Refer to the information for Whirled Inc. in BE13-15. Assume now that the employer is required to match every dollar of the CPP contributions of its employees and to contribute 1.4 times the EI withholdings. (a) Prepare the journal entry to record Whirled’s payroll-related expenses. (b) Prepare Whirled’s entry to record its payroll-related payment to the Receiver General. Data from BE13-15: Whirled Inc.’s weekly payroll of $23,000 included employee income taxes withheld of $3,426, CPP withheld of $990, EI withheld of $420, and health insurance premiums withheld of $250. Prepare the journal entry to record Whirled’s weekly payroll.
> Mallard Inc. owns shares of Oakwood Corporation that are classified as Mallard’s fair value through net income (FV-NI) investment portfolio and accounted for using the FV-NI model. At December 31, 2016, the securities were carried in Mallard’s accounting
> Martinez Ltd. has the following equity accounts at January 1, 2017. Preferred shares outstanding: 2,500 shares……………………………$ 62,500 Common shares outstanding: 4,000 shares…………………………….400,000 (a) What was the average issue price of the preferred shares? (
> Hamza Inc. declared a cash dividend of $0.60 per share on its 1.5 million outstanding shares. The dividend was declared on August 1 and is payable on September 9 to all shareholders of record on August 15. Prepare all necessary journal entries for those
> Explain the pros and cons of incorporating.
> Pflug Ltd. signed an instalment note on January 1, 2017 in settlement of an account payable of $40,000 owed to Mott Ltd. Pflug is able to borrow funds from its bank at 11%, whereas Mott can borrow at the rate of 10%. The note calls for two equal payments
> Big Country Corporation is in the business of selling cattle. Due to recent diseases plaguing cattle, Big Country is experiencing a cash shortage. Big Country issued a $280,000, six-year, zero-interest-bearing note to Little Town Corp. on January 1, 2017
> Brestovacki Corporation issued a $50,000, five-year, 5% note to Jernigan Corp. on January 1, 2017 and received a piece of equipment that normally sells for $38,912. The note requires annual interest payments each December 31. The market interest rate for
> Rosek Inc. provides the following information related to its post-retirement health care benefits for the year 2017: Defined post-retirement benefit obligation at January 1, 2017………………………………$110,000 Plan assets, January 1, 2017……………………………………………………………………
> Sophia Incorporated issued a $105,000, five-year, zero-interest-bearing note to Angelica Corp. on January 1, 2017 and received $52,000 cash. Sophia uses the effective interest method. (a) Using a financial calculator and computer spreadsheet functions, c
> Companies around the globe have moved to, or are in the process of moving to, IFRS. Evidence has shown that it is preferable to adopt IFRS in its entirety, with no deviations from the standards. This chapter shows how much the legal environment affects t
> On May 1, 2017, Jadeja Corporation, a publicly listed corporation, issued $200,000 of five-year, 8% bonds, with interest payable semi-annually on November 1 and May 1. The bonds were issued to yield a market interest rate of 6%. Jadeja uses the effective
> Samwall Ltd. needed funding to bridge the gap between paying its suppliers and collecting its receivables. As such, Samwall issued a $300,000, four-year, 8% note at face value to Easy Loan Bank on January 1, 2017 and received $300,000 cash. The note requ
> Buchanan Corporation issues $500,000 of 11% bonds that are due in 10 years and pay interest semi- annually. At the time of issue, the market rate for such bonds is 10%. Using time value of money tables, a financial calculator, and computer spreadsheet fu
> At December 31, 2017, Jelena Incorporated has a bond payable with a carrying value of $1,200,000 (based on amortized cost) due September 1, 2018 and a current value of $1,250,000. The interest payable as at December 31, 2017 is $25,000. Show how the abov
> On January 1, 2017, Steinem Corporation established a special purpose entity to buy $1 million of accounts receivable from Steinem. Investors have invested in the special purpose entity to benefit from the return on assets and certain tax advantages. The
> Lawrence Incorporated owes $100,000 to Ontario Bank Inc. on a two-year, 10% note due on December 31, 2017. The note was issued at par. Because Lawrence is in financial trouble, Ontario Bank agrees to extend the maturity date of the note to December 31, 2
> Assume that Theo Limited has a loan that is currently due at year end. The debt is being refinanced with a five-year loan and the deal to refinance the debt is signed two days after year end. How would the original loan be classified in the year-end stat
> Jensen & Jensen Incorporated, a telecommunications equipment manufacturer, has a debt to total assets ratio of 55%, while competing companies of similar size operating in the same industry have an average debt to total assets ratio of 62%. Jensen & Jense
> The following information is in regard to Saverio Corp.’s defined benefit pension plan. Defined benefit obligation, 1/1/17 (before amendment)………………………$239,000 Plan assets, 1/1/17……………………………………………………………………………….155,000 Discount rate……………………………………………………………
