Questions and Answers of Intermediate Accounting 11th

Assume the same facts as in BE 6–24 except that the trade name “Saar Associates” is not well known in the market place, and the owner provides no advertising or other benefits to a licensee of
Nike, Inc., is a leading manufacturer of sports apparel, shoes, and equipment. The company’s 2020 financial statements contain the following information ($ in millions):Assume that all sales are
Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2023 balance
Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the
On December 28, 2024, Tristar Communications sold 10 units of its new satellite uplink system to various customers for $25,000 each. The terms of each sale were 1/10, n/30. Tristar uses the gross
Avon Products, Inc., located in New York City, is one of the world’s largest producers of beauty and related products. The company’s consolidated balance sheets for the 2016 and 2015 fiscal years
Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2024. The units have a list price of $600 each, but Thomas was given a 30% trade discount. The
McLaughlin Corporation uses the allowance method to account for bad debts. At the end of the company’s fiscal year, accounts receivable are analyzed and the allowance for uncollectible accounts is
Cypress Oil Company’s December 31, 2024, balance sheet listed $645,000 of notes receivable and $16,000 of interest receivable included in current assets. The following notes make up the notes
During 2024, its first year of operations, Hollis Industries recorded sales of $10,600,000 and experienced returns of $720,000. Cost of goods sold totaled $6,360,000 (60% of sales). The company
Harwell Company manufactures automobile tires. On July 15, 2024, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the gross
Search on the Internet for the 2019 annual report for Sanofi-Aventis. Find the accounts receivable disclosure note.Required:1. Has Sanofi-Aventis factored or securitized accounts receivable? How do
Harwell Company manufactures automobile tires. On July 15, 2024, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the net method
Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2024, the company had accounts receivable of $780,000. Lonergan needs approximately $500,000 to
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax’s sales are for credit (no cash
The table below contains selected financial information included in the 2016 financial statements of Tyson Foods Inc. and Pilgrim’s Pride Corp.Required:1. Calculate the 2019 receivables turnover
Samson Wholesale Beverage Company regularly factors its accounts receivable with the Milpitas Finance Company. On April 30, 2024, the company transferred $800,000 of accounts receivable to Milpitas.
Halifax Manufacturing allows its customers to return merchandise for any reason and receive a credit to their accounts. All of Halifax’s sales are for credit (no cash is collected at the time of
The following facts apply to Walken Company during December 2024:a. Walken began December with an accounts receivable balance (net of bad debts) of €25,000.b. Walken had credit sales of
Descriptors are provided below for six situations involving notes receivable being discounted at a bank. In each case, the maturity date of the note is December 31, 2024, and the principal and
Evergreen Company sells lawn and garden products to wholesalers. The company’s fiscal year-end is December 31. During 2024, the following transactions related to receivables occurred:Feb. 28
How did the CARES Act affect adoption of the CECL model?
Pincus Associates uses the allowance method to account for bad debts. 2024 was the first year of operations for Pincus, so it had a $0 opening balance in its allowance for uncollectible accounts.
On June 30, 2024, Countryside Farms purchased custom-made harvesting equipment from a local producer. In payment, Countryside signed a noninterest-bearing note requiring the payment of $60,000 in two
On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the
On September 30, 2024, Crown Corporation purchased franchise rights from a national restaurant chain. In payment, Crown has the option of paying $356,000 immediately or $400,000 in two years by
Refer to the facts in P 10–9 but now assume the $3 million loan is not specifically tied to construction of the building. Using the weighted-average interest method, answer the following
On February 1, 2024, the Xilon Corporation issued 50,000 shares of its no-par common stock in exchange for five acres of land located in the city of Monrovia. On the date of the acquisition,
In 2024, Starsearch Corporation began work on three research and development projects. One of the projects was completed and commercial production of the developed product began in December. The
Diamond Corporation acquired a patent in exchange for 50,000 shares of the company’s no-par common stock. On the date of the exchange, the common stock had a fair value of $22 per share. Determine
Cranston LTD prepares its financial statements according to International Financial Reporting Standards. In October 2024, the company received a $2 million government grant. The grant represents 20%
Huebert Corporation and Winslow Corporation reported the following information:Calculate each companies fixed-asset turnover ratio and determine which company utilizes its fixed assets most
Early in its fiscal year ending December 31, 2024, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the
Nvidia Corporation, a global technology company located in Santa Clara, California, reported the following information in its financial statements for the fiscal year ending January 26, 2020 ($ in
The balance sheets of Pinewood Resorts reported net fixed assets of $740,000 and $940,000 at the end of 2023 and 2024, respectively. The fixed-asset turnover ratio for 2024 was 3.25. Calculate
Assume the same facts as in E 10-14, except that the fair value of the old equipment is $170,000.Data from in E 10-14Cedric Company recently traded in an older model of equipment for a new model. The
Define R&D according to U.S. GAAP.
