On December 1, 2024, Davenport Company sold merchandise to a customer for $20,000. In payment for the merchandise, the customer signed a 6% note requiring the payment of interest and principal on March 1, 2025. How much interest revenue will the company recognize during 2024? In 2025?
> On January 1, 2021, Amen Company purchased major pieces of manufacturing equipment for a total of $36 million. Amen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2023, the book value
> Eye Deal Optometry leased vision-testing equipment from Insight Machines on January 1, 2024. Insight Machines manufactured the equipment at a cost of $200,000 and lists a cash selling price of $250,177. Appropriate adjusting entries are made quarterly.
> Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of each year. The lessee is aware of the lessor’s implicit rate of return. Required: For each situation, det
> Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2024. International Machines manufactured the equipment at a cost of $85,000. Manufacturers Sothern’s fiscal year ends December 31.
> Thaler Inc. holds a $1 million receivable ($800,000 principal, $200,000 accrued interest) from Einhorn Industries, and agrees to settle the receivable outright for $900,000 given Einhorn’s difficult financial situation. How much gain or loss should Thale
> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material also is available under the Investor Relations li
> Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2024. Edison purchased the equipment from International Machines at a cost of $112,080. Required: Prepare a lease amortization schedule and appropriate entries
> Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2024. Edison purchased the equipment from International Machines at a cost of $112,080. Required: Prepare a lease amortization schedule and appropriate entrie
> On June 30, 2024, Georgia-Atlantic, Inc., leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term (also the asset’s useful life), payable eac
> To raise operating funds, National Distribution Center sold its office building to an insurance company on January 1, 2024, for $800,000 and immediately leased the building back. The operating lease is for the final 12 years of the building’s estimated 2
> To raise operating funds, Signal Aviation sold an airplane on January 1, 2024, to a finance company for $770,000. Signal immediately leased the plane back for a 13-year period, at which time ownership of the airplane will transfer to Signal. The airplan
> Microsoft Corporation reported the following disclosure note in its 2020 financial statements: Required: 1. Prepare a journal entry that summarizes the cash payments for operating leases during the year. 2. Prepare a journal entry that summarizes the ca
> Access the FASB’s Codification Research System® at the FASB website (www.fasb.org) and select Basic View. Determine the specific seven- or eight-digit Codification citation (XXX-XX-XX-X) for accounting for each of the following items: 1. Definition of in
> The following relate to an operating lease agreement: a. The lease term is three years, beginning January 1, 2024. b. The leased asset cost the lessor $800,000 and had a useful life of eight years with no residual value. The lessor uses straight-line dep
> The lease agreement and related facts indicate the following: a. Leased equipment had a retail cash selling price of $300,000. Its useful life was five years with no residual value. b. The lease term was five years and the lessor paid $265,000 to acquire
> On June 30, 2024, Georgia-Atlantic, Inc., leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term (also the asset’s useful life), pa
> Shan Enterprises received a bank statement listing its May 31, 2024, bank balance as $47,582. Shan determined that as of May 31 it had cash receipts of $2,500 that were not yet deposited and checks outstanding of $7,224. Calculate Shan’s correct May 31,
> Terms of a lease agreement and related facts were as follows: a. Incremental costs of commissions for brokering the lease and consummating the completed lease transaction incurred by the lessor were $4,242. b. The retail cash selling price of the leased
> On January 1, 2024, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earn NRC a 12% rate of return for providing long-term financing. The lease agreement specified the following: a. Ten annual payment
> Warren Marina owns a large marina that contains numerous boat slips of various sizes. Warren contracts with boat owners to provide slips to house the customers’ boats. Lucky Fisher Fleet contracted with Warren to provide space for four of its fishing boa
> Warren Marina owns a large marina that contains numerous boat slips of various sizes. Warren contracts with boat owners to provide slips to house the customers’ boats. Lucky Fisher Fleet contracted with Warren to provide space for four of its fishing boa
> Universal Leasing leases electronic equipment to a variety of businesses. The company’s primary service is providing alternate financing by acquiring equipment and leasing it to customers under long-term sales-type leases. Universal earns interest under
> Federated Fabrications leased a tooling machine on January 1, 2024, for a three-year period ending December 31, 2026. The lease agreement specified annual payments of $36,000 beginning with the first payment at the beginning of the lease, and each Decem
