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intermediate accounting volume 1
Accounting Principles Volume 1 9th Canadian Edition Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak - Solutions
Up North Company recently hired a new accountant whose first task was to prepare the financial statements for the year ended December 31, 2024. The following is what she produced:The owner of the company, James Prideaux, is confused by the statements and has asked you for your help. He doesn’t
New West Company recently hired a new accountant whose first task was to prepare the financial statements for the year ended December 31, 2024. The following is what he produced:The owner of the company, Lily Oliver, is confused by the statements and has asked you for your help. She doesn’t
The following information (dollars in millions) is for Canadian Tire Corporation, Limited.Instructionsa. Calculate the gross profit margin, profit margin, and current ratio for each year.b. Comment on whether the ratios have improved or deteriorated over the three years.Taking It FurtherWhat other
Assume the same information as in BE8.9. Tokarik Inc.’s financial difficulties are over. On June 4, 2024, Perry Co. receives a payment in full of $5,500 from Tokarik Inc. Record this transaction.
Magna International Inc. is a leading global supplier of technologically advanced automotive components, systems, and modules. Selected financial information (in US$ millions) follows:Instructionsa. Calculate the gross profit margin, profit margin, and current ratio for each year.b. Comment on
The unadjusted trial balance of World Enterprises for the year ended December 31, 2024, follows:Additional information:1. There is $750 of supplies on hand on December 31, 2024.2. The one-year insurance policy was purchased on March 1, 2024.3. Depreciation expense for the year is $10,000 for the
Reynold’s Company had net sales of $2,500,000, cost of goods sold of $1,150,000, and profit of $500,000 in 2024. The company had a January 1, 2024, inventory balance of $132,000 and a December 31, 2024, inventory balance of $143,000. Calculate the inventory turnover and days sales in inventory
Explain the difference between a purchase return and a purchase allowance. In a perpetual inventory system, what accounts would be affected by a purchase return and a purchase allowance?
The unadjusted trial balance of Global Enterprises for the year ended December 31, 2024, follows:Additional information:1. There was $700 of supplies on hand on December 31, 2024.2. Depreciation expense for the year is $5,360 on the furniture, and $4,200 on the equipment3. Accrued interest expense
Western Lighting Warehouse has a July 31 fiscal year end and uses a perpetual inventory system with the earnings approach. An alphabetical list of its account balances at July 31, 2024, follows. All accounts have normal balances.Additional information:1. All adjustments have been recorded and
Wolcott Warehouse Store has an August 31 fiscal year end and uses a perpetual inventory system and the earnings approach. An alphabetical list of its account balances at August 31, 2024, follows. All accounts have normal balances.Additional information:1. All adjustments have been recorded and
Because Natalie has had such a successful first few months, she is considering other opportunities to develop her business. One opportunity is the sale of fine European juicing machines. The owner of Kzinski Supply Co. has approached Natalie to become the exclusive Canadian distributor of these
At the beginning of June 2024, Willingham Distributing Company’s ledger showed Cash $18,000, Merchandise Inventory $5,900, and D. Willingham, Capital $23,900. During the month of June, the company had the following selected transactions:June 1 Purchased $9,200 of merchandise inventory from Sun
You are given the following information for Swan Valley Company for the month ended June 30, 2024:Swan Valley Company uses a perpetual inventory system. All sales and purchases are on account.Instructionsa. Calculate the cost of goods sold and the ending inventory using weighted average. Round the
In December, Carrie’s Car Emporium purchased the following items:On December 22, the 2022 Honda and 2021 Jeep were sold for $16,500 each.Instructionsa. Should Carrie’s Car Emporium use specific identification or one of the two cost formulas (FIFO or weighted average) instead? Explain.b.
