A business borrows $1,000, signing a note that requires an interest rate of 12% per year and repayment of principal plus interest in a single payment at the end of 1 year. Calculate the total interest on the note. What is the amount of the single payment?
> Pam Corporation purchased 75 percent of the outstanding voting stock of Sun Corporation for $4,800,000 on January 1, 2016. Sun’s stockholders’ equity on this date consisted of the following (in thousands): Capital sto
> Intercompany transactions between Pop Corporation and Son Corporation, its 80 percent–owned subsidiary, from January 2016, when Pop acquired its controlling interest, to December 31, 2019, are summarized as follows: 2016 P
> Partial adjusted trial balances for Pam Corporation and its 90 percent–owned subsidiary, Sun Corporation, for the year ended December 31, 2016, are as follows: Sun Corporation acquired $100,000 par of Pam’s bonds on
> Pop Corporation acquired an 80 percent interest in Son Corporation at book value equal to fair value on January 1, 2017, at which time Son’s capital stock and retained earnings were $200,000 and $80,000, respectively. On January 2, 2018, Son purchased $1
> Pop Corporation, which owns an 80 percent interest in Son Corporation, purchases $100,000 of Son’s 8 percent bonds at 106 on July 2, 2016. The bonds pay interest on January 1 and July 1 and mature on July 1, 2019. Pop uses the equity me
> Comparative income statements for Pam Corporation and its 80 percent–owned subsidiary, Sun Corporation, for the year ended December 31, 2017, are summarized as follows: Pam purchased its 80 percent interest in Sun at book value on Jan
> Pop Corporation has $8,000,000 of 12 percent bonds outstanding on December 31, 2016, with unamortized premium of $240,000. These bonds pay interest semiannually on July 1 and January 1 and mature on January 1, 2022. On January 2, 2017, Son Corporation, a
> The balance sheets of Pam and Sun Corporations, an 80 percent–owned subsidiary of Pam, at December 31, 2016, are as follows (in thousands): The book value of Pam’s bonds reflects a $100,000 unamortized discount. The
> The consolidated balance sheet of Pop Corporation and Son (an 80 percent–owned subsidiary) at December 31, 2016, includes the following items related to an 8 percent, $500,000 outstanding bond issue: Current Liabilities Bond interest payable (6 months’
> Comparative balance sheets of Pam and Sun Corporations at December 31, 2016, follow: Pam acquired 80 percent of Sun’s capital stock for $3,320,000 on January 1, 2014, when Sun’s capital stock was $4,000,000 and Sun&a
> Pop Corporation owns a 70 percent interest in Son Corporation acquired several years ago at book value equal to fair value. On January 1, 2016, Son had outstanding $1,000,000 of 9 percent bonds with a book value of $990,000. On January 2, 2016, Pop purch
> Pop Company paid $88,000 for an 80% interest in Son Company on January 5, 2016, when Son’s capital stock was $60,000 and its retained earnings $40,000. Trial balances for the companies at December 31, 2016, are as follows (in thousands)
> Comparative income statements for Pam Corporation and its 100 percent–owned subsidiary, Sun Corporation, for the year ended December 31, 2024, are summarized as follows: Pam purchased its interest in Sun at fair value equal to book va
> Pop Company acquired an 80 percent interest in Son Company on January 1, 2016, for $1,600,000 in excess of book value and fair value. On January 1, 2019, Pop had $4,000,000 par, 8 percent bonds outstanding with a $160,000 unamortized discount. On January
> Pam Corporation’s long-term debt on January 1, 2016, consists of $400,000 par value of 10 percent bonds payable due on January 1, 2020, with an unamortized discount of $8,000. On January 2, 2016, Sun Corporation, Pam’s 90 percentowned subsidiary, purchas
> Son Corporation is a 70 percent–owned subsidiary of Pop Corporation. On January 2, 2016, Son purchased $600,000 par of Pop’s $900,000 outstanding bonds for $602,000 in the bond market. Pop’s bonds have an 8 percent interest rate, pay interest on January
> 1. Which of the following is not a characteristic of a constructive retirement of bonds from an intercompany bond transaction? a Bonds are retired for consolidated statement purposes only. b The reciprocal intercompany bond investment and liability amoun
> What is the effect of intercompany sales of plant assets on the parent and consolidated net income in years subsequent to the year of sale?