Refer to the situation described in BE 10–15. Answer the questions assuming that the exchange lacks commercial substance.Data from in BE 10-15Refer to the situation described in BE 10–14. Answer
Assume the same facts as in E 10-16 except that Bronco received $10,000 from the owner of the equipment to complete the exchange.Data from in E 10-16The Bronco Corporation exchanged land for
In February 2024, Culverson Company began developing a new software package to be sold to customers. The software allows people to enter health information and daily eating and exercise habits to
In March 2024, Price Company began developing a new software system to be used internally for managing its inventory. The software integrates customer orders with inventory on hand to automatically
On January 1, 2024, the Marjlee Company began construction of an office building to be used as its corporate headquarters. The building was completed early in 2025. Construction expenditures for
Garrett Corporation began operations in 2024. To maintain its accounting records, Garrett entered into a two-year agreement with Accurite Company. The agreement specifies that Garrett will pay
On January 1, 2024, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2025. The company borrowed $1,500,000 at 8% on January 1 to
Thornton Industries began construction of a warehouse on July 1, 2024. The project was completed on March 31, 2025. No new loans were required to fund construction. Thornton does have the following
Delaware Company incurred the following research and development costs during 2024:The equipment has a seven-year life and will be used for a number of research projects. Depreciation for 2024 is
In 2024, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures:The equipment will be used on this and other
Janson Pharmaceuticals incurred the following costs in 2024 related to a new cancer drug:The development costs were incurred after technological and commercial feasibility was established and after
The Massoud Consulting Group reported net income of $1,354,000 for its fiscal year ended December 31, 2024. In addition, during the year the company experienced a positive foreign currency
Presented below are condensed financial statements adapted from those of two actual companies competing in the pharmaceutical industry—Johnson and Johnson (J&J) and Pfizer, Inc. ($ in millions,
The controller of the Red Wing Corporation is in the process of preparing the company’s 2024 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be
Swathmore Clothing Corporation grants its customers 30 days’ credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is
Dell Technologies is a leading global end-to-end technology provider, with a portfolio of hardware, software and service solutions. In a recent annual report, the balance sheet included the following
Hogan Company uses the net method of accounting for sales discounts. Hogan offers trade discounts to various groups of buyers. On August 1, 2024, Hogan factored some accounts receivable on a without
Delta Automotive Corporation has the following assets listed in its 12/31/2024 trial balance:Required:1. Determine the correct balance of cash and cash equivalents to be reported in the current asset
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2024 ($ in thousands):In addition, during the year, the company completed the disposal of its plastics
Rice Corporation is negotiating a loan for expansion purposes and the bank requires financial statements. Before closing the accounting records for the year ended December 31, 2024, Rice’s
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2024, appears belowThe following balance sheet information
On January 1, 2024, Wooten Technology Associates sold computer equipment to the Denison Company. Delivery was made on January 1, 2024, but payment for the equipment of $10,000 is not due until
Parents want to accumulate $100,000 to be used for their child’s college education. The parents would like to have the amount available on December 31, 2029. Assume that the funds will accumulate
President Company purchased merchandise from Captain Corp. on September 30, 2024. Payment was made in the form of a noninterest-bearing note requiring President to make six annual payments of $5,000
You have been issued a patent giving you exclusive rights to sell a new type of software. You believe the patent will produce sales of $200,000 each year as long as the software remains in demand.
On the last day of its fiscal year ending December 31, 2024, the Safe & Reliable (S&R) Glass Company completed two financing arrangements. The funds provided by these initiatives will allow
You have entered into an agreement to purchase a local accounting firm. The agreement specifies you will pay the seller $150,000 each year for six years. What is the cost today of the purchase,
Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of $5,000 under each of the following situations:1. The payments are received at the end of each of
Three employees of the Horizon Distributing Company will receive annual pension payments from the company when they retire. The employees will receive their annual payments for as long as they live.
A company plans to make four annual deposits of $200,000 each to a special building fund. The fund’s assets will be invested in mortgage instruments expected to pay interest at 12% on the fund’s
What is a deferred annuity?
