Question: Lucky Enterprises is using a discounted cash

> On September I, it rented storage space to a lessee (tenant) for six months for a total cash payment of $ 12,000 received in advance. Prepare two sets of journal entries for Store-it Here, with each set of journal entries recording the September 1 journa

> To prepare financial statements for the month of March 2014. Mona accumulated all the ledger balances from the business records and found the following: Mona reviewed the records and found the following errors: 1. Cash received from a customer on account

> The unadjusted trial balance of Imagine Ltd. at December 31,2014, is as follows: Additional information: 1. On November 1, 2014, Imagine received $10,200 rent from its lessee for a 12-month lease beginning on that date. This was credited to Rent Revenue.

> The unadjusted trial balance of Clancy Inc. at December 31, 2014, is as follows: Additional information: 1. Actual advertising costs amounted to$1,500 per month. The company has already paid for advertisements in Montezuma Magazine for the first quarter

> The December 31 trial balance of Red Roses Boutique Inc. follows: Instructions (a) Create T accounts and enter the balances shown. (b) Prepare adjusting entries for the following and post to the T accounts. Open additional T accounts as necessary. (The b

> Willis Corporation has Beginning Inventory $76,000; Purchases $486,000; Freight-in $16,200; Purchase Returns 55,800; Purchase Discounts $5,000; and Ending Inventory $69,500. Calculate Willis's cost of goods sold.

> The trial balance follows of the Masters Golf Club, Inc. as at December 31. The books are closed annually on December 31. Instructions (a) Enter the balances in ledger accounts. Allow five lines for each account. (b) From the trial balance and the inform

> The following information relates to Joachim Anderson, Realtor, at the close of the fiscal year ending December 31: 1. Joachim paid the local newspaper S335 for an advertisement to be run in January of the next year, and charged it to Advertising Expense

> Brook Corporation was founded by Ronnie Brook in January 2003. The adjusted and unadjusted trial balances as at December 31, 2014, follow: Instructions (a) Journalize the annual adjusting entries that were made. (b) Prepare an income statement and state

> The trial balance and the other information for consulting engineers Mustang Rovers Consulting Limited follow: Additional information: 1. Fees received in advance from clients were $6,900. 2. Services performed for clients that were not recorded by Decem

> LD Driving Range Inc. was opened on March 1 by Phil Woods. The following selected events and transactions occurred during March: Woods uses the following accounts for his company: Cash; Prepaid Insurance; Prepaid Rent; Land; Buildings; Equipment; Accoun

> The trial balance of Mis-Match Inc. on June 30, 2014, is as follows: The following transactions took place in July 2014: 1. Payments received from customers on account amounted to $ 1,320. 2. A computer printer was purchased on account for $500. 3. Ser

> On August I, Secret Sauce Technologies Inc. paid $ 12,600 in advance for two years' membership in a global technology association. Prepare two sets of journal entries for Secret Sauce, with each set of journal entries recording the August I journal entry

> Below is the April 30 trial balance of Blues Around the Corner Corporation: An examination of the ledger shows these errors: 1. Salaries and Wages Payable include $300 of salaries and wages accrued in April, which are related to employee services provid

> The April 30, 2014 trial balance below of Many Happy Returns Company, a sole proprietorship, does not balance. Your review of the ledger reveals the following: 1. Each account has a normal balance. 2. The debit footings (totals) in Prepaid Insurance, Acc

> Bill Rosenberg recently opened his legal practice. During the first month of operations of his business (a sole proprietorship), the following events and transactions occurred: Instructions Prepare a correct trial balance. April 2 Invested $15,000 c

> Jerry Holiday is the maintenance supervisor for Ray's Insurance Co. and has recently purchased a riding lawn mower and accessories that will be used in caring for the grounds around corporate headquarters. He sent the following information to the account

> Financial information follows for four different companies: Instructions Determine the missing amounts for (a) to (i). Show all calculations. Pamela's Scheibli Berthault Kaiserman Cosmetics Inc. $98,000 Grocery Inc. Supply Ltd. $120,000 9,000 Wholesa

