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intermediate accounting

Intermediate Accounting 10th edition J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas - Solutions

On January 30, 2019, a suit was filed against Frazier Corporation under the Environmental Protection Act. On August 6, 2020, Frazier Corporation agreed to settle the action and pay $920,000 in damages to certain current and former employees. How should this settlement be reported in the 2020
Greer Incorporated discovered the following errors on the books at the beginning of 2017:a. Maintenance expense on account was overstated by $20,000 in 2015 and understated by $30,000 in 2016. The payables for both years are still unpaid.b. Depreciation expense was overstated by $55,000 in 2015 and
Tuscany Timber Company incorrectly recorded inventory in 2017. Rather than recording ending inventory as $2,200. Tuscany's accounting manager entered $2,500. An inventory summary for 2017 and 2018 follows. Required a. Prepare an analysis of this error over the 2-year period, recommend any
Lombardo Lumber Company incorrectly recorded inventory in 2017. Rather than recording ending inventory as $500, Lombardo's accounting manager entered $560, overstating ending inventory by $60. An inventory summary for 2017 and 2018 as actually recorded b y the company follows. Required a. Prepare
Jupiter Electric Company provided the following financial statement information for 2018 before considering the accounting changes that follow:Retained earnings, January 1, 2018$ 49,540Sales308,000Selling and administrative expenses54,000Cash dividends declared15,000Cost of goods sold
Incorporated provided the following financial statement information for 2018:Credit sales$2,500,000Retained earnings, January 1, 20181,600,000Sales3,000,000Selling and administrative expenses480,000Restructuring gain (pretax)720,000Cash dividends declared190,000Cost of goods sold1,755,000Error
Corrnuto Equipment Manufacturers, Inc. (CEM) reported the net book value of a plant asset at $2,600,000 on January 1 of the current year. There is a $500,000 expected residual value, and the estimated useful life is 25 years. On January 1 of the current year. following to full years of
Romer Corporation began operations on January 1, 2015. The company decided to lease all plant assets rather than purchase them. Romer used the operating method for all leased assets in 2015 and 2016. On January 1, 2017. a new accountant joined the company and determined that the assets should be
Without Stores began operations on January 1, 2014, and adopted the FIFO method of accounting for its inventory for book and tax purposes. In 2017, it is considering a change to the average-cost method basis for book purposes only. Winthur provided the following information to assist in deciding
Welsh, Inc. began operations January 1, 2017, during 2019. management changed its method of accounting for inventories from the average-cost method to the first-in, first-out (FIFO) method. This change is effective as of January 1, 2019. If cost of goods sold had been determined under each of these
Sumner Stores began operations on January 1, 2014, and adopted the average-cost method of accounting. In 2017, it is considering a change to the FIFO basis. Sumner provided the following information to assist in deciding ?whether to change inventory valuation techniques. Sumner Stores reported
J&S Amez Company began operations in 2017 and initially adopted the weighted-average method for inventory valuation. In 2019, in accordance with the inventory valuation policies followed by other companies in its industry, Amez changed its inventory pricing to the FIFO method. The company still
Arlen Technology Solutions, Inc. adopted the percentage-of-completion method when it began operations on January 1, 2016. The company elected to change to the completed-contact method on January 1, 2018, due to a change in the size of its computer network contracts. Net income under both methods
Second Thought Products (STP) began operations on January 1, 2017, and adopted the FIFO method of inventory valuation at that time. Management elected to change its inventory method to the average-cost method effective January 1, 2020. The new method more fairly presents the company's financial
Massi Pharmacies, Inc. started operations on January 1, 2014. The company initially used the average-cost method 10 value its inventory for both book and tax purposes. Effective January 1, 2018, Massi elected 10 change its inventory valuation method to the FIFO basis for financial reporting
Are accounting changes per milled in financial statements?
