Neilson Corp. reported $245,000 of net income for 2017. In preparing the statement of cash flows, the accountant noted several items that might affect cash flows from operating activities. 1. During 2017, Neilson reported a sale of equipment for $7,000. The equipment had a carrying amount of $23,500. 2. During 2017, Neilson sold 100 Lontel Corporation common shares at $200 per share. The acquisition cost (and fair value of these shares on December 31, 2016) was $145 per share. This investment was shown on Neilson’s December 31, 2016 statement of financial position as an investment at fair value with gains and losses in net income (FV-NI). 3. During 2017, Neilson corrected an error in ending inventory of December 31, 2016. The debit to opening retained earnings was $14,600. The cost of goods sold in the current income statement was adjusted accordingly. 4. During 2017, Neilson revised its estimate for bad debts. Before 2017, Neilson’s bad debt expense was 1% of its net sales. In 2017, this percentage was increased to 2%. Net sales for 2017 were $500,000, and net accounts receivable decreased by $5,000 during 2017. 5. During 2017, Neilson issued 500 common shares in exchange for a patent. The shares’ market value on the transaction date was $23 per share. 6. Depreciation expense for 2017 was $48,000. 7. Neilson Corp. holds 30% of Nirbana Corporation’s common shares as a long-term investment and exercises significant influence. Nirbana reported $27,000 of net income for 2017. 8. Nirbana Corporation paid a total of $2,800 of cash dividends to all shareholders in 2017. 9. During 2017, Neilson declared a 10% stock dividend, distributing 1,000 common shares. The market price at the date of issuance was $20 per share. 10. Neilson Corp. paid $10,000 in dividends: $2,500 of this amount was paid on term preferred shares classified as a long-term liability. Instructions: (a) Prepare a schedule that shows the net cash flow from operating activities using the indirect method. Assume that no items other than the ones listed affected the calculation of 2017 cash flow from operating activities. Also assume that Neilson Corp. follows ASPE. Discuss how items not included in the operating activities would be treated. (b) Assume now that Neilson Corp. follows IFRS. What alternatives would it have regarding interest and dividend amounts to be reported?
> A statistics practitioner working for major league baseball wants to supply radio and television commentators with interesting statistics. He observed several hundred games and counted the number of times a runner on first base attempted to steal second
> Suppose that you used the sample size calculated in Exercise 12.89 and found p^ = .5. a. Estimate the population proportion with 90% confidence. b. Is this the result you expected? Explain. c. If you were hired to conduct this analysis, would the person
> Suppose that you used the sample size calculated in Exercise 12.89 and found p^ = .92. a. Estimate the population proportion with 90% confidence. b. Is this the result you expected? Explain. c. If you were hired to conduct this analysis, would the person
> Suppose that you used the sample size calculated in Exercise 12.89 and found p^ = .75. a. Estimate the population proportion with 90% confidence. b. Is this the result you expected? Explain.
> Re-do Exercise 12.86 assuming that you know that the sample proportion will be no less than .75. Data from Exercise 12.86: Determine the sample size necessary to estimate a population proportion to within .03 with 90% confidence assuming you have no kno
> Suppose that you used the sample size calculated in Exercise 12.86 and found p^ = .75. a. Estimate the population proportion with 90% confidence. b. Is this the result you expected? Explain. c. If you were hired to conduct this analysis, would the person
> Suppose that you used the sample size calculated in Exercise 12.86 and found p^ = .5. a. Estimate the population proportion with 90% confidence. b. Is this the result you expected? Explain.
> Determine the sample size necessary to estimate a population proportion to within .03 with 90% confidence assuming you have no knowledge of the approximate value of the sample proportion.
