Question: Air France-KLM (AF), a Franco-Dutch

> Refer to the situation described in BE 5–4. Assume that the trip will cost $26,600. What interest rate, compounded annually, must be earned to accumulate enough to pay for the trip?

> Suppose a husband wants to take his wife on a trip three years from now to Europe to celebrate their 40th anniversary. He has just received a $20,000 inheritance from an uncle and intends to invest it for the trip. The husband estimates the trip will cos

> You are saving for a new boat. You place $25,000 in an investment account today that earns 6% compounded annually. How much will be in the account after (a) three years, (b) four years, or (c) five years?

> On September 30, 2024, a company leased a warehouse. Terms of the lease require 10 annual lease payments of $55,000 with the first payment due immediately. Accounting standards require the company to record a lease liability when recording this type of l

> You are saving for a new car. You place $10,000 into an investment account today. How much will you have after four years if the account earns (a) 4%, (b) 6%, or (c) 8% compounded annually?

> In February 2024, Culverson Company began developing a new software package to be sold to customers. The software allows people to enter health information and daily eating and exercise habits to track their health status. The project was completed in No

> On December 31, 2024, a company issued 6% stated rate bonds with a face amount of $100 million. The bonds mature on December 31, 2054. Interest is payable annually on each December 31, beginning in 2025. Determine the price of the bonds on December 31, 2

> Refer to the situation described in BE 5–16. What amount did the company borrow, assuming that the first of the five annual $10,000 payments was not due for three years?

> Refer to the situation described in BE 5–16. What amount did the company borrow, assuming that the first $10,000 payment was due immediately?

> A company borrowed money from a local bank. The note the company signed requires five annual installment payments of $10,000 beginning one year from today. The interest rate on the note is 7%. What amount did the company borrow?

> You have been issued a patent giving you exclusive rights to sell a new type of software. You believe the patent will produce sales of $200,000 each year as long as the software remains in demand. Assume a discount rate of 7% compounded annually. What is

> You have entered into an agreement to purchase a local accounting firm. The agreement specifies you will pay the seller $150,000 each year for six years. What is the cost today of the purchase, assuming a discount rate of (a) 8%, (b) 10%, or (c) 12%?

> Refer to the situation described in BE 5–12. How much will accumulate in three years by depositing $500 at the beginning of each of the next 12 quarters?

> You would like to contribute to a savings account over the next three years in order to accumulate enough money to take a trip to Europe. Assuming an interest rate of 4%, compounded quarterly, how much will accumulate in three years by depositing $500 at

> You want to buy a nice road bike. You place $3,000 each year in an investment account that earns 8% compounded annually. How much will be in the account after (a) two years, (b) three years, or (c) four years

> You are saving for a new house. You place $40,000 into an investment account each year for five years. How much will you have after five years if the account earns (a) 3%, (b) 6%, or (c) 9% compounded annually?

> Huebert Corporation and Winslow Corporation reported the following information: Calculate each companies fixed-asset turnover ratio and determine which company utilizes its fixed assets most efficiently to generate sales.

> You have two investment opportunities. The interest rate for both investments is 8%. Interest on the first investment will compound annually, while interest on the second will compound quarterly. Which investment opportunity should you choose? Why?

> Refer to the situation described in BE 4–8. Assume instead that the estimated fair value of the segment’s assets, less costs to sell, on December 31 was $7 million rather than $10 million. Prepare the lower portion of the 2024 income statement beginning

> Refer to the situation described in BE 4–7. Assume that the semiconductor segment was not sold during 2024 but was held for sale at year-end. The estimated fair value of the segment’s assets, less costs to sell, on December 31 was $10 million. Prepare th

> On December 31, 2024, the end of the fiscal year, California Micromesh Corporation completed the sale of its semiconductor business for $10 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. Consider the

> On December 31, 2024, the end of the fiscal year, Revolutionary Industries completed the sale of its robotics business for $9 million. The robotics business segment qualifies as a component of the entity, according to GAAP. Consider the following additio

> The following are partial income statement account balances taken from the December 31, 2024, year-end trial balance of White and Sons, Inc.: restructuring costs, $300,000; interest revenue, $40,000; before-tax loss on discontinued operations, $400,000;

> The following is a partial year-end adjusted trial balance. Income tax expense has not yet been recorded. The income tax rate is 25%. Determine the following: (a) operating income (loss), (b) income (loss) before income taxes, and (c) net income (loss).

> Refer to the situation described in BE 4–1. Using the account balances, prepare a multiple-step income statement. An example of a multiple-step income statement can be found in Illustration 4–4 of this chapter.

> Refer to the situation described in BE 4–1. If the company’s accountant prepared a multiple-step income statement, what amount would appear in that statement for (a) operating income and (b) no operating income?

> Refer to the situation described in BE 4–11. Prepare the cash flows from investing and financing activities sections of HHC’s statement of cash flows

> Diamond Corporation acquired a patent in exchange for 50,000 shares of the company’s no-par common stock. On the date of the exchange, the common stock had a fair value of $22 per share. Determine the cost of the patent.

> The adjusted trial balance of Pacific Scientific Corporation on December 31, 2024, the end of the company’s fiscal year, contained the following income statement items ($ in millions): sales revenue, $2,106; cost of goods sold, $1,240; selling expense, $

> During 2024, Rogue Corporation reported net sales of $600,000. Inventory at both the beginning and end of the year totaled $75,000. The inventory turnover ratio for the year was 6.0. What amount of gross profit did the company report in its 2024 income s

> Refer to the facts described in BE 4–16. Show the DuPont framework’s calculation of the three components of the 2024 return on equity for Circuit TV and Appliance.

> The 2024 income statement for Circuit TV and Appliance reported net sales of $420,000 and net income of $65,000. Average total assets for 2024 was $800,000. Shareholders’ equity at the beginning of the year was $500,000, and $20,000 was paid to sharehold

> Net income of Trout Company was $45,000. The accounting records reveal depreciation expense of $80,000 as well as increases in prepaid rent, salaries payable, and income taxes payable of $60,000, $15,000, and $12,000, respectively. Prepare the cash flows

> At the end of 2024, Barker Corporation’s preliminary trial balance indicated a current ratio of 1.2. Management is contemplating paying some of its accounts payable balance before the end of the fiscal year. Determine whether the effect of this transacti

> Refer to the trial balance information in BE 3–5. Calculate the (a) current ratio, (b) acid-test ratio, and (c) debt to equity ratio.

> If the adjusting entries prepared in BE 2–11 were not recorded, would net income be higher or lower and by how much?

> Post the journal entries prepared in BE 2–8 to T-accounts. Assume that the opening balances in each of the accounts is zero except for cash, accounts receivable, and accounts payable that had opening balances of $65,000, $43,000, and $22,000, respectivel

> Prepare journal entries for each of the transactions listed in BE 2–7.

> On September 30, 2024, Crown Corporation purchased franchise rights from a national restaurant chain. In payment, Crown has the option of paying $356,000 immediately or $400,000 in two years by signing a noninterest- bearing note. Crown chooses the optio

> Post the following transactions to the Cash T-account and calculate the ending balance. The beginning balance in the Cash T-account is $5,000. 1. Receive cash from customers, $15,000. 2. Pay cash for employee salaries, $9,000. 3. Pay cash for rent, $3,00

> Prepare journal entries for each of the following transactions: 1. Issue common stock for $21,000. 2. Obtain $9,000 loan from the bank by signing a note. 3. Purchase construction equipment for $25,000 cash. 4. Purchase advertising for the current month f

> Prepare journal entries for each of the following transactions: 1. Pay $700 for radio advertising for the current month. 2. Purchase supplies of $1,300 on account. 3. Provide services of $2,900 to customers and receive cash. 4. Pay employee salaries for

> Prepare journal entries for each of the following transactions: 1. Purchase equipment in exchange for cash of $23,400. 2. Provide services to customers and receive cash of $6,800. 3. Pay the current month’s rent of $1,300. 4. Purchase office supplies on

> Analyze each of the following transactions and show the effect on the accounting equation. 1. Issue 10,000 shares of common stock in exchange for $32,000 in cash. 2. Purchase land for $19,000. A note payable is signed for the full amount. 3. Purchase equ

> For each situation, determine the date for which the company recognizes the expense under (a) accrual-basis accounting and (b) cash-basis accounting. 1. American Airlines operates a flight from Dallas to Los Angeles on August 16. The pilots’ salaries ass

> For each situation, determine the date for which the company recognizes the revenue under (a) accrual-basis accounting and (b) cash-basis accounting. 1. American Airlines collects cash on June 12 from the sale of a ticket to a customer. The flight occurs

> The year-end adjusted trial balance of the Tool and Die Corporation included the following account balances: retained earnings, $220,000; dividends, $12,000; sales revenue, $850,000; cost of goods sold, $580,000; salaries expense, $180,000; rent expense,

> The following account balances were taken from the 2024 post-closing trial balance of the Bowler Corporation: cash, $5,000; accounts receivable, $10,000; inventory, $16,000; equipment, $100,000; accumulated depreciation, $40,000; accounts payable, $20,00

> The following account balances were taken from the 2024 adjusted trial balance of the Bowler Corporation: sales revenue, $325,000; cost of goods sold, $168,000; salaries expense, $45,000; rent expense, $20,000; depreciation expense, $30,000; and miscella

> Prepare the necessary adjusting entries for Digital Controls at the end of its December 31, 2024, fiscal year-end for each of the following situations. No adjusting entries were recorded during the year. 1. On March 31, 2024, the company lent $50,000 to

> If the adjusting journal entries prepared in BE 2–13 were not recorded, would assets, liabilities, and shareholders’ equity on the December 31, 2024, balance sheet be higher or lower and by how much?

> Prepare the necessary adjusting entries on its year-end of December 31, 2024, for the Jingle Corporation for each of the following situations. No adjusting entries were recorded during the year. 1. On December 10, 2024, Jingle received a $4,000 payment f

> Analyze each of the following transactions and show the effect on the accounting equation. 1. Provide services to customers on account for $50,000. 2. Purchase equipment by signing a note with the bank for $35,000. 3. Repay $10,000 of the note in 2 above

> On January 1, 2024, Hodge Beanery received $8,000 from the Kennedy Company in exchange for a coffee roaster that it will deliver to Kennedy on December 31, 2024. Assuming that Hodge views the time value of money to be a significant component of this tran

> On January 1, 2024, Wooten Technology Associates sold computer equipment to the Denison Company. Delivery was made on January 1, 2024, but payment for the equipment of $10,000 is not due until December 31, 2024. Assuming that Wooten views the time value

> Finerly Corporation sells cosmetics through a network of independent distributors. Finerly shipped cosmetics to its distributors and is considering whether it should record $300,000 of revenue upon shipment of a new line of cosmetics. Finerly expects the

> In January 2024, Continental Fund Services, Inc., enters into a one-year contract with a client to provide investment advisory services. The company will receive a management fee, prepaid at the beginning of the contract, that is calculated as 1% of the

> Aria Perfume, Inc., sold 3,210 boxes of white musk soap during January of 2024 at the price of $90 per box. The company offers a full refund to unsatisfied customers for any product returned within 30 days from the date of purchase. Based on historical e

> On January 1, 2024, Lego Construction Company signed a contract to build a custom garage for a customer and received $10,000 in advance for the job. The new garage will be built on the customer’s land. To complete this project, Lego must first build a co

> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This m

> Precision Equipment, Inc., specializes in designing and installing customized manufacturing equipment. On February 1, 2024, it signs a contract to design a fully automated wristwatch assembly line for $2 million, which will be settled in cash upon comple

> On May 1, 2024, Varga Tech Services signed a $6,000 consulting contract with Shaffer Holdings. The contract requires Varga to provide computer technology support services whenever requested over the period from May 1, 2024, to April 30, 2025, with Shaffe

> Refer to the situation described in BE 6–33. Assume that the building was completed during the second year, and construction costs incurred during the second year were $10 million. How much revenue and gross profit or loss will the company recognize in t

> As of December 31, 2024, Cady Construction has one construction job for which the construction in progress (CIP) account has a balance of $20,000, and the billings on the construction contract account has a balance of $14,000. Cady has another constructi

> GoodBuy sells gift cards redeemable for GoodBuy products either in store or online. During 2024, GoodBuy sold $1,000,000 of gift cards, and $840,000 of the gift cards were redeemed for products. As of December 31, 2024, $30,000, of the remaining gift car

> Kerianne paints landscapes, and in late 2024 placed four paintings with a retail price of $250 each in the Holmstrom Gallery. Kerianne’s arrangement with Holmstrom is that Holmstrom will earn a 20% commission on paintings sold to gallery patrons. As of D

> Dowell Fishing Supply, Inc., sold $50,000 of Dowell Rods on December 15, 2024, to Bassadrome. Because of a shipping backlog, Dowell held the inventory in Dowell’s warehouse until January 12, 2025 (having assured Bassadrome that it would deliver sooner if

> Top Chop sells hairstyling franchises. Top Chop receives $50,000 from a new franchisee for providing initial training, equipment, and furnishings that have a stand-alone selling price of $50,000. Top Chop also receives $30,000 per year for use of the Top

> Assume the same facts as in BE 6–25. How much revenue will Saar recognize in 2024 under this arrangement if Saar reports under IFRS?

> Assume the same facts as in BE 6–24 except that the trade name “Saar Associates” is not well known in the market place, and the owner provides no advertising or other benefits to a licensee of the Saar Associates trade name during the license period. How

> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 20

> Saar Associates sells two licenses to Kim & Company on September 1, 2024. First, in exchange for $100,000, Saar provides Kim with a copy of its proprietary investment management software, which Saar does not anticipate updating and which Kim can use perm

> On July 1, 2024, Apache Company, a real estate developer, sold a parcel of land to a construction company for $3,000,000. The book value of the land on Apache’s books was $1,200,000. Terms of the sale required a down payment of $150,000 and 19 annual pay

> Assume the same facts as in BE 12–8, but that Fowler intends to hold the bonds until maturity. How much unrealized gain or loss would Fowler include in 2024 net income with respect to the bonds?

> Fowler Inc. purchased $75,000 of bonds on January 1, 2024. The bonds pay interest semiannually and mature in 20 years, at which time the $75,000 principal will be paid. The bonds do not pay any amounts other than interest and principal. Fowler’s intentio

> Assume that for several years Fister Links Products has held Microsoft bonds, considered by the company to be securities available-for-sale. The bonds were acquired at a cost of $500,000. At the end of 2024, their fair value was $610,000 and their amorti

> S&L Financial buys and sells securities that it typically classifies as available-for-sale. Assume that on December 27, 2024, S&L purchased Coca-Cola bonds at par for $875,000 and sold the bonds on January 3, 2025, for $880,000. At December 31, the bonds

> For the Coca-Cola bonds described in BE 12–4, prepare journal entries to record (a) any unrealized gains or losses occurring in 2024 and (b) the sale of the bonds in 2025, including recognition of any unrealized gains in 2025 prior to sale and reclassifi

> S&L Financial buys and sells securities which it classifies as available-for-sale. Assume that on December 27, 2024, S&L purchased Coca-Cola bonds at par for $875,000 and sold the bonds on January 3, 2025, for $880,000. At December 31, the bonds had a fa

> For the Coca-Cola bonds described in BE 12–2, prepare journal entries to record (a) any unrealized gains or losses occurring in 2024 and (b) the sale of the bonds in 2025.

> S&L Financial buys and sells securities expecting to earn profits on short-term differences in price. Assume that on December 27, 2024, S&L purchased Coca-Cola bonds at par for $875,000 and sold the bonds on January 3, 2025, for $880,000. At December 31,

> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This m

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material also is available under the Investor Relations li

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material also is available under the Investor Relations li

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material also is available under the Investor Relations li

> Assume the same facts as in BE 12-20, except that Wickum accounts for the investment as FVOCI rather than HTM. How would Wickum record the $300,000 decrease in credit loss?

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations li

> The following is the ending balances of accounts at December 31, 2024, for the Weismuller Publishing Company. Additional Information: 1. Prepaid expenses include $120,000 paid on December 31, 2024, for two years of rent on the building that houses both t

> CMOS Chips is hedging a 20-year, $10 million, 7% bond payable with a 20-year interest rate swap and has designated the swap as a fair value hedge. The agreement called for CMOS to receive payment based on a 7% fixed interest rate on a notional amount of

> On January 1, 2024, Avalanche Corporation borrowed $100,000 from First Bank by issuing a two-year, 8% fixed rate note with annual interest payments. The principal of the note is due on December 31, 2025. ∙ Avalanche wanted to hedge agai

> On January 1, 2024, Avalanche Corporation borrowed $100,000 from First Bank by issuing a two-year, 8% fixed-rate note with annual interest payments. The principal of the note is due on December 31, 2025. ∙ Avalanche wanted to hedge agai

> Using the information from P 2–8, prepare and complete a worksheet similar to Illustration 2A–1. Use the information in the worksheet to prepare an income statement and a statement of shareholders’ equity for 2024 and a balance sheet as of December 31, 2

> Zambrano Wholesale Corporation maintains its records on a cash basis. At the end of each year the company’s accountant obtains the necessary information to prepare accrual basis financial statements. The following cash flows occurred du