Question: Comparative balance sheet data for Tanzanite

> Ratcliff Corporation purchased land, a building, a patent, and a franchise for the lump sum of $1,450,000. A real estate appraiser estimated the building to have a resale value of $600,000 (2/3 of the total worth of land and building). The franchise had

> The company sells satellite phone service. Customers are required to pay an initial fee of $360, followed by continuing service fees of $50 per month. The initial fee is not refundable. The company’s best estimate is that the average customer will contin

> Allred Shipping Co. acquired land, buildings, and equipment at a lump-sum price of $920,000. An appraisal of the assets at the time of acquisition disclosed the following values. Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> Refer to Practice 8-18. Indicate how the installment sales receivable would be reported in the balance sheet at the end of the year. In Practice 8-18 The company had sales during the year of $350,000. The gross profit percentage during the year was 20%.

> Bad debt expense is estimated using the percentage-of-accounts-receivable method. Total sales for the year were $600,000. The ending balance in Accounts Receivable was $200,000. An examination of the outstanding accounts at the end of the year indicates

> In exchange for land, the company received a 12-month note on January 1. The face amount of the note is $2,000, and the stated rate of interest is 12%, compounded annually. The 12% rate is equal to the market rate. The original cost of the land was $2,45

> Because of the extreme deterioration in the financial condition of a customer, the customer’s account in the amount of $7,500 was written off as uncollectible on July 23. By November 1, the customer’s financial condition had improved such that the custom

> The company paid $750,000 to buy a collection of assets. The assets had the following appraised values: Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250,000 Buil

> Company A had sales for the year totaling $480,000. The net property, plant, and equipment balance at the beginning of the year was $160,000; the ending balance was $200,000. Compute the fixed asset turnover ratio.

> Using the following information, compute the cash balance. Restricted deposits in foreign bank accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,200 Cash overdraft . . . . . . . . . . . . . . . . . . . . . . . . . .

> Buyer Company purchased Target Company for $800,000 cash. Target Company had total liabilities of $300,000. Buyer Company’s assessment of the fair values it obtained when it purchased Target Company is as follows: Cash . . . . . . . . . . . . . . . . .

> Sales for the year were $400,000. The Accounts Receivable balance was $50,000 at the beginning of the year and $65,000 at the end of the year. Compute the average collection period using (1) The average accounts receivable balance and (2) The ending acco

> Refer to Practice 7-15. Assume that the sale of the receivables was done with recourse. The estimated value of the recourse obligation is $1,300. Make the journal entry necessary on Cammo’s books to record the sale of these receivables with recourse. In

> Cammo Company sold receivables (without recourse) for $53,000. Cammo received $50,000 cash immediately from the factor (the company to whom the receivables were sold). The remaining $3,000 will be received once the factor verifies that none of the receiv

> Stafford Company purchased Deaver Manufacturing for $1,400,000 cash on January 1. The book value and fair value of the assets of Deaver as of the date of the acquisition follow: In addition, Deaver had liabilities totaling $500,000 at the time of the a

> Using the following information, compute cash paid for income taxes. Reported income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,500

> Using the following information, compute cash flow from operating activities. (With the limited information given, only the indirect method can be used.) Decrease in inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> During the year, the company made the following research and development expenditures: Compute the total research and development (R&D) expense for the year assuming (1) The expenditures were for normal R&D, (2) The expenditures were for softwa

> On January 16, two credit sales were made, one for $300 and one for $400. Terms for both sales were 3/15, n/30. Cash for the $300 sale was collected on January 25; cash for the $400 sale was collected on February 14. Make all journal entries necessary to

> Using the following information, compute cash flow from operating activities. (With the limited information given, only the indirect method can be used.) Increase in accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> The company recently replaced the heating/cooling system for its building. The old system cost $160,000, and was 80% depreciated. The new system cost $210,000, which was paid in cash. The new system will extend the economic useful life of the building by

> On July 15, goods costing $8,400 were sold for $12,000 on account. The customer returned the goods before paying for them. Make the journal entry or entries necessary on the books of the seller to record the return of the goods. Assume that the goods are

> The company purchased a mining site that will have to be restored to certain specifications when the mining production ceases. The cost of the mining site is $800,000, and the restoration cost is expected to be $200,000. It is estimated that the mine wil

> Historically, warranty expenditures have been equal to 4% of sales. Total sales for the year were $750,000. Actual warranty repairs made during the year totaled $37,400. Make the necessary summary journal entries to record this warranty-related informati

> The company has received a donation of land from a rich local philanthropist. The land originally cost the philanthropist $48,000. On the date of the donation, it had a market value of $111,000. Make the journal entry necessary on the books of the compan

> The following aging of accounts receivable is as of the end of the year: Historical experience indicates the following: Age of Account ______________________Percentage Ultimately Uncollectible Less than 30 days . . . . . . . . . . . . . . . . . . . .