> Each of the four independent situations below describes a sales-type lease in which annual lease payments of $100,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Determine the following amounts at the beginning of t
> At January 1, 2024, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $25,000 beginning January 1, 2024, the beginning of the lease, and on each December 31
> On January 1, 2024, Rick’s Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease for three years. Rick’s had no significant economic incentive as of the beginning of the lease to exercise the three-year exten
> On January 1, 2024, Taco King leased retail space from Fogelman Properties. The 10-year finance lease requires quarterly variable lease payments equal to 3% of Taco King’s sales revenue, with a quarterly sales minimum of $400,000. Payments at the beginni
> Marin Company’s general ledger indicates a cash balance of $22,340 as of September 30, 2024. Early in October Marin received a bank statement indicating that during September Marin had an NSF check of $1,500 returned to a customer and incurred service ch
> On June 30, 2024, Georgia-Atlantic, Inc., leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term, payable each June 30 and December
> On January 1, 2024, Quick Stream Communications leased telephone equipment from Degum, Inc. Degums cash selling price for the equipment is $1,306,578. The lease agreement specifies six annual payments of $300,000 beginning December 31, 2024, and on each
> On January 1, 2024, we tick Optometrists leased diagnostic equipment from Southern Corp., which had purchased the equipment at a cost of $1,437,237. The lease agreement specifies six annual payments of $300,000 beginning January 1, 2024, the beginning o
> Natick Industries leased high-tech instruments from Framingham Leasing on January 1, 2024. Natick has the option to renew the lease at the end of two years for an additional three years. Natick is subject to a $45,000 penalty after two years if it fails
> Chance Enterprises leased equipment from Third Bank Leasing on January 1, 2024. Chance elected the short-term lease option. Required: Prepare appropriate entries for Chance from the beginning of the lease through April 1, 2024.
> On January 1, 2024, Neath Angstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from Computer World Leasing, which routinely finances equipment for other firms at an annual interes
> Baillie Power leased high-tech electronic equipment from Courtney Leasing on January 1, 2024. Courtney purchased the equipment from Duane Machines at a cost of $250,000, its f Required: Prepare appropriate entries for Baillie Power from the beginning of
> Zhang Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $52,538 over a six-year lease term (also the asset’s useful life), with the first payment on January 1, the beginn
> At January 1, 2024, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $25,000 beginning January 1, 2024, the beginning of the ease, and on each December 31
> At January 1, 2024, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $25,000 beginning January 1, 2024, the beginning of the lease, and on each December 31
> On April 19, 2024, Millipede Machinery sold a tractor to Thomas Hart wood, accepting a note promising payment of $120,000 in five years. The applicable effective interest rate is 7%. What amount of sales revenue would Millipede recognize on April 19, 202
> At January 1, 2024, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $25,000 beginning January 1, 2024, the beginning of the lease, and on each December 31
> American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2024. The lease agreement for the $4 million (fair value and present value of the lease pay
> Circuit Town commenced a gift card program in January 2024 and sold $10,000 of gift cards in January, $15,000 in February, and $16,000 in March 2024 before discontinuing further gift card sales. During 2024, gift card redemptions were $6,000 for the Janu
> The following selected transactions relate to liabilities of Interstate Farm Equipment Company for December2024. Interstate’s fiscal year ends on December 31. Required: Prepare the appropriate journal entries for these transactions. 1. On December 15, r
> Diversified Semiconductors sells perishable electronic components. Some must be shipped and stored in reusable protective containers. Customers pay a deposit for each container received. The deposit is equal to the container’s cost. They receive a refund
> Bavarian Bar and Grill opened for business in November 2024. During its first two months of operation, the restaurant sold gift cards in various amounts totaling $5,200, mostly as Christmas presents. They are redeemable for meals within two years of the
> On January 1, 2024, Poplar Fabricators Corporation agreed to grant its employees two weeks of vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2024, Poplar Fabricato
> JWS Transport Company’s employees earn vacation time at the rate of 1 hour per 40-hour work period. The vacation pay vests immediately (that is, an employee is entitled to the pay even if employment terminates). During 2024, total salaries paid to employ
> The following selected transactions relate to liabilities of United Insulation Corporation. United’s fiscal year ends on December 31. Required: Prepare the appropriate journal entries through the maturity of each liability.
