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intermediate accounting reporting

Intermediate Accounting 16th Edition Donald E. Kieso - Solutions

*E 9-25 (L07) (Retail Inventory Method—Conventional and LIFO) Leonard Company began operations late in 2016 and adopted the conventional retail inventory method. Because there was no beginning inventory for 2016 and no markdowns during 2016, the ending inventory for 2016 was $14,000 under both
*E 9-24 (L07) (Retail Inventory Method—Conventional and LIFO) Keller Company began operations on January 1, 2016, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2016 and, because there was no beginning inventory, its ending inventory for
(L06) (Analysis of Inventories) The financial statements of ConAgra Foods, Inc.’s 2014 annual report disclose the following information.Instructions Compute ConAgra’s (a) inventory turnover and (b) the average days to sell inventory for 2014 and 2013. (in millions) 2014 2013 2012 Year-end
(L05) (Retail Inventory Method) The records of Ellen’s Boutique report the following data for the month of April.Sales revenue $99,000 Purchases (at cost) $48,000 Sales returns 2,000 Purchases (at sales price) 88,000 Markups 10,000 Purchase returns (at cost) 2,000 Markup cancellations 1,500
(L05) (Retail Inventory Method) Presented below is information related to Ricky Henderson Company.Cost Retail Beginning inventory $ 200,000 $ 280,000 Purchases 1,375,000 2,140,000 Markups 95,000 Markup cancellations 15,000 Markdowns 35,000 Markdown cancellations 5,000 Sales revenue 2,200,000
(L05) (Retail Inventory Method) Presented below is information related to Bobby Engram Company.Cost Retail Beginning inventory $ 58,000 $100,000 Purchases (net) 122,000 200,000 Net markups 10,345 Net markdowns 26,135 Sales revenue 186,000 Instructions(a) Compute the ending inventory at retail.(b)
(L04) (Gross Profit Method) Presented below is information related to Aaron Rodgers Corporation for the current year.Beginning inventory $ 600,000 Purchases 1,500,000 Total goods available for sale $2,100,000 Sales revenue 2,500,000 Instructions Compute the ending inventory, assuming that (a) gross
(L04) (Gross Profit Method) Gheorghe Moresan Lumber Company handles three principal lines of merchandise with these varying rates of gross profit on cost.Lumber 25%Millwork 30%Hardware and fi ttings 40%On August 18, a fire destroyed the office, lumber shed, and a considerable portion of the lumber
(L04) (Gross Profit Method) You are called by Tim Duncan of Spurs Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available.Inventory, July 1 $ 38,000
(L04) (Gross Profit Method) Wallace Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation’s books disclosed the following.Beginning inventory $170,000 Sales revenue $650,000 Purchases for the year 390,000 Sales returns
(L04) (Gross Profit Method) Tim Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $38,000. Purchases since January 1 were $72,000; freight-in, $3,400; purchase returns and allowances,$2,400. Sales are made at 331/3% above cost and totaled
(L04) (Gross Profit Method) Mark Price Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.Inventory, May 1 $ 160,000 Purchases (gross) 640,000 Freight-in 30,000 Sales revenue 1,000,000 Sales returns 70,000
(L04) (Gross Profit Method) Each of the following gross profit percentages is expressed in terms of cost.1. 20%. 3. 331/3%.2. 25%. 4. 50%.Instructions Indicate the gross profit percentage in terms of sales for each of the above.
