Furtastic manufactures imitation fur garments. On June 1, 2024, Furtastic made a sale to Willett’s Department Store under terms that require Willett to pay $150,000 to Furtastic on June 30, 2024. In a separate transaction on June 15, 2024, Furtastic purchased brand advertising services from Willett for $12,000. The fair value of those advertising services is $5,000. Furtastic expects that 3% of all sales will prove uncollectible. Required: 1. Prepare the journal entry to record Furtastic’s sale on June 1, 2024. 2. Prepare the journal entry to record Furtastic’s purchase of advertising services from Willett on June 15, 2024. Assume all of the advertising services are delivered on June 15, 2024. 3. Prepare the journal entry to record Furtastic’s receipt of $150,000 from Willett on June 30, 2024. 4. How would Furtastic’s expectation regarding uncollectible accounts affect its recognition of revenue from the sale to Willett’s Department Store on June 1, 2024? Explain briefly.
> Altira Corporation provides the following information related to its inventory during the month of August 2024: Required: Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 202
> Altira Corporation provides the following information related to its inventory during the month of August 2024: Required: Using calculations based on a periodic inventory system, determine the inventory balance Altira would report in its August 31, 2024
> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Determine each of the following: 1. The specific eight-digit Codification citation (XXX-XX-XX-X) that describes the meaning of cos
> Comfort Company purchased 100 units of inventory on November 17, 2024. The units have a list price of $500 each, but Comfort was given a 30% trade discount. The terms of the sale were 2/10, n/30. Comfort uses a perpetual inventory system. Required: 1. P
> On July 15, 2024, the Niche Car Company purchased 1,000 tires from the Treadwell Company for $50 each. The terms of the sale were 2/10, n/30. Nixon uses a perpetual inventory system and the net method of accounting for purchase discounts. Required: 1. P
> Specialty Store uses a perpetual inventory system. The following are some inventory transactions for the month of May: 1. Specialty Store purchased inventory on account for $5,000. Freight charges of $300 were paid in cash. 2. Specialty Store returned so
> Irwin, Inc. constructed a machine at a total cost of $35 million. Construction was completed at the end of 2020 and the machine was placed in service at the beginning of 2021. The machine was being depreciated over a 10-year life using the sum-of-the-yea
> Halifax Manufacturing allows its customers to return merchandise for any reason and receive a credit to their accounts. All of Halifax’s sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $3
> Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax’s sales are for credit (no cash is collected at the time of sale). The company began 2024
> Harwell Company manufactures automobile tires. On July 15, 2024, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the net method of accounting for cash discounts. Required: 1. Prepar
> Harwell Company manufactures automobile tires. On July 15, 2024, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the gross method of accounting for cash discounts. Required: 1. Prep
> Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2024. The units have a list price of $600 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30. Required: 1. Prepare th
> Parker Inc. has the following cash balances: Required: 1. Prepare the current assets and current liabilities section of Parker’s 2024 balance sheet, assuming Parker reports under U.S. GAAP. 2. Prepare the current assets and current lia
> On January 1, 2024, the general ledger of 3D Family Fireworks includes the following account balances: During January 2024, the following transactions occur: The following information is available on January 31, 2024. 1. At the end of January, $5,000 of
> At January 1, 2024, Clayton Hoists Inc. owed Third Banc Corp $12 million, under a 10% note due December 31, 2025. Interest was paid last on December 31, 2022. Clayton was experiencing severe financial difficulties and asked Third Banc Corp to modify the
> Harrison Company maintains a checking account at the First National City Bank. The bank provides a bank statement along with canceled checks on the last day of each month. The July 2024 bank statement included the following information: The companyâ
> Jansen Company’s general ledger showed a checking account balance of $23,820 at the end of May 2024. The May 31 cash receipts of $2,340, included in the general ledger balance, were placed in the night depository at the bank on May 31 and were processed
> In 2024, J J Dishes changed its method of valuing inventory from the FIFO method to the LIFO method. At December 31, 2023, J J’s inventories were $96 million (FIFO). J J’s records were insufficient to determine what inventories would have totaled if dete
> The petty cash fund of Ricco’s Automotive contained the following items at the end of September 2024: The petty cash fund was established at the beginning of September with a transfer of $150 from cash to the petty cash account. Requir
> Loucks Company established a $200 petty cash fund on October 2, 2024. The fund is replenished at the end of each month. At the end of October 2024, the fund contained $37 in cash and the following receipts: Required: Prepare the necessary general journa
> The current asset section of the Moorcroft Outboard Motor Company’s balance sheet reported the following amounts: The average collection period for 2024 is 50 days. Required: Determine net sales for 2024.