> Lee Financial Services pays employees monthly. Payroll information is listed below for January 2024, the first month of Lee’s fiscal year. Assume that none of the employees exceeded any relevant base of pay, such that all benefit percen
> DuPont Inc. provides chemical, plastic, and agricultural products and services to various consumer markets. The following excerpt is taken from the disclosure notes of DuPont’s 2019 annual report: Required: 1. Does the excerpt describe
> The Commonwealth of Virginia filed suit in October 2022 against Northern Timber Corporation, seeking civil penalties and injunctive relief for violations of environmental laws regulating forest conservation. When the 2023 financial statements were issued
> Woodmere Lawn Products introduced a new line of commercial sprinklers in 2023 that carry a one-year warranty against manufacturer’s defects. Because this was the first product for which the company offered a warranty, trade publications
> Indicate (by letter) the way each of the items listed below should be reported in a balance sheet at December 31, 2024.
> Refer to the circumstances listed in E 13–21, but assume that Erismus prepares its financial statements according to International Financial Reporting Standards. Required: For each circumstance, indicate the amount of asset or liability that Erismus wou
> The following selected circumstances relate to pending lawsuits for Erasmus, Inc. Erasmus’s fiscal year ends on December 31. Financial statements are issued in March 2025. Erasmus prepares its financial statements according to U.S. GAAP. Required: Indic
> On July 1, 2024, Li-Ma Industries issued nine-month notes in the amount of $400 million. Interest is payable at maturity. Required: Determine the amount of interest expense that should be recorded in a year-end adjusting entry under each of the followin
> The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2024. Classical fiscal year ends on December 31. Financial statements are issued in April 2025. Required: Prepare the year-end ent
> At April 1, 2025, the Food and Drug Administration is in the process of investigating allegations of false marketing claims by Hulky Muscle Supplements. The FDA has not yet proposed a penalty assessment. Holly’s fiscal year ends on December 31, 2024. The
> The Mandan Panda Company uses the allowance method to account for bad debts. At the beginning of 2024, the allowance account had a credit balance of $75,000. Credit sales for 2024 totaled $2,400,000 and the year-end accounts receivable balance was $490,0
> Refer to the situation described in BE 7–15. If credit sales for the year were $8,200,000 and $7,950,000 was collected from credit customers, what was the beginning-of-year balance in accounts receivable?
> Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2024 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually
> Cupola Awning Corporation introduced a new line of commercial awnings in 2024 that carry a two-year warranty against manufacturer’s defects. Based on their experience with previous product introductions, warranty costs are expected to a
> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Required: 1. Obtain the relevant authoritative literature on recognition of contingent losses. What is the specific eight-digit C
> At December 31, 2024, Newman Engineering’s liabilities include the following: 1. $10 million of 9% bonds were issued for $10 million on May 31, 2002. The bonds mature on May 31, 2032, but bondholders have the option of calling (demanding payment on) the
> Consider the information presented in E 13–11. Required: 1. How would Marriott report the debt in its balance sheet if it reported under IFRS? Why? 2. Would your answer to requirement 1 change if Marriott obtained its long-term credit facility after the
> An annual report of Marriott International, Inc., contained a rather lengthy narrative entitled “Liquidity and Capital Resources.” The narrative noted that a revolving credit agreement outstanding at the end of the year aggregated $4.5 billion and that d
> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Required: Determine the specific eight- or nine-digit Codification citation (XXX-XX-XX-XX) that describes the following items: 1.
> On November 1, 2024, Quantum Technology, a geothermal energy supplier, borrowed $16 million cash to fund a geological survey. The loan was made by Nevada Bancorp under a noncommittal short-term line of credit arrangement. Quantum issued a nine-month, 12%
> A company plans to make four annual deposits of $200,000 each to a special building fund. The fund’s assets will be invested in mortgage instruments expected to pay interest at 12% on the fund’s balance. Determine how much will be accumulated in the fund
> You would like to start saving for retirement. Assuming you are now 25 years old and want to retire at age 55, you have 30 years to watch your investment grow. You decide to invest in the stock market, which has earned about 13% per year over the past 80
> A company’s year-end balance in accounts receivable is $2,000,000. The allowance for uncollectible accounts had a beginning-of-year credit balance of $30,000. An aging of accounts receivable at the end of the year indicates a required allowance of $38,00
> Lights, Camera, and More sells filmmaking equipment. George is considering buying equipment from Lights, Camera, and More for $150,000 and has the following payment options: (1) pay $150,000 today, (2) pay $75,000 today and issue a non-interest bearing n
> The Field Detergent Company sold merchandise to a customer on June 30, 2024. Payment was made in the form of a noninterest-bearing note requiring the customer to pay $85,000 on June 30, 2026. Assume that a 10% interest rate properly reflects the time val
> For each of the following situations involving single amounts, solve for the unknown (?). Assume that interest is compounded annually. (i = interest rate, and n = number of years)
> Ray and Rachel are considering the purchase of two deluxe kitchen ovens. The first store offers the two ovens for $3,500 with payment due today. The second store offers the two ovens for $3,700 due in one year. Assuming an annual discount rate of 9%, fro
> Four actors have just signed a contract to star in a dramatic movie about relationships among hospital doctors. Filming is expected to take two years to complete. Each person signs independent contracts today with terms below. Assuming an annual discount
> 1. To save for their new child’s college education, a couple places $25,000 in an account. What amount will accumulate in the account at the end of 18 years, assuming an interest rate of 7.25% compounded annually? 2. An individual has just inherited a pi
> On March 31, 2024, Southwest Gas leased equipment from a supplier and agreed to pay $200,000 annually for 20 years beginning March 31, 2025. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the pr
> On June 30, 2024, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the lease require Fly-By-Night to make 20 annual payments of $400,000 on each June 30. Generally accepted accounting principles require this lease to be reco
> Big Warehouses borrowed $100,000 from a bank and signed a note requiring 20 annual payments of $13,388 beginning one year from the date of the agreement. Required: Determine the interest rate implicit in this agreement.
