Refer to the situation described in BE 7–15. If credit sales for the year were $8,200,000 and $7,950,000 was collected from credit customers, what was the beginning-of-year balance in accounts receivable? Data from BE 7-15: A company’s year-end balance in accounts receivable is $2,000,000. The allowance for uncollectible accounts had a beginning-of-year credit balance of $30,000. An aging of accounts receivable at the end of the year indicates a required allowance of $38,000. If bad debt expense for the year was $40,000, what was the amount of bad debts written off during the year?
> Listed below are several terms and phrases associated with cash and receivables. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. List A: 1. Internal control 2. Trade discount 3. Cash equival
> Selkirk Company obtained a $15,000 note receivable from a customer on January 1, 2021. The note, along with interest at 10%, is due on July 1, 2021. On February 28, 2020, Selkirk discounted the note at Unionville Bank. The bank’s discount rate is 12%. Re
> Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cov
> Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. W
> Marin Company’s general ledger indicates a cash balance of $22,340 as of September 30, 2021. Early in October Marin received a bank statement indicating that during September Marin had an NSF check of $1,500 returned to a customer and incurred service ch
> If the adjusting entries prepared in BE 2–5 were not recorded, would net income be higher or lower and by how much? Data from BE 2-5: Prepare the necessary adjusting entries at December 31 for each of the items listed in BE 2–4. Depreciation on the equi
> Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivabl
> On June 30, 2021, the High Five Surfboard Company had outstanding accounts receivable of $600,000. On July 1, 2021, the company borrowed $450,000 from the Equitable Finance Corporation and signed a promissory note. Interest at 10% is payable monthly. The
> On January 1, 2021, the Apex Company exchanged some shares of common stock it had been holding as an investment for a note receivable. The note principal plus interest is due on January 1, 2022. The 2021 income statement reported $2,200 in interest reven
> On January 1, 2021, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $515,000 by Elmira on December 31, 2023. The effective interest rate is 8%. Required: 1. How
> Delta Automotive Corporation has the following assets listed in its 12/31/2021 trial balance: Required: 1. Determine the correct balance of cash and cash equivalents to be reported in the current asset section of the 2021 balance sheet. 2. For each of th
> On June 30, 2021, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $30,000 on March 21, 2022. The fair value of the merchandise exchanged is $28,200. Esquire views the fi
> On June 30, 2021, the Esquire Company sold some merchandise to a customer for $30,000. In payment, Esquire agreed to accept a 6% note requiring the payment of interest and principal on March 31, 2022. The 6% rate is appropriate in this situation. Require
> General Mills reported the following information in its 2017 financial statements ($ in millions): A note disclosed that the allowance for uncollectible accounts had a balance of $24.3 million and $29.6 million at the end of 2017 and 2016, respectively.
> Castle Company provides estimates for its uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $17,280 at the beginning of 2021 and a $22,410 credit balance at the end of 2021 (after adjusting entries). If the direct w
> Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2021, accounts receivable totaled $625,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balanc
> Refer to the situation described in BE 7–19. Assuming that the sale criteria are not met, describe how Logitech would account for the transfer. Data from BE 7-19: Logitech Corporation transferred $100,000 of accounts receivable to a local bank. The tran
> Zuo Software categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due = $400,000; estimated uncollectible = 8%. 2. Accounts 1–30 days past due = $50,000; estimat
> Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due = $180,000; estimated uncollectible = 10%. 2. Accounts 1–45 days past due = $25,000; e
> Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $4,500,000, and the estimated bad debt percentage is 1.5%. No pr
> Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $30,000 at the beginning of 2021. No previously written-off ac
> Pincus Associates uses the allowance method to account for bad debts. During 2021, its first year of operations, Pincus provided a total of $250,000 of services on account. In 2021, the company wrote off uncollectible accounts of $10,000. By the end of 2
> The controller of the Red Wing Corporation is in the process of preparing the company’s 2021 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the balance sheet. The fol
> On May 1, 2021, Meta Computer, Inc., enters into a contract to sell 5,000 units of Comfort Office Keyboard to one of its clients, Bionics, Inc., at a fixed price of $95,000, to be settled by a cash payment on May 1. Delivery is scheduled for June 1, 2021
> On March 1, 2021, Gold Examiner receives $147,000 from a local bank and promises to deliver 100 units of certified 1-oz. gold bars on a future date. The contract states that ownership passes to the bank when Gold Examiner delivers the products to Brink’s
