Indicate (by letter) the way each of the items listed below should be reported in a balance sheet at December 31, 2011.
1. Commercial paper.
2. Noncommitted line of credit.
3. Customer advances.
4. Estimated warranty cost.
5. Accounts payable.
6. Long-term bonds that will be callable by the creditor in ther upcoming year unless an existing violation is not corrected (there is a reasonable possibility the violation will be corrected within the grace period).
7. Note due March 3, 2012.
8. Interest accrued on note, Dec. 31, 2011.
9. Short-term bank loan to be paid with proceeds of sale of common stock.
10. A determinable gain that is contingent on a future event that appears extremely likely to occur in three months.
11. Unasserted assessment of back taxes that probably will be asserted, in which case there would probably be a loss in six months.
12. Unasserted assessment of back taxes with a reasonable possibility of being asserted, in which case there would probably be a loss in 13 months.
13. A determinable loss from a past event that is contingent on a future event that appears extremely likely to occur in three months.
14. Bond sinking fund.
15. Long-term bonds callable by the creditor in the upcoming year that are not expected to be called.
Click here for the solution: Indicate (by letter) the way each of the items listed below should be reported in a balance sheet at December 31, 2011
Showing posts with label items. Show all posts
Showing posts with label items. Show all posts
Wednesday, October 14, 2015
Friday, September 25, 2015
The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year
PR 11-1A The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year.
Jan 15. Purchased merchandise on account from hood Co., $200,000, terms n/30.
Feb 14. Issued 60-day, %6 note for $200,000 to Hood Co on account.
April 15. Paid Hood Co. the amount owed on the note of February 14.
June2. Borrowed $187,500 from Acme Bank, issuing a 60-day, 8% note.
July 10. Purchased tools by issuing a $190,000, 90-day note to Columbia supply Co., which discounted the note at the rate of 6%.
Aug 1. Paid Acme Bank the interest rate due on the note of June 2 and renewed the loan by issuing a new 60-day, 10% not for $187,500 (Journalize both the debit and credit to the notes payable account.)
Sept 30. Paid Acme Bank the amount due on the note of August 1.
Oct 8. Paid Columbia Supply co. the amount due on the note of July 10.
Dec 1. Purchased office equipment from Mountain Equipment co. for $120,000 paying $20,000 and issuing a series of ten 6% notes for $10,000 each coming due at 30-day intervals.
Dec 5. Settled a product liability lawsuit with a customer for $76,000, payable in January. Emerald Bay accrued the loss in litigation claims payable account.
Dec 31. paid the amount due Mountain Equipment co. on the first note in the series issued on December 1.
Instructions:
1. Journalize the transactions.
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year.
(a) Product warranty cost $16,400;
(b) Interest on the nine remaining notes owed to Mountain Equipment Co
Click here for the solution: The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year
Jan 15. Purchased merchandise on account from hood Co., $200,000, terms n/30.
Feb 14. Issued 60-day, %6 note for $200,000 to Hood Co on account.
April 15. Paid Hood Co. the amount owed on the note of February 14.
June2. Borrowed $187,500 from Acme Bank, issuing a 60-day, 8% note.
July 10. Purchased tools by issuing a $190,000, 90-day note to Columbia supply Co., which discounted the note at the rate of 6%.
Aug 1. Paid Acme Bank the interest rate due on the note of June 2 and renewed the loan by issuing a new 60-day, 10% not for $187,500 (Journalize both the debit and credit to the notes payable account.)
Sept 30. Paid Acme Bank the amount due on the note of August 1.
Oct 8. Paid Columbia Supply co. the amount due on the note of July 10.
Dec 1. Purchased office equipment from Mountain Equipment co. for $120,000 paying $20,000 and issuing a series of ten 6% notes for $10,000 each coming due at 30-day intervals.
Dec 5. Settled a product liability lawsuit with a customer for $76,000, payable in January. Emerald Bay accrued the loss in litigation claims payable account.
Dec 31. paid the amount due Mountain Equipment co. on the first note in the series issued on December 1.
Instructions:
1. Journalize the transactions.
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year.