> Refer to the information in Practice 5-6. Compute cash paid for operating expenses. In Practice 5-6 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000 Cost of goods sol

> Refer to Practice 10-6. Make the journal entry necessary to record total interest paid for the year. Assume that all of the interest was paid in cash on December 31. In Practice 10-6 The company had the following loans outstanding for the entire year:

> Bad debt expense is estimated using the percentage-of-sales method. Total sales for the year were $600,000. The ending balance in Accounts Receivable was $100,000. Historically, bad debts have been 3% of total sales. The economic circumstances of credit

> Credit sales for the year were $150,000. Collections on account were $101,000. Make the necessary summary journal entries to record this information.

> The following summary data are for Gwynn Company: All current assets and current liabilities relate to operations. Instructions: 1. Compute net cash provided by (used in) operating activities for 2012 and 2013. 2. How would the numbers you computed in

> On December 31, 2013, analysis of Sayer Sporting Goods’ operations for 2013 revealed the following. (a) Total cash collections from customers, $105,260. (b) December 31, 2012, inventory balance, $12,180. (c) Total cash payments, $92,450. (d) Accounts rec

> The following data are for Ernst Company. (All inventory is purchased on account, and Accounts Payable relates only to the purchase of inventory.) INCOME STATEMENT DATA Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> A newly hired staff accountant prepared the pre-audit income statement of Be Fit Recreation Incorporated for the year ending December 31, 2013. The following information was obtained by Be Fit’s independent auditor. (a) Net revenues i

> Refer to the data for Novations, Inc., in Problem 5-47. In Problem 5-47 The table below shows the account balances of Novations, Inc., at the beginning and end of the company’s accounting period. The following additional information

> Selected account balances of Connell Company for 2013 along with additional information as of December 31 are as follows: Bad Debt Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> The table below shows the account balances of Novations, Inc., at the beginning and end of the company’s accounting period. The following additional information is available: (a) All purchases and sales were on account. (b) Equipment

> The following financial statement information for Tronics Inc. is available: The following information relates to the firm’s common stock for the same period: Instructions: 1. For each year compute (a) Gross profit percentage. (b) R

> Sparkling Cleaner Company reported net income of $7,450 for 2013 but has been showing an overdraft in its bank account in recent months. The manager has contacted you as the auditor for an explanation. The comparative balance sheet was given to you for e

> In 2013, Laetner Industries decided to discontinue its Laminating Division, a separately identifiable component of Laetner’s business. At December 31, Laetner’s year-end, the division has not been completely sold. However, negotiations for the final and

> On June 4, Seller Company signed a sales agreement with Buyer Company to deliver and install a piece of factory equipment. The total contract price is $300,000. Customers usually buy an equipment/installation package, but Seller Company does sell equipme

> Comparative balance sheet data for the partnership of Bond and Wallin follow. Net income for the year was $22,000, and this was transferred in equal amounts to the partners’ capital accounts. Additional changes in the capital accounts

> Plush Textiles Inc. shows a retained earnings balance on January 1, 2013, of $580,000. For 2013, the income from continuing operations was $240,000 before income tax. Following is a list of special items: Income from operations of a discontinued textile

> Based on an analysis of the cash and other accounts, the following information was provided by the controller of Black Iron, Inc., a manufacturer of wood-burning stoves, for the year 2013. (a) Cash sales for the year were $210,000; sales on account total

> The following information relates to Spiker Manufacturing Inc. for the fiscal year ended July 31, 2013. Assume that there are no tax rate changes, a 30% tax rate applies to all items reported in the income statement, and there are no differences between

> The following information was obtained from analysis of selected accounts of Orlando Company for the year ended December 31, 2013. Increase in long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> On December 31, 2013, Hadley Company provides the following pre-audit income statement for your review: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $185,00

> The following information was taken from the records of Glassett Produce Company for the year ended June 30, 2013. Borrowed on long-term notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,000 Issued

> Manchester Company manufactures and sells robot-type toys for children. Under one type of agreement with the dealers, Manchester is to receive payment upon shipment to the dealers. Under another type of agreement, Manchester receives payments only after

> McGrath Co. on June 30, 2013, reported a retained earnings balance of $1,475,000 before closing the books. The books of the company showed the following account balances on June 30, 2013: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> What special accounting problems are introduced when a company purchases equipment on a deferred payment contract rather than with cash?

