How did the CARES Act affect adoption of the CECL model?
> The unadjusted trial balance of the Manufacturing Equitable at December 31, 2024, the end of its fiscal year, included the following account balances. Manufacturing’s 2024 financial statements were issued on April 1, 2025. Other informa
> The balance sheet at December 31, 2024, for Nevada Harvester Corporation includes the liabilities listed below: a. 11% bonds with a face amount of $40 million were issued for $40 million on October 31, 2015. The bonds mature on October 31, 2035. Bondhold
> Camden Biotechnology began operations in September 2024. The following selected transactions relate to liabilities of the company for September 2024 through March 2025. Camden’s fiscal year ends on December 31. Its financial statements are issued in Apri
> Blanton Plastics, a household plastic product manufacturer, borrowed $14 million cash on October 1, 2024, to provide working capital for year-end production. Blanton issued a four-month, 12% promissory note to L&T Bank under a prearranged short-term line
> Bravo Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Bravo. The machine has a cash price of $800,000. Bravo wants to be reimbursed for financing the machine at an 8% annual interest rate. Required:
> Lowlife Company defaulted on a $250,000 loan that was due on December 31, 2024. The bank has agreed to allow Lowlife to repay the $250,000 by making a series of equal annual payments beginning on December 31, 2025. Required: 1. Calculate the required an
> On January 1, 2024, The Barrel Company purchased merchandise from a supplier. Payment was a noninterest bearing note requiring five annual payments of $20,000 on each December 31 beginning on December 31, 2024, and a lump-sum payment of $100,000 on Decem
> Shay is 55 years old and has been asked to accept early retirement from his company. The company has offered Shay three alternative compensation packages to induce Shay to retire. 1. $180,000 cash payment to be paid immediately 2. A 20-year annuity of $1
> On January 1, 2024, the Mountain Company agreed to purchase a building by making six payments. The first three are to be $25,000 each, and will be paid on December 31, 2024, 2025, and 2026. The last three are to be $40,000 each and will be paid on Decemb
> The following situations should be considered independently. 1. You want to accumulate $60,000 for a down payment on a small business. You will invest $30,000 today in a bank account paying 8% interest compounded annually. Approximately how long will it
> The Clauses are considering the purchase of a hardware store. The Clauses anticipate that the store will generate cash flows of $70,000 per year for 20 years. At the end of 20 years, they intend to sell the store for an estimated $400,000. The clauses wi
> On July 15, 2024, M.W. Morgan Distribution sold land for $35 million that it had purchased in 2019 for $22 million. What would be the amount(s) related to the sale that Morgan would report in its statement of cash flows for the year ended December 31, 20
> Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $800,000. Helga has used past financial information to estimate that the net cash flows (cash inflows less cash outflows) generated by the restaurant woul
> On the last day of its fiscal year ending December 31, 2024, the Safe & Reliable (S&R) Glass Company completed two financing arrangements. The funds provided by these initiatives will allow the company to expand its operations. 1. S&R issued 8% stated ra
> Three employees of the Horizon Distributing Company will receive annual pension payments from the company when they retire. The employees will receive their annual payments for as long as they live. Life expectancy for each employee is 15 years beyond re
> Bravo Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Bravo. The machine has a cash price of $800,000. Bravo wants to be reimbursed for financing the machine at a 12% annual interest rate over the fiv
> Stone Company is facing several decisions regarding investing and financing activities. Address each decision independently. 1. On June 30, 2024, the Stone Company purchased equipment from Paper Corp. Stone agreed to pay $10,000 on the purchase date and
> The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2024, appears below: The following balance sheet information also is available: In addition, the following transac
> Duke Company’s records show the following account balances at December 31, 2024: Income tax expense has not yet been determined. The following events also occurred during 2024. All transactions are material in amount. 1. $300,000 in res
> The following income statement items appeared on the adjusted trial balance of Schemer Manufacturing Corporation for the year ended December 31, 2024 ($ in thousands): sales revenue, $15,300; cost of goods sold, $6,200; selling expenses, $1,300; general
> Rembrandt Paint Company had the following income statement items for the year ended December 31, 2024 ($ in thousands): In addition, during the year, the company completed the disposal of its plastics business and incurred a loss from operations of $1.6
> Refer to the information presented in P 4–4. Prepare a revised income statement for 2024 reflecting the additional facts. Use a multiple-step format similar to Illustration 4–4 of this chapter to prepare income from continuing operations, and then add to
