Question: Ames Company reported 2017 net income of $

> On January 30, 2016, a suit was filed against Frazier Corporation under the Environmental Protection Act. On August 6, 2017, Frazier Corporation agreed to settle the action and pay $920,000 in damages to certain current and former employees. How should t

> During 2017, Liselotte Company reported income of $1,500,000 before income taxes and realized a gain of $450,000 on the disposal of assets related to a discontinued operation. The criteria for classification as a discontinued operation is appropriate for

> Cooper Investments reported an unusual gain from the sale of certain assets in its 2017 income statement. How does intraperiod tax allocation affect the reporting of this unusual gain?

> Answer the following questions. a. On May 1, 2017, Goldberg Company sold some machinery to Newlin Company on an installment contract basis. The contract required five equal annual payments, with the first payment due on May 1, 2017. What present value c

> On January 1, 2017, Lombard Co. sells property for which it had paid $690,000 to Sargent Company, receiving in return Sargent’s zero-interest-bearing note for $1,000,000 payable in 5 years. What entry would Lombard make to record the sale, assuming that

> The New York Knicks, Inc. sold 10,000 season tickets at $2,000 each. By December 31, 2017, 16 of the 40 home games had been played. What amount should be reported as a current liability at December 31, 2017?

> In its December 31, 2017, balance sheet Oakley Corporation reported as an asset, “Net notes and accounts receivable, $7,100,000.” What other disclosures are necessary?

> Becker Ltd. is planning to adopt IFRS and prepare its first IFRS financial statements at December 31, 2018. What is the date of Becker’s opening balance sheet, assuming one year of comparative information? What periods will be covered in Becker’s first I

> The trial balance before adjustment of Taylor Swift Inc. shows the following balances. Instructions Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 4% of gross accounts receiv

> At the end of 2017, Aramis Company has accounts receivable of $800,000 and an allowance for doubtful accounts of $40,000. On January 16, 2018, Aramis Company determined that its receivable from Ramirez Company of $6,000 will not be collected, and managem

> The following is the balance sheet of Sameed Brothers Corporation (000s omitted). Instructions Evaluate the balance sheet presented. State briefly the proper treatment of any item criticized. SAMEED BROTHERS CORPORATION BALANCE SHEET DECEMBER 31,

> What would you pay for a $100,000 debenture bond that matures in 15 years and pays $5,000 a year in interest if you wanted to earn a yield of: a. 4%? b. 5%? c. 6%?

> Karen Weller, D.D.S., opened a dental practice on January 1, 2017. During the first month of operations, the following transactions occurred. 1. Performed services for patients who had dental plan insurance. At January 31, $750 of such services was perf

> Colin Davis Machine Company maintains a general ledger account for each class of inventory, debiting such accounts for increases during the period and crediting them for decreases. The transactions below relate to the Raw Materials inventory account, whi

> Presented below are selected accounts for Alvarez Company as reported in the worksheet at the end of May 2017. Instructions Complete the worksheet by extending amounts reported in the adjusted trial balance to the appropriate columns in the worksheet.

> Oasis Company has used the dollar-value LIFO method for inventory cost determination for many years. The following data were extracted from Oasis’ records. Instructions Calculate the index used for 2018 that yielded the above results

> JFK Corp. factors $300,000 of accounts receivable with LBJ Finance Corporation on a without recourse basis on July 1, 2017. The receivables records are transferred to LBJ Finance, which will receive the collections. LBJ Finance assesses a finance charge

> On April 1, 2017, Rasheed Company assigns $400,000 of its accounts receivable to the Third National Bank as collateral for a $200,000 loan due July 1, 2017. The assignment agreement calls for Rasheed to continue to collect the receivables. Third National

> Presented below is financial information for two different companies. Instructions Compute the missing amounts. Alatorre Company Eduardo Company Sales revenue $90,000 (a) 81,000 56,000 (b) 15,000 (c) (d) $ 5,000 95,000 (e) 38,000 23,000 15,000 Sal

> Presented below is information related to Gonzales Corporation for the month of January 2017. Instructions Prepare the necessary closing entries. $ 61,000 8,000 13,000 350,000 Salaries and wages expense Cost of goods sold Delivery expense Insuranc

> The adjusted trial balance of Lopez Company shows the following data pertaining to sales at the end of its fiscal year, October 31, 2017: Sales Revenue $800,000, Delivery Expense $12,000, Sales Returns and Allowances $24,000, and Sales Discounts $15,000.

