The following statement is an excerpt from the FASB pronouncement related to interim reporting. Interim financial information is essential to provide investors and others with timely information as to the progress of the enterprise. The usefulness of such information rests on the relationship that it has to the annual results of operations. Accordingly, the Board has concluded that each interim period should be viewed primarily as an integral part of an annual period. In general, the results for each interim period should be based on the accounting principles and practices used by an enterprise in the preparation of its latest annual financial statements unless a change in an accounting practice or policy has been adopted in the current year. The Board has concluded, however, that certain accounting principles and practices followed for annual reporting purposes may require modification at interim reporting dates so that the reported results for the interim period may better relate to the results of operations for the annual period. Instructions The following six independent cases present how accounting facts might be reported on an individual company’s interim financial reports. For each of these cases, state whether the method proposed to be used for interim reporting would be acceptable under generally accepted accounting principles applicable to interim financial data. Support each answer with a brief explanation. a. J. D. Long Company takes a physical inventory at year-end for annual financial statement purposes. Inventory and cost of sales reported in the interim quarterly statements are based on estimated gross profit rates, because a physical inventory would result in a cessation of operations. Long Company does have reliable perpetual inventory records. b. Rockford Company is planning to report one-fourth of its pension expense each quarter. c. Republic Company wrote inventory down to reflect lower-of-cost-or-market in the first quarter. At year-end, the market exceeds the original acquisition cost of this inventory. Consequently, management plans to write the inventory back up to its original cost as a year-end adjustment. d. Gansner Company realized a large gain on the sale of investments at the beginning of the second quarter. The company wants to report one-third of the gain in each of the remaining quarters. e. Fredonia Company has estimated its annual audit fee. It plans to pro rate this expense equally over all four quarters. f. LaBrava Company was reasonably certain it would have an employee strike in the third quarter. As a result, it shipped heavily during the second quarter but plans to defer the recognition of the sales in excess of the normal sales volume. The deferred sales will be recognized as sales in the third quarter when the strike is in progress. LaBrava Company management thinks this is more representative of normal second- and third-quarter operations.
> Three moles of an ideal monatomic gas expands at a constant pressure of 2.50 atm; the volume of the gas changes from 3.20 × 10-2 m3 to 4.50 × 10-2 m3. Calculate (a). the initial and final temperatures of the gas; (b). the amount of work the gas does in
> In an experiment to simulate conditions inside an automobile engine, 0.185 mol of air at 780 K and 3.00 × 106 Pa is contained in a cylinder of volume 40.0 cm3. Then 645 J of heat is transferred to the cylinder. (a) If the volume of the cylin
> A gas in a cylinder expands from a volume of 0.110 m3 to 0.320 m3. Heat flows into the gas just rapidly enough to keep the pressure constant at 1.65 × 105 Pa during the expansion. The total heat added is 1.15 × 105 J. (a). Find the work done by the gas.
> Figure E19.8 shows a pV-diagram for an ideal gas in which its absolute temperature at b is one-fourth of its absolute temperature at a. Figure E19.8: (a). What volume does this gas occupy at point b? (b). How many joules of work was done by or on the
> An ideal gas is taken from a to b on the pV-diagram shown in Fig. E19.15. During this process, 700 J of heat is added and the pressure doubles. Fig. E19.15: (a). How much work is done by or on the gas? Explain. (b). How does the temperature of the g
> When water is boiled at a pressure of 2.00 atm, the heat of vaporization is 2.20 × 106 J/kg and the boiling point is 120°C. At this pressure, 1.00 kg of water has a volume of 1.00 × 10-3 m3, and 1.00 kg of steam has a volume of 0.824 m3. (a). Compute th
> The pV-diagram in Fig. E19.13 shows a process abc involving 0.450 mol of an ideal gas. Figure E19.13: (a). What was the temperature of this gas at points a, b, and c? (b). How much work was done by or on the gas in this process? (c) How much heat h
> A gas in a cylinder is held at a constant pressure of 1.80 × 105 Pa and is cooled and compressed from 1.70 m3 to 1.20 m3. The internal energy of the gas decreases by 1.40 × 105 J. (a). Find the work done by the gas. (b). Find the absolute value of the h
> The process abc shown in the pV-diagram in Fig. E19.11 involves 0.0175 mol of an ideal gas. Fig. E19.11: (a). What was the lowest temperature the gas reached in this process? Where did it occur? (b). How much work was done by or on the gas from a to
> Five moles of an ideal monatomic gas with an initial temperature of 127°C expand and, in the process, absorb 1500 J of heat and do 2100 J of work. What is the final temperature of the gas?