(L03) (Purchase Commitments) At December 31, 2017, Indigo Girls Company has outstanding noncancelable purchase commitments for 36,000 gallons, at $3.00 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is
(L03) (Purchase Commitments) Marvin Gaye Company has been having difficulty obtaining key raw materials for its manufacturing process. The company therefore signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2017, at an agreed price
(L01) (LCNRV—Error Effect) LaGreca Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2017, included product X. Relevant per-unit data for product X are as follows.Estimated selling price $50 Cost 40 Estimated selling costs 14
(L01) (LCNRV—Journal Entries) Dover Company began operations in 2017 and determined its ending inventory at cost and at LCNRV at December 31, 2017, and December 31, 2018. This information is presented below.Cost Net Realizable Value 12/31/17 $346,000 $322,000 12/31/18 410,000 390,000
(L01) (LCNRV) Sedato Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis.Item No. Quantity Cost per Unit Estimated Selling Price Cost to Complete and Sell 1320 1,200 $3.20 $4.50 $1.60 1333 900 2.70 3.40 1.00 1426 800 4.50 5.00 1.40 1437 1,000 3.60 3.20 1.35
(L01) EXCEL (LCNRV) The inventory of Oheto Company on December 31, 2017, consists of the following items.Part Quantity Cost per Unit Net Realizable Value 110 600 $ 95 $100 111 1,000 60 52 112 500 80 76 113 200 170 180 120 400 205 208 121a 1,600 16 1 122 300 240 235 aPart No. 121 is obsolete and has
(L06) WRITING (Dividend Policy Analysis) Matheny Inc. went public 3 years ago. The board of directors will be meeting shortly after the end of the year to decide on a dividend policy. In the past, growth has been financed primarily through the retention of earnings. A stock or a cash dividend has
*P 24-3 (L06,8) EXCEL GROUPWORK (Ratio Computations and Additional Analysis) Bradburn Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Bradburn and is its current president. The company has
(L02) (Segmented Reporting) Cineplex Corporation is a diversified company that operates in five different industries:A, B, C, D, and E. The following information relating to each segment is available for 2018.A B C D E Sales revenue $40,000 $ 75,000 $580,000 $35,000 $55,000 Cost of goods sold
(L02) (Subsequent Events) Your firm has been engaged to examine the financial statements of Almaden Corporation for the year 2017. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2012.
(L02,4) (Indirect SCF) Dingel Corporation has contracted with you to prepare a statement of cash flows. The controller has provided the following information.December 31 2017 2016 Cash $ 38,500 $13,000 Accounts receivable 12,250 10,000 Inventory 12,000 10,000 Equity investments –0– 3,000
(L02,4) (SCF—Direct and Indirect Methods) Comparative balance sheet accounts of Sharpe Company are presented below.SHARPE COMPANY COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31 Debit Balances 2017 2016 Cash $ 70,000 $ 51,000 Accounts Receivable 155,000 130,000 Inventory 75,000 61,000 Debt
(L02,3,4) GROUPWORK (SCF—Direct and Indirect Methods from Comparative Financial Statements) Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Chapman as of May 31, 2017,
(L02,3,4) (SCF—Indirect Method, and Net Cash Flow from Operating Activities, Direct Method) Comparative balance sheet accounts of Marcus Inc. are presented below.MARCUS INC.COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2017 AND 2016 December 31 Debit Accounts 2017 2016 Cash $ 42,000 $
(L02,4) (SCF—Indirect Method) You have completed the field work in connection with your audit of Alexander Corporation for the year ended December 31, 2017. The balance sheet accounts at the beginning and end of the year are shown below.Dec. 31, Dec. 31, Increase or 2017 2016 (Decrease)Cash $
(L02,4) (SCF—Direct Method) Michaels Company had available at the end of 2017 the following information.MICHAELS COMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31, 2017 AND 2016 2017 2016 Cash $ 10,000 $ 4,000 Accounts receivable 20,500 12,950 Short-term investments 22,000 30,000 Inventory
(L02) EXCEL (SCF—Direct Method) Mortonson Company has not yet prepared a formal statement of cash flows for the 2017 fiscal year. Comparative balance sheets as of December 31, 2016 and 2017, and a statement of income and retained earnings for the year ended December 31, 2017, are presented as
(L02,4) EXCEL GROUPWORK (SCF—Indirect Method) The comparative balance sheets for Hinckley Corporation show the following information.December 31 2017 2016 Cash $ 33,500 $13,000 Accounts receivable 12,250 10,000 Inventory 12,000 9,000 Available-for-sale debt investments –0– 3,000 Buildings
(L02,4) (SCF—Indirect Method) The following are Sullivan Corp.’s comparative balance sheet accounts at December 31, 2017 and 2016, with a column showing the increase (decrease) from 2016 to 2017.Comparative Balance Sheets Increase 2017 2016 (Decrease)Cash $ 815,000 $ 700,000 $115,000 Accounts
(L05) (Change from Fair Value to Equity Method) On January 3, 2016, Martin Company purchased for $500,000 cash a 10% interest in Renner Corp. On that date, the net assets of Renner had a book value of $3,700,000. The excess of cost over the underlying equity in net assets is attributable to
(L05) (Fair Value to Equity Method with Goodwill) On January 1, 2017, Millay Inc. paid $700,000 for 10,000 shares of Genso Company’s voting common stock, which was a 10% interest in Genso. At that date, the net assets of Genso totaled$6,000,000. The fair values of all of Genso’s identifiable
(L03,4) (Error Analysis and Correcting Entries) You have been asked by a client to review the records of Roberts Company, a small manufacturer of precision tools and machines. Your client is interested in buying the business, and arrangements have been made for you to review the accounting records.