The management of Birchwood Inc. is evaluating the appropriateness of using its present inventory cost determination method, which is FIFO. The company requests your help in comparing the results of operations for 2024 if weighted average were used instead. For 2024, you have been provided with the
The management of Gresa Inc. is evaluating the appropriateness of using its present inventory cost determination method, which is weighted average. The company requests your help in comparing the results of operations for 2024 if FIFO were used instead. For 2024, you have been provided with the
You are the controller of Small Toys Inc. Mutahir Kazmi, the president, recently mentioned to you that he found an error in the 2023 financial statements that he believes has now corrected itself. In discussions with the purchasing department, Mutahir determined that the 2023 ending inventory was
The records of James Company show the following data:After its July 31, 2024, year end, James Company discovered two errors:1. In August 2022, James recorded a $30,000 inventory purchase on account for goods that had been received in July 2022. The physical inventory account correctly included this
Harrison Company has a July 31 fiscal year end and uses a perpetual inventory system. The records of Harrison Company show the following data:After its July 31, 2024, year end, Harrison discovered two errors:1. At July 31, 2023, Harrison had $10,000 of goods held on consignment at another company
Top Light Company uses a perpetual inventory system. The company began 2024 with 1,000 lamps in inventory at a cost of $12 per unit. During 2024, Top Light had the following purchases and sales of lamps:All purchases and sales are on account.Instructionsa. Calculate the cost of goods sold and
The following financial information (in US$ millions) is for two major corporations for the three fiscal years ended December 31 as follows:Instructionsa. Calculate the inventory turnover, days sales in inventory, and gross profit margin for each company for 2019 and 2018.b. Comment on your
Glacier Fishing Gear reported the following amounts for its cost of goods sold and ending inventory:Glacier made two errors: (1) 2023 ending inventory was overstated by $5,500, and (2) 2024 ending inventory was understated by $4,000.Instructionsa. Calculate the correct cost of goods sold and ending
The following financial information (in US$ millions) is for two major corporations for the three years ended December 31:Instructionsa. Calculate the inventory turnover, days sales in inventory, and gross profit margin for each company for 2019 and 2018.b. Comment on your findings.Taking It
Westor Company lost all of its inventory in a fire on December 28, 2024. The accounting records showed the following gross profit data for November and December:Westor is fully insured for fire losses but must prepare a report for the insurance company.Instructionsa. Calculate gross profit for the
Smart Watch Company reported the following income statement data for a two-year period.Smart Watch uses a perpetual inventory system. The inventory amounts on January 1, 2023, and December 31, 2024, are correct. However, the ending inventory on December 31, 2023, was overstated by
Aldor Corporation opened a new store on January 1, 2024. During 2024, the first year of operations, the following purchases and sales of inventory were made:Instructionsa. Calculate the cost of goods available for sale and the number of units of ending inventory.b. Assume Aldor uses weighted
Merrett Company lost 80% of its inventory in a fire on March 23, 2024. The accounting records showed the following gross profit data for February and March:Merrett is fully insured for fire losses but must prepare a report for the insurance company.Instructionsa. Calculate gross profit for the
Which inventory cost formula—FIFO or weighted average—provides a better match between sales and cost of goods sold? The better inventory valuation? Explain.
Mila Company discovers in 2024 that its ending inventory at December 31, 2023, was overstated by $5,000. What effect will this error have on (a) 2023 profit, (b) 2024 profit, (c) The combined profit for the two years?
