Question: On February 18, 2024, Union Corporation purchased

> Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $30,000 at the beginning of 2024. No previously written-off ac

> Pincus Associates uses the allowance method to account for bad debts. 2024 was the first year of operations for Pincus, so it had a $0 opening balance in its allowance for uncollectible accounts. During 2024, Pincus provided a total of $250,000 of servic

> The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required: 1. Obtain the relevant authoritative literature on accounting for accounts receivable using the FASB’s Codi

> The controller of the Red Wing Corporation is in the process of preparing the company’s 2024 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the balance sheet. The fol

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Required: Determine the specific nine-digit Codification citation (XXX-XX-XX-XX) for accounting for each of the following items:

> Monitor Muffler sells franchise arrangements throughout the United States and Canada. Under a franchise agreement, Monitor receives $600,000 in exchange for satisfying the following separate performance obligations: (1) franchisees have a five-year righ

> Furtastic manufactures imitation fur garments. On June 1, 2024, Furtastic made a sale to Willett’s Department Store under terms that require Willett to pay $150,000 to Furtastic on June 30, 2024. In a separate transaction on June 15, 2024, Furtastic purc

> Refer to the situation described in BE 20–10. Assume the error was discovered in 2026, after the 2025 financial statements are issued. Ignoring income taxes, what journal entry will PKE use to correct the error?

> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This m

> Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles that have a fair market value of $40,000. Seneca paid for the snowmobiles on January 1, 2024, with delivery to occur subsequently. Unless informed otherwise, assume that Arctic views the time

> Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2024, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $40,000 on a future date. Unless informed otherwise, assume th

> Assume the same facts as in E 6–10. Required: Complete the requirements of E 6–10, assuming that Rocky bases estimates of variable consideration on the expected value it expects to receive.

> On May 1, 2024, Meta Computer, Inc., enters into a contract to sell 5,000 units of Comfort Office Keyboard to one of its clients, Bionics, Inc., at a fixed price of $95,000, to be settled by a cash payment on May 1. Delivery is scheduled for June 1, 2024

> On March 1, 2024, Gold Examiner receives $147,000 from a local bank and promises to deliver 100 units of certified 1-oz. gold bars on a future date. The contract states that ownership passes to the bank when Gold Examiner delivers the products to Brink’s

> In 2024, Long Construction Corporation began construction work under a three-year contract. The contract price is $1,600,000. Long recognizes revenue over time according to percentage of completion for financial reporting purposes. The financial statemen

> Brady Construction Company contracted to build an apartment complex for a price of $5,000,000. Construction began in 2024 and was completed in 2026. The following is a series of independent situations, numbered 1 through 6, involving differing costs for

> On February 1, 2024, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2024, costs of $2,000,000 were incurred, with estimated costs of $4,000,000 yet to be incurred. Billings o

> On February 1, 2024, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2024, costs of $2,000,000 were incurred with estimated costs of $4,000,000 yet to be incurred. Billings of

> On June 15, 2024, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $220 million. The expected completion date is April 1, 2026, just in time for the 2026 baseball season. Costs inc

> In 2024, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2021. The machine’s useful life was expected to be five years with no residual value. Straight-line d

> Assume Avaya contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Required: 1. Compute the amount of revenue and gross prof

> Ski West, Inc., operates a downhill ski area near Lake Tahoe, California. An all-day adult lift ticket can be purchased for $85. Adult customers also can purchase a season pass that entitles the pass holder to ski any day during the season, which typical

> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 8% for bonds of simil

> Loreal-American Corporation purchased several marketable securities during 2024. At December 31, 2024, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2023, and all are considered securities a

> Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The company’s fiscal year ends on December 31. The following selecte

> Mills Corporation acquired as an investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills p

> Tanner-UNF Corporation acquired as an investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Ta

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Required: 1. What is the specific eight-digit Codification citation (XXX-XX-XX-X) that describes examples of circumstances under w

> FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment objectives. The following selected transactions relate to FF&€™s investment activities during the last two months of 202

