At December 31, 2012, Grinkov Corporation had the following account balances. Installment Accounts Receivable, 2011 ………………………. $ 65,000 Installment Accounts Receivable, 2012 …………………….….. 110,000 Deferred Gross Profit, 2011 …………………………………………… 23,400 Deferred Gross Profit, 2012 …………………………………….……. 41,800 Most of Grinkov’s sales are made on a 2-year installment basis. Indicate how these accounts would be reported in Grinkov’s December 31, 2012, balance sheet. The 2011 accounts are collectible in 2013, and the 2012 accounts are collectible in 2014.
> During 2012, Simms Company redeemed $2,000,000 of bonds payable for $1,880,000 cash. Indicate how this transaction would be reported on a statement of cash flows, if at all.
> What controversy relates to the accounting for net operating loss carryforwards?
> Berstler Construction Company began operations in 2012. Construction activity for the first year is shown below. All contracts are with different customers, and any work remaining at December 31, 2012, is expected to be completed in 2013. Instructions
> Emerson Tool Company’s December 31 year-end financial statements contained the following errors. An insurance premium of $60,000 was prepaid in 2011 covering the years 2011, 2012, and 2013. The entire amount was charged to expense in
> Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo Inc. (a) Identify the changes in accounting principles reported by Coca-Cola during the 3 years covered by i
> The accounting staff of Usher Inc. has prepared the following pension worksheet. Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the accounting tasks r
> During 2012, Graham Co.’s first year of operations, the company reports pretax financial income of $250,000. Graham’s enacted tax rate is 40% for 2012 and 35% for all later years. Graham expects to have taxable income
> The following accounts appear in the ledger of Popovich Company Instructions From the postings in the accounts above, indicate how the information is reported on a statement of cash flows by preparing a partial statement of cash flows using the indirec
> Stan Conner and Mark Stein were discussing the presentation format of the statement of cash flows of Bombeck Co. At the bottom of Bombeck’s statement of cash flows was a separate section entitled “Noncash investing and financing activities.” Give three e
> In January 2012, installation costs of $6,000 on new machinery were charged to Maintenance and Repairs Expense. Other costs of this machinery of $30,000 were correctly recorded and have been depreciated using the straight line method with an estimated li
> What methods are used in practice to determine the extent of progress toward completion? Identify some “input measures” and some “output measures” that might be used to determine the extent of progress.
> Yanmei Construction Company began operations January 1, 2012. During the year, Yanmei Construction entered into a contract with Lundquist Corp. to construct a manufacturing facility. At that time, Yanmei estimated that it would take 5 years to complete t
> Keeton Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided the following information about the plan. The average remaining service life per employee is 10.5 years. The service cost com
> Taxable income and pretax financial income would be identical for Jones Co. except for its treatments of gross profit on installment sales and estimated costs of warranties. The following income computations have been prepared. The tax rates in effect
> The reported net incomes for the first 2 years of Sinclair Products, Inc., were as follows: 2012, $147,000; 2013, $185,000. Early in 2014, the following errors were discovered. 1. Depreciation of equipment for 2012 was overstated $19,000. 2. Depreciation
> Go to the book’s companion website or the company websites and use information found there to answer the following questions related to UAL, Inc. and Southwest Airlines. (a) What types of leases are used by Southwest and on what assets are these leases p
> Ochoa Inc., had the following condensed balance sheet at the end of operations for 2011. During 2012, the following occurred. 1. A tract of land was purchased for $11,000. 2. Bonds payable in the amount of $20,000 were retired at par. 3. An additional
> Elliott Corp. failed to record accrued salaries for 2011, $2,000; 2012, $2,100; and 2013, $3,900. What is the amount of the overstatement or understatement of Retained Earnings at December 31, 2014?
> Differentiate between “loss carryback” and “loss carryforward.” Which can be accounted for with the greater certainty when it arises? Why?