> Bobek Inc. has recently reported steadily increasing income. The company reported income of $20,000 in 2014, $25,000 in 2015, and $30,000 in 2016. A number of market analysts have recommended that investors buy the stock because they expect the steady gr

> Midori Company had ending inventory at end-of-year prices of $100,000 at December 31, 2016; $119,900 at December 31, 2017; and $134,560 at December 31, 2018. The year-end price indexes were 100 at 12/31/16, 110 at 12/31/17, and 116 at 12/31/18. Compute t

> Bienvenu Enterprises reported cost of goods sold for 2017 of $1,400,000 and retained earnings of $5,200,000 at December 31, 2017. Bienvenu later discovered that its ending inventories at December 31, 2016 and 2017, were overstated by $110,000 and $35,000

> On October 1, 2017, Chung, Inc. assigns $1,000,000 of its accounts receivable to Seneca National Bank as collateral for a $750,000 note. The bank assesses a finance charge of 2% of the receivables assigned and interest on the note of 9%. Prepare the Octo

> Dold Acrobats lent $16,529 to Donaldson, Inc., accepting Donaldson’s 2-year, $20,000, zero-interest-bearing note. The implied interest rate is 10%. Prepare Dold’s journal entries for the initial transaction, recognition of interest each year, and the col

> Milner Family Importers sold goods to Tung Decorators for $30,000 on November 1, 2017, accepting Tung’s $30,000, 6-month, 6% note. Prepare Milner’s November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and i

> Use the information presented in BE7-5 for Wilton, Inc. a. Instead of an Allowance for Doubtful Accounts Balance of $2,400 credit, the balance was $1,900 debit. Assume that 10% of accounts receivable will prove to be uncollectible. Prepare the entry to

> Wilton, Inc. had net sales in 2017 of $1,400,000. At December 31, 2017, before adjusting entries, the balances in selected accounts were Accounts Receivable $250,000 debit, and Allowance for Doubtful Accounts $2,400 credit. If Wilton estimates that 8% of

> Roeher Company sold $9,000 of its specialty shelving to Elkins Office Supply Co. on account. Prepare the entries when (a) Roeher makes the sale, (b) Roeher grants an allowance of $700 when some of the shelving does not meet exact specifications but sti

> Use the information from BE7-2, assuming Restin Co. uses the net method to account for cash discounts. Prepare the required journal entries for Restin Co. From BE 7-2: Restin Co. uses the gross method to record sales made on credit. On June 1, 2017, it

> Restin Co. uses the gross method to record sales made on credit. On June 1, 2017, it made sales of $50,000 with terms 3/15, n/45. On June 12, 2017, Restin received full payment for the June 1 sale. Prepare the required journal entries for Restin Co.

> O’Malley Corporation was incorporated and began business on January 1, 2017. It has been successful and now requires a bank loan for additional working capital to finance expansion. The bank has requested an audited income statement for

> Assume that Toni Braxton Company has recently fallen into financial difficulties. By reviewing all available evidence on December 31, 2017, one of Toni Braxton’s creditors, the National American Bank, determined that Toni Braxton would pay back only 65%

> Kraft Enterprises owns the following assets at December 31, 2017. What amount should be reported as cash? 68,000 Checking account balance Postdated checks Certificates of deposit (180-day) Cash in bank- savings account 17,000 Cash on hand 9,300 750

> Morgan Freeman is investing $9,069 at the end of each year in a fund that earns 5% interest. In how many years will the fund be at $100,000?