> In which situation must you do more work: inflating a balloon at sea level or inflating the same balloon to the same volume at the summit of Mt. McKinley? Explain in terms of pressure and volume change.
> Six moles of an ideal gas are in a cylinder fitted at one end with a movable piston. The initial temperature of the gas is 27.0°C and the pressure is constant. As part of a machine design project, calculate the final temperature of the gas after it has d
> (a). In Fig. 19.7a, consider the closed loop 1→ 3→ 2→ 4→ 1. This is a cyclic process in which the initial and final states are the same. Find the total work done by the system in thi
> A gas undergoes two processes. In the first, the volume remains constant at 0.200 m3 and the pressure increases from 2.00 × 105 Pa to 5.00 × 105 Pa. The second process is a compression to a volume of 0.120 m3 at a constant pressure of 5.00 × 105 Pa. (a)
> During the time 0.305 mol of an ideal gas undergoes an isothermal compression at 22.0 °C, 392 J of work is done on it by the surroundings. (a). If the final pressure is 1.76 atm, what was the initial pressure? (b). Sketch a pV-diagram for the process.
> The graph in Fig. E19.4 shows a pV-diagram of the air in a human lung when a person is inhaling and then exhaling a deep breath. Such graphs, obtained in clinical practice, are normally somewhat curved, but we have modeled one as a set of straight lines
> A thermodynamic system undergoes a cyclic process as shown in Fig. Q19.24. The cycle consists of two closed loops: I and II. (a). Over one complete cycle, does the system do positive or negative work? (b). In each loop, is the net work done by the syst
> A system is taken from state a to state b along the three paths shown in Fig. Q19.23. (a). Along which path is the work done by the system the greatest? The least? (b). If Ub > Ua, along which path is the absolute value of the heat transfer, |Q| , t
> The gas used in separating the two uranium isotopes 235U and 238U has the formula UF6. If you added heat at equal rates to a mole of UF6 gas and a mole of H2 gas, which one’s temperature would you expect to rise faster? Explain.
> If you run a movie film backward, it is as if the direction of time were reversed. In the time-reversed movie, would you see processes that violate conservation of energy? Conservation of linear momentum? Would you see processes that violate the second l
> Suppose that you put a hot object in thermal contact with a cold object and observe (much to your surprise) that heat flows from the cold object to the hot object, making the cold one colder and the hot one hotter. Does this process necessarily violate t
> Give two examples of reversible processes and two examples of irreversible processes in purely mechanical systems, such as blocks sliding on planes, springs, pulleys, and strings. Explain what makes each process reversible or irreversible.
> Are the earth and sun in thermal equilibrium? Are there entropy changes associated with the transmission of energy from the sun to the earth? Does radiation differ from other modes of heat transfer with respect to entropy changes? Explain your reasoning.
> The free expansion of an ideal gas is an adiabatic process and so no heat is transferred. No work is done, so the internal energy does not change. Thus, Q/T = 0, yet the randomness of the system and thus its entropy have increased after the expansion. Wh
> How can the thermal conduction of heat from a hot object to a cold object increase entropy when the same amount of heat that flows out of the hot object flows into the cold one?
> On a sunny day, large “bubbles” of air form on the sun warmed earth, gradually expand, and finally break free to rise through the atmosphere. Soaring birds and glider pilots are fond of using these “thermals” to gain altitude easily. This expansion is es
> In Example 20.4, a Carnot refrigerator requires a work input of only 230 J to extract 346 J of heat from the cold reservoir. Doesn’t this discrepancy imply a violation of the law of conservation of energy? Explain why or why not.
> Two moles of an ideal gas are compressed in a cylinder at a constant temperature of 65.0°C until the original pressure has tripled. (a). Sketch a pV-diagram for this process. (b). Calculate the amount of work done.
> A liquid is irregularly stirred in a well-insulated container and thereby undergoes a rise in temperature. Regard the liquid as the system. Has heat been transferred? How can you tell? Has work been done? How can you tell? Why is it important that the st
> Why must a room air conditioner be placed in a window rather than just set on the floor and plugged in? Why can a refrigerator be set on the floor and plugged in?
> In a test of the effects of low temperatures on the gas mixture, a cylinder filled at 20.0°C to 2000 psi (gauge pressure) is cooled slowly and the pressure is monitored. What is the expected pressure at -5.00°C if the gas remains a homogeneous mixture?
