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intermediate accounting 11th
Intermediate Accounting 11th Edition David Spiceland - Solutions
Listed below are the transactions that affected the shareholders’ equity of Branch-Rickie Corporation during the period 2024–2026. At December 31, 2023, the corporation’s accounts included:a. November 1, 2024, the board of directors declared a cash dividend of $0.80 per share on its common
AGF Foods Company is a large, primarily domestic, consumer foods company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy’s The Almanac of Business and Industrial Financial Ratios and Dun and Bradstreet’s Industry Norms
Agee Storage issued 35 million shares of its $1 par common stock at $16 per share several years ago. Last year, for the first time, Agee retired 1 million shares at $14 per share. If Agee now retires 1 million shares at $19 per share. By what amount will Agee’s total paid-in capital decline?
Comparative statements of shareholders’ equity for Anaconda International Corporation were reported as follows for the fiscal years ending December 31, 2024, 2025, and 2026.Required:1. Infer from the statements the events and transactions that affected Anaconda International Corporation’s
The Basu Group reacquired 2 million of its shares at $70 per share as treasury stock. Last year, for the first time, Basu sold 1 million treasury shares at $71 per share. If Basu now sells the remaining 1 million treasury shares at $67 per share, by what amount will retained earnings decline?
Liu Industries issued 15 million of its $1 par common shares for $424 million on April 11. Legal, promotional, and accounting services necessary to effect the sale cost $2 million.Required:1. Prepare the journal entry to record the issuance of the shares.2. Explain how recording the share issue
The following is a portion of the Statement of Shareholders’ Equity from Cisco Systems’ July 25, 2020 annual report.Required:1. How does Cisco account for its share buybacks? Treasury stock or retired shares?2. For its share buybacks in the period shown, was the price Cisco paid for the shares
Bricker Graphics is a privately held company specializing in package labels. Representatives of the firm have just returned from Switzerland, where a Swiss firm is manufacturing a custom-made high speed, color labeling machine. Confidence is high that the new machine will help rescue Bricker from
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions. The following disclosure note appeared in the company’s 2024 annual report:Required:1. What amount of dividends is paid annually to a preferred shareholder owning 100
During its first year of operations, Cupola Fan Corporation issued 30,000 of $1 par Class B shares for $385,000 on June 30, 2024. Share issue costs were $1,500. One year from the issue date (July 1, 2025), the corporation retired 10% of the shares for $39,500.Required:1. Prepare the journal entry
The shareholders’ equity of Wang Industries includes the data shown below. During 2025, cash dividends of $150 million were declared. Dividends were not declared in 2023 or 2024.Required:Determine the amount of dividends payable to preferred shareholders and to common shareholders under each of
Following is a recent Target press release: MINNEAPOLIS, March 12, 2020 /PRNewswire/—The board of directors of Target Corporation (NYSE:TGT) has declared a quarterly dividend of 66 cents per common share. The dividend is payable June 10, 2020, to shareholders of record at the close of business
Borner Communications’ articles of incorporation authorized the issuance of 130 million common shares. The transactions described below effected changes in Borner’s outstanding shares. Prior to the transactions, Borner’s shareholders’ equity included the following:Required:Assuming that
Indicate by letter whether each of the transactions listed below increases (I), decreases (D), or has no effect (N) on retained earnings. Assume the shareholders’ equity of the transacting company includes only common stock, paid-in capital—excess of par, and retained earnings at the time of
The shareholders’ equity of MLS Enterprises includes $200 million of no par common stock and $400 million of 6% cumulative preferred stock. The board of directors of MLS declared cash dividends of $50 million in 2024 after paying $20 million cash dividends in both 2023 and 2022. What is the
In 2024, Borland Semiconductors entered into the transactions described below. In 2021, Borland had issued 170 million shares of its $1 par common stock at $34 per share.Required:Assuming that Borland retires shares it reacquires, record the appropriate journal entry for each of the following
Part AIn late 2023, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 5,000,000 shares of common stock carrying a $1 par value, and 1,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. On January 2, 2024, 3,000,000 shares of the
In 2024, Western Transport Company entered into the treasury stock transactions described below. In 2022, Western Transport had issued 140 million shares of its $1 par common stock at $17 per share.Required:Prepare the appropriate journal entry for each of the following transactions:1. On January