> Sue’s Construction is in its fourth year of business. Sue performs long-term construction projects and accounts for them using the completed-contract method. Sue built an apartment building at a price of $1,100,000. The costs and billin
> Goring Dairy leases its milking equipment from King Finance Company under the following lease terms. 1. The lease term is 10 years, noncancelable, and requires equal rental payments of $30,300 due at the beginning of each year starting January 1, 2012. 2
> Sharrer Inc.’s only temporary difference at the beginning and end of 2012 is caused by a $2 million deferred gain for tax purposes for an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current ass
> You have been engaged to review the financial statements of Longfellow Corporation. In the course of your examination, you conclude that the bookkeeper hired during the current year is not doing a good job. You notice a number of irregularities as follow
> Presented below are four independent situations. (a) On December 31, 2012, Beard Inc. sold computer equipment to Barber Co. and immediately leased it back for 10 years. The sales price of the equipment was $560,000, its carrying amount is $400,000, and i
> The actuary for the pension plan of Gustafson Inc. calculated the following net gains and losses. Incurred during the Year ______(Gain) or Loss 2012 ……………
> The balance sheet data of Wyeth Company at the end of 2012 and 2011 are shown on page 1488. Land was acquired for $30,000 in exchange for common stock, par $30,000, during the year; all equipment purchased was for cash. Equipment costing $13,000 was so
> Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) What kind of pension plans do Coca-Cola and PepsiCo provide their employees? (b) What net periodic
> What are interim reports? Why are balance sheets often not provided with interim data?
> Prior to 2012, Heberling Inc. excluded manufacturing overhead costs from work in process and finished goods inventory. These costs have been expensed as incurred. In 2012, the company decided to change its accounting methods for manufacturing inventories
> The net income for Letterman Company for 2012 was $320,000. During 2012, depreciation on plant assets was $124,000, amortization of patent was $40,000, and the company incurred a loss on sale of plant assets of $21,000. Compute net cash flow from operati
> You are auditing the December 31, 2012, financial statements of Hockney, Inc., manufacturer of novelties and party favors. During your inspection of the company garage, you discovered that a used automobile not listed in the equipment subsidiary ledger i
> In 2012, Gurney Construction Company agreed to construct an apartment building at a price of $1,200,000. The information relating to the costs and billings for this contract is shown below. Instructions (a) Assuming that the percentage-of-completion me
> Assume that on January 1, 2012, Elmer’s Restaurants sells a computer system to Liquidity Finance Co. for $510,000 and immediately leases the computer system back. The relevant information is as follows. 1. The computer was carried on Elmer’s books at a v
> Latoya Company provides the following selected information related to its defined benefit pension plan for 2012. Pension asset/liability (January 1) …………………………………………… $ 25,000 Cr. Accumulated benefit obligation (December 31) ….…………………………… 400,000 Actual
> Assume the same information as E19-14, except that at the end of 2012, Callaway Corp. had a valuation account related to its deferred tax asset of $40,000. In E19-14 Callaway Corp. has a deferred tax asset account with a balance of $150,000 at the end o
> The first audit of the books of Fenimore Company was made for the year ended December 31, 2012. In examining the books, the auditor found that certain items had been overlooked or incorrectly handled in the last 3 years. These items are: 1. At the beginn
> Presented below are data taken from the records of Morganstern Company. Additional information: 1. Held-to-maturity securities carried at a cost of $43,000 on December 31, 2011, were sold in 2012 for $34,000. The loss (not extraordinary) was incorrectl
> As stated in the chapter, notes to the financial statements are the means of explaining the items presented in the main body of the statements. Common note disclosures relate to such items as accounting policies, segmented information, and interim report
> Youngman Corporation has temporary differences at December 31, 2012, that result in the following deferred taxes. Deferred tax liability—current ………………….……… $38,000 Deferred tax asset—current………………………….. $(62,000) Deferred tax liability—noncurrent ………………
> The following comment appeared in the financial press: “Inadequate financial disclosure, particularly with respect to how management views the future and its role in the marketplace, has always been a stone in the shoe. After all, if you don’t know how a
> Addison Co. has one temporary difference at the beginning of 2012 of $500,000. The deferred tax liability established for this amount is $150,000, based on a tax rate of 30%. The temporary difference will provide the following taxable amounts: $100,000 i
> Saprano Company, on January 2, 2012, entered into a contract with a manufacturing company to purchase room-size air conditioners and to sell the units on an installment plan with collections over approximately 30 months with no carrying charge. For incom
> Elton Co. has the following postretirement benefit plan balances on January 1, 2012. Accumulated postretirement benefit obligation ……………â€&brvb
> On April 1, 2012, Dougherty Inc. entered into a cost-plus-fixed-fee contract to construct an electric generator for Altom Corporation. At the contract date, Dougherty estimated that it would take 2 years to complete the project at a cost of $2,000,000. T
> Below is the net income of Benchley Instrument Co., a private corporation, computed under the three inventory methods using a periodic system. Instructions (Ignore tax considerations.) (a) Assume that in 2013 Benchley decided to change from the FIFO me
> On February 20, 2012, Hooke Inc., purchased a machine for $1,200,000 for the purpose of leasing it. The machine is expected to have a 10-year life, no residual value, and will be depreciated on the straight-line basis. The machine was leased to Sage Comp
> Callaway Corp. has a deferred tax asset account with a balance of $150,000 at the end of 2012 due to a single cumulative temporary difference of $375,000. At the end of 2013, this same temporary difference has increased to a cumulative amount of $500,000
> Data for Andrews Inc. are presented in E23-13. In E23-13 Andrews Inc., a greeting card company, had the following statements prepared as of December 31, 2012. ANDREWS INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2012 Sales â€&brvb
> The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions.
