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intermediate accounting reporting
Intermediate Accounting 14th Edition Fred Skousen, James Stice, Earl Kay Stice - Solutions
The Rushing Construction Company obtained a construction contract to build a highway and bridge over the Snake River It was estimated at the beginning of the contract that it would take 3 years to complete the project at an expected cost of \($50,000,000\).The contract price was \($60,000,000.\)
The Urban Construction Company commenced doing business in January 2002.Construction activities for the year 2002 are summarized in the following table.The company is your client. The president has asked you to compute the amounts of revenue for the year ended December 31, 2002, that would be
The Kurtz Construction Corporation contracted with the City of Port Huron to construct a dam on the Erie River at a price of \($16.000.000.\) Kurtz expects to earn \($1,520.000\) on the contract. The percentage-of-completion method is to be used, and the completion stage is to be determined by
Jana Crebs is a contractor for the construction of large office buildings. At the beginning of 2002. 3 buildings were in progress. The following data describe the status of these buildings at the beginning of the year:During 2002. the following costs were incurred.Instructions:1. Compute the total
The Power Construction Company was the low bidder on a specialized equipment contract.The contract bid was \($6,000.000\) with an estimated cost to complete the project of \($5,300.\) 000. The contract period was 33 months, beginning Januan- 1. 2001. The company uses the cost-to-cost method to
Seattle Boatbuilders was recently awarded a \($14,000,000\) contract to construct a luxury liner for Cruiseliners Inc. Seattle estimates it will take 42 months to complete the contract.The company uses the cost-to-cost method to estimate profits.The following information details the actual and
London Corporation has been using the cash method to account for income since its first year of operation in 2002. All sales are made on credit with notes receivable given by the customers. The income statements for 2002 and 2003 included the following amounts:The balances due on the notes at the
Bain's Furniture sells furniture and electronic items. The majority of its business is on credit, and the following information is available relating to sales transactions for 2001, 2002, and 2003.Instructions: Prepare the journal entries for the years 2001-2003 assuming Bains uses the installment
The Wasatch Construction Company entered into a \($4,500,000\) contract in early 2002 to construct a multipurpose recreational facility for the city of helper. Construction time extended over a 2-year period. The table below describes the pattern of progress payments made by the city of Helper and
Tingey Industries sells merchandise on a consignment basis to dealers. Shipping costs are chargeable to Tingey. although in some cases the dealer pays them. The selling price of the merchandise averages 25% above cost of merchandise exclusive of freight. The dealer is paid a 10% commission on the
In what way does U.S. GAAP differ from LAS 18 in the area of revenue recognition?
Under the provisions of IAS 11, what revenue recognition approach should be used whenever the outcome of a construction contract can not be reliably estimated? Briefly describe this approach.
What special recognition problems arise in accounting for franchise fees?
Consignment accounting is primarily a method of accounting for transfers of inventory' prior to the point of revenue recognition. Describe the essential elements of this method from the standpoint of (a) the consignor and (b) the consignee.
Ultimate Corporation is a computer products supplier. Ultimate sells products to dealers who then sell the products to the end users. Most of the company's competitors require dealers to pay for shipments within 45 to 60 days. Ultimate has followed a more relaxed policy; in 2002 the averase lensth
Jack Wilson, manager of Expert Building Company, is a valued and trusted employee. He has been with the company from its start 2 years ago. Because of the demands of his job, he has not taken a vacation since he began working. He is in charge of recording collections on account, making the daily
You have just accepted a job with Philodendron Co. Your duties include being cashier of the petty cash fund. Upon inspection of the fund, you find that it includes \($143\) in currency, \($5\) in postage stamps, \($21\) in lOUs, and \($37\) in various receipts. Because no written records are kept
The following information from Jumbo Company's first year of operations is to be used in testing the accuracy' ofAccounts Receivable. The December 31, 2002, balance is \($33,500\).(a) Collections from customers, \($72,000\).(b) Merchandise purchased. \($98,000\).(c) Ending merchandise inventory.