> Microsoft Corporation reported the following information in its financial statements for three successive quarters ($ in millions): Required: Compute the receivables turnover ratio and the average collection period for Q4 and Q3. Assume that each quarte
> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Required: Indicate the specific seven-digit Codification citation (XXX-XX-XX) for each of the following items: 1. Accounts receiv
> Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2024: Required: 1. Prepare journal entries for each of the above transactions (round all calculations
> Listed below are several terms and phrases associated with cash and receivables. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
> Selkirk Company obtained a $15,000 note receivable from a customer on January 1, 2024. The note, along with interest at 10%, is due on July 1, 2024. On February 28, 2024, Selkirk discounted the note at Unionville Bank. The bank’s discount rate is 12%. R
> This is a variation of E 7–25 modified to focus on factoring with recourse under IFRS. Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made with recours
> Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. W
> In 2024, Adonis Industries changed its method of valuing inventory from the average cost method to the FIFO method. At December 31, 2023, Adonis’s inventories were $47.6 million (average cost). Adonis’s records indicated that the inventories would have t
> Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivabl
> On June 30, 2024, the High Five Surfboard Company had outstanding accounts receivable of $600,000. On July 1, 2024, the company borrowed $450,000 from the Equitable Finance Corporation and signed a promissory note. Interest at 10% is payable monthly. The
> On January 1, 2024, the Apex Company exchanged some shares of common stock it had been holding as an investment for a note receivable. The note principal plus interest is due on January 1, 2025. The 2024 income statement reported $2,200 in interest reven
> On January 1, 2024, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $515,000 by Elmira on December 31, 2026. The effective interest rate is 8%. Required: 1. Ho
> On June 30, 2024, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $30,000 on March 31, 2025. The fair value of the merchandise exchanged is $28,200. Esquire views the fi
> Delta Automotive Corporation has the following assets listed in its 12/31/2024 trial balance: Required: 1. Determine the correct balance of cash and cash equivalents to be reported in the current asset section of the 2024 balance sheet. 2. For each of t
> On June 30, 2024, the Esquire Company sold some merchandise to a customer for $30,000. In payment, Esquire agreed to accept a 6% note requiring the payment of interest and principal on March 31, 2025. The 6% rate is appropriate in this situation. Require
> General Mills reported the following information in its 2020 financial statements ($ in millions): A note disclosed that the allowance for uncollectible accounts had a balance of $33.2 million and $28.8 million at the end of 2020 and 2019, respectively.
> Castle Company provides estimates for its uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $17,280 at the beginning of 2024 and a $22,410 credit balance at the end of 2024 (after adjusting entries). If the direct w
> Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2024, accounts receivable totaled $625,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balanc
> In 2024, the internal auditors of Development Technologies, Inc., discovered that (a) 2023 accrued salaries of $2 million were not recognized until they were paid in 2024 and (b) a $3 million purchase of merchandise in 2024 was recorded as a debit to Pur
> Zuo Software categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due = $400,000; estimated uncollectible = 8%. 2. Accounts 1–30 days past due = $50,000; estimat
> Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due = $180,000; estimated uncollectible = 10%. 2. Accounts 1–45 days past due = $25,000; e
> Ervin Company uses the allowance method to account for uncollectible accounts receivable. The allowance account is adjusted based on bad debt expense as a percentage of credit sales. For 2024, net credit sales totaled $4,500,000, and the estimated bad de
> Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $30,000 at the beginning of 2024. No previously written-off ac
> Pincus Associates uses the allowance method to account for bad debts. 2024 was the first year of operations for Pincus, so it had a $0 opening balance in its allowance for uncollectible accounts. During 2024, Pincus provided a total of $250,000 of servic
> The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required: 1. Obtain the relevant authoritative literature on accounting for accounts receivable using the FASB’s Codi
> The controller of the Red Wing Corporation is in the process of preparing the company’s 2024 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the balance sheet. The fol
> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Required: Determine the specific nine-digit Codification citation (XXX-XX-XX-XX) for accounting for each of the following items:
> Monitor Muffler sells franchise arrangements throughout the United States and Canada. Under a franchise agreement, Monitor receives $600,000 in exchange for satisfying the following separate performance obligations: (1) franchisees have a five-year righ
> Refer to the situation described in BE 20–10. Assume the error was discovered in 2026, after the 2025 financial statements are issued. Ignoring income taxes, what journal entry will PKE use to correct the error?
> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This m
> Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles that have a fair market value of $40,000. Seneca paid for the snowmobiles on January 1, 2024, with delivery to occur subsequently. Unless informed otherwise, assume that Arctic views the time
> Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2024, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $40,000 on a future date. Unless informed otherwise, assume th
> Assume the same facts as in E 6–10. Required: Complete the requirements of E 6–10, assuming that Rocky bases estimates of variable consideration on the expected value it expects to receive.
> On May 1, 2024, Meta Computer, Inc., enters into a contract to sell 5,000 units of Comfort Office Keyboard to one of its clients, Bionics, Inc., at a fixed price of $95,000, to be settled by a cash payment on May 1. Delivery is scheduled for June 1, 2024
> On March 1, 2024, Gold Examiner receives $147,000 from a local bank and promises to deliver 100 units of certified 1-oz. gold bars on a future date. The contract states that ownership passes to the bank when Gold Examiner delivers the products to Brink’s
> In 2024, Long Construction Corporation began construction work under a three-year contract. The contract price is $1,600,000. Long recognizes revenue over time according to percentage of completion for financial reporting purposes. The financial statemen
> Brady Construction Company contracted to build an apartment complex for a price of $5,000,000. Construction began in 2024 and was completed in 2026. The following is a series of independent situations, numbered 1 through 6, involving differing costs for
> On February 1, 2024, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2024, costs of $2,000,000 were incurred, with estimated costs of $4,000,000 yet to be incurred. Billings o
> On February 1, 2024, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2024, costs of $2,000,000 were incurred with estimated costs of $4,000,000 yet to be incurred. Billings of
> On June 15, 2024, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $220 million. The expected completion date is April 1, 2026, just in time for the 2026 baseball season. Costs inc
> In 2024, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2021. The machine’s useful life was expected to be five years with no residual value. Straight-line d
> Assume Avaya contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Required: 1. Compute the amount of revenue and gross prof
> Ski West, Inc., operates a downhill ski area near Lake Tahoe, California. An all-day adult lift ticket can be purchased for $85. Adult customers also can purchase a season pass that entitles the pass holder to ski any day during the season, which typical
> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 8% for bonds of simil
> Loreal-American Corporation purchased several marketable securities during 2024. At December 31, 2024, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2023, and all are considered securities a
> Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The company’s fiscal year ends on December 31. The following selecte
> Mills Corporation acquired as an investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills p
> Tanner-UNF Corporation acquired as an investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Ta
> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Required: 1. What is the specific eight-digit Codification citation (XXX-XX-XX-X) that describes examples of circumstances under w
> FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment objectives. The following selected transactions relate to FF&€™s investment activities during the last two months of 202
> Rell Corporation reports under IFRS No. 9. Rell has an investment in Tirish, Inc., bonds that Rell accounts for at amortized cost, given that the bonds pay only interest and principal and Rell’s business purpose is to hold the bonds to maturity. Rell pur
> In 2024, the Barton and Barton Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2023, B & B’s inventories were $32 million (FIFO). B & B’s records indicated that the inventories would have t
> Assume all of the same facts and scenarios as E 12–30, except that Bloom Corporation classifies its Taylor investment as AFS. Required: 1. For each of the scenarios shown in E 12–30, prepare the appropriate entry(s) at December 31, 2024. Indicate how the
> Bloom Corporation purchased $1,000,000 of Taylor Company 5% bonds, at their face amount, with the intent and ability to hold the bonds until they matured in 2028, so Bloom classifies its investment as HTM. Unfortunately, a combination of problems at Tayl
> Edible Chemicals Corporation owns a $4 million whole life insurance policy on the life of its CEO, naming Edible Chemicals as beneficiary. The annual premiums are $70,000 and are payable at the beginning of each year. The cash surrender value of the poli
> As a long-term investment at the beginning of the 2024 fiscal year, Florists International purchased 30% of Nursery Supplies Inc.’s 8 million shares of capital stock for $56 million. The fair value and book value of the shares were the same at that time.