> Podracer Productions provides the following income statement for the year ended December 31, 2013: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,530,600 Cos

> Ryan Company wishes to prepare a forecasted income statement and a forecasted balance sheet for 2014. Ryan’s balance sheet and income statement for 2013 follow. Balance Sheet _____________________________________________2013 Cash . . . . . . . . . . . .

> Ryan Company wishes to prepare a forecasted income statement, balance sheet, and statement of cash flows for 2014. Ryan’s balance sheet and income statement for 2013 follow: Balance Sheet ____________________________________________2013 Cash . . . . . .

> Romney and Associates wishes to forecast its net income for the year 2014. Romney has assembled balance sheet and income statement data for 2013 and has also done a forecast of the balance sheet for 2014. In addition, Romney has estimated that its sales

> Romney and Associates wishes to forecast its net income for the year 2014. In addition, for planning purposes Romney intends to construct a forecasted statement of cash flows for 2014. Romney has assembled balance sheet and income statement data for 2013

> Svedin Incorporated provides the following information relating to 2013: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,200 Unrealized losses on available-fo

> Following are data from the financial statements for Houma Company. Compute the following for both 2012 and 2013: 1. Cash-flow-to-net-income ratio 2. Cash flow adequacy ratio 3. Cash times interest earned ratio

> J. Mair has been employed as a bookkeeper at Problems Inc. for a number of years. With the assistance of a clerk, Mair handles all accounting duties, including the preparation of financial statements. The following is a statement of earned surplus prepar

> The following information is available for Santiago Inc.: Compute the following for 2013: 1. Net income 2. Cash from operating activities

> Jacksonville Window Co. reports the following for 2013: Retained earnings, January 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $335,200 Selling expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .

> The company reported the following information for the year: Ending work-in-process inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000 Depreciation on factory building . . . . . . . . . . . . . . .

> The following information is available for Kelsey Inc. (All inventory is purchased on account, and Accounts Payable relates only to the purchase of inventory.) Compute the following for 2013: 1. The ending balance in accounts receivable 2. The amount o

> From the following list of accounts, prepare a multiple-step income statement in good form showing all appropriate items properly classified, including disclosure of earnings-per-share data. (No monetary amounts are to be reported.) Accounts Payable Accu

> Following is information for Goulding Manufacturing Company: (a) Long-term debt of $500,000 was retired at face value. (b) New machinery was purchased for $62,000. (c) Common stock with a par value of $100,000 was issued for $160,000. (d) Dividends of $2

> Under what classification would you report each of the following items on the financial statements? (a) Revenue from sale of obsolete inventory. (b) Loss on sale of the fertilizer production division of a lawn supplies manufacturer. (c) Loss stemming fro

> A comparative balance sheet, income statement, and additional information for Shillig Doors Inc. follow. Additional information for Shillig: (a) All accounts receivable and accounts payable relate to trade merchandise. (b) The proceeds from the notes

> In 2013, Compliance Industries changed its method of inventory valuation. The summary effect of those changes is as follows: Net income was $128,000, $119,000, and $98,000 for 2013, 2012, and 2011, respectively. The income tax rate is 30%. 1. Compute t

> Based on the information given in Exercise 5-31 and using the direct method, compute the net amount of cash provided by (used in) operating activities for the year. In Exercise 5-31 The following information was taken from the comparative financial stat

> Jason Bond Company operates two restaurants, one in Valencia and one in Saugus. The operations and cash flows of each of the two restaurants are clearly distinguishable. During 2013, Jason Bond decided to close the restaurant in Saugus and sell the prope

> The Intercontinental Publishing Company follows the procedure of debiting Bad Debt Expense for 2% of all new sales. Sales for four consecutive years and year-end allowance account balances were as follows: 1. Compute the amount of accounts written off

> On May 31, 2013, top management of Stafford Manufacturing Co. decided to dispose of an unprofitable business component. An operating loss of $210,000 associated with the component was incurred during the year. The plant facilities associated with the bus

> The company purchased a piece of equipment. Terms of the purchase were as follows: $10,000 in cash immediately, followed by note payments of $20,000 at the end of each year for the next eight years. The market rate of interest is 9%. Make the journal ent

> A summary of revenues and expenses for Norwalk Company for 2013 follows: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,200,000 Cost of goods manufactured

> Nephi Corporation reported the following income items before tax for the year 2013: Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . $260,000 Loss from operations of a discontinued business componen

> The following information was taken from the books of Tapwater Company. Compute the amount of net cash provided by (used in) operating activities during 2013 using the indirect method.