> Financial information follows for two different companies: Instructions Calculate the missing amounts. Bessembinder Ltd. Doberman Inc. $192,000 (a) 162,000 55,500 (b) 35,000 (c) Sales Revenue (d) $16,000 65,000 (e) 37,000 23,000 14,000 Sales Returns

> Selected accounts for Winslow Inc. as at December 31, 2014, are as follows: Instructions Prepare closing entries for Winslow Inc. on December 31, 2014. Inventory FV-NI Investments FV-OCI Investments Retained Earnings Dividends Accumulated Other Comp

> Information follows for Shakira Corporation for the month of January: Instructions Prepare the necessary closing entries. $228,000 62,000 3,200 33,000 9,000 12,000 20,000 $ 61,000 16,000 1,200 7,000 1,000 364,000 14,000 Cost of Goods Sold Salary and

> The adjusted trial balance of Serious Limited shows the following sales data at the end of its fiscal year on October 31, 2014: Sales $1,250,000; Freight-out $18,000; Sales Returns and Allowances $4,000; and Sales Discounts $15,000. Instructions (a) Pr

> The trial balance for Hanna Resort Limited on August 31 is as follows: Additional information: 1. The balance in Prepaid Rent includes payment of the final month's rent and rent for August 2014. 2. An inventory count on August 31 shows $650 of supplies

> Selected accounts of Bang Bang Boom Fireworks Limited follow: Inst ructions From an analysis of the T accounts, reconstruct (a) the August transaction entries, and (b) the adjusting entries that were recorded on August 3 I. Supplies Accounts Receiva

> Using the data in BE3-6, prepare two sets of journal entries for No Claims Insurance, with each set of journal entries recording the July I, 2014 entry and the December 31, 2014 adjusting entry. No Claims uses an Unearned Revenue account and an Insurance

> Alberto Rock is the new owner of Summer Computer Services Inc. At the end of August 2014, his first month of ownership, Alberto is trying to prepare monthly financial statements. Information follows for transactions that occurred in August: 1. At August

> A partial adjusted trial balance of Joy Limited at January 31, 2014, shows the following: Instructions Answer the following questions, assuming the company's fiscal year begins January 1: (a) If the amount in Supplies Expense is the January 31 adjusting

> On May I, Bashir and Hendricks (B&H), Accountants, pays $1,200 to a landlord for one month's rent in advance for the month of May. (a) Assuming that B&H records all prepayments in (permanent) balance sheet accounts: 1. Prepare the journal entry B&H shoul

> Suli Mani opened a legal practice on January 1, 2014. During the first month of operations, the following transactions occurred. 1. Performed services for clients represented by insurance companies. At January 31, $6,000 of such services was earned but n

> The ledger of Rainy Day Umbrella Ltd. on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared: An analysis of the accounts shows the following: 1, The equipment depreciation is $3 50 per month

> Black-Eyed Pears Ltd. initially records all prepaid costs as expenses and all revenue collected in advance as revenues. The following information is available for the year ended December 31, 2014. 1. Purchased a one-year insurance policy on May I, 2014,

> At Sugarland Ltd., prepaid costs are debited to expense when cash is paid and unearned revenues are credited to revenue when the cash is received. During January of the current year, the following transactions occurred. On January 31, it is determined t

> A review of the accounts of Tucker and Wu Pan Accountants reflected the following transactions, which may or may not require adjustment at the year ended December 31, 2014. 1. The Prepaid Rent account shows a debit of $7,200 paid October 1, 2014, for a o

> On December 31, the adjusted trial balance of Domino Inc. shows the following selected data: Analysis shows that adjusting entries had been made, and included above, for (1) $9,700 of services performed but not billed, and (2) $6,400 of accrued but unpa

> On December 31, adjusting information for Big & Rich Corporation is as follows: 1. Estimated depreciation on equipment is S3, 400. 2. Property taxes amounting to $2,525 have been incurred but are unrecorded and unpaid. 3. Employee wages that are earned b