> On January 1, 2017, Jamil Incorporated redeemed bonds prior to their maturity date of January 1, 2018. The face value of the bonds was $800,000, and the redemption was performed at 97. As at the redemption date, the unamortized premium was $6,500. Prepar
> Hanson Incorporated issued $1 million of 7%, 10-year bonds on July 1, 2016 at face value. Interest is payable each December 31. The company has chosen to apply the fair value option in accounting for the bonds. A risk assessment at December 31, 2017 show
> BCE Inc., a well-known Canadian telecommunications and media company, has a December 31 year end. Access the company’s 2014 annual report from the company website or from www.sedar.com. Instructions: (a) What per share information has the company provid
> Travel In Style Limited issued $1,000,000 of 9% bonds on September 1, 2017 for $1,058,671. The term of the bonds is September 1, 2017 to September 1, 2025, with interest payable quarterly each December 1, March 1, June 1, and September 1. The company use
> Assume that the bonds in BE14-15 were issued for $644,632 and the effective interest rate was 6%. (a) Prepare the company’s journal entry for the January 1 issuance. (b) Prepare the company’s journal entry for the July 1 interest payment. (c) Prepare the
> On January 1, 2017, Quinton Corporation issued $600,000 of 7% bonds that are due in 10 years. The bonds were issued for $559,229 and pay interest each July 1 and January 1. The company uses the effective interest method. Assume an effective rate of 8%. (
> The City of Fram issued 100 bonds at their face value of $6,000 each plus accrued interest on June 1, 2017. The term of the bonds was January 1, 2017 to January 1, 2023, with interest payable semi-annually each January 1 and July 1 at 6%. Fram uses the e
> Assume that the bonds in BE14-11 were issued at 103. Assume also that Grenier Limited records the amortization using the straight-line method. Prepare the journal entries related to the bonds for (a) January 1, (b) July 1, and (c) December 31. Data from
> Assume that the bonds in BE14-11 were issued at 98. Assume also that Grenier Limited records the amortization using the straight-line method. Prepare the journal entries related to the bonds for (a) January 1, (b) July 1, and (c) December 31. Data from
> Grenier Limited issued $300,000 of 10% bonds on January 1, 2017. The bonds are due on January 1, 2022, with interest payable each July 1 and January 1. The bonds are issued at face value. Grenier uses the effective interest method. Prepare the company’s
> Griseta Limited sponsors a defined benefit pension plan for its employees, which it accounts for under ASPE. The following data relate to the operation of the plan for the year 2017: 1. The actuarial present value of future benefits earned by employees f
> Watson Corporation issued $500,000 of 8%, 10-year bonds on January 1, 2017 at face value. The bonds require annual interest payments each December 31. Costs associated with the bond issuance were $25,000. Watson follows ASPE and uses the straight-line me
> Lamanna Laundry Ltd. is a full-service laundry provider, focusing on high-end clientele. Lamanna Laundry has recently invested in new technology to improve efficiency. In order to finance the new technology, the company issued a 10-year bond on January 1
> Refer to the information for DeGroot Limited in BE13-8. Assume that the amounts include tax. Prepare the entries for DeGroot. Round amounts to the nearest cent. Data from BE13-8: DeGroot Limited conducts all of its business in a province with HST of 13
> Refer to the financial statements of Brookfield Asset Management Inc. for its year ended December 31, 2014, which are reproduced at the end of Volume 2 of this text, and for its year ended December 31, 2013 found at www.sedar.com or on the company’s webs
> DeGroot Limited conducts all of its business in a province with HST of 13%. Prepare the summary journal entry to record DeGroot’s sales for the month of July, during which customers purchased $37,500 of goods on account and a journal entry for the cash p
> Cartwright Springs Brewery Ltd. (CSB) operates a microbrewery and sells beer directly to customers, bars, and restaurants. CSB uses one-liter blue glass refillable bottles featuring a swing-top ceramic lid. The bottles cost CSB $4.90 each. CSB charges cu
> Takemoto Inc. borrowed $60,000 on November 1, 2017 by signing a $61,350, three-month, zero-interest-bearing note. (a) Using a financial calculator or Excel, calculate the effective interest charged on the note. (b) Prepare Takemoto’s November 1, 2017 ent
> Refer to the information for Upland Limited in BE13-4. Assume that Upland uses reversing entries. Prepare the 2018 journal entry(ies) for Upland. Data from BE13-4: Upland Limited borrowed $40,000 on November 1, 2017 by signing a $40,000, three-month, 9
> Upland Limited borrowed $40,000 on November 1, 2017 by signing a $40,000, three-month, 9% note. Prepare Upland’s November 1, 2017 entry; the December 31, 2017 annual adjusting entry; and the February 1, 2018 entry.