Accounts Receivable of the Drummond Manufacturing Co. on December 31. 2002, had a balance of \($300,000.\) Allowance for Bad Debts had a \($4,200\) debit balance. Sales in 2002 were \($1,690,000\) less sales discounts of \($14.000.\) Give the adjusting entr)' for estimated Bad Debt Expense under
Blanchard Company's accounts receivable subsidiary ledger reveals the following information.Blanchard Company's receivable collection experience indicates that, on the average, losses have occurred as follows:The Allowance for Bad Debts credit balance on December 31, 2002, was \($2,245\) before
The Transtech Publishing Company follows the procedure of debiting Bad Debt Expense for 2% of all new sales. Sales for 4 consecutive years and year-end allowance account balances were as follows:1. Compute the amount of accoums written off for the years 2000, 2001 , and 2002.2. The external
In 2001 Hampton Office Supply began selling a new computer that carried a 2-year warranty against defects. Based on the manufacturer's recommendations. Hampton projects estimated warranty costs (as a percentage of dollar sales) as follows:Sales and actual warranty repairs for 2001 and 2002 are
Modem Appliance Company's accountant has been reviewing the firms past television sales. For the past 2 years, Modern has been offering a special service warranty on all televisions sold. With the purchase of a television, the customer has the right to purchase a 3-year service contract for an
Trend Industries Company reported the following amounts on its 2001 and 2002 financial statements.1. Compute the accounts receivable turnover for 2002.2. What is the average collection period during 2002? (Use 365 days.) Accounts receivable. Allowance for bad debts Net sales Cost of sales. 2002 $
Warfield Company had the following cash balances at December 31, 2002:Undeposited coin and currency \($35,000 \) .In exchange for a guaranteed line of credit. Warfield has agreed to maintain a minimum balance of \($150,000\) in its unrestricted demand deposits account. How much should Warfield
High Country', Inc., purchased inventory costing \($50,000\). Terms of the purchase were 5/10, n/30. In order to take advantage of the cash discount. High Country' borrowed \($40,000\) from Downtown First National, signing a 2-month. 12% note. The bank requires monthly interest payments. Make the
An examination on the morning of January 2 by the auditor for the Santiago Appliance Company discloses the following items in the petty cash drawer.The ledger account discloses a \($1,125\) balance for Petty Cash; (1) What adjusting entries should be made so that petty cash is correctly stated on
The following transactions affecting the accounts receivable of Wonderland Corporation took place during the year ended January 31, 2002.The following two balances were taken from the January 31. 2001. balance sheet.The corporation provides for its net uncollectible account losses by crediting
Beebe Company sold goods on account with a sales price of \($50,000\) on August 17.The terms of the sale were 2/10, n/30.Instructions:1. Record the sale using the gross method of accounting for cash discounts.2. Record the sale using the net method of accounting for cash discounts.3. Assume that
During 2002, Lacee Enterprises had gross sales of \($247,000.\) At the end of 2002, Lacee had accounts receivable of \($83,000\) and a credit balance of \($5,600\) in Allowance for Bad Debts. Lacee has used the percentage-of-sales method to estimate the bad debt expense. For the past several years,
Rainy Day Company, a wholesaler, uses the aging method to estimate bad debt losses.The following schedule of aged accounts receivable was prepared at December 31 , 2002.The following schedule shows the year-end receivables balances and uncollectible accounts experience for the previous 5 years.The
High Fidelity Corporation sells stereos under a 2-year warranty contract that requires High Fidelity to replace defective parts and provide free labor on all repairs. During 2001, 1,050 units were sold at \($900\) each. In 2002. High Fidelity sold an additional 900 units at \($92\) 5. Based on past
Monroe Corporation, a client, requests that you compute the appropriate balance of its estimated liability for product warranty account for a statement as of June 30. 2002.Monroe Corporation manufactures television components and sells them with a 6-month warranty under which defective components