> How does a parent eliminate the effects of unrealized gains on intercompany sales of plant assets under the equity method?
> Describe the computation of noncontrolling interest share in the year of an upstream sale of depreciable plant assets.
> How are unrealized gains and losses from intercompany transactions involving depreciable assets eventually realized?
> Consolidation workpaper entries are made to eliminate 100 percent of the unrealized profit from the land account in downstream sales of land. Is 100 percent also eliminated for upstream sales of land?
> Pop Company paid $198,000 for a 90 percent interest in Son on January 5, 2016, when Son’s capital stock was $120,000 and its retained earnings $40,000. Trial balances for the companies at December 31, 2019, are as follows (in thousands)
> How is the computation of noncontrolling interest share affected by downstream sales of land? By upstream sales of land?
> When are unrealized gains and losses from intercompany sales of land realized from the viewpoint of the selling affiliate?
> In accounting for unrealized profits and losses from intercompany sales of plant assets, does it make any difference if the parent is the purchaser or the seller? Would your answer be different if the subsidiary were 100 percent owned?
> Explain the sequence of workpaper adjustments and eliminations for unrealized gains and losses on depreciable plant assets. Is your answer affected by whether the intercompany transaction occurred in the current year or in prior years?
> What is the objective of eliminating the effects of intercompany sales of plant assets in preparing consolidated financial statements?
> What information should be disclosed about property, plant, and equipment in the consolidated financial statements?
> How should a company treat intercompany sales of assets in the consolidated financial statements?
> Separate company and consolidated financial statements for Pop Corporation and its only subsidiary, Son Corporation, for 2017 are summarized here. Pop acquired its interest in Son on January 1, 2016, at a price in excess of book value, which was due to a
> Financial statements for Pam and Sun Corporations for 2016 are as follows (in thousands): ADDITIONAL INFORMATION: 1. Pam acquired an 80 percent interest in Sun on January 2, 2014, for $290,000, when Sun’s stockholdersâ€
> Pam Corporation acquired an 80 percent interest in Sun Corporation on January 1, 2016, for $108,000 cash, when Sun’s capital stock was $100,000 and retained earnings were $10,000. The difference between investment fair value and book va
> The information needed to prepare the Cash Flow from Operating Activities section of Pop Corporation’s consolidated statement of cash flows is included in the following list (in thousands): Cash received from customers...................................
> Describe how total noncontrolling interest at the end of an accounting period is determined.
> Customer Rob Hufnagel owes Kellman Corp. $1,250. Kellman determines that the total amount is uncollectible and writes off all of Hufnagel’s debt. Hufnagel later pays $350 to Kellman. Required: Make the appropriate journal entries (if any) to record the
> At the beginning of the year, Kullerud Manufacturing had a credit balance in its allowance for doubtful accounts of $10,670, and at the end of the year it was a credit balance of $11,240. During the year, Kullerud made credit sales of $1,270,990, collect
> Perkinson Corporation sells paper products to a large number of retailers. Perkinson’s accountant has prepared the following aging schedule for its accounts receivable at the end of the year. Before adjusting entries are entered, the ba
> Glencoe Supply had the following accounts receivable aging schedule at the end of a recent year. The balance in Glencoe’s allowance for doubtful accounts at the beginning of the year was $58,620 (credit). During the year, accounts in th
> Murphy Inc. maintains a balance of $2,500 in its petty cash fund. On December 31, Murphy’s petty cash account has a balance of $216. Murphy replenishes the petty cash account to bring it back up to $2,500. Murphy classifies all petty cash transactions as
> Bradford Plumbing had the following data for a recent year: Credit sales...................................................................................... $547,900 Allowance for doubtful accounts, 1/1 (a credit balance)................. 8,740 Accoun
> Gilmore Electronics had the following data for a recent year: Cash sales....................................................................................... $135,000 Credit sales........................................................................
> The accountant for Porile Company prepared the following data for sales and losses from uncollectible accounts: * Losses from uncollectible accounts are the actual losses related to sales of that year (rather than write-offs of that year). Required: 1.
