Questions and Answers of Intermediate Accounting Volume 1

What are the similarities and differences between a debit card sale and a bank credit card sale to a retailer? To the customer?
Ramesh & Company allows customers to use debit and bank credit cards and cash for purchases of merchandise. The company does not accept personal cheques from customers. Ramesh’s bank charges
An aging analysis of Hake Company’s accounts receivable at November 30, 2023 and 2024, showed the following:Additional information:1. At November 30, 2023, the unadjusted balance in Allowance for
Rayon Co. uses the percentage of sales approach to record bad debt expense for its monthly financial statements and the percentage of receivables approach for its year-end financial statements. Rayon
Meraki Company uses the allowance method to estimate uncollectibles. The company produced the following aging of the accounts receivable at year end:Instructionsa. Calculate the total estimated
Presented below is an aging schedule for Sonder Company at June 30, 2023:Instructionsa. Prepare T accounts for Accounts Receivable and Allowance for Doubtful Accounts and enter the 2023 unadjusted
Casa Garage Co. accepts the following forms of payment: Visa, Mastercard, the Casa Garage Co. credit card, and debit. Casa is charged 3.5% for all bank credit card transactions and $0.50 per
At March 31, 2024, the trial balance of Agape Company contained the following amounts before adjustment:Instructionsa. Prepare the adjusting entry at March 31, 2024, to record bad debt expense,
The account balances of Assen Company at December 31, 2024, the end of the current year, show Accounts Receivable $180,000; Allowance for Doubtful Accounts $2,200 (credit); Sales $1,420,000; Sales
Rowen Company has accounts receivable of $241,000 at September 30, 2024. An analysis of the accounts shows the following:Credit terms are 2/10, n/30. The unadjusted balance in the Allowance for
At December 31, 2024, the trial balance of Darby Company contained the following amounts before adjustment:Instructionsa. Prepare the adjusting entry at December 31, 2024, to record bad debt expense,
Minerva Company’s year end is December 31. Minerva prepares adjusting entries to accrue interest revenue annually. On November 30, the Notes Receivable account balance is $28,560 and the Credit
Milton Company’s year end is July 31. Milton prepares adjusting entries to accrue interest revenue annually. On June 30, the Notes Receivable account balance is $23,800 and the Credit Card
Godfreid Company has accounts receivable of $95,400 at March 31, 2024. Credit terms are 2/10, n/30. At March 31, 2024, there is a $2,100 credit balance in Allowance for Doubtful Accounts prior to
Information on Hohenberger Company for 2024 follows:Instructionsa. Assume that Hohenberger Company decides to estimate its uncollectible accounts using the allowance method and an aging schedule.
Information for Jager Company in 2024 follows:Instructionsa. Assume that Jager Company decides to use the allowance method and estimates its uncollectible accounts to be $52,000 based on an aging
Creative Co. uses the allowance method to estimate uncollectible accounts receivable. The computer produced the following aging of the accounts receivable at year end:Instructionsa. Complete the
Presented below is an aging schedule for Kimler Company on December 31, 2024. Kimler sells all of its goods on account with terms n/30.Instructionsa. Using the above aging schedule, determine the
An aging analysis of Hagiwara Company’s accounts receivable at December 31, 2023 and 2024, showed the following:Additional information:1. At December 31, 2023, the unadjusted balance in Allowance
Accounts receivable transactions are provided below for J Looney Co.Instructionsa. Prepare the journal entries on December 31, 2023, March 5, 2024, and June 6, 2024.b. Post the journal entries to
Data on three promissory notes accepted by Levin Ltd. during 2024 follow.InstructionsDetermine the missing amounts. Date of Note Oct. 1 Aug. 1 Nov. 1 Term
Presented below is an aging schedule for Bravo Wholesale Food Company on December 31, 2024. Bravo sells all its goods on account with terms n/7.Instructionsa. Using the above aging schedule,
