On April 15, 2024, Sampson Consulting provides services to a customer for $110,000. To pay for the services, the customer signs a three-year, 12% note. The face amount is due at the end of the third year, while annual interest is due each April 15. (Hint: Because the note is accepted during the middle of the month, Sampson plans to recognize one-half month of interest revenue in April 2024, and one-half month of interest revenue in April 2027.) Required: 1. Record the acceptance of the note on April 15, 2024. 2. Record the adjusting entry for interest revenue on December 31 for 2024, 2025, and 2026, and the collection of annual interest on April 15, 2025 and 2026. 3. Record the cash collection on April 15, 2027.
> What is the definition of a liability?
> Disney has several types of long-term assets. What are the primary ones shown in its balance sheet?
> What is the purpose of the adjusted trial balance? How do the adjusted trial balance and the (unadjusted) trial balance differ?
> For each of the following accounts, indicate whether we use a debit or a credit to decrease the balance of the account. a. Cash. b. Salaries Payable. c. Utilities Expense. d. Service Revenue.
> Explain what it means to say that an accounting class is not the same as a math class.
> How is preferred stock reported differently under U.S. GAAP and IFRS? Do you think preferred stock is a liability or an equity item? Why?
> Would a company be more likely to report a contingent liability under U.S. GAAP or IFRS? Which is more conservative in the reporting of contingent liabilities, U.S. GAAP or IFRS?
> On October 1, 2024, Ogneva Corporation loans one of its employees $40,000 and accepts a 12 month, 9% note receivable. Calculate the amount of interest revenue Ogneva will recognize in 2024 and 2025.
> How do IFRS rules differ in the reporting of research and development costs? Which is more conservative in the reporting of research and development costs, U.S. GAAP or IFRS?
> What does it mean to revalue a long-term asset? How do U.S. GAAP and IFRS differ regarding revaluation of long-term assets?
> What effect does writing down inventory have on total assets and net income in that reporting period? The reversal of an inventory write-down in a future period, which is recorded under IFRS but not allowed under U.S. GAAP, has what effect on total asset
> Which inventory cost flow assumption is allowed under U.S. GAAP but not under IFRS? Explain why some U.S. companies will lobby strongly to keep this method as an allowable alternative.
> Explain how an income statement might be organized along the same categories currently used in the statement of cash flows—operating, investing, and financing activities.
> What is meant by a conceptual framework in accounting? Why is it important that the FASB and the IASB develop a common conceptual framework?
> Provide at least one argument against the trend toward convergence between U.S. GAAP and IFRS.
> Describe the Norwalk Agreement. What is the significance of this agreement?
> Explain the difference between principles-based accounting standards and rules-based accounting standards.
> What is the main objective of the International Accounting Standards Board (IASB)?
> Refer to the information in BE5–18. Determine the financial statement effects of (a) lending $40,000 cash to an employee, (b) interest on the note as of December 31, 2024, and (c) collecting cash for the note and interest on October 1, 2025. Data from B
> What difficulties do differences in accounting standards create for multinational corporations in preparing their financial statements?
> Tar Heel Corporation provides the following information at the end of 2024. Required: Prepare the income statement, statement of stockholders’ equity, and balance sheet for Tar Heel Corporation on December 31, 2024.
> Below are incomplete financial statements for Cyclone, Inc. Required: Calculate the missing amounts.
> Gator Investments provides financial services related to investment selections, retirement planning, and general insurance needs. At the end of the year on December 31, 2024, the company reports the following amounts: In addition, the company had common
> Horned Frogs Fine Cooking maintains its books using cash-basis accounting. However, the company recently borrowed $50,000 from a local bank, and the bank requires the company to provide annual financial statements prepared using accrual-basis accounting
> Consider the following transactions. Required: For each transaction, determine the amount of revenue or expense, if any, that is recorded under accrual-basis accounting and under cash-basis accounting.