The balance sheet for the Itex Corporation on December 31, 2001, includes the following cash and receivables balances.Current liabilities reported in the December 31 , 2001, balance sheet included:Transactions during 2002 included the following:(a) Sales on account were \($767,000\).(b) Cash
On July 1. 2002. Balmforth Company used receivables totaling \($200,000\) as collateral on a \($150,000,\) 16% note from Rocky Mountain Bank. The transaction is not structured such that receivables are being sold. Balmforth will continue to collect the assigned receivables. In addition to the
During its second year of operations. Shank Corporation found itself in financial difficulties. Shank decided to use its accounts receivable as a means of obtaining cash to continue operations. On July 1, 2002, Shank sold \($75,000\) of accounts receivable for cash proceeds of \($69,500.\) Xo bad
Freemont Factors provides financing to other companies by purchasing their accounts receivable on a nonrecourse basis. Freemont charges a commission to its clients of 15% of all receivables factored. In addition, Freemont withholds 10% of receivables factored as protection against sales returns or
On January 1, 2002, Lost Valley Realty sold a tract of land to three doctors as an investment. The land, purchased 10 years ago, was carried on Lost Valley's books at a value of \($125,000.\) Lost Valley received a non-interest-bearing note for \($220,000\) from the doctors.The note is due December
On January 1, 2002, the Denver Company sold land that originally cost \($400,000\) to the Boise Company. As payment. Boise gave Denver a \($600,000\) note. The note bears an interest rate of 4% and is to be repaid in 3 annual installments of \($200,000\) (plus interest on the outstanding balance).
On December 1. 2002, LGA Corporation established an imprest petty cash fund. The operations of the fund for the last month of 2002 and the first month of 2003 are summarized as follows:Dec.1 The petty cash fund was established by cashing a company check for \($2,000\) and delivering the proceeds to
In accounting for uncollectible accounts receivable, why is the allowance method, rather than the direct write-off method, required by GAAP?
(a) What are the major advantages in using imprest petty cash funds?(b) What dangers must be guarded against when petty cash funds are used?
Early in the year 2003, John Roberts, a recent graduate of Southeast State College, delivers the financial statements shown on page 277 to Laura Dennis of Dennis, Inc. After a quick review, Dennis exclaims, "What do you mean I had net income of \($20,000?\) I borrowed \($40,000\) from the bank and
State how each of the following items would be reflected on a statement of cash flows.(a) Securities classified as available:foi:sa.le were purchased for \($5,000.\) (b) Buildings were acquired for \($187,500,\) the company paying \($50,000\) cash and signing a 12% mortgage note, payable in 5
The accountant for Alpine Hobby Stores prepared the following selected information for the vear ended December 31. 2002.Equipment with a book value of \($20,000\) was sold for \($17,000\) cash. The original cost of the equipment was \($25,000\).Determine the cash inflows and outflows during 2002
Anakin, Inc. provides the following account balances for 2002 and 2001Using the format presented in the chapter, prepare the operating activities section of the statement of cash flows and present that information using (a) the direct method and (b) the indirect method. -76-) Accounts Receivable
Naboo Enterprises provides the following income statement for 2002.In addition, the following balance sheet information is available:Using the format presented in the chapter, prepare the operating activities section of the statement of cash flows and present that information using (a) the direct
From the following information for the Carter Corporation, prepare a statement of cash flows for the year ended December 31, 2002, using the indirect method. Amortization of patent. Depreciation expense. Issuance of common stock. Issuance of new bonds payable... Net income.. Payment of dividends
The following information was taken from the books of Tapwater Company. Compute the amount of net cash provided by (used in) operating activities during 2002 using the indirect method. Accounts receivable. Accounts payable Accumulated depreciation (no plant assets retired during year). Inventories.