(a) Product warranty cost $16,400;
(b) Interest on the nine remaining notes owed to Mountain Equipment Co
Click here for the solution: The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year
Wednesday, September 23, 2015
The following items were taken from the balance sheet of Nike, Inc
The following items were taken from the balance sheet of Nike, Inc.
1. Cash $828.0
2. Accounts receivable 2,120.2
3. Common stock 890.6
4. Notes payable 146.0
5. Other assets 1,722.9
6. Other liabilities 2,081 .9
7. Inventories 1,633.6
8. Income taxes payable 118.2
9. Property, plant, and equipment 1,586.9
10. Retained earnings 3,891.1
11. Accounts payable 763.8
Instruction
a. Classify each of these items as an asset, liability, or stockholder equity.
b. Determine Nike's accounting equation by calculating the value of total assets, total liabilities, and total stockholders equity.
c. To what extent does Nike rely on debt versus equity financing?
Click here for the solution: The following items were taken from the balance sheet of Nike, Inc
1. Cash $828.0
2. Accounts receivable 2,120.2
3. Common stock 890.6
4. Notes payable 146.0
5. Other assets 1,722.9
6. Other liabilities 2,081 .9
7. Inventories 1,633.6
8. Income taxes payable 118.2
9. Property, plant, and equipment 1,586.9
10. Retained earnings 3,891.1
11. Accounts payable 763.8
Instruction
a. Classify each of these items as an asset, liability, or stockholder equity.
b. Determine Nike's accounting equation by calculating the value of total assets, total liabilities, and total stockholders equity.
c. To what extent does Nike rely on debt versus equity financing?
Click here for the solution: The following items were taken from the balance sheet of Nike, Inc
Sunday, September 13, 2015
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2011 ($ in 000s)
P4-6 Income statement presentation
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2011 ($ in 000s):
In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $1.6 million and a gain on disposal of the component's assets of $2 million. 500,000 shares of common stock were outstanding throughout 2011. Income tax expense has not yet been accrued. The income tax rate is 30% on all items of income (loss).
Required:
Prepare a multiple-step income statement for 2011, including EPS disclosures.
Click here for the solution: Rembrandt Paint Company had the following income statement items for the year ended December 31, 2011
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2011 ($ in 000s):
In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $1.6 million and a gain on disposal of the component's assets of $2 million. 500,000 shares of common stock were outstanding throughout 2011. Income tax expense has not yet been accrued. The income tax rate is 30% on all items of income (loss).
Required:
Prepare a multiple-step income statement for 2011, including EPS disclosures.
Click here for the solution: Rembrandt Paint Company had the following income statement items for the year ended December 31, 2011
The shareholders' equity of WBL Industries includes the items shown below
E 18-10 Effect of cumulative, nonparticipating preferred stock on dividends—3 years
The shareholders' equity of WBL Industries includes the items shown below. The board of directors of WBL declared cash dividends of $8 million, $20 million, and $150 million in its first three years of operation—2011, 2012, and 2013, respectively.
Common stock 100
Paid in capital excess of par, common 980
Preferred stock, 8% 200
Paid in capital excess of par, preferred 555
Required:
Determine the amount of dividends to be paid to preferred and common shareholders in each of the three years, assuming that the preferred stock is cumulative and nonparticipating.
Click here for the solution: The shareholders' equity of WBL Industries includes the items shown below
The shareholders' equity of WBL Industries includes the items shown below. The board of directors of WBL declared cash dividends of $8 million, $20 million, and $150 million in its first three years of operation—2011, 2012, and 2013, respectively.
Common stock 100
Paid in capital excess of par, common 980
Preferred stock, 8% 200
Paid in capital excess of par, preferred 555
Required:
Determine the amount of dividends to be paid to preferred and common shareholders in each of the three years, assuming that the preferred stock is cumulative and nonparticipating.
Click here for the solution: The shareholders' equity of WBL Industries includes the items shown below
Tuesday, September 8, 2015
Tucson, a U.S. corporation organized in Year 1, reports the following items for a three-year period
C:16-41 Foreign Tax Credit Limitation. Tucson, a U.S. corporation
organized in Year 1, reports the following items for a three-year
period.