(L03,4) (Error Analysis) Lowell Corporation has used the accrual basis of accounting for several years. A review of the records, however, indicates that some expenses and revenues have been handled on a cash basis because of errors made by an inexperienced bookkeeper. Income statements prepared by
(L03,4) GROUPWORK (Comprehensive Error Analysis) On March 5, 2018, you were hired by Hemingway Inc., a closely held company, as a staff member of its newly created internal auditing department. While reviewing the company’s records for 2016 and 2017, you discover that no adjustments have yet been
(L03,4) GROUPWORK (Error Corrections) You have been assigned to examine the financial statements of Zarle Company for the year ended December 31, 2017. You discover the following situations.1. Depreciation of $3,200 for 2017 on delivery vehicles was not recorded.2. The physical inventory count on
(L01,3,4) EXCEL (Accounting Change and Error Analysis) On December 31, 2017, before the books were closed, the management and accountants of Madrasa Inc. made the following determinations about three pieces of equipment.1. Equipment A was purchased January 2, 2014. It originally cost $540,000 and,
(L02) GROUPWORK ETHICS (Accounting Changes) Aston Corporation performs year-end planning in November of each year before its calendar year ends in December. The preliminary estimated net income is $3 million. The CFO, Rita Warren, meets with the company president, J. B. Aston, to review the
(L01,2,3) (Error Corrections and Accounting Changes) Penn Company is in the process of adjusting and correcting its books at the end of 2017. In reviewing its records, the following information is compiled.1. Penn has failed to accrue sales commissions payable at the end of each of the last 2
(L01,2,3) (Comprehensive Accounting Change and Error Analysis Problem) Botticelli Inc. was organized in late 2015 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported net incomes.2015 $140,000a
(L01,2,3) EXCEL GROUPWORK (Change in Estimate and Error Correction) Holtzman Company is in the process of preparing its financial statements for 2017. Assume that no entries for depreciation have been recorded in 2017. The following information related to depreciation of fixed assets is provided to
(L01) (Change in Principle—Inventory—Periodic) The management of Utrillo Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Utrillo changed its method of pricing inventory from last-in, first-out
(L02,3,4) GROUPWORK (Lessee-Lessor Accounting for Residual Values) Goring Dairy leases its milking equipment from King Finance Company under the following lease terms.1. The lease term is 10 years, noncancelable, and requires equal rental payments of $30,300 due at the beginning of each year
(L02,4) WRITING (Operating Lease vs. Capital Lease) You are auditing the December 31, 2017, financial statements of Hockney, Inc., manufacturer of novelties and party favors. During your inspection of the company garage, you discovered that a used automobile not listed in the equipment subsidiary
and that Chambers Medical Center has an incremental borrowing rate of 10%.Instructions (a) Discuss the nature of this lease in relation to the lessee, and compute the amount of the initial lease liability.(b) Prepare a 10-year lease amortization schedule.(c) Prepare all of the lessee’s journal
(L02,4) (Lessee Computations and Entries, Capital Lease with Guaranteed Residual Value) Assume the same data as in
(L03,4) (Lessor Computations and Entries, Sales-Type Lease with Guaranteed Residual Value) Amirante Inc.manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years. The normal selling price of the machine is $411,324, and its
(L02,4) (Basic Lessee Accounting with Difficult PV Calculation) In 2016, Grishell Trucking Company negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The buildings were erected to the company’s specifications on land owned by the
with National Airlines having an incremental borrowing rate of 10%.Instructions (a) Discuss the nature of this lease in relation to the lessee, and compute the amount of the initial lease liability.(b) Prepare a 10-year lease amortization schedule.(c) Prepare all of the lessee’s journal entries
(L02,4) (Lessee Computations and Entries, Capital Lease with Unguaranteed Residual Value) Assume the same data as in
