E22-2 (Change in Principle—Inventory Methods) Holder-Webb Company began operations on January 1, 2005, and uses the average cost method of pricing inventory. Management is contemplating a change in inventory methods for 2008. The following information is available for the years 2005–2007.
Net Income Computed Using
2005: Average Cost = $15,000 FIFO: $19,000 LIFO: $12,000
2006: Average Cost = $18,000 FIFO: $23,000 LIFO: $14,000
2007: Average Cost= $20,000 FIFO: $25,000 LIFO: $17,000
Instructions
(Ignore all tax effects.)
(a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2008.
(b) Determine net income to be reported for 2005, 2006, and 2007, after giving effect to the change in accounting principle.
(c) Assume Holder-Webb Company used the LIFO method instead of the average cost method during the years 2005–2007. In 2008, Holder-Webb changed to the FIFO method. Prepare the journal entry necessary to record the change in principle.
Click here for the solution: Holder-Webb Company began operations on January 1, 2005, and uses the average cost method of pricing inventory
Showing posts with label Method. Show all posts
Showing posts with label Method. Show all posts
Tuesday, November 10, 2015
Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory
E 9-21 Dollar-value LIFO retail
Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provides the following information:
Merchandise Inventory, Jan 1, 2011 Cost 160,000 Retail 250,000
Net Purchases Cost 350,200 Retail 510,000
Net Markups Retail 7,000
Net Markdowns Retail 2,000
Net Sales Retail 380,000
Pertinent retail price indexes are as follows
January 1, 2011 1.00
December 31, 2011 1.10
Required:
Determine ending inventory and cost of goods sold.
Click here for the solution: Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory
Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provides the following information:
Merchandise Inventory, Jan 1, 2011 Cost 160,000 Retail 250,000
Net Purchases Cost 350,200 Retail 510,000
Net Markups Retail 7,000
Net Markdowns Retail 2,000
Net Sales Retail 380,000
Pertinent retail price indexes are as follows
January 1, 2011 1.00
December 31, 2011 1.10
Required:
Determine ending inventory and cost of goods sold.
Click here for the solution: Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory
Monday, October 26, 2015
DRS Corporation changed the way it depreciates its computers from the sum-of-the-year's-digits method
Analysis Case 20-10 Various changes
DRS Corporation changed the way it depreciates its computers from the sum-of-the-year's-digits method to the straight-line method beginning January 1, 2011. DRS also changed its estimated residual value used in computing depreciation for its office building. At the end of 2011, DRS changed the specific subsidiaries constituting the group of companies for which its consolidated financial statements are prepared.
Required:
1. For each accounting change DRS undertook, indicate the type of change and how DRS should report the change. Be specific.
2. Why should companies disclose changes in accounting principles?
Click here for the solution: DRS Corporation changed the way it depreciates its computers from the sum-of-the-year's-digits method
DRS Corporation changed the way it depreciates its computers from the sum-of-the-year's-digits method to the straight-line method beginning January 1, 2011. DRS also changed its estimated residual value used in computing depreciation for its office building. At the end of 2011, DRS changed the specific subsidiaries constituting the group of companies for which its consolidated financial statements are prepared.
Required:
1. For each accounting change DRS undertook, indicate the type of change and how DRS should report the change. Be specific.
2. Why should companies disclose changes in accounting principles?
Click here for the solution: DRS Corporation changed the way it depreciates its computers from the sum-of-the-year's-digits method
Saturday, October 17, 2015
Beck Company uses the indirect method of preparing the Statement of Cash Flows
Beck Company uses the indirect method of preparing the Statement of Cash Flows and reports the following comparative balance sheet information. As customary, the most recent data is in the first column.
Balance Sheets
12-31-2007 12-31-2006
Cash $60,000 $80,000
Inventory 150,000 128,000
Equipment 240,000 205,000
Accumulated depreciation (39,000) (15,000)
$411,000 $398,000
Accounts payable $93,000 $133,000
Bonds payable (due in 7 years) 81,000 70,000
Common stock 129,000 120,000
Retained earnings 108,000 75,000
$411,000 $398,000
Additional information:
Net income for 2007 was $40,000.
No equipment was disposed of during 2007.
Required:
Prepare a Cash Flow Statement using the indirect method.