Foreign tax accrual $ 100,000 $ 120,000 $ 180,000
Foreign source taxable income 400,000 300,000 500,000
Worldwide taxable income 1,000,000 1,000,000 1,000,000
The foreign source and worldwide taxable income items are determined under U.S. law.
a. What is Tucson’s foreign tax credit limitation for each of the three years (assume a 34% U.S. corporate tax rate and that income from all foreign activities fall into a single basket)?
b. How are Tucson’s excess foreign tax credits (if any) treated? Do any carryovers remain after Year 3?
c. How would your answers to Parts a and b change if the IRS determines that $100,000 of expenses allocable to U.S.-source income should have been allocable to foreign source income?
d. What measures should Tucson consider if it expects its current excess foreign tax credit position to persist in the long-run?
Click here for the solution: Tucson, a U.S. corporation organized in Year 1, reports the following items for a three-year period
Foreign tax accrual $ 100,000 $ 120,000 $ 180,000
Foreign source taxable income 400,000 300,000 500,000
Worldwide taxable income 1,000,000 1,000,000 1,000,000
The foreign source and worldwide taxable income items are determined under U.S. law.
a. What is Tucson’s foreign tax credit limitation for each of the three years (assume a 34% U.S. corporate tax rate and that income from all foreign activities fall into a single basket)?
b. How are Tucson’s excess foreign tax credits (if any) treated? Do any carryovers remain after Year 3?
c. How would your answers to Parts a and b change if the IRS determines that $100,000 of expenses allocable to U.S.-source income should have been allocable to foreign source income?
d. What measures should Tucson consider if it expects its current excess foreign tax credit position to persist in the long-run?
Click here for the solution: Tucson, a U.S. corporation organized in Year 1, reports the following items for a three-year period
Sunday, September 6, 2015
Farmer Frank’s produces items from local farm products and distributes them to supermarkets
Ethics and Standard Costs
Farmer Frank’s produces items from local farm products and distributes them to supermarkets. Over the years, price competition has become increasingly important, so Susan Kramer, the company’s controller, is planning to implement a standard cost system for Farmer Frank’s. She asked her cost accountant, Margaret Chang, to gather cost information on the production of blueberry preserves (Farmer Frank’s most popular product). Margaret reported that blueberries cost $.75 per quart, the price she intends to pay to her good friend who has been operating a blueberry farm that has been unprofitable for the last few years. Because of an oversupply in the market, the price for blueberries has dropped to $.60 per quart. Margaret is sure that the $.75 price will be enough to pull her friend’s farm out of the red and into the black.
Required:
Is Margaret’s behavior regarding the cost information she provided to Susan unethical? Explain your answer.
Click here for the solution: Farmer Frank’s produces items from local farm products and distributes them to supermarkets
Farmer Frank’s produces items from local farm products and distributes them to supermarkets. Over the years, price competition has become increasingly important, so Susan Kramer, the company’s controller, is planning to implement a standard cost system for Farmer Frank’s. She asked her cost accountant, Margaret Chang, to gather cost information on the production of blueberry preserves (Farmer Frank’s most popular product). Margaret reported that blueberries cost $.75 per quart, the price she intends to pay to her good friend who has been operating a blueberry farm that has been unprofitable for the last few years. Because of an oversupply in the market, the price for blueberries has dropped to $.60 per quart. Margaret is sure that the $.75 price will be enough to pull her friend’s farm out of the red and into the black.
Required:
Is Margaret’s behavior regarding the cost information she provided to Susan unethical? Explain your answer.
Click here for the solution: Farmer Frank’s produces items from local farm products and distributes them to supermarkets
Friday, August 21, 2015
Identify the TRUE statement regarding non-recurring items on the income statement
MULTIPLE CHOICE
1. Identify the TRUE statement regarding non-recurring items on the income statement. (Points : 2)
2. Which of the following is NOT a category of inventory used in a manufacturing company? (Points : 2)
3. The City of Gunnison awarded a $5,000,000 road-construction contract to the Fast Builders Construction Company. Construction was expected to take three years. After one year, Fast Builders had incurred $625,000 of cost and was approximately 20% completed with the road. The company estimated that another $2,500,000 would be expended to complete the contract. The company is confident regarding its estimates. What amount of profit, if any, should Fast Builders recognize for the first year? (Points : 2)
4. Which of the following should be subtracted out to arrive at the proper amount of net sales revenue to be reported on the income statement.
