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intermediate accounting
Intermediate Accounting 17th edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel - Solutions
Assume that you are following IFRS 13 and measuring the fair value of a building. The building is currently being rented out. Under IFRS 13, the entity must determine the following: (a) How the item could be/is used, (b) The market, (c) The valuation technique/model. Briefly explain
Medici Patriarchs purchased the following investments during 2020:a. 1,000 shares of Private Limited, a start-up company. The value of this investment was based on an internally developed model.b. 5,000 shares of CIBC, a public company listed on the TSX.c. $15,000 of corporate bonds. Although these
If Kerry Dahl invests $3,152 now, she will receive $10,000 at the end of 15 years. What annual rate of interest will Kerry earn on her investment? Round your answer to the nearest whole number. Show calculations using any of three methods: (a) Factor Table PV.1, (b) A financial
Kilarny Company is considering investing in an annuity contract that will return $25,000 at the end of each year for 15 years. What amount should Kilarny Company pay for this investment if it earns a 6% return? Show calculations using any of the following methods: (a) Factor Table
Assume the same information as BE3.18, except that the market interest rate is 6% instead of 5%. In this case, how much can Cross Country expect to receive from the sale of these bonds? Show calculations using any of the following three methods: (a) Factor Tables PV.1 and PV.2, (b) A
HQ Ltd. purchased a used truck from Trans Auto Sales Inc. HQ paid a $4,000 down payment and signed a note that calls for 36 payments of $1,033.34 at the end of each month. The stated rate of interest in the note is 4%. As an incentive for entering into the contract, Trans has agreed to forgive the
Hung-Chao Yu Company issues a six-year, 8% mortgage note on January 1, 2020, to obtain financing for new equipment. The terms provide for semi-annual instalment payments of $112,825. What were the cash proceeds received from the issue of the note? Show calculations using(a) Factor Table
Assume the same information as in BE3.22 except that the note calls for quarterly instalment payments of $1,000. Before repeating the calculation, try to predict the outcome of the calculation and determine if the total interest will be higher or lower than with an annual payment. Show calculations
Assume the same information as in BE3.24 except that the payments are made monthly, at the end of each month, instead of annually. What would be the monthly payments? Show calculations using (a) A financial calculator or (b) Excel function PMTData from BE3.24 You would like to purchase a
Assume the same information as in BE3.24, except that you can afford to make annual payments of only $6,000. If you decide to trade in your current car to help reduce the amount of financing required, what trade-in value would you need to negotiate to ensure your annual payment is $6,000?
If the market rate of interest in BE3.27 were 10%, would you choose the same option? To calculate each option, use (a) A financial calculator(b) Excel function PV.Data from BE3.27As CFO of a small manufacturing firm, you have been asked to determine the best financing for the purchase of a new
Assume the same information as in BE3.27. (a) Describe how the vendor arrived at the amounts of the two options. (b) What would have been the equivalent cash selling price? (c) Is the risk the same to the vendor as with a cash sale? (d) What, if any, would be the difference in
The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online.InstructionsUse the companies’ financial information to answer the following
William Murray achieved one of his life-long dreams by opening his own business, The Caddie Shack Driving Range, on May 1, 2020. He invested $20,000 of his own savings in the business. He paid $6,000 cash to have a small building constructed to house the operations and spent $800 on golf clubs,
The financial statements of M&S are presented in Appendix E. The company’s complete annual report, including the notes to the fi nancial statements, is available online.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the following questions.a.
Presented below is information related to Cramer, Inc. Instructions Comment on the appropriateness of the accounting procedures followed by Cramer, Inc. a. Depreciation expense on the building for the year was $60,000. Because the building was increasing in value during the year, the controller
Vande Velde Company made three investments during 2020.(1) It purchased 1,000 shares of Sastre Company, a start-up company. Vande Velde made the investment based on valuation estimates from an internally developed model.(2) It purchased 2,000 shares of GE stock, which trades on the NYSE.(3) It
In January 2021, Janeway Inc. doubled the amount of its outstanding stock by selling on the market an additional 10,000 shares to finance an expansion of the business. You propose that this information be shown by a footnote on the balance sheet as of December 31, 2020. The president objects,
The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to these financial statements and the accompanying notes to answer the following questions.a. What were
The following trial balance of Wanda Landowska Company does not balance. Your review of the ledger reveals the following. (a) Each account had a normal balance. (b) The debit footings in Prepaid Insurance, Accounts Payable, and Property Tax Expense were each understated $100. (c) A transposition
Mason Advertising was founded in January 2013. Presented below are adjusted and unadjusted trial balances as of December 31, 2020. Instructions a. Journalize the annual adjusting entries that were made. (Omit explanations.) b. Prepare an income statement and a retained earnings statement for the
The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online.InstructionsUse the companies’ financial information to answer the following
On July 1, 2020, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Crowe Co., journalize the entry on July 1 and the adjusting entry on December 31.