> a. A statistics practitioner wants to test the following hypotheses: H0: p = .70 H1: p > .70 A random sample of 100 produced p^ = .73. Calculate the p-value of the test. b. Repeat part (a) with p^ = .72. c. Repeat part (a) with p^ = .71. d. Describe the
> a. Calculate the p-value of the test of the following hypotheses given that p^ = .63 and n = 100: H0: p = .60 H1: p > .60 b. Repeat part (a) with n = 200. c. Repeat part (a) with n = 400. d. Describe the effect on the p-value of increasing the sample siz
> a. The proportion of successes in a random sample of 400 was calculated as 50%. Estimate the population proportion with 95% confidence. b. Repeat part (a) with p^ = 33%. c. Repeat part (a) with p^ = 10%. d. Discuss the effect on the width of the confiden
> a. In a random sample of 200 observations, we found the proportion of successes to be 48%. Estimate with 95% confidence the population proportion of successes. b. Repeat part (a) with n = 500. c. Repeat part (a) with n = 1000. d. Describe the effect on t
> Home blood-pressure monitors have been on the market for several years. This device allows people with high blood pressure to measure their own and determine whether additional medication is necessary. Concern has been expressed about inaccurate readings
> One problem facing the manager of maintenance departments is when to change the bulbs in streetlamps. If bulbs are changed only when they burn out, it is quite costly to send crews out to change only one bulb at a time. This method also requires someone
> The job placement service at a university observed the not unexpected result of the variance in marks and work experience of the university’s graduates: Some graduates received numerous offers whereas others received far fewer. To learn more about the pr
> Some traffic experts believe that the major cause of highway collisions is the differing speeds of cars. That is, when some cars are driven slowly while others are driven at speeds well in excess of the speed limit, cars tend to congregate in bunches, in
> One important factor in inventory control is the variance of the daily demand for the product. A management scientist has developed the optimal order quantity and reorder point, assuming that the variance is equal to 250. Recently, the company has experi
> During annual checkups physicians routinely send their patients to medical laboratories to have various tests performed. One such test determines the cholesterol level in patients’ blood. However, not all tests are conducted in the same way. To acquire m
> With gasoline prices increasing, drivers are more concerned with their cars’ gasoline consumption. For the past 5 years a driver has tracked the gas mileage of his car and found that the variance from fill-up to fill-up was 2 = 23 mpg2. Now that his car
> After many years of teaching, a statistics professor computed the variance of the marks on her final exam and found it to be 2 = 250. She recently made changes to the way in which the final exam is marked and wondered whether this would result in a redu
> The weights of a random sample of cereal boxes that are supposed to weigh 1 pound are listed here. Estimate the variance of the entire population of cereal box weights with 90% confidence. 1.05 1.03 .98 1.00 .99 .97 1.01 .96
> a. Estimate _2 with 90% confidence given that n = 15 and s2 = 12. b. Repeat part (a) with n = 30. c. What is the effect of increasing the sample size?
> a. The sample variance of a random sample of 50 observations from a normal population was found to be s2 = 80. Can we infer at the 1% significance level that _2 is less than 100? b. Repeat part (a) increasing the sample size to 100. c. What is the effect
> a. A random sample of 100 observations was drawn from a normal population. The sample variance was calculated to be s2 = 220. Test with _ = .05 to determine whether we can infer that the population variance differs from 300. b. Repeat Part a changing the
> The manager of a restaurant believes that waiters and waitresses who introduce themselves by telling customers their names will get larger tips than those who don’t. In fact, she claims that the average tip for the former group is 18%, whereas that of th
> a. Determine β for the following test of hypothesis, given that μ = 310: H0: μ = 300 H1: μ > 300 The statistics practitioner knows that the population standard deviation is 50, the significance level is 5%, and the sample size is 81. b. Repeat part (a) w
> a. Find the probability of a Type II error for the following test of hypothesis, given that μ = 196: H0: μ = 200 H1: μ < 200 The significance level is 10%, the population standard deviation is 30, and the sample size is 25. b. Repeat part (a) with n = 10
> Repeat Exercise 9.64 assuming that the means are 140 and 138, respectively. Data from Exercise 9.64: Suppose that we have two normal populations with the means and standard deviations listed here. If random samples of size 25 are drawn from each populat
> a. Calculate the probability of a Type II error for the following hypotheses when μ = 37: H0: μ = 40 H1: μ < 40 The significance level is 5%, the population standard deviation is 5, and the sample size is 25. b. Repeat part (a) with α = 15%. c. Describe
> A statistics practitioner wants to test the following hypotheses with σ = 20 and n = 100: H0: μ = 100 H1: μ > 100 a. Using α = .10 find the probability of a Type II error when μ = 102. b. Repeat part (a) with α = .02. c. Describe the effect on β of decre
> Repeat Exercise 9.61 with samples of size 100. Data from Exercise 9.61: Independent random samples of 10 observations each are drawn from normal populations. The parameters of these populations are Population 1: μ = 280, σ = 25 Population 2: μ = 270, σ
> Determine β for the following test of hypothesis, given that μ = 48. H0: μ = 50 H1: μ < 50 α = .05, σ = 10, n = 40
> Find the probability of a Type II error for the following test of hypothesis, given that μ = 1,050. H0: μ = 1,000 H1: μ > 1,000 α = .01, σ = 50, n = 25
> Calculate the probability of a Type II error for the following test of hypothesis, given that μ = 203. H0: μ = 200 H1: μ ≠ 200 α = .05, σ = 10, n = 100
> A survey of 25- to 35-year-old Americans with professional or Ph.D. degrees was asked to report their monthly incomes. Can we conclude at the 10% significance level that the mean income exceeds $7,500 assuming that the incomes are normally distributed wi
> How well were American families doing in 2014? One very good guide is total family income (INCOME). Estimate the income for the average American family.
