At January 1, 2017, the credit balance of Andy Corp.’s Allowance for Doubtful Accounts was $400,000. During 2017, the bad debt expense entry was based on a percentage of net credit sales. Net sales for 2017 were $80 million, of which 90% were on account. Based on the information available at the time, the 2017 bad debt expense was estimated to be 0.8% of net credit sales. During 2017, uncollectible receivables amounting to $500,000 were written off against the allowance for doubtful accounts. The company has estimated that at December 31, 2017, based on a review of the aged accounts receivable, the allowance for doubtful accounts would be properly measured at $525,000. Instructions: Prepare a schedule calculating the balance in Andy Corp.’s Allowance for Doubtful Accounts at December 31, 2017. Prepare any necessary journal entry at year end to adjust the allowance for doubtful accounts to the required balance.
> The records of Sudbury Menswear report the following data for the month of September: Instructions: (a) Estimate the ending inventory using the conventional retail inventory method. (b) Assuming that a physical count of the inventory determined that th
> In early January 2017, Chi Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for $410,000. Chi was now able to exercise considerable influence in decisions made by Washi’s management. Washi Corp.’s statement
> On January 3, 2017, Mego Limited purchased 3,000 (30%) of the common shares of Sonja Corp. for $438,000. The following information is provided about the identifiable assets and liabilities of Sonja at the date of acquisition: During 2017, Sonja reporte
> The following are two independent situations. Situation 1: Lauren Inc. received dividends from its common share investments during the year ended December 31, 2017, as follows: • A cash dividend of $12,250 is received from Peel Corporation. Lauren owns a
> On January 1, 2017, Rae Corporation purchased 30% of the common shares of Martz Limited for $196,000. Martz Limited shares are not traded in an active market. The carrying amount of Martz’s net assets was $520,000 on that date. Any excess of the purchase
> Harnish Inc. acquired 25% of the outstanding common shares of Gregson Inc. on December 31, 2016. The purchase price was $1,250,000 for 62,500 shares, and is equal to 25% of Gregson’s carrying amount. Gregson declared and paid a $0.75 per share cash divid
> Fox Ltd. invested $1 million in Gloven Corp. early in the current year, receiving 25% of its outstanding shares. At the time of the purchase, Gloven Corp. had a carrying amount of $3.2 million. Gloven Corp. pays out 35% of its net income in dividends eac
> Holmes, Inc. purchased 30% of Nadal Corporation’s 30,000 outstanding common shares at a cost of $15 per share on January 3, 2017. The purchase price of $15 per share was based solely on the book value of Nadal’s net assets. On September 21, Nadal declare
> Access the financial statements of BHP Billiton plc for the company’s year ended June 30, 2014. Also access the financial statements of Newfield Exploration Company for the company’s year ended December 31, 2014. These are available at the companies’ web
> On January 1, 2017, Kenn Corp. purchased at par 10% bonds having a maturity value of $300,000. They are dated January 1, 2017, and mature on January 1, 2022, with interest receivable on December 31 of each year. The bonds are accounted for using the amor
> Weekly Corp., a December 31 yearend company that applies IFRS, acquired an investment of 1,000 shares of Credence Corp. in mid-2013 for $29,850. Between significant volatility in the markets and in the business prospects of Credence Corp., the accounting
> On January 1, 2015, Mamood Ltd. paid $322,744.44 for 12% bonds of Variation Ltd. with a maturity value of $300,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2015, mature on January 1, 2021, and pay interest each Decem
> Tsui Corporation owns corporate bonds at December 31, 2017, accounted for using the amortized cost model. These bonds have a par value of $800,000 and an amortized cost of $788,000. After an impairment review was triggered, Tsui determined that the disco
> In early 2017, for the first time, HTSM Corp. invested in the common shares of another Canadian company. It acquired 5,000 shares of Toronto Stock Exchange–traded Bayscape Ltd. at a cost of $68,750. Bayscape is projected to reach a value of $15.50 per sh
> Niger Corp. provided you with the following information about its investment in Fahad Corp. shares purchased in May 2017 and accounted for using the FV-OCI method: Cost…………………………………………………………….$ 39,900 Fair value, December 31, 2017………………………..$41,750 Fair
> At December 31, 2017, the equity investments of Wang Inc. that were accounted for using the FV-OCI model without recycling (application of IFRS 9) were as follows: Because of a change in relationship with Ahn Inc., Wang Inc. sold its investment in Ahn
> Assume the same information as in E9-12, except that the bonds are carried at FV-OCI. The fair value of the bonds at December 31 of each year-end is as follows: Instructions: (a) Prepare the journal entries to record the interest received and recogniti
> On January 1, 2016, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.72. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2016, and mature January 1, 2021, with interest receivable Dece
> Arantxa Corporation made the following purchases of investments during 2017, the first year in which Arantxa invested in equity securities: 1. On January 15, purchased 9,000 shares of Nirmala Corp.’s common shares at $33.50 per share plus commission of $
> Access the financial statements of Brookfield Asset Management Inc. for the company’s year ended December 31, 2014. These are included at the end of the book. Review the information that is provided and answer the following questions about the company.