Access Company has had significant bad debts in previous years. To eliminate the risk of bad debts, the accounting manager of Access Company has recommended to the sales manager to make only cash
Yamada Co. has three outstanding notes receivable at its December 31, 2024, fiscal year end. For each note, calculate(a) Total interest revenue,(b) Interest revenue to be recorded in 2024,(c)
At December 31, 2023, Blanda Company had a credit balance of $15,000 in Allowance for Doubtful Accounts. During 2024, Blanda wrote off accounts totalling $11,000. One of those accounts of $1,800 was
Ouellette Co. adjusts its books monthly. On June 30, 2024, notes receivable include the following:Instructionsa. Calculate the balance in the Interest Receivable and Notes Receivable accounts at June
Data on four promissory notes accepted by Dryer Interiors during 2024 follow.InstructionsDetermine the missing amounts. Note # 1234 3 Principal (a) $30,000 $60,000 $45,000 Annual Interest
Qinshan Co. uses the percentage of sales approach to record bad debt expense. It estimates that 1.5% of net credit sales will become uncollectible. Credit sales are $950,000 for the year ended April
Norlandia Saga Company’s general ledger included the following selected accounts (in thousands) at November 30, 2024:Additional information:1. On November 30, 2023, Accounts Receivable was $271.7
Jensen Company’s general ledger included the following selected accounts (in thousands) at December 31, 2024:Additional information:1. On December 31, 2023, Accounts Receivable was $611.1 thousand
At the end of 2023, Perry Co. has an allowance for doubtful accounts of $28,000. On January 31, 2024, when it has accounts receivable of $575,000, Perry Co. learns that its $5,500 receivable from
Financial Statement The adjusted trial balance of Eureka Company for the year ended December 31, 2024, is as follows:InstructionsPrepare a multiple-step income statement, statement of owner’s
The adjusted trial balance of Gibson Company for the year ended December 31, 2024, is as follows:InstructionsPrepare a multiple-step income statement, statement of owner’s equity, and classified
At December 31, 2024, Nicholay Industries reports the following selected accounts from the unadjusted trial balance for its first year of operations:Instructionsa. Prepare the journal entry to record
The following information (in millions) was taken from the December 31 financial statements of Canadian National Railway Company:Instructionsa. Calculate the 2019 and 2018 current ratios.b. Calculate
Ni Co. has the following notes receivable outstanding at December 31, 2024:Interest on each of the above notes is payable at maturity.Instructionsa. Calculate the interest revenue that Ni Co. will
On January 10, 2024, Kato Kreations sold merchandise on account to Lechner & Associates for $15,600, n/30. On February 9, Lechner gave Kato a 10% promissory note in settlement of this account.
The financial statements of Maple Leaf Foods Inc. reported the following for the years ended December 31, 2019, 2018, and 2017.a. Calculate Maple Leaf’s receivables turnover and collection period
Lee Company accepts a $27,000, four-month, 6% note receivable in settlement of an account receivable on June 1, 2024. Interest is to be paid at maturity. Lee Company has a December 31 year end and
Demir Financial Services loaned Sharp Inc. $100,000 cash in exchange for a one- year, 4% note on July 1, 2024. Interest is payable quarterly beginning on October 1, 2024. Demir has a December 31 year
Saucier Company has accounts receivable, notes receivable due in three months, notes receivable due in two years, an allowance for doubtful accounts, sales taxes recoverable, and income tax
In 2024, Weisman Company had the following transactions related to the purchase of a property. All transactions are for cash unless otherwise stated.Feb. 7 Purchased real estate for $575,000, paying
Canadian Worldwide Communications Co.’s receivables turnover was 6.5 times in 2023 and 5.9 times in 2024. Has the company’s receivables management improved or worsened?
Cotton Company uses the percentage of sales approach to record bad debt expense for its monthly financial statements and the percentage of receivables approach for its year-end financial statements.
