued 300 shares of $10 par value common stock for $4,500. Prepare Buttercup’s journal entry.
(L01,2) Wilco Corporation has the following account balances at December 31, 2017.Common stock, $5 par value $ 510,000 Treasury stock 90,000 Retained earnings 2,340,000 Paid-in capital in excess of par—common stock 1,320,000 Prepare Wilco’s December 31, 2017, stockholders’ equity section.
(L01) On February 1, 2017, Buffalo Corporation issued 3,000 shares of its $5 par value common stock for land worth$31,000. Prepare the February 1, 2017, journal entry.
(L01) Hinges Corporation issued 500 shares of $100 par value preferred stock for $61,500. Prepare Hinges’s journal entry.
(L03) Cole Inc. owns shares of Marlin Corporation stock. At December 31, 2017, the securities were carried in Cole’s accounting records at their cost of $875,000, which equals their fair value. On September 21, 2018, when the fair value of the securities was $1,200,000, Cole declared a property
(L03) Graves Mining Company declared, on April 20, a dividend of $500,000 payable on June 1. Of this amount,$125,000 is a return of capital. Prepare the April 20 and June 1 entries for Graves.
(L05) Nottebart Corporation has outstanding 10,000 shares of $100 par value, 6% preferred stock and 60,000 shares of $10 par value common stock. The preferred stock was issued in January 2017, and no dividends were declared in 2017 or 2018.In 2019, Nottebart declares a cash dividend of $300,000.
(L01) Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2017, when the unamortized discount is $30,000 and the market price of the stock is $21 per share. Record the conversion using the
(L03) On January 1, 2017, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of Barwood’s $5 par value common stock at $50 per share at any time during the next 5 years. The market price of the stock is $65 per share on the date of
(L03) Refer to the data for Barwood Corporation in BE16-6. Repeat the requirements assuming that instead of options, Barwood granted 2,000 shares of restricted stock.
(L03) On January 1, 2017 (the date of grant), Lutz Corporation issues 2,000 shares of restricted stock to its executives.The fair value of these shares is $75,000, and their par value is $10,000. The stock is forfeited if the executives do not complete 3 years of employment with the company.
(L04) Kalin Corporation had 2017 net income of $1,000,000. During 2017, Kalin paid a dividend of $2 per share on 100,000 shares of preferred stock. During 2017, Kalin had outstanding 250,000 shares of common stock. Compute Kalin’s 2017 earnings per share.
(L04) Douglas Corporation had 120,000 shares of stock outstanding on January 1, 2017. On May 1, 2017, Douglas issued 60,000 shares. On July 1, Douglas purchased 10,000 treasury shares, which were reissued on October 1. Compute Douglas’s weighted-average number of shares outstanding for 2017.
(L04) The 2017 income statement of Wasmeier Corporation showed net income of $480,000 and a loss from discontinued operations of $120,000. Wasmeier had 100,000 shares of common stock outstanding all year. Prepare Wasmeier’s income statement presentation of earnings per share.
(L05) Rockland Corporation earned net income of $300,000 in 2017 and had 100,000 shares of common stock outstanding throughout the year. Also outstanding all year was $800,000 of 9% bonds, which are convertible into 16,000 shares of common. Rockland’s tax rate is 40%. Compute Rockland’s 2017
(L05) DiCenta Corporation reported net income of $270,000 in 2017 and had 50,000 shares of common stock outstanding throughout the year. Also outstanding all year were 5,000 shares of cumulative preferred stock, each convertible into 2 shares of common. The preferred stock pays an annual dividend
(L06) Ferraro, Inc. established a stock-appreciation rights (SARs) program on January 1, 2017, which entitles executives to receive cash at the date of exercise for the difference between the market price of the stock and the pre-established price of $20 on 5,000 SARs. The required service period
(L01) Garfield Company purchased, on January 1, 2017, as a held-to-maturity investment, $80,000 of the 9%, 5-year bonds of Chester Corporation for $74,086, which provides an 11% return. Prepare Garfield’s journal entries for (a) the purchase of the investment, and (b) the receipt of annual
(L01) Use the information from
but assume the bonds are purchased as an available-for-sale security. Prepare Garfield’s journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and(c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value
(L01) Hendricks Corporation purchased trading investment bonds for $50,000 at par. At December 31, Hendricks received annual interest of $2,000, and the fair value of the bonds was $47,400. Prepare Hendricks’ journal entries for (a) the purchase of the investment, (b) the interest received, and
(L02) Fairbanks Corporation purchased 400 shares of Sherman Inc. common stock for $13,200 (Fairbanks does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share. Prepare Fairbanks’ journal
but assume the stock is nonmarketable. Prepare Fairbanks’ journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment, if any.