Bravo Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Bravo. The machine has a cash price of $800,000. Bravo wants to be reimbursed for financing
Bravo Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Bravo. The machine has a cash price of $800,000. Bravo wants to be reimbursed for financing
You are saving for a new house. You place $40,000 into an investment account each year for five years. How much will you have after five years if the account earns (a) 3%, (b) 6%,
Lowlife Company defaulted on a $250,000 loan that was due on December 31, 2024. The bank has agreed to allow Lowlife to repay the $250,000 by making a series of equal annual payments beginning on
Lights, Camera, and More sells filmmaking equipment. George is considering buying equipment from Lights, Camera, and More for $150,000 and has the following payment options: (1) pay $150,000 today,
On January 1, 2024, The Barrel Company purchased merchandise from a supplier. Payment was a noninterest bearing note requiring five annual payments of $20,000 on each December 31 beginning on
You have an investment opportunity that promises to pay you $16,000 in four years. You could earn a 6% annual return investing elsewhere. What is the maximum amount you would be willing to invest in
The Field Detergent Company sold merchandise to a customer on June 30, 2024. Payment was made in the form of a noninterest-bearing note requiring the customer to pay $85,000 on June 30, 2026. Assume
You have entered into an agreement for the purchase of land. The agreement specifies that you will take ownership of the land immediately. You have agreed to pay $50,000 today and another $50,000 in
The following situations should be considered independently.1. You want to accumulate $60,000 for a down payment on a small business. You will invest $30,000 today in a bank account paying 8%
Shuai is 55 years old and has been asked to accept early retirement from his company. The company has offered Shuai three alternative compensation packages to induce Shuai to retire.1. $180,000 cash
You believe you have discovered a new medical device. You anticipate it will take additional time to get the device fully operational, run clinical trials, obtain FDA approval, and sell to a buyer
On January 1, 2024, the Mountain Company agreed to purchase a building by making six payments. The first three are to be $25,000 each, and will be paid on December 31, 2024, 2025, and 2026. The last
Southwest Airlines provides scheduled air transportation services in the United States. Like many airlines, Southwest leases many of its planes from Boeing Company. In its long-term debt disclosure
You are saving for a new boat. You place $25,000 in an investment account today that earns 6% compounded annually. How much will be in the account after(a) Three years, (b) Four years,
You are saving for a new car. You place $10,000 into an investment account today. How much will you have after four years if the account earns (a) 4%, (b) 6%, or (c) 8% compounded
Explain compound interest.
Stone Company is facing several decisions regarding investing and financing activities. Address each decision independently.1. On June 30, 2024, the Stone Company purchased equipment from Paper Corp.
The following condensed information was reported by Peabody Toys, Inc., for 2024 and 2023:Required:1. Determine the following ratios for 2024:a. Profit margin on salesb. Return on assetsc. Return on
The 2024 income statement of Anderson Medical Supply Company reported net sales of $8 million, cost of goods sold of $4.8 million, and net income of $800,000. The following table shows the
Presented below is the 2024 income statement and comparative balance sheet information for Tiger Enterprises.Required:Prepare Tiger’s statement of cash flows, using the indirect method to present
The statement of cash flows for the year ended December 31, 2024, for Bronco Metals is presented below.Required:Prepare the statement of cash flows assuming that Bronco prepares its financial
During 2024, Rogue Corporation reported net sales of $600,000. Inventory at both the beginning and end of the year totaled $75,000. The inventory turnover ratio for the year was 6.0. What amount of
Chew Corporation prepares its statement of cash flows using the indirect method of reporting operating activities. Net income for the 2024 fiscal year was $1,250,000. Depreciation expense of $140,000
Cemptex Corporation prepares its statement of cash flows using the indirect method to report operating activities. Net income for the 2024 fiscal year was $624,000. Depreciation and amortization
The 2024 income statement for Circuit TV and Appliance reported net sales of $420,000 and net income of $65,000. Average total assets for 2024 was $800,000. Shareholders’ equity at the beginning of
The following transactions occurred during March 2024 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. 1. Issued 30,000 shares of common stock in exchange for
Cadux Candy Company’s income statement for the year ended December 31, 2024, reported interest expense of $2 million and income tax expense of $12 million. Current assets listed in its balance
Net income of Trout Company was $45,000. The accounting records reveal depreciation expense of $80,000 as well as increases in prepaid rent, salaries payable, and income taxes payable of $60,000,
The following summary transactions occurred during 2024 for Bluebonnet Bakers:The balance of cash and cash equivalents at the beginning of 2024 was $17,000.Required:Prepare a statement of cash flows
Financial statements for Askew Industries for 2024 are shown below (in thousands):Required:Calculate the following ratios for 2024.1. Inventory turnover ratio2. Average days in inventory3.
The following are summary cash transactions that occurred during the year for Hope Healthcare Co. (HHC):Prepare the cash flows from operating activities section of HHC’s statement of cash flows

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