Douglas McDonald Company’s balance sheet included the following shareholders’ equity accounts at December 31, 2023:On March 16, 2024, a 4% common stock dividend was declared and distributed. The market value of the common stock was $21 per share. Fractional share rights represented 2 million
The balance sheet of Consolidated Paper, Inc. included the following shareholders’ equity accounts at December 31, 2023:During 2024, several events and transactions affected the retained earnings of Consolidated Paper.Required:1. Prepare the appropriate entries for these events:a. On March 3, the
Comparative balance sheets for Softech Canvas Goods for 2024 and 2023 are shown below. Softech pays no dividends and instead reinvests all earnings for future growth.Required:1. Determine the return on shareholders’ equity for 2024.2. What does the ratio measure? Comparative Balance Sheets ($ in
Indicate by letter whether each of the terms or phrases listed below is more associated with financial statements prepared in accordance with U.S. GAAP (U) or International Financial Reporting Standards (I). Terms and phrases 1. Common stock 2. Preference shares 3. Liabilities often listed before
On January 1, 2024, the general ledger of Freedom Fireworks includes the following account balances:During January 2024, the following transactions occur:The following information is available on January 31, 2024.1. Unpaid utilities for the month of January are $6,200.2. Supplies at the end of
Like the rest of the airline industry, American Airlines was dealt a cruel blow in 2020 by the COVID-19 pandemic. Struggling to cope with plummeting demand for air travel and the resulting financial impact, American took advantage of a provision in the CARES Act to avail itself of funds provided by
In keeping with a modernization of corporate statutes in its home state, Miller-Li Corporation decided in 2024 to discontinue accounting for reacquired shares as treasury stock. Instead, shares repurchased will be viewed as having been retired, reassuming the status of unissued shares. As part of
Shown below in T-account format are the changes affecting the retained earnings of Brenner-Jude Corporation during 2024. On January 1, 2024, the corporation had outstanding 105 million common shares, $1 par per share.Required:1. From the information provided by the account changes, you should be
The shareholders’ equity of ILP Industries includes the items shown below. The board of directors of ILP declared cash dividends of $8 million, $20 million, and $150 million in its first three years of operation—2024, 2025, and 2026, respectively.Required:1. Determine the amount of dividends to
The shareholders’ equity of Core Technologies Company on June 30, 2023, included the following:On April 1, 2024, the board of directors of Core Technologies declared a 10% stock dividend on common shares, to be distributed on June 1. The market price of Core Technologies’ common stock was $30
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $10,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Determine the following amounts at the beginning of the lease.A. The lessor’s1. Lease payments2.
Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2024 through 2027 except for differences in depreciation on an operational asset. The asset cost $120,000 and is depreciated for income tax purposes in the following
Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting
Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset’s cost for income tax reporting in 2024. The me, depreciation, and taxable income in
In 2024, DFS Medical Supply collected rent revenue for 2025 tenant occupancy. For income tax reporting, the rent is taxed when collected. For financial statement reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy the rental property. The
Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the warranty work is completed. At December 31, 2024, Lance has a warranty liability of $2 million and
LossCo reported a net operating loss of $25 million for financial reporting and tax purposes. The enacted tax rate] is 25%. Assume that LossCo does not qualify as a type of company that is allowed to carry back an NOL to prior taxable years. Prepare the journal entry to recognize the income tax
The information that follows pertains to Esther Food Products: a. At December 31, 2024, temporary differences were associated with the following future taxable (deductible) amounts:b. No temporary differences existed at the beginning of 2024.c. Pretax accounting income was $80,000 and taxable
Sachs Brands’s defined benefit pension plan specifies annual retirement benefits equal to 1.6% × service years × final year’s salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years’
On August 31, 2021, Chickasaw Industries issued $25 million of its 30-year, 5% convertible bonds dated August 31, priced to yield 6%. The bonds are convertible at the option of the investors into 1,500,000 shares of Chickasaw’s common stock. Chickasaw records interest expense at the effective
Your investment department has researched possible investments in corporate debt securities. Among the available investments are the following $100 million bond issues, each dated January 1, 2024. Prices were determined by underwriters at different times during the last few weeks.Each of the bond