> Rell Corporation reports under IFRS No. 9. Rell has an investment in Tirish, Inc., bonds that Rell accounts for at amortized cost, given that the bonds pay only interest and principal and Rell’s business purpose is to hold the bonds to maturity. Rell pur

> In 2024, the Barton and Barton Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2023, B & B’s inventories were $32 million (FIFO). B & B’s records indicated that the inventories would have t

> Assume all of the same facts and scenarios as E 12–30, except that Bloom Corporation classifies its Taylor investment as AFS. Required: 1. For each of the scenarios shown in E 12–30, prepare the appropriate entry(s) at December 31, 2024. Indicate how the

> Bloom Corporation purchased $1,000,000 of Taylor Company 5% bonds, at their face amount, with the intent and ability to hold the bonds until they matured in 2028, so Bloom classifies its investment as HTM. Unfortunately, a combination of problems at Tayl

> Edible Chemicals Corporation owns a $4 million whole life insurance policy on the life of its CEO, naming Edible Chemicals as beneficiary. The annual premiums are $70,000 and are payable at the beginning of each year. The cash surrender value of the poli

> As a long-term investment at the beginning of the 2024 fiscal year, Florists International purchased 30% of Nursery Supplies Inc.’s 8 million shares of capital stock for $56 million. The fair value and book value of the shares were the same at that time.

> Colah Company purchased $1 million of Jackson, Inc., 5% bonds at their face amount on July 1, 2024, with interest paid semi-annually. The bonds mature in 20 years but Colah planned to keep them for less than three years, and classified them as available

> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired, Tanner-UNF decid

> On July 1, 2024, Gupta Corporation bought 25% of the outstanding common stock of VB Company for $100 million cash, giving Gupta the ability to exercise significant influence over VB’s operations. At the date of acquisition of the stock, VB’s net assets h

> On January 1, 2024, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Company for $300 million cash, giving Cameron the ability to exercise significant influence over Lake’s operations. At the date of acquisition of the stock,

> Fizer Pharmaceutical paid $68 million on January 2, 2024, for 4 million shares of Carne Cosmetics common stock. The investment represents a 25% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne’s

> Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of si

> On January 1, 2024, Farmer Fabrication issued stock options for 100,000 shares to a division manager. The options have an estimated fair value of $6 each. To provide additional incentive for managerial achievement, the options are not exercisable unless

> On December 12, 2024, an equity investment costing $80,000 was sold for $100,000. The investment was carried in the balance sheet at $75,000, and was accounted for under the equity method. An error was made in which the total of the sale proceeds was cre

> As a long-term investment at the beginning of the 2024 fiscal year, Florists International purchased 30% of Nursery Supplies Inc.’s 8 million shares for $56 million. The fair value and book value of the shares were the same at that time. During the year,

> The investments of Harlon Enterprises included the following cost and fair value amounts ($ in millions): Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation shares on June 1, 20

> The accounting records of Jamaican Importers, Inc., at January 1, 2024, included the following: No changes occurred during 2024 in the investment portfolio. Required: Prepare appropriate adjusting entry(s) at December 31, 2024, assuming the fair value of

> On January 2, 2024, Sanborn Tobacco Inc. bought 5% of Jackson Industry’s capital stock for $90 million. Jackson Industry’s net income for the year ended December 31, 2024, was $120 million. The fair value of the shares held by Sanborn was $98 million at

> On March 31, 2024, Chow Brothers, Inc., bought 10% of KT Manufacturing’s capital stock for $50 million. KT’s net income for the year ended December 31, 2024, was $80 million. The fair value of the shares held by Chow was $35 million at December 31, 2024.

