Questions and Answers of Modern Advanced Accounting

The following activities and transactions are typical of those that may affect the various funds used by a typical municipal government.Required:Prepare journal entries to record each transaction and
On January 1, 2020, Allentown issued $800,000 of 9% serial bonds at par. Semiannual interest is payable on January 1 and July 1 and principal of $80,000 matures each January 1 starting in 2021. The
An administrative section of the County Assessor’s Office of Mecklenburg County serves as the billing and collection agency for all property taxes assessed in Mecklenburg County. A charge of 1% of
The administrators of the City of Lyons have obtained approval from the City Council to centralize the computer facility as of January 1, 2020. An internal service fund is created to account for the
The City of Dayville has undertaken a sidewalk construction project. The project is being financed by the proceeds from the issue on July 1, 2020, of $500,000 of 7% special assessment debt. One
On January 1, 2020, the City of Cape May authorized and issued $200,000 of 5%, three-year term bonds. Interest is payable annually on December 31. A debt service fund is established to accumulate the
The following events relate typical activities in a municipality that affect the General Fund.1. The Meadville City Council passed an ordinance approving a general operating budget of $580,000 for
The following summary of transactions was taken from the accounts of the Madras School District General Fund before the books were closed for the fiscal year ended June 30, 2020: Additional
During 2020, the City of Greenfield engaged in the following financial activities:1. The City Council approved the budget for the general operating fund. The budget shows estimated revenues of
The January 1, 2020, trial balance, the calendar-year 2020 budget, and the 2020 transactions of the City of Roseburg are presented here: Transactions of the City of Roseburg that affected the
At the beginning of 2020, the City of Fairview reported an Unassigned Fund Balance of $555,000 and a supplies inventory balance of $175,000. During the year, Fairview purchased $225,000 in supplies
Hunnington Township?s adjusted trial balance for the General Fund at the close of its fiscal year ended June 30, 2021, is presented here: Note 1: The current tax roll and accounts receivable,
In 2020, Bay City purchased supplies valued at $350,000. At the end of the year, $65,000 of the supplies were still in the inventory. No supplies were on hand at the beginning of the year. The city
The trial balance for the General Fund of the City of Fairfield as of December 31, 2020, is presented here: Transactions for the year ended December 31, 2021, are summarized as follows: 1. The City
The preclosing trial balance for the General Fund of the City of Springfield is presented below. Note 1: Includes $35,000 of encumbrances from 2019. Required: Prepare the closing entries for the
The trial balance for the General Fund of the City of Monte Vista as of December 31, 2020, is presented here: Transactions of the General Fund for the year ended December 31, 2021, are summarized
Following is the preclosing trial balance for the General Fund of the City of Doyle. Note 1: Includes $50,000 of encumbrances from 2020. Required: Prepare in general journal form the closing
The following account balances, among others, were included in the preclosing trial balance of the General Fund of the City of Madison on December 31, 2021.Appropriations
Go online and find the City of Atlanta’s Comprehensive Annual Financial Report for the year ended June 30, 2017. Find footnotes related to defined pensions and other post-employment benefits
The following account balances, among others, were included in the preclosing trial balance of the General Fund of the City of Lynchburg on December 31, 2021.Estimated Revenue
The general ledger trial balance of the General Fund of the City of Bedford on January 1, 2020, shows the following: A summary of activities and transactions for the General Fund during 2020 is
In the appendix to this chapter, the balance sheet for the General Fund for the City of Atlanta is reported.1. How is the format used on the balance sheet for the general fund different from the
What is the significance of the “unassigned fund balance” of an expendable fund entity?