> The following information is available about Kao Corp.’s investments at December 31, 2017. This is the first year Kao has purchased securities for investment purposes. Assume that Kao Corp. follows IFRS and applies IFRS 9. Instructio
> Transactions follow for Cassio Limited: March 10………………Purchased goods billed at $40,000, terms 3/10, n/60. 11…………………………..Purchased goods billed at $25,000, terms 1/15, n/30. 19……………………………………………………………………Paid invoice of March 10. 24………………………….Purchased go
> Eureka Limited has a calendar-year accounting period. The following errors were discovered in 2017. 1. The December 31, 2015 merchandise inventory had been understated by $51,000. 2. Merchandise purchased on account in 2016 was recorded on the books for
> Salamander Limited makes the following errors during the current year. Each error is an independent case. 1. Ending inventory is overstated by $1,020, but purchases are recorded correctly. 2. Both ending inventory and a purchase on account are understate
> At December 31, 2017, Igor Ltd. has outstanding non-cancellable purchase commitments for 32,500 litres of raw material at $2.00 per litre. The material will be used in Igor’s manufacturing process, and the company prices its raw materials inventory at co
> During 2017, Build it Furniture Limited purchased a railway car load of wicker chairs. The manufacturer of the chairs sold them to Build it for a lump sum of $59,850, because it was discontinuing manufacturing operations and wanted to dispose of its enti
> In an annual audit of Solaro Company Limited, you find that a physical inventory count on December 31, 2017, showed merchandise of $441,000. You also discover that the following items were excluded from the $441,000: 1. Merchandise of $61,000 is held by
> The following is a list of items that may or may not be reported as inventory in J Soukas Corp.’s December 31 balance sheet: 1. Goods out on consignment at another company’s store 2. Goods sold on an installment basis 3. Goods purchased f.o.b. shipping p
> Jaeco Corporation asks you to review its December 31, 2017 inventory values and prepare the necessary adjustments to the books. The following information is given to you: 1. Jaeco uses the periodic method of recording inventory. A physical count reveals
> Khalfan Industries would like to determine the fair value of its manufacturing facility in London, Ontario. The facility consists of land, building, and manufacturing equipment. Instructions: (a) Identify some of the considerations that are involved in
> Companies in the same line of business usually have similar investments and capital structures, and an opportunity for similar rates of return. One of the key performance indicators that is used to assess the profitability of companies is the return on a
> The financial statements of Trifolium Corporation for fiscal 2015 to fiscal 2017 are as follows (in thousands): Instructions: (a) Calculate Trifolium’s (1) inventory turnover and (2) average days to sell inventory for each of the two
> Milan Company Limited uses the gross profit method to estimate inventory for monthly reports. Information follows for the month of May: Instructions: (a) Calculate the estimated inventory at May 31, assuming that the gross profit is 25% of sales. (b) C
> Nicholas’s Christmas Tree Farm Ltd. grows pine, fi r, and spruce trees. The farm cuts and sells trees during the Christmas season and exports most of the trees to the United States. The remaining trees are sold to local tree-lot operators. It normally ta
> The Becker Milk Company Limited, a real estate and investment management company, reports the following information in its financial statements for the years ended April 30, 2014, 2013, and 2102: Instructions: (a) Calculate the accounts receivable turn
> The inventory of 3T Company on December 31, 2017, consists of the following items. Instructions: (a) Determine the inventory as at December 31, 2017, by the lower of cost and net realizable value method, applying this method directly to each item. (b)