> On January 1, 2024, the Merit Group issued to its bank a $41 million, five-year installment note to be paid in five equal payments at the end of each year. Installment payments of $10 million annually include interest at the rate of 7%. What would be the
> The preliminary 2024 income statement of Alexia Systems, Inc., is presented below: Additional Information: 1. Selling and administrative expense includes $26 million in restructuring costs. 2. Included in other income is $120 million in income from a dis
> For the year ending December 31, 2024, Olive Corporation had income from continuing operations before taxes of $1,200,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should b
> The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2024 and 2023: On October 15, 2024, Jackson entered into a tentative agreement to sell the assets of one of its divisions. The div
> Presented below are condensed financial statements adapted from those of two actual companies competing in the pharmaceutical industry—Johnson and Johnson (J&J) and Pfizer, Inc. ($ in millions, except per share amounts). Required:
> Financial statements for Askew Industries for 2024 are shown below (in thousands): Required: Calculate the following ratios for 2024. 1. Inventory turnover ratio 2. Average days in inventory 3. Receivables turnover ratio 4. Average collection period 5. A
> Presented below are the 2024 income statement and comparative balance sheets for Santana Industries. Additional information for the 2024 fiscal year ($ in thousands): 1. Cash dividends of $1,000 were declared and paid. 2. Equipment costing $4,000 was pur
> The chief accountant for Grandview Corporation provides you with the company’s 2024 statement of cash flows and income statement. The accountant has asked for your help with some missing figures in the company’s compar
> Selected information about income statement accounts for the Reed Company is presented below (the company’s fiscal year ends on December 31). On July 1, 2024, the company adopted a plan to discontinue a division that qualifies as a comp
> Presented below are condensed financial statements adapted from those of two actual companies competing as the primary players in a specialty area of the food manufacturing and distribution industry ($ in millions, except per share amounts). Required: E
> Caudex Candy Company’s income statement for the year ended December 31, 2024, reported interest expense of $2 million and income tax expense of $12 million. Current assets listed in its balance sheet include cash, accounts receivable, and inventory. Prop
> Refer to the situation described in BE 21–5. What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2024, if it uses the indirect method?
> The following is a December 31, 2024, post-closing trial balance for Almay Corporation. Additional Information: 1. The investment in equity securities account includes an investment in common stock of another corporation of $30,000 which management inten
> The data listed below are taken from a balance sheet of Trident Corporation at December 31, 2024. Some amounts, indicated by question marks, have been intentionally omitted. Required: 1. Determine the missing amounts. 2. Prepare Trident’
> Presented below is a list of balance sheet accounts. Required: Prepare a classified balance sheet ignoring monetary amounts. Include headings for each classification, as well as titles for each classification’s subtotal. An example of
> Melody Lane Music Company was started by John Ross early in 2024. Initial capital was acquired by issuing shares of common stock to various investors and obtaining a bank loan. The company operates a retail store that sells records, tapes, and compact di
> Presented below is the balance sheet for HHD, Inc., at December 31, 2024. The captions shown in the summarized statement above include the following: a. Current assets: cash, $150,000; accounts receivable (net), $200,000; inventory, $225,000; and prepaid
> The following incomplete balance sheet for the Sanderson Manufacturing Company was prepared by the company’s controller. As accounting manager for Sanderson, you are attempting to reconstruct and revise the balance sheet. Additional Inf
> The following balance sheet for the Hubbard Corporation was prepared by the company: Additional Information: 1. The buildings, land, and machinery are all stated at cost except for a parcel of land that the company is holding for future sale. The land or
> The following is the ending balances of accounts at December 31, 2024, for the Vosburgh Electronics Corporation. Additional Information: 1. The receivables from employees are due on June 30, 2025. 2. The notes receivable are due in installments of $50,00
> The following is the ending balances of accounts at June 30, 2024, for Excel Company Additional Information: 1. The short-term investments account includes $18,000 in U.S. treasury bills purchased in May. The bills mature in July, 2024. 2. The accounts r
> Define the CECL model for accounts receivable. On what does it base the estimate of the allowance for uncollectible accounts?
> Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $400 million on July 1, 2024, at a price of $380 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and Decembe
> 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, 20
> Is restricted cash included in the reconciliation of cash balances on a statement of cash flows? Explain.