> Lazy Dog Inc. is a small private company that prepares monthly financial statements from a work sheet. Selected parts of the February work sheet showed the following data: During February, no events occurred that affected these accounts. At the end of F

> On July 1, 2014, Blondie Ltd. pays $18,000 to No Claims Insurance Ltd. for a three-year insurance contract. Both companies have fiscal years ending December 31. Prepare two sets of journal entries for Blondie, with each set of journal entries recording t

> The adjusted trial balance of North Bay Corporation is provided in the following work sheet for the year ended December 31, 2014. Instructions The note payable is due in four months. Complete the work sheet and prepare a statement of financial position

> Yeliw Enterprises purchases inventory amounting to $12,000, and records the expenditure as a debit to Office Equipment. What would be the effect of this error on the balance sheet and income statement in the period of the purchase, assuming the inventory

> One Wiser Corp. had the following transactions during the first month of business. Journalize the transactions. August 2 Invested $12,000 cash and $2,500 of equipment in the business in exchange for common shares. 7 Purchased supplies on account for

> Recently, your Uncle Warren, who knows that you always have your eye out for a profitable investment, has discussed the possibility of your purchasing some corporate bonds that he just learned of. He suggests that you may wish to get in on the ground flo

> Indicate the qualitative characteristic of financial information being described in each item below: (a) Financial statements should include all information necessary to portray the underlying transactions. (b) Financial information should make a differe

> A Special Committee on Financial Reporting proposed the following constraints related to financial reporting. 1. Business reporting should exclude information outside of management's expertise or for which management is not the best source, such as infor

> The following transactions fall somewhere in the continuum of the choices in accounting decision-making that are shown in Illustration 2-5. 1. The company president approaches one of the company's creditors to ask for a modification of the repayment te

> For each item that follows, indicate which element of the financial statements it belongs to: (a) Retained earnings (b) Sales Revenue (c) Acquired goodwill (d) Inventory (e) Depreciation (f) Loss on sale of equipment (g) Interest payable (h) Dividends

> You are hired to review the accounting records of Sheridan Corporation (a public corporation) before it closes its revenue and expense accounts as at December 31, 2014, the end of its current fiscal year. The following information comes to your attention

> Examples of some operational guidelines used by accountants follow. 1. The treasurer of Sweet Grapes Corp. would like to prepare financial statements only during downturns in the company's wine production, which occur periodically when the grape crop fai

> The following are operational guidelines and practices that have developed over time for financial reporting. 1. Price-level changes (inflation and deflation) are not recognized in the accounting records. 2. Financial information is presented so that rea

> The foundational principles of accounting are as follows: Recognition/ Derecognition 1. Economic entity 2. Control 3. Revenue recognition and realization 4. Matching Measurement 5. Periodicity 6. Monetary unit 7. Going concern 8. Historical cost 9. Fair

> Medici Patriarchs purchased the following investments during 2014: (a) 1,000 shares of Private Limited, a start-up company. The value of this investment was based on an internally developed model. (b) 5,000 shares of CIBC, a public company listed on the

> Repeat BE2-6 but apply the definition of a liability proposed by the IASB and FASB. BE2-6 Discuss whether the following items would meet the definition of a liability using the criteria currently in place under IFRS. If so, explain with reference to th

> Discuss whether the following items would meet the definition of a liability using the criteria currently in place under IFRS. If so, explain with reference to the appropriate criteria. (a) Environmental remediation when a chemical spill has occurred. Th

> Refer to BE2-4. Discuss whether the items identified would be considered assets if the definition proposed by IFRS were applied. BE2·4 Discuss whether the following items would meet the definition of an asset using the IFRS definitions currently in pla

> The conceptual framework identifies the fundamental and enhancing qualitative characteristics that make accounting information useful. Instructions Answer the following questions related to these qualitative characteristics. (a) 'Which quality of financi

> Discuss whether the following items would meet the definition of an asset using the IFRS definitions currently in place. If so, explain with reference to the appropriate criteria. (a) Maxwell Ltd. owns a corporate fleet of cars for senior management's us