> Income statement and balance sheet data for The Athletic Attic are provided below. Required: 1. Calculate the following risk ratios for 2024 and 2025: a. Receivables turnover ratio b. Inventory turnover ratio. c. Current ratio. d. Debt to equity ratio. 2
> Data for The Athletic Attic are provided in P12–4B. Earnings per share for the year ended December 31, 2024, are $1.36. The closing stock price on December 31, 2024, is $22.42. Required: Calculate the following profitability ratios for
> The following income statement and balance sheets for The Athletic Attic are provided. Required: Assuming that all sales were on account, calculate the following risk ratios for 2024: 1. Receivables turnover ratio. 2. Average collection period. 3. Invent
> The balance sheets for Fantasy Football for 2024 and 2023 are provided below. Required: 1. Prepare a vertical analysis of Fantasy Football’s 2024 and 2023 balance sheets. Express each amount as a percentage of total assets for that year
> Refer to the information in BE3–13. Determine the financial statement effects for (1) the borrowing on July 1, 2024, and (2) the adjusting entry for interest owed on December 31, 2024. Data from BE 3-13: Refer to the information in BE3–12. (1) Record th
> The income statements for Galaxy Tennis for the years ending December 31, 2024 and 2023, are provided below. Required: 1. Complete the “Amount” and “%” columns to be used in a horizo
> Game-On Sports operates in two distinct segments: athletic equipment and accessories. The income statement for each operating segment is presented below. Required: 1. Complete the “%” columns to be used in a vertical a
> Cash flows from operating activities for both the indirect and direct methods are presented for Electronic Transformations. Required: Complete the following income statement for Electronic Transformations. Assume all accounts payable are to suppliers.
> The income statement, balance sheets, and additional information for Virtual Gaming Systems are provided. Additional Information for 2024: 1. Purchased additional investment in stocks for $95,000. 2. Sold land for $62,
> Portions of the financial statements for Software Associates are provided below. Required: Prepare the operating activities section of the statement of cash flows for Software Associates using the indirect method.
> Natalie King has completed the basic format to be used in preparing the statement of cash flows (indirect method) for CPU Hardware Designers. All amounts are in thousands (000s). Below, in random order, are line items to be included in the statement of c
> National League Gear has two classes of stock authorized: 4%, $20 par preferred, and $5 par value common. The following transactions affect stockholders’ equity during 2024, National League’s first year of operations: February 2 Issue 1.5 million shares
> Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2024, 125 shares of preferred stock and 3,000 shares of common stock have been issued. The following transactions affect stockholdersâ&
> Selected financial data for Surf City and Paradise Falls are as follows: Required: 1. Calculate the debt to equity ratio for Surf City and Paradise Falls for the most recent year. Which company has the higher ratio? 2. Calculate the return on assets for
> On January 1, 2024, Christmas Anytime issues $850,000 of 6% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Required: Calculate the issue price of a bond and complete the first three rows of an amortizatio
> Refer to the information in BE3–11. Determine the financial statement effects of the adjusting entry for salaries owed on December 31, 2024. Data from BE 3-11: Fighting Irish Incorporated pays its employees $5,600 every two weeks ($400/day). The current
> Super Splash issues $1,000,000, 7% bonds on January 1, 2024, that mature in 15 years. The market interest rate for bonds of similar risk and maturity is 6%, and the bonds issue for $1,098,002. Interest is paid semiannually on June 30 and December 31. Req
> Temptation Vacations issues $60 million in bonds on January 1, 2024, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Required: 1. Were the bonds issued at face amount, a discount, or a p
> Viking Voyager specializes in the design and production of replica Viking boats. On January 1, 2024, the company issues $3,000,000 of 9% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Required: 1. If the
> Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December 31, 2024. Required: Determine the appropriate way Compact Electronics would report the contingencies. Record
> Togo’s Sandwich Shop had the following long-term asset balances as of January 1, 2024: Additional information: · Togo’s purchased all the assets at the beginning of 2022. · The building is
> The following information relates to the intangible assets of Lettuce Express: a. On January 1, 2024, Lettuce Express completed the purchase of Farmers Produce, Inc., for $1,600,000 in cash. The fair value of the identifiable net assets of Farmers Produc
> The Fun Zone sells a variety of children’s toys, games, books, and accessories. Assume that a local store has the following amounts for the month of March 2024. Required: 1. Prepare a multiple-step income statement for the month ended M
> Sylvester has a bird shop that sells canaries. Sylvester maintains accurate records on the number of birds purchased from its suppliers and the number sold to customers. The records show the following purchases and sales during 2024. Sylvester uses a per
> Facial Cosmetics provides plastic surgery primarily to hide the appearance of unwanted scars and other blemishes. During 2024, the company provides services of $410,000 on account. Of this amount, $60,000 remains uncollected at the end of the year. An ag
> Refer to the information in BE3–10. Determine the financial statement effects for (1) the cash received in advance on November 1 and (2) the adjusting entry for services provided by December 31. Data from BE 3-10: Suppose a customer rents a vehicle for