Click here for the solution: Beck Company uses the indirect method of preparing the Statement of Cash Flows
Balance Sheets
12-31-2007 12-31-2006
Cash $60,000 $80,000
Inventory 150,000 128,000
Equipment 240,000 205,000
Accumulated depreciation (39,000) (15,000)
$411,000 $398,000
Accounts payable $93,000 $133,000
Bonds payable (due in 7 years) 81,000 70,000
Common stock 129,000 120,000
Retained earnings 108,000 75,000
$411,000 $398,000
Additional information:
Net income for 2007 was $40,000.
No equipment was disposed of during 2007.
Required:
Prepare a Cash Flow Statement using the indirect method.
Click here for the solution: Beck Company uses the indirect method of preparing the Statement of Cash Flows
Friday, September 18, 2015
Journalize the following transactions using the perpetual inventory method
5. Journalize the following transactions using the perpetual inventory method.
Aug. 6 Purchased $830 of inventory on account from Johnston with terms of 2/10, n/30.
Aug. 8 Purchased $2,611 of inventory for cash from Pillner Company.
Aug.15 Paid for August 6 purchase from Johnston.
Aug. 17 Purchased $1,743 of merchandise on account from Luis Company with Terms of 3/15, n/45.
Click here for the solution: Journalize the following transactions using the perpetual inventory method
Aug. 6 Purchased $830 of inventory on account from Johnston with terms of 2/10, n/30.
Aug. 8 Purchased $2,611 of inventory for cash from Pillner Company.
Aug.15 Paid for August 6 purchase from Johnston.
Aug. 17 Purchased $1,743 of merchandise on account from Luis Company with Terms of 3/15, n/45.
Click here for the solution: Journalize the following transactions using the perpetual inventory method
Sunday, September 13, 2015
What are the advantages and disadvantages associated with the unadjusted rate of return method for evaluating capital investments
21. What are the advantages and disadvantages associated with the unadjusted rate of return method for evaluating capital investments?
Click here for the solution: What are the advantages and disadvantages associated with the unadjusted rate of return method for evaluating capital investments
Click here for the solution: What are the advantages and disadvantages associated with the unadjusted rate of return method for evaluating capital investments
Friday, September 11, 2015
Which method (direct or indirect) of presenting the statement of cash flows is more intuitively logical? Why?
13. Which method (direct or indirect) of presenting the statement of cash flows is more intuitively logical? Why?
Click here for the solution: Which method (direct or indirect) of presenting the statement of cash flows is more intuitively logical? Why?
Click here for the solution: Which method (direct or indirect) of presenting the statement of cash flows is more intuitively logical? Why?
Tuesday, September 8, 2015
Landmark Book Store uses the conventional retail method
Landmark Book Store uses the conventional retail method.
Instructions
Given the following data, prepare a neat, labeled schedule showing the computation of the cost of inventory on hand at 12/31/10.
Cost Retail
Inventory 1/1/10 $ 28,900 $ 40,000
Purchases 353,600 610,000
Purchases Returns 9,000 20,000
Purchase Discounts 7,000
Sales (Gross) 615,000
Sales Returns 20,000
Employee Discounts 5,000
Freight-in 23,500
Freight-out 50,000
Loss from Breakage 2,500
Markups 38,000
Markup Cancellations 18,000
Markdowns 13,500
Markdown Cancellations 8,500
B. Landmark Book Store has decided to switch to the LIFO retail method for the period beginning 1/1/11.
Instructions
Prepare a schedule showing the computation of the 12/31/11 inventory under the LIFO retail method adjusted for price level changes (i.e., dollar-value LIFO Retail.) Without prejudice to your answer in requirement A above, assume that the 12/31/10 inventory computed under the LIFO Retail method was $40,000 and $27,500 at retail and cost, respectively, for purposes of this requirement. Data for 2011 follows:
Cost Retail
Purchases (net) $375,000 $485,000
Sales (net) 420,000
Markups (net) 30,000
Markdowns (net) 15,000
2010 Price Index 100
2011 Price Index 120
Click here for the solution: Landmark Book Store uses the conventional retail method
Instructions
Given the following data, prepare a neat, labeled schedule showing the computation of the cost of inventory on hand at 12/31/10.