Refer to the information about Hutchins Company in MC20-I .Diluted earnings per share for the current year was (rounded to the nearest penny):a. $5.00b . $3.35c. $3.53d. $3.06MC20-I Hutchins Company had 200,000 shares of common stock. 50,000 shares of convertible preferred stock, and
On January 1, 2018, Western Wear. Inc., granted 100,000 stock options to its employees. Of these options, 30% will vest on December 31, 2018, 30% will vest on December 31, 2019, and the remaining 40% will vest on December 31, 2020. The fair value of the options was$ 15.34 per share using a
Using the information from BE21-12, prepare the journal entry necessary 10 correct the inventory error, assuming that Barin's controller discovered the error in 2017 after the books had been closed for 2016. Ignore any income tax effects.BE21-12Sarin Retail Outlets incorrectly recorded inventory in
Tyrion Retailers, Inc. incorrectly recorded inventory in 2016. Rather than recording ending inventory as $570,000. Tydon's accounting manager entered $750,000. Tyrion's controller discovered the error in 2017. Prepare the journal entry necessary to correct the inventory error, ignoring any income
Kogo Incorporation started a share appreciation plan on January 1, 2017, when it granted 100,000 rights to its executives. The vesting period is 2 years. The stock appreciation rights are settled for cash. The plan expires on January 1, 2019. The fair value of Kogo's SARs for the years ended
Eli Lilly and Company. a global pharmaceutical company. offers defined-benefit plans to its employees. The following table presents select data about Eli Lilly 's defined-benefits pension plan. Eli Lilly reports under U.S. GAAP, Use this information to answer the questions that follow regarding Eli
Pfizer Inc., a global pharmaceutical company, offers several different types of stock-based compensation to its employees. Pfizer reports under U.S. GAAP. Use the disclosures provided in Exhibit 19.3 to answer the following questions.Requireda. What types of stock compensation plans does Pfizer
On January 1, 2018, Western Wear, Inc. granted 100,000 stock options to its employees. Of these options, 30% will vest on December 31, 2018, 30% will vest on December 31, 2019, and the remaining 40% will vest on December 31, 2020. The fair value of the options was $15.34 per share using a
Using the information from BE 19-9. now assume that the stock appreciation rights are settled for stock. Prepare the journal entries to record the SAR plan. The par value of common stock is $1 per share. What journal entry will the company make not the date the employees purchase the shares?Data
Sam song Company issued 100,000 shares of $1 par value, restricted stock to its top five key employees on January 1, 2017. The market value of Samsong's shares is $45 per share on the date of issue. The restricted shares require a vesting period of 4 years. Prepare the journal entries for the first
The following information relates to the defined benefit pension plan of Murry Corp. for the year ended December 31, 2019:Prior service cost for a plan amendment during the year .............................. $ 800,000Projected benefit obligation - beginning balance
Welsa Manufacturing. Inc. offers a noncontributory, defined-benefit pension plan to its employees. The average remaining service life of employees is 10 years. The company provides you with the following information for the year ended December 31, 2019:Employer's contribution at end of year
The following information is provided regarding a company's defined benefit pension plan. The projected benefit obligation (PBO) was $600,000 at the beginning of the current year. During the year, pension benefits paid were $165,000, service cost for the year was $210,000, and a plan amendment
OZ Leasing Associates provides you with the following information for the current year:Beginning projected benefit obligation ........................................................................$900,000Settlement rate
You are assistant controller of Stamos & Company, a medium-size manufacturer of machine parts. On October 22, 2020, the board of directors approved a stock option plan for key executives. On January 1, 2021, a specific number of stock options were granted. The options were exercisable between
After graduating near the top of his class, Ben Naegle was hired by the local office of a Big 4 CPA firm in his hometown. Two years later, impressed with his technical skills and experience, Park Electronics, a large regional consumer electronics chain, hired Ben as assistant controller. This was
Below are three independent and unrelated errors.a. On December 31, 2020, Wolfe-Bache Corporation failed to accrue salaries expense of $1,800. In January 2021, when it paid employees for the December 27–January 2 workweek, Wolfe-Bache made the following entry:Salaries expense
At January 1, 2021, Canaday Corporation had outstanding the following securities:600 million common shares20 million 6% cumulative preferred shares, $50 par6.4% convertible bonds, $2,000 million face amount, convertible into 80 million common sharesThe following additional information is
On January 1, 2021, JPS Industries borrowed $300,000 from Austin Bank by issuing a three-year, floating rate note based on LIBOR, with interest payable semi-annually on June 30 and December of each year. JPS entered into a three-year interest rate swap agreement on January 1, 2021, and designated