Estimated sales
discounts to be Expected
taken by customers Warranty Costs (Points : 2)
5. Cost of goods sold for a manufacturing company would be calculated as
Beginning finished goods inventory (BFGI)
Ending finished goods inventory (EFGI)
Work-in-process (WIP)
Cost of goods manufactured (CGM)
Raw materials (RM)
Overhead (OH) (Points : 2)
6. Automated Merchandising Company uses the LIFO method of cost assignment. The following data are available:
Date Units Unit Cost Total Cost
Beginning inventory Jan. 1 400 $24 $ 9,600
Purchase Mar. 13 800 28 22,400
Purchase June 20 1,200 32 38,400
Ending inventory Dec. 31 200
The value of the ending inventory will be (Points : 2)
7. Duhany Auto Company sold off a major segment of its business during March of 2007 at a loss. The loss from the sale should be reported in the firm's financial statements as a(n)(Points : 2)
8. Which of the following items is reported on an income statement?
Income from Cash provided
Continuing operations by operations (Points : 2)
9. Which of the following is NOT a deduction on the income statement when computing net income? (Points : 2)
10. Work-in-process includes all of the items below EXCEPT (Points : 2)
11. The FIFO inventory cost method differs from the LIFO method in that the (Points : 2)
12. For most firms, revenue is recognized (Points : 2)
13. Product lines eliminated by a company due to the fact that they no longer generate profits are known as (Points : 2)
14. The Fat Brush Paint Store sold merchandise on 30-day credit in the amount of $1,500. A discount of 3% was offered if the customer would pay within 10 days. What is the minimum amount that should be recorded on the day of sale for Accounts Receivable? (Points : 2)
15. Which inventory method results in the lowest income taxes during periods of increasing prices? (Points : 2)
16. The Philandering Soy Company reported the following accounts receivable balances for 2008:
Beginning of the year $84,000
End of the year 90,000
This information means that (Points : 2)
17. The Food-Mart Grocery is preparing its 2007 income statements. In doing so, cost of goods sold and wages expense are both deducted in computing which of the following?
Operating Income Gross Profit (Points : 2)
18. Certain depreciation costs and the amounts paid to certain employees would be reported on the income statement as part of cost of goods sold if the company (Points : 2)
19. A loss from a natural disaster that is both unusual and infrequent should be reported on a company's income statement (Points : 2)
20. The Big Tobacco Company sells cigars. Inventory information for a recent week is below:
Units Unit Cost Total Cost
Beginning inventory 2 $ 6 $12
Purchase 4 8 32
Purchase 6 10 60
If five units were sold during the week, what is the COST OF GOODS SOLD if the LIFO method is used? (Points : 2)
Click here for the solution: Identify the TRUE statement regarding non-recurring items on the income statement
1. Identify the TRUE statement regarding non-recurring items on the income statement. (Points : 2)
2. Which of the following is NOT a category of inventory used in a manufacturing company? (Points : 2)
3. The City of Gunnison awarded a $5,000,000 road-construction contract to the Fast Builders Construction Company. Construction was expected to take three years. After one year, Fast Builders had incurred $625,000 of cost and was approximately 20% completed with the road. The company estimated that another $2,500,000 would be expended to complete the contract. The company is confident regarding its estimates. What amount of profit, if any, should Fast Builders recognize for the first year? (Points : 2)
4. Which of the following should be subtracted out to arrive at the proper amount of net sales revenue to be reported on the income statement.
