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business
intermediate accounting 11th

Intermediate Accounting 11th Edition David Spiceland - Solutions

Refer to the situation described in BE 5–16. What amount did the company borrow, assuming that the first $10,000 payment was due immediately?Data from in BE 5-16A company borrowed money from a local bank. The note the company signed requires five annual installment payments of $10,000 beginning
Complete the requirements of P 6–10, assuming that Westgate Construction’s contract with Santa Clara County does not qualify for revenue recognition over time.Data from in P 6-10In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for
Brady Construction Company contracted to build an apartment complex for a price of $5,000,000. Construction began in 2024 and was completed in 2026. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in
This exercise is designed to offer examples of time value problems that cannot be solved using the time value tables at the book of the book. Instead, they can be solved using Excel or a financial calculator. Compute the value for each of the following independent situations.1. To save for their
Complete the requirements of E 6–10, assuming that Rocky bases estimates of variable consideration on the expected value it expects to receive.Data from in E 6-10Rocky Guide Service provides guided 1–5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various
Assume the same facts as in BE 6–25. How much revenue will Saar recognize in 2024 under this arrangement if Saar reports under IFRS?Data from in BE 6-25Assume the same facts as in BE 6–24 except that the trade name “Saar Associates” is not well known in the market place, and the owner
Assume the same facts as in BE 6–24 except that the trade name “Saar Associates” is not well known in the market place, and the owner provides no advertising or other benefits to a licensee of the Saar Associates trade name during the license period. How much revenue will Saar recognize in
Nike, Inc., is a leading manufacturer of sports apparel, shoes, and equipment. The company’s 2020 financial statements contain the following information ($ in millions):Assume that all sales are made on a credit basis.Required:1. What is the amount of gross (total) accounts receivable due from
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 sheet disclosed the following:Current assets:Receivables, net of allowance for uncollectible
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
On December 28, 2024, Tristar Communications sold 10 units of its new satellite uplink system to various customers for $25,000 each. The terms of each sale were 1/10, n/30. Tristar uses the gross method to account for sales discounts. In what year will income before tax be affected by discounts,
Avon Products, Inc., located in New York City, is one of the world’s largest producers of beauty and related products. The company’s consolidated balance sheets for the 2016 and 2015 fiscal years included the following ($ in thousands):A disclosure note accompanying the financial statements
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 terms of the sale were 2/10, n/30.Required:1. Prepare the journal entries to record the sale on November
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 adjusted. At the end of 2024, the company reported the following amounts:In 2025, it was determined
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 receivable balance:The company records adjusting entries only at year-end. There were no other 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 estimates that 8% of all sales will be returned. Prepare the year-end adjusting journal entries to
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 method of accounting for cash discounts.Required:1. Prepare the journal entries to record the sale on
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 you know?2. Assume that Sanofi-Aventis decided to increase the extent to which it securitizes its
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 of accounting for cash discounts.Required:1. Prepare the journal entries to record the sale on July
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 capitalize on a unique investment opportunity. On July 1, 2024, a local bank offers Lonergan the
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 is collected at the time of sale). The company began 2024 with a refund liability of $300,000. During
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 ratio and average collection period for both companies. Evaluate the management of each company’s
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. The transfer was made without recourse. Milpitas remits 90% of the factored amount and retains 10%.
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 sale). The company began 2024 with a refund liability of $300,000. During 2024, Halifax sold
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 €85,000.c. Walken had cash collections of €30,000.d. Walken factored €20,000 of net accounts receivable
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 interest are due at maturity.Required:For each situation, determine the proceeds received from the bank on
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 Sold merchandise to Lennox, Inc., for $10,000 and accepted a 10%, 7-month note. 10% is an
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. During 2024, Pincus provided a total of $250,000 of services on account. In 2024, the company wrote off
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 years. The fair value of the equipment is not known, but an 8% interest rate properly reflects the
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 project were as follows:On January 1, 2024, the company obtained a $3 million construction loan with a
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 signing a noninterest- bearing note. Crown chooses the option of paying $400,000 in two years. At what
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 questions:Data from in P 10-9On January 1, 2024, the Mason Manufacturing Company began construction of a
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, Xilon’s common stock had a fair value of $18 per share. An office building was constructed on the site by
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 company’s fiscal yearend is December 31. All of the following 2024 expenditures were included in 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 the cost of the patent.
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% of the total cost of equipment that will be used to improve the roads in the local area. Cranston
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 efficiently to generate sales. Property, plant, and equipment (net) Net
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 outskirts of the city. The land and existing building were purchased by paying $200,000 immediately
Nvidia Corporation, a global technology company located in Santa Clara, California, reported the following information in its financial statements for the fiscal year ending January 26, 2020 ($ in millions):Required:1. Calculate the company’s 2020 fixed-asset turnover ratio.2. How would you
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 Pinewood’s net sales for 2024.
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 old model’s book value was $180,000 (original cost of $400,000 less $220,000 in accumulated
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 the questions assuming that the fair value of the equipment was $24,000, instead of
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 equipment. The land had a book value of $120,000 and a fair value of $150,000. Bronco paid the owner
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 track their health status. The project was completed in November 2024 at a cost of $800,000. Of this
