Question: In preparation for developing its statement of

> On two previous occasions, the management of Dennison and Company, Inc., repurchased some of its common shares. Between buyback transactions, the corporation issued common shares under its management incentive plan. Shown below is shareholdersâ&#12

> The Canliss Milling Company purchased machinery on January 2, 2016, for $800,000. A five-year life was estimated and no residual value was anticipated. Canliss decided to use the straight-line depreciation method and recorded $160,000 in depreciation in

> For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2015 for $2,560,000. Its useful life was estimated to be six years with a $160,000 residual value. At

> On July 15, 2018, M.W. Morgan Distribution sold land for $35 million that it had purchased in 2013 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

> Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2018, Wolfgang decided to change to the LIFO method. Net income in 2018 was correctly stated as $90 million. If the com

> Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2018, Flay decided to change to the LIFO method. As a result of the change, net income in 2018 was $80 million. If the company

> Millington Materials is a leading supplier of building equipment, building products, materials and timber for sale, with over 200 branches across the Mid-South. On January 1, 2018, management decided to change from the average inventory costing method to

> Anderson Steel Company began 2018 with 600,000 shares of common stock outstanding. On March 31, 2018, 100,000 new shares were sold at a price of $45 per share. The market price has risen steadily since that time to a high of $50 per share at December 31.

> As part of its stock-based compensation package, International Electronics granted 24 million stock appreciation rights (SARs) to top officers on January 1, 2018. At exercise, holders of the SARs are entitled to receive stock equal in value to the excess

> 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 2018? In

> British Telecommunications Plc (BT), a U.K. company, is the world’s oldest communications company. The company prepares its financial statements in accordance with International Financial Reporting Standards. Locate BT’s statement of cash flows from it’s

> Irwin, Inc., constructed a machine at a total cost of $35 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 10-year life using the sum-of-the-ye

> “This one’s got me stumped,” you say to no one in particular. “First day on the job; I’d better get it right.” It’s the classification of notes payable in the statement of cash flows that has you in doubt. Having received an “A” in Intermediate Accountin

> Refer to the financial statements and related disclosure notes of The Kroger Company for the fiscal year ending January 30, 2016. You can locate the report online from “investor relations” at www.kroger.com. Notice that Kroger’s net income has increased

> What action is required when it is discovered that a five-year insurance premium payment of $50,000 two years ago was debited to insurance expense? (Ignore taxes.)

> Comparative statements of retained earnings for Renn-Dever Corporation were reported in its 2018 annual report as follows. At December 31, 2015, common shares consisted of the following: Common stock, 1,855,000 shares at $1 par …&ac

> Staples, Inc., is the world’s leading office products company. Locate the statement of cash flows of Staples for the fiscal year ended January 30, 2016, on the Internet. Required: 1. In the three years reported, what was Staples’ primary investing activ

> “Be careful with that coffee!” Your roommate is staring in disbelief at the papers in front of her. “This was my contribution to our team project,” she moaned. “Whe

> The following schedule relates the income statement with cash flows from operating activities, derived by both the direct and indirect methods, in the format illustrated by Illustration 21–11 in the chapter. Some elements necessary to c

> Portions of the financial statements for Hawkeye Company are provided below. Required: 1. Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the direct method. 2. Prepare the cash flows fro

> Portions of the financial statements for Parnell Company are provided below. Required: 1. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method. 2. Prepare the cash flows fro

> Effects of all cash flows affect the balances of various accounts reported in the balance sheet. Also, the activities that cause some of these cash flows are reported in the income statement. What, then, is the need for an additional financial statement

> In 2018, J J Dishes changed its method of valuing inventory from the FIFO method to the LIFO method. At December 31, 2017, J J’s inventories were $96 million (FIFO). J J’s records were insufficient to determine what inventories would have totaled if dete

> The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Macrosoft Corporation. Required: Prepare the cash flows from operating activities section of the statement of cash flows (direct m

> The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Mike Roe Computers. Required: 1. Calculate each of the following amounts for Mike Roe Computers: a. Cash received from customers d

> Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided. Additional information from the accounti

> The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Dux Company. Additional information from Dux’s accounting records is provided also. Additional information from the accounting

> If it is discovered that an extraordinary repair in the previous year was incorrectly debited to repair expense, how will retained earnings be reported in the current year’s statement of shareholders’ equity?

> The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for National Intercable Company. Additional information from NIC’s accounting records is provided also. Additional information from

> National Supply’s shareholders’ equity included the following accounts at December 31, 2017: Shareholders’ Equity ____________________($ in millions) Common stock, 6 million shares at $1 par ………………………… $ 6,000,000 Paid-in capital—excess of par …………………………

> The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Wright Company. Additional information from Wright’s accounting records is provided also. Additional information from the accoun

> Listed below are transactions that might be reported as investing and/or financing activities on a statement of cash flows. Possible reporting classifications of those transactions are provided also. Required: Indicate the reporting classification of ea

> Refer to the data provided in the P 21–11 for Arduous Company. In P 21–11 The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are given below for Arduous Company. Additional information

> In 2018, the Barton and Barton Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2017, B & B’s inventories were $32 million (FIFO). B & B’s records indicated that the inventories would have t