(L02) Cleveland Company has a stock portfolio valued at $4,000. Its cost was $3,300. If the Fair Value Adjustment account has a debit balance of $200, prepare the journal entry at year-end.
(L02,4) The following information relates to Moran Co. for the year ended December 31, 2017: net income $1,245.7 million; unrealized holding loss of $10.9 million related to available-for-sale debt securities during the year; accumulated other comprehensive income of $57.2 million on December 31,
(L04) Hillsborough Co. has a held-to-maturity investment in the bonds of Schuyler Corp. with a carrying value of $70,000. Hillsborough determined that due to poor economic prospects for Schuyler, the bonds have decreased in value to$60,000. It is determined that this loss in value is uncollectible.
(L04) Presented below are two independent cases related to available-for-sale debt investments.Case 1 Case 2 Amortized cost $40,000 $100,000 Fair value 30,000 110,000 Expected credit losses 25,000 92,000 For each case, determine the amount of impairment loss, if any.
(L01) In 2017, Amirante Corporation had pretax financial income of $168,000 and taxable income of $120,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 40%.Compute the amount to be reported as income taxes payable at
(L01) Oxford Corporation began operations in 2017 and reported pretax financial income of $225,000 for the year.Oxford’s tax depreciation exceeded its book depreciation by $40,000. Oxford’s tax rate for 2017 and years thereafter is 30%. In its December 31, 2017, balance sheet, what amount of
(L01,2) Using the information from BE19-2, assume this is the only difference between Oxford’s pretax financial income and taxable income. Prepare the journal entry to record the income tax expense, deferred income taxes, and income taxes payable, and show how the deferred tax liability will be
(L01,2) At December 31, 2017, Appaloosa Corporation had a deferred tax liability of $25,000. At December 31, 2018, the deferred tax liability is $42,000. The corporation’s 2018 current tax expense is $48,000. What amount should Appaloosa report as total 2018 income tax expense?
(L01,2) At December 31, 2017, Suffolk Corporation had an estimated warranty liability of $105,000 for accounting purposes and $0 for tax purposes. (The warranty costs are not deductible until paid.) The effective tax rate is 40%. Compute the amount Suffolk should report as a deferred tax asset at
(L01,2) At December 31, 2017, Percheron Inc. had a deferred tax asset of $30,000. At December 31, 2018, the deferred tax asset is $59,000. The corporation’s 2018 current tax expense is $61,000. What amount should Percheron report as total 2018 income tax expense?
(L01,2) At December 31, 2017, Hillyard Corporation has a deferred tax asset of $200,000. After a careful review of all available evidence, it is determined that it is more likely than not that $60,000 of this deferred tax asset will not be realized. Prepare the necessary journal entry.
(L01,2) Mitchell Corporation had income before income taxes of $195,000 in 2017. Mitchell’s current income tax expense is $48,000, and deferred income tax expense is $30,000. Prepare Mitchell’s 2017 income statement, beginning with Income before income taxes.
(L01,2) Shetland Inc. had pretax financial income of $154,000 in 2017. Included in the computation of that amount is insurance expense of $4,000 which is not deductible for tax purposes. In addition, depreciation for tax purposes exceeds accounting depreciation by $10,000. Prepare Shetland’s
(L01,2) Clydesdale Corporation has a cumulative temporary difference related to depreciation of $580,000 at December 31, 2017. This difference will reverse as follows: 2018, $42,000; 2019, $244,000; and 2020, $294,000. Enacted tax rates are 34% for 2018 and 2019, and 40% for 2020. Compute the
(L02) At December 31, 2017, Fell Corporation had a deferred tax liability of $680,000, resulting from future taxable amounts of $2,000,000 and an enacted tax rate of 34%. In May 2018, a new income tax act is signed into law that raises the tax rate to 40% for 2018 and future years. Prepare the
(L03) Conlin Corporation had the following tax information.Year Taxable Income Tax Rate Taxes Paid 2015 $300,000 35% $105,000 2016 325,000 30 97,500 2017 400,000 30 120,000 In 2018, Conlin suffered a net operating loss of $480,000, which it elected to carry back. The 2018 enacted tax rate is 29%.