Estimated sales
discounts to be Expected
taken by customers Warranty Costs (Points : 2)
5. Cost of goods sold for a manufacturing company would be calculated as
Beginning finished goods inventory (BFGI)
Ending finished goods inventory (EFGI)
Work-in-process (WIP)
Cost of goods manufactured (CGM)
Raw materials (RM)
Overhead (OH) (Points : 2)
6. Automated Merchandising Company uses the LIFO method of cost assignment. The following data are available:
Date Units Unit Cost Total Cost
Beginning inventory Jan. 1 400 $24 $ 9,600
Purchase Mar. 13 800 28 22,400
Purchase June 20 1,200 32 38,400
Ending inventory Dec. 31 200
The value of the ending inventory will be (Points : 2)
7. Duhany Auto Company sold off a major segment of its business during March of 2007 at a loss. The loss from the sale should be reported in the firm's financial statements as a(n)(Points : 2)
8. Which of the following items is reported on an income statement?
Income from Cash provided
Continuing operations by operations (Points : 2)
9. Which of the following is NOT a deduction on the income statement when computing net income? (Points : 2)
10. Work-in-process includes all of the items below EXCEPT (Points : 2)
11. The FIFO inventory cost method differs from the LIFO method in that the (Points : 2)
12. For most firms, revenue is recognized (Points : 2)
13. Product lines eliminated by a company due to the fact that they no longer generate profits are known as (Points : 2)
14. The Fat Brush Paint Store sold merchandise on 30-day credit in the amount of $1,500. A discount of 3% was offered if the customer would pay within 10 days. What is the minimum amount that should be recorded on the day of sale for Accounts Receivable? (Points : 2)
15. Which inventory method results in the lowest income taxes during periods of increasing prices? (Points : 2)
16. The Philandering Soy Company reported the following accounts receivable balances for 2008:
Beginning of the year $84,000
End of the year 90,000
This information means that (Points : 2)
17. The Food-Mart Grocery is preparing its 2007 income statements. In doing so, cost of goods sold and wages expense are both deducted in computing which of the following?
Operating Income Gross Profit (Points : 2)
18. Certain depreciation costs and the amounts paid to certain employees would be reported on the income statement as part of cost of goods sold if the company (Points : 2)
19. A loss from a natural disaster that is both unusual and infrequent should be reported on a company's income statement (Points : 2)
20. The Big Tobacco Company sells cigars. Inventory information for a recent week is below:
Units Unit Cost Total Cost
Beginning inventory 2 $ 6 $12
Purchase 4 8 32
Purchase 6 10 60
If five units were sold during the week, what is the COST OF GOODS SOLD if the LIFO method is used? (Points : 2)
Click here for the solution: Identify the TRUE statement regarding non-recurring items on the income statement
Tuesday, August 18, 2015
The December 31, 2010 balance sheet of Wolfe Co. included the following items
The December 31, 2010 balance sheet of Wolfe Co. included the following items:
7.5% bonds payable due December 31, 2018 $1,200,000
Unamortized discount on bonds payable 48,000
The bonds were issued on December 31, 2008 at 95, with interest payable on June 30 and December 31. (Use straight-line amortization.)
On April 1, 2011, Wolfe retired $240,000 of these bonds at 101 plus accrued interest.
Prepare journal entries to record the following retirement. (Show computations and round to the nearest dollar.)
Click here for the solution: The December 31, 2010 balance sheet of Wolfe Co. included the following items
7.5% bonds payable due December 31, 2018 $1,200,000
Unamortized discount on bonds payable 48,000
The bonds were issued on December 31, 2008 at 95, with interest payable on June 30 and December 31. (Use straight-line amortization.)
On April 1, 2011, Wolfe retired $240,000 of these bonds at 101 plus accrued interest.
Prepare journal entries to record the following retirement. (Show computations and round to the nearest dollar.)
Click here for the solution: The December 31, 2010 balance sheet of Wolfe Co. included the following items
Monday, August 17, 2015
The inventory of Oheto Company on December 31, 2011, consists of the following items
E9-1 (Lower-of-Cost-or-Market) The inventory of Oheto Company on December 31, 2011, consists of the following items.
Part No. Quantity Cost per Unit Cost to Replace per Unit
110 600 $95 $100
111 1,000 60 52
112 500 80 76
113 200 170 180
120 400 205 208
121a 1,600 16 14
122 300 240 235
aPart No. 121 is obsolete and has a realizable value of $0.50 each as scrap.