> What principle(s) from the conceptual framework does Hen day Limited use in each of the following situations? (a) Henday includes the activities of its subsidiaries in its financial statements. (b) Henday was involved in litigation with Kinshasa Ltd. ove

> 'What is the objective of financial reporting? For each of the situations discussed below, explain the qualitative characteristics of financial information that help provide decision-useful information to users. (a) Marcus Corp. has a management bonus pl

> Using fair values came under attack in light of the credit crunch of the last decade and the related financial crisis. Some have even accused fair value accounting of exacerbating the crisis. Access the following articles: "Discussing the Credit Crunch,"

> In its 2011 financial statements (Note 4), Air Canada has disclosed its critical estimates and judgments used in preparation of the financial statements. Instructions Access the 2011 annual report for Air Canada for the year ended December 31,2011, from

> Obtain the 2011 financial statements of Teck Resources Limited from SEDAR (www.sedar.com). Instructions (a) Using the notes to the consolidated financial statements, determine the company's revenue recognition policy. Comment on whether the company uses

> An accountant must be familiar with the concepts involved in determining the earnings of a business entity. The amount of earnings that is reported for a business entity depends on the proper recognition, in general, of revenues and expenses for a specif

> In the IASB standard-setting conceptual framework, the word "reliability" has been replaced with "faithful representation." This has caused much discussion among preparers of financial information. This change has led to other implications related to sub

> Roger Chang has some questions about the theoretical framework in which standards are set. He knows that standard setters are continually striving to develop a conceptual framework for the formulation of accounting theory. Yet Roger's supervisors have sa

> The elements that are most directly related to measuring an enterprise performance and financial status follow: Instructions (a) Indicate which element is being described below. For any item that is an asset or liability, consider if the item qualifies u

> Hoda Inc. owns 25% of the common shares of Willard Corp. The other 75% are owned by the Willard family. Hoda acquired the shares eight years ago through a financing transaction. Each year, Hoda has received a dividend from Willard. Willard has been in bu

> The proposed definition of a liability is a "present economic obligation for which the entity is the obligor." These terms can be further expanded as follows (as taken from l>\SB Board meeting minutes): "Present'' means at the report date that an economi

> The fair value hierarchy establishes three levels of input, with level one being the best type, because it uses the most objective inputs, and level three using the most subjective inputs. Instructions For each of the following scenarios, identify the le

> (Bre-X), a small mining company, announced in the early 1990s that it had discovered a fairly significant gold deposit in Indonesia. The company's shares skyrocketed from pennies a share to over $280 per share. Subsequently, it was discovered that the co

> For each item that follows, identify the foundational principle of accounting that best describes it. (a) For its annual repom, Sumsong Corp. divides its economic activities into 12-month periods. (b) Sullivan, Inc. does not adjust amounts in its financi

> The statement that follows about Timber Company appeared in a financial magazine: The land and timber holdings are now carried on the company's books at a mere S100 million (U.S.). The value of the timber alone is variously estimated at $1 billion to $3

> Its basic business is high-temperature treatment Services for contaminated soil. In its 2011 financial statements, the company had a loss of $9.3 million (and an accumulated deficit of $43.7 million). In the notes to the financial statements, the company

> Accounting information provides useful data about business transactions and events. The people who provide and use financial reports must often select and evaluate accounting alternatives. The conceptual framework that was discussed in this chapter exami

> Transactions from Lucky Bamboo, Inc.'s current year follow. 1. Lucky Bamboo, Inc. thinks it should dispose of its excess land. VVhile the book value is $50,000, current market prices are depressed and only $25,000 is expected upon disposal. The following

> Fusters, Inc. issues audited financial statements to its creditors and is required to maintain certain covenants based on its debt to equity ratio and return on assets. In addition, management of Fusters receives a bonus partially based on revenues for t

> Foundational principles of financial reporting may be grouped into four categories: recognition / derecognition, measurement, presentation, and disclosure. Instructions Briefly describe what is meant by these terms.