> At December 31, 2024, Hull-Meyers Corp. had the following investments that were purchased during 2024, its first year of operations: // No investments were sold during 2024. All securities except Security D and Security F are considered short term invest

> Colah Company purchased $1 million of Jackson, Inc., 5% bonds at par on July 1, 2024, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2024, the Jackson bonds had

> Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 4% for bonds of similar ri

> Refer to the situation described in BE 19–8. Suppose that Farmer initially estimates that it is not probable the goal will be achieved, but then after one year, Farmer estimates that it is probable that divisional revenue will increase by 5% by the end o

> Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds

> Dower Corporation prepares its financial statements according to IFRS. On March 31, 2024, the company purchased equipment for $240,000. The equipment is expected to have a six-year useful life with no residual value. Dower uses the straight-line deprecia

> On June 30, 2024, Rosetta Granite purchased equipment for $120,000. The estimated useful life of the equipment is eight years and no residual value is anticipated. An important component of the equipment is a specialized highspeed drill that will need to

> On March 31, 2024, Susquehanna Insurance purchased an office building for $12,000,000. Based on their relative fair values, one-third of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased se

> For each of the following depreciable assets, determine the missing amount (?). Abbreviations for depreciation methods are SL for straight-line and DDB for double-declining-balance. Property, Plant, and Equipment and Intangible Assets: Utilization and Di

> Tristen Company purchased a five-story office building on January 1, 2022, at a cost of $5,000,000. The building has a residual value of $200,000 and a 30-year life. The straight-line depreciation method is used. On June 30, 2024, construction of a sixth

> On January 1, 2024, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and the estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Requir

> On January 1, 2024, the general ledger of Parts Unlimited included the following account balances: From January 1 to December 31, the following summary transactions occurred: a. Purchased inventory on account, $325,800. b. Sold inventory on account, $567

> On January 1, 2024, the general ledger of TNT Fireworks included the following account balances: During January 2024, the following transactions occurred: Jan. 1 Purchased equipment for $19,500. The company estimates a residual value of $1,500 and a five

> Cadillac Construction Company uses the retirement method to determine depreciation on its small tools. During 2022, the first year of the company’s operations, tools were purchased at a cost of $8,000. In 2024, tools originally costing $2,000 were sold f

> Refer to the situation described in BE 19–8. Suppose that after one year, Farmer estimates that it is not probable that divisional revenue will increase by 5% in three years. What journal entry will be needed to account for the options in 2025?

> On September 30, 2022, Leeds LTD. acquired a patent in conjunction with the purchase of another company. The patent, valued at $6 million, was estimated to have a 10-year life and no residual value. Leeds uses the straight-line method of amortization for

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Determine each of the following: 1. The specific eight-digit Codification citation (XXX-XX-XX-X) that discusses depreciation as a

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Determine each of the following: Required: 1. The topic number (Topic XXX) that provides guidance on accounting for the impairment

> On May 28, 2024, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $420 million. The fair value of Harman’s identifiable tangible and intangible assets totaled $512 million, and the fair value of liabil

> Refer to the situation described in E 11–31, requirement 1. Alliant prepares its financial statements according to IFRS, and Center point is considered a cash-generating unit. Assume that Center point’s fair value of $220 million approximates fair value

> In 2022, Alliant Corporation acquired Center point Inc. for $300 million, of which $50 million was allocated to goodwill. At the end of 2024, management has provided the following information for a required goodwill impairment test: Required: 1. Determin

> General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for

> On October 1, 2024, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and the estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Requir

> Collinsworth LTD, a U.K. company, prepares its financial statements according to International Financial Reporting Standards. Late in its 2024 fiscal year, a significant adverse change in business climate indicated to management that the assets of its ap

> Refer to the situation described in E 11–27. Required: How might your solution differ if Chadwick Enterprises, Inc., prepares its financial statements according to International Financial Reporting Standards? Assume that the fair value amount given in th

> On January 1, 2024, Farmer Fabrication issued stock options for 100,000 shares to a division manager. The options have an estimated fair value of $6 each. To provide additional incentive for managerial achievement, the options are not exercisable unless

> Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company’s manageme

> In 2024, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of equipment purchased on January 1, 2021. The equipment’s life was expected to be five years with no residual value. Straight-line deprec