The following trial balance of Blues Traveler Corporation does not balance. An examination of the ledger shows these errors. 1. Cash received from a customer on account was recorded (both debit and credit) as $1,380 instead of $1,830. 2. The purchase on account of a computer costing $3,200 was
A review of the ledger of Baylor Company at December 31, 2020, produces the following data pertaining to the preparation of annual adjusting entries. 1. Salaries and Wages Payable $0. There are eight employees. Salaries and wages are paid every Friday for the current week. Five employees receive
Kellogg Company has its headquarters in Battle Creek, Michigan. The company manufactures and sells ready-to-eat breakfast cereals and convenience foods including cookies, toaster pastries, and cereal bars. Selected data from Kellogg Company?s recent annual report follows (dollar amounts in
Using the data in BE3.3, journalize the entry on July 1 and the adjusting entry on December 31 for Zubin Insurance Co. Zubin uses the accounts Unearned Service Revenue and Service Revenue.In BE3.3On July 1, 2020, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both
The following trial balance of Watteau Co. does not balance. Each of the listed accounts should have a normal balance per the general ledger. An examination of the ledger and journal reveals the following errors. 1. Cash received from a customer on account was debited for $570, and Accounts
The trial balance of Bellemy Fashion Center contained the following accounts at November 30, the end of the company?s fiscal year. Adjustment data: 1. Supplies on hand totaled $1,500. 2. Depreciation is $15,000 on the equipment. 3. Interest of $11,000 is accrued on notes payable at November
The Amato Theater is nearing the end of the year and is preparing for a meeting with its bankers to discuss the renewal of a loan. The accounts listed below appeared in the December 31, 2020, trial balance. Additional information is available as follows. 1. The equipment has an estimated useful
Becker Ltd. is planning to adopt IFRS and prepare its first IFRS financial statements at December 31, 2021. What is the date of Becker’s opening balance sheet, assuming one year of comparative information? What periods will be covered in Becker’s first IFRS financial statements?
The ledger of Duggan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. An analysis of the accounts shows the following. 1. The equipment depreciates $250 per month. 2. One-third of the unearned rent was recognized
Karen Weller, D.D.S., opened a dental practice on January 1, 2020. During the first month of operations, the following transactions occurred.1. Performed services for patients who had dental plan insurance. At January 31, $750 of such services was performed but not yet billed to the insurance
The following are the trial balance and the other information related to Perez Consulting Engineers. 1. Fees received in advance from clients $6,000, which were recorded as revenue. 2. Services performed for clients that were not recorded by December 31, $4,900. 3. Bad debt expense for the year
The financial statements of (M&S) are presented in Appendix E. The company’s complete annual report, including the notes to the fi nancial statements, is available online.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the following questions.a.
A partial adjusted trial balance of Piper Company at January 31, 2020, shows the following. Instructions Answer the following questions, assuming the year begins January 1. a. If the amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was purchased in January, what
Rolling Hills Golf Inc. was organized on July 1, 2020. Quarterly financial statements are prepared. The unadjusted trial balance and adjusted trial balance on September 30 are shown below. Instructions a. Journalize the adjusting entries that were made. b. Prepare an income statement and a
Andy Roddick is the new owner of Ace Computer Services. At the end of August 2020, his first month of ownership, Roddick is trying to prepare monthly financial statements. Below is some information related to unrecorded expenses that the business incurred during August.1. At August 31, Roddick owed
Vedula Advertising was founded by Murali Vedula in January 2015. The following are both the adjusted and unadjusted trial balances as of December 31, 2020. Instructions a. Journalize the annual adjusting entries that were made. b. Prepare an income statement and a retained earnings statement for
Selected accounts of Urdu Company are shown below. Instructions From an analysis of the T-accounts, reconstruct (a) The October transaction entries, (b) The adjusting journal entries that were made on October 31, 2020. Prepare explanations for each journal entry. Supplies Accounts Receivable 800
Greco Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows. Other data: 1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020. 2. An inventory count on August 31 shows $450 of supplies on hand. 3. Annual
The adjusted trial balance of Anderson Cooper Co. as of December 31, 2020, contains the following. Instructions a. Prepare an income statement. b. Prepare a retained earnings statement. c. Prepare a classified balance sheet. Anderson Cooper Co. Adjusted Trial Balance December 31, 2020 Cr. Dr.