> Refer to the data in BE6-7. Assuming quarterly compounding of amounts invested at 8%, how much of John Fillmore’s inheritance must be invested to have enough at retirement to buy the boat? From BE 6-7 John Fillmore’s lifelong dream is to own his own fis

> John Fillmore’s lifelong dream is to own his own fishing boat to use in his retirement. John has recently come into an inheritance of $400,000. He estimates that the boat he wants will cost $300,000 when he retires in 5 years. How much of his inheritance

> Steve Madison needs $250,000 in 10 years. How much must he invest at the end of each year, at 5% interest, to meet his needs?

> Adams Inc. will deposit $30,000 in a 6% fund at the end of each year for 8 years beginning December 31, 2017. What amount will be in the fund immediately after the last deposit?

> Maria Alvarez is investing $300,000 in a fund that earns 4% interest compounded annually. What equal amounts can Maria withdraw at the end of each of the next 20 years?

> Use the information presented in BE5-8 for Adams Company to prepare the long-term liabilities section of the balance sheet. From BE 5-8: Included in Adams Company’s December 31, 2017, trial balance are the following accounts: Accounts Payable $220,000,

> Included in Adams Company’s December 31, 2017, trial balance are the following accounts: Accounts Payable $220,000, Pension Liability $375,000, Discount on Bonds Payable $29,000, Unearned Rent Revenue $41,000, Bonds Payable $400,000, Salaries and Wages P

> In January 2017, Susquehanna Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in, first-out (LIFO) method and elected to determine inventory cost under the dollar-value LIFO

> Thomas Corporation’s adjusted trial balance contained the following liability accounts at December 31, 2017: Bonds Payable (due in 3 years) $100,000, Accounts Payable $72,000, Notes Payable (due in 90 days) $22,500, Salaries and Wages Payable $4,000, and

> Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2017: Prepaid Rent $12,000, Goodwill $50,000, Franchise Fees Receivable $2,000, Franchises $47,000, Patents $33,000, and Trademarks $10,000. Prepare the i

> Lowell Company’s December 31, 2017, trial balance includes the following accounts: Inventory $120,000, Buildings $207,000, Accumulated Depreciation—Equipment $19,000, Equipment $190,000, Land (held for investment) $46,000, Accumulated Depreciation—Buildi

> Included in Outkast Company’s December 31, 2017, trial balance are the following accounts: Prepaid Rent $5,200, Debt Investments (to be held to maturity until 2020) $56,000, Unearned Fees $17,000, Land (held for investment) $39,000, and Notes Receivable

> Martinez Corporation engaged in the following cash transactions during 2017. Sale of land and building………………...$191,000 Purchase of treasury stock………………..40,000 Purchase of land……………………………..37,000 Payment of cash dividend………………. 95,000 Purchase of equip

> Stowe Company’s December 31, 2017, trial balance includes the following accounts: Investment in Common Stock $70,000, Retained Earnings $114,000, Trademarks $31,000, Preferred Stock $152,000, Common Stock $55,000, Deferred Income Taxes $88,000, Paid-in C

> Hawthorn Corporation’s adjusted trial balance contained the following accounts at December 31, 2017: Retained Earnings $120,000, Common Stock $750,000, Bonds Payable $100,000, Paid-in Capital in Excess of Par—Common Stock $200,000, Goodwill $55,000, Accu

> Using the information in BE5-14, determine Martinez’s free cash flow, assuming that it reported net cash provided by operating activities of $400,000. From BE 5-14: Martinez Corporation engaged in the following cash transactions during 2017. Sale of lan

> Use the information presented in BE5-14 for Martinez Corporation to compute the net cash used (provided) by financing activities. From BE 5-14: Martinez Corporation engaged in the following cash transactions during 2017. Sale of land and building……………….

> Clay Mattews, an inventory control specialist, is interested in better understanding the accounting for inventories. Although Clay understands the more sophisticated computer inventory control systems, he has little knowledge of how inventory cost is det

> Brisky Corporation had net sales of $2,400,000 and interest revenue of $31,000 during 2017. Expenses for 2017 were cost of goods sold $1,450,000, administrative expenses $212,000, selling expenses $280,000, and interest expense $45,000. Brisky’s tax rate

> In 2017, Hollis Corporation reported net income of $1,000,000. It declared and paid preferred stock dividends of $250,000. During 2017, Hollis had a weighted average of 190,000 common shares outstanding. Compute Hollis’s 2017 earnings per share.