Cleveland Company is a U.S. firm with a U.S. dollar functional currency that manufactures copper-related products. It forecasts that it will sell 5,000 feet of copper tubing to one of its largest customers at a price of ?50,000,000. Although this sale has not been firmly committed, Cleveland
Arlington Steel Company is a producer of raw steel and steel-related products. On January 3, 2022, Arlington enters into a firm commitment to purchase 10,000 tons of iron ore pellets from a supplier to satisfy spring production demands. The purchase is to be at a fixed price of $63 per ton on April
(Note: This is a variation of Exercise A?5, modified to consider fair value change unrelated to hedged risk.)On January 1, 2021, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. LLB entered into a two-year interest rate swap
(This is a variation of Exercise A?2, modified to consider the extended method.)On January 1, 2021, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. LLB entered into a two-year interest rate swap agreement on January 1, 2021, and
(This is a variation of E A?2, modified to consider fair value change unrelated to hedged risk.)LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. LLB entered into a two-year interest rate swap agreement on January 1, 2021, and
(This is a variation of E A?2, modified to consider an investment in debt securities.)On January 1, 2021, S&S Corporation invested in LLB Industries? negotiable two-year, 10% notes, with interest receivable quarterly. The company classified the investment as available-for-sale. S&S entered
On January 1, 2021, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. LLB entered into a two-year interest rate swap agreement on January 1, 2021, and designated the swap as a fair value hedge. Its intent was to hedge the risk that
Refer to the data provided in E 21–27 for Red, Inc.Required:Prepare the statement of cash flows (direct method) for Red, Inc. Use the T-account method to assist in your analysis.E 21–27 RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 (S in millions) 2021 2020 Assets $ 24 $ 110
Refer to the data provided in E 21–27 for Red, Inc.Required:Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities.E 21–27 RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 (S in millions) 2021 2020 Assets $ 24 $ 110 132 Cash
Mayer Corporation has a defined benefit pension plan. Mayer?s policy is to fund the plan annually, cash payments being made at the end of each year. Data relating to the pension plan for 2021 are as follows: Required:Recreate the journal entries used to record Mayer?s 2021 pension expense, gain
Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting records of Red, Inc., are provided below. Additional information from the accounting records:a. During 2021, $230 million of equipment was purchased to replace $180 million
Refer to the data provided in E 21–25 for Clear Transmissions Company.Required:Prepare the cash flows from operating activities section of the statement of cash flows for Clear Transmissions Company using the indirect method.E 21–25 CLEAR TRANSMISSIONS COMPANY Income Statement For the Year
Portions of the financial statements for Clear Transmissions Company are provided on the next page. Required:Prepare the cash flows from operating activities section of the statement of cash flows for Clear Transmissions Company using the direct method. CLEAR TRANSMISSIONS COMPANY Income
The income statement and a schedule reconciling cash flows from operating activities to net income are provided below ($ in thousands) for Peach Computers. Required:1. Calculate each of the following amounts for Peach Computers:a. Cash received from customers during the reporting periodb. Cash
Refer to the data provided in the P 21–5 for Metagrobolize Industries.Required:Prepare the statement of cash flows for Metagrobolize Industries. Use the T-account method to assist in your analysis. P 21–5 METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2021 and 2020 (S in
The income statement and the cash flows from the operating activities section of the statement of cash flows are provided below for Syntric Company. The merchandise inventory account balance neither increased nor decreased during the reporting period. Syntric had no liability for insurance,
Refer to the data provided in the P 21–4 for Dux Company.Required:Prepare the statement of cash flows for Dux Company. Use the T account method to assist in your analysis. P 21–4 DUX COMPANY Comparative Balance Sheets December 31, 2021 and 2020 (S in thousands) 2021 2020 Assets Cash $ 33 $
The statement of retained earnings of Gary Larson Publishers is presented below. Required:For the transactions that affected Larson?s retained earnings, reconstruct the journal entries that can be used to determine cash flows to be reported in a statement of cash flows. Also indicate any
Refer to the data provided in the P 21–5 for Metagrobolize Industries.Required:Prepare the statement of cash flows for Metagrobolize Industries using the indirect method. P 21–5 METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2021 and 2020 (S in thousands) 2021 2020 Assets
Refer to the data provided in the P 21–4 for Dux Company.Required:Prepare the statement of cash flows for Dux Company using the indirect method.P 21–4 DUX COMPANY Comparative Balance Sheets December 31, 2021 and 2020 (S in thousands) 2021 2020 Assets $ 33 $ 20 Cash Accounts receivable 48
On January 1, 2021, Beilich Enterprises bought 20% of the outstanding common stock of Wolfe Construction Company for $600 million cash. Wolfe?s net income for the year ended December 31, 2021, was $300 million. During 2021, Wolfe declared and paid cash dividends of $60 million. Beilich recorded