> As a result of its annual inventory count, Tarweed Corp. determined its ending inventory at cost and at lower of cost and net realizable value at December 31, 2016, and December 31, 2017. This information is as follows: Instructions: (a) Prepare the jo
> The Ogale Equipment Corporation maintains a general ledger account for each class of inventory, debiting the individual accounts for increases during the period and crediting them for decreases. The transactions that follow are for the Raw Materials inve
> Information is presented in E8-18 on the inventory of mini-kettles at Funnell Company Limited for the month of May. Instructions: (a) Assuming that the perpetual inventory method is used, calculate the inventory cost at May 31 under each of the followin
> The following information is for the inventory of mini-kettles at Funnell Company Limited for the month of May: Instructions: (a) Assuming that the periodic inventory method is used, calculate the inventory cost at May 31 under each of the following co
> Schonfeld Corporation began operations on December 1, 2016. The only inventory transaction in 2016 was the purchase of inventory on December 10, 2016, at a cost of $20 per unit. None of this inventory was sold in 2016. Relevant information for fi scal 20
> Access the annual financial statements of Stora Enso Oyj for the company’s year ended December 31, 2014. These are available at the company’s website, www.storaenso.com. Review the information that is provided and answer the following questions about the
> Aquino Corporation is a multi-product fi rm. The following information concerns one of its products, the Trinton: Instructions: Calculate cost of goods sold, assuming Aquino uses: (a) A periodic inventory system and FIFO cost formula (b) A periodic inv
> On July 1, 2017, Agincourt Inc. made two sales: 1. It sold excess land in exchange for a four-year, non–interest-bearing promissory note in the face amount of $1,101,460. The land’s carrying value is $590,000. 2. It rendered services in exchange for an e
> Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missing. 2015 2016 2017 Sales $290,000 6,000 $410,000 Sales returns 13,000 347,000 32,000 Net sales Beginning inventory Ending
> In fiscal 2017, Ivanjoh Realty Corporation purchased unimproved land for $55,000. The land was improved and subdivided into building lots at an additional cost of $34,460. These building lots were all the same size but, because of differences in location
> Linsang Corporation’s retail store and warehouse closed for an entire weekend while the year-end inventory was counted. When the count was finished, the controller gathered all the count books and information from the clerical staff, co
> Iqbal Corporation uses the lower of FIFO cost and net realizable value method on an individual item basis, applying the direct method. The inventory at December 31, 2016, included product AG. Relevant per-unit data for product AG follow: Estimated selli
> The net income per books of Russell Industries Limited was determined without any knowledge of the following errors. The 2012 year was Russell’s first year in business. No dividends have been declared or paid. Instructions: (a) Prepar
> At the end of 2017, Perez Corporation has accounts receivable of $2.5 million and an allowance for doubtful accounts of $120,000. On January 16, 2018, Perez determined that its $20,000 receivable from Morganfield Ltd. will not be collected, and managemen
> Information on Janut Corp., which reports under ASPE, follows: July 1 Janut Corp. sold to Harding Ltd. merchandise having a sales price of $9,000, terms 3/10, n/60. Janut records its sales and receivables net. 3 Harding Ltd. returned defective merchandis
> Access the financial statements of Magna International Inc. for the company’s year ended December 31, 2014. These are available at www. sedar.com or the company’s website. Review the information that is provided and answer the following questions about t
> Assume that Lee Inc. has the following accounts at the end of the current year: 1. Common Shares 2. Raw Materials Inventory 3. FV-OCI Investments 4. Unearned Rent Revenue 5. Work-in-Process Inventory 6. Intangible Assets—Copyrights 7. Buildings 8.
