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intermediate accounting
Intermediate Accounting Volume 1 12th Canadian edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy - Solutions
Uhura Company has decided to expand its operations. The bookkeeper recently completed the following balance sheet in order to obtain additional funds for expansion. Instructions Prepare a revised balance sheet given the available information. Assume that the accumulated depreciation balance for
Presented below is the balance sheet of Sargent Corporation for the current year, 2020. The following information is presented. 1. The current assets section includes cash $150,000, accounts receivable $170,000 less $10,000 for allowance for doubtful accounts, inventories $180,000, and unearned
The partner in charge of the Kappeler Corporation audit comes by your desk and leaves a letter he has started to the CEO and a copy of the cash flow statement for the year ended December 31, 2020. Because he must leave on an emergency, he asks you to finish the letter by explaining: (1) the
Presented below is the SEC-mandated disclosure of contractual obligations provided by Deere & Company in a recent annual report. Deere & Company reported current assets of $50,060 and total current liabilities of $21,394 at year-end. (All dollars are in millions.) Instructions a. Compute
The bookkeeper for Geronimo Company has prepared the following balance sheet as of July 31, 2020. The following additional information is provided. 1. Cash includes $1,200 in a petty cash fund and $15,000 in a bond sinking fund. 2. The net accounts receivable balance is comprised of the following
Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2020: Prepaid Rent $12,000, Goodwill $50,000, Franchise Fees Receivable $2,000, Franchises $47,000, Patents $33,000, and Trademarks $10,000. Prepare the intangible assets section of the balance
Lansbury Inc. had the following balance sheet at December 31, 2019. During 2020, the following occurred. 1. Lansbury Inc. sold part of its debt investment portfolio for $15,000. This transaction resulted in a gain of $3,400 for the firm. The company classifies these investments as
The incredible growth of Amazon.com has put fear into the hearts of traditional retailers. Amazon?s stock price has soared to amazing levels. However, it is often pointed out in the fi nancial press that it took the company several years to report its first profit. The following financial
Presented below are selected accounts of Yasunari Kawabata Company at December 31, 2020. The following additional information is available. 1. Inventories are valued at lower-of-cost-or-market using LIFO. 2. Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line
The financial statements of M&S are presented in Appendix E. The company’s complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the following questions.a. What
Thomas Corporation’s adjusted trial balance contained the following liability accounts at December 31, 2020: Bonds Payable (due in 3 years) $100,000, Accounts Payable $72,000, Notes Payable (due in 90 days) $22,500, Salaries and Wages Payable $4,000, and Income Taxes Payable $7,000. Prepare the
Aero Inc. had the following balance sheet at December 31, 2019. During 2020, the following occurred. 1. Aero liquidated its available-for-sale debt investment portfolio at a loss of $5,000. 2. A tract of land was purchased for $38,000. 3. An additional $30,000 in common stock was issued at
Early in January 2021, Hopkins Company is preparing for a meeting with its bankers to discuss a loan request. Its bookkeeper provided the following accounts and balances at December 31, 2020. Except for the following items, Hopkins has recorded all adjustments in its accounts. 1. Cash includes
Frederic Chopin Corporation is preparing its December 31, 2020, balance sheet. The following items may be reported as either a current or long-term liability.1. On December 15, 2020, Chopin declared a cash dividend of $2.50 per share to stockholders of record on December 31. The dividend is payable
Included in Adams Company’s December 31, 2020, trial balance are the following accounts: Accounts Payable $220,000, Pension Liability $375,000, Discount on Bonds Payable $29,000, Unearned Rent Revenue $41,000, Bonds Payable $400,000, Salaries and Wages Payable $27,000, Interest Payable $12,000,
The current assets and current liabilities sections of the balance sheet of Allessandro Scarlatti Company appear as follows. The following errors in the corporation?s accounting have been discovered: 1. January 2021 cash disbursements entered as of December 2020 included payments of accounts
Use the information presented in BE5.8 for Adams Company to prepare the long-term liabilities section of the balance sheet.In BE5.8Included in Adams Company’s December 31, 2020, trial balance are the following accounts: Accounts Payable $220,000, Pension Liability $375,000, Discount on Bonds
Norma Smith is the controller of Baylor Corporation and is responsible for the preparation of the year-end financial statements. The following transactions occurred during the year.a. On December 20, 2020, a former employee filed a legal action against Baylor for $100,000 for wrongful dismissal.
In its December 31, 2020, balance sheet Oakley Corporation reported as an asset, “Net notes and accounts receivable, $7,100,000.” What other disclosures are necessary?
