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Question: Use the information from BE17-1 but


Use the information from BE17-1 but assume the bonds are purchased as an available-for-sale security.
In BE17-2
Garfield Company purchased, as a held-to-maturity investment, $80,000 of the 9%, 5-year bonds of Chester Corporation for $74,086, which provides an 11% return.
Prepare Garfield’s journal entries for
(a) The purchase of the investment,
(b) The receipt of annual interest and discount amortization, and
(c) The year-end fair value adjustment.
(Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $75,500.


> Using the information in E20-2, In E20-2 Prepare a pension worksheet inserting January 1, 2014, balances, showing December 31, 2014, balances, and the journal entry recording pension expense. $ 90,000 105,000 10,000 64,000 40,000 640,000 700,000 150

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> Use the information from BE18-7, but assume Turner uses the completed-contract method. In BE18-7 O’Neil, Inc. began work on a $7,000,000 contract in 2014 to construct an office building. O’Neil uses the percentage-of-completion method. At December 31, 2

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> On January 1, 2011, Jackson Company purchased a building and equipment that have the following useful lives, salvage values, and costs. Building, 40-year estimated useful life, $50,000 salvage value, $800,000 cost Equipment, 12-year estimated useful life

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> Fairbanks Corporation purchased 400 shares of Sherman Inc. common stock as an available for-sale investment for $13,200. During the year, Sherman paid a cash dividend of $3.25 per share. At yearend, Sherman stock was selling for $34.50 per share. Prepare

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> Listed below are various types of accounting changes and errors. ______ 1. Change in a plant asset’s salvage value. ______ 2. Change due to overstatement of inventory. ______ 3. Change from sum-of-the-years’-digits to straight-line method of depreciation

> A lease agreement between Mooney Leasing Company and Rode Company is described in E21-8. In E21-8 Instructions Refer to the data in E21-8 and do the following for the lessor. (a) Compute the amount of the lease receivable at the inception of the lease. (

> For 2014, Sampsell Inc. computed its annual postretirement expense as $240,900. Sampsell’s contribution to the plan during 2014 was $180,000. Prepare Sampsell’s 2014 entry to record postretirement expense.

> The book basis of depreciable assets for Erwin Co. is $900,000, and the tax basis is $700,000 at the end of 2015. The enacted tax rate is 34% for all periods. Determine the amount of deferred taxes to be reported on the balance sheet at the end of 2015.

> Complete the following statements by filling in the blanks. (a) In a period in which a taxable temporary difference reverses, the reversal will cause taxable income to be _______ (less than, greater than) pretax financial income. (b) If a $76,000 balance

> Telephone Sellers Inc. sells prepaid telephone cards to customers. Telephone Sellers then pays the telecommunications company, TeleExpress, for the actual use of its telephone lines. Assume that Telephone Sellers sells $4,000 of prepaid cards in January

> Hendricks Corporation purchased trading investment bonds for $50,000 at par. At December 31, Hendricks received annual interest of $2,000, and the fair value of the bonds was $47,400. Prepare Hendricks’ journal entries for (a) The purchase of the invest

> Bedard Corporation reported net income of $300,000 in 2014 and had 200,000 shares of common stock outstanding throughout the year. Also outstanding all year were 45,000 options to purchase common stock at $10 per share. The average market price of the st

> Carlton Company is involved in four separate industries. The following information is available for each of the four industries. Instructions Determine which of the operating segments are reportable based on the: (a) Revenue test. (b) Operating profit (l

> Data for Krauss Company are presented in E23-5. In E23-5 Krauss’s balance sheet contained the following comparative data at December 31. Instructions Prepare the operating activities section of the statement of cash flows using the indi

> Presented below are the comparative income and retained earnings statements for Denise Habbe Inc. for the years 2014 and 2015. The following additional information is provided: 1. In 2015, Denise Habbe Inc. decided to switch its depreciation method from

> The following facts pertain to a noncancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs y

> Manno Corporation has the following information available concerning its postretirement benefit plan for 2014. Compute Manno’s 2014 postretirement expense. $40,000 47,400 26,900 Service cost Interest cost Actual and expected return

> Jansen Corporation shipped $20,000 of merchandise on consignment to Gooch Company. Jansen paid freight costs of $2,000. Gooch Company paid $500 for local advertising, which is reimbursable from Jansen. By year-end, 60% of the merchandise had been sold fo

> What are the three alternative accounting methods available to a seller that is exposed to continued risks of ownership through return of the product?