Cost Retail
Inventory 1/1/10 $ 28,900 $ 40,000
Purchases 353,600 610,000
Purchases Returns 9,000 20,000
Purchase Discounts 7,000
Sales (Gross) 615,000
Sales Returns 20,000
Employee Discounts 5,000
Freight-in 23,500
Freight-out 50,000
Loss from Breakage 2,500
Markups 38,000
Markup Cancellations 18,000
Markdowns 13,500
Markdown Cancellations 8,500
B. Landmark Book Store has decided to switch to the LIFO retail method for the period beginning 1/1/11.
Instructions
Prepare a schedule showing the computation of the 12/31/11 inventory under the LIFO retail method adjusted for price level changes (i.e., dollar-value LIFO Retail.) Without prejudice to your answer in requirement A above, assume that the 12/31/10 inventory computed under the LIFO Retail method was $40,000 and $27,500 at retail and cost, respectively, for purposes of this requirement. Data for 2011 follows:
Cost Retail
Purchases (net) $375,000 $485,000
Sales (net) 420,000
Markups (net) 30,000
Markdowns (net) 15,000
2010 Price Index 100
2011 Price Index 120
Click here for the solution: Landmark Book Store uses the conventional retail method
The Pyramid Construction Company has used the completed-contract method of accounting for construction contracts
P 20-2 Change in principle; change in method of accounting for long-term construction
The Pyramid Construction Company has used the completed-contract method of accounting for construction contracts during its first two years of operation, 2009 and 2010. At the beginning of 2011, Pyramid decided to change to the percentage-of-completion method for both tax and financial reporting purposes. The following table presents information concerning the change for 2009–2011. The income tax rate for all years is 40%.
Pyramid issued 50,000 $1 par, common shares for $230,000 when the business began, and there have been no changes in paid-in capital since then. Dividends were not paid the first year, but $10,000 cash dividends were paid in both 2010 and 2011.
Required:
1. Prepare the journal entry to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.)
2. Prepare the 2011–2010 comparative income statements beginning with income before income taxes.
3. Prepare the 2011–2010 comparative statements of shareholders' equity. (Hint: The 2009 statements reported retained earnings of $36,000. This is $60,000 − [$60,000 × 40%].
Click here for the solution: The Pyramid Construction Company has used the completed-contract method of accounting for construction contracts
The Pyramid Construction Company has used the completed-contract method of accounting for construction contracts during its first two years of operation, 2009 and 2010. At the beginning of 2011, Pyramid decided to change to the percentage-of-completion method for both tax and financial reporting purposes. The following table presents information concerning the change for 2009–2011. The income tax rate for all years is 40%.
Pyramid issued 50,000 $1 par, common shares for $230,000 when the business began, and there have been no changes in paid-in capital since then. Dividends were not paid the first year, but $10,000 cash dividends were paid in both 2010 and 2011.
Required:
1. Prepare the journal entry to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.)
2. Prepare the 2011–2010 comparative income statements beginning with income before income taxes.
3. Prepare the 2011–2010 comparative statements of shareholders' equity. (Hint: The 2009 statements reported retained earnings of $36,000. This is $60,000 − [$60,000 × 40%].
Click here for the solution: The Pyramid Construction Company has used the completed-contract method of accounting for construction contracts
Sunday, September 6, 2015
If two service departments service the same number of departments, which service department's costs are allocated first when using the step method
1. If two service departments service the same number of departments, which service department's costs are allocated first when using the step method?
2. Which of the following service department cost allocation methods is most widely used by manufacturing companies?
3. Which of the following statements is (are) false regarding the effective use of management control systems.
(A) In general, cost allocations should not be used in management control systems because clear control over the cost being allocated cannot be determined.
(B) The primary reason to use a dual rate allocation system is to focus a manager's performance evaluation on factors under the manager's direct control.
4. The amount of resources used in an activity-based costing (ABC) system for a specific activity is computed by multiplying the:
5. Which of the following statements is false?
6. In general, the first budget prepared is the
7. Relative performance evaluations (RPE) are not designed to
8. Which of the following items would be classified as a batch-level cost in an activity-based cost management (ABM) system?
