Question: Refer to the situation described in BE

> At December 31, 2023 and 2024, Funk & Noble Corporation had outstanding 820 million shares of common stock and 2 million shares of 8%, $100 par value cumulative preferred stock. No dividends were declared on either the preferred or common stock in 2023 o

> Refer to the information in BE 10–6. Now assume that instead of purchasing the patent, Advanced Technologies spent $1,200,000 to develop the patent internally, consisting of personnel ($800,000), equipment ($300,000), and materials ($100,000). All additi

> McDonnell-Myer Corporation reported net income of $741 million. The company had 544 million common shares outstanding at January 1 and sold 36 million shares on February 28. As part of an annual share repurchase plan, 6 million shares were retired on Apr

> Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2024, that permit executives to purchase 12 million of the company’s $1 par common shares within the next six years, but not before December 31, 2026 (th

> On January 1, 2024, Medical Transport Company’s accumulated postretirement benefit obligation was $25 million. At the end of 2024, retiree benefits paid were $3 million. Service cost for 2024 is $7 million. Assumptions regarding the trend of future heal

> Prince Distribution Inc. has an unfunded postretirement benefit plan. Medical care and life insurance benefits are provided to employees who render 10 years’ service and attain age 55 while in service. At the end of 2024, Jim Luka wits is 31. He was hire

> Craned Corp had been a very profitable company until the current tax year, in which it generated an NOL because a competitor launched a product that is much better than Grand’s. Craned recognized a deferred tax asset associated with the NOL carry forward

> Hwang Inc. had taxable income of $100,000 in 2017, no income or loss in 2018 and 2019, and an NOL of $50,000 in 2020. The applicable tax rate was 40% in 2017 and 25% in 2018 and thereafter. Prepare the journal entry that Hwang would make in 2020, assumin

> Loss Co reported a net operating loss of $25 million for financial reporting and tax purposes. Taxable income last year and the previous year, respectively, was $20 million and $15 million. The enacted tax rate each year is 25%. Assume that Loss Co quali

> Superior Developers sells lots for residential development. When lots are sold, Superior recognizes income for financial reporting purposes in the year of the sale. For some lots, Superior recognizes income for tax purposes when the cash is collected. In

> J-Matt, Inc., had pretax accounting income of $291,000 and taxable income of $300,000 in 2024. The only difference between accounting and taxable income is estimated product warranty costs of $9,000 for sales in 2024. Warranty payments are expected to b

> A company reports 2024 pretax accounting income of $10 million, but because of a single temporary difference, taxable income is only $7 million. No temporary differences existed at the beginning of the year, and the tax rate is 25%. Prepare the appropria

> On March 17, Advanced Technologies purchased a patent related to laser surgery techniques. The purchase price of the patent is $1,200,000. The patent is expected to benefit the company for the next five years. The company had the following additional cos

> On January 1, 2024, Jaspers Corporation leased equipment under a finance lease designed to earn the lessor a 12% rate of return for providing long-term financing. The lease agreement specified ten annual payments of $75,000 beginning January 1 and each D

> Manning Imports is contemplating an agreement to lease equipment to a customer for five years. Manning normally sells the asset for a cash price of $100,000. Assuming that 8% is a reasonable rate of interest, what must be the amount of quarterly lease pa

> At March 13, 2025, the Securities Exchange Commission is in the process of investigating a possible securities law violation by Now Chemical. The SEC has not yet proposed a penalty assessment. Now’s fiscal year ends on December 31, 2024, and its financia

> Das Medical introduced a new implant that carries a five-year warranty against manufacturer’s defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 1% of sales. Sales were $15 million and act

> Flexner Company is in the process of refinancing some long-term debt. Its fiscal year ends on December 31, 2024, and its financial statements will be issued on March 15, 2025. Under current IFRS, how would the debt be classified if the refinancing is com

> Coulson Company is in the process of refinancing some long-term debt. Its fiscal year ends on December 31, 2024, and its financial statements will be issued on March 15, 2025. Under current U.S. GAAP, how would the debt be classified if the refinancing i

> Consider the following liabilities of Future Brands, Inc., at December 31, 2024, the company’s fiscal year-end. Should they be reported as current liabilities or long-term liabilities? 1. $77 million of 8% notes are due on May 31, 2028. The notes are cal

> During December, Rainey Equipment made a $600,000 credit sale. The state sales tax rate is 6% and the local sales tax rate is 1.5%. Prepare the appropriate journal entry.