> Jupiter Corp. provides at no extra charge a two-year warranty with one of its products, which was first sold in 2017. In that year, Jupiter sold products for $2.5 million and spent $68,000 servicing warranty claims. At year end, Jupiter estimates that an
> The following information is available for Antoine Corporation’s pension plan for the 2017 fiscal year: Defined benefit obligation, 1/1/17, accounting basis, before plan amendment………….$255,000 Fair value of plan assets, 1/1/17………………………………………………………………………
> Cozy Home Inc. offers its customers two furnace maintenance services. One service is for a one-time cleaning and servicing of a home furnace at a cost of $100. Customers can earn a 5% discount from this price if they pay before Cozy’s calendar fiscal yea
> Refer to the information for Lu Corp. in BE13-20 and BE13-21. Assume that the increase in the asset retirement obligation in 2017 related to the production of oil in 2017 was $61,942. Prepare any necessary entries to record the increase in the asset reti
> Refer to the information for Lu Corp. in BE13-20. Prepare any necessary adjusting entries that are associated with the asset retirement obligation and related expenses at December 31, 2017, assuming that Lu follows (a) IFRS, and (b) ASPE. Ignore producti
> Lu Corp. erected and placed into service an offshore oil platform on January 1, 2017 at a cost of $10 million. Lu is legally required to dismantle and remove the platform at the end of its nine-year useful life. Lu estimates that it will cost $1 million
> IFRS allows per share amounts to be reported on items other than earnings. Instructions: (a) Adopt the role of the ethical accountant and write a short essay on the pros and cons of allowing companies to include alternate per share amounts in their annu
> Primeau Inc. pays its officers bonuses based on income. For 2017, the bonuses total $350,000 and are paid on February 15, 2018. Prepare Primeau’s December 31, 2017 adjusting entry and the February 15, 2018 entry. For the payment entry, ignore withholding
> Laurin Corporation offers parental benefits to its staff as a top-up on Employment Insurance benefits so that employees end up receiving 100% of their salary for 12 months of parental leave. Ruzbeh Awad, who earns $74,000 per year, announced that he will
> At December 31, 2017, 30 employees of Kasten Inc. have each earned one week of vacation time. The employees’ average salary is $1,000 per week. Prepare Kasten’s December 31, 2017 adjusting entry.
> Whirled Inc.’s weekly payroll of $23,000 included employee income taxes withheld of $3,426, CPP withheld of $990, EI withheld of $420, and health insurance premiums withheld of $250. Prepare the journal entry to record Whirled’s weekly payroll.
> The following information is available for Huntley Corporation’s pension plan for the year 2017: Plan assets, January 1, 2017………………………………………………………………………$400,000 Actual return on plan assets……………………………………………………………………………17,000 Benefits paid to retirees………
> At December 31, 2017, Parew Corporation has a long-term debt of $700,000 owing to its bank. The existing debt agreement imposes several covenants related to Parew’s liquidity and solvency. At December 31, 2017, Parew was not in compliance with the covena
> Refer to the information about Clausius Ltd. in BE13-11. Assume instead that the tax return indicated 2017 income tax of $10,200. (a) Prepare the adjusting year-end entry to recognize the 2017 income tax. (b) Identify any yearend statement of financial p
> Clausius Ltd. made four quarterly payments of $3,200 each to the CRA during 2017 as instalment payments on its estimated 2017 corporate tax liability. At year end, Clausius’s controller completed the company’s 2017 tax return, which showed income tax of
> Louise Inc. operates in Alberta, where it is subject to GST of 5%. In August, Louise purchased $29,400 of merchandise inventory, and had sales of $45,000 on account. Louise uses a periodic inventory system. Prepare (a) the summary entry to record the pur
> Wellson Ltd. has current assets, including cash, accounts receivable, and inventory, and current liabilities, including accounts payable and short-term notes payable. Wellson manages its working capital by focusing on management of current assets. Wellso