At December 31, 2024, the general ledger and subsidiary ledger for Albert’s, a small auto parts store, showed the following:Instructionsa. Record the above transactions. Ignore credit card fees and
At December 31, 2021, the general ledger and subsidiary ledger for Wow’s, a small beauty supply company, showed the following:Jan. 3 Hair Designs paid $8,000 on its account.4 New Do paid $900 on
Long Trucking Corporation is a medium-sized trucking company with trucks that are driven across North America. The company owns large garages and equipment to repair and maintain the trucks. Ken
In its first year of business, Solinger Company purchased land, a building, and equipment on November 5, 2023, for $700,000 in total. The land was valued at $262,500, the building at $337,500, and
Glans Company purchased equipment on account on April 6, 2022, at an invoice price of $442,000. On April 7, 2022, it paid $4,000 for delivery of the equipment. A one-year, $3,000 insurance policy on
Sugden Company has a December 31 fiscal year end and follows IFRS. The following selected transactions are related to its property, plant, and equipment in 2024:Jan. 22 Performed an annual safety
The intangible assets and goodwill section of Ghani Corporation’s balance sheet at December 31, 2023, is as follows:The copyright was acquired in January 2022 and has an estimated useful life of
Mock Orange Company and Cotoneaster Company both manufacture pruning shears. The following financial information is for three years ended December 31 (in thousands):Instructionsa. Calculate the asset
Andruski Company and Brar Company both manufacture school science equipment. The following financial information is for three years ended December 31 (in thousands):Instructionsa. Calculate the asset
Silver Cloud manufactures and sells computers for $2,000 each, with a two-year parts and labour warranty. Based on prior experience, the company expects, on average, to incur warranty costs equal to
Slope Style Snowboarding Company, a public company, purchased equipment on January 10, 2020, for $750,000. At that time, management estimated that the equipment would have a useful life of 10 years
The following selected account balances are from LightHouse Distributors’ adjusted trial balance at September 30, 2024:Additional information:1. On September 30, 2024, the unused operating line of
Speedy Taxi Service uses the units-of-production method in calculating depreciation on its taxicabs. Each cab is expected to be driven 550,000 km. Taxi 10 cost $38,950 and is expected to have a
Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were recorded in a questionable way by Hahn Company in the year ended August 31,
Torstar Corporation is a media company that publishes newspapers and digital media. The company reports the following current assets and current liabilities at December 31, 2019 (in
Due to rapid turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by Riley Co. in the year ended December 31, 2024:1. Riley developed
Rivers Mining Company has a December 31 fiscal year end. The following information relates to its Golden Grove mine:1. Rivers purchased the Golden Grove mine on March 31, 2023, for $2.6 million cash.
Cuono Mining Co. purchased a mine for $6.5 million that is estimated to have 25 million tonnes of ore and a residual value of $500,000. In the first year, 5 million tonnes of ore are extracted and 3
Payne Company purchased equipment on account on September 3, 2022, at an invoice price of $210,000. On September 4, 2022, it paid $4,400 for delivery of the equipment. A one-year, $1,975 insurance
1. The following are users of financial information:_______ Customers______ Store manager_______ Canada Revenue Agency______ Supplier_______ Labour unions______ Chief Financial Officer_______
Obtain the 2016 annual report for Bombardier Inc. from the company’s website or from SEDAR (www.sedar.com). Required:a. How much in inventories did the company have at the end of 2016? What
In early 2018, Skyline Corp. won a contract to build a rapid transit line along the Broadway corridor. The contract was for $1.9 billion to be received over the construction period of six years,
Acorn Mines began developing an open pit copper and zinc mine in northern Ontario in April of 2019. As part of the regulatory approvals to develop and to extract minerals from the site, the company
The Argyle Company acquired a $10 million face value bond that has an 8% coupon rate (pays interest annually on December 31) on January 1, 2017. The bond matures on December 31, 2022. On January 1,
On January 1, 2020, LL Company acquired 20,000 shares, representing 20% of the outstanding shares of TT Limited at a price of $15 per share. On July 31, 2020, TT declared and paid a dividend of $1
The following is a partial list of the accounts for Boot Company for the year ended December 31, 2020, in alphabetical order: During the year, the company issued shares for proceeds of $400,000.
Brigitte’s Bathrooms Ltd.’s balance sheet for the year ended December 31, 2021, follows: Additional information:■ During the year, Brigitte declared and paid cash dividends of $50,000.