> A large research balloon containing 2.00 × 103 m3 of helium gas at 1.00 atm and a temperature of 15.00C rises rapidly from ground level to an altitude at which the atmospheric pressure is only 0.900 atm (Fig. P19.50). Assume the helium behav
> A monatomic ideal gas that is initially at 1.50 × 105 Pa and has a volume of 0.0800 m3 is compressed adiabatically to a volume of 0.0400 m3. (a). What is the final pressure? (b). How much work is done by the gas? (c). What is the ratio of the final te
> Five moles of monatomic ideal gas have initial pressure 2.50 × 103 Pa and initial volume 2.10 m3. While undergoing an adiabatic expansion, the gas does 1480 J of work. What is the final pressure of the gas after the expansion?
> When you blow on the back of your hand with your mouth wide open, your breath feels warm. But if you partially close your mouth to form an “o” and then blow on your hand, your breath feels cool. Why?
> On a warm summer day, a large mass of air (atmospheric pressure 1.01 × 105 Pa) is heated by the ground to 26.0°C and then begins to rise through the cooler surrounding air. (This can be treated approximately as an adiabatic process; why?) Calculate the t
> A player bounces a basketball on the floor, compressing it to 80.0% of its original volume. The air (assume it is essentially N2 gas) inside the ball is originally at 20.0°C and 2.00 atm. The ball’s inside diameter is 23.9 cm. (a). What temperature does
> Heat Q flows into a monatomic ideal gas, and the volume increases while the pressure is kept constant. What fraction of the heat energy is used to do the expansion work of the gas?
> When a quantity of monatomic ideal gas expands at a constant pressure of 4.00 × 104 Pa, the volume of the gas increases from 2.00 × 10-3 m3 to 8.00 × 10-3 m3. What is the change in the internal energy of the gas?
> During an isothermal compression of an ideal gas, 410 J of heat must be removed from the gas to maintain constant temperature. How much work is done by the gas during the process?
> When a wet cloth is hung up in a hot wind in the desert, it is cooled by evaporation to a temperature that may be 20 C0 or so below that of the air. Discuss this process in light of the second law of thermodynamics.
> Explain why each of the following processes is an example of increasing randomness: mixing hot and cold water; free expansion of a gas; irreversible heat flow; developing heat by mechanical friction. Are entropy increases involved in all of these? Why or
> Does a refrigerator full of food consume more power if the room temperature is 200C than if it is 150C? Or is the power consumption the same? Explain your reasoning.
> A growing plant creates a highly complex and organized structure out of simple materials such as air, water, and trace minerals. Does this violate the second law of thermodynamics? Why or why not? What is the plant’s ultimate source of energy? Explain.
> Some critics of biological evolution claim that it violates the second law of thermodynamics, since evolution involves simple life forms developing into more complex and more highly ordered organisms. Explain why this is not a valid argument against evol
> Compare the pV-diagram for the Otto cycle in Fig. 20.6 with the diagram for the Carnot heat engine in Fig. 20.13. Explain some of the important differences between the two cycles. Fig. 20.6: Fig. 20.13: Otto cycle 2 Heating at constant volume (fu
> Two moles of an ideal gas are heated at constant pressure from T = 27°C to T = 107°C. (a). Draw a pV-diagram for this process. (b). Calculate the work done by the gas.
> Katherine Irving, controller of Lotan Corp., is aware of a pronouncement on accounting changes. After reading the pronouncement, she is confused about what action should be taken on the following items related to Lotan Corp. for the year 2017. 1. In 2017
> The following are three independent, unrelated sets of facts relating to accounting changes. Situation 1: Sanford Company is in the process of having its first audit. The company has used the cash basis of accounting for revenue recognition. Sanford pr
> Snider Corporation, a publicly traded company, is preparing the interim financial data which it will issue to its stockholders and the Securities and Exchange Commission (SEC) at the end of the first quarter of the 2017–2018 fiscal year. Snider’s financi
> What comprises a lessee’s minimum lease payments? What is excluded?
> The following article appeared in the Wall Street Journal. Washington—The Securities and Exchange Commission staff issued guidelines for companies grappling with the problem of dividing up their business into industry segments for their annual reports.