Hawthorn Corporation’s adjusted trial balance contained the following accounts at December 31, 2020: Retained Earnings $120,000, Common Stock $750,000, Bonds Payable $100,000, Paid-in Capital in Excess of Par—Common Stock $200,000, Goodwill $55,000, Accumulated Other Comprehensive Loss
Presented below is the adjusted trial balance of Kelly Corporation at December 31, 2020. Additional information: 1. Net loss for the year was $2,500. 2. No dividends were declared during 2020. Instructions Prepare a classified balance sheet as of December 31, 2020. Credit Debit Cash Supplies
Stowe Company’s December 31, 2020, trial balance includes the following accounts: Investment in Common Stock $70,000, Retained Earnings $114,000, Trademarks $31,000, Preferred Stock $152,000, Common Stock $55,000, Deferred Income Taxes $88,000, Paid-in Capital in Excess of Par— Common Stock
Presented below is the trial balance of Scott Butler Corporation at December 31, 2020. Instructions Prepare a balance sheet at December 31, 2020, for Scott Butler Corporation. (Ignore income taxes.) Debit Credit $ 197,000 Cash $ 8,100,000 Sales Revenue Debt Investments (trading) (at cost,
The New York Knicks, Inc. sold 10,000 season tickets at $2,000 each. By December 31, 2020, 16 of the 40 home games had been played. What amount should be reported as a current liability at December 31, 2020?
Ames Company reported 2020 net income of $151,000. During 2020, accounts receivable increased by $13,000 and accounts payable increased by $9,500. Depreciation expense was $44,000. Prepare the cash flows from operating activities section of the statement of cash flows.
The comparative balance sheets of Constantine Cavamanlis Inc. at the beginning and the end of the year 2020 are as follows. Net income of $44,000 was reported, and dividends of $23,000 were paid in 2020. New equipment was purchased and none was sold. Instructions Prepare a statement of cash
Martinez Corporation engaged in the following cash transactions during 2020.Sale of land and building........................$191,000Purchase of treasury stock.........................40,000Purchase of land..........................................37,000Payment of cash
The following is a condensed version of the comparative balance sheets for Zubin Mehta Corporation for the last two years at December 31. Additional information: Investments were sold at a loss of $10,000; no equipment was sold; cash dividends paid were $30,000; and net income was
A comparative balance sheet for Shabbona Corporation is presented as follows. Additional information: 1. Net income for 2020 was $125,000. No gains or losses were recorded in 2020. 2. Cash dividends of $60,000 were declared and paid. 3. Bonds payable amounting to $50,000 were retired through
Grant Wood Corporation?s balance sheet at the end of 2019 included the following items. The following information is available for 2020. 1. Net income was $55,000. 2. Equipment (cost $20,000 and accumulated depreciation $8,000) was sold for $10,000. 3. Depreciation expense was $4,000 on the
Recall the definition of assets: probable economic benefits obtained or controlled by a particular entity as a result of past transactions or events. Discuss how a leased building might qualify as an asset of the lessee (tenant) under this definition.
Answer each of these unrelated questions.a. On January 1, 2020, Fishbone Corporation sold a building that cost $250,000 and that had accumulated depreciation of $100,000 on the date of sale. Fishbone received as consideration a $240,000 non-interest-bearing note due on January 1, 2023. There was no
For each of the following cases, indicate (a) to what rate columns, and (b) to what number of periods you would refer in looking up the interest factor. 1. In a future value of 1 table: 2. In a present value of an annuity of 1 table: Annual Number of Years Invested Compounded Rate a. 9% b. 12%
In addition to the list of topics identified in footnote 1 in the chapter, identify the specific Codification guidance related to the use of present value in goodwill impairment.
Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns.a. What is the amount of the payments that Ned Winslow must make at the end of each of 8 years to accumulate a fund of $90,000 by the end of the eighth year, if the fund
Consolidated Natural Gas Company (CNG), with corporate headquarters in Pittsburgh, Pennsylvania, is one of the largest producers, transporters, distributors, and marketers of natural gas in North America.Periodically, the company experiences a decrease in the value of its gas- and oil-producing
Sally Medavoy will invest $8,000 a year for 20 years in a fund that will earn 6% annual interest. If the first payment into the fund occurs today, what amount will be in the fund in 20 years? If the first payment occurs at year-end, what amount will be in the fund in 20 years?
Steve Madison needs $250,000 in 10 years. How much must he invest at the end of each year, at 5% interest, to meet his needs?