> Use the information for Rode Inc. given in BE19-13. Assume that it is more likely than not that the entire net operating loss carryforward will not be realized in future years. Prepare all the journal entries necessary at the end of 2012. In BE19-13 Rod
> Distinguish between counterbalancing and noncounterbalancing errors. Give an example of each.
> Metheny Corporation’s lease arrangements qualify as sales-type leases at the time of entering into the transactions. How should the corporation recognize revenues and costs in these situations?
> The financial statements of Marks and Spencer plc Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://corporate.marksandspencer.com/documents/publications/2010/Annual_Report_2010. Instructions Refer to
> The financial statements of Marks and Spencer plc (M&S) Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://corporate.marksandspencer.com/documents/publications/2010/Annual_Report_2010. Instructions Ref
> Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2012. Plan assets ……………………………………………………………….……………..… $200,000 Expected postretirement benefit oblig
> In 2012, Steinrotter Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Steinrotter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is b
> Bryant Construction Company began operations in 2011 and changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2012. For tax purposes, the company employs the completed contra
> On January 1, 2012, a machine was purchased for $900,000 by Floyd Co. The machine is expected to have an 8-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to Crampton Inc. on January 1, 2012, at a
> The financial statements of P&G are provided in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions. (
> At the end of 2012, Wasicsko Company has $180,000 of cumulative temporary differences that will result in reporting future taxable amounts as follows. 2013 ……………..……… $ 70,000 2014 ………………….……. 50,000 2015 ……………………….. 40,000 2016 ……………….………. 20,000 ………………
> Andrews Inc., a greeting card company, had the following statements prepared as of December 31, 2012. ANDREWS INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2012 Sales ………â€
> Lazaro Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $800, resulting in a gross profit rate of 40%. At the time of repossession, the
> Rode Inc. incurred a net operating loss of $500,000 in 2012. Combined income for 2010 and 2011 was $350,000. The tax rate for all years is 40%. Rode elects the carryback option. Prepare the journal entries to record the benefits of the loss carryback and
> Explain how multiple-deliverable arrangements are measured and reported.
> “The financial statements of a company are management’s, not the accountant’s.” Discuss the implications of this statement.
> Simms Corp. controlled four domestic subsidiaries and one foreign subsidiary. Prior to the current year, Simms Corp. had excluded the foreign subsidiary from consolidation. During the current year, the foreign subsidiary was included in the financial sta
> Explain a multiple-deliverable arrangement. What is the major accounting issue related to these arrangements?
> Kleckner Company started operations in 2009, and although it has grown steadily, the company reported accumulated operating losses of $450,000 in its first four years in business. In the most recent year (2013), Kleckner appears to have turned the corner
> The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://corporate.marksandspencer.com/documents/publications/2010/Annual_Report_2010. Instructions Refer to M&S’s financial statem
> The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to P&G’s financial statements, accompanying notes, and management’s discussion and analysis
> In June 2012, the board of directors for McElroy Enterprises Inc. authorized the sale of $10,000,000 of corporate bonds. Jennifer Grayson, treasurer for McElroy Enterprises Inc., is concerned about the date when the bonds are issued. The company really n
> Larson Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2013, the following balances related to this plan. Plan assets (market-related value) ……………………………. $270,000 Projected benefit obligation ………………………………………… 340,000 Pensio
> On January 3, 2011, Martin Company purchased for $500,000 cash a 10% interest in Renner Corp. On that date, the net assets of Renner had a book value of $3,700,000. The excess of cost over the underlying equity in net assets is attributable to undervalue
> In 2011, Grishell Trucking Company negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The buildings were erected to the company’s specifications on land owned by the co
> During 2012, Nilsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2014. The following information is available. Instructions (a) Compute the amount of gross profit to be recognized each year, assuming
> Frederick Industries changed from the double-declining balance to the straight-line method in 2012 on all its plant assets. There was no change in the assets’ salvage values or useful lives. Plant assets, acquired on January 2, 2011, had an original cost
> On January 1, 2012, Secada Co. leased a building to Ryker Inc. The relevant information related to the lease is as follows. 1. The lease arrangement is for 10 years. 2. The leased building cost $3,600,000 and was purchased for cash on January 1, 2012. 3.
