Composite Fabricators, Inc. is a U.S.-based company that develops its financial statements under GAAP. The total amount of the company’s assets shown on its balance sheet for the current year was approximately $370 million. The president of Composite Fabricators is considering the possibility of relocating the company to a country that practices accounting under IFRS. The president has hired an international accounting firm to determine what the company’s statements would look like if they were prepared under IFRS. One striking difference is that under IFRS the assets shown on the balance sheet would be valued at approximately $430 million. Required a. Would Composite Fabricators’ assets really be worth $60 million more if it moves its headquarters? b. Discuss the underlying conceptual differences between U.S. GAAP and IFRS that cause the difference in the reported asset values.
> The equity section of the balance sheet of Halmera Ltd as at 31 March 2023 was as follows: During the year ended 31 March 2024, the following events took place: (i) A 1-for-3 rights issue of ordinary shares was made in May 2023 at a price of Â&pou
> The following trial balance has been extracted from the books of Gain and Main as at 31 March 2022; Gain and Main are in partnership sharing profits and losses in the ratio 3 to 2: In appropriating the net profit for the year, it has been agreed that Ma
> Proudie, Slope and Thorne were in partnership sharing profits and losses in the ratio 3 : 1 : 1. The draft balance sheet of the partnership as at 31 May 2019 is shown below: Additional information: 1. Proudie decided to retire on 31 May 2019. However, S
> A, B and C are partners sharing profits and losses in the ratio 2 : 2 : 1. The balance sheet of the partnership as at 30 September 2020 was as follows: The partners agreed to dispose of the business to CNO Limited with effect from 1 October 2020 under t
> The balance sheet of A. Barnes and C. Darwin at 31 March 2022 is as follows: The partners share profits and losses: Barnes three-fifths and Darwin two-fifths. At the date of the above balance sheet, it was agreed to admit E. Fox who was to bring cash of
> Fitch and Wall have been in partnership for many years sharing profits and losses in the ratio 5:3 respectively. The following was their balance sheet as at 31 December 2023: On 1 January 2024, they decided to admit Home as a partner on the condition th
> Blunt, Dodds and Fuller are in partnership. They shared profits in the ratio 1:3:2. It is decided to admit Baxter. It is agreed that goodwill is worth £60,000, but that this is not to be brought into the business records. Baxter will bring &
> Complete the columns to show the effects of the following transactions:
> Abel, Burt, Cole and Dodds are in partnership. They are to change their profit ratios as shown: They decide to bring in a goodwill amount of £72,000 on the change. The last balance sheet before any element of goodwill has been introduced wa
> George, Henry and Lee are partners. They share profits and losses in the ratios of 5:3:2 respectively. For the year ending 31 December 2024 their capital accounts remained fixed at the following amounts: George ………. 120,000£ Henry …………… 80,000 Lee ………………
> Bush, Home and Wilson share profits and losses in the ratios 4:1:3 respectively. Their trial balance as at 30 April 2020 was as follows: Draw up a set of financial statements for the year ending 30 April 2020. The following notes are relevant at 30 Apri
> Scot and Joplin are in partnership. They share profits in the ratio: Scot 70 per cent; Joplin 30 per cent. The following trial balance was extracted as at 31 December 2020: The following notes are applicable at 31 December 2020: (a) Inventory, 31 Decemb
> A and B are in partnership sharing profits and losses 3:2. Under the terms of the partnership agreement, the partners are entitled to interest on capital at 5 per cent per annum and B is entitled to a salary of £4,500. Interest is charged on drawings at
> Smith and Tolhurst are in partnership, sharing profits and losses in the ratio 5:3. The following information has been taken from the partnership records for the year ended 31 October 2019: (i) According to its Income Statement, the net profit of the par
> Draw up a profit and loss appropriation account for Cole, Knox and Lamb for the year ending 31 December 2024, and a balance sheet extract at that date, from the following: (i) Net profits £184,800. (ii) Interest to be charged on capitals: Cole £3,600; Kn
> Rock, Hill and Pine enter into a joint venture for dealing in paintings. The following transactions took place: 2024 May 1 Rock rented a shop paying three months’ rent £2,100. 3 Hill bought a van for £2,200. 5 Hill bought paintings for £8,000. 17 Pine re
> Frank entered into a joint venture with Graham for the purchase and sale of robot mowers. They agreed that profits and losses should be shared equally. The following transactions took place: (a) Frank purchased mowers for £120,400 and paid carriage £320.