At State College, where football has long reigned as king and fans are near fanatical in their attendance, the frenzy for football tickets has recently reached an all-time high. With requests for
Jan and Sue have engaged successfully as partners in their law firm for a number of years. Soon after their state?s incorporation laws are changed to allow professionals to incorporate, the partners
Mark Malone, Pete Patton, and Sally Spencer formed a partnership on January 1, 2019. Their original capital investments (all cash) were $140,000, $160,000, and $100,000, respectively. During the
Part ABaker, Strong, and Weak have called on you to assist them in winding up the affairs of their partnership. You are able to gather the following information. 1. The trial balance of the
Hann, Murphey, and Ryan have operated a retail furniture store for the past 30 years. Their business has been unprofitable for several years, since several large discount furniture stores opened in
The Discount Partnership is being liquidated. The current balance sheet is shown here. Dawson, Feeney, and Hardin share profits and losses in a 30:40:30 ratio. Required: A. Prepare a schedule of
During a liquidation, at which point may cash be distributed to any of the partners?
The partnership agreement of ABC Associates provides that income should be allocated in the following manner:1. Each partner receives interest of 20% of beginning capital.2. Sue receives a salary of
Select the best answer for each of the following.1. Which of the following is not a characteristic of a partnership?(a) Limited life.(b) Mutual agency.(c) Limited liability.(d) Right to dispose of
Select the best answer for each of the following.? 1. Jon and Joe formed a partnership on July 1, 2019, and invested the following assets: The realty was subject to a mortgage of $25,000, which was
Partner C buys a 60% interest from the partnership by bringing her business to combine with that of AB. Partners A and B share profits in a 3:1 ratio. Required: A. Does this admission qualify as a
Bill and Jane share profits and losses in a 70:30 ratio. Mike is to be admitted into a partnership upon the investment of $14,000 for a one-third capital interest. Account balances for Bill and Jane
Brian Snow and Wendy Waite formed a partnership on July 1, 2018 Brian invested $20,000 cash, inventory valued at $15,000, and equipment valued at $67,000. Wendy invested $50,000 cash and land valued
Neal, Palmer, and Ruppe are partners in a real estate company. Their respective capital balances and profit-sharing ratios are as follows: Neal wishes to withdraw from the partnership on January 1,
Hill, Jones, and Vose have been partners throughout 2019. Their average balances for the year and their balances at the end of the year before closing the nominal accounts are as follows: The
The December 31, 2019, balance sheet of the Datamation Partnership is shown below. Dave, Allen, and Matt share profits and loses in the ratio of 50:30:20. The inventory on December 31 has a fair
The CAB Partnership, although operating profitably, has had a cash flow problem. Unable to meet its current commitments, the firm borrowed $34,000 from a bank giving a long-term note. During a recent
On January 1, 2019, Tony and Jon formed T&J Personal Financial Planning with capital investments of $480,000 and $340,000, respectively. The partners wanted to draft a profit and loss agreement
The partnership of Cain, Gallo, and Hamm engaged you to adjust its accounting records and convert them uniformly to the accrual basis in anticipation of admitting Kerns as a new partner. Some
Dave, Brian, and Paul are partners in a retail appliance store. The partnership was formed January 1, 2019, with each partner investing $45,000. They agreed that profits and losses are to be shared
Tom and Julie formed a management consulting partnership on January 1, 2019. The fair value of the net assets invested by each partner follows: During the year, Tom withdrew $15,000 and Julie
Day and Night formed an accounting partnership in 2019. Capital transactions for Day and Night during 2019 are as follows: Partnership net income for the year ended December 31, 2019; is $68,400
Spur Company’s actual earnings for the first two quarters of 2019 and its estimate during each quarter of its annual earnings are:Actual first-quarter earnings
Actual quarterly earnings and quarterly estimates of annual earnings for Sloan Company for the year ended December 31, 2019 are as follows: The combined state and federal tax rate for 2019 is 30%.
The following information is available for Bailey Company for 2019:1. On January 2, 2014, Bailey paid property taxes amounting to $60,000 on its plant and equipment for the calendar year 2019. In
Bismac Industries is a diversified company whose operations are conducted in five product lines, L, M, N, O, and P. Segmented financial information is to be included with the December 31, 2019 annual
LAX Inc. has the following income before income tax and estimated effective annual income tax rates for the first three quarters of 2019. Required: What should be LAX?s income tax provision in the
Branson Industries conducts operations in five major industries, A, B, C, D, and E. Financial data relevant to each industry for the year ending December 31, 2019, are as follows: Included in the
The following information concerns the operations of Blane Company for the year ended December 31, 2019. Required: Determine the operating profit (loss) for each of Blane?s two segments for 2019.