(L03) Rode Inc. incurred a net operating loss of $500,000 in 2017. Combined income for 2015 and 2016 was $350,000.The tax rate for all years is 40%. Rode elects the carryback option. Prepare the journal entries to record the benefits of the loss carryback and the loss carryforward. Rode expects to
(L03) Use the information for Rode Inc. given in BE19-13. Assume that it is more likely than not that the entire net operating loss carryforward will not be realized in future years. Prepare all the journal entries necessary at the end of 2017.
(L04) Youngman Corporation has temporary differences at December 31, 2017, that result in the following deferred taxes.Deferred tax liability related to depreciation difference $38,000 Deferred tax asset related to warranty liability 62,000 Deferred tax liability related to revenue recognition
(L01) AMR Corporation (parent company of American Airlines) reported the following (in millions).Service cost $366 Interest on P.B.O. 737 Return on plan assets 593 Amortization of prior service cost 13 Amortization of net loss 154 Compute AMR Corporation’s pension expense.
(L02) At January 1, 2017, Hennein Company had plan assets of $280,000 and a projected benefit obligation of the same amount. During 2017, service cost was $27,500, the settlement rate was 10%, actual and expected return on plan assets were$25,000, contributions were $20,000, and benefits paid were
(L02) Campbell Soup Company reported pension expense of $73 million and contributed $71 million to the pension fund. Prepare Campbell Soup Company’s journal entry to record pension expense and funding, assuming Campbell has no OCI amounts.
(L03) Mancuso Corporation amended its pension plan on January 1, 2017, and granted $160,000 of prior service costs to its employees. The employees are expected to provide 2,000 service years in the future, with 350 service years in 2017. Compute prior service cost amortization for 2017.
(L03) At December 31, 2017, Besler Corporation had a projected benefit obligation of $560,000, plan assets of $322,000, and prior service cost of $127,000 in accumulated other comprehensive income. Determine the pension asset/liability at December 31, 2017.
(L04) Shin Corporation had a projected benefit obligation of $3,100,000 and plan assets of $3,300,000 at January 1, 2017. Shin also had a net actuarial loss of $465,000 in accumulated OCI at January 1, 2017. The average remaining service period of Shin’s employees is 7.5 years. Compute Shin’s
(L05) Hawkins Corporation has the following balances at December 31, 2017.Projected benefi t obligation $2,600,000 Plan assets at fair value 2,000,000 Accumulated OCI (PSC) 1,100,000 How should these balances be reported on Hawkins’ balance sheet at December 31, 2017?
(L05) Norton Co. had the following amounts related to its pension plan in 2017.Actuarial liability loss for 2017 $28,000 Unexpected asset gain for 2017 18,000 Accumulated other comprehensive income (G/L) (beginning balance) 7,000 Cr.Determine for 2017 (a) Norton’s other comprehensive income
(L05) Lahey Corp. has three defined benefit pension plans as follows.Pension Assets Projected Benefi t(at Fair Value) Obligation Plan X $600,000 $500,000 Plan Y 900,000 720,000 Plan Z 550,000 700,000 How will Lahey report these multiple plans in its financial statements?
(L06,7) Manno Corporation has the following information available concerning its postretirement benefit plan for 2017.Service cost $40,000 Interest cost 47,400 Actual and expected return on plan assets 26,900 Compute Manno’s 2017 postretirement expense.
(L06,7) For 2017, Sampsell Inc. computed its annual postretirement expense as $240,900. Sampsell’s contribution to the plan during 2017 was $180,000. Prepare Sampsell’s 2017 entry to record postretirement expense, assuming Sampsell has no OCI amounts.
