Samwall Ltd. needed funding to bridge the gap between paying its suppliers and collecting its receivables. As such, Samwall issued a $300,000, four-year, 8% note at face value to Easy Loan Bank on January 1, 2017 and received $300,000 cash. The note requires annual interest payments each December 31. Prepare Samwall’s journal entries to record (a) the note issuance and (b) the December 31, 2017 interest payment.
> Refer to the information in E19-16 and assume Opsco applies IFRS. Instructions: Complete a post-retirement work sheet for 2017, and prepare all required journal entries related to the plan made by Opsco in 2017. Data from E19-16: Opsco Corp. provides
> Refer to BE16-12. Assume that Bantry Capital Ltd. follows ASPE and valued the debt component of the instruments first, applying the residual to the equity component. On a date when the bonds had a carrying value of $489,100 and fair value of $492,370, Ba
> Refer to BE16-12. Assume that Bantry Capital Ltd. follows IFRS and recorded the issuance of the bonds and warrants accordingly. On a date when the bonds had a carrying value of $489,100, Bantry paid $14,000 to the bondholders to induce early conversion.
> Refer to BE16-12 but assume that the instruments are convertible bonds and that they have now been converted. Assume that Bantry Capital Ltd. follows ASPE, and that all of the proceeds were allocated to the debt component upon initial recognition. At the
> Bantry Capital Ltd. issued 500 $1,000 bonds at 103. Each bond was issued with 10 detachable stock warrants. After issuance, similar bonds were sold at 97, and the warrants had a fair value of $2.50. (a) Record the issuance of the bonds and warrants assum
> On January 1, 2017, MacGregor Ltd. issued 1,000 five-year, 10% convertible bonds at par of $1,000, with interest payable each December 31. Each bond is convertible into 100 common shares, and the current fair value of each common share is $6 per share. S
> During 2017, Genoa Limited issued retractable preferred shares. The shares may be presented to the company by the holder for redemption after 2020. Explain how these should be presented in the financial statements under IFRS and ASPE.
> Sometimes an entity issues financial instruments that require settlement using its own shares. Examples of these include purchased or written options to buy or sell its own shares, or forward contracts to buy or sell its own shares. Explain the accountin
> Abourawes Services Inc. issued 1,000 $2 convertible preferred shares at $75 and 5,000 common shares at $25 each in 2016. Each preferred share is convertible into three common shares. On March 15, 2017, preferred shareholders converted 200 preferred share
> Maple Leaf Foods Inc. is a Canadian company that produces food products such as prepared meats, ready-to-cook and ready-to-serve meals, and fresh pork and poultry. While most of Maple Leaf Foods’ business is conducted in Canada, it also generates revenue
> Spencer Limited has 50,000 common shares outstanding, with an average issue price per share of $8. On August 1, 2017, the company reacquired and cancelled 600 shares at $40 per share. There was contributed surplus of $0.25 per share at the time of the re
> Opsco Corp. provides the following information about its post-retirement health care benefit plan for the year 2017: Current service cost…………………………………………………………………………$ 202,500 Contribution to the plan………………………………………………………………………..47,250 Actual return on p
> Higgins Inc. has 52,000 common shares outstanding. The shares have an average cost of $21 per share. On July 1, 2017, Higgins reacquired 800 shares at $56 per share and retired them. Assume no contributed surplus balances exist from previous share repurc
> Platinum Corporation issued 4,000 of its common shares for $66,000. The company also incurred $1,700 of costs associated with issuing the shares. Prepare a single combined journal entry to record the issuance of the company’s shares.
> On March 1, Kramers Inc. sells 1,000 common shares to its employees at $25 per share and lends the money to the employees to buy the new shares. The employees pay 50% of the price on the transaction date and pay the balance in one year. (a) Prepare the c
> Bonata Inc. sells 1,400 common shares on a subscription basis at $65 per share on June 1 and accepts a 45% down payment. On December 1, Bonata collects the remaining 55% and issues the shares. Prepare the company’s journal entries.
> Walter Corporation has three classes of shares: Series A, Series B, and Class A. How should Walter classify and present the different classes if the characteristics of each class are as follows? Series A shares The shares are mandatorily redeemable and c
> Henry Corporation sells home entertainment systems. The corporation also offers to sell its customers a two-year warranty contract as a separate service. During 2017, Henry sold 20,000 warranty contracts at $99 each. The corporation spent $180,000 servic
> Refer to the information for Jupiter Corp. in BE13-25. (a) Prepare entries for the warranty that recognize the sale as a multiple deliverable with the warranty as a separate service that Jupiter bundled with the selling price of the product. Sales in 201
> Sports International had total debt of $500,000 and $750,000 as at December 31, 2017 and December 31, 2016, respectively, of which $100,000 and $150,000 was current. In addition, the company had total assets of $900,000 and $700,000 as at December 31, 20
> Ambrosia Limited has the following balances as at December 31, 2017: accounts payable and accrued liabilities $20,000, wages payable $15,000, severance payable (due September 30, 2019) $15,000, and bonds payable of $140,000 due September 30, 2020 (curren
> Davida Limited started operations in 2013. Although it has grown steadily, the company reported accumulated operating losses of $450,000 in its first four years in business. In the most recent year (2017), Davida appears to have turned the corner and rep
> Access the annual financial statements of Empire Company Limited for its year ended May 2, 2015 at www.sedar.com or the company’s website. Instructions: Review Empire Company Limited’s consolidated financial statements and provide answers to the followi
> Tsui Corporation went through a financial reorganization by writing down its buildings by $107,000 and eliminating its deficit, which was $182,000 before the reorganization. As part of the reorganization, the creditors agreed to take back 55% of the comm
> Use the information for Hanover Corporation in BE15-21. Assume now that the company resells the 1,000 treasury shares at $55 per share. Prepare the journal entries for the repurchase and subsequent sale of the treasury shares. Data from BE15-21: Hanove
> Hanover Corporation has 750,000 shares outstanding. The shares have an average cost of $45 per share. On September 5, 2017, the company repurchases 1,500 of its own shares at $75 per share and does not cancel them. The shares are classified as treasury s
> Sullivan Limited issued 2,000 shares of no par value common shares for $79,000. Prepare Sullivan’s journal entry if (a) the shares have no par value, and (b) the shares have a par value of $11 per share.