> The following facts relate to McKane Corporation. 1. Deferred tax liability, January 1, 2012, $60,000. 2. Deferred tax asset, January 1, 2012, $20,000. 3. Taxable income for 2012, $115,000. 4. Cumulative temporary difference at December 31, 2012, giving
> Data for Fairchild Company are presented in E23-11. In E23-11 Condensed financial data of Fairchild Company for 2012 and 2011 are presented below. FAIRCHILD COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2012 Sales …&acir
> Gordeeva Corporation began selling goods on the installment basis on January 1, 2012. During 2012, Gordeeva had installment sales of $150,000; cash collections of $54,000; cost of installment sales of $102,000. Prepare the company’s entries to record ins
> The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions.
> Oliver Corporation has owned stock of Conrad Corporation since 2009. At December 31, 2012, its balances related to this investment were: Equity Investments …………………………………………… $185,000 Fair Value Adjustment (AFS)……………………….…… 34,000 Dr. Unrealized Holding G
> On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $33,000 and immediately leased it back. The truck was carried on Irwin’s books at $28,000. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requir
> Conlin Corporation had the following tax information. In 2013, Conlin suffered a net operating loss of $480,000, which it elected to carry back. The 2013 enacted tax rate is 29%. Prepare Conlin’s entry to record the effect of the loss
> An article in the financial press entitled “Important Information in Annual Reports This Year” noted that annual reports include a management’s discussion and analysis section. What would this section contain?
> How is it determined whether deferred tax amounts are considered to be “related” to specific asset or liability amounts?
> Collinsworth Co. reported sales on an accrual basis of $100,000. If accounts receivable increased $30,000, and the allowance for doubtful accounts increased $9,000 after a write-off of $2,000, compute cash sales.
> Callaway Corp. has a deferred tax asset account with a balance of $150,000 at the end of 2012 due to a single cumulative temporary difference of $375,000. At the end of 2013, this same temporary difference has increased to a cumulative amount of $500,000
> The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://corporate.marksandspencer.Com/documents/publications/2010/Annual_Report_2010. Instructions Refer to M&S’s financial statem
> A lease agreement between Lennox Leasing Company and Gill Company is described in IFRS21-10. Refer to the data in IFRS21-10 and do the following for the lessor. (Round all numbers to the nearest cent.) In IFRS21-10 The following facts pertain to a non-c
> Jack Kelly Company has grown rapidly since its founding in 2002. To instill loyalty in its employees, Kelly is contemplating establishment of a defined benefit plan. Kelly knows that lenders and potential investors will pay close attention to the impact
> The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions.
> Nancy Tercek, the financial vice president, and Margaret Lilly, the controller, of Romine Manufacturing Company are reviewing the financial ratios of the company for the years 2012 and 2013. The financial vice president notes that the profit margin on sa
> The following summarized information relates to the installment-sales activity of Phillips Stores, Inc. for the year 2012. Installment sales during 2012 ………………………………………. $500,000 Cost of goods sold on installment basis ……………………………. 350,000 Collections f
> The following data relate to the operation of Kramer Co.’s pension plan in 2013. The pension worksheet for 2012 is provided in P20-10. Service cost …………&aci
> On January 1, 2012, Millay Inc. paid $700,000 for 10,000 shares of Genso Company’s voting common stock, which was a 10% interest in Genso. At that date, the net assets of Genso totaled $6,000,000. The fair values of all of Genso’s identifiable assets and
> Assume the same data as in P21-10 with National Airlines Co. having an incremental borrowing rate of 10%. In P21-10 George Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period
> On December 31, 2012, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando includes a 1-year warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2012. Grando estimat
> Thurber Co. purchased equipment for $710,000 which was estimated to have a useful life of 10 years with a salvage value of $10,000 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2013, it is determined that
> Grady Leasing Company signs an agreement on January 1, 2012, to lease equipment to Azure Company. The following information relates to this agreement. 1. The term of the noncancelable lease is 5 years with no renewal option. The equipment has an estimate