(L03,4) GROUPWORK (Lessor Computations and Entries, Sales-Type Lease with Unguaranteed Residual Value) George Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is
(L02) (Lessee Entries, Capital Lease with Monthly Payments) Shapiro Inc. was incorporated in 2016 to operate as a computer software service firm with an accounting fiscal year ending August 31. Shapiro’s primary product is a sophisticated online inventory-control system; its customers pay a fixed
(L02,4) (Lessee Entries and Balance Sheet Presentation, Capital Lease) On January 1, 2017, Cage Company contracts to lease equipment for 5 years, agreeing to make a payment of $137,899 (including the executory costs of $6,000) at the beginning of each year, starting January 1, 2017. The taxes, the
(L02,4) GROUPWORK (Lessee Entries and Balance Sheet Presentation, Capital Lease) Ludwick Steel Company as lessee signed a lease agreement for equipment for 5 years, beginning December 31, 2017. Annual rental payments of$40,000 are to be made at the beginning of each lease year (December 31). The
(L02,4) (Lessee Entries with Residual Value) The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee.Inception date January 1, 2017 Annual lease payment due at the beginning of each year, beginning with January 1, 2017 $124,798
(L03,4) EXCEL (Balance Sheet and Income Statement Disclosure—Lessor) Assume the same information as in P21-4.Instructions(a) Assuming the lessor’s accounting period ends on September 30, answer the following questions with respect to this lease agreement.(1) What items and amounts will appear
(L02,4) EXCEL (Balance Sheet and Income Statement Disclosure—Lessee) The following facts pertain to a noncancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system.Inception date October 1, 2017 Lease term 6 years Economic life of leased
(L02,4) (Lessee-Lessor Entries, Balance Sheet Presentation, Sales-Type Lease) Winston Industries and Ewing Inc.enter into an agreement that requires Ewing Inc. to build three diesel-electric engines to Winston’s specifications. Upon completion of the engines, Winston has agreed to lease them for
(L02,3) GROUPWORK (Lessee-Lessor Entries, Operating Lease) Cleveland Inc. leased a new crane to Abriendo Construction under a 5-year noncancelable contract starting January 1, 2017. Terms of the lease require payments of $33,000 each January 1, starting January 1, 2017. Cleveland will pay
(L02,4) (Lessee-Lessor Entries, Sales-Type Lease) Glaus Leasing Company agrees to lease machinery to Jensen Corporation on January 1, 2017. The following information relates to the lease agreement.1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated
*P 20-14 (LO6,7) (Postretirement Benefit Worksheet—2 Years) Elton Co. has the following postretirement benefit plan balances on January 1, 2017.Accumulated postretirement benefi t obligation $2,250,000 Fair value of plan assets 2,250,000 The interest (settlement) rate applicable to the plan is
*P 20-13 (LO6,7) GROUPWORK (Postretirement Benefit Worksheet) Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2017.Plan assets $200,000 Expected postretirement benefi t obligation 820,000
(LO1,2,3,4,5) (Pension Worksheet) Larson Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2018, the following balances related to this plan.Plan assets (market-related value) $270,000 Projected benefi t obligation 340,000 Pension asset/liability 70,000 Cr.Prior service
(LO1,2,3,4,5) (Pension Worksheet) The following data relate to the operation of Kramer Co.’s pension plan in 2018.The pension worksheet for 2017 is provided in P20-10.Service cost $59,000 Actual return on plan assets 32,000 Amortization of prior service cost 28,000 Annual contributions 51,000
(LO1,2,3,4) (Pension Worksheet—Missing Amounts) Kramer Co. has prepared the following pension worksheet.Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the accounting tasks related to the
(LO1,2,3,4,5) GROUPWORK (Comprehensive 2-Year Worksheet) Hobbs Co. has the following defined benefit pension plan balances on January 1, 2017.Projected benefi t obligation $4,600,000 Fair value of plan assets 4,600,000 The interest (settlement) rate applicable to the plan is 10%. On January 1,
(LO1,2,3,4,5) GROUPWORK (Comprehensive 2-Year Worksheet) Lemke Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2017 and 2018.2017 2018 Projected benefi t obligation, January 1 $600,000 Plan assets (fair value