Presented below are three unrelated situations.a. Dwayne Wade Company recently signed a lease for a new office building, for a lease period of 10 years. Under the lease agreement, a security deposit of $12,000 is made, with the deposit to be returned at the expiration of the lease, with interest
Answer the following questions related to Dubois Inc.a. Dubois Inc. has $600,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump-sum payment of
John Fillmore’s lifelong dream is to own his own fishing boat to use in his retirement. John has recently come into an inheritance of $400,000. He estimates that the boat he wants will cost $300,000 when he retires in 5 years. How much of his inheritance must he invest at an annual rate of 8%
What would you pay for a $100,000 debenture bond that matures in 15 years and pays $5,000 a year in interest if you wanted to earn a yield of:a. 4%?b. 5%?c. 6%?
Refer to the data in BE6.7. Assuming quarterly compounding of amounts invested at 8%, how much of John Fillmore’s inheritance must be invested to have enough at retirement to buy the boat?In BE6.7John Fillmore’s lifelong dream is to own his own fishing boat to use in his retirement. John has
Clarence Weather spoon, a super salesman contemplating retirement on his fifty-fifth birthday, decides to create a fund on an 8% basis that will enable him to withdraw $20,000 per year on June 30, beginning in 2024 and continuing through 2027. To develop this fund, Clarence intends to make equal
You have been hired as a benefit consultant by Jean Honore, the owner of Attic Angels. She wants to establish a retirement plan for herself and her three employees. Jean has provided the following information. The retirement plan is to be based upon annual salary for the last year before retirement
Rizzo Excavating Inc. is purchasing a bulldozer. The equipment has a price of $100,000. The manufacturer has offered a payment plan that would allow Rizzo to make 10 equal annual payments of $16,274.53, with the first payment due one year after the purchase.Instructionsa. How much total interest
Maria Alvarez is investing $300,000 in a fund that earns 4% interest compounded annually. What equal amounts can Maria withdraw at the end of each of the next 20 years?
Danny?s Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2020, Danny sold $300,000 of new specialty mowers for golf greens for which Danny?s service department does not have the equipment to do the service. Danny has entered into an
Adams Inc. will deposit $30,000 in a 6% fund at the end of each year for 8 years beginning December 31, 2020. What amount will be in the fund immediately after the last deposit?
Hincapie Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company’s bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for
At the end of 2020, Sawyer Company is conducting an impairment test and needs to develop a fair value estimate for machinery used in its manufacturing operations. Given the nature of Sawyer?s production process, the equipment is for special use. (No secondhand market values are available.) The
Nerwin, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2020. Each employee covered by the plan is
Ricky Fowler borrowed $70,000 on March 1, 2018. This amount plus accrued interest at 6% compounded semiannually is to be repaid March 1, 2028. To retire this debt, Ricky plans to contribute to a debt retirement fund five equal amounts starting on March 1, 2023, and for the next 4 years. The fund is
Answer the following questions.a. On May 1, 2020, Goldberg Company sold some machinery to Newlin Company on an installment contract basis. The contract required five equal annual payments, with the first payment due on May 1, 2020. What present value concept is appropriate for this situation?b. On
Your client, Albert Almora Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Almora has an investment cost of $365,755 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is
In its 2017 financial statements (Note 3), Air Canada has disclosed its critical estimates and judgements used in preparing the financial statements.InstructionsAccess the 2017 audited annual financial statements for Air Canada for the year ended December 31, 2017, from the company’s website or
Fusters Inc. provides audited financial statements to its creditors and is required to maintain certain covenants based on its debt to equity ratio and return on assets. In addition, management of Fusters receives a bonus partially based on revenues for the year. Information related to Fusters
Sherry Tsang has just started up a small corporation that produces clothing. She has applied for and received a government grant. The grant will automatically be renewed as long as the business shows a profit at year end. Because she is trying to control costs, Sherry will prepare the financial
When the AcSB issues new standards, the implementation date is usually 12 months after the issue date, but early implementation is encouraged. In this case, Paula Prentice, controller, is discussing with her financial vice-president the need for early implementation of a standard that would result
Verity Retail Limited was a private company that experienced cash flow difficulties and hired new management to turn the company around. The company then went public and the shares sold at $15 per share. Within months, however, the share price plummeted and Beatle Clothing Inc. acquired the company
Hans Hoogervorst, Chair of the IASB, has spoken of issues related to the IASB’s disclosure initiative, particularly corporate reporting of non-GAAP measures and the need for professional judgement when making disclosure decisions.InstructionsAccess one of Mr. Hoogervorst’s speeches dealing with