> Presented in Illustration 21-31 are the financial statement disclosures from the January 31, 2015, annual report of Wal-Mart Stores, Inc. Instructions Answer the following questions related to these disclosures. a. What is the total obligation under ca
> The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G’s financial statements, accompanying notes, and manageme
> As stated in the chapter, notes to the financial statements are the means of explaining the items presented in the main body of the statements. Common note disclosures relate to such items as accounting policies, segmented information, and interim report
> You are compiling the consolidated financial statements for Winsor Corporation International. The corporation’s accountant, Anthony Reese, has provided you with the following segment information. Instructions Determine which of the a
> Botticelli Inc. was organized in late 2015 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported net incomes. aIncludes a $10,000 increase because of
> The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G’s financial statements and the accompanying notes to answ
> The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G’s financial statements and the accompanying notes to answ
> The financial statements and notes to the financial statements for Delta Air Lines and Southwest Airlines can be found online. Instructions Use information found in the companies’ financial reports to answer the following questions. a. What types of l
> The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online. Instructions Use the companies’ financial
> The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online. Instructions Use the companies’ financi
> The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online. Instructions Use the companies’ financi
> Salaur Company is evaluating a lease arrangement being offered by TSP Company for use of a computer system. The lease is noncancelable, and in no case does Salaur receive title to the computers during or at the end of the lease term. The lease starts on
> Savannah, Inc. is a company that manufactures and sells a single product. Unit sales for each of the four quarters of 2017 are projected as follows. Quarter…………………Units First…………………..80,000 Second……………..150,000 Third………………..550,000 Fourth………………120,000 A
> The income statement for the year ended December 31, 2017, for Laskowski Manufacturing Company contains the following condensed information. Included in operating expenses is a $24,000 loss resulting from the sale of machinery for $270,000 cash. The co
> In preparation for significant expansion of its international operations, ABC Co. has adopted a plan to gradually shift to the same accounting methods as used by its international competitors. Part of this plan includes a switch from LIFO inventory accou
> Goring Dairy leases its milking equipment from King Finance Company under the following lease terms. 1. The lease term is 10 years, noncancelable, and requires equal rental payments of $30,300 due at the beginning of each year starting January 1, 2017.
> At December 31, 2017, Coburn Corp. has assets of $10,000,000, liabilities of $6,000,000, common stock of $2,000,000 (representing 2,000,000 shares of $1 par common stock), and retained earnings of $2,000,000. Net sales for the year 2017 were $18,000,000,
> Equipment was purchased on January 2, 2017, for $24,000, but no portion of the cost has been charged to depreciation. The corporation wishes to use the straight-line method for these assets, which have been estimated to have a life of 10 years and no sal
> An entry to record Purchases and related Accounts Payable of $13,000 for merchandise purchased on December 23, 2018, was recorded in January 2019. This merchandise was not included in inventory at December 31, 2018. What effect does this error have on re
> During 2017, Simms Company redeemed $2,000,000 of bonds payable for $1,880,000 cash. Indicate how this transaction would be reported on a statement of cash flows, if at all.
> Elliott Corp. failed to record accrued salaries for 2016, $2,000; 2017, $2,100; and 2018, $3,900. What is the amount of the overstatement or understatement of Retained Earnings at December 31, 2019?
> The net income for Fallon Company for 2017 was $320,000. During 2017, depreciation on plant assets was $124,000, amortization of patent was $40,000, and the company incurred a loss on sale of plant assets of $21,000. Compute net cash flow from operating
> Use the information for Rick Kleckner Corporation from IFRS21-7. Assume that at December 31, 2017, Kleckner made an adjusting entry to accrue interest expense of $29,530 on the lease. Prepare Kleckner’s January 1, 2018, journal entry to record the second
> Rick Kleckner Corporation recorded a finance lease at $300,000 on January 1, 2017. The interest rate is 12%. Kleckner Corporation made the first lease payment of $53,920 on January 1, 2017. The lease requires eight annual payments. The equipment has a us
> When the records of Debra Hanson Corporation were reviewed at the close of 2018, the following errors were discovered. For each item, indicate by a check mark in the appropriate column whether the error resulted in an overstatement, an understatement, or
> Holder-Webb Company began operations on January 1, 2015, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2018. The following information is available for the years 2015â€
> You are auditing the December 31, 2017, financial statements of Hockney, Inc., manufacturer of novelties and party favors. During your inspection of the company garage, you discovered that a used automobile not listed in the equipment subsidiary ledger i
> On January 1, 2017, a machine was purchased for $900,000 by Young Co. The machine is expected to have an 8-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to St. Leger Inc. on January 1, 2017, at
> Ace Inc. produces electronic components for sale to manufacturers of radios, television sets, and digital sound systems. In connection with her examination of Ace’s financial statements for the year ended December 31, 2018, Gloria Rodd, CPA, completed fi
> The transactions listed below relate to Wainwright Inc. You are to assume that on the date on which each of the transactions occurred, the corporation’s accounts showed only common stock ($100 par) outstanding, a current ratio of 2.7:1, and a substantial
> In 2017, Elbert Corporation had net cash provided by operating activities of $531,000, net cash used by investing activities of $963,000, and net cash provided by financing activities of $585,000. At January 1, 2017, the cash balance was $333,000. Comput
> Moxley Corporation had January 1 and December 31 balances as follows. For 2017, cost of goods sold was $500,000. Compute Moxley’s 2017 cash payments to suppliers. 1/1/17 12/31/17 $95,000 Inventory Accounts payable $113,000 69,000
> At January 1, 2017, Eikenberry Inc. had accounts receivable of $72,000. At December 31, 2017, accounts receivable is $54,000. Sales revenue for 2017 total $420,000. Compute Eikenberry’s 2017 cash receipts from customers.