> The following trial balance of the Grampian Golf Club was extracted from the books as on 31 December 2019: Notes: (i) Bar purchases and sales were on a cash basis. Bar inventory at 31 December 2019 was valued at £12,820. (ii) Subscriptions
> Complete the following table:
> The treasurer of the Plumpton Leisure Centre has produced the following receipts and payments account for the year ended 31 December 2020: Notes: (i) Refreshment inventory was valued: 31 December 2019 £680; 31 December 2020 £92
> You are given the following details in connection with the non-current assets of Roy Snell’s business for the year ended 31 July 2023: 1 August 2022, non-current assets at cost minus accumulated depreciation ………. 777,000£ Acquisitions of non-current asse
> Martin Petty is in the process of preparing a statement of cash flows for his business for the year to 30 April 2023. You establish the following facts in connection with that financial year: Net profit for the year ………………………….. 429,000£ Depreciation exp
> The balance sheets of Wendy Langmore’s business as at the end of its two most recent financial years are given to you below: (i) In December 2022, a delivery van was purchased for £18,950, paid for immediately by bank tran
> The balance sheets of Ruth Byrde’s business as at the end of its two most recent financial years are presented below: There were no acquisitions of non-current assets during the year ended 31 October 2024, but a delivery van that had a
> B. Barnes is a dealer who has not kept proper books of account. At 31 October 2019 his state of affairs was as follows: Cash ……………………………………………… 210£ Bank balance (not overdrawn) ……….. 4,700 Fixtures ………………………………………. 2,800 Inventory …………………………………… 18,200
> Using the information in Review question 27.13, prepare P. Maclaran’s balance sheet as at 31 December 2018. Review Question 27.13: The following are summaries of the cash book and bank accounts of P. Maclaran who does not keep her book
> The following are summaries of the cash book and bank accounts of P. Maclaran who does not keep her books using the double entry system. The following referred to 2018 The following additional information is available. You are required to: (a) Calcula
> Jean Smith, who retails wooden ornaments, has been so busy since she commenced business on 1 April 2018 that she has neglected to keep adequate accounting records. Jean’s opening capital consisted of her life savings of £15,000 which she used to open a b
> Bill Smithson runs a second-hand furniture business from a shop which he rents. He does not keep complete accounting records, but is able to provide you with the following information about his financial position at 1 April 2018: Inventory of furniture &
> Draw up Amy Banfield’s balance sheet as at 30 June 2024 from the following items: Capital ……………………. 22,960£ Equipment ………………… 11,660 Trade payables ………….… 6,390 Inventory …………….….….. 7,920 Trade receivables …..….… 9,400 Cash at bank ……………..…… 370
> Electronic spreadsheets (such as Microsoft Excel) are extensively used by accountants today and have been for decades. With reference to some of the various topics covered in this book, can you suggest some specific purposes for which accountants might u
> On January 1, Year 1, Poultry Processing Company purchased a freezer and related installation equipment for $42,000. The equipment had a three-year estimated life with a $3,000 salvage value. Straight- line depreciation was used. At the beginning of Year
> City Taxi Service purchased a new auto to use as a taxi on January 1, Year 1, for $36,000. In addition, City paid sales tax and title fees of $1,200 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $4,000. Required a.
> The following trial balance was drawn from the accounts of Little Grocery Supplier (LGS) as of December 31, Year 2: Transactions for Year 3 1. Acquired additional $20,000 cash from the issue of common stock. 2. Purchased $85,000 of inventory on account.
> Joey’s Bike Shop sells new and used bicycle parts. Although a majority of its sales are cash sales, it makes a significant amount of credit sales. During Year 1, its first year of operations, Joey’s Bike Shop experienc
> Fresh Foods established a petty cash fund of $100 on January 2. On January 31, the fund contained cash of $9.20 and vouchers for the following cash payments: The four distinct accounting events affecting the petty cash fund for the period were (1) establ
> Required a. Discuss the requirements of Section 404 of the Sarbanes–Oxley Act and how it relates to COSO. b. What type of companies do these rules apply to?