Smart Information Technology Company has the following cost and net realizable value data at December 31, 2024:a. Calculate the lower of cost and net realizable value valuation assuming Smart Information Technology Company applies LCNRV to individual products.b. What adjustment should the company
Hakim’s Department Store uses the retail inventory method to estimate its monthly ending inventories. The following information is available for two of its departments at August 31, 2024:On August 31, Hakim’s Department Store takes a physical inventory count at retail. The actual retail values
Brandon Shoe Store uses the retail inventory method to estimate its monthly ending inventories. The following information is available at November 30, 2024:At November 30, Brandon Shoe Store takes a physical inventory count at retail. The actual retail values of the inventories in each department
Collie Company incorrectly included $23,000 of goods held on consignment for Retriever Company in its beginning inventory for the year ended December 31, 2023. The ending inventory for 2023 and 2024 was correctly counted.(a) What is the impact on the 2023 financial statements?(b) What is the impact
FirstIn Company reported profit of $90,000 in 2023. When counting its inventory on December 31, 2023, the company forgot to include items stored in a separate room in the warehouse. As a result, ending inventory was understated by $7,000.a. What is the correct profit for 2023?b. What effect, if
Dartmouth Games reported the following information for a three-year period:Instructionsa. Calculate the inventory turnover, days sales in inventory, and gross profit margin for 2024 and 2023.b. Based on this information, does the company’s liquidity appear to be improving or deteriorating? Ending
Refer to the data in BE6.14 for Smart Information Technology Company. Prior to making the adjustment in BE6.14 part (b), cost of goods sold for 2024 was $418,500. What is the correct ending inventory that should be reported on the balance sheet at December 31, 2024? What is the correct cost of
Shereen Company reported the following information for November and December 2024:Shereen’s ending inventory at December 31 was destroyed in a fire.Instructionsa. Calculate the gross profit margin for November.b. Using your answer from part (a), determine the estimated cost of inventory lost in
Gupta Company maintains a petty cash fund for small expenditures. The following transactions occurred over a two-month period:Instructionsa. Journalize the petty cash transactions.b. What internal control features exist in a petty cash fund?Taking It FurtherGupta Company established a petty cash
New Look Vision Group Inc. manufactures and retails eye care products. The company operates company stores under different banners including New Look Eyewear, Vogue Optical, Iris, and Greiche & Scaff. Selected information from New Look’s comparative balance sheet follows:Instructionsa.
Aritzia Inc.’s financial statements are presented in Appendix A of this book.Instructionsa. Based on the information contained in these financial statements, determine each of the following:1. Cash and cash equivalents balance at March 1, 2020, and the prior year, March 3, 2019.2. Increase
Refer to the data in BE6.16 for Reynold’s Company. Assume for 2023 the company had an inventory turnover ratio of 9.1 and 40.1 days sales in inventory. Has the company’s inventory management improved or deteriorated in 2024? Explain.Data from BE6.16Reynold’s Company had net sales of
Barinder’s Barbourshop Co. owns the following items:Cash in bank savings account $ 5,000Cash on hand 1,050Cash refund due from the Canada Revenue Agency 1,000Chequing account balance 14,000Postdated cheques 2,500What amount should Barinder’s report as cash?
Presented below are two independent situations.1. On March 15, 50 customers used debit cards to purchase merchandise for a total of $8,740 from SoccerMax. SoccerMax pays a $1.25 debit card fee for each transaction.2. On June 21, Coral Creations Gallery sells a painting to Constance Furrow for
The internal control procedures in Valentine Company result in the following provisions. Identify the control activity that is being followed in each case.1. Employees who have physical custody of assets do not have access to the accounting records.2. Each month, the assets on hand are compared to
The following is an alphabetical list of Bud’s Bakery’s adjusted account balances at the end of the company’s fiscal year on November 30, 2024:Additional facts:1. Bud’s Bakery uses a periodic inventory system with the earnings approach.2. Of the mortgage payable, $8,500 is due on March 31,
Nelson Company provides the following information for the month ended October 31, 2024: sales on credit $280,000, cash sales $95,000, sales discounts $5,000, and sales returns and allowances $11,000. Prepare the sales section of the income statement based on this information.