> On January 1, 2018, David Mest Communications granted restricted stock units (RSUs) representing 30 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs

> Refer to the data provided in the P 21–5 for Metagrobolize Industries. In P 21–5 Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given below for Metagrobolize Industries. Additional

> Refer to the data provided in the P 21–4 for Dux Company. In P 21–4 The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Dux Company. Additional information from Du

> Refer to the data provided in the P 21–11 for Arduous Company. In P 21–11 The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are given below for Arduous Company. Additional information

> Refer to the data provided in the P 21–5 for Metagrobolize Industries. In P 21–5 Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given below for Metagrobolize Industries. Additional

> Refer to the data provided in the P 21–4 for Dux Company. In P 21–4 The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Dux Company. Additional information from Du

> If merchandise inventory is understated at the end of 2017, and the error is not discovered, how will net income be affected in 2018?

> Digital Telephony issued 10% bonds, dated January 1, with a face amount of $32 million on January 1, 2018. The bonds mature in 2028 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest is paid semiannually on June 30 and D

> The comparative balance sheets for 2018 and 2017 are given below for Surmise Company. Net income for 2018 was $50 million. Required: Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2018. Use the indirect method to

> Indicate by letter whether each of the terms or phrases listed below is more associated with financial statements prepared in accordance with U.S. GAAP (U) or International Financial Reporting Standards (I). _______________________Terms and phrases______

> In 2018, the internal auditors of Development Technologies, Inc., discovered that (a) 2017 accrued wages of $2 million were not recognized until they were paid in 2018, and (b) A $3 million purchase of merchandise in 2018 was recorded in 2017 instead. Th

> Following are selected balance sheet accounts of Del Conte Corp. at December 31, 2018 and 2017, and the increases or decreases in each account from 2017 to 2018. Also presented is selected income statement information for the year ended December 31, 2018

> U.S. GAAP designates cash outflows for interest payments and cash inflows from interest and dividends received as operating cash flows. Dividends paid to shareholders are classified as financing cash flows. How are these cash flows reported under IFRS?

> Shown below in T-account format are the changes affecting the retained earnings of Brenner-Jude Corporation during 2018. At January 1, 2018, the corporation had outstanding 105 million common shares, $1 par per share. Required: 1. From the information

> The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are given below for Arduous Company. Additional information from Arduous’s accounting records is provided also. Additional information from the accoun

> National Food Services, Inc., borrowed $4 million from its local bank on January 1, 2018, and issued a 4-year installment note to be paid in four equal payments at the end of each year. The payments include interest at the rate of 10%. Installment paymen

> Most Solutions, Inc., issued 10% bonds, dated January 1, with a face amount of $640 million on January 1, 2018. The bonds mature in 2028 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest expense is recorded at the effec

> For each of the five independent situations below, prepare a single journal entry that summarizes the recording and payment of income taxes in order to determine the amount of cash paid for income taxes and explain the change (if any) in each of the acco

> Describe the process of correcting an error when it’s discovered in a subsequent reporting period.

> Determine the amount of cash paid for income taxes in each of the nine independent situations below. All dollars are in millions. Income Tax Deferred Tax Cash Paid for Taxes Income Tax Payable Increase (Decrease) Liability Increase (Decrease) Situat

> At December 31, 2017, the balance sheet of Meca International included the following shareholders’ equity accounts: Shareholders’ Equity ___________________ ($ in millions) Common stock, 60 million shares at $1 par …………………………… $ 60 Paid-in capital—excess

> For each of the four independent situations below, prepare a single journal entry that summarizes the recording and payment of interest in order to determine the amount of cash paid for bond interest and explain the change (if any) in each of the account

> Determine the amount of cash paid to bondholders for bond interest for each of the six independent situations below. All dollars are in millions. Bond Interest Unamortized Bond Interest Discount Payable Increase (Decrease) Cash Paid Situation Expens

> Why does the FASB recommend the direct method over the indirect method?

> Comparative balance sheets for Softech Canvas Goods for 2018 and 2017 are shown below. Softech pays no dividends and instead reinvests all earnings for future growth. Required: 1. Determine the return on shareholders’ equity for 2018.

> For each of the five independent situations below, prepare a journal entry that summarizes the purchases, sales, and payments related to inventories in order to determine the amount of cash paid to suppliers and explain the change in each account shown.

> Determine the amount of cash paid to suppliers of merchandise for each of the nine independent situations below. All dollars are in millions. Cost of Inventory Cash Paid Accounts Payable Increase (Decrease) Situation Goods Sold Increase (Decrease) t

> For each of the three independent situations below, prepare journal entries that summarize the selling and collection activities for the reporting period in order to determine the amount of cash received from customers and to explain the change in each a

> Determine the amount of cash received from customers for each of the three independent situations below. All dollars are in millions. Sales Accounts Receivable Cash Received from Situation Revenue Increase (Decrease) Customers 1 100 -0- 2 100 5 3 10

> Shown below in T-account format are the beginning and ending balances ($ in millions) of both inventory and accounts payable. Required: 1. Use a T-account analysis to determine the amount of cash paid to suppliers of merchandise during the reporting pe

> Listed below are several transactions that typically produce either an increase or a decrease in cash. Indicate by letter whether the cash effect of each transaction is reported on a statement of cash flows as an operating (O), investing (I), or financin

> On January 1, 2018, 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 issuance of FASB guidance regarding consolidation of all majority-owned subsidiaries required Ford Motors to include a previously unconsolidated finance subsidiary as part of the reporting entity. How did Ford report the change?