> The following events occur for Municipal Engineering during 2024 and 2025, its first two years of operations. February 2, 2024 Provide services to customers on account for $38,000. July 23, 2024 Receive $27,000 from customers on account. December 31, 202
> Assume the following scenarios. Scenario 1: During 2024, The Hubbard Group provides services of $900,000 for repair of a state highway. The company receives an initial payment of $300,000 with the balance to be received the following year. Scenario 2: Ro
> Following is a summary of all transactions of Dreamworks Bedding Supplies for the month of August 2024. Required: Prepare a statement of cash flows for the month of August, properly classifying each of the transactions into operating, investing, and fina
> The cash records and bank statement for the month of July for Glover Incorporated are shown next. Additional information: a. The difference in the beginning balances in the company’s records and the bank statement relates to check #530,
> The general ledger of Jackrabbit Rentals at January 1, 2024, includes the following account balances: The following is a summary of the transactions for the year: 1. January 12 Provide services to customers on account, $62,400. 2. February 25 Provide ser
> Grasshopper Lawn Service provides general lawn maintenance to customers. The company’s fiscal year-end is December 31. Information necessary to prepare the year-end adjusting entries appears below. 1. On October 1, 2024, Grasshopper lent $60,000 to anoth
> Thunder Cat Services specializes in training and veterinary services to household pets, such as dogs, birds, lizards, fish, horses, and of course, cats. After the first 11 months of operations in 2024, Thunder Cat has the following account balances. The
> The general ledger of Pipers Plumbing at January 1, 2024, includes the following account balances: The following is a summary of the transactions for the year: 1. January 24 Provide plumbing services for cash, $20,000, and on account, $65,000. 2. March 1
> Jaguar Auto Company provides general car maintenance to customers. The company’s fiscal year-end is December 31. The December 31, 2024, trial balance (before any adjusting entries) appears below. In addition, the company had the followi
> The information necessary for preparing the 2024 year-end adjusting entries for Bearcat Personal Training Academy appears below. Bearcat’s fiscal year-end is December 31. 1. At the end of the year, Bearcat calculated that it owed $24,000 in income taxes.
> Refer to the information in BE3–7. Determine the financial statement effects for (1) the payment of rent in advance on October 1 and (b) the adjusting entry for rent expired by December 31. Data from BE 3-7: Suppose Hoosiers, a specialty clothing store,
> The cash records and bank statement for the month of May for Diaz Entertainment are shown below. Additional information: a. The difference in the beginning balances in the company’s records and the bank statement relates to checks #469
> The general ledger of Zips Storage at January 1, 2024, includes the following account balances: The following is a summary of the transactions for the year: 1. January 9 Provide storage services for cash, $134,100, and on account, $52,200. 2. February 12
> RiverHawk Expeditions provides guided tours in scenic mountainous areas. After the first 11 months of operations in 2024, RiverHawk has the following account balances. The following transactions occur during December 2024: December  1 P
> The general ledger of Red Storm Cleaners at January 1, 2024, includes the following account balances: The following is a summary of the transactions for the year: 1. March 12 Provide services to customers, $60,000, of which $21,000 is on account. 2. May
> Crimson Tide Music Academy offers lessons in playing a wide range of musical instruments. The unadjusted trial balance as of December 31, 2024, appears below. December 31 is the company’s fiscal year-end. In addition, the company had th
> Oscar’s Red Carpet Store maintains a checking account with Academy Bank. Oscar’s sells carpet each day but makes bank deposits only once per week. The following provides information from the company’s
> Cornhusker Company provides the following information at the end of 2024. Required: Prepare the income statement, statement of stockholders’ equity, and balance sheet for Cornhusker Company on December 31, 2024. No common stock is issue
> The information necessary for preparing the 2024 year-end adjusting entries for Gamecock Advertising Agency appears below. Gamecock’s fiscal year-end is December 31. 1. On July 1, 2024, Gamecock received $6,000 from a customer for advertising services to
> Longhorn Corporation provides low-cost food delivery services to senior citizens. At the end of the year on December 31, 2024, the company reports the following amounts: In addition, the company had common stock of $40,000 at the beginning of the year an
> Minutemen Law Services maintains its books using cash-basis accounting. However, the company decides to borrow $100,000 from a local bank, and the bank requires Minutemen to provide annual financial statements prepared using accrual-basis accounting as p
> Refer to the information in BE3–6. Determine the financial statement effects for (1) the purchase of supplies during the year and (2) the adjusting entry for supplies used by the end of the year. Data from BE 3-6: At the beginning of the year, Golden Go
> Scenario 1: During 2024, IBM provides consulting services on its mainframe computer for $11,000 on account. The customer does not pay for those services until 2025. Scenario 2: On January 1, 2024, Gold’s Gym sells a one-year membership for $1,200 cash. N
> Income statement and balance sheet data for Virtual Gaming Systems are provided below. Required: 1. Calculate the following risk ratios for 2024 and 2025: a. Receivables turnover ratio. b. Inventory turnover ratio. c. Current ratio. d. Debt to equity rat
> Earnings per share for the year ended December 31, 2024, are $1.40. The closing stock price on December 31, 2024, is $28.30. Required: Calculate the following profitability ratios for 2024. 1. Gross profit ratio. 2. Return on assets. 3. Profit margin. 4.