The following is an alphabetical list of Tse’s Tater Tots’ adjusted account balances at the end of the company’s fiscal year on December 31, 2024:Additional information:1. Tse’s Tater Tots uses a periodic inventory system with the earnings approach.2. A physical inventory count determined
Chocolate Treats has the following account balances:Assuming Chocolate Treats uses a multiple-step income statement, calculate the following:(a) Net sales,(b) Gross profit,(c) Operating expenses,(d) Profit from operations,(e) Profit. Cost of goods sold Depreciation expense Insurance
Raymond is the accountant at an electronics retail store. He is friends with one of the salespeople, Geoff. The electronics retail store follows ASPE. Geoff tells Raymond to simply debit Sales whenever a customer returns an item that Geoff originally sold. Do you agree with Geoff’s advice? What
Presented below are selected transactions for Patterson Warehouse during April and May of the current year. Patterson uses a perpetual inventory system and the contract-based approach for revenue recognition. Patterson has a stated return policy of 15 days from the date of sale and management
The following is Crystal Company’s adjusted trial balance at December 31, 2024:Instructionsa. Prepare a single-step income statement for the year ended December 31, 2024.b. Prepare closing entries and a post-closing trial balance. Cash Notes receivable Merchandise inventory Equipment Accumulated
GS Retail reported the following for the past two fiscal years:(a) Calculate the gross profit margin and profit margin for both years.(b) Comment on any changes in profitability. Net sales Cost of goods sold Profit for the year 2024 $950,000 600,000 70,000 2023 $800,000 500,000 65,000
Presented below is selected information for Kaila Company for the month of March, 2024.Instructionsa. Prepare a multiple-step income statement.b. Calculate the gross profit margin. Cost of goods sold Delivery expense Insurance expense Salaries expense $215,000 7,000 6,000 58,000 Rent expense Sales
An alphabetical list of Rikards Company adjusted accounts at its fiscal year end, August 31, 2024, follows. All accounts have normal balances.Additional information:1. Of the notes payable, $6,000 becomes due on February 17, 2025. The balance is due in 2026.2. On July 18, 2024, R. Smistad invested
lululemon athletica inc. reported the following information (in US$ thousands) for the three fiscal years ended:Instructionsa. Calculate the gross profit margin and profit margin for lululemon for each of the three years.b. Recalculate profit margin using profit from operations as opposed to profit
Sagina Stores uses a periodic inventory system and reports the following information for 2024:Prepare the cost of goods sold section of the multiple-step income statement for Sagina Stores. Beginning inventory Ending inventory Freight in Delivery expense $51,000 68,000 13,600 10,625 Net
On January 1, 2024, Casselberry Retailers had inventory of $50,000. On December 31, 2024, total inventory on hand was $66,000. Casselberry reported the following account balances on December 31:Instructionsa. Calculate Casselberry Retailers’ 2024 gross profit.b. Calculate Casselberry Retailers’
Venti Construction Supplies uses a perpetual inventory system and the contract-based approach for revenue recognition. Management estimates that 15% of sales will be returned by customers within the 30-day return period. The company had the following transactions in April and May.Apr. 16 Sold
The following selected information is for Okanagan Company for the year ended January 31, 2024:Instructionsa. Prepare a multiple-step income statement.b. Prepare closing entries. Delivery expense Freight in Insurance expense Interest expense Merchandise inventory, beginning Merchandise inventory,
The following are some of the terms discussed in the chapter:1. Performance obligation 4. Contract-based approach2. Right of return 5. Refund liability3. Variable consideration 6. Estimated inventory returnsInstructionsMatch each term with the best description below. Each term may be used more than
At the beginning of the current soccer season, on May 1, 2024, Fullback Sports has 100 soccer balls in inventory at $10 each. The company uses a perpetual inventory system and the contract-based approach for revenue recognition. Based on past experience, Fullback’s management estimates returns at
The following merchandise transactions occurred in January. Pippen Company uses a perpetual inventory system and the contract-based approach to revenue recognition. Pippen Company has a stated policy that all sales are final—no returns or exchanges.Dec. 3 Pippen Company sold merchandise to Thomas
Data visualization can be used to compare inventory management. Inventory turnover shows the number of times during the period a firm sells the entire dollar amount of its inventory. It is advantageous to “turn over” inventory more quickly to reduce the risk of obsolescence and spoilage. As