A summary of revenues and expenses for Stanton Company for 2002 follows:Net changes in working capital accounts for 2002 were as follows:Depreciation on plant and equipment for the year totaled \($600,000;\) 70% was related to manufacturing activities and 30% to general and administrative
The following information was taken from the comparative financial statements of Buttercup Corporation.Using the indirect method, compute the net amount of cash provided by (used in)operating activities for the year. Net income for year Sales revenue... Cost of goods sold (except depreciation).
Based on the information given in Exercise 5-18 and using the direct method, compute the net amount of cash provided by (used in) operating activities for the year.Exercise 5-18:The following information was taken from the comparative financial statements of Buttercup Corporation.Using the indirect
A comparative balance sheet, income statement, and additional information for the Xavier Metals Company are presented below.Additional information for Xavier:(a) All accounts receivable and accounts payable relate to trade merchandise.(b) The proceeds from the notes payable were used to finance
Below is information for Boswell Manufacturing Company:(a) Long-term debt of \($450,000\) was retired at face value.(b) New machinery was purchased for \($48,000\).(c) Common stock with a par value of \($120,000\) was issued for \($150,000\).(d) Dividends of \($18,000\) declared in 2001 were paid
The Sunny-vale Corporation prepared for 2002 and 2001 the following balance sheet data.Cash needed to purchase new equipment and to improve the company's working capital position was raised by borrowing from the bank with a long-term note. Equipment costing \($75,000\) with a book value of
The following are financial statements for LaForge Company.The following information is also available for 2002:(a) Plant assets were sold for their book value of \($200\) during the year. The assets had an original cost of \($330\).(b) Cash dividends totaling \($75\) were paid during the year.(c)
Using the information given in Exercise 5-23, prepare a statement of cash flows for 2002 for LaForge Company using the direct method.Exercise 5-23:The following are financial statements for LaForge Company.The following information is also available for 2002:(a) Plant assets were sold for their
Following are data from the financial statements for Choi Hung Company.Compute the following for both 2001 and 2002:1. Cash flow-to-net income ratio 2. Cash flow adequacy ratio 3. Cash times interest earned ratio Net income.. Choi Hung Company Selected Financial Statement Data For the Years Ended
Podracer Productions provides the following income statement for the year ended December 31, 2002.In addition, Podracer provides the following balance sheet information.Instructions: Using the simultaneous analysis matrix illustrated in the text, prepare the operating activities section of the
Comparative balance sheet data for the Amber Company are presented below and on the following page. In addition, new equipment was purchased for \($50,000,\) payment consisting of \($25,000\) cash and a long-term note for \($25,000.\) Proceeds from the shortterm notes payable were used for
The following information was taken from the records ofAlderman Produce Company for the year ended June 30, 2002.Instructions:1. From the information given, prepare a statement of cash flows using the indirect method.2. Briefly explain what an interested party would learn from studying the cash
The following information was obtained from analysis of selected accounts of Orlando Company for the year ended December 31, 2002.Instructions: From the information given, prepare a statement of cash flows using the indirect method. Increase in long-term debt.. Purchase of treasury stock.
