Oil Products Company purchases an oil tanker depot on January 1, 2017, at a cost of $600,000. Oil Products expects to operate the depot for 10 years, at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that it will cost $75,000 to dismantle the depot and remove the tanks at the end of the depot’s useful life. Instructions a. Prepare the journal entries to record the depot and the asset retirement obligation for the depot on January 1, 2017. Based on an effective-interest rate of 6%, the present value of the asset retirement obligation on January 1, 2017, is $41,879. b. Prepare any journal entries required for the depot and the asset retirement obligation at December 31, 2017. Oil Products uses straight-line depreciation; the estimated salvage value for the depot is zero. c. On December 31, 2026, Oil Products pays a demolition firm to dismantle the depot and remove the tanks at a price of $80,000. Prepare the journal entry for the settlement of the asset retirement obligation.
> A major leaguer hits a baseball so that it leaves the bat at a speed of 30.0 m/s and at an angle of 36.9° above the horizontal. Ignore air resistance. (a) At what two times is the baseball at a height of 10.0 m above the point at which it left the bat? (
> On level ground a shell is fired with an initial velocity of 40.0 m>s at 60.0° above the horizontal and feels no appreciable air resistance. (a) Find the horizontal and vertical components of the shell’s initial velocity. (b) How long does it take the sh
> Inside a starship at rest on the earth, a ball rolls off the top of a horizontal table and lands a distance D from the foot of the table. This starship now lands on the unexplored Planet X. The commander, Captain Curious, rolls the same ball off the same
> The froghopper, Philaenus spumarius, holds the world record for insect jumps. When leaping at an angle of 58.0° above the horizontal, some of the tiny critters have reached a maximum height of 58.7 cm above the level ground. (a) What was the takeoff spee
> During a storm, a car traveling on a level horizontal road comes upon a bridge that has washed out. The driver must get to the other side, so he decides to try leaping the river with his car. The side of the road the car is on is 21.3 m above the river,
> Can you have zero acceleration and nonzero velocity? Use a vxt graph to explain.
> How many correct experiments do we need to disprove a theory? How many do we need to prove a theory? Explain.
> Marshall Company, organized in 2016, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2017. Instructions Prepare the necessary entries to clear the Intangi
> On July 31, 2017, Mexico Company paid $3,000,000 to acquire all of the common stock of Conchita Incorporated, which became a division of Mexico. Conchita reported the following balance sheet at the time of the acquisition.It was determined at the date of
> Alladin Company purchased Machine #201 on May 1, 2017. The following information relating to Machine #201 was gathered at the end of May.Price…………………………………………………………………….$85,000Credit terms………………………………………………………2/10, n/30Freight-in…………………………………………………………….$
> Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products
> The inventory of Oheto Company on December 31, 2017, consists of the following items.1. Determine the inventory as of December 31, 2017, by the LCNRV method, applying this method to each item. 2. Determine the inventory by the LCNRV method, applying the
> The following information has been taken from the ledger accounts of Isaac Stern Corporation. Total income since incorporation……………$317,000 Total cash dividends paid…………………………60,000 Total value of stock dividends distributed…. 30,000 Gains on treasury s
> The stockholders’ equity accounts of G.K. Chesterton Company have the following balances on December 31, 2017. Common stock, $10 par, 300,000 shares issued and outstanding………..$3,000,000 Paid-in capital in excess of par—common stock………………………………………1,200,0
> The common stock of Alexander Hamilton Inc. is currently selling at $120 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Nine million sha
> For a recent 2-year period, the balance sheet of Santana Dotson Company showed the following stockholders’ equity data at December 31 (in millions). Instructions a. Answer the following questions. 1. What is the par value of the com
> On June 30, 2017, Mischa Auer Company issued $4,000,000 face value of 13%, 20-year bonds at $4,300,920, a yield of 12%. Auer uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and -Decemb
> Presented below are two independent situations. a. George Gershwin Co. sold $2,000,000 of 10%, 10-year bonds at 104 on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on July 1 and January 1. If Gershwin uses the straight-line me
> Assume the same information as E14-6. Instructions Set up a schedule of interest expense and discount amortization under the effective-interest method. (Hint: The effective-interest rate must be computed.) From E14-6: Devon Harris Company sells 10% bo
> Devon Harris Company sells 10% bonds having a maturity value of $2,000,000 for $1,855,816. The bonds are dated January 1, 2017, and mature January 1, 2022. Interest is payable annually on January 1. Instructions Set up a schedule of interest expense an
> Presented below are two independent situations. 1. On January 1, 2017, Simon Company issued $200,000 of 9%, 10-year bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1. 2. On June 1, 2017, Garfunkel Company issued $
> Vargo Corp. owes $270,000 to First Trust. The debt is a 10-year, 12% note due December 31, 2017. Because Vargo Corp. is in financial trouble, First Trust agrees to extend the maturity date to December 31, 2019, reduce the principal to $220,000, and reduc
> At December 31, 2017, Burr Corporation owes $500,000 on a note payable due February 15, 2018. a. If Burr refinances the obligation by issuing a long-term note on February 14 and using the proceeds to pay off the note due February 15, how much of the $50
> Using the same information as in E14-22 and E14-24, answer the following questions related to American Bank (creditor). Instructions a. Compute the loss American Bank will suffer under this new term modification. Prepare the journal entry to record the