When a buyer returns goods to a seller, the seller will also adjust Cost of Goods Sold, Estimated Inventory Returns, and Inventory if the seller is using the contract-based approach to revenue recognition and a perpetual inventory system. Explain the two situations that make it necessary to record
Carberry Company is trying to determine the value of its ending inventory as at February 29, 2024, the company’s year end. The accountant counted everything that was in the warehouse as at February 29, which resulted in an ending inventory valuation of $65,000. However, he was not sure how to
Refer to the consolidated financial statements for Aritzia Inc. reproduced in Appendix A.Instructionsa. How does Aritzia value its inventory?b. Which inventory cost formula does Aritzia use?c. Would using the specific identification cost determination method be appropriate for an organization like
Morden Company is trying to determine the value of its ending inventory as at February 29, 2024, the company’s year end. The accountant counted everything that was in the warehouse as at February 29, which resulted in an ending inventory cost of $56,000. However, she was not sure how to treat the
The merchandise inventory in Claire’s Clothing Store was counted after the close of business on December 31, 2024, the company’s year end. It was determined that the total cost of this inventory was $55,500. Claire wants to know if this is the correct amount that should be reported on the
Kari Downs, an auditor with Wheeler & Co., CPAs, is performing a review of Depue Company’s inventory account. Depue did not have a good year, and top management is under pressure to boost reported income. According to its record, the inventory balance at year end was $740,000. Kari prepared
Headquartered in Toronto, Indigo Books & Music Inc. is Canada’s largest book retailer. The following selected information is from the consolidated financial statements for Indigo Books & Music Inc. for the fiscal periods ended March 28, 2020, March 30, 2019, and March 31, 2018 (in
You are given the following information for Churchill Company for the month ended November 30, 2024:Churchill Company uses a perpetual inventory system. All sales and purchases are on account.Instructionsa. Calculate the cost of goods sold and the ending inventory using FIFO.b. Assume the sales
Inventory data for Moath Company are reported as follows:Assume a sale of 440 units occurred on June 15 for a selling price of $8 and a sale of 360 units on June 27 for $9. On June 30, 100 units remain in inventory.InstructionsCalculate the cost of ending inventory and cost of goods sold on June 30
Duval Retailers uses a perpetual inventory system. Data for athletic t-shirts include the following purchases:On July 9, Duval sold 18 t-shirts, and on September 7, 30 more units. Prepare the perpetual inventory record for the above transactions using weighted average. Round per-unit cost to three
On May 31, 2024, Forester Theatre’s Cash account per its general ledger showed the following balance:A comparison of the details on the bank statement with the details in the Cash account revealed the following facts.1. The statement included a debit memo of $45 for the monthly bank service
On June 30, 2024, EZ Fertilizer’s Cash account per its general ledger showed the following balance:A comparison of the details on the bank statement with the details in the Cash account revealed the following facts.1. The statement included a debit memo of $40 for printing of additional company
The bank portion of the bank reconciliation for Katsaris Company at August 31, 2024, was as follows:The unadjusted cash balance per books on September 30, 2024, was $10,228. The September bank statement showed the following:Additional information:1. The deposit of $3,145 on September 15 is an
You are given the following information for River Adventures Company:Additional information from the bank statement:1. The deposit of $1,650 on May 13 is an electronic transfer from a customer in payment of its account. The amount includes $35 of interest, which River Adventures Company had not
On July 31, 2024, Daisy Company had a cash balance per books of $7,250. The statement from Canada Bank on that date showed a balance of $7,690.80. A comparison of the bank statement with the Cash account revealed the following facts:1. The bank service charge for July was $25.2. The bank collected
The March bank statement showed the following for Yap Co.:Additional information:1. The bank statement contained three debit memoranda:• An NSF cheque of $595 that Yap had deposited was returned due to insufficient funds in the maker’s bank account. This cheque was originally given to Yap by
On April 16, Temptalia Company made sales of $15,000 to customers using credit cards for payment. The credit card company charges Temptalia a service fee of 2.5% for credit card transactions. Prepare the entry to record the credit card sales.