Based on an analysis of the cash account and other accounts, the following information was provided by the controller of Lumbercamp, Inc., a manufacturer of wood-burning stoves, for the year 2002.(a) Cash sales for the year were \($150,000;\) sales on account totaled \($180,000\).(b) Cost of goods
Comparative balance sheet data for the partnership ofYoung and Jones are presented below.Net income for the year was \($43,000,\) and this was transferred in equal amounts to the partners' capital accounts. Further changes in the capital accounts arose from additional investments and withdrawals by
The table on the next page shows the account balances of Novations, Inc., at the beginning and end of the company's accounting period.The following additional information is available.(a) All purchases and sales were on account.(b) Equipment costing \($10,000\) was sold for \($3,000;\) a loss of
Refer to the data for Novations, Inc., in Problem 5-35.Instructions:1. Prepare an income statement for Novations, Inc. , for the year ended December 31 , 2002.2. Prepare a statement of cash flows for the year ended December 3 1 , 2002, using the indirect method. Problem 5-35:The table on the next
The following summany data are for Queue Company.All current assets and current liabilities relate to operations.Instructions:1. Compute net cash provided by (used in) operating activities for 2001 and 2002.2. How would the numbers you computed in (1) change if Queue had decided to delay payment of
The following summary information is for Data Company.Instructions:1. Compute net cash provided by (used in) operating activities for Data Company for the years 1999 through 2002.2. One definition of "cash flow " often used in financial analysis is net income + depreciation.Use this definition to
The following combined income and retained earnings statement, along with selected balance sheet data, are provided for the Timberdale Company.Instructions:1. Using the direct method, compute the amount of net cash provided by (used in)operating activities for Timberdale Company for 2002.2. What is
Below are data from the financial statements for Ping Shek Company.Instructions:1. Compute the following for 2001 and 2002.a. Return on salesb. Return on assetsc. Return on equit}'d. Cash flow-to-net income ratioe. Cash flow adequacy ratiof. Cash times interest earned ratio 2. In which year did
Lorien Company wishes to prepare a forecasted income statement, a forecasted balance sheet, and a forecasted statement of cash flows for 2003. Lorien's balance sheet and income statement for 2002 are given below.In addition, Lorien has assembled the following forecasted information for 2003.(a)
The post-closing trial balances are provided for the Dallas Department Store. Credit balances are denoted with parentheses.The following additional information was obtained from Dallas Department Store's accounting records.1. All accounts receivable were from sales to customers.2. The inventor}'
Refer to the information for Dallas Department Store in Problem 5-44.Instructions: Using a work sheet, prepare a statement of cash flows (indirect method) for the vear ended December 31, 2002.Problem 5-44:The post-closing trial balances are provided for the Dallas Department Store. Credit balances
Prior to 1988. a "funds" statement was required instead of a cash flow statement. What was that "funds" statement called? How did it differ from a statement of cash flows?
Compare how interest paid is classified in a statement of cash flows under the provisions of FASB Statement No. 95 and IAS 7.
What is the difference between "cash from operating activities ' as reported in the United States and in the United Kingdom?
What techniques can be used to simplify the preparation of a statement of cash flows when there are many accounts and transactions?
Management for Marlowe Manufacturing Company decided in 2001 to discontinue one of its unsuccessful product lines. (The product line does not meet the definition of a business segment.) The planned discontinuance involved obsolete inventory, assembly lines, and packaging and advertising supplies.
The Flexisoft Company has had excellent success in developing business software for microcomputers. Management has followed the accounting practice of deferring the development costs for the software until sufficient sales have developed to cover the software cost. Because of past successes,
The Walesco Corporation has decided to discontinue an entire segment of its business effective November 1, 2002. It hopes to sell the assets involved and convert the physical plant to other uses within the manufacturing division. The CPA auditing the books indicates that GAAP requires separate
The stock market crash of October 1987 caused many businesses to rethink the manner in which they operate. The crash caused at least one business to consider the way it recosnized revenues and expenses. BOSTON COMPANY, INC , a money-managing unit of SHEARSON LEHMAN HUHON HOLDINGS INC., reported
Changes in the balance sheet account balances for the Smite Sales Co. during 2002 are shown below. Dividends declared during 2002 were \($25.000.\) Calculate the net income for the year assuming there were no transactions, other than the dividends, affecting retained earnings. Cash Accounts