> n 2021, Long Construction Corporation began construction work under a three-year contract. The contract price is $1,600,000. Long recognizes revenue over time according to percentage of completion for financial reporting purposes. The financial statement
> Brady Construction Company contracted to build an apartment complex for a price of $5,000,000. Construction began in 2021 and was completed in 2023. The following is a series of independent situations, numbered 1 through 6, involving differing costs for
> On April 19, 2021, Millipede Machinery sold a tractor to Thomas Hartwood, accepting a note promising payment of $120,000 in five years. The applicable effective interest rate is 7%. What amount of sales revenue would Millipede recognize on April 19, 2021
> On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2021, costs of $2,000,000 were incurred, with estimated costs of $4,000,000 yet to be incurred. Billings o
> On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2021, costs of $2,000,000 were incurred with estimated costs of $4,000,000 yet to be incurred. Billings of
> On June 15, 2021, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $220 million. The expected completion date is April 1, 2023, just in time for the 2023 baseball season. Costs inc
> Ski West, Inc., operates a downhill ski area near Lake Tahoe, California. An all-day adult lift ticket can be purchased for $85. Adult customers also can purchase a season pass that entitles the pass holder to ski any day during the season, which typical
> Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2021 and was completed in 2022. Data relating to the contract are summarized below: Required: 1. Compute the amount of revenue and g
> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Required: Determine the specific nine-digit Codification citation (XXX-XX-XX-XX) for accounting for each of the following items: 1. What disclosures are required with r
> Monitor Muffler sells franchise arrangements throughout the United States and Canada. Under a franchise agreement, Monitor receives $600,000 in exchange for satisfying the following separate performance obligations: (1) franchisees have a five-year right
> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Required: Determine the specific nine-digit Codification citation (XXX-XX-XX-XX) for accounting for each of the following items: 1. What alternative approaches can be u
> Furtastic manufactures imitation fur garments. On June 1, 2021, Furtastic made a sale to Willett’s Department Store under terms that require Willett to pay $150,000 to Furtastic on June 30, 2021. In a separate transaction on June 15, 2021, Furtastic purc
> Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles that have a fair market value of $40,000. Seneca paid for the snowmobiles on January 1, 2021, with delivery to occur subsequently. Unless informed otherwise, assume that Arctic views the time
> On December 1, 2021, Davenport Company sold merchandise to a customer for $20,000. In payment for the merchandise, the customer signed a 6% note requiring the payment of interest and principal on March 1, 2022. How much interest revenue will the company
> Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2021, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $40,000 on a future date. Unless informed otherwise, assume th
> Assume the same facts as in E 6–10. Required: Complete the requirements of E 6–10 assuming that Rocky bases estimates of variable consideration on the expected value it expects to receive. Data from E 6-10: Rocky Guide Service provides guided 1–5-day hi
> Using the appropriate present value table and assuming a 12% annual interest rate, determine the present value on December 31, 2021, of a five-period annual annuity of $5,000 under each of the following situations: 1. The first payment is received on Dec
> Wiseman Video plans to make four annual deposits of $2,000 each to a special building fund. The fund’s assets will be invested in mortgage instruments expected to pay interest at 12% on the fund’s balance. Using the appropriate time-value of money table,
> Determine the combined present value as of December 31, 2021, of the following four payments to be received at the end of each of the designated years, assuming an annual interest rate of 8%.
> On March 31, 2021, Southwest Gas leased equipment from a supplier and agreed to pay $200,000 annually for 20 years beginning March 31, 2022. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the pr
> On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the lease require Fly-By-Night to make 20 annual payments of $400,000 on each June 30. Generally accepted accounting principles require this lease to be reco
> On June 30, 2021, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2036 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semian
> On September 30, 2021, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of $300 million. The bonds mature on September 30, 2041 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on
> On April 1, 2021, John Vaughn purchased appliances from the Acme Appliance Company for $1,200. In order to increase sales, Acme allows customers to pay in installments and will defer any payments for six months. John will make 18 equal monthly payments,
> Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2021. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of $5,000 on each September 30, beginning on September 30, 2024.