> When the economy is healthy many firms ask their employees to put in overtime, which usually means working more than 40 hours per week. Is the average working American working for more than 40 hours per week (HRS1)? a. Conduct a test to answer the questi
> Americans are getting married (if at all) at a higher age than in the past. A marketing manager for a baby food maker wanted an estimate of how old are Americans when they have their first child (AGEKDBRN). Estimate the mean and describe whether the requ
> Is there sufficient evidence to infer that the proportion of White Americans has decreased since the 2010 census (RACE: 1 = White)?
> Access the financial statements of Loblaw Companies Limited for its year ended January 3, 2015. The statements are available on the company’s website or SEDAR (www.sedar.com). Instructions: (a) Loblaw’s balance sheet reports an item entitled “Capital Se
> Guas Inc., a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative statement of financial position and income statement for Gu
> Tuit Inc., a greeting card company that follows ASPE, had the following statements prepared as at December 31, 2017: Additional information: 1. Dividends on common shares in the amount of $6,000 were declared and paid during 2017. 2. Depreciation expe
> The following are the transactions from Izzy Inc. concerning its allowance for doubtful accounts. Assume these are the only transactions for the year. Instructions: (a) Prepare the journal entries to record the above transactions. (b) Prepare the repo
> Malouin Corp.’s income statement for the year ended December 31, 2017 had the following condensed information: There were no purchases or sales of trading (FV-NI) investments during 2017. Malouin’s statement of finan
> Baird Corp. had the following activity in its most recent year of operations: 1. Purchase of equipment 2. Redemption of bonds 3. Conversion of bonds into common shares 4. Sale of building 5. Depreciation of equipment 6. Exchange of equipment for furnitur
> Dunrobin Industries Ltd., which uses IFRS, had the following transactions during its most recent fiscal year. 1. Received a shipment of raw materials inventory purchased on account. 2. Declared a cash dividend on common shares. 3. Collected cash from ten
> Strong House Inc. had the following condensed statement of financial position at December 31, 2016: Strong House Inc. follows IFRS and chooses to classify dividends paid as financing activities and interest paid as operating activities on the statement
> Golden Properties Corporation purchased a parcel of land in March 2016 for $1 million with the intent to construct a building on the property in the near future. At the time of purchase, Golden applied the cost model and measured and reported the land at
> Linden Corporation started operations on January 1, 2012, and has used the FIFO cost formula since its inception. In 2018, it decides to switch to the weighted average cost formula. You are provided with the following information. Instructions: Answer
> Merrick Inc. follows IFRS and is adjusting and correcting its books at the end of 2017. In reviewing its records, the following information has been compiled: 1. In 2017, the depreciation method on plant assets should be changed from sum-of-the-years&aci
> Access the annual report of Canadian Tire Corporation for its year ended January 2, 2016 from the company’s website or SEDAR (www.sedar. com). According to Note 1 to the financial statements, the company operates in three main segments: retail, a real es
> Yates Manufacturing Ltd. is preparing its year-end financial statements. Yates is a private enterprise. The controller, Theo Kimbria, is confronted with several decisions about statement presentation for the following items. 1. The company has decided to
> The following are various types of accounting changes: ______ 1. Change in a plant asset’s residual value ______ 2. Change due to an overstatement of inventory (in the preceding period) ______ 3. Change from sum-of-the-years’-digits to straight-line meth
> Field Corp.’s controller was preparing the year-end adjusting entries for the company’s year ended December 31, 2017, when the V.P. Finance called him into her office. “Jean-Pierre,” she said, “I’ve been considering a couple of matters that may require d
> In 2016, Bergeron Construction Company Ltd. applied the completed contract method of accounting for long-term construction contracts. However, in 2017, Bergeron discovered that the percentage-of-completion method should have been applied instead. For tax
> Ever since the unethical actions of some employees of Enron Corp. first came to light, ethics in accounting has been in the news with increasing frequency. The unethical actions of the employees essentially involved their selection of certain accounting
> Peter M. Dell Co. purchased equipment for $510,000, which was estimated to have a useful life of 10 years with a residual value of $10,000 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2017, it is determi
> Rodriguez Corp. changed from the straight-line method of depreciation on its plant assets acquired in early 2015 to the double-declining-balance method in 2017 (before finalizing its 2017 financial statements) because of a change in the pattern of benefi
> On January 1, 2013, Zui Corporation purchased a building and equipment that had the following useful lives, residual values, and costs: Building: 40-year estimated useful life, $50,000 residual value,………………..$1,200,000 cost Equipment: 12-year estimated
> Comparative statement of financial position accounts of Secada Inc., which follows IFRS, follow Additional information: Secada Inc. has adopted the policy of classifying interest paid as operating activities and dividends paid as financing activities.