> Rubin Enterprises had the following sales-related transactions on a recent day: a. Billed customer $27,500 on account for services already provided. b. Collected $5,875 in cash for services to be provided in the future. c. The customer complained about a
> Wilburton Riding Stables provides stables, care for animals, and grounds for riding and showing horses. The account balances at the beginning of 2019 were: During 2019, the following transactions occurred: a. Wilburton provided animal care services, all
> Citron Mechanical Systems makes all sales on credit, with terms 1/15, n/30. During 2019, the list price (pre discount) of services provided was $687,500. Customers paid $482,000 (list price) of these sales within the discount period and the remaining $20
> Chicago Inc. had a balance of $1,200 in cash in its petty cash fund at the beginning of September. The following transactions took place in September: a. On September 4, the custodian paid $75 out of petty cash for new stationery on which the company pre
> Nevada Company provided services with a list price of $48,500 to Small Enterprises with terms 2/15, n/45. Nevada records sales at gross. Required: 1. Prepare the entries to record this sale in Nevada’s journal. 2. Prepare the entry for Nevada’s journal
> What documents must be present to trigger the recording of a sale (and associated receivable) in the accounting records?
> A business borrows $1,000, signing a note that requires repayment of the amount borrowed in two payments of $600 each, one at the end of each of the next two 6-month periods. Calculate the total interest on the note. What is the principal amount of the n
> What kind of account is allowance for doubtful accounts? What does it represent?
> Walker Department Store has one cash register. On a recent day, the cash register tape reported sales in the amount of $13,729.87. Actual cash in the register (after deducting and removing the opening change amount of $75) was $13,747.21, which was depos
> What is the conceptual difference between the (1) Percentage of credit sales and (2) Aging methods of estimating bad debts?
> Why is the direct write-off method not GAAP?
> How do these control activities help protect a company against error, theft, and fraud?
> Under the allowance method, why do we make an entry to record bad debt expense in the period of sale rather than in the period in which an account is determined to be uncollectible?
> What are the principal types of receivables?
> The cash account of Mason Products reveals the following information: The bank statement for May contains the following information: Bank balance, 4/30...................................................... $ 9,750 Add: Deposits during May...............
> What are sales returns?
> At what amount should sales revenue be recorded when sales discounts are present?
> When is a performance obligation satisfied?
> When is revenue recognized?
> How may analyzing sales and receivables provide information about a firm’s profitability?
> Describe the documents that underlie the typical accounting system for sales. Give an example of a failure of internal control that might occur if these documents were not properly prepared.
> On a recent day, Pence Company obtained the following data from its cash registers: Pence deposits its cash receipts in its bank account daily. Required: Prepare a journal entry to record these cash sales. Cash Sales per Register Tape $12,675.12 I1,4
> Port Austin Boat Repair Inc. has entered and posted its adjusting entries for 2019. The following are selected account balances after adjustment: Required: 1. Using the accounts and balances above, prepare the closing entries for 2019. 2. Prepare an inc
> Why is interest typically charged on notes receivable, but not on accounts receivable?
> Accepting major credit cards requires the seller to pay a service charge. What advantages does the seller obtain by accepting major credit cards?
> Describe what happens when receivables are factored.
> Donald Corporation received the bank statement shown below for the month of October: *NSF check **Debit memo (Rent Expense) ***Service charge The cash records of Donald Corporation provide the following information: The items on the bank statement are co
> How much interest will be due at maturity for each of the following interest-bearing notes? Principal Months to Maturity Annual Interest Rate $10,000 42,000 18,000 37,000 a. 12% b. 14 с. 13 d. 11 2546
> Why do companies issue credit when their past experience indicates that some customers will not pay?
> What are trade discounts and quantity discounts?
> What are sales allowances? How do sales allowances differ from sales discounts?
> Why are sales discounts offered?
> How may analyzing sales and receivables provide information about a firm’s asset management?
> The following schedule shows all the accounts of Eagle Imports that received year end adjusting entries: Required: 1. Calculate the missing amounts identified by the letters (a) through (e). 2. Prepare the five adjusting entries that must have been made
> At December 31, 2019, Garner has a $15,000 credit balance in its allowance for doubtful accounts. Garner estimates that 3% of its 2019 credit sales will eventually default. During 2019, Garner had credit sales of $970,000. Required: Estimate the bad deb
> Tiny Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement indicated the following: Balance, beginning of the month............................................................... $15,640 Service charge for Octob
> Internal control systems include policies and procedures to do what?