> Molson Coors Brewing Company has a December 31 year end. Access the company’s 2014 annual report from the company website (www.molsoncoors.com). Instructions: (a) What types of earnings per share information does the company provide? (b) Does the compa
> Access IAS 34 (Interim Financial Reporting), and the interim financial report for the six-month period ended June 30, 2015, for Nestlé SA from the company’s website (www.nestle.com). Instructions: (a) Identify what specific financial statements and the
> Yuen Corporation shows the following financial position and results for the three years ended December 31, 2017, 2018, and 2019 (in thousands): For each year, calculate the current ratio, quick ratio, and days payables outstanding ratio, and comment on
> Siddle Corp. was recently sued by a competitor for patent infringement. Lawyers have determined that it is probable (and very likely) that Siddle will lose the case, and that Siddle will have to pay between $100,000 and $250,000 in damages. Siddle follow
> At December 31, 2017, Lawton & Border Inc. (L&B) is involved in a lawsuit. Under existing standards in IAS 37, (a) prepare the December 31 entry assuming it is probable (and very likely) that L&B will be liable for $700,000 as a result of this suit. (b)
> Kea Limited provides a defined contribution pension plan for its employees. The plan requires the company to deduct 5% of each employee’s gross pay for each payroll period as the employee contribution. The company then contributes 7% of the gross pay for
> Wynn Corp. offers a set of building blocks to customers who send in three codes from Wynn cereal, along with $1. Wynn purchased 100,000 building block sets in 2017 for $2.50 each, and paid for them by cash. During 2017, Wynn sold one million boxes of cer
> In July 10, 2017, Nguyen Ltd. sold $1.7 million worth of compressors to retailers on account. Nguyen had paid $960,000 for these compressors. Nguyen grants the right to return compressors that do not sell in three months following delivery. Past experien
> Discuss whether and how financial instruments are disclosed under IFRS, and the reason for the disclosure requirement.
> Explain how options pricing models are useful in determining fair value. What are the inputs to such models?
> Penner Corp. is preparing the management discussion and analysis portion of the annual report to shareholders. It wishes to provide a visual depiction of the proportion of the total revenue each segment uses. Using Excel, graph the seven industry segment
> Yuen Corporation shows the following financial position and results for the three years ended December 31, 2017, 2018, and 2019 (in thousands): For each year, calculate the current ratio, quick ratio, and days payables outstanding ratio, and comment on
> Referring to the research study mentioned in this chapter (in the section “Limitations of Financial Statement Analysis”), discuss some limitations of the financial statement analysis done in BE23-21. Include in your an
> formerly British Sky Broadcasting Group plc, is a pan-European pay television giant and multimedia content company whose common shares trade on the London Stock Exchange. The company produces financial statements in accordance with IFRS. Access the compa
> Condensed data from the comparative statement of financial position (SFP) of Legros Inc. follow: (a) Using vertical (common-size) analysis, calculate the various SFP categories as a percentage of total assets for Legros Inc. for each of 2015, 2016, and
> The income statements of Dwayne Corporation show the following amounts: Using vertical (common-size) analysis, analyze Dwayne Corporation’s declining profit before tax. 2017 2016 2015 $800 $770 530 $720 468 Net sales Cost of goods
> Refer to E18-7 for Sayaka Tar and Gravel Ltd., and assume the same facts as in E18-8 for the fiscal year ended December 31, 2018, except that the enacted tax rate for 2019 and subsequent years was reduced to 20% on September 15, 2018. Instructions: (a)
> What is the difference between an auditor’s unmodified opinion and a qualified opinion?