9. Which of the following activities is most likely to be classified as value-added for a manufacturing company?
10. The unused resource capacity is the difference between the resources supplied and the resources
Click here for the solution: If two service departments service the same number of departments, which service department's costs are allocated first when using the step method
2. Which of the following service department cost allocation methods is most widely used by manufacturing companies?
3. Which of the following statements is (are) false regarding the effective use of management control systems.
(A) In general, cost allocations should not be used in management control systems because clear control over the cost being allocated cannot be determined.
(B) The primary reason to use a dual rate allocation system is to focus a manager's performance evaluation on factors under the manager's direct control.
4. The amount of resources used in an activity-based costing (ABC) system for a specific activity is computed by multiplying the:
5. Which of the following statements is false?
6. In general, the first budget prepared is the
7. Relative performance evaluations (RPE) are not designed to
8. Which of the following items would be classified as a batch-level cost in an activity-based cost management (ABM) system?
9. Which of the following activities is most likely to be classified as value-added for a manufacturing company?
10. The unused resource capacity is the difference between the resources supplied and the resources
Click here for the solution: If two service departments service the same number of departments, which service department's costs are allocated first when using the step method
Arnie, a U.S. citizen who uses the calendar year as his tax year and the cash method of accounting, operates a sole proprietorship in Country Z
C:16-39 Translation of Foreign Tax Payments.
Arnie, a U.S. citizen who uses the calendar year as his tax year and the cash method of accounting, operates a sole proprietorship in Country Z. In Year 1, he reports 500,000 doubles of pretax profits. On June 1 of Year 2, he pays Country Z income taxes of 150,000 doubles for calendar Year 1. Double-U.S. dollar exchange rates on various dates in Year 1 and Year 2 are as follows:
December 31, Year 1 4.00 doubles $1 (U.S.)
Year 1 average 3.75 doubles $1 (U.S.)
June 1, Year 2 4.25 doubles $1 (U.S.)
a. What is the U.S. dollar amount of Arnie’s foreign tax credit? In what year can Arnie claim the credit?
b. How would your answer to Part a change if Arnie elected to accrue his foreign income taxes on December 31 of Year 1, and filed his Year 1 U.S. income tax return on April 15 of Year 2?
c. What adjustment to the credit claimed in Part b would Arnie have to make when he pays his Country Z taxes on June 1 of Year 2?
Click here for the solution: Arnie, a U.S. citizen who uses the calendar year as his tax year and the cash method of accounting, operates a sole proprietorship in Country Z
Arnie, a U.S. citizen who uses the calendar year as his tax year and the cash method of accounting, operates a sole proprietorship in Country Z. In Year 1, he reports 500,000 doubles of pretax profits. On June 1 of Year 2, he pays Country Z income taxes of 150,000 doubles for calendar Year 1. Double-U.S. dollar exchange rates on various dates in Year 1 and Year 2 are as follows:
December 31, Year 1 4.00 doubles $1 (U.S.)
Year 1 average 3.75 doubles $1 (U.S.)
June 1, Year 2 4.25 doubles $1 (U.S.)
a. What is the U.S. dollar amount of Arnie’s foreign tax credit? In what year can Arnie claim the credit?
b. How would your answer to Part a change if Arnie elected to accrue his foreign income taxes on December 31 of Year 1, and filed his Year 1 U.S. income tax return on April 15 of Year 2?
c. What adjustment to the credit claimed in Part b would Arnie have to make when he pays his Country Z taxes on June 1 of Year 2?
Click here for the solution: Arnie, a U.S. citizen who uses the calendar year as his tax year and the cash method of accounting, operates a sole proprietorship in Country Z
What advantages does a cash method taxpayer gain by electing to accrue foreign taxes for foreign tax credit purposes?
C:16-8 What advantages does a cash method taxpayer gain by electing to accrue foreign taxes for foreign tax credit purposes?
Click here for the solution: What advantages does a cash method taxpayer gain by electing to accrue foreign taxes for foreign tax credit purposes?
Click here for the solution: What advantages does a cash method taxpayer gain by electing to accrue foreign taxes for foreign tax credit purposes?