The Agricultural Genetics Company’s Cash account in its general ledger reported a balance of $6,782 on May 31, 2024. The company’s bank statement from Western Bank reported a balance of $6,405 on the same date. A comparison of the details in the bank statement with the details in the Cash
The following information is for Tindall Company in September:1. Cash balance per bank, September 30, $7,100.2. Cash balance per books, September 30, $5,470.3. Outstanding cheques, $3,120.4. Bank service charge, $22.5. NSF cheque from customer, $220.6. Deposits in transit, $1,380.7. EFT receipts
The bank portion of the bank reconciliation for Maloney Company at October 31, 2024, was as follows:The adjusted cash balance per bank agreed with the cash balance per books at October 31. The November bank statement showed the following:Additional information from the bank statement:1. The EFT of
On December 31, 2024, Lally Company had a cash balance per books of $8,981. The bank statement on that date showed a balance of $10,155. A comparison of the statement with the Cash account revealed the following:1. The statement included debit memos of $70 for the printing of additional company
In the November 30, 2024, bank reconciliation at Kiran’s Kayaks, there were two outstanding cheques: #165 for $812 and #169 for $529. There was a $1,128 deposit in transit as at November 30, 2024. The bank balance at November 30 was $7,181; the adjusted cash balance was $6,968. The December bank
The following information is for Robin’s Logistics Company:1. Cash balance per bank, July 31, $7,263.2. July bank service charge not recorded by the depositor, $28.3. Cash balance per books, July 31, $7,284.4. Deposits in transit, July 31, $2,314.5. Bank collected $1,700 note for Robin’s in
Walker Company has recorded the following items in its financial records:The highly liquid investments had maturities of three months or less when they were purchased. The stock investments will be sold in the next six to 12 months. The plant expansion project will begin in three
The following reconciling items are applicable to the bank reconciliation for Ellington Company. Indicate which items will require a journal entry. Explain if any items do not require an entry.a. Outstanding chequesb. Bank debit memorandum for service chargec. EFT payment made by a customerd.
South Hampton Pool Supplies’ May 31, 2024, bank balance was $7,350. The company’s cash balance at May 31 was $8,210. Other information follows:1. Outstanding cheques were #321 for $653, #371 for $238, #375 for $281, and #376 for $958. Cheque #321 was also outstanding on April 30 and was
Salut Company owns the following assets at the balance sheet date:What amount should be reported as cash and cash equivalents in the balance sheet? Cash in bank-savings account Cash on hand Cash refund due from the Canada Revenue Agency Cash in bank-chequing account Stale-dated cheques from
Sunil’s Supplies has hired a new junior accountant and has given her the task of identifying what should be reported as cash as at February 29, the company’s balance sheet date. The following information is available.1. Cash on hand in the cash registers on February 29 totals $2,339. Of this
Shaw Communications Inc. is a diversified Canadian communications company whose core operating business is providing broadband cable television services, internet, telecommunications services, satellite services, and programming content. The following selected information (in millions) was taken
At July 31, Rai Company has the following bank information: cash balance per bank $9,375, outstanding cheques $875, deposits in transit $2,260, and a bank service charge $20. Determine the adjusted cash balance per bank at July 31.
On August 31, 2024, Claresview Company had a cash balance per its books of $26,030. The bank statement on that date showed a balance of $17,100. A comparison of the bank statement with the Cash account revealed the following.1. The August 31 deposit of $17,050 was not included on the August bank
At August 31, Wong Company has a cash balance per books of $9,500 and the following additional data from the bank statement: charge for printing Wong Company cheques $55, interest earned on chequing account balance $18, and outstanding cheques $780. Determine the adjusted cash balance per books at
A new accountant at Magenta Company is trying to identify which of the following amounts should be reported as the current asset Cash and Cash Equivalents in the year-end balance sheet, as at June 30, 2024:1. Currency and coins totalling $76 in a locked box used for petty cash transactions.2. A
The following errors were found when the controller at Harrison Hotel was doing the October 31 bank reconciliation.1. On October 3, Harrison recorded a payment of an account payable as $590. The correct amount was $950. It was correctly recorded by the bank.2. On October 16, Harrison recorded a
The receivables turnover and collection period for BCE Inc. were calculated in this chapter, based on the company’s financial statements for the 2020 fiscal year. Portions of these financial statements are presented in Illustrations 8.10 and 8.11.Instructionsa. Calculate BCE’s receivables
On September 12, five customers use debit cards to purchase merchandise totalling $600 from Temptalia Company. The bank charges Temptalia Company $1.25 per debit card transaction. Prepare the entry to record the transactions by Temptalia Company.
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