> In Lizzie Shoes’ experience, gift cards that have not been redeemed within 12 months are not likely to be redeemed. Lizzie Shoes sold gift cards for $18,000 during August 2024. $4,000 of cards were redeemed in September 2024, $3,000 in October, $2,500 in

> On December 12, 2021, Park Electronics received $24,000 from a customer toward a cash sale of $240,000 of diodes to be completed on January 16, 2025. What journal entries should Park record on December 12 and January 16?

> In March 2024, Price Company began developing a new software system to be used internally for managing its inventory. The software integrates customer orders with inventory on hand to automatically place orders for additional inventory when needed. The s

> 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, 20

> Wang Corporation issued $12 million of commercial paper on March 1 on a nine-month note. Interest was discounted at issuance at a 9% discount rate. Prepare the journal entry for the issuance of the commercial paper and its repayment at maturity.

> Refer to the situation described in BE 5–8. Suppose the opportunity requires you to invest $13,200 today. What is the interest rate you would earn on this investment?

> You have an investment opportunity that promises to pay you $16,000 in four years. You could earn a 6% annual return investing elsewhere. What is the maximum amount you would be willing to invest in this opportunity?

> You believe you have discovered a new medical device. You anticipate it will take additional time to get the device fully operational, run clinical trials, obtain FDA approval, and sell to a buyer for $250,000. Assume a discount rate of 7% compounded ann

> You have entered into an agreement for the purchase of land. The agreement specifies that you will take ownership of the land immediately. You have agreed to pay $50,000 today and another $50,000 in three years. Calculate the total cost of the land today

> Refer to the situation described in BE 5–4. Assume that the trip will cost $26,600. What interest rate, compounded annually, must be earned to accumulate enough to pay for the trip?

> Suppose a husband wants to take his wife on a trip three years from now to Europe to celebrate their 40th anniversary. He has just received a $20,000 inheritance from an uncle and intends to invest it for the trip. The husband estimates the trip will cos

> You are saving for a new boat. You place $25,000 in an investment account today that earns 6% compounded annually. How much will be in the account after (a) three years, (b) four years, or (c) five years?

> On September 30, 2024, a company leased a warehouse. Terms of the lease require 10 annual lease payments of $55,000 with the first payment due immediately. Accounting standards require the company to record a lease liability when recording this type of l

> You are saving for a new car. You place $10,000 into an investment account today. How much will you have after four years if the account earns (a) 4%, (b) 6%, or (c) 8% compounded annually?

> In February 2024, Culverson Company began developing a new software package to be sold to customers. The software allows people to enter health information and daily eating and exercise habits to track their health status. The project was completed in No

> On December 31, 2024, a company issued 6% stated rate bonds with a face amount of $100 million. The bonds mature on December 31, 2054. Interest is payable annually on each December 31, beginning in 2025. Determine the price of the bonds on December 31, 2

> Refer to the situation described in BE 5–16. What amount did the company borrow, assuming that the first of the five annual $10,000 payments was not due for three years?

> Refer to the situation described in BE 5–16. What amount did the company borrow, assuming that the first $10,000 payment was due immediately?

> A company borrowed money from a local bank. The note the company signed requires five annual installment payments of $10,000 beginning one year from today. The interest rate on the note is 7%. What amount did the company borrow?

