Questions from Intermediate Accounting

Q: Little Corp. was experiencing cash flow problems and was unable to

Little Corp. was experiencing cash flow problems and was unable to pay its $105,000 account payable to Big Corp. when it fell due on September 30, 2017. Big agreed to substitute a one-year note for th...

Q: On September 1, 2017, Myo Inc. sold goods to

On September 1, 2017, Myo Inc. sold goods to Khin Corporation, a new customer. Before shipping the goods, Myo’s credit and collections department conducted a procedural credit check and determined tha...

Q: By December 31, 2017, Clearing Corp. had performed a

By December 31, 2017, Clearing Corp. had performed a significant amount of environmental consulting services for Rank Ltd. Rank was short of cash, and Clearing agreed to accept a $200,000, non–interes...

Q: On April 1, 2017, Ibrahim Corporation assigns $400,

On April 1, 2017, Ibrahim Corporation assigns $400,000 of its accounts receivable to First National Bank as collateral for a $200,000 loan that is due July 1, 2017. The assignment agreement calls for...

Q: The trial balance before adjustment for Bassel Company shows the following balances

The trial balance before adjustment for Bassel Company shows the following balances. The following cases are independent: 1. To obtain cash, Bassel factors without recourse $20,000 of receivables wi...

Q: Chessman Corporation factors $600,000 of accounts receivable with Liquidity

Chessman Corporation factors $600,000 of accounts receivable with Liquidity Financing, Inc. on a with recourse basis. Liquidity Financing will collect the receivables. The receivable records are trans...

Q: The classifications on Chesapeake Limited’s statement of financial position are as follows

The classifications on Chesapeake Limited’s statement of financial position are as follows: 1. Current assets 2. Long-term investments 3. Property, plant, and equipment 4. Intangible assets 5. Oth...

Q: Financial statements can be a valuable tool for many parties interested in

Financial statements can be a valuable tool for many parties interested in a company’s performance. Consider a public company in Alberta that drills oil and sells it to refineries in the United States...

Q: Lute Retail Ltd. follows ASPE. It transfers $355,

Lute Retail Ltd. follows ASPE. It transfers $355,000 of its accounts receivable to an independent trust in a securitization transaction on July 11, 2017, receiving 96% of the receivables balance as pr...

Q: Use the information in E5-17 for Dropafix Inc.

Use the information in E5-17 for Dropafix Inc. Instructions: (a) Calculate the current and acid test ratios for 2016 and 2017. (b) Calculate Dropafix’s current cash debt coverage ra...