(LO2,3,4) (Pension Worksheet) Hanson Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2017, the following balances related to this plan.Plan assets (market-related value) $520,000 Projected benefi t obligation 700,000 Pension asset/liability 180,000 Cr.Prior service
(LO3,4) GROUPWORK (Computation of Prior Service Cost Amortization, Pension Expense, Journal Entries, and Net Gain or Loss) Aykroyd Inc. has sponsored a noncontributory, defined benefit pension plan for its employees since 1994. Prior to 2017, cumulative net pension expense recognized equaled
(LO2,3,4) (Computation of Pension Expense, Amortization of Net Gain or Loss–Corridor Approach, Journal Entries for 3 Years) Hiatt Toothpaste Company initiates a defined benefit pension plan for its 50 employees on January 1, 2017.The insurance company which administers the pension plan provided
(L01,2,3,4) EXCEL (Pension Expense, Journal Entries for 2 Years) Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2017 and 2018.2016 2017 2018 Annual service cost $16,000 $ 19,000 $ 26,000 Settlement rate and expected
(LO1,2,3,4,5) (Pension Expense, Journal Entries, Amortization of Loss) Gottschalk Company sponsors a defined benefit plan for its 100 employees. On January 1, 2017, the company’s actuary provided the following information.Accumulated other comprehensive loss (PSC) $150,000 Pension plan assets
(LO1,2,3,4,5) GROUPWORK (3-Year Worksheet, Journal Entries, and Reporting) Jackson Company adopts acceptable accounting for its defined benefit pension plan on January 1, 2016, with the following beginning balances: plan assets$200,000; projected benefit obligation $250,000. Other data relating to
(L01,2,3,4) EXCEL (2-Year Worksheet) On January 1, 2017, Harrington Company has the following defined benefit pension plan balances.Projected benefi t obligation $4,500,000 Fair value of plan assets 4,200,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2018, the
(LO1,2,4) GROUPWORK (Five Differences, Compute Taxable Income and Deferred Taxes, Draft Income Statement)Wise Company began operations at the beginning of 2018. The following information pertains to this company.1. Pretax financial income for 2018 is $100,000.2. The tax rate enacted for 2018 and
(LO1,2,4) (Two Differences, 2 Years, Compute Taxable Income and Pretax Financial Income) The following information was disclosed during the audit of Elbert Inc.1. Amount Due Year per Tax Return 2017 $130,000 2018 104,000 2. On January 1, 2017, equipment costing $600,000 is purchased. For financial
(LO1,2,4) GROUPWORK (One Temporary Difference, Tracked 3 Years, Change in Rates, Income Statement Presentation) Crosley Corp. sold an investment on an installment basis. The total gain of $60,000 was reported for financial reporting purposes in the period of sale. The company qualifies to use the
(L01,4) (Two Differences, Two Rates, Future Income Expected) Presented below are two independent situations related to future taxable and deductible amounts resulting from temporary differences existing at December 31, 2017.1. Mooney Co. has developed the following schedule of future taxable and
(LO3) EXCEL GROUPWORK (NOL without Valuation Account) Jennings Inc. reported the following pretax income(loss) and related tax rates during the years 2013–2019.Pretax Income (loss) Tax Rate 2013 $ 40,000 30%2014 25,000 30%2015 50,000 30%2016 80,000 40%2017 (180,000) 45%2018 70,000 40%2019 100,000
(LO1,2,4) (Permanent and Temporary Differences, One Rate) The accounting records of Shinault Inc. show the following data for 2017 (its first year of operations).1. Life insurance expense on officers was $9,000.2. Equipment was acquired in early January for $300,000. Straight-line depreciation over
(LO1,2,4) (Second Year of Depreciation Difference, Two Differences, Single Rate, Discontinued Operation) The following information has been obtained for Gocker Corporation.1. Prior to 2017, taxable income and pretax financial income were identical.2. Pretax financial income is $1,700,000 in 2017
(L01,2) (One Temporary Difference, Tracked for 4 Years, One Permanent Difference, Change in Rate) The pretax financial income of Truttman Company differs from its taxable income throughout each of 4 years as follows.Pretax Taxable Year Financial Income Income Tax Rate 2017 $290,000 $180,000 35%2018