> Bradley Co. is expanding its operations and is in the process of selecting the method of financing this program. After some investigation, the company determines that it may (1) issue bonds and with the proceeds purchase the needed assets or (2) lease th

> Carow Corporation purchased, as a held-to-maturity investment, $60,000 of the 8%, 5-year bonds of Harrison, Inc. for $65,118, which provides a 6% return. The bonds pay interest semiannually. Prepare Carow’s journal entries for (a) The purchase of the in

> DiCenta Corporation reported net income of $270,000 in 2014 and had 50,000 shares of common stock outstanding throughout the year. Also outstanding all year were 5,000 shares of cumulative preferred stock, each convertible into 2 shares of common. The pr

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> Krauss Company’s income statement for the year ended December 31, 2014, contained the following condensed information. Krauss’s balance sheet contained the following comparative data at December 31. Instructions Prepar

> Kathleen Cole Inc. acquired the following assets in January of 2012. The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2015, the company decided to ch

> On January 1, 2014, Bensen Company leased equipment to Flynn Corporation. The following information pertains to this lease. 1. The term of the noncancelable lease is 6 years, with no renewal option. The equipment reverts to the lessor at the termination

> Lahey Corp. has three defined benefit pension plans as follows. How will Lahey report these multiple plans in its financial statements? Projected Benefit Obligation Pension Assets (at Fair Value) Plan X Plan Y Plan Z $600,000 900,000 550,000 $500,000

> Aamodt Music sold CDs to retailers and recorded sales revenue of $700,000. During 2014, retailers returned CDs to Aamodt and were granted credit of $78,000. Past experience indicates that the normal return rate is 15%. Prepare Aamodt’s entries to record

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> Explain how the conversion feature of convertible debt has a value (a) to the issuer and (b) to the purchaser.

> Madrasah Corporation issued its financial statements for the year ended December 31, 2014, on March 10, 2015. The following events took place early in 2015. (a) On January 10, 10,000 shares of $5 par value common stock were issued at $66 per share. (b) O

> Data for the Vince Gill Company are presented in E23-3. In E23-3 Instructions Prepare the operating activities section of the statement of cash flows using the direct method. VINCE GILL COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2014 Sa

> Presented below are income statements prepared on a LIFO and FIFO basis for Kenseth Company, which started operations on January 1, 2013. The company presently uses the LIFO method of pricing its inventory and has decided to switch to the FIFO method in

> Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2014. The lease is for an 8-year period and requires equal annual payments of $35,013 at the beginning of each year. The first payment is received on January 1, 201

> Norton Co. had the following amounts related to its pension plan in 2014. Determine for 2014: (a) Norton’s other comprehensive income (loss), and (b) Comprehensive income. Net income for 2014 is $26,000; no amortization of gain or los

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> Travel Inc. sells tickets for a Caribbean cruise to Carmel Company employees. The total cruise package costs Carmel $70,000 from ShipAway cruise liner. Travel Inc. receives a commission of 6% of the total price. Travel Inc. therefore remits $65,800 to Sh

> Garfield Company purchased, as a held-to-maturity investment, $80,000 of the 9%, 5-year bonds of Chester Corporation for $74,086, which provides an 11% return. Prepare Garfield’s journal entries for (a) The purchase of the investment, and (b) The recei

> Tomba Corporation had 300,000 shares of common stock outstanding on January 1, 2014. On May 1, Tomba issued 30,000 shares. (a) Compute the weighted-average number of shares outstanding if the30,000 shares were issued for cash. (b) Compute the weighted-