> The bookkeeper for Garfield Corp. has prepared the following statement of financial position as at July 31, 2017: The following additional information is provided: 1. Cash includes $1,200 in a petty cash fund and $12,000 in a bond sinking fund. 2. The
> Bruno Corp. has decided to expand its operations. The bookkeeper recently completed the following statement of financial position in order to obtain additional funds for expansion: Instructions: (a) Prepare a revised statement of financial position usi
> LeBlanc Inc. shows a balance of $519,289 in the Accounts Receivable account on December 31, 2017. The balance consists of the following: Installment accounts due in 2018……………………………………………..$ 91,000 Installment accounts due after 2018……………………………………………80,0
> Selected accounts follow for Kings Inc., as reported in the work sheet at the end of May 2017: Instructions: Extend the amounts reported in the adjusted trial balance to the appropriate columns in the work sheet. Do not total individual columns. Ad
> Eli Corp. has just received its August 31, 2017 bank statement, which is summarized as follows: The general ledger Cash account contained the following entries for the month of August: Deposits in transit at August 31 are $3,800, and cheques outstand
> The following independent situations require professional judgement for determining when to recognize revenue from the transactions. 1. Air Yukon sells you an advance purchase airline ticket in September for your flight home at Christmas. 2. Better Buy L
> Kali Corp. established a petty cash fund early in 2017 to increase the efficiency of accounting for small cash transactions and to improve control over many of the small expenditures it makes. The company decided to set up the imprest fund at $500 and a
> Use the information in E5-17 for Dropafix Inc. Instructions: (a) Calculate the current and acid test ratios for 2016 and 2017. (b) Calculate Dropafix’s current cash debt coverage ratio for 2017. (c) Calculate Dropafix’
> Lute Retail Ltd. follows ASPE. It transfers $355,000 of its accounts receivable to an independent trust in a securitization transaction on July 11, 2017, receiving 96% of the receivables balance as proceeds. Lute will continue to manage the customer acco
> Financial statements can be a valuable tool for many parties interested in a company’s performance. Consider a public company in Alberta that drills oil and sells it to refineries in the United States. The company prepares its financial statements using
> The classifications on Chesapeake Limited’s statement of financial position are as follows: 1. Current assets 2. Long-term investments 3. Property, plant, and equipment 4. Intangible assets 5. Other assets 6. Current liabilities 7. Non-current liab
> Chessman Corporation factors $600,000 of accounts receivable with Liquidity Financing, Inc. on a with recourse basis. Liquidity Financing will collect the receivables. The receivable records are transferred to Liquidity Financing on August 15, 2017. Liqu
> The trial balance before adjustment for Bassel Company shows the following balances. The following cases are independent: 1. To obtain cash, Bassel factors without recourse $20,000 of receivables with Anila Finance. The finance charge is 10% of the amo
> On April 1, 2017, Ibrahim Corporation assigns $400,000 of its accounts receivable to First National Bank as collateral for a $200,000 loan that is due July 1, 2017. The assignment agreement calls for Ibrahim to continue to collect the receivables. First
> By December 31, 2017, Clearing Corp. had performed a significant amount of environmental consulting services for Rank Ltd. Rank was short of cash, and Clearing agreed to accept a $200,000, non–interest-bearing note due December 31, 2019, as payment in fu
> On September 1, 2017, Myo Inc. sold goods to Khin Corporation, a new customer. Before shipping the goods, Myo’s credit and collections department conducted a procedural credit check and determined that Khin is a high-credit-risk customer. As a result, My
> Little Corp. was experiencing cash flow problems and was unable to pay its $105,000 account payable to Big Corp. when it fell due on September 30, 2017. Big agreed to substitute a one-year note for the open account. The following two options were present
> The current assets and current liabilities sections of the statement of financial position of Agincourt Corp. are as follows: The following errors have been discovered in the corporation’s accounting: 1. January 2018 cash disbursement
> Uddin Corp.’s statement of financial position at the end of 2016 included the following items: The following information is available for the 2017 fiscal year: 1. Net income was $391,000. 2. Equipment (cost of $20,000 and accumulated
> Selected accounts follow of Aramis Limited at December 31, 2017: The following additional information is available: 1. Inventory is valued at the lower of cost and net realizable value using FIFO. 2. Equipment is recorded at cost. Accumulated depreciat
> Hans Hoogervorst, Chair of the IASB, delivered a speech at the Korean Accounting Review International Symposium in Seoul, Korea, on March 31, 2015, entitled “Mind the Gap (Between non-GAAP and GAAP).” In this presentation, he spoke of issues related to t
> The controller for Fashion Co. is trying to determine the amount of cash to report on the December 31, 2017 statement of financial position. The following information is provided: 1. A commercial savings account with $600,000 and a commercial chequing ac
> Lujie Xie is the controller of Lincoln Corporation and is responsible for the preparation of the year-end financial statements on December 31, 2017. Lincoln prepares financial statements in accordance with ASPE. The following transactions occurred during
> The trial balance of Zhang Ltd. at December 31, 2017, follows: Instructions: (a) Prepare a classified statement of financial position as at December 31, 2017. Ignore income taxes. (b) Is there any situation where it would make more sense to have a stat