Wednesday, September 2, 2015
The management of Coker Corp. is doing a quick forecast of 20X9 using the modified percentage of sales method
The management of Coker Corp. is doing a quick forecast of 20X9 using the modified percentage of sales method in preparation for a more detailed planning exercise later in the month. The estimate is to assume a 10% growth in sales. All other line items are to be assumed to grow at the same rate except for fixed assets which is projected to increase by $88,000 due to an expansion program already underway. Approximate financial statements for the current year, 20X8, and a planning worksheet are shown below. The firm pays 9% interest on all of its debt. Assume the tax rate is a flat 25%. There are no plans for dividends or the sale of additional stock next year. Make a forecast of Coker’s complete income statement and balance sheet. Work to the nearest thousand dollars. (Hints: The easiest way to grow a number by 10% is to multiply it by 1.1 rather than taking 10% and adding. Do not grow subtotals. For example, to grow Revenue and COGS by 10%, round each to the nearest thousand and subtract for Gross Margin. Don’t grow interest, debt, or equity; use the debt/interest iteration technique.)
Click here for the solution: The management of Coker Corp. is doing a quick forecast of 20X9 using the modified percentage of sales method
Click here for the solution: The management of Coker Corp. is doing a quick forecast of 20X9 using the modified percentage of sales method
Sunday, August 23, 2015
Journalize the following transactions for Wilson Company using the gross method of accounting for purchase discounts
Journalize the following transactions for Wilson Company using the gross method of accounting for purchase discounts. Assume a perpetual inventory system.
June 2 Purchased goods from Peterson Company on account, $13,600, terms 3/10, n/30.
June 8 Returned merchandise to Peterson Company that was previously purchased on account, $3,400.
June 12 Paid the amount due to Peterson Company.
Click here for the solution: Journalize the following transactions for Wilson Company using the gross method of accounting for purchase discounts
June 2 Purchased goods from Peterson Company on account, $13,600, terms 3/10, n/30.
June 8 Returned merchandise to Peterson Company that was previously purchased on account, $3,400.
June 12 Paid the amount due to Peterson Company.
Click here for the solution: Journalize the following transactions for Wilson Company using the gross method of accounting for purchase discounts
Saturday, August 15, 2015
LaGreca Company uses the lower-of-cost-or-market method, on an individual-item basis, in pricing its inventory items
E9-6 (Lower-of-Cost-or-Market—Error Effect) LaGreca Company uses the lower-of-cost-or-market method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2010, included product X. Relevant per-unit data for product X appear below.
Estimated selling price $50
Cost 40
Replacement cost 38
Estimated selling expense 14
Normal profit 9
There were 1,000 units of product X on hand at December 31, 2010. Product X was incorrectly valued at $38 per unit for reporting purposes. All 1,000 units were sold in 2011.
Instructions
Compute the effect of this error on net income for 2010 and the effect on net income for 2011, and indicate the direction of the misstatement for each year.
Click here for the solution: LaGreca Company uses the lower-of-cost-or-market method, on an individual-item basis, in pricing its inventory items
Estimated selling price $50
Cost 40
Replacement cost 38
Estimated selling expense 14
Normal profit 9
There were 1,000 units of product X on hand at December 31, 2010. Product X was incorrectly valued at $38 per unit for reporting purposes. All 1,000 units were sold in 2011.
Instructions
Compute the effect of this error on net income for 2010 and the effect on net income for 2011, and indicate the direction of the misstatement for each year.
Click here for the solution: LaGreca Company uses the lower-of-cost-or-market method, on an individual-item basis, in pricing its inventory items
Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes
E9-12 (Gross Profit Method) Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.
Inventory, May 1 $ 160,000
Purchases (gross) 640,000
Freight-in 30,000
Sales 1,000,000
Sales returns 70,000
Purchase discounts 12,000
Instructions
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.
Click here for the solution: Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes
Inventory, May 1 $ 160,000
Purchases (gross) 640,000
Freight-in 30,000
Sales 1,000,000
Sales returns 70,000
Purchase discounts 12,000
Instructions
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.
Click here for the solution: Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes
You assemble the following information for Dillon Department Store, which computes its inventory under the dollar-value LIFO method
E9-24 (Dollar-Value LIFO Retail) You assemble the following information for Dillon Department Store, which computes its inventory under the dollar-value LIFO method.
Cost Retail
Inventory on January 1, 2010 $222,000 $300,000
Purchases 364,800 480,000
Increase in price level for year 9%
Instructions
Compute the cost of the inventory on December 31, 2010, assuming that the inventory at retail is (a) $294,300 and (b) $359,700.