On January 1, 2024, Baddour, Inc., issued 10%, 12-year bonds with a face amount of $160 million.∙ The bonds were priced at $140 million to yield 12%.∙ Interest is paid semiannually on June 30 and December 31.∙ Baddour’s fiscal year ends September 30.Required:1. What amount(s) related to the
Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations link at the company’s website
The following inventory transactions took place near December 31, 2024, the end of the Rasul Company’s fiscal year-end:1. On December 27, 2024, inventory costing $2,000 was shipped to the Milat Company on consignment. The shipment arrived at Milat’s location on December 29, but none of the
In 2023, the Moncrief Company purchased from Jim Lester the right to be the sole distributor in the western states of a product called Zelenex. In payment, Moncrief agreed to pay Lester 20% of the gross profit recognized from the sale of Zelenex in 2024. Moncrief reports inventory using the
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 year ended December 31, 2019, are available in Connect. This material is also available under the
Autumn Company began the month of October with inventory of $15,000. The following inventory transactions occurred during the month:a. The company purchased inventory on account for $22,000 on October 12. Terms of the purchase were 2/10, n/30. Autumn uses the net method to record purchases. The
The Cloud Company employs a perpetual inventory system, and the Sky Corporation uses a periodic system. Describe the differences between the two systems in accounting for the following events: (1) Purchase of inventory (2) Sale of inventory(3) Return of inventory to supplier (4)
Refer to the situation described in BE 8–2. Prepare the journal entries to record these transactions using a periodic inventory system.Data from in BE 8-2A company uses a perpetual inventory system. The company began its fiscal year with inventory of $267,000. Purchases of inventory on account
Income statement and balance sheet information abstracted from a recent annual report of Wolverine World Wide, Inc., appears below:The significant accounting policies note disclosure contained the following:Required:1. Is Wolverine disclosing the FIFO cost of its LIFO inventory?2. Calculate what
The June 30, 2024, year-end trial balance for Askew Company contained the following information:In addition, you determine that the June 30, 2024, inventory balance is $40,000.Required:Calculate the cost of goods sold for the Askew Company for the year ending June 30, 2024. Account Inventory,
Rachet Corporation is a wholesale distributor of truck replacement parts. Initial amounts taken from Rachet’s records are as follows:Additional Information:1. Parts held by Rachet on consignment from Crates, amounting to $155,000, were included in the physical count of goods in Rachet’s
The Boxcar Company shipped inventory to Depot Corporation on December 28, 2024. Depot received the shipment on January 3, 2025. December 31 is the fiscal year-end for both companies. The inventory was shipped f.o.b. shipping point. Explain the difference in the accounting treatment of the inventory
On April 1, 2024, Titan Corporation purchases office equipment for $50,000. For tax reporting, the company uses MACRS and classifies the equipment as five-year personal property. In 2024, this type of equipment is eligible for 60% first-year bonus depreciation. For financial reporting, the company
Highsmith Rental Company purchased an apartment building early in 2024. There are 20 apartments in the building and each is furnished with major kitchen appliances. The company has decided to use the group depreciation method for the appliances. The following data are available:In 2027, three new
Refer to the situation described in BE 11–14. Assume that instead of changing the useful life and residual value, in 2024 the company switched to the double-declining-balance depreciation method. How should Robotics account for the change? What is depreciation on the building for 2024?Data from
On January 2, 2024, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $30,625. The expenditures made to acquire the asset were as follows:Jackson’s policy is to use the
Refer to the situation described in BE 11–14. Assume that 2022 depreciation was incorrectly recorded as $32,000. This error was discovered in 2024. (1) Record the journal entry needed in 2024 to correct the error.(2) What is depreciation on the building for 2024, assuming no change in
On April 17, 2024, the Loadstone Mining Company purchased the rights to a copper mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the copper totaled $4,500,000. The company expects to extract 900,000 tons of copper during a four-year period. During
Collison and Ryder Company (C&R) has been experiencing declining market conditions for its sportswear division. Management decided to test the assets of the division for possible impairment. The test revealed the following: book value of division’s assets, $26.5 million; fair value of