(L02) Rick Kleckner Corporation recorded a capital lease at $300,000 on January 1, 2017. The interest rate is 12%.Kleckner Corporation made the first lease payment of $53,920 on January 1, 2017. The lease requires eight annual payments. The equipment has a useful life of 8 years with no salvage
(L02) Use the information for Rick Kleckner Corporation from BE21-3. Assume that at December 31, 2017, Kleckner made an adjusting entry to accrue interest expense of $29,530 on the lease. Prepare Kleckner’s January 1, 2018, journal entry to record the second lease payment of $53,920.
(L02) Jana Kingston Corporation enters into a lease on January 1, 2017, that does not transfer ownership or contain a bargain-purchase option. It covers 3 years of the equipment’s 8-year useful life, and the present value of the minimum lease payments is less than 90% of the fair value of the
(L03) Use the information for IBM from BE21-6. Assume the direct-financing lease was recorded at a present value of$150,000. Prepare IBM’s December 31, 2017, entry to record interest.
(L03) Jennifer Brent Corporation owns equipment that cost $80,000 and has a useful life of 8 years with no salvage value. On January 1, 2017, Jennifer Brent leases the equipment to Donna Havaci Inc. for 1 year with one rental payment of$15,000 on January 1. Prepare Jennifer Brent Corporation’s
(L04) Indiana Jones Corporation enters into a 6-year lease of equipment on January 1, 2017, which requires 6 annual payments of $40,000 each, beginning January 1, 2017. In addition, Indiana Jones guarantees the lessor a residual value of $20,000 at lease-end. The equipment has a useful life of 6
(L04) Geiberger Corporation manufactures replicators. On January 1, 2017, it leased to Althaus Company a replicator that had cost $110,000 to manufacture. The lease agreement covers the 5-year useful life of the replicator and requires 5 equal annual rentals of $40,800 payable each January 1,
(L01) At the beginning of 2017, Wertz Construction Company changed from the completed-contract method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to
(L01) Shannon, Inc., changed from the LIFO cost flow assumption to the FIFO cost flow assumption in 2017. The increase in the prior year’s income before taxes is $1,200,000. The tax rate is 40%. Prepare Shannon’s 2017 journal entry to record the change in accounting principle.
(L01) Tedesco Company changed depreciation methods in 2017 from double-declining-balance to straight-line.Depreciation prior to 2017 under double-declining-balance was $90,000, whereas straight-line depreciation prior to 2017 would have been $50,000. Tedesco’s depreciable assets had a cost of
(L02) Sesame Company purchased a computer system for $74,000 on January 1, 2016. It was depreciated based on a 7-year life and an $18,000 salvage value. On January 1, 2018, Sesame revised these estimates to a total useful life of 4 years and a salvage value of $10,000. Prepare Sesame’s entry to
(L03) In 2017, Bailey Corporation discovered that equipment purchased on January 1, 2015, for $50,000 was expensed at that time. The equipment should have been depreciated over 5 years, with no salvage value. The effective tax rate is 30%.Prepare Bailey’s 2017 journal entry to correct the error.