(L01,2,4) EXCEL (Three Differences, No Beginning Deferred Taxes, Multiple Rates) The following information is available for Remmers Corporation for 2017.1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $120,000. This difference will reverse in
(LO8) (Franchise Revenue) Amigos Burrito Inc. sells franchises to independent operators throughout the northwestern part of the United States. The contract with the franchisee includes the following provisions.1. The franchisee is charged an initial fee of $120,000. Of this amount, $20,000 is
(LO5,6,7) EXCEL (Long-Term Contract with an Overall Loss) On July 1, 2017, Torvill Construction Company Inc.contracted to build an office building for Gumbel Corp. for a total contract price of $1,900,000. On July 1, Torvill estimated that it would take between 2 and 3 years to complete the
(LO5,6,7) (Long-Term Contract with Interim Loss) On March 1, 2017, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by October 31, 2019. The annual contract costs incurred,
(LO5,6) EXCEL (Recognition of Profit on Long-Term Contract) Shanahan Construction Company has entered into a contract beginning January 1, 2017, to build a parking complex. It has been estimated that the complex will cost $600,000 and will take 3 years to construct. The complex will be billed to
(LO2,3) (Time Value, Gift Cards, Discounts) Presented below are two independent revenue arrangements for Colbert Company.Instructions Respond to the requirements related to each revenue arrangement.(a) Colbert sells 3D printer systems. Recently, Colbert provided a special promotion of zero-interest
(LO3) (Customer Loyalty Program) Martz Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2017, customers purchase products for $300,000 (with a cost of
(LO3) (Warranty, Customer Loyalty Program) Hale Hardware takes pride as the “shop around the corner” that can compete with the big-box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Hale has developed the
(LO2,3,4) (Allocate Transaction Price, Returns, and Consignments) Ritt Ranch & Farm is a distributor of ranch and farm equipment. Its products range from small tools, power equipment for trench-digging and fencing, grain dryers, and barn winches.Most products are sold direct via its company catalog
(LO2,3,4) (Allocate Transaction Price, Discounts, Time Value) Economy Appliance Co. manufactures low-price, nofrills appliances that are in great demand for rental units. Pricing and cost information on Economy’s main products are as follows.Standalone Item Selling Price (Cost)Refrigerator $500
(LO2,3,4) (Allocate Transaction Price, Discounts, Time Value) Grill Master Company sells total outdoor grilling solutions, providing gas and charcoal grills, accessories, and installation services for custom patio grilling stations.Instructions Respond to the requirements related to the following
(LO2,3,4) (Allocate Transaction Price, Modification of Contract) Refer to the Tablet Bundle A revenue arrangement in P18-1. In response to competitive pressure for Internet access for Tablet Bundle A, after 2 years of the 3-year contract, Tablet Tailors offers a modified contract and extension
(LO2,3) (Allocate Transaction Price, Upfront Fees) Tablet Tailors sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot. It offers two bundles with the following terms.1. Tablet Bundle A sells a tablet with 3 years
*P17-17 (L06) (Fair Value Hedge) On October 15, 2017, Oil Products Co. purchased 4,000 barrels of fuel oil with a cost of $240,000 ($60 per barrel). Oil Products is holding this inventory in anticipation of the winter 2018 heating season. Oil Products accounts for its inventory at the
*P17-16 (L06) (Cash Flow Hedge) LEW Jewelry Co. uses gold in the manufacture of its products. LEW anticipates that it will need to purchase 500 ounces of gold in October 2017, for jewelry that will be shipped for the holiday shopping season. However, if the price of gold increases, LEW’s cost to
*P17-15 (L06) EXCEL (Fair Value Hedge Interest Rate Swap) On December 31, 2017, Mercantile Corp. had a $10,000,000, 8% fixed-rate note outstanding, payable in 2 years. It decides to enter into a 2-year swap with Chicago First Bank to convert the fixed-rate debt to variable-rate debt. The terms of

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