> Colah Company purchased $1 million of Jackson, Inc., 5% bonds at their face amount on July 1, 2024, with interest paid semi-annually. The bonds mature in 20 years but Colah planned to keep them for less than three years, and classified them as available
> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired, Tanner-UNF decid
> On July 1, 2024, Gupta Corporation bought 25% of the outstanding common stock of VB Company for $100 million cash, giving Gupta the ability to exercise significant influence over VB’s operations. At the date of acquisition of the stock, VB’s net assets h
> On January 1, 2024, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Company for $300 million cash, giving Cameron the ability to exercise significant influence over Lake’s operations. At the date of acquisition of the stock,
> Fizer Pharmaceutical paid $68 million on January 2, 2024, for 4 million shares of Carne Cosmetics common stock. The investment represents a 25% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne’s
> Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of si
> On January 1, 2024, Farmer Fabrication issued stock options for 100,000 shares to a division manager. The options have an estimated fair value of $6 each. To provide additional incentive for managerial achievement, the options are not exercisable unless
> On December 12, 2024, an equity investment costing $80,000 was sold for $100,000. The investment was carried in the balance sheet at $75,000, and was accounted for under the equity method. An error was made in which the total of the sale proceeds was cre
> As a long-term investment at the beginning of the 2024 fiscal year, Florists International purchased 30% of Nursery Supplies Inc.’s 8 million shares for $56 million. The fair value and book value of the shares were the same at that time. During the year,
> The investments of Harlon Enterprises included the following cost and fair value amounts ($ in millions): Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation shares on June 1, 20
> The accounting records of Jamaican Importers, Inc., at January 1, 2024, included the following: No changes occurred during 2024 in the investment portfolio. Required: Prepare appropriate adjusting entry(s) at December 31, 2024, assuming the fair value of
> On January 2, 2024, Sanborn Tobacco Inc. bought 5% of Jackson Industry’s capital stock for $90 million. Jackson Industry’s net income for the year ended December 31, 2024, was $120 million. The fair value of the shares held by Sanborn was $98 million at
> On March 31, 2024, Chow Brothers, Inc., bought 10% of KT Manufacturing’s capital stock for $50 million. KT’s net income for the year ended December 31, 2024, was $80 million. The fair value of the shares held by Chow was $35 million at December 31, 2024.
> At December 31, 2024, Hull-Meyers Corp. had the following investments that were purchased during 2024, its first year of operations: // No investments were sold during 2024. All securities except Security D and Security F are considered short term invest
> On February 18, 2024, Union Corporation purchased 600 IBM bonds as a long-term investment at their face value for a total of $600,000. Union will hold the bonds indefinitely, and may sell them if their price increases sufficiently. On December 31, 2024,
> Colah Company purchased $1 million of Jackson, Inc., 5% bonds at par on July 1, 2024, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2024, the Jackson bonds had
> Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 4% for bonds of similar ri
> Refer to the situation described in BE 19–8. Suppose that Farmer initially estimates that it is not probable the goal will be achieved, but then after one year, Farmer estimates that it is probable that divisional revenue will increase by 5% by the end o
> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds
> Dower Corporation prepares its financial statements according to IFRS. On March 31, 2024, the company purchased equipment for $240,000. The equipment is expected to have a six-year useful life with no residual value. Dower uses the straight-line deprecia
> On June 30, 2024, Rosetta Granite purchased equipment for $120,000. The estimated useful life of the equipment is eight years and no residual value is anticipated. An important component of the equipment is a specialized highspeed drill that will need to
> On March 31, 2024, Susquehanna Insurance purchased an office building for $12,000,000. Based on their relative fair values, one-third of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased se
> For each of the following depreciable assets, determine the missing amount (?). Abbreviations for depreciation methods are SL for straight-line and DDB for double-declining-balance. Property, Plant, and Equipment and Intangible Assets: Utilization and Di