> Use the same information as in E14-22 above except that American Bank reduced the principal to $1,900,000 rather than $2,400,000. On January 1, 2021, Barkley pays $1,900,000 in cash to American Bank for the principal. Instructions a. Can Barkley Compan
> Using the same information as in E14-22, answer the following questions related to American Bank (creditor). Instructions a. What interest rate should American Bank use to calculate the loss on the debt restructuring? b. Compute the loss that American
> On December 31, 2017, American Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,000,000 note receivable by the following modificatio
> Strickland Company owes $200,000 plus $18,000 of accrued interest to Moran State Bank. The debt is a 10-year, 10% note. During 2017, Strickland’s business deteriorated due to a faltering regional economy. On December 31, 2017, Moran State Bank agrees to
> Fallen Company commonly issues long-term notes payable to its various lenders. Fallen has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). Fallen has elected to use the fair value opti
> On January 1, 2017, Margaret Avery Co. borrowed and received $400,000 from a major customer evidenced by a zero-interest-bearing note due in 3 years. As consideration for the zero-interest-bearing feature, Avery agrees to supply the customer’s inventory
> Presented below are two independent situations. a. On January 1, 2017, Robin Wright Inc. purchased land that had an assessed value of $350,000 at the time of purchase. A $550,000, zero-interest-bearing note due January 1, 2020, was given in exchange. Th
> On January 1, 2017, Ellen Carter Company makes the two following acquisitions. 1. Purchases land having a fair value of $200,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $337,012. 2. Purchases equipment by issuin
> Jason Day Company had bonds outstanding with a maturity value of $300,000. On April 30, 2017, when these bonds had an unamortized discount of $10,000, they were called in at 104. To pay for these bonds, Day had issued other bonds a month earlier bearing
> The following are three different and unrelated situations involving depreciation accounting. Answer the question(s) at the end of each situation. Situation I: Recently, Broderick Company experienced a strike that affected a number of its operating plant
> On June 30, 2009, County Company issued 12% bonds with a par value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2017. Because of lower interest rates and a significant change in the company’s cre
> Matt Perry, Inc. had outstanding $6,000,000 of 11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $9,000,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 98. A portion of the proceeds was used to
> On January 2, 2012, Banno Corporation issued $1,500,000 of 10% bonds at 97 due December 31, 2021. Interest on the bonds is payable annually each December 31. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (S
> Karen Austin Inc. has issued three types of debt on January 1, 2017, the start of the company’s fiscal year. a. $10 million, 10-year, 15% unsecured bonds, interest payable quarterly. Bonds were priced to yield 12%. b. $25 million par of 10-year, zero-c
> On January 1, 2017, Aumont Company sold 12% bonds having a maturity value of $500,000 for $537,907.37, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2017, and mature January 1, 2022, with interest payable December 31 of
> On December 31, 2017, Kate Holmes Company has $7,000,000 of short-term debt in the form of notes payable to Gotham State Bank due in 2018. On January 28, 2018, Holmes enters into a refinancing agreement with Gotham that will permit it to borrow up to 60%
> On December 31, 2017, Hattie McDaniel Company had $1,200,000 of short term debt in the form of notes payable due February 2, 2018. On January 21, 2018, the company issued 25,000 shares of its common stock for $38 per share, receiving $950,000 proceeds af
> Green Day Hardware Company’s payroll for November 2017 is summarized below. At this point in the year, some employees have already received wages in excess of those to which payroll taxes apply. Assume that the state unemployment t
> The payroll of YellowCard Company for September 2016 is as follows. Total payroll was $480,000, of which $110,000 is exempt from Social Security tax because it represented amounts paid in excess of $118,500 to certain employees. The amount paid to employ
> Matt Broderick Company began operations on January 2, 2016. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 6 paid sick days annually. Vacation days may be taken after January 15 of the yea
> Assume the bonds in BE14-6 were issued for $644,636 and the effective-interest rate is 6%. Prepare the company’s journal entries for a. the January 1 issuance, b. the July 1 interest payment, and c. the December 31 adjusting entry. From BE14-6: On Ja
> Presented below is information related to Carver Inc. Instructions a. Compute the following ratios or relationships of Carver Inc. Assume that the ending account balances are representative unless the information provided indicates differently. 1. Cu
> Prior Company’s condensed financial statements provide the following information. Instructions a. Determine the following for 2017. 1. Current ratio at December 31. 2. Acid-test ratio at December 31. 3. Accounts receivable turnov
> Sprague Company has been operating for several years, and on December 31, 2017, presented the following balance sheet. The net income for 2017 was $25,000. Assume that total assets are the same in 2016 and 2017. Instructions Compute each of the follow
> The following are three independent situations. 1. Hairston Stamp Company records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. Hairston’s past experience indicates that only 80% of the stamps s
> Presented below are three independent situations. Answer the question at the end of each situation. 1. During 2017, Salt-n-Pepa Inc. became involved in a tax dispute with the IRS. Salt-n-Pepa’s attorneys have indicated that they believe it is probable t
> No Doubt Company includes 1 coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2017, No Doubt Company purchased 8,800 premiums at 80 cents each and sold 110,000 boxes of soap powder at $3.