> The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: During the year, The Shirt Shop sold 810 T-shirts for $20 each. Required a. Compute the amount of ending inventory The Shirt Shop would report on the bal
> The following information pertains to Mason Company for Year 2: Ending inventory consisted of 30 units. Mason sold 370 units at $90 each. All purchases and sales were made with cash. Operating expenses amounted to $4,100. Required a. Compute the gross ma
> For each of the following events, indicate whether the freight terms are FOB destination or FOB shipping point. a. Sold merchandise and the buyer paid the transportation costs. b. Purchased merchandise and the seller paid the transportation costs. c. Sol
> Powell Company began the Year 3 accounting period with $40,000 cash, $86,000 inventory, $60,000 common stock, and $66,000 retained earnings. During Year 3, Powell experienced the following events: 1. Sold merchandise costing $58,000 for $99,500 on accoun
> Obtain Target Corporation’s annual report for its 2018 fiscal year (year ended February 2, 2019) at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions: a. What was Target’s debt-to-assets ratio
> The following information was taken from the accounts of Green Market, a small grocery store, at December 31, Year 1. The accounts are listed in alphabetical order, and all have normal balances. Dollar amounts are given in thousands. Required First, prep
> The beginning account balances for Terry’s Auto Shop as of January 1, Year 2, follow: The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $15,000. 2. The goods in
> Clark Bell started a personal financial planning business when he accepted $36,000 cash as advance payment for managing the financial assets of a large estate. Bell agreed to manage the estate for a one-year period beginning June 1, Year 1. Required a. S
> The following information was drawn from the Year 5 balance sheets of two companies: During Year 5, Butler’s net income was $25,200, while Lynch’s net income was $43,200. Required a. Compute the return-on-equity ratio
> On January 1, Year 2, LCJ Rental Cars purchased a car that is to be used to produce rental income. The car cost $35,000. It has an expected useful life of five years and a $5,000 salvage value. The car produced rental income of $9,000 per year throughout
> Indicate whether each of the following statements is true or false: a. The unearned revenue account appears on the income statement. b. Supplies expense appears on the statement of cash flows. c. Prepaid rent appears on the balance sheet. d. The book val
> The following is a partial list of transactions Bok Company experienced during its Year 3 accounting period: 1. Paid cash to purchase supplies. 2. Paid cash to purchase insurance coverage for the coming year. 3. Collected cash for services to be performe
> Match the financial statements with the appropriate statement to describe them.
> Ortho Company experienced the following events during its first- and second-year operations: Year 1 Transactions: 1. Acquired $68,000 cash from the issue of common stock. 2. Borrowed $36,000 cash from the National Credit Union. 3. Earned $59,000 of cash
> The following data are based on information in the 2018 annual report of Cracker Barrel Old Country Store. As of August 3, 2018, Cracker Barrel operated 655 restaurants and gift shops in 45 states. Dollar amounts are in thousands. Required a. Calculate t
> As of January 1, Year 2, Room Designs Inc. had a balance of $9,900 in Cash, $3,500 in Common Stock, and $6,400 in Retained Earnings. These were the only accounts with balances on January 1, Year 2. During the Year 2 accounting period, the company had (1)
> Identify whether each of the following items would appear on the income statement (IS), statement of changes in stockholders’ equity (SE), balance sheet (BS), or statement of cash flows (CF). Some items may appear on more than one statement; if so, ident
> The following transactions pertain to the operations of Ewing Company for Year 2: 1. Acquired $30,000 cash from the issue of common stock. 2. Provided $65,000 of services on account. 3. Paid $22,000 cash on accounts payable. 4. Performed services for $8,
> During Year 6, Kincaid, Inc. earned $85,000 of cash revenue. The company incurs all operating expenses on account. The Year 6 beginning balance in Kincaid’s accounts payable account was $2,000, while the ending balance was $25,000. The company made cash
> Harbert, Inc. had a beginning balance of $12,000 in its Accounts Receivable account. The ending balance of Accounts Receivable was $10,500. During the period, Harbert collects $72,000 of its accounts receivable. Harbert incurred $63,000 of cash expenses