Indicate which of the following transactions or events gives rise to the recognition of revenue in 2002 under the accrual basis of accounting. If revenue is not recognized, what is the account, if any. that is credited?(a) On December 15, 2002, Howe Company received \($20.000\) as rent revenue for
The selling expenses of Caribou Inc. for 2002 are 13% of sales. General expenses, excluding doubtful accounts, are 25% of cost of goods sold, but only 15% of sales.Doubtful accounts are 2% of sales. The beginning inventory was \($136,000,\) and it decreased 30% during the year Income from
The Brigham Corporation reported the following income items before tax for the year 2002:The income tax rate is 35% on all items. Prepare the portion of the income statement beginning with "Income from continuing operations before income taxes" for the year ended December 31, 2002, after applying
On June 30, 2002. top management of Garrison Manufacturing Co. decided to dispose of an unprofitable business segment. A loss of \($110,000\) associated with the segment was incurred during the first 6 months of 2002, prior to management s decision.Between July 1 and November 30, an additional
For the following independent cases, compute (1) the gain (loss) from operations of a discontinued segment, and (2) the gain (loss) from disposal of a discontinued segment.Ignore income taxes. Operating gain (loss) of discontinued segment to measurement date. Operating gain (loss) of discontinued
In 1988. SEARS. ROEBUCKAND CO. changed its method of accounting for income taxes. The FASB required the new principle to be applied retroactively, but prior years' financial statements were not required to be restated. The change decreased 1988 income from continuing operations by \($177.6\)
The Pensacola Awning Co. reports the following for 2002:Prepare a single-step income statement (including earnings-per-share data) and a statement of retained earnings for Pensacola. Retained earnings, January 1 Selling expenses... Sales revenue.. Interest expense General and administrative
M. Taylor has been employed as a bookkeeper at the Losser Corporation for a number of years. With the assistance of a clerk, Taylor handles all accounting duties, including the preparation of financial statements. The following is a statement of earned surplus prepared by Taylor for
Svedin Incorporated provides the following information relating to 2002.The foreign currency adjustment resulted from a weakening in the currencies of Svedin's foreign subsidiaries relative to the U.S. dollar The minimum pension liability adjustment required an increase in the pension liability
Han Company wishes to forecast its net income for the year 2003. Han has assembled balance sheet and income statement data for 2002 and has also done a forecast of the balance sheet for 2003. In addition. Han has estimated that its sales in 2003 will rise to $2,200. This information is summarized
Ryan Company wishes to prepare a forecasted income statement and a forecasted balance sheet for 2003 Ryans balance sheet and income statement for 2002 are given below.In addition, Ryan has assembled the following forecasted information regarding 2003.(a) Sales are expected to increase to
The Payette Co. on June 30, 2002, reported a retained earnings balance of \($1,535,000\).The books of the company showed the following account balances on June 30, 2002.Instructions:Prepare a single-step income statement and a retained earnings statement. The Payette Co. has 325,000 shares of
The Richmond Company manufactures and sells robot-tvpe toys for children. Under one type of agreement with the dealers, Richmond is to receive payment upon shipment to the dealers. Under another type of agreement, Richmond receives payments only after the dealer makes the sale. Under this latter
On December 31, 2002, the Hadley Company provides the following pre-audit income statement for your review.The following information is also available:(a) Many of Hadley's customers pay for their orders in advance. At year-end, \($18,000\) of orders paid for in advance of shipment have been
The following information relates to Delaney Manufacturing Inc. for the fiscal year ended July 31. 2002. Assume there are no tax rate changes, a 30% tax rate applies to all items reported in the income statement, and there are no differences between financial and taxable income.Instructions:Prepare
Radiant Cosmetics Inc. shows a retained earnings balance on January' 1. 2002. of \($620,000.\) For 2002, the income from continuing operations was \($210,000\) before income tax. Following is a list of special items.Income taxes paid during 2002 were \($82.000.\) which consisted of the tax on
In 2002, Laetner Industries decided to discontinue its Laminating Division, an identifiable segment of Laetners business. The measurement date for the discontinuance is August 1. At December 31, Laetner s year-end, the division has not been sold. However, negotiations for the sale are progressing
Selected account balances of Connell Company for 2002 along with additional information as of December 31 are as followsInstructions:Prepare a multiple-step income statement and statement of retained earnings for the year ended December 31 2002. Contribution to Employee Pension Fund Delivery
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