(L03) At January 1, 2017, Beidler Company reported retained earnings of $2,000,000. In 2017, Beidler discovered that 2016 depreciation expense was understated by $400,000. In 2017, net income was $900,000 and dividends declared were $250,000.The tax rate is 40%. Prepare a 2017 retained earnings
(L03) Indicate the effect—Understate, Overstate, No Effect—that each of the following errors has on 2017 net income and 2018 net income.2017 2018(a) Equipment (with a useful life of 5 years) was purchased and expensed in 2015.(b) Wages payable were not recorded at 12/31/17.(c) Equipment
(L05) Simmons Corporation owns stock of Armstrong, Inc. Prior to 2017, the investment was accounted for using the equity method. In early 2017, Simmons sold part of its investment in Armstrong, and began using the fair value method. In 2017, Armstrong earned net income of $80,000 and paid dividends
(L05) Oliver Corporation has owned stock of Conrad Corporation since 2014. At December 31, 2017, its balances related to this investment were:Equity Investments $185,000 Fair Value Adjustment (AFS) 34,000 Dr.Accumulated Unrealized Holding Gain or Loss—Income (recorded in Retained Earnings) 34,000
(L01) Novak Corporation is preparing its 2017 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2017 statement of cash flows.Code Letter Effect A Added to net
(L02) Wainwright Corporation had the following activities in 2017.1. Sale of land $180,000. 4. Purchase of equipment $415,000.2. Purchase of inventory $845,000. 5. Issuance of common stock $320,000.3. Purchase of treasury stock $72,000. 6. Purchase of available-for-sale debt securities
(L02) Stansfield Corporation had the following activities in 2017.1. Payment of accounts payable $770,000. 4. Collection of note receivable $100,000.2. Issuance of common stock $250,000. 5. Issuance of bonds payable $510,000.3. Payment of dividends $350,000. 6. Purchase of treasury stock
(L02,3) Bloom Corporation had the following 2017 income statement.Sales revenue $200,000 Cost of goods sold 120,000 Gross profi t 80,000 Operating expenses (includes depreciation of $21,000) 50,000 Net income $ 30,000 The following accounts increased during 2017: Accounts Receivable $12,000,
(L02,3) Use the information from
for Bloom Corporation. Prepare the cash flows from operating activities section of Bloom’s 2017 statement of cash flows using the indirect method.
(L03) At January 1, 2017, Eikenberry Inc. had accounts receivable of $72,000. At December 31, 2017, accounts receivable is $54,000. Sales revenue for 2017 total $420,000. Compute Eikenberry’s 2017 cash receipts from customers.
(L03) Moxley Corporation had January 1 and December 31 balances as follows.1/1/17 12/31/17 Inventory $95,000 $113,000 Accounts payable 61,000 69,000 For 2017, cost of goods sold was $500,000. Compute Moxley’s 2017 cash payments to suppliers.
(L02) In 2017, Elbert Corporation had net cash provided by operating activities of $531,000, net cash used by investing activities of $963,000, and net cash provided by financing activities of $585,000. At January 1, 2017, the cash balance was $333,000.Compute December 31, 2017, cash.
(L02,3) Colbert Corporation had the following 2017 income statement.Revenues $100,000 Expenses 60,000$ 40,000 In 2017, Colbert had the following activity in selected accounts.Allowance for Accounts Receivable Doubtful Accounts 1/1/17 20,000 1,200 1/1/17 Revenues 100,000 1,000 Write-offs Write-offs
(L03) Hendrickson Corporation reported net income of $50,000 in 2017. Depreciation expense was $17,000. The following working capital accounts changed.Accounts receivable $11,000 increase Available-for-sale debt securities 16,000 increase Inventory 7,400 increase Nontrade note payable 15,000
(L03) In 2017, Wild Corporation reported a net loss of $70,000. Wild’s only net income adjustments were depreciation expense $81,000, and increase in accounts receivable $8,100. Compute Wild’s net cash provided (used) by operating activities.
(L04) In 2017, Leppard Inc. issued 1,000 shares of $10 par value common stock for land worth $40,000.(a) Prepare Leppard’s journal entry to record the transaction.(b) Indicate the effect the transaction has on cash.(c) Indicate how the transaction is reported on the statement of cash flows.
(L02) Morlan Corporation is preparing its December 31, 2017, financial statements. Two events that occurred between December 31, 2017, and March 10, 2018, when the statements were issued, are described below.1. A liability, estimated at $160,000 at December 31, 2017, was settled on February 26,
Understand the financial reporting environment.
Explain the meaning of generally accepted accounting principles (GAAP)and the role of the Codification for GAAP.
Describe major challenges in the financial reporting environment.
Understand the objective of financial reporting.
Describe the impact that the cost constraint has on reporting accounting information.
Understand the basic accounting information system.
Record and summarize basic transactions.
Identify and prepare adjusting entries.
Prepare financial statements from the adjusted trial balance.
Prepare closing entries.
Prepare financial statements for a merchandising company.
Understand the uses and limitations of an income statement.
Describe the content of the income statement.
Prepare an income statement.
Explain how to report various income items.
Understand the reporting of accounting changes and errors.
Prepare a retained earnings statement.
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