Instructions
(a) Determine the inventory as of December 31, 2011, by the lower-of-cost-or-market method, applying this method directly to each item.
(b) Determine the inventory by the lower-of-cost-or-market method, applying the method to the total of the inventory.
Click here for the solution: The inventory of Oheto Company on December 31, 2011, consists of the following items
Part No. Quantity Cost per Unit Cost to Replace per Unit
110 600 $95 $100
111 1,000 60 52
112 500 80 76
113 200 170 180
120 400 205 208
121a 1,600 16 14
122 300 240 235
aPart No. 121 is obsolete and has a realizable value of $0.50 each as scrap.
Instructions
(a) Determine the inventory as of December 31, 2011, by the lower-of-cost-or-market method, applying this method directly to each item.
(b) Determine the inventory by the lower-of-cost-or-market method, applying the method to the total of the inventory.
Click here for the solution: The inventory of Oheto Company on December 31, 2011, consists of the following items
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
Thursday, August 13, 2015
Presented below is a list of items that could be included in the intangible assets section of the balance sheet
E12-1 Presented below is a list of items that could be included in the intangible assets section of the balance sheet.
a) Indicate which items on the list above would generally be reported as intangible assets in the balance sheet.
b) Indicate how, if at all, the items not reportable as intangible assets would be reported in the financial statements
1. Investment in a subsidiary company.
2. Timberland
3. Cost of engineering activity required to advance the design of a product to the manufacturing stage.
4. Lease prepayment (6 months' rent paid in advance)
5. Cost of equipment obtained.
6. Cost of searching for applications of new research findings.
7. Costs incurred in the formation of a corporation.
8. Operating losses incurred in the start-up of a business.
9. Training costs incurred in start-up of a business.
10. Purchase cost of a franchise.
11. Goodwill generated internally.
12. Cost of testing in search for product alternatives.
13. Goodwill acquired in the purchase of a business.
14. Cost of developing a patent.
15. Cost of purchasing a patent from an inventor.
16. Legal costs incurred in securing a patent.
17. Unrecovered costs of a successful legal suit to protect the patent.
18. Cost of conceptual formulation of possible product alternatives.
19. Cost of purchasing a copyright.
20. Research and development costs.
21. Long-term receivables.
22. Cost of developing a trademark.
23. Cost of purchasing a trademark.
Click here for the solution: Presented below is a list of items that could be included in the intangible assets section of the balance sheet
a) Indicate which items on the list above would generally be reported as intangible assets in the balance sheet.
b) Indicate how, if at all, the items not reportable as intangible assets would be reported in the financial statements
1. Investment in a subsidiary company.
2. Timberland
3. Cost of engineering activity required to advance the design of a product to the manufacturing stage.
4. Lease prepayment (6 months' rent paid in advance)
5. Cost of equipment obtained.
6. Cost of searching for applications of new research findings.
7. Costs incurred in the formation of a corporation.
8. Operating losses incurred in the start-up of a business.
9. Training costs incurred in start-up of a business.
10. Purchase cost of a franchise.
11. Goodwill generated internally.
12. Cost of testing in search for product alternatives.
13. Goodwill acquired in the purchase of a business.
14. Cost of developing a patent.
15. Cost of purchasing a patent from an inventor.
16. Legal costs incurred in securing a patent.
17. Unrecovered costs of a successful legal suit to protect the patent.
18. Cost of conceptual formulation of possible product alternatives.
19. Cost of purchasing a copyright.
20. Research and development costs.
21. Long-term receivables.
22. Cost of developing a trademark.
23. Cost of purchasing a trademark.
Click here for the solution: Presented below is a list of items that could be included in the intangible assets section of the balance sheet
Thursday, July 30, 2015
Each of the items below must be considered in preparing a statement of cash flows for Alpha-Omega Co. for the year ended December 31, 2014
BE13-1 Each of the items below must be considered in preparing a statement of cash flows for Alpha-Omega Co. for the year ended December 31, 2014. For each item, state how it should be shown in the statement of Cash flows for 2014.