> 1. Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-period annuity of $8,000 beginning one year from today, or (3) a six-period annuit
> On September 17, 2021, Ziltech, Inc., entered into an agreement to sell one of its divisions that qualifies as a component of the entity according to generally accepted accounting principles. By December 31, 2021, the company’s fiscal year-end, the divis
> Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been
> Esquire Comic Book Company had income before tax of $1,000,000 in 2021 before considering the following material items: 1. Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting pri
> Chance Company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by generally accepted accounting principles. The farm equipment component had been un
> The following incorrect income statement was prepared by the accountant of the Axel Corporation: Required: Prepare a multiple-step income statement for 2021 applying generally accepted accounting principles. The income tax rate is 25%. Be sure to includ
> The trial balance for Lindor Corporation, a manufacturing company, for the year ended December 31, 2021, included the following accounts: The gain on debt securities is unrealized and classified as other comprehensive income. The trial balance does not i
> Assume the same facts as in E 4–31, but that Shields Company reports under IFRS. For each expenditure, indicate the amount that would be reported in the quarterly income statements for the periods ending March 31, June 30, September 30,
> Shields Company is preparing its interim report for the second quarter ending June 30. The following payments were made during the first two quarters: Required: For each expenditure, indicate the amount that would be reported in the quarterly income stat
> A company’s year-end balance in accounts receivable is $2,000,000. The allowance for uncollectible accounts had a beginning-of-year credit balance of $30,000. An aging of accounts receivable at the end of the year indicates a required allowance of $38,00
> The following is a partial trial balance for General Lighting Corporation as of December 31, 2021: There were 160,000 shares of common stock outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25%. Required:
> Joplin Laminating Corporation reported income before income taxes during the first three quarters, and management’s estimates of the annual effective tax rate at the end of each quarter as shown below: Required: Determine the income tax
> This exercise is based on the Peabody Toys, Inc., data from E 4–27. Required: 1. Determine the following components of the DuPont framework for 2021: a. Profit margin on sales b. Asset turnover c. Equity multiplier d. Return on equity 2
> The following condensed information was reported by Peabody Toys, Inc., for 2021 and 2020: Required: 1. Determine the following ratios for 2021: a. Profit margin on sales b. Return on assets c. Return on equity 2. Determine the amount of dividends paid t
> The 2021 income statement of Anderson Medical Supply Company reported net sales of $8 million, cost of goods sold of $4.8 million, and net income of $800,000. The following table shows the company’s comparative balance sheets for 2021 a
> Refer to the situation described in E 4–20. Required: Prepare the cash flows from operating activities section of Tiger’s 2021 statement of cash flows using the direct method. Assume that all purchases and sales of inv
> Presented below is the 2021 income statement and comparative balance sheet information for Tiger Enterprises. Required: Prepare Tiger’s statement of cash flows, using the indirect method to present cash flows from operating activities.
> The following is a partial trial balance for the Green Star Corporation as of December 31, 2021: There were 100,000 shares of common stock outstanding throughout 2021. Required: 1. Prepare a single-step income statement for 2021, including EPS disclosure
> The statement of cash flows for the year ended December 31, 2021, for Bronco Metals is presented below. Required: Prepare the statement of cash flows assuming that Bronco prepares its financial statements according to International Financial Reporting St
> Chew Corporation prepares its statement of cash flows using the indirect method of reporting operating activities. Net income for the 2021 fiscal year was $1,250,000. Depreciation expense of $140,000 was included with operating expenses in the income sta
> Refer to the situation described in BE 7–13. Answer the two questions assuming the company estimates that future bad debts will equal 10% of the year-end balance in accounts receivable. Data from BE 7-13: The following information relates to a company’s
> Cemptex Corporation prepares its statement of cash flows using the indirect method to report operating activities. Net income for the 2021 fiscal year was $624,000. Depreciation and amortization expense of $87,000 was included with operating expenses in
> The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. 1. Issued 30,000 shares of common stock in exchange for $300,000 in cash. 2. Purchased equipment at a cost of $40,0
> The accounting records of Hampton Company provided the data below ($ in thousands). Required: Prepare a reconciliation of net income to net cash flows from operating activities.