> Early in 2017, Sheryl Crow Equipment Company sold 500 Rollomatics during 2017 at $6,000 each. During 2017, Crow spent $20,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis. Instr
> During 2013, Winston Corporation spent $170,000 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2013, and had a legal life of 20 years and a useful life of 10 year
> Carter Company has provided information on intangible assets as follows. A patent was purchased from Ford Company for $2,000,000 on January 1, 2016. Carter estimated the remaining useful life of the patent to be 10 years. The patent was carried in Ford’s
> On January 1, 2017, JWS Corporation issued $600,000 of 7% bonds, due in 10 years. The bonds were issued for $559,224, and pay interest each July 1 and January 1. JWS uses the effective-interest method. Prepare the company’s journal entries for a. the Ja
> In early January 2016, Outkast Corporation applied for a trade name, incurring legal costs of $16,000. In January 2017, Outkast incurred $7,800 of legal fees in a successful defense of its trade name. Instructions a. Compute 2016 amortization, 12/31/16
> As the recently appointed auditor for Bryan Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2017, are prepared. The controller for Bryan Corporation mentions that only one account is kept
> The following is selected information for Alatorre Company. 1. Alatorre purchased a patent from Vania Co. for $1,000,000 on January 1, 2015. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2025. During 201
> More Company incurred the following costs during the current year in connection with its research and development activities. Cost of equipment acquired that will have alternative uses in future R&D projects over the next 5 years (uses straight-line depr
> Price Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2016, the company expends $325,000 on a research project, but by the end of 2016 it is impossible to determine whether any benefit will
> Angelou Corporation was organized in 2016 and began operations at the beginning of 2017. The company is involved in interior design consulting services. The following costs were incurred prior to the start of operations. Attorney fees in connection with
> Presented below is net asset information related to the Carlos Division of Santana, Inc. The purpose of the Carlos Division is to develop a nuclear-powered aircraft. If successful, traveling delays associated with refueling could be substantially reduc
> Presented below is information related to copyrights owned by Mare Company at December 31, 2017. Cost ……………………………………………... $8,600,000 Carrying amount ……………………………. 4,300,000 Expected future net cash flows ………. 4,000,000 Fair value ……………………………………… 3,200,00
> On July 1, 2017, Brigham Corporation purchased Young Company by paying $250,000 cash and issuing a $100,000 note payable to Steve Young. At July 1, 2017, the balance sheet of Young Company was as follows. The recorded amounts all approximate current va
> Fred Moss, owner of Moss Interiors, is negotiating for the purchase of Zweifel Galleries. The following balance sheet of Zweifel is given in an abbreviated form as follows. Moss and Zweifel agree that: 1. Land is undervalued by $30,000. 2. Equipment
> Troopers Medical Labs, Inc., began operations 5 years ago producing stetrics, a new type of instrument it hoped to sell to doctors, dentists, and hospitals. The demand for stetrics far exceeded initial expectations, and the company was unable to produce
> Tones Industries has the following patents on its December 31, 2016, balance sheet. The following events occurred during the year ended December 31, 2017. 1. Research and development costs of $245,700 were incurred during the year. 2. Patent D was pu
> Presented below is information related to LeBron James Manufacturing Corporation. Instructions a. Compute the rate of depreciation per year to be applied to the plant assets under the composite method. b. Prepare the adjusting entry necessary at the
> George Zidek Corporation bought a machine on June 1, 2015, for $31,000, f.o.b. the place of manufacture. Freight to the point where it was set up was $200, and $500 was expended to install it. The machine’s useful life was estimated at 10 years, with a s
> Jackel Industries presents you with the following information. Instructions Complete the table for the year ended December 31, 2019. The company depreciates all assets using the half-year convention. Accumulated Date Salvage Value Depreciation Lif
> Muggsy Bogues Company purchased equipment for $212,000 on October 1, 2017. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $12,000. Estimated production is 40,000 units and estimated working hours are 20,000.
