Questions from Intermediate Accounting

Q: Mayfair Department Stores operates over 30 retail stores in the Pacific Northwest

Mayfair Department Stores operates over 30 retail stores in the Pacific Northwest. Prior to 2024, the company used the FIFO method to value its inventory. In 2024, Mayfair decided to switch to the dol...

Q: Early one Wednesday afternoon, Ken and Larry studied in the dormitory

Early one Wednesday afternoon, Ken and Larry studied in the dormitory room they shared at Fogelman College. Ken, an accounting major, was advising Larry, a management major, regarding a project for La...

Q: DRS Corporation changed the way it depreciates its computers from the sum

DRS Corporation changed the way it depreciates its computers from the sum-of-the-year’s-digits method to the straight-line method beginning January 1, 2024. DRS also changed its estimated residual val...

Q: Sometimes a business entity will change its method of accounting for certain

Sometimes a business entity will change its method of accounting for certain items. The change may be classified as a change in accounting principle, a change in accounting estimate, or a change in re...

Q: Some inventory errors are said to be “self-correcting”

Some inventory errors are said to be “self-correcting” in that the error has the opposite financial statement effect in the period following the error, thereby “correcting,” the original account balan...

Q: Ray Solutions decided to make the following changes in its accounting policies

Ray Solutions decided to make the following changes in its accounting policies on January 1, 2024: a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service co...

Q: Late in 2024, you and two other officers of Carob Fabrications

Late in 2024, you and two other officers of Carob Fabrications Corporation just returned from a meeting with officials of the City of Jackson. The meeting was unexpectedly favorable even though it cul...

Q: Danville Bottlers is a wholesale beverage company. Danville uses the FIFO

Danville Bottlers is a wholesale beverage company. Danville uses the FIFO inventory method to determine the cost of its ending inventory. Ending inventory quantities are determined by a physical count...

Q: Why can’t we pay our shareholders a dividend?” shouted your new

Why can’t we pay our shareholders a dividend?” shouted your new boss. “This income statement you prepared for me says we earned $5 million in our...

Q: A company purchased inventory on account for $100,000.

A company purchased inventory on account for $100,000. Freight charges to have the inventory shipped to the company’s location were $5,000 (paid in cash). Record (1) the purchase of inventory on accou...