In its financial reports, Cracker Barrel states that their stores represent a single, integrated operation with two related substantially integrated product lines. The operating expenses of the
In the Appendix to this chapter, found from your instructor, the partial segmental disclosures for General Electric (GE) are provided. 1. How does GE organize and present its segment data? 2. Compute
A translation adjustment results from the process of translating financial statements of a foreign subsidiary from its functional currency into dollars. Where is the translation adjustment reported
Slocome Travel owns a travel agency that operates in London. Account balances in pounds for the subsidiary are summarized below: Exchange rates for the British pound for 2019 were as
P Company holds an 80% interest in SFr Company, a Swiss company. A trial balance for P Company and SFr Company at December 31, 2020, and other data are given in Problems 13-3 and 13-4. Ignore
Dorsey Corporation purchased 90% of the common stock of Lansing Company on January 1, 2008. The cost of the investment was equal to the book value interest acquired. Lansing Company operates two
For this problem, refer to the information provided in Problem 13-3 for P Company and SFr Company. Ignore deferred income taxes in the assignment of the difference between implied and book
Define remeasurement.
Pasquale Company is a manufacturer of oil drilling equipment located in Canada. The company is 90% owned by a U.S. parent company. The accounting department of Pasquale Company accumulated the
Use the information provided in Problem 13-3 for P Company and SFr Company. Required:A. Convert the accounts of the foreign subsidiary, assuming that the U.S. dollar is the functional currency of
The ______ is the functional currency of a foreign subsidiary that is a direct and integral component or extension of a U.S. parent company. In such cases, the ______ method of translation is used to
On January 2, 2019, P Company, a U.S.-based company, acquired for 2,000,000 francs an 80% interest in SFr Company, a Swiss company. On January 2, 2019, SFr Company reported a retained earnings
The ______ is the functional currency of a foreign subsidiary with operations that are relatively self-contained and integrated within the country in which it is located. In such cases, the ______
Red Hat, Inc. reported the following in its 2017 10K:Non-GAAP disclosuresIn accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), the income statements of
On January 1, 2019, a U.S. company purchased 100% of the outstanding stock of Ventana Grains, a company located in Latz City, New Zealand. Ventana Grains was organized on January 1, 2000. All the
Red Hat, Inc. reported comprehensive income from 2013 to 2015 as follows ($ thousands): Required: A. Which method does Red Hat use to translate foreign subsidiaries? Why? B. Explain the change in
1. On June 1, 2019, a U.S. firm contracts to sell equipment (with an asking price of 2,000,000 krona) in Sweden. The firm will take delivery and will pay for the equipment on August 1, 2019. 2. Spot
Consider the following information: 1. On December 1, 2019, a U.S. firm contracts to sell equipment (with an asking price of 1,000,000 pesos) in Mexico. The firm will take delivery and will pay for
Consider the following information: 1. On December 1, 2019, a U.S. firm plans to purchase a piece of equipment (with an asking price of 100,000 francs) in Switzerland during January of 2020. The
On November 15, 2019, Solanski Inc. imported 500,000 barrels of oil from an oil company in Venezuela. Solanski agreed to pay 50,000,000 bolivars on January 15, 2020. To ensure that the dollar outlay
On October 1, 2019, Fairchange Corporation ordered some equipment from a supplier for 300,000 euros. Delivery and payment are to occur on November 15, 2019. The spot rates on October 1 and November
Roland Brothers, Inc. purchased equipment from a British firm for £120,000 on April 1, 2019. To finance the purchase of the equipment, the president of the company signed a note for £120,000 with a
How are foreign currency exchange gains and losses from hedging a forecasted transaction handled?