On January 1, 2020, Norma Smith and Grant Wood formed a computer sales and service company in Soapsville, Arkansas, by investing $90,000 cash. The new company, Arkansas Sales and Service, has the following transactions during January.1. Pays $6,000 in advance for 3 months’ rent of office,
Kelly Company had cash receipts from customers in 2020 of $142,000. Cash payments for operating expenses were $97,000. Kelly has determined that at January 1, accounts receivable was $13,000, and prepaid expenses were $17,500. At December 31, accounts receivable was $18,600, and prepaid expenses
Santo Design was founded by Thomas Grant in January 2011. Presented below is the adjusted trial balance as of December 31, 2020. Instructions a. Prepare an income statement and a retained earnings statement for the year ending December 31, 2020, and an unclassified balance sheet at December
Cooke Company has a fiscal year ending on September 30. Selected data from the September 30 worksheet are presented below. Instructions a. Prepare a complete worksheet. b. Prepare a classified balance sheet. c. Journalize the adjusting entries using the worksheet as a basis. d. Journalize the
Jay Hawk, maintenance supervisor for Boston Insurance Co., has purchased a riding lawnmower and accessories to be used in maintaining the grounds around corporate headquarters. He has sent the following information to the accounting department. Compute the amount of depreciation expense (related
The adjusted trial balance of Lopez Company shows the following data pertaining to sales at the end of its fiscal year, October 31, 2020: Sales Revenue $800,000, Delivery Expense $12,000, Sales Returns and Allowances $24,000, and Sales Discounts $15,000.Instructionsa. Prepare the revenues section
Midwest Enterprises made the following entry on December 31, 2020.Interest Expense................................10,000Interest Payable.................................10,000(To record interest expensedue on loan from AnaheimNational Bank)What entry would Anaheim National Bank make regarding its
Presented below is information related to Gonzales Corporation for the month of January 2020. Instructions Prepare the necessary closing entries. Cost of goods sold Delivery expense Insurance expense Rent expense Salaries and wages expense Sales discounts Sales returns and allowances Sales
Presented below are selected account balances for Homer Winslow Co. as of December 31, 2020. Instructions Prepare closing entries for Homer Winslow Co. on December 31, 2020. (Omit explanations.) Inventory 12/31/20 Common Stock Cost of Goods Sold Selling Expenses Administrative Expenses Income Tax
Scratch Miniature Golf and Driving Range Inc. was opened on March 1 by Rick Fowler. The following selected events and transactions occurred during March.Mar. 1 Invested $50,000 cash in the business in exchange for common stock. 3 Purchased Michelle Wie’s Golf Land for $38,000 cash. The price
Jill Accardo, M.D., maintains the accounting records of Accardo Clinic on a cash basis. During 2020, Dr. Accardo collected $142,600 from her patients and paid $55,470 in expenses. At January 1, 2020, and December 31, 2020, she had accounts receivable, unearned service revenue, accrued expenses, and
Wayne Rogers Corp. maintains its financial records on the cash basis of accounting. Interested in securing a long-term loan from its regular bank, Wayne Rogers Corp. requests you as its independent CPA to convert its cash-basis income statement data to the accrual basis. You are provided with the
Presented below are selected accounts for Alvarez Company as reported in the worksheet at the end of May 2020. Instructions Complete the worksheet by extending amounts reported in the adjusted trial balance to the appropriate columns in the worksheet. Do not total individual columns. Alvarez
The adjusted trial balance for Ed Bradley Co. is presented in the following worksheet for the month ended April 30, 2020. Instructions Complete the worksheet and prepare a classified balance sheet. Ed Bradley Co. Insert Home Page Layout Formulas Data Review View P18 fx A B Ed Bradley Co.