> Juan purchased a new automobile for $20,000. Juan made a cash down payment of $5,000 and agreed to pay the remaining balance in 30 monthly installments, beginning one month from the date of purchase. Financing is available at a 24% annual interest rate.
> Crell Computers categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due = $60,000; estimated uncollectible = 5%. 2. Accounts 1–30 days past due = $15,000; estim
> Alec, Daniel, William, and Stephen decide today to save for retirement. Each person wants to retire by age 65 and puts $11,000 into an account earning 10% compounded annually. Calculate how much each person will have accumulated by the age of 65.
> On June 30, 2024, Single Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2039 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannua
> On September 30, 2024, the Techno Corporation issued 8% stated rate bonds with a face amount of $300 million. The bonds mature on September 30, 2044 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March
> On April 1, 2024, Antonio purchased appliances from the Acme Appliance Company for $1,200. In order to increase sales, Acme allows customers to pay in installments and will defer any payments for six months. Antonio will make 18 equal monthly payments, b
> A student just graduated from State University with a bachelor’s degree in history. During four years at the university, $12,000 in student loans were accumulated. The student asks for your help in determining the amount of the quarterly loan payment. Th
> For each of the following situations involving annuities, solve for the unknown (?). Assume that interest is compounded annually and that all annuity amounts are received at the end of each period. (i = interest rate, and n = number of years)
> Parents want to accumulate $100,000 to be used for their child’s college education. The parents would like to have the amount available on December 31, 2029. Assume that the funds will accumulate in an account paying 8% interest compounded annually. Req
> President Company purchased merchandise from Captain Corp. on September 30, 2024. Payment was made in the form of a noninterest-bearing note requiring President to make six annual payments of $5,000 on each September 30, beginning on September 30, 2027.
> 1. You recently won a lottery and have the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-year annuity of $8,000 beginning one year from today, or (3) a six-year annuity of $13,
> Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of $5,000 under each of the following situations: 1. The payments are received at the end of each of the five years and interest is compounded annually. 2. T
> At the end of the year, Syer Associates had a debit balance in its allowance for uncollectible accounts of $12,000 before adjustment. The balance in Syer’s gross accounts receivable is $600,000. Syer’s management estimates that 10% of its accounts receiv
> Denzel needs a new car. At the dealership, he finds the car that he likes. The dealership gives him two payment options: (1) pay $35,000 today for the car or (2) pay $4,000 at the end of each quarter for three years. Assuming Denzel uses a discount rate
> The four people below have the following investments. Determine which of the four people will have the greatest investment accumulation in six years.
> On September 17, 2024, Zilch, Inc., entered into an agreement to sell one of its divisions that qualifies as a component of the entity according to generally accepted accounting principles. By December 31, 2024, the company’s fiscal year-end, the divisio
> Kamden Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been
> Esquire Comic Book Company had income before tax of $1,000,000 in 2024 before considering the following material items: 1. Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting pri
> Chance Company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by generally accepted accounting principles. The farm equipment component had been u
> The following single-step income statement was prepared by the accountant of the Axel Corporation: Required: Prepare a multiple-step income statement applying generally accepted accounting principles. The income tax rate is 25%. Be sure to include appro