(a) Issued bonds for $150,000 cash.
(b) Purchased equipment for $200,000 cash.
(c) Sold land costing $50,000 for $50,000 cash.
(d) Declared and paid a $20,000 cash dividend.
Click here for the solution: Each of the items below must be considered in preparing a statement of cash flows for Alpha-Omega Co. for the year ended December 31, 2014
(a) Issued bonds for $150,000 cash.
(b) Purchased equipment for $200,000 cash.
(c) Sold land costing $50,000 for $50,000 cash.
(d) Declared and paid a $20,000 cash dividend.
Click here for the solution: Each of the items below must be considered in preparing a statement of cash flows for Alpha-Omega Co. for the year ended December 31, 2014
Tuesday, July 14, 2015
Classify the following items as (a) an addition to the bank balance, (b) a subtraction from the bank balance
Classify the following items as (a) an addition to the bank balance, (b) a subtraction from the bank balance, (c) an addition to the book balance, or (d) a subtraction from the book balance:
_____ $20 in service charges
_____ A $300 check deposited that was returned NSF
_____ An outstanding check that you wrote for $2,000
_____ A deposit in transit of $5,500
_____ Bank Error: the bank credited your account for a deposit made by another customer
Click here for the solution: Classify the following items as (a) an addition to the bank balance, (b) a subtraction from the bank balance
_____ $20 in service charges
_____ A $300 check deposited that was returned NSF
_____ An outstanding check that you wrote for $2,000
_____ A deposit in transit of $5,500
_____ Bank Error: the bank credited your account for a deposit made by another customer
Click here for the solution: Classify the following items as (a) an addition to the bank balance, (b) a subtraction from the bank balance
Sunday, July 12, 2015
On February 1 of year 1, Richard, Mike, Patrick, and Sean form Brothers Corp and transfer the following items
Problem 2-2 On February 1 of year 1, Richard, Mike, Patrick, and Sean form Brothers Corp and transfer the following items: Property Transferred Transferor Asset Basis to Transferor FMV Number of Common Shares Issued Richard Land 12000 30000 400 Building 38000 70000 Mortgage on Land and Building 60000 60000 Mike Machines 25000 40000 300 Patrick Truck 15000 10000 50 Sean Legal Services 0 10000 100 Richard purchased the building and land several years ago, $50,000 for the building, and $12,000 for the land. Depreciation has been claimed using the straight line method. In addition to the machines, Mike received a note from Brothers corp. due in 3 years for $10,000 at the market interest rate. Mike originally purchase the machines 3 years ago for $50,000. In addition to the truck, Patrick received a cash payment of $5,000. Patrick’s truck is 2 years old with an original price of $20,000.
(a) Does the transaction meet the requirements of section 351?
(b) What are the amounts of the gains or losses recognized by Richard, Mike, Patrick, Sean, and Brothers?
(c) What is each shareholder’s basis in their Brothers stock? When does the holding period for the stock begin?
(d) What is Brothers’ basis in its property and services? When does the holding period for each property begin?
Click here for the solution: On February 1 of year 1, Richard, Mike, Patrick, and Sean form Brothers Corp and transfer the following items
(a) Does the transaction meet the requirements of section 351?
(b) What are the amounts of the gains or losses recognized by Richard, Mike, Patrick, Sean, and Brothers?
(c) What is each shareholder’s basis in their Brothers stock? When does the holding period for the stock begin?
(d) What is Brothers’ basis in its property and services? When does the holding period for each property begin?
Click here for the solution: On February 1 of year 1, Richard, Mike, Patrick, and Sean form Brothers Corp and transfer the following items
Thursday, July 2, 2015
State how each of the following items is reflected in the financial statements
State how each of the following items is reflected in the financial statements.
1.Change from FIFO to LIFO method for inventory valuation purposes.
2.Charge for failure to record depreciation in a previous period.
3.Litigation won in current year, related to prior period.
4.Change in the realizability of certain receivables.
5.Writeoff of receivables.
6.Change from the percentage-of-completion to the completed-contract method for reporting net income.
Click here for the solution: State how each of the following items is reflected in the financial statements
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