> Meerkat 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 a

> Instructions (a) Explain the meaning and implications of the going concern assumption in financial accounting. (b) If the going concern assumption did not apply in accounting, how would this affect the amounts shown in the financial statements for the fo

> The following information is for Brittany, Inc. 1. To be more concise, the company decided that only net income should be reported on the income statement. Details on revenues, cost of goods sold, and expenses were also omitted from the notes. 2. Equipme

> The following are transactions recorded by Bounce Corporation during the current year. 1. Ordinary operating maintenance on equipment was recorded as follows: 2. The company received an advance on a custom order for merchandise that will be shipped durin

> Some individuals have argued that all Canadian companies should follow the same set of accounting principles. Explain why there are multiple sets of standards in Canada.

> In general, financial information should include all relevant information that faithfully represents the economic substance of business transactions. Instructions Discuss whether it is possible for financial information to have all of the qualitative ch

> Assets are the cornerstone of financial reporting; often it is unclear whether an expenditure is an asset or an expense. For each of the transactions described below, consider if the expenditure should be recorded as an asset or as an expense. Be sure to

> Some accountants have said that the development and acceptance of generally accepted accounting principles (that is, standard setting) is undergoing a “politicization.” Some use the term “politicization” in a narrow sense to mean the influence by governm

> Some critics argue that having different organizations establish accounting principles is wasteful and inefficient. Instead of mandating accounting standards, each company could voluntarily disclose the type of information it considered important. In add

> The national credit rating agency downgraded the credit rating of Grand Limited by two levels from BB to B+. The credit rating agency was concerned about the company’s ability to refinance portions of its debt. Both BB and B+ are considered “junk” bonds

> Boston Clothing Limited was a private company that experienced cash flow difficulties and hired new management to turn the company around. The company then went public and the shares sold at $15 per share. Within months, however, the share price plummete

> When the AcSB issues new standards, the implementation date is usually 12 months after the issue date, but early implementation is encouraged. In this case, Paula Popov, controller, is discussing with her financial vice-president the need for early imple

> What is the difference between principles-based and rules-based accounting standards? In which category does IFRS belong? ASPE? Explain.

> Some individuals have argued that the ACSB and the International Accounting Standards Board (IASB) need to be aware of the economic consequences of their pronouncements. What is meant by “economic consequences”? What are some of the dangers if politics p

> What are some possible reasons why another organization, such as the OSC or the Securities and Exchange Commission (SEC), should not issue financial reporting standards?

> What is the role of the Ontario Securities Commission (OSC) in standard setting?

> Explain the role of the Canadian Accounting Standards Board (AcSB) in establishing generally accepted accounting principles.

> Which organization is currently dominant in the world for setting accounting standards?

> The chairman of the Financial Accounting Standards Board (FASB) at one time noted that “the flow of standards can only be slowed if (1) producers focus less on quarterly earnings per share and tax benefits and more on quality products, and (2) accountant

> What are some of the developments or events that occurred between 1900 and 1930 that helped bring about changes in accounting theory or practice?

> In 2012, Hans Hoogervorst, Chairman of the IASB, gave a speech at the FEE Conference on Corporate Reporting of the Future entitled “The Concept of Prudence: Dead or Alive?”. The speech can be found on the IFRS website at: www.ifrs.org. Instructions (a)

> What follows is part of the testimony from Troy Normand in the WorldCom case. He was a manager in the corporate reporting department and is one of five individuals who pleaded guilty. He testified in the hope of receiving no prison time when he was ultim

> Find the FASB website and locate the “Update Report to the FSB Plenary on Accounting Convergence” that was issued in 2012. Convergence between the standards in the United States and IFRS is an ongoing topic of discussion among standard setters. Some of t

> In 2002, the Sarbanes-Oxley Act was passed in the United States to strengthen the capital market- place. In the following year, there were many debates in Canada about whether the securities com-missions in Canada should adopt the same regulations. In th

> The Canadian Coalition for Good Governance was formed in 2002 and represents a significant number of institutional investors in Canada. Instructions (a) How does an institutional investor differ from other investors? (b) In your opinion, what impact wou