On October 1, 2019, Fairchange Corporation ordered some equipment from a supplier for 300,000 euros. Delivery is to occur on November 15, 2019, while payment is expected to occur on December 15,
On October 1, 2019, Fairchange Corporation ordered some equipment from a supplier for 300,000 euros. Delivery and payment are to occur on November 15, 2019. The spot rates on October 1 and November
Sharon Myers, chief finance officer for Sitco Products, convinced the president of the company to enter into a 90-day forward contract to sell 900,000 Swedish kronas as a speculative venture. When
Consider the following information: 1. On December 1, 2011, a U.S. firm plans to sell a piece of equipment [with an asking price of 200,000 units of a foreign currency (FC)] during January of 2012.
Vanderbilt Clothing Company placed a clothing order with a company located in Taiwan. The order was placed on November 1, 2019, for delivery on May 1, 2020. Vanderbilt agreed to pay for the goods on
A U.S. company estimated that, in the first two months of 2016, its export sales to a Swiss company would generate 400,000 francs. On December 1, 2020, in an effort to protect against the weakening
ASI recently completed the development and installation of an accounting information system for a company located in Rio De Janeiro, Brazil. The company considered that all revenue realization
Citron Company is a U.S.-based citrus grower. On October 1, 2019, the company entered into a contract to ship 25,000 boxes of grapefruit on January 28 to Japan. Payment of 50,100,000 yen is to be
Select the best answer for each of the following.1. A sale of goods by a U.S. company was denominated in a foreign currency. The sale resulted in a receivable that was fixed in terms of the amount of
Apple Company was incorporated in Delaware in 2012. On November 2, 2019, the controller of the company entered into a forward contract to sell 50,000 British pounds for $1.5920 on March 1, 2020. The
Select the best answer for each of the following. 1. A forward contract is a hedge of an identifiable foreign currency commitment if (a) The forward contract is designated as, and is effective as, a
Centennial Exchange of St. Louis, Missouri, imports and exports grains. The company has a September 30 fiscal year-end. The periodic inventory system and the weighted-average cost flow method are
On December 1, 2019, Tuscano Corp. entered into a transaction to import raw materials from a foreign company. The account is to be settled on February 1 with the payment of 60,000 foreign currency
On December 1, 2019, King Company exported equipment that had cost $210,000 to a Brazilian company for 1,000,000 real. The account is to be settled on January 31, 2020. King Company is a
GAF manufactures electrical cells at its St. Louis facility. The company?s fiscal year-end is September 30. It has adopted the perpetual inventory cost flow method to control inventory costs. The
This problem uses the information from Problem 11-4 or Problem 11-5. Recall that on January 1, 2019, P Company, a European based-company, purchased 80% of S Company for €200,000 (when the common
This problem is a continuation of the problem in Section 11.5 of the chapter. In the chapter, the workpaper was prepared for the year of the acquisition. In this problem, the consolidated statements
PMC acquired 100% of S Company for 200,000 when the fair value of the identifiable net assets was 160,000. PMC operates in three geographical regions: Europe, North America, and South America. Each
Nokia reported 2017 operating income on the Income Statement by subtracting expenses listed by function (i.e., selling, general, and administration) as seen below: In footnotes 8 and 10, they list
Air France?KLM Group reports the following balance sheet for the year ended December 31, 2013. Required: A. In what order are assets listed on the balance sheet? B. Comment on other differences
ASM International is a Dutch Public liability company domiciled in the Netherlands. Since ASM International?s initial listing on Nasdaq, ASMI has followed accounting principles generally accepted in
Caterpillar uses U.S. GAAP when preparing its consolidated financial statements. Information concerning inventories from their 2017 annual report is as follows: Inventories are stated at the lower of
The first two lines of Unilever Group?s 2013 consolidated income statement (using IFRS) report the following amounts (in millions of euros): Required: A. On the income statement, the first two
Ferrari disclosed the following concerning research and development in their 2017 annual report: Development costs for car project production and related components, engines and systems are
British Petroleum?s income statement was prepared using IFRS is presented below (in $ millions). ExxonMobil Corporation?s income statement prepared using U.S. GAAP is presented below (in $

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