> Side Kicks has year-end account balances of Sales Revenue $808,900, Interest Revenue $13,500, Cost of Goods Sold $556,200, Administrative Expenses $189,000, Income Tax Expense $35,100, and Dividends $18,900. Prepare the year-end closing entries.

> Kelly Company had cash receipts from customers in 2017 of $142,000. Cash payments for operating expenses were $97,000. Kelly has determined that at January 1, accounts receivable was $13,000, and prepaid expenses were $17,500. At December 31, accounts re

> Vande Velde Company made three investments during 2017. (1) It purchased 1,000 shares of Sastre Company, a start-up company. Vande Velde made the investment based on valuation estimates from an internally developed model. (2) Itpurchased 2,000 shares o

> Identify which basic principle of accounting is best described in each item below. a. Norfolk Southern Corporation reports revenue in its income statement when the performance obligation is satisfied instead of when the cash is collected. b. Yahoo! rec

> Portman Corporation has retained earnings of $675,000 at January 1, 2017. Net income during 2017 was $1,400,000, and cash dividends declared and paid during 2017 totaled $75,000. Prepare a retained earnings statement for the year ended December 31, 2017.

> Included in Gonzalez Company’s December 31 trial balance is a note receivable of $12,000. The note is a 4-month, 10% note dated October 1. Prepare Gonzalez’s December 31 adjusting entry to record $300 of accrued interest, and the February 1 journal entry

> Vandross Company has recorded bad debt expense in the past at a rate of 1½% of accounts receivable, based on an aging analysis. In 2017, Vandross decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt ex

> During 2017, Williamson Company changed from FIFO to weighted-average inventory pricing. Pretax income in 2016 and 2015 (Williamson’s first year of operations) under FIFO was $160,000 and $180,000, respectively. Pretax income using weighted-average prici

> Crane Corporation has the following accounts included in its December 31, 2017, trial balance: Equity Investments (trading) $21,000, Goodwill $150,000, Prepaid Insurance $12,000, Patents $220,000, and Franchises $130,000. Prepare the intangible assets se

> Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, management wishes to consider all of the effects on the company, including its reported performance, before making

> Using the data in BE3-3, journalize the entry on July 1 and the adjusting entry on December 31 for Zubin Insurance Co. Zubin uses the accounts Unearned Service Revenue and Service Revenue. From BE3-3: On July 1, 2017, Crowe Co. pays $15,000 to Zubin Ins

> On July 1, 2017, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Crowe Co., journalize the entry on July 1 and the adjusting entry on December 31.

> Koch Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2017: Cash $7,000, Land $40,000, Patents $12,500, Accounts Receivable $90,000, Prepaid Insurance $5,200, Inventory $30,000, Allowance for Doubtful Accounts $

> Harding Corporation has the following accounts included in its December 31, 2017, trial balance: Accounts Receivable $110,000, Inventory $290,000, Allowance for Doubtful Accounts $8,000, Patents $72,000, Prepaid Insurance $9,500, Accounts Payable $77,000

> The Kroger Company reported the following data in its annual report (in millions). Instructions a. Compute Kroger’s inventory turnovers for fiscal years ending January 31, 2015, and February 1, 2014, using: (1) Cost of sales and LIF

> Describe the estimation of the allowance, based on expected cash flows.

> Qualls Corporation reported 2017 earnings per share of $7.21. In 2018, Qualls reported earnings per share as follows. On income from continuing operations……………$6.40 On discontinued operations………………………………1.88 On net income………………………………………………. $8.28 Is the

> Distinguish among the following: (1) a general checking account, (2) an imprest bank account, and (3) a lockbox account.