> Robert Parish Corporation purchased a new machine for its assembly process on August 1, 2017. The cost of this machine was $117,900. The company estimated that the machine would have a salvage value of $12,900 at the end of its service life. Its life is
> Judds Company purchased a new plant asset on April 1, 2017, at a cost of $711,000. It was estimated to have a service life of 20 years and a salvage value of $60,000. Judds’ accounting period is the calendar year. Instructions a. Compute the depreciati
> Shimei Inc. purchased computer equipment on March 1, 2017, for $31,000. The computer equipment has a useful life of 10 years and a salvage value of $1,000. For tax purposes, the MACRS class life is 5 years. Instructions a. Assuming that the company use
> Futabatei Enterprises purchased a delivery truck on January 1, 2017, at a cost of $27,000. The truck has a useful life of 7 years with an estimated salvage value of $6,000. The straight-line method is used for book purposes. For tax purposes, the truck,
> The 2014 annual report of Tootsie Roll Industries contains the following information. Instructions Compute the following ratios for Tootsie Roll for 2014. a. Asset turnover. b. Return on assets. c. Profit margin on sales. d. How can the asset turn
> Assume the bonds in BE14-2 were issued at 103. Prepare the journal entries for a. January 1, b. July 1, and c. December 31. Assume The Colson Company records straight-line amortization semiannually. From BE14-2: The Colson Company issued $300,000 of
> Stanislaw Timber Company owns 9,000 acres of timberland purchased in 2006 at a cost of $1,400 per acre. At the time of purchase, the land without the timber was valued at $400 per acre. In 2007, Stanislaw built fire lanes and roads, with a life of 30 yea
> The management of Petro Garcia Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $900,000 with depreciation to date of $400,000 as of December 31, 2
> Assume the same information as E11-16, except that Suarez intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $20,000. Instructions a. Prepare the journal entry (if any) to record the impairment of t
> Presented below is information related to equipment owned by Suarez Company at December 31, 2017. Cost……………………………………………………$9,000,000 Accumulated depreciation to date…………. 1,000,000 Expected future net cash flows……………..7,000,000 Fair value………………………………………
> On March 10, 2019, Lost World Company sells equipment that it purchased for $192,000 on August 20, 2012. It was originally estimated that the equipment would have a life of 12 years and a salvage value of $16,800 at the end of that time, and depreciation
> Johnson & Johnson, the world’s leading and most diversified healthcare corporation, serves its customers through specialized worldwide franchises. Each of its franchises consists of a number of companies throughout the world that fo
> The following note related to stockholders’ equity was reported in Wiebold, Inc.’s annual report. Instructions a. What is the significance of the date of record and the date of distribution? b. Why might Wiebold ha
> Robots, Inc. reported the following information regarding 2016–2017 inventory. Instructions a. Comment on why Robots, Inc., might disclose how its LIFO inventories would be valued under FIFO. b. Why does the LIFO liquidation reduce
> Kellogg Company is the world’s leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for
> McDonald’s is the largest and best-known global food-service retailer, with more than 32,000 restaurants in 118 countries. On any day, McDonald’s serves approximately 1 percent of the worldâ€
> As discussed in the chapter, an important consideration in evaluating current liabilities is a company’s operating cycle. The operating cycle is the average time required to go from cash to cash in generating revenue. To determine the l
> Presented below is the current liabilities section and related note of Mohican Company. Instructions Answer the following questions. a. What is the difference between the cash basis and the accrual basis of accounting for warranty costs? b. Under wh
> Despite being a publicly traded company only since 1987, Northland Cranberries of Wisconsin Rapids, Wisconsin, is one of the world’s largest cranberry growers. During its short life as a publicly traded corporation, it has engaged in an
> The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G’s financial statements and the accompanying notes to answ
> The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G’s financial statements and the accompanying notes to ans
> The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G’s 2014 financial statements and the accompanying notes to
> The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to these financial statements and the accompanying notes to answ
> The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G’s financial statements and the accompanying notes to ans
> The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G’s financial statements and the accompanying notes to answ
> The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online. Instructions Use the companies’ financia
> The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online. Instructions Use the companies’ financi
> The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online. Instructions Use the companies’ financi
> The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online. Instructions Use the companies’ financia