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> The following information was described in a note of Canon Packing Co. “During August, Holland Products Corporation purchased 311,003 shares of the Company’s common stock which constitutes approximately 35% of the stock outstanding. Holland has since obt

> The income statement of Vince Gill Company is shown below. Additional information: 1. Accounts receivable decreased $360,000 during the year. 2. Prepaid expenses increased $170,000 during the year. 3. Accounts payable to suppliers of merchandise decrease

> Gordon Company started operations on January 1, 2009, and has used the FIFO method of inventory valuation since its inception. In 2015, it decides to switch to the average-cost method. You are provided with the following information. Instructions (a) Wha

> Mike Macinski Leasing Company leases a new machine that has a cost and fair value of $95,000 to Sharrer Corporation on a 3-year noncancelable contract. Sharrer Corporation agrees to assume all risks of normal ownership including such costs as insurance,

> Hawkins Corporation has the following balances at December 31, 2014. How should these balances be reported on Hawkins’s balance sheet at December 31, 2014? $2,600,000 2,000,000 1,100,000 Projected benefit obligation Plan assets at f

> Bandung Corporation began 2014 with a $92,000 balance in the Deferred Tax Liability account. At the end of 2014, the related cumulative temporary difference amounts to $350,000, and it will reverse evenly over the next 2 years. Pretax accounting income f

> Adani Inc. sells goods to Geo Company for $11,000 on January 2, 2014, with payment due in 12 months. The fair value of the goods at the date of sale is $10,000. Prepare the journal entry to record this transaction on January 2, 2014. How much total reven

> What is a variable-interest entity?

> Douglas Corporation had 120,000 shares of stock outstanding on January 1, 2014. On May 1, 2014, Douglas issued 60,000 shares. On July 1, Douglas purchased 10,000 treasury shares, which were re issued on October 1. Compute Douglas’s weighted-average numbe

> Answer each of the questions in the following unrelated situations. (a) The current ratio of a company is 5:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $500,000, what is the amount of current liabilities? (b) A compan

> Each of the following items must be considered in preparing a statement of cash flows (indirect method) for Turbulent Indigo Inc. for the year ended December 31, 2014. (a) Plant assets that had cost $20,000 6 years before and were being depreciated on a

> Identify and explain the major steps involved in preparing the statement of cash flows.

> Taveras Co. decides at the beginning of 2014 to adopt the FIFO method of inventory valuation. Taveras had used the LIFO method for financial reporting since its inception on January 1, 2012, and had maintained records adequate to apply the FIFO method re

> Castle Leasing Company signs a lease agreement on January 1, 2014, to lease electronic equipment to Jan Way Company. The term of the noncancelable lease is 2 years, and payments are required at the end of each year. The following information relates to t

> Shin Corporation had a projected benefit obligation of $3,100,000 and plan assets of $3,300,000 at January 1, 2014. Shin also had a net actuarial loss of $465,000 in accumulated OCI at January 1, 2014. The average remaining service period of Shin’s emplo

> The following information is available for Wenger Corporation for 2013 (its first year of operations). 1. Excess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2014–2017. 2. Deferral, for

> Manual Company sells goods to Nolan Company during 2014. It offers Nolan the following rebates based on total sales to Nolan. If total sales to Nolan are 10,000 units, it will grant a rebate of 2%. If it sells up to 20,000 units, it will grant a rebate o

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> Identifiable assets for the seven industry segments of Foley Corporation are: Based only on the identifiable assets test, which industry segments are reportable? Penley $500 Cheng $200 Konami 550 Takuhi 150 KSC 250 Molina 475 Red Moon 400

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> How should a franchisor account for continuing franchise fees and routine sales of equipment and supplies to franchisees?

> Refer to the data for Barwood Corporation in BE16-6. In BE16-6 On January 1, 2014, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of Barwood’s $5 par value common stock at $50 per share at

> Foley Corporation has seven industry segments with total revenues as follows. Based only on the revenues test, which industry segments are reportable? Penley $600 Cheng $225 Konami 650 Takuhi 200 KSC 250 Molina 700 Red Moon 275

> In 2014, 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

2.99

See Answer