> The selling expenses of Caribou Inc. for 2013 are 13% of sales. General expenses, excluding doubtful accounts, are 25% of cost of goods sold but only 15% of sales. Doubtful accounts are 2% of sales. The beginning inventory was $136,000, and it decreased

> From the following information for Carter Corporation, prepare a statement of cash flows for the year ended December 31, 2013, using the indirect method. Amortization of patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> Where in a multiple-step income statement would each of the following items be reported? (a) Purchase discounts (b) Gain on early retirement of debt (c) Interest revenue (d) Loss on sale of equipment (e) Casualty loss from hurricane (f) Sales commissions

> Norrington Trading Co. provides the following income statement for 2013: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $675,400 Cost of goods sold . . . . . . . . . . . .

> Borgquist Corporation purchased a patent on January 2, 2010, for $600,000. Its original life was estimated to be 10 years. However, in December of 2013, Borgquist’s controller received information proving conclusively that the product protected by the Bo

> Anakin, Inc., provides the following account balances for 2013 and 2012: Using the format presented in the chapter, prepare the Operating Activities section of the statement of cash flows and present that information using (a) The direct method and (b)

> For each of the following items, indicate whether the expense should be recognized using (1) Direct matching, (2) Systematic and rational allocation, or (3) Immediate recognition. Provide support for your answer. (a) Johnson & Smith, Inc., conducts cance

> On January 1, the company received layaway payments from two customers. Each customer paid $50. On December 24, the layaway period expired. On that date, the company received $300 from Customer 1 and delivered the promised merchandise (costing $200). Cus

> The accountant for Alpine Hobby Stores prepared the following selected information for the year ended December 31, 2013: Equipment with a book value of $18,000 was sold for $16,000 cash. The original cost of the equipment was $21,000. Determine the ca

> Indicate which of the following transactions or events gives rise to the recognition of revenue in 2013 under the accrual basis of accounting. If revenue is not recognized, what account, if any, is credited? (a) On December 15, 2013, Howe Company receive

> State how each of the following items would be reflected on a statement of cash flows. (a) Securities classified as available for sale were purchased for $4,200. (b) Buildings were acquired for $210,000, the company paying $60,000 cash and signing an 11%

> For each of the following transactions, events, or circumstances, indicate whether the recognition criteria for revenues and gains are met and provide support for your answer. (a) An order of $25,000 for merchandise is received from a customer. (b) The v

> Indicate whether each of the following items would be classified as (1) An operating activity, an investing activity, or a financing activity or (2) As a noncash transaction or noncash item. (a) Cash collected from customers. (b) Cash paid to suppliers f

> Why is an adjustment made on the balance sheet date to reflect exchange rate changes?

> Identify three different indexes that can be used in valuing a new LIFO layer with dollar-value LIFO. Which index is most consistent with the LIFO assumption?

> What is wrong with the statement, “Cash flow is equal to net income plus depreciation”?

> The income statement provides detail as to transactions that occurred during the period relating to what balance sheet account? The statement of cash flows provides detail as to the transactions that occurred during the period relating to what balance sh

> How do the provisions of IAS 2 differ from the lower-of-cost-or-market rule contained in U.S. GAAP?

> Installment sales contracts generally include interest. Contrast the method of recognizing interest revenue from the method used to recognize the gross profit on the sale.

> Changes in the balance sheet account balances for the Bubble Bobble Co. during 2013 follow. Dividends declared during 2013 were $18,000. Calculate the net income for the year assuming that no transactions other than the dividends affected retained earnin

> What differences result from applying lower of cost or market to individual inventory items instead of to the inventory as a whole?

> On average, which number is larger, net income or cash from operations? Explain.

> How is interest paid classified in a statement of cash flows under the provisions of FASB ASC Topic 230?

> What is the current status of LIFO under IASB standards?