> Samson Corporation is preparing its December 31, 2017 statement of financial position. The following items may be reported as either current or long-term liabilities: 1. On December 15, 2017, Samson declared a cash dividend of $1.50 per common share to s
> Assume that Elrond Inc. decided to sell Demand TV Ltd., a subsidiary, on September 30, 2017. There is a formal plan to dispose of the business component, and the sale qualifies for discontinued operations treatment. Pertinent data on the operations of th
> Keith Nobrega is trying to determine the amount to set aside so that he will have enough money on hand in two years to overhaul the engine on his vintage used car. While there is some uncertainty about the cost of engine overhauls in two years, by conduc
> Corporation during the current year. 1. Ordinary operating maintenance on equipment was recorded as follows: Equipment……………………………………………..2,500 Accounts Payable…………………………………….2,500 2. Trimm received an advance on a custom order for merchandise that will
> Selected accounts for Winslow Inc. as at December 31, 2017, are as follows: Instructions: Prepare closing entries for Winslow Inc. on December 31, 2017. Inventory FV-NI Investments FV-OCI Investments Retained Earnings Dividends Accumulated Other $
> Use the information in E5-14 for Carmichael Industries. Instructions: (a) Calculate the current and acid test ratios for 2016 and 2017. (b) Calculate Carmichael’s current cash debt coverage ratio for 2017. (c) Based on the analyses in
> Use the information in E5-18 for Sensify Corporation. Instructions: (a) Calculate the current ratio and debt to total assets ratio as at December 31, 2016 and 2017. Calculate the free cash flow for December 31, 2017. (b) Based on the analysis in (a), co
> Rudolph Corp. is a subsidiary of Huntley Corp. and follows IFRS. The ethical accountant, working as Rudolph’s controller, believes that the yearly charge for doubtful accounts for Rudolph should be 2% of net credit sales. The president, nervous that the
> Echo Corp., a retail propane gas distributor, has increased its annual sales volume to a level that is three times greater than the annual sales of a dealer that it purchased in 2016 in order to begin operations. The board of directors of Echo Corp. rece
> The comparative statement of financial position of Sensify Corporation as at December 31, 2017, follows: Net income of $37,000 was reported and dividends of $13,000 were declared and paid in 2017. New equipment was purchased, and equipment with a carry
> The comparative statement of financial position of Dropafix Inc. as at June 30, 2017, and a statement of comprehensive income for the 2017 fiscal year follow: DROPAFIX INC. Statement of Comprehensive Income For the Year Ended June 30, 2017 Net sales&ac
> The statement of income of Kneale Transport Inc. for the year ended December 31, 2017, reported the following condensed information: Kneale’s statement of financial position included the following comparative data at December 31: Ad
> Eddie Zambrano Corporation, a private company, began operations on January 1, 2014. During its first three years of operations, Zambrano reported net income and declared dividends as follows: The following information is for 2017: Income before income
> A comparative statement of financial position for Carmichael Industries Inc. follows: Additional information: 1. Net income for the fiscal year ending December 31, 2017, was $129,000. 2. Cash dividends of $60,000 were declared and paid. Dividends paid
> It is February 2018 and Janix Corporation is preparing to issue fi nancial statements for the year ended December 31, 2017. To prepare fi nancial statements and related disclosures that are faithfully representative, Janix is reviewing the following even
> Several statement of financial position accounts of Green spoon Inc. follow: 1. FV-OCI Investments 2. Common Shares 3. Dividends Payable 4. Accumulated Depreciation—Equipment 5. Construction in Process (Warehouse) 6. Petty Cash 7. Interest Payable
> The following information was taken from the records of Biscay Inc. for the year 2017: The following additional information was also available: income tax applicable to income from continuing operations, $465,000; income tax recovery applicable to loss
> Income statement information for Flett Tire Repair Corporation for the year 2017 follows: The effective tax rate on all income is 25%, and Flett applies ASPE. Instructions: (a) Prepare a multiple-step income statement for 2017, showing expenses by fun
> The trial balance for Hanna Resort Limited on August 31 is as follows: Additional information: 1. The balance in Prepaid Insurance includes the cost of an insurance policy that will expire on September 30, 2017. 2. An inventory count on August 31 shows
> Write a short essay (one or two pages) describing the incurred loss model and the expected loss model of impairment. Summarize each model and compare the two models, indicating the potential benefits and drawbacks of each. Which model do you think provid
> Videohound Video Company, a sole proprietorship, had the following information for 2017: Instructions: Calculate the net income for 2017. $ 23,000 19,000 $101,000 20,000 Cash balance, January 1 Accounts receivable, January 1 Collections from custom
> The following are all changes in the account balances of Chili Lime Ltd. during the current year, except for Retained Earnings: Instructions: Calculate the net income for the current year, assuming that there were no entries in the Retained Earnings ac
> On October 5, 2017, Diamond in the Rough Recruiting Group Inc.’s board of directors decided to dispose of the Blue Division. A formal plan was approved. Diamond derives approximately 75% of its income from its human resources management practice. The Blu