> Bennett Corp., which began operations in January 2014, follows IFRS and is subject to a 30% income tax rate. In 2017, the following events took place: 1. The company switched from the zero-profit method to the percentage-of-completion method of accountin
> Oliver Inc. acquired the following assets in January 2014: Equipment: estimated useful life, 5 years; residual value, $15,000 ……………….465,000 Building: estimated useful life, 30 years; no residual value………………………….$780,000 The equipment was depreciated u
> Access the financial statements of Saskatoon-based Potash Corporation of Saskatchewan Inc. for its year ended December 31, 2014 from the company’s website or SEDAR (www.sedar.com). PotashCorp is a well-known Canadian global fertilizer and related industr
> When the records of Hilda Corporation were reviewed at the close of 2017, the following errors were discovered. Instructions: For each item, indicate by a check mark in the appropriate column whether the error resulted in an overstatement or understate
> The before-tax income for Hawks Corp. for 2016 was $101,000; for 2017, it was $77,400. However, the accountant noted that the following errors had been made: 1. Sales for 2016 included $38,200 that had been received in cash during 2016, but for which the
> Neilson Tool Corporation’s December 31 year-end financial statements contained the following errors: An insurance premium of $66,000 covering the years 2016, 2017, and 2018 was prepaid in 2016, with the entire amount charged to expens
> A partial trial balance of Lindy Corporation at December 31, 2017 follows: Additional adjusting data: 1. A physical count of supplies on hand on December 31, 2017 totaled $3,400. Through an oversight, the Salaries and Wages Payable account was not chan
> You have been engaged to review the financial statements of Walsh Corporation. In the course of your examination of the work of the bookkeeper hired during the year that just ended, you noticed a number of irregularities for the past fiscal year: 1. Year
> Tracy Ltd. purchased a piece of equipment on January 1, 2013 for $1.2 million. At that time, it was estimated that the machine would have a 15-year life and no residual value. On December 31, 2017, Tracy’s controller found that the entry for depreciation
> Carly Inc. reported the following accounting income (loss) and related tax rates during the years 2012 to 2018: Accounting income (loss) and taxable income (loss) were the same for all years since Carly began business. The tax rates from 2015 to 2018 w
> The following information relates to Shirley Corporation’s transactions during 2017, its first year of operations. 1. Income before income tax on the income statement for 2017 was $64,000. 2. Income before income tax ($64,000 above) is net of loss due to
> The following information was disclosed during the audit of Shawna Inc.: 1. On January 1, 2017, equipment was purchased for $400,000. For financial reporting purposes, the company uses straight-line depreciation over a five-year life, with no residual
> Anthony Ltd. began business on January 1, 2016. At December 31, 2016, it had a $4,500 balance in the Deferred Tax Liability account that pertains to property, plant, and equipment acquired during 2016 at a cost of $900,000. The property, plant, and equip
> An excerpt from the statement of financial position of Twilight Limited follows: 1. Options were granted/written in 2016 that give the holder the right to purchase 100,000 common shares at $8 per share. The average market price of the companyâ
> Joy Cunningham Co. purchased a machine on January 1, 2014 for $550,000. At that time, it was estimated that the machine would have a 10-year life and no residual value. On December 31, 2017, the firm’s accountant found that the entry for depreciation exp
> Gao Limited, a publicly traded company, uses IFRS and had the following events and transactions occur in its fiscal year ending October 31, 2017. Although no dates are given, the events described are in chronological order. 1. Gao Limited repurchased com
> Isabelle Leclerc is the controller at Camden Pharmaceutical Industries, a public company. She is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Camden’s external financial sta
> Shari Patel of the controller’s office of Diamond Corporation was given the assignment of determining the basic and diluted earnings per share values for the year ended December 31, 2017. Patel has gathered the following information. 1. The company is au
> Bryce Corporation is preparing the comparative financial statements for the annual report to its shareholders for the fiscal years ended May 31, 2017 and May 31, 2018. The income from operations was $1.8 million and $2.5 million, respectively, for each y
> Tseng Corporation Ltd. has the following capital structure at the following fiscal years ended December 31: The following additional information is available. 1. On July 31, 2017, Tseng Corporation exchanged common shares for a large piece of equipment