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 place orders for additional inventory when needed. The software then automatically records inventory
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 2024, which were incurred evenly throughout the year, totaled $6,000,000. Marjlee had the following debt
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 $35,000 to Accurite immediately, and in return, Accurite will make its accounting software accessible via
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 help finance the construction. In addition to the construction loan, Highlands had the following
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 two interest-bearing liabilities that were outstanding throughout the construction
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 $120,000.Required:Calculate the amount of research and development expense that Delaware should report
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 research projects. Depreciation on the equipment for 2024 is $10,000. During your year-end review of
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 future economic benefits were deemed probable. The project was successfully completed and the new
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 translation adjustment of $240,000 and an unrealized loss on debt securities of $80,000. The company’s
Presented below are condensed financial statements adapted from those of two actual companies competing in the pharmaceutical industry—Johnson and Johnson (J&J) and Pfizer, Inc. ($ in millions, except per share amounts).Required:Evaluate and compare the two companies by responding to the
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 reported as a current asset in the balance sheet. The following items are being considered:a.
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 made by multiplying 3% times the amount of credit sales for the month. At the fiscal year-end of
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 information ($ in millions):In addition, the income statement reported sales revenue of $92,154
Hogan Company uses the net method of accounting for sales discounts. Hogan offers trade discounts to various groups of buyers. On August 1, 2024, Hogan factored some accounts receivable on a without recourse basis. Hogan incurred a finance charge. Hogan also has some notes receivable bearing an
Delta Automotive Corporation has the following assets listed in its 12/31/2024 trial balance:Required:1. Determine the correct balance of cash and cash equivalents to be reported in the current asset section of the 2024 balance sheet.2. For each of the items not included in your answer to
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2024 ($ in thousands):In addition, during the year, the company completed the disposal of its plastics business and incurred a loss from operations of $1.6 million and a gain on disposal of the
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 controller prepared the following financial statements:Additional Information:1. The company’s common
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 also is available:In addition, the following transactions took place during the year:1. Common stock
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 December 31, 2024. Assuming that Wooten views the time value of money to be a significant component of
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 in an account paying 8% interest compounded annually.Required:Answer each of the following
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 on each September 30, beginning on September 30, 2027.Required:Calculate the amount at which
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. Assume a discount rate of 7% compounded annually. What is the value today of having the patent,
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 the company to expand its operations.1. S&R issued 8% stated rate bonds with a face amount of
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 discount rate of(a) 8%, (b) 10%, or (c) 12%?
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 the five years and interest is compounded annually.2. The payments are received at the beginning 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. Life expectancy for each employee is 15 years beyond retirement. Their names, the amount of their
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 balance. Determine how much will be accumulated in the fund after four years under each of the
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 the machine at a 12% annual interest rate over the five-year lease term.Required:1. Determine the
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 the machine at an 8% annual interest rate.Required:1. Determine the required lease payment if the
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%, or (c) 9% compounded annually?
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 December 31, 2025.Required:1. Calculate the required annual payment if the bank’s interest rate is
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, (2) pay $75,000 today and issue a non-interest bearing note promising to pay $82,500 in one year, or
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 December 31, 2024, and a lump-sum payment of $100,000 on December 31, 2028. A 10% interest rate properly
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 this opportunity?
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 that a 10% interest rate properly reflects the time value of money in this
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 three years. Calculate the total cost of the land today, assuming a discount rate of (a) 5%, (b)
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% interest compounded annually. Approximately how long will it take you to reach this goal?2. The Jasmine Tea
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 payment to be paid immediately2. A 20-year annuity of $16,000 beginning immediately3. A 10-year
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 for $250,000. Assume a discount rate of 7% compounded annually. What is the value today of discovering
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 three are to be $40,000 each and will be paid on December 31, 2027, 2028, and 2029. Mountain
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 note included in the financial statements for the year ended December 31, 2019, the company listed
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, or (c) Five 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 annually?
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. Stone agreed to pay $10,000 on the purchase date and the balance in five annual installments of
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 equity2. Determine the amount of dividends paid to shareholders during 2024. Income statement
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 company’s comparative balance sheets for 2024 and 2023:Required:1. Determine the following ratios for
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 cash flows from operating activities. (Hint: You will have to calculate dividend payments). TIGER
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 statements according to International Financial Reporting Standards. Where IFRS allows flexibility, use the
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 gross profit did the company report in its 2024 income statement?
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 was included with operating expenses in the income statement. The following information describes
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 expense of $87,000 was included with operating expenses in the income statement. The following
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 year was $500,000, and $20,000 was paid to shareholders as dividends. There were no other

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