Digital Telephony issued 10% bonds, dated January 1, with a face amount of $32 million on January 1, 2021. The bonds mature in 2031 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Digital recorded the issue as
Wilson Foods Corporation leased a commercial food processor on September 30, 2021. The five-year finance lease agreement calls for Wilson to make quarterly lease payments of $195,774, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2021. Wilson?s
The comparative balance sheets for 2021 and 2020 are given below for Surmise Company. Net income for 2021 was $50 million. Required:Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2021. Use the indirect method to present cash flows from operating activities
In preparation for developing its statement of cash flows for the year ended December 31, 2021, Millennium Solutions, Inc. collected the following information: Required:1. In Millennium?s statement of cash flows, what were net cash inflows (or outflows) from investing activities for 2021?2. In
In preparation for developing its statement of cash flows for the year ended December 31, 2021, Rapid Pac, Inc., collected the following information: Required:1. In Rapid Pac?s statement of cash flows, what were net cash inflows (or outflows) from investing activities for 2021?2. In Rapid Pac?s
National Food Services, Inc., borrowed $4 million from its local bank on January 1, 2021, and issued a 4-year installment note to be paid in four equal payments at the end of each year. The payments include interest at the rate of 10%. Installment payments are $1,261,881 annually.Required:What
Most Solutions, Inc., issued 10% bonds, dated January 1, with a face amount of $640 million on January 1, 2021. The bonds mature in 2031 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest expense is recorded at the effective interest rate. Interest is paid
On July 15, 2021, M.W. Morgan Distribution sold land for $35 million that it had purchased in 2016 for $22 million. What would be the amount(s) related to the sale that Morgan would report in its statement of cash flows for the year ended December 31, 2021, using the direct method? The indirect
On January 1, 2021, the Merit Group issued to its bank a $41 million, five-year installment note to be paid in five equal payments at the end of each year. Installment payments of $10 million annually include interest at the rate of 7%. What would be the amount(s) related to the note that Merit
Investing activities include the acquisition and disposition of assets. Provide three specific examples. Identify two exceptions.
Refer to the financial statements and related disclosure notes of The Kroger Company for the fiscal year ending January 30, 2018. You can locate the report online from “investor relations” at www.kroger.com.Notice that Kroger’s net income has declined over the three years reported. To
The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Mike Roe Computers. Required:1. Calculate each of the following amounts for Mike Roe Computers:a. Cash received from customers during the reporting period.b. Cash paid to
Refer to the situation described in BE 21–5. What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2021, if it uses the indirect method?BE 21–5Agee Technology, Inc., issued 9% bonds, dated January 1, with a face
Comparative balance sheets for 2021 and 2020 and a statement of income for 2021 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided. Additional information from the accounting records:a. Annual payments of $20,000 on
Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $400 million on July 1, 2021, at a price of $380 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Prepare the journal entry to record
?Be careful with that coffee!? Your roommate is staring in disbelief at the papers in front of her. ?This was my contribution to our team project,? she moaned. ?When you spilled your coffee, it splashed on this page. Now I can?t recognize some of these numbers, and Craig has my source
The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Dux Company. Additional information from Dux?s accounting records is provided also. Additional information from the accounting records:a. A building that originally cost $40,000, and which was
Locate the financial statements and related disclosure notes of FedEx Corporation for the fiscal year ended May 31, 2017. You can locate the report online at www.fedex.com. Use the information provided in the statement of cash flows to respond to the questions below.Required:1. Is FedEx expanding
The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for National Intercable Company. Additional information from NIC?s accounting records is provided also. Additional information from the accounting records:a. Investment revenue includes National
The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Wright Company. Additional information from Wright?s accounting records is provided also. Additional information from the accounting records:a. Land that originally cost $10,000 was sold for
?Why can?t we pay our shareholders a dividend?? shouted your new boss. ?This income statement you prepared for me says we earned $5 million in our first half-year!? You were hired last month as the chief accountant for Enigma Corporation, which was organized on July 1 of the year just ended. You
For each of the following inventory errors occurring in 2021, determine the effect of the error on 2021?s cost of goods sold, net income, and retained earnings. Assume that the error is not discovered until 2022 and that a periodic inventory system is used. Ignore income taxes. U = Understated O =