> For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2021 for $2,560,000. Its useful life was estimated to be six years, with a $160,000 residual value. A

> Alteran Corporation purchased office equipment for $1.5 million at the beginning of 2022. The equipment is being depreciated over a 10-year life using the double-declining-balance method. The residual value is expected to be $300,000. At the beginning of

> Wardell Company purchased a minicomputer on January 1, 2022, at a cost of $40,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $4,000. On January 1, 2024, the estimate o

> Saint John Corporation prepares its financial statements according to IFRS. On June 30, 2024, the company purchased a franchise for $1,200,000. The franchise is expected to have a 10-year useful life with no residual value. Saint John uses the straight-l

> Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the patent on a straight-line basis since 2020, when it was acquired at a cost of $9 million at the beginning of that year. Due to rapid technological

> On January 2, 2024, David Corporation purchased a patent for $500,000. The remaining legal life is 12 years, but the company estimated that the patent will be useful only for eight years. In January 2026, the company incurred legal fees of $45,000 in suc

> On January 1, 2024, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and the estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Requi

> Janes Company provided the following information on intangible assets: a. A patent was purchased from the Lou Company for $700,000 on January 1, 2022. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou&

> At the end of the first year of operations, Gaur Manufacturing had gross accounts receivable of $300,000. Gaur’s management estimates that 6% of the accounts will prove uncollectible. What journal entry should Gaur record to establish an allowance for un

> Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2024 for the mining site and spent an additional $600,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately fo

> At the beginning of 2024, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000. After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operations were constructed and completed on M

> On April 17, 2024, the Loadstone Mining Company purchased the rights to a copper mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the copper totaled $4,500,000. The company expects to extract 900,000 tons of

> On January 2, 2024, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $30,625. The expenditures made to acquire the asset were as follows

> Highsmith Rental Company purchased an apartment building early in 2024. There are 20 apartments in the building and each is furnished with major kitchen appliances. The company has decided to use the group depreciation method for the appliances. The foll

> On March 31, 2024, management of Quality Appliances committed to a plan to sell equipment. The equipment was available for immediate sale, and an active plan to locate a buyer was initiated. The equipment had been purchased on January 1, 2022, for $260,0

> Howarth Manufacturing Company purchased equipment on June 30, 2020, at a cost of $800,000. The residual value of the equipment was estimated to be $50,000 at the end of a five-year life. The equipment was sold on March 31, 2024, for $170,000. Howarth use

> On July 1, 2019, Farm Fresh Industries purchased a specialized delivery truck for $126,000. At the time, Farm Fresh estimated the truck to have a useful life of eight years and a residual value of $30,000. On March 1, 2024, the truck was sold for $58,000

> Mercury Inc. purchased equipment in 2022 at a cost of $400,000. The equipment was expected to produce 700,000 units over the next five years and have a residual value of $50,000. The equipment was sold for $210,000 part way through 2024. Actual productio

> On January 1, 2024, the Excel Delivery Company purchased a delivery van for $33,000. At the end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year period, the company expects to drive the van 100,000 mi

> Refer to the situation described in BE 7–6. Prepare the year-end adjusting journal entries to account for anticipated sales returns, assuming that all sales are made on credit and all accounts receivable are outstanding.

> The income statement and the cash flows from operating activities section of the statement of cash flows are provided below for Synergic Company. The merchandise inventory account balance neither increased nor decreased during the reporting period. Syner

> The statement of retained earnings of Gary Larson Publishers is presented below. Required: For the transactions that affected Larson’s retained earnings, reconstruct the journal entries that can be used to determine cash flows to be re

> On January 1, 2024, Corporal Enterprises bought 20% of the outstanding common stock of Chen Construction Company for $600 million cash. Chen’s net income for the year ended December 31, 2024, was $300 million. During 2024, Chen declared

> Nery Foods Corporation leased a commercial food processor on September 30, 2024. The five-year finance lease agreement calls for Nery to make quarterly lease payments of $195,774, payable each September 30, December 31, March 31, June 30, with the first