Uplifting Co. is a manufacturer of escalators and elevators. The following provides information on two types of PPE as at the end of fiscal year 2020: Required:a. Using the above information,
The following is the complete mineral exploration, development, and extraction history of Nikko Minerals Inc. Early in 2019, owners invested $50 million to start the company. No further financing was
Pear Company (PC) had been renting its office building for several years. On January 1, 2016, it decided to have a new office building constructed. On that date, it acquired land with an abandoned
In January 2019, JN Norman Inc. (JNN) purchased and installed production equipment. It was first available for use on March 1, 2019. JNN has a December 31 year-end and accounts for partial years
Sandhawalia Inc. (SI) sold a division of its business in 2020 for $2,700,000 cash and a $1,800,000, 4% note repayable in annual installments of $495,882. The interest rate charged approximated the
Petropower Corporation engages in the exploration, development, and production of oil and natural gas. In 2019, the company spent $8,500,000 exploring a new site in northern Alberta. The site was
Cuprum Inc. specializes in copper mining and production. In 2019, the company spent $5,125,000 exploring a new site at Brass Mountain. In 2020, the site was determined to be viable and an additional
At December 31, 2020, the following data were available for a building owned by NU Company: A small room was built on the back of the building at a cost of $50,000. The room was completed on
Axo Mirth Company paid $24 million to purchase a drug patent on April 1, 2019. At the date of purchase, the patent remained valid for another 12 years. In 2021, the company spent $4 million to
Eeyore Toys made significant renovations to one of its retail stores. Total costs of the renovation were $800,000 completed over six months ending October 31, 2019. The company financed the
The following are several independent transactions.a. A telecommunications company sponsors $10 million of university research into whether quantum entanglement can be used as a method of
Dolan Enterprises constructed a new warehouse for its distribution facility. The construction period began on May 1, 2019, and continued until October 31, 2020. Dolan began operating the warehouse on
On April 1, 2021, STV Company acquired $30,000 of furniture. The furniture is expected to last 10 years with no residual value. STV uses the double-declining-balance method and fractional year
On January 1, 2020, Sunshine Ltd. acquired 30% of the outstanding ordinary shares of Moonbeam Inc. for $270,000 and now has significant influence over the investee. The fair value of Moonbeam’s net
Green Teaz (GT) has a December 31 fiscal year-end. The company purchased Hydro One bonds with face value of $10,000. These bonds were purchased on January 1, 2020, at a cost of $10,267. The bonds pay
Blixi Bikes manufactures commuter bicycles in the United States. The following information pertains to the company’s inventories for 2020:The company had no work in process at the end of both 2019
Refer to the facts in problem P7-39.Data in problem P7-39.Armstrong Corp. purchased a bond with a maturity value of $10,000 payable in five years. These bonds have a 6% coupon rate payable annually.
During 2019, Heather Ltd. purchased 6,000 shares of Oaktree Corp. for $31 per share ($186,000 total). Heather held these shares until September 2021, when it sold them for $36 per share. During these
Britannia Water Company (BWC) purchased 1,000 shares of Scotiabank on March 11, 2021, when the share price was $58 per share. At the close of December 31, 2021, the price of Scotiabank shares had
Comfy Feet manufactures slippers. In 2020, the company hired a new bookkeeper who did not have appropriate training. The bookkeeper charged to “production expense” all of the following costs for
Refer to the facts presented in problem P7-21. Data in problem P7-21.On January 25, 2020, Douglas Ltd. purchased 1,000 common shares of BMO (Bank of Montreal) for $65 each. During the remainder
On January 1, 2019, Arch Ltd. purchased 30% of the common shares of AP Inc. for $1,700,000. In 2019, AP reported net income of $880,000 and paid dividends of $600,000.
In early 2021, Darwin’s Pet Shop discovered that some of its inventory of dogs were not what the supplier purported them to be. More than 300 puppies that were supposed to be purebred (and
The financial statements of Bavarian Sausage Works (BSW) dated December 31, 2020, show $50,000 for “Note receivable.” You learn that the company provided $50,000 cash to a customer (a new chain
On January 1, 2018, Hicks Corp. sold inventory costing $32,000 and received $6,000 cash and a $40,000 promissory note. The five-year note was repayable at $8,734 per annum including interest at 3%.
Aberdeen Co. started applying the percentage of sales method to account for bad debts in 2021. In 2020, the company’s first fiscal year, the company had used the direct write-off method because the
Pessimist Inc. had credit sales totalling $4,900,000 and $5,100,000 for the years ended December 31, 2020 and 2021, respectively. Information on trade accounts receivable for the company is presented
Stanger Corp.’s December 31, 2020, year-end unadjusted trial balance showed the following amounts: Stanger Corp. estimates the following percentages of accounts receivable will not be
Cascadia Products uses the aging method for its accounts receivable. On January 1, 2020, the balance in the allowance for doubtful accounts was $320,000. For the year ended December 31, 2020,

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