> Determine the missing amounts in each of the following four independent scenarios: a. X Co. had a $4,700 beginning balance in accounts payable on January 1, Year 8. During Year 8, the company incurred $67,600 of operating expenses on account and paid $68
> In Year 1, Lee Inc. billed its customers $62,000 for services performed. The company collected $51,000 of the amount billed. Lee incurred $39,000 of other operating expenses on account, and paid $31,000 of the accounts payable. It acquired $40,000 cash f
> Ollie Company experienced the following events during its first-year operations: 1. Acquired $72,000 cash from the issue of common stock. 2. Borrowed $26,000 from the First City Bank. 3. Earned $59,000 of cash revenue. 4. Incurred $43,000 of cash expense
> At the end of Year 1, Emma, Inc. had $600 of cash, $400 of liabilities, $200 of common stock, and zero in retained earnings. During Year 2, the company generated $560 of cash revenue and incurred $900 of cash expenses. Required Based on this information,
> Ollie Company experienced the following events during its first-year operations: 1. Acquired $72,000 cash from the issue of common stock. 2. Borrowed $26,000 from the First City Bank. 3. Earned $59,000 of cash revenue. 4. Incurred $43,000 of cash expense
> The following information is drawn from the accounting records of Kristy Company: Divide the class into groups of four or five students. Organize the groups into four sections. Assign each section of groups the following tasks: Required Group Tasks Sec
> Determine the missing amounts in each of the following four independent scenarios: a. X Co. had a $4,500 beginning balance in accounts receivable on January 1, Year 4. During Year 4, the company earned $69,400 of revenue on account and collected $68,200
> Both balance sheets shown in the following table were dated as of December 31, Year 3. Required a. Based only on the information shown in the balance sheets, can Allen Co. pay a $2,000 cash dividend? b. Based only on the information shown in the balance
> Jones Enterprises was started on January 1, Year 1, when it acquired $6,000 cash from creditors and $10,000 from owners. The company immediately purchased land that cost $12,000. The land purchase was the only transaction occurring during Year 1. Require
> This exercise continues the scenario described in Exercise 1-11A shown earlier. Specifically, the Better Corp. Year 1 ending balances become the Year 2 beginning balances. These balances are shown in the following accounting equation. Better Corp. comple
> Better Corp. (BC) began operations on January 1, Year 1. During Year 1, BC experienced the following accounting events: 1. Acquired $7,000 cash from the issue of common stock. 2. Borrowed $12,000 cash from the State Bank. 3. Collected $47,000 cash as a r
> Cordell Inc. experienced the following events in Year 1, its first year of operation: 1. Received $40,000 cash from the issue of common stock. 2. Performed services on account for $82,000. 3. Paid a $6,000 cash dividend to the stockholders. 4. Collected
> Riley Company paid $60,000 cash to purchase land from Clay Company. Clay originally paid $60,000 for the land. Required a. Did this event cause the balance in Riley’s cash account to increase, decrease, or remain unchanged? b. Did this event cause the ba
> Milea Inc. experienced the following events in Year 1, its first year of operations: 1. Received $20,000 cash from the issue of common stock. 2. Performed services on account for $56,000. 3. Paid the utility expense of $2,500. 4. Collected $48,000 of the
> On June 1, Year 1, Hamlin, Inc. paid $12,000 for 12 months rent on its warehouse in Huntsville, Alabama. In addition, on October 1, Year 1, Hamlin paid $3,000 for a one-year insurance policy on the warehouse. Hamlin’s reporting period ends on December 31
> Troy Company earned $15,000 of cash revenue. Troy incurred $12,000 of utility expense on account during Year 1. The company made cash payments of $8,000 to reduce its accounts payable during Year 1. Required Based on this information alone, determine the
> Obtain Target Corporation’s annual report for its 2018 fiscal year (year ended February 2, 2019) at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions: a. Which accounts on Target’s balance shee
> The Containers Inc. experienced the following events during its first year of operations, Year 1: 1. Acquired $42,000 cash by issuing common stock. 2. Earned $25,000 revenue on account. 3. Paid $18,000 cash for operating expenses. 4. Borrowed $10,000 cas
> Selected data from Emporia Company follow: Required Compute the following and round computations to two decimal points: a. The accounts receivable turnover for Year 3. b. The inventory turnover for Year 3. c. The net margin for Year 2.