At the beginning of 2024, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000. After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operations were constructed and completed on March 30, 2024. The cost of the roads, which
Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2024 for the mining site and spent an additional $600,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately four years, the company is required to restore
Janes Company provided the following information on intangible assets:a. A patent was purchased from the Lou Company for $700,000 on January 1, 2022. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of
WebHelper Inc. acquired 100% of the outstanding stock of Silicon Chips Corporation (SCC) for $45 million, of which $15 million was allocated to goodwill. At the end of the current fiscal year, an impairment test revealed the following: fair value of SCC, $40 million; book value of SCC’s net
Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the patent on a straight-line basis since 2020, when it was acquired at a cost of $9 million at the beginning of that year. Due to rapid technological advances in the industry, management decided
Saint John Corporation prepares its financial statements according to IFRS. On June 30, 2024, the company purchased a franchise for $1,200,000. The franchise is expected to have a 10-year useful life with no residual value. Saint John uses the straight-line amortization method for all intangible
Wardell Company purchased a minicomputer on January 1, 2022, at a cost of $40,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $4,000. On January 1, 2024, the estimate of useful life was changed to a total of 10
Alteran Corporation purchased office equipment for $1.5 million at the beginning of 2022. The equipment is being depreciated over a 10-year life using the double-declining-balance method. The residual value is expected to be $300,000. At the beginning of 2024 (two years later), Alteran decided to
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2021 for $2,560,000. Its useful life was estimated to be six years, with a $160,000 residual value. At the beginning of 2024, Clinton decides to
In 2024, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of equipment purchased on January 1, 2021. The equipment’s life was expected to be five years with no residual value. Straight-line depreciation is used by PKE.Required:1. Determine
Refer to the situation described in E 11–27.Data from in E 11-27Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company’s
Collinsworth LTD, a U.K. company, prepares its financial statements according to International Financial Reporting Standards. Late in its 2024 fiscal year, a significant adverse change in business climate indicated to management that the assets of its appliance division may be impaired. The
In 2022, Alliant Corporation acquired Centerpoint Inc. for $300 million, of which $50 million was allocated to goodwill. At the end of 2024, management has provided the following information for a required goodwill impairment test:Required:1. Determine the amount of the impairment loss reported in
On May 28, 2024, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $420 million. The fair value of Harman’s identifiable tangible and intangible assets totaled $512 million, and the fair value of liabilities assumed by Pesky was $150 million. Pesky performed a
On September 30, 2022, Leeds LTD. acquired a patent in conjunction with the purchase of another company. The patent, valued at $6 million, was estimated to have a 10-year life and no residual value. Leeds uses the straight-line method of amortization for intangible assets. At the beginning of
Cadillac Construction Company uses the retirement method to determine depreciation on its small tools. During 2022, the first year of the company’s operations, tools were purchased at a cost of $8,000. In 2024, tools originally costing $2,000 were sold for $250 and replaced with new tools costing
On January 1, 2024, the general ledger of TNT Fireworks included the following account balances:During January 2024, the following transactions occurred:Required:1. Record each of the transactions listed above in the “General Journal” tab (these are shown as items 1–8), assuming a perpetual
On January 2, 2024, David Corporation purchased a patent for $500,000. The remaining legal life is 12 years, but the company estimated that the patent will be useful only for eight years. In January 2026, the company incurred legal fees of $45,000 in successfully defending a patent infringement
On January 1, 2024, the general ledger of Parts Unlimited included the following account balances:From January 1 to December 31, the following summary transactions occurred:In addition, Parts Unlimited had the following transactions during the year:Required:1. Record each of the transactions listed
Lance Brothers Enterprises acquired $720,000 of 3% bonds, dated July 1, on July 1, 2024, as a long-term investment. Management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Lance Brothers paid
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated January 1, on January 1, 2024. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 10%. The price paid for the