> It is discovered in 2024 that ending inventory in 2022 was understated. What is the effect of the understatement on the following:
> Define the ECL model for accounts receivable. How does it differ from the CECL model?
> On January 1, 2024, Oriole Company purchased $500,000 of Nest Corporation’s five-year, 4% notes at par, with interest receivable semiannually. The company classified the investment as available-for-sale. To hedge the risk that general i
> On January 1, 2024, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. LLB entered into a two-year interest rate swap agreement on January 1, 2021, and designated the swap as a fair value h
> On January 1, 2024, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. ∙ LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swa
> LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. ∙ LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swap as a fair value he
> On January 1, 2024, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. ∙ LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swa
> The accounting system of a company consists of a general journal (GJ), a cash receipts journal (CR), a cash disbursements journal (CD), a sales journal (SJ), and a purchases journal (PJ). For each of the following, indicate which journal should be used t
> When Desoto Water Works purchased equipment at the end of 2023 at a cost of $65,000, the company debited Buildings and credited Cash $65,000. The error was discovered in 2024. What journal entry will Desoto use to correct the error? What other step(s) wo
> A company’s accounting system consists of a general journal (GJ), a cash receipts journal (CR), a cash disbursements journal (CD), a sales journal (SJ), and a purchases journal (PJ). For each of the following, indicate which journal sho
> Refer to E 2–9 and respond to the following requirements. Required: 1. If Microchip’s accountant employed reversing entries for accruals, which adjusting entries would she likely reverse at the beginning of the following year? 2. Prepare the adjusting e
> The employees of Xitrex, Inc., are paid each Friday. The company’s fiscal year-end is June 30, which falls on a Wednesday for the current year. Salaries are earned evenly throughout the five-day work week, and $10,000 will be paid on Friday, July 2. Req
> The December 31, 2024, unadjusted trial balance for the Wolkstein Drug Company is presented below. December 31 is the company’s year-end reporting date. The following year-end adjusting entries are required: a. Depreciation expense for
> Haskins and Jones, Attorneys-at-Law, maintains its books on a cash basis. During 2024, the law firm collected $545,000 for services rendered to its clients and paid out $412,000 in expenses. You are able to determine the following information about accou
> S&J Lawn Service Company maintains its books on a cash basis. However, the company recently borrowed $100,000 from a local bank, and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2024, the follo
> During the course of your examination of the financial statements of the Hales Corporation for the year ended December 31, 2024, you discover net income in 2024 is $30,000 but no adjusting entries have been prepared. To prepare adjusting entries, you dis
> The following transactions occurred during 2024 for the Beehive Honey Corporation: Required: 1. Record each transaction in general journal form. Omit explanations. 2. Prepare any necessary adjusting entries at the year-end on December 31, 2024. No adjust
> The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2024, trial balances contained the following account information: The following information also is known: a. The December income statemen
> Presented below is income statement information of the Schefter Corporation for the year ended December 31, 2024. Required: Prepare the necessary closing entries on December 31, 2024.
> Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the $18 million cost of the patent on a straight-line basis since it was acquired at the beginning of 2020. Due to rapid technological advances in the
> American Chip Corporation’s reporting year-end is December 31. The following is a partial adjusted trial balance as of December 31, 2024. Required: Prepare the necessary closing entries on December 31, 2024.
> The December 31, 2024, adjusted trial balance for the Blueboy Cheese Corporation is presented below. Required: 1. Prepare an income statement for the year ended December 31, 2024, and a classified balance sheet as of December 31, 2024. 2. Prepare the nec
> The Mazzanti Wholesale Food Company’s fiscal year-end is June 30. Prepare the necessary year-end adjusting entries at the end of June 30, 2024, for the following situations. 1. On December 1, 2023, the company paid its annual fire insurance premium of $6
> The Eldorado Corporation’s controller prepares adjusting entries only at the end of the reporting year. The following adjusting entries were prepared on December 31, 2024: Additional information: 1. The company borrowed $120,000 on Marc
> Prepare the necessary adjusting entries on December 31, 2024, for the Microchip Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. 1. On October 1, 2024,
> Prepare the necessary adjusting entries on December 31, 2024, for the Fierro Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. 1. A three-year fire insu
> The following transactions occurred during the month of June 2024 for the Stridewell Corporation. The company owns and operates a retail shoe store. 1. Issued 100,000 shares of common stock in exchange for $500,000 cash. 2. Purchased office equipment at
> Post the journal entries prepared in E 2–2 to T-accounts. Assume that the opening balances in each of the accounts is zero. Prepare a trial balance from the ending account balances.