> The following balances were drawn from the accounts of Carter Company. The accounts and balances shown here are presented in random order: Equipment–$14,000; Cash–$25,000; Depreciation Expense–$7,000; Notes Payable–$22,000; Common Stock–$41,000; Accumula
> The following information was drawn from the accounting records of Chapin Company. 1. On January 1, Year 1, Chapin paid $56,000 cash to purchase a truck. The truck had a five-year useful life and a $6,000 salvage value. 2. As of December 31, Year 1, Chap
> Explain how each of the following posting errors affects a trial balance. State whether the trial balance will be out of balance because of the posting error, and indicate which side of the trial balance will have a higher amount after each independent e
> In July 2015, H. J. Heinz Company and Kraft Foods Group completed their merger. The new company, named The Kraft Heinz Company (KHC), became the fifth largest food and beverage company in the world. Prior to the merger, Kraft had been much larger than He
> J. Talbot is the accounting manager for Kolla Waste Disposal Corporation. Kolla is having its worst financial year since its inception. The company is expected to report a net loss. In the midst of such bad news, Ms. Talbot surprised the company presiden
> The following ratios are for four companies in different industries. Some of these ratios have been discussed in the textbook and others have not, but their names explain how the ratio was computed. The four sets of ratios, presented randomly, are as fol
> Presented as follows are 12 financial ratios for two companies in separate industries. Ford Motor Company manufactures automobiles and sells them to retail dealers. AutoZone, Inc. sells automobile parts and car-care products directly to consumers. Requir
> Presented as follows are 12 financial ratios for two companies in the sane industry. Colgate-Palmolive Co. (Colgate) and Procter & Gamble Co. (P&G). Both of these companies sell health, beauty, and other household consumer goods. Required a. Dete
> Corola Corporation reported $34,000 of net income and $25,000 of net cash flow from operating activities. All revenue is earned on account. Required Write a brief memo that explains how earning revenue on account could have caused the difference between
> Presented here is selected information from the 2018 fiscal-year 10-K reports of four companies. The four companies, in alphabetical order, are: AT&T, Inc., a company that provides communications and digital entertainment; Deere & Company, a manu
> The following information relates to Home Depot, Inc., and Lowe’s Companies, Inc. for their 2017 and 2016 fiscal years. Required a. Compute the following ratios for the companies’ 2017 fiscal years (years ending in Jan
> In 2017 and 2016, Sears Holding Corporation reported net losses and negative cash flows from operating activities. Using the company’s Form 10-K for the fiscal year ended February 3, 2018 (2017), complete the requirements shown as follows. The Form 10-K
> The following information was taken from the annual reports of Pfizer, Inc. and Ford Motor Company. These data are for 2018, and all amounts are in millions. Required a. Calculate the amount of inventory that Pfizer purchased during 2018. b. Calculate ho
> The following financial statements and information are available for Blythe Industries Inc.: Additional Information 1. Sold land that cost $40,000 for $44,000. 2. Sold equipment that cost $30,000 and had accumulated depreciation of $20,000 for $18,000. 3
> Tesla, Inc. began operations in 2003 but did not begin selling its stock to the public until June 28, 2010. It has lost money every year it has been in existence, and by December 31, 2016, it had total lifetime losses of approximately $5 billion. In addi
> Obtain Target Corporation’s annual report for its 2018 fiscal year (year ended February 2, 2019) at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions: a. For the year ended February 2, 2019 (20
> Using either Bed Bath & Beyond, Inc.’s most current Form 10-K or the company’s annual report, answer the following questions. To obtain the Form 10-K, use either the EDGAR system, following the instructions in Appendix A, or the company’s website. The co
> There were 37,855 McDonald’s Company restaurants in over 100 countries as of December 31, 2018. Chipotle Mexican Grill, Inc., a much newer fast-food restaurant company, began operations with one restaurant in 1993. At one time, McDonald
> Listed here are data for five companies. These data are for the companies’ 2017 fiscal years. The market price per share is the closing price of the companies’ stock as of February 28, 2018, two months after the end of
> The following data are based on information in the 2017 annual report of YUM! Brands, Inc. YUM! Brands is the parent company of KFC, Pizza Hut, and Taco Bell. As of December 31, 2017, the parent company owned or franchised over 45,000 restaurants in 135
> Listed here are the stockholders’ equity sections of three public companies for fiscal years ending in 2017 and 2016. Note that for General Mills these data are for the fiscal years ended on May 27, 2018 (2017) and May 28, 2017 (2016).
> Obtain Target Corporation’s annual report for its 2018 fiscal year (year ended February 2, 2019) at http:// investors.target.com using the instructions in Appendix B, and use it to answer the following questions: Required a. What is the par value per sha
> Interest rates in the United States were at historic lows for much of the period from 2013 through 2019. The economy was slowly recovering from the recession of 2008 and 2009, and the Federal Reserve kept interest rates low to encourage this recovery. Be
> Mack Company plans to invest $50,000 in land that will produce annual rent revenue equal to 15 percent of the investment, starting on January 1, Year 1. The revenue will be collected in cash at the end of each year, starting December 31, Year 1. Mack can