> You have been issued a patent giving you exclusive rights to sell a new type of software. You believe the patent will produce sales of $200,000 each year as long as the software remains in demand. Assume a discount rate of 7% compounded annually. What is

> You have entered into an agreement to purchase a local accounting firm. The agreement specifies you will pay the seller $150,000 each year for six years. What is the cost today of the purchase, assuming a discount rate of (a) 8%, (b) 10%, or (c) 12%?

> Refer to the situation described in BE 5–12. How much will accumulate in three years by depositing $500 at the beginning of each of the next 12 quarters?

> You would like to contribute to a savings account over the next three years in order to accumulate enough money to take a trip to Europe. Assuming an interest rate of 4%, compounded quarterly, how much will accumulate in three years by depositing $500 at

> You want to buy a nice road bike. You place $3,000 each year in an investment account that earns 8% compounded annually. How much will be in the account after (a) two years, (b) three years, or (c) four years

> You are saving for a new house. You place $40,000 into an investment account each year for five years. How much will you have after five years if the account earns (a) 3%, (b) 6%, or (c) 9% compounded annually?

> Huebert Corporation and Winslow Corporation reported the following information: Calculate each companies fixed-asset turnover ratio and determine which company utilizes its fixed assets most efficiently to generate sales.

> You have two investment opportunities. The interest rate for both investments is 8%. Interest on the first investment will compound annually, while interest on the second will compound quarterly. Which investment opportunity should you choose? Why?

> Refer to the situation described in BE 4–8. Assume instead that the estimated fair value of the segment’s assets, less costs to sell, on December 31 was $7 million rather than $10 million. Prepare the lower portion of the 2024 income statement beginning

> On December 31, 2024, the end of the fiscal year, California Micromesh Corporation completed the sale of its semiconductor business for $10 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. Consider the

> On December 31, 2024, the end of the fiscal year, Revolutionary Industries completed the sale of its robotics business for $9 million. The robotics business segment qualifies as a component of the entity, according to GAAP. Consider the following additio

> The following are partial income statement account balances taken from the December 31, 2024, year-end trial balance of White and Sons, Inc.: restructuring costs, $300,000; interest revenue, $40,000; before-tax loss on discontinued operations, $400,000;

> The following is a partial year-end adjusted trial balance. Income tax expense has not yet been recorded. The income tax rate is 25%. Determine the following: (a) operating income (loss), (b) income (loss) before income taxes, and (c) net income (loss).

> Refer to the situation described in BE 4–1. Using the account balances, prepare a multiple-step income statement. An example of a multiple-step income statement can be found in Illustration 4–4 of this chapter.

> Refer to the situation described in BE 4–1. If the company’s accountant prepared a multiple-step income statement, what amount would appear in that statement for (a) operating income and (b) no operating income?

> Refer to the situation described in BE 4–11. Prepare the cash flows from investing and financing activities sections of HHC’s statement of cash flows

> Diamond Corporation acquired a patent in exchange for 50,000 shares of the company’s no-par common stock. On the date of the exchange, the common stock had a fair value of $22 per share. Determine the cost of the patent.

> The adjusted trial balance of Pacific Scientific Corporation on December 31, 2024, the end of the company’s fiscal year, contained the following income statement items ($ in millions): sales revenue, $2,106; cost of goods sold, $1,240; selling expense, $

> During 2024, Rogue Corporation reported net sales of $600,000. Inventory at both the beginning and end of the year totaled $75,000. The inventory turnover ratio for the year was 6.0. What amount of gross profit did the company report in its 2024 income s

> Refer to the facts described in BE 4–16. Show the DuPont framework’s calculation of the three components of the 2024 return on equity for Circuit TV and Appliance.