> Use the same information for Audrey Inc. as in P17-3, but also assume the following. 1. On September 30, 200,000 convertible preferred shares were redeemed. If they had been converted, these shares would have resulted in an additional 100,000 common shar
> The 2014 financial statements (for its 53-week period ended January 3, 2015) and 10-year financial review of Canadian Tire Corporation, Limited can be found at www.sedar.com or on the company’s website. Instructions: (a) What makes up Canadian Tire’s cu
> Audrey Inc. has 1 million common shares outstanding as at January 1, 2017. On June 30, 2017, 4% convertible bonds were converted into 100,000 additional shares. Up to that point, the bonds had paid interest of $250,000 after tax. Net income for the year
> Loretta Corporation, a publicly traded company, is preparing the comparative financial statements to be included in the annual report to shareholders. Loretta’s fiscal year ends May 31. The following information is available. 1. Income from operations be
> Rocky Mountain Corp. currently has an issued debenture outstanding with Abbra Bank. The note has a principal of $2 million, was issued at face value, and interest is payable at 7%. The term of the debenture was 10 years, and was issued on December 31, 20
> Gateway Corporation has outstanding 200,000 common shares that were issued at $10 per share. The balances at January 1, 2017 were $21 million in its Retained Earnings account; $4.3 million in its Contributed Surplus account; and $1.1 million in its Accum
> The first audit of the books of Gomez Limited was recently carried out for the year ended December 31, 2017. Gomez follows IFRS. In examining the books, the auditor found that certain items had been overlooked or might have been incorrectly handled in th
> The following information is available for Dylan Inc., a company whose shares are traded on the Toronto Stock Exchange: Other information: 1. For all of the fiscal year 2017, $100,000 of 6% cumulative convertible bonds have been outstanding. The bonds
> Jackie Enterprises Ltd. has a tax rate of 30% and reported net income of $8.5 million in 2017. The following details are from Jackie’s statement of financial position as at December 31, 2017, the end of its fiscal year: Other informat
> The following information is for Polo Limited for 2017: There were no changes during 2017 in the number of common shares, preferred shares, or convertible bonds outstanding. For simplicity, ignore the requirement to book the convertible bondsâ
> As auditor for Checkem & Associates, you have been assigned to review Tao Corporation’s calculation of earnings per share for the current year. The controller, Mac Taylor, has supplied you with the following calculations: You have
> Treeton Inc. had net income for the fiscal year ended June 30, 2017 of $5 million. There were 500,000 common shares outstanding throughout 2017. The average market price of the common shares for the entire fiscal year was $50. Treeton’s tax rate was 25%
> Mavis Corporation is a new audit client of yours and has not reported earnings per share data in its annual reports to shareholders in the past. The treasurer, Andrew Benninger, has asked you to provide information about the reporting of earnings per sha
> Access the audited annual financial statements of Rogers Sugar Inc. for the year ended October 3, 2015 from SEDAR (www.sedar.com) or the company’s website. Instructions: (a) Identify the components of the company’s shareholders’ equity, including the re
> On September 30, 2017, Gargiola Inc. issued $4 million of 10-year, 8% convertible bonds for $4.6 million. The bonds pay interest on March 31 and September 30 and mature on September 30, 2027. Each $1,000 bond can be converted into 80 no par value common
> Manitoba Deck System Corporation (MDSC) is a public company whose shares are actively traded on the Toronto Stock Exchange. The following transactions occurred in 2017: Jan. 1 The company was granted a charter that authorizes the issuance of an unlimited
> Parker Corporation’s charter authorizes the issuance of 1 million common shares and 500,000 preferred shares that have a dividend rate of $6 per share per year. The following transactions involving share issues were completed. Assume that Parker follows
> Pace Instrument Corp., a small company that follows ASPE, began operations on January 1, 2014, and uses a periodic inventory system. The following net income amounts were calculated for Pace under three different inventory cost formulas: Instructions:
> Oregano Inc. was formed on July 1, 2014. It was authorized to issue an unlimited number of common shares and 100,000 shares of cumulative and non-participating preferred shares carrying a $2 dividend. The company has a July 1 to June 30 fiscal year. The
> Perfect Ponds Inc. (PPI) is a backyard pond design and installation company. PPI was incorporated during 2017, with an unlimited number of common shares, and 50,000 preferred shares with a $3 dividend rate authorized. PPI follows ASPE. The following tran