The Canadian Coalition for Good Governance (www.ccgg.ca) was formed in 2002 and represents a significant number of institutional investors in Canada.Instructionsa. What is the purpose of the CCGG?b. How does an institutional investor differ from other investors?c. In your opinion, what impact would
In 2002, the Sarbanes-Oxley Act (SOX) was passed in the United States to strengthen the capital marketplace. In the following year, there were many debates in Canada about whether the securities commissions here should adopt the same regulations. In the end, Canada did adopt a similar level of
From the IFRS website (www.ifrs.org), locate reports relating to the convergence between U.S. GAAP and IFRS. These reports provide a picture of the extent to which convergence is being achieved on significant accounting and reporting issues. Some of the significant differences between U.S. GAAP and
What follows is part of the testimony from Troy Normand in the case of WorldCom, the U.S. telecommunications company that filed for bankruptcy in 2002 after an accounting scandal. He was a manager in the corporate reporting department and is one of five individuals who pleaded guilty to various
In 2012, Hans Hoogervorst, Chairman of the IASB, gave a speech at the FEE Conference on Corporate Reporting of the Future entitled “The Concept of Prudence: Dead or Alive?” This speech was in answer to many who opposed the elimination of “prudence” from the recently revised qualitative
How are financial accountants pressured when they need to make ethical decisions in their work? Is having technical mastery of GAAP enough to practise financial accounting?
The Sarbanes-Oxley Act was enacted to combat fraud and curb poor reporting practices. What are some key provisions of this legislation? Are these provisions in effect in Canada?
Obtain the 2017 financial statements of Teck Resources Limited from SEDAR (www.sedar.com).Instructionsa. Using the notes to the consolidated financial statements, determine the company’s revenue recognition policy. Comment on whether the company uses an aggressive or conservative method for
Identify which specific qualitative characteristic of accounting information is best described in each item below.a. The annual financial reports of Treelivingo Corp. are audited by public accountants.b. Able Corp. and Mona Inc. both use the straight-line depreciation method.c. Global Corp. issues
Environmental Inc. operates in Canada and the United States. Its basic business is high-temperature treatment services for contaminated soil. In its 2020 financial statements, the company had a loss of $9.3 million (and an accumulated deficit of $43.7 million).In the notes to the financial
Presented below are four different transactions related to materiality. Explain whether you would classify these transactions as material.a. Blair Inc. has reported a positive trend in earnings over the past three years. In the current year, it reduces its allowance for bad debts and corresponding
Sider Corp. was recently sued by a competitor for patent infringement. Lawyers have determined that it is probable that Sider will lose the case, and will have to pay $250,000 in damages. Using the three-step analysis for determining whether the fundamental characteristics of useful information are
Bradford Construction Ltd. submitted a $14.5-million sealed bid for a fixed-price roads contract with the local municipality. Historically, Bradford is awarded 20% of the contracts on which it submits sealed bids. Using the three-step analysis for determining whether the fundamental characteristics
a. Identify three common forms of business organizations. Briefly outline the pros and cons of setting up a company using each form of organization.b. Identify why accounting professionals use limited liability partnerships and professional corporations.
You are hired to review the accounting records of Sheridan Inc. (a public corporation) before it closes its revenue and expense accounts as at December 31, 2020, the end of its current fiscal year. The following information comes to your attention.1. During the current year, Sheridan Inc. changed
Access the Investor Perspectives article written by Steve Cooper, a member of the IASB, in June 2015, entitled “A Tale of ‘Prudence’?” (https://www.ifrs.org/-/media/feature/resources-for/investors/investorperspectives/investor-perspective-jun-2015.pdf). Mr. Cooper states that two different
Refer to the information for Bradford Construction Ltd. in BE2.5. Assume that the sealed bid for the road contract was submitted on December 28, 2020, that Bradford has a calendar year end, and that the annual financial statements are issued in late February 2021. The bidding process closed on
In the IASB standard-setting conceptual framework, the word “reliability” has been replaced with “faithful representation.” This has caused much discussion among preparers of financial information. The change has led to other implications related to substance over form, neutrality,
ASPE and IFRS have differing criteria for whether an element should be recognized or not. Assume that Thatcher Inc. (TI) is the subject of a lawsuit. TI sells prepared food on a wholesale basis to supermarket chains (which resell the food at a retail level). The food is perishable and must be kept
Jasper Bakery Limited signed a purchase order to buy 50 kg of butter from a farmer over the next month at a fixed price. The butter is of exceptional quality and will be used in baked goods that will be sold in the bakery.Instructionsa. Define the term “executory contract.”b. Is the contract to
The ASPE conceptual framework acknowledges the concept of conservatism.Instructionsa. Define the term “conservatism.”b. IFRS introduced the term “prudence” in the new Conceptual Framework. Explain what this means.c. Is conservatism and/or prudence in conflict with the concept of neutrality?