> The following income statement and balance sheets for Virtual Gaming Systems are provided. Required: Assuming that all sales were on account, calculate the following risk ratios for 2024. 1. Receivables turnover ratio. 2. Average collection period. 3. In
> The balance sheets for Sports Unlimited for 2024 and 2023 are provided below. Required: 1. Prepare a vertical analysis of Sports Unlimited’s 2024 and 2023 balance sheets. Express each amount as a percentage of total assets for that year
> The income statements for Anything Tennis for the years ending December 31, 2024 and 2023, are provided below. Required: 1. Complete the “Amount” and “%” columns to be used in a hori
> Sports Emporium has two operating segments: sporting goods and sports apparel. The income statement for each operating segment is presented below. Required: 1. Complete the “%” columns to be used in a vertical analysis
> Cash flows from operating activities for both the indirect and direct methods are presented for Reverse Logic. All amounts are in thousands (000s). Required: Complete the following income statement for Reverse Logic. Assume all accounts payable are to Su
> The income statement, balance sheets, and additional information for Video Phones, Inc., are provided. Additional Information for 2024: 1. Purchased investment in bonds for $115,000. 2. Sold land for $31,000. The land originally was purchased for $40,000
> Portions of the financial statements for Alliance Technologies are provided below. Required: Prepare the operating activities section of the statement of cash flows for Alliance Technologies using the indirect method.
> Sanders Inc. is a small brick manufacturer that uses the direct write-off method to account for uncollectible accounts. At the end of 2024, its balance for Accounts Receivable is $35,000. The company estimates that of this amount, $4,000 is not likely to
> An investments account offers a 12% annual return. If $50,000 is placed in the account for two years, by how much will the investment grow if interest is compounded (a) annually, (b) semiannually, (c) quarterly, or (d) monthly?
> Major League Apparel has two classes of stock authorized: 6%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2024, its first year of operations: January 2 Issue 110,000 shares of common stock for
> Refer to the information provided in P10–2A. Required: Taking into consideration the beginning balances on January 1, 2024 and all the transactions during 2024, respond to the following for Donnie Hilfiger: 1. Prepare the stockholders’ equity section of
> Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2024, 300 shares of preferred stock and 4,000 shares of common stock have been issued. The following transactions affect stockholders
> On January 1, 2024, Coney Island Entertainment issues $1,300,000 of 7% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Required: Calculate the issue price of a bond and complete the first three rows of an
> On January 1, 2024, Universe of Fun issues $900,000, 8% bonds that mature in 10 years. The market interest rate for bonds of similar risk and maturity is 9%, and the bonds issue for $841,464. Interest is paid semiannually on June 30 and December 31. Requ
> On January 1, 2024, Vacation Destinations issues $40 million of bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Required: 1. Were the bonds issued at face amount, a discount, or a
> On January 1, 2024, Twister Enterprises, a manufacturer of a variety of transportable spin rides, issues $600,000 of 8% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Required: 1. If the market interest r
> On September 1, 2024, a company decides to lease office space in a building. The building’s owner offers the company the following options, with the first monthly payment beginning September 30, 2024: 1. Sign a two-year lease with monthly payments of $3,
> On January 1, 2024, Strato Corporation borrowed $2 million from a local bank to construct a new building over the next three years. The loan will be paid back in three equal installments of $776,067 on December 31 of each year. The payments include inter
> On January 1, 2024, Gundy Enterprises purchases an office for $360,000, paying $60,000 down and borrowing the remaining $300,000, signing a 7%, 10-year mortgage. Installment payments of $3,483.25 are due at the end of each month, with the first payment d
> At the end of 2024, Worthy Co.’s balance for Accounts Receivable is $20,000, while the company’s total assets equal $1,500,000. In addition, the company expects to collect all of its receivables in 2025. In 2025, however, one customer owing $2,000 become
> The ink-jet printing division of Environmental Printing has grown tremendously in recent years. Assume the following transactions related to the ink-jet division occur during the year ended December 31, 2024. Required: Determine the appropriate way Envir
> Caribbean Tours’ total payroll for the month of January was $600,000. The following withholdings, fringe benefits, and payroll taxes apply: Assume that none of the withholdings or payroll taxes has been paid by the end of January (recor
> Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $41 million cash on October 1, 2024, to provide working capital for anticipated expansion. Precision signs a one-year, 9% promissory note to M
> Solich Sandwich Shop had the following long-term asset balances as of January 1, 2024: Additional information: · Solich purchased all the assets at the beginning of 2022. · The building is depreciated over a 10-year service l
