Questions from Intermediate Accounting

Q: If merchandise inventory is understated at the end of 2023, and

If merchandise inventory is understated at the end of 2023, and the error is not discovered, how will net income be affected in 2024?

Q: LCI Cable Company grants 1 million performance stock options to key executives

LCI Cable Company grants 1 million performance stock options to key executives at January 1, 2024. The options entitle executives to receive 1 million of LCI $1 par common shares, subject to the achie...

Q: On December 31, 2023, Ainsworth, Inc., had 600

On December 31, 2023, Ainsworth, Inc., had 600 million shares of common stock outstanding. Twenty million shares of 8%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2...

Q: Superior Company owns 40% of the outstanding stock of Bernard Company

Superior Company owns 40% of the outstanding stock of Bernard Company. During 2024, Bernard paid a $100,000 cash dividend on its common shares. What effect did this dividend have on Superior’s 2024 fi...

Q: Comparative Statements of Retained Earnings for Renderer Corporation were reported as follows

Comparative Statements of Retained Earnings for Renderer Corporation were reported as follows for the fiscal years ending December 31, 2022, 2023, and 2024. No preferred stock or potential common shar...

Q: Refer to the situation described in BE 11–2. Calculate

Refer to the situation described in BE 11–2. Calculate depreciation expense for 2024 and 2025 using sum-of-theyears’- digits, assuming the equipment was purchased on (1) January 1, 2024, and (2) March...

Q: Northwest Carburetor Company established a fund in 2021 to accumulate money for

Northwest Carburetor Company established a fund in 2021 to accumulate money for a new plant scheduled for construction in 2024. How should this special purpose fund be reported in Northwest’s balance...

Q: The Cecil-Booker Vending Company changed its method of valuing inventory

The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost method at the beginning of 2024. At December 31, 2023, inventories were $120,000...

Q: When market rates of interest rise after a fixed-rate security

When market rates of interest rise after a fixed-rate security is purchased, the value of the now-below-market, fixed-interest payments declines, so the market value of the investment falls. How would...

Q: You have been hired as the new controller for the Ralston Company

You have been hired as the new controller for the Ralston Company. Shortly after joining the company in 2024, you discover the following errors related to the 2022 and 2023 financial statements: a. In...