Assets are the cornerstone of financial reporting; often it is unclear whether an expenditure is an asset or an expense. For each of the transactions described below, consider whether the expenditure should be recorded as an asset or as an expense. Be sure to discuss the specific criteria in your
For each item that follows, identify the foundational principle of accounting that best describes it.a. For its annual reports, Sumsong Corp. divides its economic activities into 12-month periods.b. Sullivan, Inc. does not adjust amounts in its financial statements for the effects of inflation.c.
The following independent situations require professional judgement for determining when to recognize revenue from the transactions.1. Air Yukon sells you an advance purchase airline ticket in September for your flight home at Christmas.2. Better Buy Ltd. sells you a home theatre on a “no money
Langevin Ltd., which has a calendar year end, entered into an equipment lease on June 1, 2020, with GH Financing Limited. The lease term is two years and requires payments of $3,000 at the end of each month beginning September 30. The stated rate of interest in the lease is 6%. As an incentive for
Branson Restaurants Limited is currently reviewing its financial operations for the past year. Specifically, it is looking to determine what is happening with one of its restaurants (which it owns – including the land). The following summary gives data about the restaurant in question.Restaurant
M&B Tooling Ltd. is assessing two available options for the purchase of new equipment with a negotiated cash price of $100,000. The manufacturer is willing to accept a down payment of 20% of the purchase price and an instalment note for the balance. The note would require quarterly fixed
Oil Company Limited (OCL) is in the oil and gas business and operates internationally. The company is public and lists on the National Stock Exchange. In the past two years, oil prices have been declining significantly. The company’s Canadian operations are primarily located in Western Canada and
James Halabi is a financial executive with McDowell Enterprises. Although James has not had any formal training in finance or accounting, he has a “good sense” for numbers and has helped the company grow from a very small company ($500,000 in sales) to a large operation ($45 million in sales).
LEW Company purchased a machine at a price of $100,000 by signing a note payable, which requires a single payment of $123,210 in two years.a. Assuming annual compounding of interest, what rate of interest is being paid on the loan? Use either a financial calculator or the Excel function Rate to
Assume the same information as in P3.4.InstructionsRedo the analysis using Excel functions for an annuity due. Will the conclusion reached be the same as in P3.4?Data from P3.4James Halabi is a financial executive with McDowell Enterprises. Although James has not had any formal training in finance
Assume the same role as described in P3.4. The following are the facts for the second question asked of prospective employees. Last year the company exchanged a piece of land for a non–interest-bearing note. The note is to be paid at the rate of $15,000 per year for nine years, beginning one year
Dunn Inc. owns and operates a number of hardware stores in the Atlantic region. Recently, the company has decided to open another store in a rapidly growing area of Nova Scotia. The company is trying to decide whether to purchase or lease the building and related facilities. Currently, the cost of
Viavélo Inc. manufactures cycling equipment. Recently, the company’s vice-president of operations has requested construction of a new plant to meet the increasing demand for the company’s bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for
Use the information in P3.7.Data from P3.7Dunn Inc. owns and operates a number of hardware stores in the Atlantic region. Recently, the company has decided to open another store in a rapidly growing area of Nova Scotia. The company is trying to decide whether to purchase or lease the building and
Your client, Danyleyko Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Danyleyko has an investment cost of $365,755 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is
Use the information in P3.7.Data from P3.7Dunn Inc. owns and operates a number of hardware stores in the Atlantic region. Recently, the company has decided to open another store in a rapidly growing area of Nova Scotia. The company is trying to decide whether to purchase or lease the building and
For each of the following, determine the expected cash flows. Cash Flow Estimate Probability Assessment $4,800 20% a. 6,300 50% 7,500 30% b. 5,400 7,200 30% 50% 8,400 20% (1,000) 10% c. 3,000 80% 5,000 10%
Zang Services Inc. accounts for the lease of a truck. The lease includes a residual value guarantee at the end of the lease term of $16,000. Zang estimates that the likelihood that the residual value will be $16,000 has a 50% certainty. Zang feels that there is a 30% chance that the residual value
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