> Refer to the data provided in E 21–27 for Red, Inc. In E 21–27 Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are pro

> Refer to the data provided in E 21–27 for Red, Inc. In E 21–27 Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are pro

> When using the indirect method of determining net cash flows from operating activities, how are revenues and expenses reported on the statement of cash flows if their cash effects are identical to the amounts reported in the income statement?

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine the specific citation for accounting for each of the following items: 1. Disclosure of interest and income taxes paid if the indirect method is used 2. Primar

> The statement of cash flows (as well as the balance sheet) includes within cash the notion of cash equivalents. The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Requi

> The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31, 2017: ?????_____________________________________($ in millions) Paid-in capital: Preferred stock, 8.8%, 90,000 shares at $1 par ……………………..

> Mayer Corporation has a defined benefit pension plan. Mayer’s policy is to fund the plan annually, cash payments being made at the end of each year. Data relating to the pension plan for 2018 are as follows: Required: Recreate the jou

> Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below. Additional information from the accounting records: a. During 2018, $230 million of e

> Refer to the data provided in E 21–25 for Clear Transmissions Company. In E 21–25 Portions of the financial statements for Clear Transmissions Company are provided on the following page. Required: Prepare the cash f

> When an asset is sold at a gain, why is the gain not reported as a cash inflow from operating activities?

> Portions of the financial statements for Clear Transmissions Company are provided on the following page. Required: Prepare the cash flows from operating activities section of the statement of cash flows for Clear Transmissions Company using the direct

> Refer to the data provided in E 21–23 for Myriad Products Company. In E 21–23 Portions of the financial statements for Myriad Products are provided below. Required: Prepare the cash flows from operating activities s

> On January 1, 2018, Adams-Meneke Corporation granted 25 million incentive stock options to division managers, each permitting holders to purchase one share of the company’s $1 par common shares within the next six years, but not before December 31, 2020

> Portions of the financial statements for Myriad Products are provided below. Required: Prepare the cash flows from operating activities section of the statement of cash flows for Myriad Products Company using the direct method. MYRIAD PRODUCTS COMP

> When using the indirect method of determining net cash flows from operating activities, how is warranty expense reported? Why? What other expenses are reported in a like manner?

> The accounting records of Baddour Company provided the data below. Prepare a reconciliation of net income to net cash flows from operating activities. Net loss ………………………………………….……… $5,000 Depreciation expense …………………….…………. 6,000 Increase in salaries pay

> The income statement and a schedule reconciling cash flows from operating activities to net income are provided below ($ in thousands) for Peach Computers. Required: 1. Calculate each of the following amounts for Peach Computers: a. Cash received from

> The income statement and the cash flows from the operating activities section of the statement of cash flows are provided on the next page for Syntric Company. The merchandise inventory account balance neither increased nor decreased during the reporting

> The following schedule relates the income statement with cash flows from operating activities, derived by both the direct and indirect methods, in the format illustrated by Illustration 21–11 in the chapter. The amounts for income state

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine the specific citation for accounting for each of the following items: 1. Requirements to disclose within the financial statements the pertinent rights and pri

> In 2018, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2015. The machine’s useful life was expected to be five years with no residual value. Straight-line d

> During 2018, its first year of operations, McCollum Tool Works entered into the following transactions relating to shareholders’ equity. The corporation was authorized to issue 100 million common shares, $1 par per share. Jan. 2 Issued 35 million common

> In 2018, Borland Semiconductors entered into the transactions described below. In 2015, Borland had issued 170 million shares of its $1 par common stock at $34 per share. Required: Assuming that Borland retires shares it reacquires, record the appropria

> PHN Foods granted 18 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $5 per share on January 1, 2017, the grant date. Required: 1. What jou

> As part of its executive compensation plan, Vertovec Inc. granted 54,000 of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. Vertovec’s common shares have a market price of $5 per share on Janu

> Information from the financial statements of Ames Fabricators, Inc., included the following: Ames’s net income for the year ended December 31, 2018, is $500,000. The income tax rate is 40%. Ames paid dividends of $5 per share on its p

> Stanley Department Stores reported net income of $720,000 for the year ended December 31, 2018. Additional Information: Common shares outstanding at Jan. 1, 2018 ……………………………………………………………… 80,000 Incentive stock options (vested in 2017) outstanding through

> Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2017. How would this change likely be reported in the 2018 comparative financial statements?

> On December 31, 2017, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasur

> On December 31, 2017, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasur

> On December 31, 2017, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasur

> When companies offer new equity security issues, they publicize the offerings in the financial press and on Internet sites. Assume the following were among the equity offerings reported in December 2018: New Securities Issues Equity American Materials Tr

> On December 31, 2017, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasur