Question: American Surety and Fidelity buys and sells

> You have been hired as the new controller for the Radiance Company. Shortly after joining the company in 2024, you discover the following errors related to the 2022 and 2023 financial statements: a. Inventory at December 31, 2022, was understated by $6,0

> Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In 2024, the company decided to switch to the average cost method. Data for 2024 are as follows: Additional Information: a. Th

> On January 1, 2024, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2024 and 2025 are as follows: Required: 1. Estimate the 2024 and 2025 ending inventory and cost of goods so

> Raleigh Department Store uses the conventional retail method for the year ended December 31, 2022. Available information follows: a. The inventory at January 1, 2022, had a retail value of $45,000 and a cost of $27,500 based on the conventional retail me

> On January 1, 2024, HGC Camera Store adopted the dollar-value LIFO retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2024 and 2025 are as follows: Required: Estimate the 2024 and 2025 ending inventory and cost

> Smith Kline Company maintains inventory records at selling prices as well as at cost. For 2024, the records indicate the following data: Required: Assuming the price level increased from 1.00 at January 1 to 1.10 at December 31, 2024, use the dollar-val

> Decker Company has five products in its inventory. Information about ending inventory follows. The cost to sell for each product consists of a 15 percent sales commission. Required: 1. Determine the carrying value of ending inventory, assuming the lower

> Inverness Steel Corporation is a producer of flat-rolled carbon, stainless and electrical steels, and tubular products. The company’s income statement for the 2024 fiscal year reported the following information ($ in millions): The comp

> Cast Iron Grills, Inc., manufactures premium gas barbecue grills. The company reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. Cast Iron’s December 31, 2024, fiscal year-end inventory

> Cansela Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company began 2024 with inventory of 4,500 units of its only product. The beginning inventory balance of $64,000 consisted of th

> The fair value of Wallis, Inc.’s depreciable assets exceeds their book value by $50 million. The assets have an average remaining useful life of 15 years and are being depreciated by the straight-line method. Park Industries buys 30% of Wallis’s common s

> A company reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company’s records under this system reveal the following inventory layers at the beginning of 2024 (listed in chronologi

> Caterpillar, Inc., is one of the world’s largest manufacturers of construction, mining, and forestry machinery. The following disclosure note is included in the company’s 2019 financial statements: Required: 1. The co

> Auto Dealers Inc. sells a handmade automobile as its only product. Each automobile is identical; however, they can be distinguished by their unique ID number. At the beginning of 2024, Auto Dealers had three cars in inventory, as follows: During 2024, ea

> Topanga Group began operations early in 2024. Inventory purchase information for the quarter ended March 31, 2024, for Topanga’s only product is provided below. The unit costs include the cost of freight. The company uses a periodic inv

> A company began January with 6,000 units of its principal product. The cost of each unit is $8. Inventory transactions for the month of January are as follows: 8,000 units were on hand at the end of the month. Required: Calculate Januaryâ€&#1

> At the beginning of 2024, a company adopted the dollar-value LIFO (DVL) inventory method. On that date the value of its one inventory pool was $84,000. The company uses an internally generated cost index to convert ending inventory to base year. Inventor

> On January 1, 2024, a company adopted the dollar-value LIFO inventory method. The inventory value for its one inventory pool on this date was $260,000. An internally generated cost index is used to convert ending inventory to base year. Year-end inventor

> A company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending inventory to base year. The company began operations on January 1, 2024, with an inventory of $150,000. Year-end inventories at year-end

> On January 1, 2024, a company adopted the dollar-value LIFO method. The inventory value for its one inventory pool on this date was $400,000. Inventory data for 2024 through 2026 are as follows: Required: Calculate the company’s ending

> Jillet Corporation began the year with inventory of 10,000 units of its only product. The units cost $8 each. The company uses a perpetual inventory system and the FIFO cost method. The following transactions occurred during the year: a. Purchased 50,000

> Turner Company owns 40% of the outstanding stock of ICA Company. During the current year, ICA paid a $5 million cash dividend on its common shares. What effect did this dividend have on Turner’s 2024 financial statements? Explain the reasoning for this e

> The following facts apply to Walken Company during December 2024: a. Walken began December with an accounts receivable balance (net of bad debts) of €25,000. b. Walken had credit sales of €85,000. c. Walken had cash collections of €30,000. d. Walken fact

> Samson Wholesale Beverage Company regularly factors its accounts receivable with the Milpitas Finance Company. On April 30, 2024, the company transferred $800,000 of accounts receivable to Milpitas. The transfer was made without recourse. Milpitas remits

> Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2024, the company had accounts receivable of $780,000. Lonergan needs approximately $500,000 to capitalize on a unique investment opportunity. On July

> Cypress Oil Company’s December 31, 2024, balance sheet listed $645,000 of notes receivable and $16,000 of interest receivable included in current assets. The following notes make up the notes receivable balance: The company records adju

> Avon Products, Inc., located in New York City, is one of the world’s largest producers of beauty and related products. The company’s consolidated balance sheets for the 2016 and 2015 fiscal years included the following

> Rain tree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2023 balance sheet disclosed the following: Curren

> Nike, Inc., is a leading manufacturer of sports apparel, shoes, and equipment. The company’s 2020 financial statements contain the following information ($ in millions): Assume that all sales are made on a credit basis. Required: 1. Wh

> Dell Technologies is a leading global end-to-end technology provider, with a portfolio of hardware, software and service solutions. In a recent annual report, the balance sheet included the following information ($ in millions): In addition, the income s

> Rothschild Chair Company, Inc., was indebted to First Lincoln Bank under a $20 million, 10% unsecured note. The note was signed January 1, 2014, and was due December 31, 2027. Annual interest was last paid on December 31, 2022. At January 1, 2024, Rothsc

> El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at the end of each month. The November 30, 2024, reconciliation of the bank balance is as follows: The company’s general ledger checkin

> Turner Company owns 10% of the outstanding stock of ICA Company. During the current year, ICA paid a $5 million cash dividend on its common shares. What effect did this dividend have on Turner’s 2024 financial statements? Explain the reasoning for this e

> The bank statement for the checking account of Management Systems Inc. (MSI) showed a December 31, 2024, balance of $14,632.12. Information that might be useful in preparing a bank reconciliation is as follows: a. Outstanding checks were $1,320.25. b. Th

> Chamberlain Enterprises Inc. reported the following receivables in its December 31, 2024, year end balance sheet: Additional Information: 1. The notes receivable account consists of two notes, a $60,000 note and a $200,000 note. The $60,000 note is dated

> Descriptors are provided below for six situations involving notes receivable being discounted at a bank. In each case, the maturity date of the note is December 31, 2024, and the principal and interest are due at maturity. Required: For each situation,

> Evergreen Company sells lawn and garden products to wholesalers. The company’s fiscal year end is December 31. During 2024, the following transactions related to receivables occurred: Required: 1. Prepare the necessary journal entries

> Swath more Clothing Corporation grants its customers 30 days’ credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 3% times the amoun

> Citation Builders, Inc., builds office buildings and single-family homes. The office buildings are constructed under contract with reputable buyers. The homes are constructed in developments ranging from 10–20 homes and are typically so

> Complete the requirements of P 6–10, assuming that Westgate Construction’s contract with Santa Clara County does not qualify for revenue recognition over time. Curtiss Construction Company, Inc., entered into a fixed-p

> In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: Westgate recognizes revenue over time accord

> Tran Technologies licenses its functional intellectual property to Lyon Industries. Terms of the arrangement require Lyon to pay Tran $500,000 on April 1, 2024, when Lyon first obtains access to Tran’s intellectual property, and then in the future to pay

> Assume the same facts as P 6–6. Required: 1. Assume that Super Rise anticipates it will earn the performance bonus, but is highly uncertain about its estimate given unfamiliarity with the building and uncertainty about its access to the elevators and re

> Assume that Adams Industries holds 40,000 shares of FedEx common stock, which is not a large enough ownership interest to allow Adams to exercise significant influence over FedEx. On December 31, 2024, and December 31, 2025, the market value of the stock

> Since 1970, Super Rise, Inc., has provided maintenance services for elevators. On January 1, 2024, Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 months and receives a fixed payment of $80,000. The co

> Supply Club, Inc., sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2024, it started a loyalty program through which qualifying customers can accumulate points and redeem thos

> Assume the same facts as in P 6–2, except that customers must pay $75 to purchase the extended warranty if they don’t purchase it with the $50 coupon that was included in the Protab Package. Creative estimates that 40% of customers will use the $50 coupo

> Fit & Slim (F&S) is a health club that offers members various gym services. Required: 1. Assume F&S offers a deal whereby enrolling in a new membership for $700 provides a year of unlimited access to facilities and also entitles the member to receive a v

> Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated’s i

> The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2024. The company buys equity securities as noncurrent investments. None of Ornamental’s investments are large enough to exe

> The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2024. The company buys debt securities, not intending to profit from short-term differences in price and not necessarily to hold debt securiti

> The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2024. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading por

> Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated January 1, on January 1, 2024. Management intends to have the investment available for sale when circumstances warrant. When the company purchased the bon

> Lance Brothers Enterprises acquired $720,000 of 3% bonds, dated July 1, on July 1, 2024, as a long-term investment. Management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of simi

> 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 provided in Connect. This ma

> Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated January 1, on January 1, 2024. Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk and matu

> Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $80 million of 8% bonds, dated January 1, on January 1, 2024. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and matu

> Stewart Enterprises has the following investments, all purchased prior to 2024: 1. Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,000,000, and classified as held-to-maturity. At December 31, 2024, the Bee investment had a fai

> Feherty, Inc., accounts for its investments under IFRS No. 9 and purchased the following investments during December 2024: 1. Fifty of Donald Company’s $1,000 bonds. The bonds pay semiannual interest, return principal in eight years, and include no other

> On January 1, 2024, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of $150,000. The Cortland bonds have a stated interest rate of 6%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds

> Indicate (by letter) the way each of the investments listed below most likely should be accounted for based on the information provided.

> On January 2, 2024, Miller Properties paid $19 million for 1 million shares of Marlon Company’s 6 million outstanding common shares. Miller’s CEO became a member of Marlon’s board of directors during the first quarter of 2024. The carrying amount of Marl

> Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2024, for $400

> Companies can choose the fair value option for investments that otherwise would be accounted for under the equity method. If the fair value option is chosen, the investment is shown at fair value in the balance sheet, and unrealized holding gains and los

> On January 4, 2024, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lav

> On September 30, 2024, Athens Software began developing a software program to shield personal computers from malware and spyware. Technological feasibility was established on February 28, 2025, and the program was available for release on April 30, 2025.

> On January 4, 2024, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lav

> Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated January 1, on January 1, 2024. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the

> The property, plant, and equipment section of the Jasper Company’s December 31, 2023, balance sheet contained the following: The land and building were purchased at the beginning of 2019. Straight-line depreciation is used and a residua

> The following information concerns the intangible assets of Baez Corporation: a. On June 30, 2024, Baez completed the acquisition of the Johnstone Corporation for $2,000,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,700,0

> In 2024, the Marion Company purchased land containing a mineral mine for $1,600,000. Additional costs of $600,000 were incurred to develop the mine. Geologists estimated that 400,000 tons of ore would be extracted. After the ore is removed, the land will

> On March 31, 2024, the Herzog Company purchased a factory complete with vehicles and equipment. The allocation of the total purchase price of $1,000,000 to the various types of assets along with estimated useful lives and residual values are as follows:

> The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2022. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this

> On April 1, 2022, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $48,000, has an eight-year useful life, and has no residual value. The company uses the straightline depreciation method for all manufact

> For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2024, using the following depreciation methods and useful lives: Depreciation is computed to the nearest month and whole dollar amount, and no residual

> At December 31, 2023, Cord Company’s plant asset and accumulated depreciation and amortization accounts had balances as follows: Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2024

> Early in 2024, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2024 at a cost of $6 million. Of this amount, $4 million was spent before technological feasibility was established. Excali

> On April 1, 2024, Titan Corporation purchases office equipment for $50,000. For tax reporting, the company uses MACRS and classifies the equipment as five-year personal property. In 2024, this type of equipment is eligible for 60% first-year bonus deprec

> On May 1, 2024, Hecala Mining entered into an agreement with the state of New Mexico to obtain the rights to operate a mineral mine in New Mexico for $10 million. Additional costs and purchases included the following: After the minerals are removed from

> At the beginning of 2022, Metatec Inc. acquired Ellison Technology Corporation for $600 million. In addition to cash, receivables, and inventory, the following assets and their fair values were also acquired: The plant and equipment are depreciated over

> Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,000,000. This cost figure included the following expenditures: The company estimated an eight-year useful life for the equipment. No residual value is an

> Described below are three independent and unrelated situations involving accounting changes. Each change occurs during 2024 before any adjusting entries or closing entries are prepared. a. On December 30, 2020, Rival Industries acquired its office buildi

> The fact that generally accepted accounting principles allow companies flexibility in choosing between certain allocation methods can make it difficult for a financial analyst to compare periodic performance from firm to firm. Suppose you were a financia

> Shown below in T-account format are the changes affecting the retained earnings of Brenner-Jude Corporation during 2024? At January 1, 2024, the corporation had outstanding 105 million common shares, $1 par per share. Required: 1. From the information p

> The comparative balance sheets for 2024 and 2023 and the income statement for 2024 are given below for Arduous Company. Additional information from Aldous’s accounting records is provided also. Additional information from the accounting

> Portions of the financial statements for Parnell Company are provided below. Required: 1. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method. 2. Prepare the cash flows from

> The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Microsoft Corporation. Required: Prepare the cash flows from operating activities section of the statement of cash flows (direct me

> Mondale Winery depreciates its equipment using the group method. The cost of equipment purchased in 2024 totaled $425,000. The estimated residual value of the equipment was $40,000 and the group depreciation rate was determined to be 18%. (1) What is the

> The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Mike Roe Computers. Required: 1. Calculate each of the following amounts for Mike Roe Computers: a. Cash received from customers du

> Comparative balance sheets for 2024 and 2023 and a statement of income for 2024 are given below for Meta globalize Industries. Additional information from the accounting records of Meta globalize also is provided Additional information from the accountin

> The comparative balance sheets for 2024 and 2023 and the statement of income for 2024 are given below for Dux Company. Additional information from Dud’s accounting records is provided also. Additional information from the accounting rec

> The comparative balance sheets for 2024 and 2023 and the statement of income for 2024 are given below for National Inferable Company. Additional information from NIC’s accounting records is provided also. Additional information from the

> Refer to the data provided in the P 21–11 for Arduous Company. Required: Prepare the statement of cash flows for Arduous Company. Use the T-account method to assist in your analysis.

> Refer to the data provided in the P 21–5 for Meta globalize Industries. Required: Prepare the statement of cash flows for Meta globalize Industries. Use the T-account method to assist in your analysis.

> Refer to the data provided in the P 21–4 for Dux Company. Required: Prepare the statement of cash flows for Dux Company. Use the T-account method to assist in your analysis.

> Refer to the data provided in the P 21–11 for Arduous Company. Required: Prepare the statement of cash flows for Arduous Company using the indirect method.

> Refer to the data provided in the P 21–5 for Meta globalize Industries. Required: Prepare the statement of cash flows for Meta globalize Industries using the indirect method.

> Refer to the data provided in the P 21–4 for Dux Company. Required: Prepare the statement of cash flows for Dux Company using the indirect method.

> On December 31, 2024, management of Jines Construction committed to a plan for selling an office building and its related equipment. Both are available for immediate sale. The building has a book value of $800,000 and a fair value of $900,000. The equipm

> Digital Telephony issued 10% bonds, dated January 1, with a face amount of $32 million on January 1, 2024. The bonds mature in 2034 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest is paid semiannually on June 30 and D