> At the balance sheet date, Clarkson Company held title to goods in transit amounting to $214,000. This amount was omitted from the purchases figure for the year and also from the ending inventory. What is the effect of this omission on the net income for

> Explain the following terms. a. LIFO layer. b. LIFO reserve. c. LIFO effect.

> As the manager of the accounts receivable department for Beavis Leather Goods, Ltd., you recently noticed that Kelly Collins, your accounts receivable clerk who is paid $1,200 per month, has been wearing unusually tasteful and expensive clothing. (This i

> On December 31, 2016, the inventory of Powhattan Company amounts to $800,000. During 2017, the company decides to use the dollar-value LIFO method of costing inventories. On December 31, 2017, the inventory is $1,053,000 at December 31, 2017, prices. Usi

> According to generally accepted accounting principles, what is the balance sheet valuation of each of the following assets? a. Trade accounts receivable. b. Land. c. Inventories. d. Trading securities (common stock of other companies). e. Prepaid ex

> Indicate where the following items would ordinarily appear on the financial statements of Boleyn, Inc. for the year 2017. a. The service life of certain equipment was changed from 8 to 5 years. If a 5-year life had been used previously, additional depre

> Discuss the appropriate treatment in the financial statements of each of the following. a. Gain on sale of investment securities. b. A profit-sharing bonus to employees computed as a percentage of net income. c. Additional depreciation on factory mach

> Describe the LIFO double-extension method. Using the following information, compute the index at December 31, 2017, applying the double-extension method to a LIFO pool consisting of 25,500 units of product A and 10,350 units of product B. The base-year c

> Indicate how the percentage-of-receivables method, based on an aging schedule, accomplishes the objectives of the allowance method of accounting for bad debts. What other methods, besides an aging analysis, can be used for estimating uncollectible accoun

> What are the advantages and disadvantages of the single-step income statement?

> Distinguish between Opinions of the Accounting Principles Board and Accounting Standards Updates.

> For what purposes did the AICPA create the Accounting Principles Board?

> Discuss the accounting for sales allowances and how they relate to the concept of variable consideration.

> On July 1, 2017, Moresan Company sold special-order merchandise on credit and received in return an interest-bearing note receivable from the customer. Moresan will receive interest at the prevailing rate for a note of this type. Both the principal and i

> How can earnings management affect the quality of earnings?

> What is a repurchase agreement (product financing) arrangement? How should a product repurchase agreement be reported in the financial statements?

> In what accounts should the following items be classified? a. Coins and currency. b. U.S. Treasury (government) bonds. c. Certificate of deposit (matures in 5 months). d. Cash in a bank that is in receivership. e. NSF check (returned with bank s

> On January 1, 2017, Bonanza Wholesalers Inc. adopted the dollar-value LIFO inventory method for income tax and external financial reporting purposes. However, Bonanza continued to use the FIFO inventory method for internal accounting and management purpo

> Norman’s Televisions produces television sets in three categories: portable, midsize, and flat-screen. On January 1, 2017, Norman adopted dollar-value LIFO and decided to use a single inventory pool. The company’s Janu

> The management of Tritt Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2017

> Dimitri Company, a manufacturer of small tools, provided the following information from its accounting records for the year ended December 31, 2017. Inventory at December 31, 2017 (based on physical count of goods in Dimitri’s plant,

> Richardson Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not understand how to value the inventory pools using this new me

> Presented below is information related to Kaisson Corporation for the last 3 years. Instructions Compute the ending inventories under the dollar-value LIFO method for 2016, 2017, and 2018. The base period is January 1, 2016, and the beginning inventor

> The following independent situations relate to inventory accounting. 1. Kim Co. purchased goods with a list price of $175,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. How much should Kim Co. record as the cost of thes

> In light of the full disclosure principle, investors and creditors need to know the balances for assets, liabilities, and equity as well as the accounting policies adopted by management to measure the items reported in the balance sheet. Instructions

> Braddock Inc. had the following long-term receivable account balances at December 31, 2016. Note receivable from sale of division…………$1,500,000 Note receivable from officer…………………………. 400,000 Transactions during 2017 and other information relating to