Camden Biotechnology began operations in September 2024. The following selected transactions relate to liabilities of the company for September 2024 through March 2025. Camden’s fiscal year ends on December 31. Its financial statements are issued in April. 2024 a. On September 5, opened checking accounts at Second Commercial Bank and negotiated a short-term line of credit of up to $15,000,000 at the bank’s prime rate (10.5% at the time). The company will pay no commitment fees. b. On October 1, borrowed $12 million cash from Second Commercial Bank under the line of credit and issued a five-month promissory note. Interest at the prime rate of 10% was payable at maturity. Management planned to issue 10-year bonds in February to repay the note. c. Received $2,600 of refundable deposits in December for reusable containers used to transport and store chemical-based products. d. For the September–December period, sales on account totaled $4,100,000. The state sales tax rate is 3% and the local sales tax rate is 3%. (This is a summary journal entry for the many individual sales transactions for the period.) e. Recorded the adjusting entry for accrued interest.2025 f. In March, paid the entire amount of the note on its March 1 due date, using proceeds from a February issuance of $10 million of 10-year bonds at face value, along with other available cash. g. The storage containers covered by refundable deposits are expected to be returned during the first nine months of the year. Half of the containers were returned in March 2025. Required: 1. Prepare the appropriate journal entries for items a–g. 2. Prepare the current and long-term liability sections of the December 31, 2024, balance sheet. Trade accounts payable on that date were $252,000.
> Sherrod, Inc., reported pretax accounting income of $76 million for 2024. The following information relates to differences between pretax accounting income and taxable income: a. Income from installment sales of properties included in pretax accounting i
> You are the new accounting manager at the Barry Transport Company. Your CFO has asked you to provide input on the company’s income tax position based on the following: 1. Pretax accounting income was $45 million and taxable income was $8 million for the
> The De Ville Company reported pretax accounting income on its income statement as follows: Included in the income of 2024 was an installment sale of property in the amount of $50,000. However, for tax purposes, De Ville reported the income in the year ca
> Zakary Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2024 through 2027 except for differences in depreciation on an operational asset. The asset cost $120,000 and is depreciate
> Refer to the situation described in BE 11–17. Assume that the undiscounted sum of estimated future cash flows is $24 million instead of $28 million. What amount of impairment loss should C&R report in its income statement?
> Dixon Development began operations in December 2024. When lots for industrial development are sold, Dixon recognizes income for financial reporting purposes in the year of the sale. For some lots, Dixon recognizes income for tax purposes when collected.
> Times-Roman Publishing Company reports the following amounts in its first three years of operation: The difference between pretax accounting income and taxable income is due to subscription revenue for one year magazine subscriptions being reported for t
> Shyer Co. reports net operating income (loss) for financial reporting and tax purposes in each year as follows: Shyer’s 2020 NOL is driven by an unfortunate obsolescence of its primary product. Given great uncertainty in Shyerâ
> True Developers, Inc., sells plots of land for industrial development. True recognizes income for financial reporting purposes in the year it sells the plots. For some of the plots sold this year, True took the position that it could recognize the income
> The long-term liabilities section of CPS Transportation’s December 31, 2023, balance sheet included the following: a. A lease liability with 15 remaining lease payments of $10,000 each, due annually on January 1: The incremental borrowi
> Fore Farms reported a pretax operating loss of $137 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $5 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 202
> Fore Farms reported a pretax operating loss of $137 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $5 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 202
> Alsip Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. AL sup recognizes service revenue for financial reporting purposes when the services are performed.
> Mid-South Auto Leasing leases vehicles to consumers. The attraction to customers is that the company can offer competitive prices due to volume buying. On September 30, 2024, the company leased a delivery truck to a local florist, Anything Grows. The fi
> Each of the four independent situations below describes a sales-type lease in which annual lease payments of $10,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Determine the following amounts at the beginning of th
> Refer to the situation described in BE 11–14. Assume that 2022 depreciation was incorrectly recorded as $32,000. This error was discovered in 2024. (1) Record the journal entry needed in 2024 to correct the error. (2) What is depreciation on the building
> On January 1, 2024, Rick’s Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease for three years. Rick’s had no significant economic incentive as of the beginning of the lease to exercise the three-year exte
> On January 1, 2024, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value
> On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $80,000 each, beginning December 31, 2024, and on each December 31 through 2026. The lessor,
> Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians’ Leasing purchased a lithotripter from Rand for $2,000,000 and leased it to Mid-South Urologists Group, Inc.