> Use the information from BE23-4 for Bloom Corporation. Prepare the cash flows from operating activities section of Bloom’s 2017 statement of cash flows using the indirect method. From BE23-4: Bloom Corporation had the following 2017 income statement. S
> Bloom Corporation had the following 2017 income statement. Sales revenue………………….…………$200,000 Cost of goods sold………………………...120,000 Gross profit……………………………………80,000 Operating expenses (includes depreciation of $21,000)…………………………………..50,000 Net income…………
> Stansfield Corporation had the following activities in 2017. 1. Payment of accounts payable $770,000. 2. Issuance of common stock $250,000. 3. Payment of dividends $350,000. 4. Collection of note receivable $100,000. 5. Issuance of bonds payable $51
> Wainwright Corporation had the following activities in 2017. 1. Sale of land $180,000. 2. Purchase of inventory $845,000. 3. Purchase of treasury stock $72,000. 4. Purchase of equipment $415,000. 5. Issuance of common stock $320,000. 6. Purchase of
> On January 3, 2016, Martin Company purchased for $500,000 cash a 10% interest in Renner Corp. On that date, the net assets of Renner had a book value of $3,700,000. The excess of cost over the underlying equity in net assets is attributable to undervalue
> In 2017, Leppard Inc. issued 1,000 shares of $10 par value common stock for land worth $40,000. a. Prepare Leppard’s journal entry to record the transaction. b. Indicate the effect the transaction has on cash. c. Indicate how the transaction is report
> In 2017, Wild Corporation reported a net loss of $70,000. Wild’s only net income adjustments were depreciation expense $81,000, and increase in accounts receivable $8,100. Compute Wild’s net cash provided (used) by operating activities.
> In June 2017, the board of directors for McElroy Enterprises Inc. authorized the sale of $10,000,000 of corporate bonds. Jennifer Grayson, treasurer for McElroy Enterprises Inc., is concerned about the date when the bonds are issued. The company really n
> Hendrickson Corporation reported net income of $50,000 in 2017. Depreciation expense was $17,000. The following working capital accounts changed. Accounts receivable…………………………….$11,000 increase Available-for-sale debt securities………….16,000 increase Inve
> Novak Corporation is preparing its 2017 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2017 statement of cash flows.
> Indicate the effect—Understate, Overstate, No Effect—that each of the following errors has on 2017 net income and 2018 net income. 2017 2018 (a) Equipment (with a useful life of 5 years) wa purchased and expensed
> In 2017, Bailey Corporation discovered that equipment purchased on January 1, 2015, for $50,000 was expensed at that time. The equipment should have been depreciated over 5 years, with no salvage value. The effective tax rate is 30%. Prepare Bailey’s 201
> Sesame Company purchased a computer system for $74,000 on January 1, 2016. It was depreciated based on a 7-year life and an $18,000 salvage value. On January 1, 2018, Sesame revised these estimates to a total useful life of 4 years and a salvage value of
> Shannon, Inc., changed from the LIFO cost flow assumption to the FIFO cost flow assumption in 2017. The increase in the prior year’s income before taxes is $1,200,000. The tax rate is 40%. Prepare Shannon’s 2017 journal entry to record the change in acco
> Simmons Corporation owns stock of Armstrong, Inc. Prior to 2017, the investment was accounted for using the equity method. In early 2017, Simmons sold part of its investment in Armstrong, and began using the fair value method. In 2017, Armstrong earned n