Click here for the solution: You assemble the following information for Dillon Department Store, which computes its inventory under the dollar-value LIFO method
Cost Retail
Inventory on January 1, 2010 $222,000 $300,000
Purchases 364,800 480,000
Increase in price level for year 9%
Instructions
Compute the cost of the inventory on December 31, 2010, assuming that the inventory at retail is (a) $294,300 and (b) $359,700.
Click here for the solution: You assemble the following information for Dillon Department Store, which computes its inventory under the dollar-value LIFO method
Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings
CA8-10 (FIFO and LIFO) Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, the management wishes to consider all of the effects on the company, including its reported performance, before making the final decision.
The inventory account, currently valued on the FIFO basis, consists of 1,000,000 units at $8 per unit on January 1, 2010. There are 1,000,000 shares of common stock outstanding as of January 1, 2010, and the cash balance is $400,000.
The company has made the following forecasts for the period 2010–2012.
Instructions
(a) Prepare a schedule that illustrates and compares the following data for Harrisburg Company under the FIFO and the LIFO inventory method for 2010–2012. Assume the company would begin LIFO at the beginning of 2010.
1. Year-end inventory balances.
2. Annual net income after taxes.
3. Earnings per share.
4. Cash balance.
Assume all sales are collected in the year of sale and all purchases, operating expenses, and taxes are paid during the year incurred.
(b) Using the data above, your answer to (a), and any additional issues you believe need to be considered, prepare a report that recommends whether or not Harrisburg Company should change to the LIFO inventory method. Support your conclusions with appropriate arguments.
Click here for the solution: Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings
The inventory account, currently valued on the FIFO basis, consists of 1,000,000 units at $8 per unit on January 1, 2010. There are 1,000,000 shares of common stock outstanding as of January 1, 2010, and the cash balance is $400,000.
The company has made the following forecasts for the period 2010–2012.
Instructions
(a) Prepare a schedule that illustrates and compares the following data for Harrisburg Company under the FIFO and the LIFO inventory method for 2010–2012. Assume the company would begin LIFO at the beginning of 2010.
1. Year-end inventory balances.
2. Annual net income after taxes.
3. Earnings per share.
4. Cash balance.
Assume all sales are collected in the year of sale and all purchases, operating expenses, and taxes are paid during the year incurred.
(b) Using the data above, your answer to (a), and any additional issues you believe need to be considered, prepare a report that recommends whether or not Harrisburg Company should change to the LIFO inventory method. Support your conclusions with appropriate arguments.
Click here for the solution: Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings
E14-5 Assume the same information as in E14-4, except that Foreman Company uses the effective-interest method of amortization for bond premium or discount
E14-5 (Entries for Bond Transactions—Effective-Interest) Assume the same information as in E14-4, except that Foreman Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%.
Instructions
Prepare the journal entries to record the following. (Round to the nearest dollar.)
(a) The issuance of the bonds.
(b) The payment of interest and related amortization on July 1, 2011.
(c) The accrual of interest and the related amortization on December 31, 2011.
Click here for the solution: Assume the same information as in E14-4, except that Foreman Company uses the effective-interest method of amortization for bond premium or discount
Instructions
Prepare the journal entries to record the following. (Round to the nearest dollar.)
(a) The issuance of the bonds.
(b) The payment of interest and related amortization on July 1, 2011.
(c) The accrual of interest and the related amortization on December 31, 2011.
Click here for the solution: Assume the same information as in E14-4, except that Foreman Company uses the effective-interest method of amortization for bond premium or discount
Thursday, August 13, 2015
On January 1, 2011, the Haskins Company adopted the dollar-value LIFO method for its one inventory pool
E 8-22 On January 1, 2011, the Haskins Company adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $660,000. The 2011 and 2012 ending inventory valued at year-end costs were $690,000 and $760,000, respectively. The appropriate cost indexes are 1.04 for 2011 and 1.08 for 2012.
Required:
Calculate the inventory value at the end of 2011 and 2012 using the dollar-value LIFO method.
Click here for the solution: On January 1, 2011, the Haskins Company adopted the dollar-value LIFO method for its one inventory pool
Required:
Calculate the inventory value at the end of 2011 and 2012 using the dollar-value LIFO method.
Click here for the solution: On January 1, 2011, the Haskins Company adopted the dollar-value LIFO method for its one inventory pool
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