> On January 1, 2024, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Majestic. Portio
> Abbott Equipment leased a protein analyzer to Werner Chemical, Inc., on September 30, 2024. Abbott purchased the machine from Nutrias, Inc., at a cost of $6 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $391,
> Werner Chemical, Inc., leased a protein analyzer on September 30, 2024. The five-year lease agreement calls for Werner to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, and June 30, with the first payment on
> On January 1, 2024, Worcester Construction leased International Harvester equipment from Waltham Lease Corp. Waltham Lease Corp purchased the equipment from Wellesley Harvester at a cost of $958,158. Worcester’s borrowing rate for similar transactions is
> On January 1, 2024, Harlan Consulting entered into a three-year lease for new office space agreeing to lease payments of $7,000 in 2024, $6,000 in 2025, and $5,000 in 2026. Payments are due on December 31 of each year with the first payment being made on
> On January 1, 2024, Harlan Consulting entered into a three-year lease for new office space agreeing to lease payments of $5,000 in 2024, $6,000 in 2025, and $7,000 in 2026. Payments are due on December 31 of each year with the first payment being made on
> Refer to the situation described in BE 11–14. Assume that instead of changing the useful life and residual value, in 2024 the company switched to the double-declining-balance depreciation method. How should Robotics account for the change? What is deprec
> On January 1, 2024, Nguyen Electronics leased equipment from Navels Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Navels. The equipment cost Navels $1,236,552 and has an expecte
> Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2024, Rhone-Metro leased equipment to Western Soya Co. for a non-cancelable stated lease term of four years ending December 31, 2028, at which time possession of the le
> Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2024, Rhone-Metro leased equipment to Western Soya Co. for a four-year period ending December 31, 2028, at which time possession of the leased asset will revert back to
> On December 31, 2024, Rhone-Metro Industries leased equipment to Western Soya Co. for a four-year period ending December 31, 2028, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost Rhone-Metro $365,760 and h
> At the beginning of 2024, VHF Industries acquired a machine with a fair value of $6,074,700 by signing a four year lease. The lease is payable in four annual payments of $2 million at the end of each year. Required: 1. What is the effective rate of inte
> Lathery Leasing purchased a single-engine plane for $400,000 and leased it to Red Baron Flying Club for its fair value of $645,526 on January 1, 2024. Terms of the lease agreement and related facts were a. Eight annual payments of $110,000 beginning Janu
> Lathery Leasing purchased a single-engine plane for its fair value of $645,526 and leased it to Red Baron Flying Club on January 1, 2024.Terms of the lease agreement and related facts were a. Eight annual payments of $110,000 beginning January 1, 2024, t
> On December 31, 2024, Yard Art Landscaping leased a delivery truck from Branch Motors. Branch paid $40,000 for the truck. Its retail value is $45,114. The lease agreement specified annual payments of $11,000 beginning December 31, 2024, the beginning of
> Bran if Leasing leases mechanical equipment to industrial consumers under sales-type leases that earn Bran if a 10% rate of return for providing long-term financing. A lease agreement with Branson Construction specified 20 annual payments beginning Decem
> Terms of a lease agreement and related facts were as follows: a. The lease asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation). b. Annual lease payments at the beginning of
> At the beginning of 2022, Robotics Inc. acquired a manufacturing facility for $12 million. $9 million of the purchase price was allocated to the building. Depreciation for 2022 and 2023 was calculated using the straight-line method, a 25-year useful life
> On January 1, 2024, Lecco Leasing leased equipment to Quality Services under a finance/sales-type lease designed to earn Lecco a 12% rate of return for providing long-term financing. The lease agreement specified a. Ten annual payments of $56,000 beginni
> Newton Labs leased chronometers from Brookline Instruments on January 1, 2024. Brookline Instruments manufactured the chronometers at a cost of $200,000. The chronometers have a fair value of $260,000. Appropriate adjusting entries are made quarterly. R
> On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrie Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh. The equipment cost Ghosh $956,000 and has a
> High Time Tours leased rock-climbing equipment from Adventures Leasing on January 1, 2024. High Time has the option to renew the lease at the end of two years for an additional three years for $8,000 per quarter. Adventures purchased the equipment at a c
> Universal Leasing leases electronic equipment to a variety of businesses. The company’s primary service is providing alternate financing by acquiring equipment and leasing it to customers under long-term leases. Universal earns interest under these arran
> You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2024. Your accounting group provided you the following information on the company’s debt: 1. O
> The Heinrich Tire Company recalled a tire in its subcompact line in December 2024. Costs associated with the recall were originally thought to approximate $50 million. Now, though, while management feels it is probable the company will incur substantial
> Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Easter’s fiscal year ends December 31, and the 2024 financial statements are issued on March 15, 2025. a. Eastern is involved in a law