> Softball Magazine Company received advance payments of $75,000 from customers during 2019. At December 31, 2019, $20,000 of the advance payments still had not been earned. Required: After the adjustments are recorded and posted at December 31, 2019, cal
> What kinds of bank reconciliation items require the firm to make adjusting entries?
> Diviney Corporation’s net sales and average net trade accounts receivable were $8,750,000 and $630,000, respectively. Required: Calculate Diviney’s accounts receivable turnover.
> The following information pertains to Cobb Corporation’s financial results for the past year. Net sales.................................................. $135,000 Cost of goods sold.................................... 48,000 Other expenses..............
> Link Communications programs voicemail systems for businesses. For a recent project, they charged $135,000. The customer secured this amount by signing a note bearing 9% interest on February 1, 2019. Required: 1. Prepare the journal entry to record the
> Metzler Communications designs and programs a website for a local business. Metzler charges $46,000 for the project, and the local business signs an 8% note January 1, 2019. Required: 1. Prepare the journal entry to record the sale on January 1, 2019. 2
> Frank’s Tattoos and Body Piercing operates near campus. At the end of a recent day, Frank’s cash register included credit card documents for the following sales amounts: MasterCard............................................... $756 Visa................
> The unadjusted trial balance for Mitchell Pharmacy appears below. The following information is available at year end for adjustments: a. An analysis of insurance policies indicates that $2,180 of the prepaid insurance is coverage for 2020. b. Depreciatio
> Beginning accounts receivable were $80,200, and ending accounts receivable were $83,700. All sales were on credit and totaled $562,900. Required: Determine how much cash was collected from customers.
> Beginning accounts receivable were $275,500, and ending accounts receivable were $302,300. Cash amounting to $2,965,000 was collected from customers’ credit sales. Required: Calculate the amount of sales on account during the period.
> Beginning accounts receivable were $43,375. All sales were on account and totaled $187,600. Cash collected from customers totaled $182,450. Required: Calculate the ending accounts receivable balance.
> On January 1, 2019, Smith Inc. has the following balances for accounts receivable and allowance for doubtful accounts: Accounts Receivable..................................................................... $382,000 Allowance for Doubtful Accounts (a c
> Pyramid Corporation is assessed a $40 fee as the result of a $126 NSF check received from a customer for services purchased on account. Neither the fee nor the NSF check has been accounted for on Pyramid’s books. Required: Record the appropriate journal
> Shortly after July 31, Towanda Corporation received a bank statement containing the following information: *NSF check (deposited in previous period, but withdrawn this period) **Bank service charge July cash transactions and balances on Towandaâ
> On January 1, 2019, Hungry man Inc. has the following balances for accounts receivable and allowance for doubtful accounts: Accounts Receivable ....................................................................$1,280,000 Allowance for Doubtful Account
> The Rock has credit sales of $425,000 during 2019 and estimates at the end of 2019 that 1.5% of these credit sales will eventually default. Also, during 2019 a customer defaults on a $1,200 balance related to goods purchased in 2019. Required: 1. Prepar
> Clarissa Company has credit sales of $550,000 during 2019 and estimates at the end of 2019 that 2.5% of these credit sales will eventually default. Also, during 2019 a customer defaults on a $775 balance related to goods purchased in 2018. Prior to the w
> Bolton sold a customer service contract with a price of $37,000 to Sammy’s Wholesale Company. Bolton offered terms of 1/10, n/30 and expects Sammy to pay within the discount period. Required: Prepare the journal entry assuming the payment is made after
> Four adjusting entries are shown below. a. Interest Expense ............................... 1,875 Interest Payable ............................ 1,875 b. Interest Receivable ........................... 1,150 Interest Income ............................
> Bolton sold a customer service contract with a price of $37,000 to Sammy’s Wholesale Company. Bolton offered terms of 1/10, n/30 and expects Sammy to pay within the discount period. Required: Prepare the journal entry to record the sale. Then prepare th