> Refer to the situation described in E 4–13. Required: Prepare the statement of cash flows assuming that Bluebonnet prepares its financial statements according to International Financial Reporting Standards. Where IFRS allows flexibility
> The following summary transactions occurred during 2021 for Bluebonnet Bakers: The balance of cash and cash equivalents at the beginning of 2021 was $17,000. Required: Prepare a statement of cash flows for 2021 for Bluebonnet Bakers. Use the direct metho
> The statement of cash flows classifies all cash inflows and outflows into one of the three categories shown below and lettered from a through c. In addition, certain transactions that do not involve cash are reported in the statement as noncash investing
> The Massoud Consulting Group reported net income of $1,354,000 for its fiscal year ended December 31, 2021. In addition, during the year the company experienced a positive foreign currency translation adjustment of $240,000 and an unrealized loss on debt
> The Esposito Import Company had 1 million shares of common stock outstanding during 2021. Its income statement reported the following items: income from continuing operations, $5 million; loss from discontinued operations, $1.6 million. All of these amou
> Pandora Corporation operates several factories in the Midwest that manufacture consumer electronics. The December 31, 2021, year-end trial balance contained the following income statement items: Required: Calculate the company’s operati
> The following is the balance sheet of Korver Supply Company at December 31, 2020 (prior year). Transactions during 2021 (current year) were as follows: 1. Sales to customers on account $800,000 2. Cash collected from customers 780,000 3. Purchase of merc
> Crell Computers categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due = $60,000; estimated uncollectible = 5%. 2. Accounts 1–30 days past due = $15,000; estim
> Cone Corporation is in the process of preparing its December 31, 2021, balance sheet. There are some questions as to the proper classification of the following items: a. $50,000 in cash restricted in a savings account to pay bonds payable. The bonds matu
> The following balance sheet for the Los Gatos Corporation was prepared by a recently hired accountant. In reviewing the statement you notice several errors. Additional Information: 1. Cash includes a $20,000 restricted amount to be used for repayment of
> Presented next are the ending balances of accounts for the Kansas Instruments Corporation at December 31, 2021. Additional Information: 1. The notes receivable, along with any accrued interest, are due on November 22, 2022. 2. The notes payable are due i
> The following are the ending balances of accounts at December 31, 2021, for the Valley Pump Corporation. Additional Information: 1. The $120,000 balance in the land account consists of $100,000 for the cost of land where the plant and office buildings ar
> The following is a December 31, 2021, post-closing trial balance for the Jackson Corporation. Required: Prepare a classified balance sheet for Jackson Corporation at December 31, 2021, by properly classifying each of the accounts.
> The following are the typical classifications used in a balance sheet: a. Current assets b. Investments c. Property, plant, and equipment d. Intangible assets e. Other assets f. Current liabilities g. Long-term liabilities h. Paid-in capital i. Retained
> Refer to E 3–21. Required: How might your answers differ if Canton Corporation prepares its segment disclosure according to International Financial Reporting Standards? Data from E3-21: The Canton Corporation operates in four distinct
> The Canton Corporation operates in four distinct business segments. The segments, along with 2021 information on revenues, assets, and net income, are listed below ($ in thousands): Required: 1. For which segments must Canton report supplementary informa
> Best Buy Co, Inc., is a leading retailer specializing in consumer electronics. A condensed income statement and balance sheet for the fiscal year ended January 28, 2017, are shown next. Liquidity and solvency ratios for the industry are as follows: Requi
> The 2021 balance sheet for Hallbrook Industries, Inc., is shown below. The company’s 2021 income statement reported the following amounts ($ in thousands): Required: Determine the following ratios for 2021: 1. Current ratio 2. Acid-tes
> At the end of the year, Syer Associates had a debit balance in its allowance for uncollectible accounts of $12,000 before adjustment. The balance in Syer’s gross accounts receivable is $600,000. Syer’s management estimates that 10% of its accounts receiv
> Hallergan Company produces car and truck batteries that it sells primarily to auto manufacturers. Dorothy Hawkins, the company’s controller, is preparing the financial statements for the year ended December 31, 2021. Hawkins asks for your advice concerni
> The following December 31, 2021, fiscal year-end account balance information is available for the Stonebridge Corporation: The only asset not listed is short-term investments. The only liabilities not listed are $30,000 notes payable due in two years and
> Prepare the necessary adjusting entries at December 31, 2021, 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, 2021,
> Prepare the necessary adjusting entries at December 31, 2021, for the Falwell 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 ins
> Some of the ledger accounts for the Sanderson Hardware Company are numbered and listed below. For each of the October 2021 transactions numbered 1 through 10 below, indicate by account number which accounts should be debited and which should be credited
> Listed below are several terms and phrases associated with the accounting processing cycle. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. List A: 1. Source documents 2. Transaction analysi
> The following transactions occurred during the month of June 2021 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