> Prepare journal entries to record each of the transactions listed in E 2–1.
> For each of the following situations, state whether you agree or disagree with the financial reporting practice employed, and briefly explain the reason for your answer. 1. The controller of the Dumars Corporation increased the carrying value of land fro
> In 2023, Quapaw Products introduced a new line of hot water heaters that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 5% of sales revenue. First-year sales of the heat
> For each of the following situations, indicate whether you agree or disagree with the financial reporting practice employed and state the accounting concept applied (if you agree) or violated (if you disagree). 1. Wagner Corporation adjusted the valuatio
> 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. Niche uses a perpetual inventory system and the gross method of accounting for purchase discounts. Required: 1.
> The Phoenix Corporation’s fiscal year ends on December 31. Phoenix determines inventory quantity by a physical count of inventory on hand at the close of business on December 31. The company’s controller has asked for your help in deciding if the followi
> The December 31, 2024, year-end inventory balance of the Almond Corporation is $210,000. You have been asked to review the following transactions to determine if they have been correctly recorded. 1. Goods shipped to Almond f.o.b. destination on December
> The Kwik Company’s inventory balance on December 31, 2024, was $165,000 (based on a 12/31/2024 physical count) before considering the following transactions: 1. Goods shipped to Kwik f.o.b. destination on December 20, 2024, were received on January 4, 20
> A company has the following information in its records. Certain data have been intentionally omitted ($ in thousands). Required: Determine the missing numbers. Show computations where appropriate.
> The following information is available for a company: Required: Applying both a perpetual and a periodic inventory system, prepare the journal entries that summarize the transactions that created these balances. Include all end-of-period adjusting entri
> The June 30, 2024, year-end trial balance for Askew Company contained the following information: In addition, you determine that the June 30, 2024, inventory balance is $40,000. Required: Calculate the cost of goods sold for the Askew Company for the ye
> On January 1, 2024, the general ledger of Tripley Company included the following account balances: The $30,000 beginning balance of inventory consists of 300 units, each costing $100. During January 2024, the company had the following transactions: Requ
> On January 1, 2024, Displays Incorporated had the following account balances: From January 1 to December 31, the following summary transactions occurred: a. Purchased inventory on account for $330,000. b. Sold inventory on account for $570,000. The cost
> Three programmers at Fee nix Computer Storage, Inc., write an operating systems control manual for Hill McGraw Publishing, Inc., for which Fee nix receives royalties equal to 12% of net sales. Royalties are payable annually on February 1 for sales the pr
> Mercury Company has only one inventory pool. On December 31, 2024, Mercury adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO method was $200,000. Inventory data are as follows: Required: Compute the i
> On January 1, 2024, a company adopted the dollar-value LIFO method for its one inventory pool. The pool’s value on this date was $660,000. The 2024 and 2025 ending inventory valued at year-end costs were $690,000 and $760,000, respectively. The appropria
> The table below contains selected information from recent financial statements of The Home Depot, Inc., and Lowe’s Companies, Inc., two companies in the home improvement retail industry ($ in millions): Required: Calculate the gross pr
> 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 nine-digit Codification citation (XXX-XX-XXX-X) that describes the disclosure req
> The Churchill Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 20,000 units consisted of the following, listed in chronological order of acquisition: During 2024, inventory quanti
> The Mega Mart Company began 2024 with inventory of 10,000 units at a cost of $7 per unit. During 2024, 50,000 units were purchased for $8.50 each. Sales for the year totaled 54,000 units leaving 6,000 units on hand at the end of 2024. Mega Mart uses a pe
> AmerisourceBergen is an American drug wholesale company. The company uses the LIFO inventory method for external reporting but maintains its internal records using FIFO. The following information was included in a recent annual report: Inventories are co
> Mogul Processing maintains its internal inventory records using average cost under a perpetual inventory system. The following information relates to its inventory during the year: Required: 1. Determine the amount Mogul would calculate internally for e
> Specialty Store uses a periodic 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 som
> To more efficiently manage its inventory, Telnex Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information relates to its inventory during the year: Required: 1. D
> Refer to the situation described in BE 20–4. Suppose Irwin has been using the straight-line method and switches to the sum-of-the-years’-digits method. Ignoring income taxes, what journal entry(s) should Irwin record relating to the machine for 2024?