> Sometimes compensation packages include bonuses designed to provide performance incentives to employees. The difficulty a bonus can cause accountants is not an accounting problem, but a math problem. The complication is that the bonus formula sometimes
> The unadjusted trial balance of the Manufacturing Equitable at December 31, 2024, the end of its fiscal year, included the following account balances. Manufacturing’s 2024 financial statements were issued on April 1, 2025. Other informa
> The balance sheet at December 31, 2024, for Nevada Harvester Corporation includes the liabilities listed below: a. 11% bonds with a face amount of $40 million were issued for $40 million on October 31, 2015. The bonds mature on October 31, 2035. Bondhold
> Blanton Plastics, a household plastic product manufacturer, borrowed $14 million cash on October 1, 2024, to provide working capital for year-end production. Blanton issued a four-month, 12% promissory note to L&T Bank under a prearranged short-term line
> Bravo Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Bravo. The machine has a cash price of $800,000. Bravo wants to be reimbursed for financing the machine at an 8% annual interest rate. Required:
> Lowlife Company defaulted on a $250,000 loan that was due on December 31, 2024. The bank has agreed to allow Lowlife to repay the $250,000 by making a series of equal annual payments beginning on December 31, 2025. Required: 1. Calculate the required an
> On January 1, 2024, The Barrel Company purchased merchandise from a supplier. Payment was a noninterest bearing note requiring five annual payments of $20,000 on each December 31 beginning on December 31, 2024, and a lump-sum payment of $100,000 on Decem
> Shay is 55 years old and has been asked to accept early retirement from his company. The company has offered Shay three alternative compensation packages to induce Shay to retire. 1. $180,000 cash payment to be paid immediately 2. A 20-year annuity of $1
> On January 1, 2024, the Mountain Company agreed to purchase a building by making six payments. The first three are to be $25,000 each, and will be paid on December 31, 2024, 2025, and 2026. The last three are to be $40,000 each and will be paid on Decemb
> The following situations should be considered independently. 1. You want to accumulate $60,000 for a down payment on a small business. You will invest $30,000 today in a bank account paying 8% interest compounded annually. Approximately how long will it
> The Clauses are considering the purchase of a hardware store. The Clauses anticipate that the store will generate cash flows of $70,000 per year for 20 years. At the end of 20 years, they intend to sell the store for an estimated $400,000. The clauses wi
> On July 15, 2024, M.W. Morgan Distribution sold land for $35 million that it had purchased in 2019 for $22 million. What would be the amount(s) related to the sale that Morgan would report in its statement of cash flows for the year ended December 31, 20
> Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $800,000. Helga has used past financial information to estimate that the net cash flows (cash inflows less cash outflows) generated by the restaurant woul
> On the last day of its fiscal year ending December 31, 2024, the Safe & Reliable (S&R) Glass Company completed two financing arrangements. The funds provided by these initiatives will allow the company to expand its operations. 1. S&R issued 8% stated ra
> Three employees of the Horizon Distributing Company will receive annual pension payments from the company when they retire. The employees will receive their annual payments for as long as they live. Life expectancy for each employee is 15 years beyond re
> Bravo Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Bravo. The machine has a cash price of $800,000. Bravo wants to be reimbursed for financing the machine at a 12% annual interest rate over the fiv
> Stone Company is facing several decisions regarding investing and financing activities. Address each decision independently. 1. On June 30, 2024, the Stone Company purchased equipment from Paper Corp. Stone agreed to pay $10,000 on the purchase date and
> The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2024, appears below: The following balance sheet information also is available: In addition, the following transac
> Duke Company’s records show the following account balances at December 31, 2024: Income tax expense has not yet been determined. The following events also occurred during 2024. All transactions are material in amount. 1. $300,000 in res
> The following income statement items appeared on the adjusted trial balance of Schemer Manufacturing Corporation for the year ended December 31, 2024 ($ in thousands): sales revenue, $15,300; cost of goods sold, $6,200; selling expenses, $1,300; general
> Rembrandt Paint Company had the following income statement items for the year ended December 31, 2024 ($ in thousands): In addition, during the year, the company completed the disposal of its plastics business and incurred a loss from operations of $1.6
> Refer to the information presented in P 4–4. Prepare a revised income statement for 2024 reflecting the additional facts. Use a multiple-step format similar to Illustration 4–4 of this chapter to prepare income from continuing operations, and then add to
> On January 1, 2024, the Merit Group issued to its bank a $41 million, five-year installment note to be paid in five equal payments at the end of each year. Installment payments of $10 million annually include interest at the rate of 7%. What would be the
> The preliminary 2024 income statement of Alexia Systems, Inc., is presented below: Additional Information: 1. Selling and administrative expense includes $26 million in restructuring costs. 2. Included in other income is $120 million in income from a dis