Jurassic Park Co. prepares monthly financial statements from a worksheet. Selected portions of the January worksheet showed the following data. During February, no events occurred that affected these accounts. But at the end of February, the following information was available. (a) Supplies on
The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to P&G’s financial statements and the accompanying notes to answer the following questions.a. What
The following information is related to Dickinson Company for 2020.Retained earnings balance, January 1, 2020............................................$ 980,000Sales revenue.............................................................................................25,000,000Cost of goods
O?Malley Corporation was incorporated and began business on January 1, 2017. It has been successful and now requires a bank loan for additional working capital to finance expansion. The bank has requested an audited income statement for the year 2020. The accountant for O?Malley Corporation
Starr Co. had sales revenue of $540,000 in 2020. Other items recorded during the year were:Cost of goods sold...................................................$330,000Salaries and wages expense.....................................120,000Income tax
Presented below is information related to Viel Company at December 31, 2020, the end of its first year of operations.Sales revenue...........................................................................$310,000Cost of goods
The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online.InstructionsUse the companies’ financial information to answer the following
Enyart Company has a noncontrolling interest in a subsidiary. Enyart’s controller is unsure how to report losses in the subsidiary that exceed the value of Enyart’s interest in the subsidiary. Advise the controller.
The following is the trial balance of Thompson Corporation at December 31, 2020. A physical count of inventory on December 31 resulted in an inventory amount of $64,000; thus, cost of goods sold for 2020 is $645,000. Instructions Prepare a single-step income statement and a retained earnings
Bobek Inc. has recently reported steadily increasing income. The company reported income of $20,000 in 2017, $25,000 in 2018, and $30,000 in 2019. A number of market analysts have recommended that investors buy the stock because they expect the steady growth in income to continue. Bobek is
Brisky Corporation had net sales of $2,400,000 and interest revenue of $31,000 during 2020. Expenses for 2020 were cost of goods sold $1,450,000, administrative expenses $212,000, selling expenses $280,000, and interest expense $45,000. Brisky’s tax rate is 30%. The corporation had 100,000 shares
Maher Inc. reported income from continuing operations before taxes during 2020 of $790,000. Additional transactions occurring in 2020 but not considered in the $790,000 are as follows.1. The corporation experienced an uninsured flood loss in the amount of $90,000 during the year.2. At the beginning
The financial records of LeRoi Jones Inc. were destroyed by fire at the end of 2020. Fortunately, the controller had kept certain statistical data related to the income statement as follows.1. The beginning merchandise inventory was $92,000 and decreased 20% during the current year.2. Sales
One of the more closely watched ratios by investors is the price/earnings (P/E) ratio. By dividing price per share by earnings per share, analysts get insight into the value the market attaches to a company’s earnings. More specifically, a high P/E ratio (in comparison to companies in the same
Presented below is information related to Viel Company at December 31, 2020, the end of its first year of operations.Sales revenue......................................................................$310,000Cost of goods
The following account balances were included in the trial balance of Twain Corporation at June 30, 2020. The Retained Earnings account had a balance of $337,000 at July 1, 2019. There are 80,000 shares of common stock outstanding. Instructions a. Using the multiple-step form, prepare an income
Finley Corporation had income from continuing operations of $10,600,000 in 2020. During 2020, it disposed of its restaurant division at an after-tax loss of $189,000. Prior to disposal, the division operated at a loss of $315,000 (net of tax) in 2020 (assume that the disposal of the restaurant
Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2020 information related to P. Bride Company ($000 omitted).Administrative expenseOfficers’
The income statement for a British company, Avon Rubber plc, is presented as follows. Avon prepares its financial statements in accordance with IFRS. Instructions a. Review the Avon Rubber income statement and identify at least three differences between the IFRS income statement and an income
Presented below is a combined single-step income and retained earnings statement for Nerwin Company for 2020. Additional facts are as follows. 1. ?Selling, general, and administrative expenses? for 2020 included a charge of $8,500,000 that was usual but infrequently occurring. 2. ?Other, net? for
The following financial statement was prepared by employees of Walters Corporation. Note 1: New styles and rapidly changing consumer preferences resulted in a $71,500 loss on the disposal of discontinued styles and related accessories. Note 2: The corporation sold an investment in marketable
Stacy Corporation had income from operations of $7,200,000. In addition, it suffered an unusual and infrequent pretax loss of $770,000 from a volcano eruption, interest revenue of $17,000, and a write-down on buildings of $53,000. The corporation’s tax rate is 30%. Prepare a partial income