At the end of 2020, Majors Furniture Company failed to accrue $61,000 of interest expense that accrued during the last five months of 2020 on bonds payable. The bonds mature in 2032. The discount on the bonds is amortized by the straight-line method. The following entry was recorded on February 1,
Wilkins Food Products Inc. acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2019. In payment for the machine Wilkins issued a threeyear installment note to be paid in three equal payments at the end of each year. The
On December 12, 2021, an investment in equity securities costing $80,000 was sold for $100,000. The total of the sale proceeds was credited to the investment in equity securities account.Required:1. Prepare the journal entry to correct the error, assuming it is discovered before the books are
During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts: WMC uses the periodic inventory system and the FIFO cost method. Required:1. Determine the effect of these errors on retained earnings at January 1,
Wardell Company purchased a mini computer on January 1, 2019, at a cost of $40,000. The computer has been depreciated using the straight-line method over an estimated five-year useful life with an estimated residual value of $4,000. On January 1, 2021, the estimate of useful life was changed to a
The Peridot Company purchased machinery on January 2, 2019, for $800,000. A five-year life was estimated and no residual value was anticipated. Peridot decided to use the straight-line depreciation method and recorded $160,000 in depreciation in 2019 and 2020. Early in 2021, the company revised the
Bronson Industries reported a deferred tax liability of $5 million for the year ended December 31, 2020, related to a temporary difference of $20 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax liability will become payable.
Woodmier Lawn Products introduced a new line of commercial sprinklers in 2020 that carry a one-year warranty against manufacturer’s defects. Because this was the first product for which the company offered a warranty, trade publications were consulted to determine the experience of others in the
The Commonwealth of Virginia filed suit in October 2019, against Northern Timber Corporation seeking civil penalties and injunctive relief for violations of environmental laws regulating forest conservation. When the financial statements were issued in 2020, Northern had not reached a settlement
If merchandise inventory is understated at the end of 2020, and the error is not discovered, how will net income be affected in 2021?
Dreighton Engineering Group receives royalties on a technical manual written by two of its engineers and sold to William B. Irving Publishing, Inc. Royalties are 10% of net sales, receivable on October 1 for sales in January through June and on April 1 for sales in July through December of the
In 2021, the internal auditors of Development Technologies, Inc., discovered that (a) 2020 accrued salaries of $2 million were not recognized until they were paid in 2021 and (b) a $3 million purchase of merchandise in 2021 was recorded as a debit to Purchases in 2020 instead. The physical
The Canliss Milling Company purchased machinery on January 2, 2019, for $800,000. A five-year life was estimated and no residual value was anticipated. Canliss decided to use the straight-line depreciation method and recorded $160,000 in depreciation in 2019 and 2020. Early in 2021, the company
Refer to the situation described in BE 20–10. Assume the error was discovered in 2023, after the 2022 financial statements are issued. Ignoring income taxes, what journal entry will PKE use to correct the error?BE 20–10In 2021, internal auditors discovered that PKE Displays, Inc., had debited
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $2,560,000. Its useful life was estimated to be six years with a $160,000 residual value. At the beginning of 2021, Clinton decides to
In 2021, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2018. The machine’s useful life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Ignoring income
Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income in 2021 was correctly stated as $90 million. If the company had used LIFO in 2020, its cost of goods
When DeSoto Water Works purchased a machine at the end of 2020 at a cost of $65,000, the company debited Buildings and credited Cash $65,000. The error was discovered in 2021. What journal entry will DeSoto use to correct the error? What other step(s) would be taken in connection with the error?
Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Flay decided to change to the LIFO method. As a result of the change, net income in 2021 was $80 million. If the company had used LIFO in 2020, its cost of goods
Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the $18 million cost of the patent on a straight-line basis since it was acquired at the beginning of 2017. Due to rapid technological advances in the industry, management decided that the patent
Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2021, management decided to change from the average inventory costing method to the FIFO inventory costing method at each
In 2020, Quapau Products introduced a new line of hot water heaters that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 5% of sales revenue. First-year sales of the heaters were $300,000. An evaluation of the

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