> The 2024 income statement for Circuit TV and Appliance reported net sales of $420,000 and net income of $65,000. Average total assets for 2024 was $800,000. Shareholders’ equity at the beginning of the year was $500,000, and $20,000 was paid to sharehold

> Net income of Trout Company was $45,000. The accounting records reveal depreciation expense of $80,000 as well as increases in prepaid rent, salaries payable, and income taxes payable of $60,000, $15,000, and $12,000, respectively. Prepare the cash flows

> At the end of 2024, Barker Corporation’s preliminary trial balance indicated a current ratio of 1.2. Management is contemplating paying some of its accounts payable balance before the end of the fiscal year. Determine whether the effect of this transacti

> Refer to the trial balance information in BE 3–5. Calculate the (a) current ratio, (b) acid-test ratio, and (c) debt to equity ratio.

> If the adjusting entries prepared in BE 2–11 were not recorded, would net income be higher or lower and by how much?

> Post the journal entries prepared in BE 2–8 to T-accounts. Assume that the opening balances in each of the accounts is zero except for cash, accounts receivable, and accounts payable that had opening balances of $65,000, $43,000, and $22,000, respectivel

> Prepare journal entries for each of the transactions listed in BE 2–7.

> On September 30, 2024, Crown Corporation purchased franchise rights from a national restaurant chain. In payment, Crown has the option of paying $356,000 immediately or $400,000 in two years by signing a noninterest- bearing note. Crown chooses the optio

> Post the following transactions to the Cash T-account and calculate the ending balance. The beginning balance in the Cash T-account is $5,000. 1. Receive cash from customers, $15,000. 2. Pay cash for employee salaries, $9,000. 3. Pay cash for rent, $3,00

> Prepare journal entries for each of the following transactions: 1. Issue common stock for $21,000. 2. Obtain $9,000 loan from the bank by signing a note. 3. Purchase construction equipment for $25,000 cash. 4. Purchase advertising for the current month f

> Prepare journal entries for each of the following transactions: 1. Pay $700 for radio advertising for the current month. 2. Purchase supplies of $1,300 on account. 3. Provide services of $2,900 to customers and receive cash. 4. Pay employee salaries for

> Prepare journal entries for each of the following transactions: 1. Purchase equipment in exchange for cash of $23,400. 2. Provide services to customers and receive cash of $6,800. 3. Pay the current month’s rent of $1,300. 4. Purchase office supplies on

> Analyze each of the following transactions and show the effect on the accounting equation. 1. Issue 10,000 shares of common stock in exchange for $32,000 in cash. 2. Purchase land for $19,000. A note payable is signed for the full amount. 3. Purchase equ

> For each situation, determine the date for which the company recognizes the expense under (a) accrual-basis accounting and (b) cash-basis accounting. 1. American Airlines operates a flight from Dallas to Los Angeles on August 16. The pilots’ salaries ass

> For each situation, determine the date for which the company recognizes the revenue under (a) accrual-basis accounting and (b) cash-basis accounting. 1. American Airlines collects cash on June 12 from the sale of a ticket to a customer. The flight occurs

> The year-end adjusted trial balance of the Tool and Die Corporation included the following account balances: retained earnings, $220,000; dividends, $12,000; sales revenue, $850,000; cost of goods sold, $580,000; salaries expense, $180,000; rent expense,

> The following account balances were taken from the 2024 post-closing trial balance of the Bowler Corporation: cash, $5,000; accounts receivable, $10,000; inventory, $16,000; equipment, $100,000; accumulated depreciation, $40,000; accounts payable, $20,00

> The following account balances were taken from the 2024 adjusted trial balance of the Bowler Corporation: sales revenue, $325,000; cost of goods sold, $168,000; salaries expense, $45,000; rent expense, $20,000; depreciation expense, $30,000; and miscella

> 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 provided in Connect. This ma

> Prepare the necessary adjusting entries for Digital Controls at the end of its December 31, 2024, fiscal year-end for each of the following situations. No adjusting entries were recorded during the year. 1. On March 31, 2024, the company lent $50,000 to

> If the adjusting journal entries prepared in BE 2–13 were not recorded, would assets, liabilities, and shareholders’ equity on the December 31, 2024, balance sheet be higher or lower and by how much?