> Nortel Networks experienced one of the most notorious Canadian bankruptcies. Nortel’s financial statements contained misrepresentations resulting in top executives meeting bonus targets. Eventually there was a distribution of funds obtained from selling
> Indicate in general journal form how the following items would be entered in a work sheet to prepare the statement of cash flows where payments for dividends are classified as financing activities. Indicate within the journal entries any items that impac
> Tonoma Inc., a company that follows IFRS, is preparing its December 31, 2017 financial statements. The following two events occurred after December 31, 2017: (1) A flood loss of $80,000 occurred on March 1, 2018. (2) A liability, estimated at $140,000 at
> The following information was described in a note of Cruton Packing Co., a public company that follows IFRS: “During August, Bigelow Products Corporation purchased 212,450 shares of the Company’s common shares, which constitutes approximately 35% of the
> How would the transaction in BE23-13 be recorded if the individual shareholder owned only 40% of the shares of each company? Assume that there is independent evidence to support the value of the robotic equipment. Discuss and prepare journal entries. Use
> Papadopoulos Limited (PL) sells retail merchandise in Canada. The company was incorporated last year and is now in its second year of operations. PL is owned and operated by the Papadopoulos family, and Iris Papadopoulos, the company president, has decid
> Crown Inc. (CI) is a private company that manufactures a special type of cap that fits on a bottle. At present, it is the only manufacturer of this cap and therefore enjoys market security. The machinery that makes the cap has been in use for 20 years an
> Locate and review Brookfield Asset Management’s statement of changes in shareholders’ equity in its financial statements for the fiscal years ended December 31, 2014 and 2013, at the end of Volume 2 of this text. Instructions: (a) Identify the sharehold
> The executive officers of Coach Corporation have a performance-based compensation plan that links performance criteria to growth in earnings per share. When annual earnings per share (EPS) growth is 12%, the Coach executives earn 100% of a predetermined
> Refer to E18-7 for Sayaka Tar and Gravel Ltd., and assume the same facts for the fiscal year ended December 31, 2017. For the second year of operations, Sayaka made progress on the construction of the road for the municipality. The account balances at De
> Delmar Manufacturing Inc. is a provincial manufacturer of electronics. It has been in operation for over 25 years under ownership of the same two private shareholders. It has always offered its employees a very generous defined benefit (DB) pension plan
> Baker Company Limited (BCL) was founded in 2015. Its first year of operations turned out to be a good one, as start-up years go, because the company not only broke even but actually showed a very small profit. Just as the company was getting established
> Canton Products Inc. has been in business for quite a while. Its shares trade on a public exchange and it is thinking of expanding onto the New York and London Stock Exchanges. Recently, however, the company has run into cash flow difficulties. The CEO i
> Air Canada is Canada’s largest domestic and international airline, providing scheduled and charter air transportation for passengers and cargo. The airline industry has suffered many difficulties and financial setbacks in the past decade. The high costs
> Kitchener Mechanical Incorporated is looking to expand its manufacturing facilities and buy more equipment to meet raised customer demand. The company’s strategy is to build an add-on to the current facility, and bring in new equipment that will increase
> ABC Airlines carried more than 11.9 million passengers to over 160 destinations in 17 countries in 2017. ABC is the descendant of several predecessor companies, including AB Air and BC Airlines. The amalgamated company was created in 1999. In the years t
> “You can’t write up assets,” said Nick Toby, internal audit director of Nadir International Inc., to his boss, Jim Majewski, vice-president and chief financial officer. “Nonsense,” said Jim, “I can do this as part of a quasi-reorganization of our company
> Soron Limited is a private company that uses derivatives to mitigate a variety of risks. The ethical accountant, Leon Price, has just been hired as the new controller and has recently met with the CEO. The CEO has just explained to him the following deri
> CopMin Inc. is a private enterprise that is involved in copper mining operations. The company currently owns two operating mines. It is January 1, 2017, and CopMin has recently entered into two types of contracts. For its Papula Mine, it has entered into
> Locate and review Brookfield Asset Management’s financial statements, including selected notes to its financial statements for the year ended December 31, 2014, located at the end of Volume 2 of this text. Alternatively, the full set of its annual financ
> MFI Holdings Inc. follows IFRS and applies the FV-OCI model with recycling and has adopted the option to show dividends received as operating activities. MFI’s statement of financial position contained the following comparative data at
> Kelly’s Shoes Limited used to be a major store in Canada before it went bankrupt and was bought by Bears Shoes Limited. Many of the stores were anchor tenants in medium- to large-sized retail shopping malls. This space was primarily leased under non-canc
> In June 2018, the board of directors for Holtzman Enterprises Inc. authorized the sale of $10 million of corporate bonds. Michelle Collins, treasurer for Holtzman Enterprises Inc., is concerned about the date when the bonds are issued. The company really
> Wagner Inc. is a large Canadian public company that uses IFRS. A lease for a fleet of trucks has been capitalized and the lease amortization schedule for the first three lease payments appears below. The trucks have an economic life of eight years. The l
> The following selected account balances are taken from the financial statements of Mandrich Inc. at its calendar year end prepared using IFRS: At December 31, 2017, the following information is available: 1. Mandrich Inc. repurchased 2,000 common share
> Each of the following items must be considered in preparing a statement of cash flows (indirect method) for Bastille Inc., which follows IFRS, for the year ended December 31, 2017. 1. Equipment that cost $40,000 six years before and was being depreciated