On January 1, 2024, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated January 1.∙ The bonds mature in 2043 (20 years).∙ The market yield for bonds of similar risk and maturity is 12%.∙ Interest is paid semiannually.Required:1. Determine the price of the bonds at
The following appeared in the October 15, 2024, issue of the Financial Smarts Journal:Required:1 Based on the information provided in the announcement, indicate whether the market rate of interest is higher or lower than 7.75% when the Craft Foods bonds were issued.2 If debt issue costs were
Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations link at the company’s website
Determine the price of a $1 million bond issue under each of the following independent assumption. 1. 2. 3. 4. 5. Maturity 10 years 10 years 10 years 20 years 20 years Interest Paid Annually Semiannually Semiannually Semiannually Semiannually Stated Rate 10% 10% 12% 12% 12% Effective (Market)
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 year ended December 31, 2019, are available in Connect. This material also is available at the
On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:Required:1. What is the face amount of the bonds?2. What is the initial selling price of the bonds?3. What is
On January 1, 2024, Reyes Recreational Products issued $100,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $96,768 to yield an annual return of 10%.Required:1. Prepare an amortization schedule that determines interest at the effective
The Bradford Company issued 10% bonds, dated January 1, with a face amount of $80 million on January 1, 2024.∙ The bonds mature on December 31, 2033 (10 years).∙ For bonds of similar risk and maturity, the market yield is 12%.∙ Interest is paid semiannually on June 30 and December
The Liu Group, Inc., manufactures various kinds of hydraulic pumps. In June 2024, the company signed a fouryear purchase agreement with one of its main parts suppliers, Hydraulics, Inc. Over the four-year period, Liu has agreed to purchase 100,000 units of a key component used in the manufacture of
What information is contained in a bond indenture? What purpose does it serve?
AGF Foods Company is a large, primarily domestic, consumer foods company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy’s The Almanac of Business and Industrial Financial Ratios. Following are the 2024 and 2023
The Bradford Company sold the entire bond issue described in the previous exercise to Saxton-Bose Corporation.Required:1. Prepare the journal entry to record the purchase of the bonds by Saxton-Bose on January 1, 2024.2. Prepare the journal entry to record interest revenue on June 30, 2024 (at the
On February 1, 2024, Sanyal Motor Products issued 9% bonds, dated February 1, with a face amount of $80 million.∙ The bonds mature on January 31, 2028 (four years).∙ The market yield for bonds of similar risk and maturity was 10%.∙ Interest is paid semiannually on July 31 and January 31.∙
On January 1, 2024, Brandon Electronics issued $85 million of 11.5% bonds, dated January 1. The market yield for bonds of maturity issued by similar firms in terms of riskiness is 12.25%. How can Brandon sell debt paying only 11.5% in a 12.25% market?
On January 1, a company issued 7%, 15-year bonds with a face amount of $90 million for $82,218,695 to yield 8%. Interest is paid semiannually. What was interest expense at the effective interest rate on June 30, the first interest date?
Myriad Solutions, Inc., issued 10% bonds, dated January 1, with a face amount of $320 million on January 1, 2024, for $283,294,720.∙ The bonds mature on December 31, 2033 (10 years).∙ For bonds of similar risk and maturity the market yield is 12%.∙ Interest is paid semiannually on June 30 and
On April 1, 2024, Western Communications, Inc., issued 12% bonds, dated March 1, 2024, with face amount of $30 million.∙ The bonds sold for $29.3 million and mature on February 28, 2027.∙ Interest is paid semiannually on August 31 and February 28.∙ Stillworth Corporation acquired $30,000 of
As a recently hired loan officer for USA Bank, your job description includes evaluating and recommending approval of commercial, real estate, or credit loans. USA has a policy of having its new hires go through a training exercise that includes evaluating a hypothetical loan application from a
On January 1, a company issued 3%, 20-year bonds with a face amount of $80 million for $69,057,776 to yield 4%. Interest is paid semiannually. What was the interest expense at the effective interest rate on the December 31 annual income statement?
The Gonzalez Group issued $900,000 of 13% bonds on June 30, 2024, for $967,707.∙ The bonds were dated on June 30 and mature on June 30, 2044 (20 years).∙ The market yield for bonds of similar risk and maturity is 12%.∙ Interest is paid semiannually on December 31 and June 30.Required:1.
McWherter Instruments sold $400 million of 8% bonds, dated January 1, on January 1, 2024.∙ The bonds mature on December 31, 2043 (20 years).∙ For bonds of similar risk and maturity, the market yield was 10%.∙ Interest is paid semiannually on June 30 and December 31.∙ Blanton Technologies,
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