> Prepare the necessary adjusting entries on its year-end of December 31, 2024, for the Jingle Corporation for each of the following situations. No adjusting entries were recorded during the year. 1. On December 10, 2024, Jingle received a $4,000 payment f

> Analyze each of the following transactions and show the effect on the accounting equation. 1. Provide services to customers on account for $50,000. 2. Purchase equipment by signing a note with the bank for $35,000. 3. Repay $10,000 of the note in 2 above

> On January 1, 2024, Hodge Beanery received $8,000 from the Kennedy Company in exchange for a coffee roaster that it will deliver to Kennedy on December 31, 2024. Assuming that Hodge views the time value of money to be a significant component of this tran

> On January 1, 2024, Wooten Technology Associates sold computer equipment to the Denison Company. Delivery was made on January 1, 2024, but payment for the equipment of $10,000 is not due until December 31, 2024. Assuming that Wooten views the time value

> Finerly Corporation sells cosmetics through a network of independent distributors. Finerly shipped cosmetics to its distributors and is considering whether it should record $300,000 of revenue upon shipment of a new line of cosmetics. Finerly expects the

> In January 2024, Continental Fund Services, Inc., enters into a one-year contract with a client to provide investment advisory services. The company will receive a management fee, prepaid at the beginning of the contract, that is calculated as 1% of the

> Aria Perfume, Inc., sold 3,210 boxes of white musk soap during January of 2024 at the price of $90 per box. The company offers a full refund to unsatisfied customers for any product returned within 30 days from the date of purchase. Based on historical e

> On January 1, 2024, Lego Construction Company signed a contract to build a custom garage for a customer and received $10,000 in advance for the job. The new garage will be built on the customer’s land. To complete this project, Lego must first build a co

> 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

> Precision Equipment, Inc., specializes in designing and installing customized manufacturing equipment. On February 1, 2024, it signs a contract to design a fully automated wristwatch assembly line for $2 million, which will be settled in cash upon comple

> On May 1, 2024, Varga Tech Services signed a $6,000 consulting contract with Shaffer Holdings. The contract requires Varga to provide computer technology support services whenever requested over the period from May 1, 2024, to April 30, 2025, with Shaffe

> Refer to the situation described in BE 6–33. Assume that the building was completed during the second year, and construction costs incurred during the second year were $10 million. How much revenue and gross profit or loss will the company recognize in t

> As of December 31, 2024, Cady Construction has one construction job for which the construction in progress (CIP) account has a balance of $20,000, and the billings on the construction contract account has a balance of $14,000. Cady has another constructi

> GoodBuy sells gift cards redeemable for GoodBuy products either in store or online. During 2024, GoodBuy sold $1,000,000 of gift cards, and $840,000 of the gift cards were redeemed for products. As of December 31, 2024, $30,000, of the remaining gift car

> Kerianne paints landscapes, and in late 2024 placed four paintings with a retail price of $250 each in the Holmstrom Gallery. Kerianne’s arrangement with Holmstrom is that Holmstrom will earn a 20% commission on paintings sold to gallery patrons. As of D

> Dowell Fishing Supply, Inc., sold $50,000 of Dowell Rods on December 15, 2024, to Bassadrome. Because of a shipping backlog, Dowell held the inventory in Dowell’s warehouse until January 12, 2025 (having assured Bassadrome that it would deliver sooner if

> Top Chop sells hairstyling franchises. Top Chop receives $50,000 from a new franchisee for providing initial training, equipment, and furnishings that have a stand-alone selling price of $50,000. Top Chop also receives $30,000 per year for use of the Top

> Assume the same facts as in BE 6–25. How much revenue will Saar recognize in 2024 under this arrangement if Saar reports under IFRS?

> Assume the same facts as in BE 6–24 except that the trade name “Saar Associates” is not well known in the market place, and the owner provides no advertising or other benefits to a licensee of the Saar Associates trade name during the license period. How