The following balances were taken from the books of Alonzo Corp. on December 31, 2020. Assume the total effective tax rate on all items is 20%. Instructions Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year. Interest revenue Cash Sales
Below is the Retained Earnings account for the year 2020 for Acadian Corp. Instructions a. Prepare a corrected retained earnings statement. Acadian Corp. normally sells investments of the type mentioned above. FIFO inventory was used in 2020 to compute net income. b. State where the items that do
During 2020, Williamson Company changed from FIFO to weighted-average inventory pricing. Pretax income in 2019 and 2018 (Williamson’s first year of operations) under FIFO was $160,000 and $180,000, respectively. Pretax income using weighted-average pricing in the prior years would have been
The accountant of Latifa Shoe Co. has piled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2020.Rent revenue...............................................................................................$ 29,000Interest
The financial statements of M&S are presented in Appendix E. The company’s complete annual report, including the notes to the fi nancial statements, is available online.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the following questions.a. What
Wade Corp. has 150,000 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1,210,000. Additional transactions not considered in the $1,210,000 are as follows.1. In 2020, Wade Corp. sold equipment for $40,000. The machine had
Vandross Company has recorded bad debt expense in the past at a rate of 1½% of accounts receivable, based on an aging analysis. In 2020, Vandross decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $380,000 instead of
Presented below are selected ledger accounts of Tucker Corporation as of December 31, 2020.Cash...........................................................................................$ 50,000Administrative expenses..........................................................100,000Selling
In 2020, Hollis Corporation reported net income of $1,000,000. It declared and paid preferred stock dividends of $250,000. During 2020, Hollis had a weighted average of 190,000 common shares outstanding. Compute Hollis’s 2020 earnings per share.
Presented below is information related to Ivan Calderon Corp. for the year 2020. Instructions a. Prepare a multiple-step income statement for 2020. Assume that 60,000 shares of common stock are outstanding for the entire year. b. Prepare a separate retained earnings statement for 2020.
Using the information from BE4.9, prepare a retained earnings statement for the year ended December 31, 2020. Assume an error was discovered: land costing $80,000 (net of tax) was charged to maintenance and repairs expense in 2020.BE4.9Portman Corporation has retained earnings of $675,000 at
The following are selected ledger accounts of Spock Corporation at December 31, 2020. Spock?s effective tax rate on all items is 20%. A physical inventory indicates that the ending inventory is $686,000. Instructions Prepare a condensed 2020 income statement for Spock Corporation. Cash $
On January 1, 2020, Richards Inc. had cash and common stock of $60,000. At that date, the company had no other asset, liability, or equity balances. On January 2, 2020, it purchased for cash $20,000 of debt securities that it classified as available-for-sale. It received interest of $3,000 during
Eddie Zambrano Corporation began operations on January 1, 2017. During its first 3 years of operations, Zambrano reported net income and declared dividends as follows. The following information relates to 2020.Income before income
At December 31, 2019, Shiga Naoya Corporation had the following stock outstanding.10% cumulative preferred stock, $100 par, 107,500 shares..................$10,750,000Common stock, $5 par, 4,000,000 shares...................................................20,000,000During 2020, Shiga Naoya did not
Tim Mattke Company began operations in 2018 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2020, in accordance with other companies in its industry, Mattke changed its inventory pricing to FIFO. The pretax income data is reported below. Instructions a. What is
Roxanne Carter Corporation reported the following for 2020: net sales $1,200,000, cost of goods sold $750,000, selling and administrative expenses $320,000, and an unrealized holding gain on available-for-sale debt securities $18,000.InstructionsPrepare a statement of comprehensive income, using(a)
Indicate where the following items would ordinarily appear on the financial statements of Boleyn, Inc. for the year 2020.a. The service life of certain equipment was changed from 8 to 5 years. If a 5-year life had been used previously, additional depreciation of $425,000 would have been charged.b.
The following information was taken from the records of Roland Carlson Inc. for the year 2020: income tax applicable to income from continuing operations $187,000, income tax applicable to loss on discontinued operations $25,500, and unrealized holding gain on available-for-sale debt securities
Cooper Investments reported an unusual gain from the sale of certain assets in its 2020 income statement. How does intraperiod tax allocation affect the reporting of this unusual gain?
Qualls Corporation reported 2020 earnings per share of $7.21. In 2021, Qualls reported earnings per share as follows.On income from continuing operations.............................$6.40On discontinued operations...................................................1.88On net
During 2020, Liselotte Company reported income of $1,500,000 before income taxes and realized a gain of $450,000 on the disposal of assets related to a discontinued operation. The criteria for classification as a discontinued operation is appropriate for this sale. The income is subject to income
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