> For the year ending December 31, 2024, Olive Corporation had income from continuing operations before taxes of $1,200,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should b
> The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2024 and 2023: On October 15, 2024, Jackson entered into a tentative agreement to sell the assets of one of its divisions. The div
> Presented below are condensed financial statements adapted from those of two actual companies competing in the pharmaceutical industry—Johnson and Johnson (J&J) and Pfizer, Inc. ($ in millions, except per share amounts). Required:
> Financial statements for Askew Industries for 2024 are shown below (in thousands): Required: Calculate the following ratios for 2024. 1. Inventory turnover ratio 2. Average days in inventory 3. Receivables turnover ratio 4. Average collection period 5. A
> Presented below are the 2024 income statement and comparative balance sheets for Santana Industries. Additional information for the 2024 fiscal year ($ in thousands): 1. Cash dividends of $1,000 were declared and paid. 2. Equipment costing $4,000 was pur
> The chief accountant for Grandview Corporation provides you with the company’s 2024 statement of cash flows and income statement. The accountant has asked for your help with some missing figures in the company’s compar
> Selected information about income statement accounts for the Reed Company is presented below (the company’s fiscal year ends on December 31). On July 1, 2024, the company adopted a plan to discontinue a division that qualifies as a comp
> Presented below are condensed financial statements adapted from those of two actual companies competing as the primary players in a specialty area of the food manufacturing and distribution industry ($ in millions, except per share amounts). Required: E
> Caudex Candy Company’s income statement for the year ended December 31, 2024, reported interest expense of $2 million and income tax expense of $12 million. Current assets listed in its balance sheet include cash, accounts receivable, and inventory. Prop
> Refer to the situation described in BE 21–5. What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2024, if it uses the indirect method?
> The following is a December 31, 2024, post-closing trial balance for Almay Corporation. Additional Information: 1. The investment in equity securities account includes an investment in common stock of another corporation of $30,000 which management inten
> The data listed below are taken from a balance sheet of Trident Corporation at December 31, 2024. Some amounts, indicated by question marks, have been intentionally omitted. Required: 1. Determine the missing amounts. 2. Prepare Trident’
> Presented below is a list of balance sheet accounts. Required: Prepare a classified balance sheet ignoring monetary amounts. Include headings for each classification, as well as titles for each classification’s subtotal. An example of
> Melody Lane Music Company was started by John Ross early in 2024. Initial capital was acquired by issuing shares of common stock to various investors and obtaining a bank loan. The company operates a retail store that sells records, tapes, and compact di
> Presented below is the balance sheet for HHD, Inc., at December 31, 2024. The captions shown in the summarized statement above include the following: a. Current assets: cash, $150,000; accounts receivable (net), $200,000; inventory, $225,000; and prepaid
> The following incomplete balance sheet for the Sanderson Manufacturing Company was prepared by the company’s controller. As accounting manager for Sanderson, you are attempting to reconstruct and revise the balance sheet. Additional Inf
> The following balance sheet for the Hubbard Corporation was prepared by the company: Additional Information: 1. The buildings, land, and machinery are all stated at cost except for a parcel of land that the company is holding for future sale. The land or
> The following is the ending balances of accounts at December 31, 2024, for the Vosburgh Electronics Corporation. Additional Information: 1. The receivables from employees are due on June 30, 2025. 2. The notes receivable are due in installments of $50,00
> The following is the ending balances of accounts at June 30, 2024, for Excel Company Additional Information: 1. The short-term investments account includes $18,000 in U.S. treasury bills purchased in May. The bills mature in July, 2024. 2. The accounts r
> Define the CECL model for accounts receivable. On what does it base the estimate of the allowance for uncollectible accounts?
> Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $400 million on July 1, 2024, at a price of $380 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and Decembe
> 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
> Is restricted cash included in the reconciliation of cash balances on a statement of cash flows? Explain.
> It is discovered in 2024 that ending inventory in 2022 was understated. What is the effect of the understatement on the following:
> Define the ECL model for accounts receivable. How does it differ from the CECL model?
> How did the CARES Act affect adoption of the CECL model?
> On January 1, 2024, Oriole Company purchased $500,000 of Nest Corporation’s five-year, 4% notes at par, with interest receivable semiannually. The company classified the investment as available-for-sale. To hedge the risk that general i
> On January 1, 2024, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. LLB entered into a two-year interest rate swap agreement on January 1, 2021, and designated the swap as a fair value h
> On January 1, 2024, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. ∙ LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swa
> LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. ∙ LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swap as a fair value he