> List the types of dividends. Why do companies or investors have a preference for one or the other?
> Khalid Inc. has the following selected financial data: There were no preferred dividends in arrears. (a) Calculate the following ratios for 2017: (1) rate of return on common shareholders’ equity, (2) payout ratio, (3) price earnings
> The Sawgrass Corporation, a public company, reported the following balances at January 1, 2017: Common Shares (32,000 shares issued, unlimited authorized)…………………$ 800,000 Retained Earnings…………………………………………………………………………………1,500,000 Contributed Surplus……………
> Lu Corporation has the following account balances at December 31, 2017: Common Shares Subscribed………………………………………………..$ 250,000 Common Shares…………………………………………………………………….310,000 Subscriptions Receivable…………………………………………………………80,000 Retained Earnings………………………
> Use the information for Kindey Corporation from BE15-15. Assume instead that Kindey declared a 1-for-5 reverse stock split, and answer the same questions. Data from BE15-15: Kindey Corporation has 185,000 common shares outstanding with a carrying value
> Kindey Corporation has 185,000 common shares outstanding with a carrying value of $20 per share. Kindey declares a 4-for-1 stock split. (a) How many shares are outstanding after the split? (b) What is the carrying value per share after the split? (c) Wha
> The following facts apply to the pension plan of Yorke Inc. for the year 2017. Yorke applies ASPE. Plan assets, January 1, 2017……………………………………………………………….$490,000 Defined benefit obligation, funding basis, January 1, 2017………………………389,000 Defined benefit o
> Davis Inc. is a privately held company that uses ASPE. Davis had the following information available at March 31, 2017: Davis Inc.’s partial list of comparative account balances as at March 31, 2017 and 2016 is as follows: Additiona
> Access the audited annual financial statements of Goldcorp Inc. for its year ended December 31, 2014 from SEDAR (www.sedar.com) or the company’s website. Instructions: (a) Describe the business that Goldcorp Inc. operates in. (b) Identify the components
> Chadwick Corporation has 450,000 common shares outstanding. The corporation declares a 6% stock dividend when the common shares’ fair value is $30 per share. (Their carrying value is $18 per share.) Prepare the journal entries for the company for both th
> On April 20, Raule Mining Corp. declared a dividend of $400,000 that is payable on June 1. Of this amount, $150,000 is a return of capital. Raule had no contributed surplus on April 20. Prepare the April 20 and June 1 journal entries for Raule.
> Mallard Inc. owns shares of Oakwood Corporation that are classified as Mallard’s fair value through net income (FV-NI) investment portfolio and accounted for using the FV-NI model. At December 31, 2016, the securities were carried in Mallard’s accounting
> Martinez Ltd. has the following equity accounts at January 1, 2017. Preferred shares outstanding: 2,500 shares……………………………$ 62,500 Common shares outstanding: 4,000 shares…………………………….400,000 (a) What was the average issue price of the preferred shares? (
> Hamza Inc. declared a cash dividend of $0.60 per share on its 1.5 million outstanding shares. The dividend was declared on August 1 and is payable on September 9 to all shareholders of record on August 15. Prepare all necessary journal entries for those
> Explain the pros and cons of incorporating.
> Pflug Ltd. signed an instalment note on January 1, 2017 in settlement of an account payable of $40,000 owed to Mott Ltd. Pflug is able to borrow funds from its bank at 11%, whereas Mott can borrow at the rate of 10%. The note calls for two equal payments
> Big Country Corporation is in the business of selling cattle. Due to recent diseases plaguing cattle, Big Country is experiencing a cash shortage. Big Country issued a $280,000, six-year, zero-interest-bearing note to Little Town Corp. on January 1, 2017
> Brestovacki Corporation issued a $50,000, five-year, 5% note to Jernigan Corp. on January 1, 2017 and received a piece of equipment that normally sells for $38,912. The note requires annual interest payments each December 31. The market interest rate for
> Rosek Inc. provides the following information related to its post-retirement health care benefits for the year 2017: Defined post-retirement benefit obligation at January 1, 2017………………………………$110,000 Plan assets, January 1, 2017……………………………………………………………………
> Sophia Incorporated issued a $105,000, five-year, zero-interest-bearing note to Angelica Corp. on January 1, 2017 and received $52,000 cash. Sophia uses the effective interest method. (a) Using a financial calculator and computer spreadsheet functions, c
> Companies around the globe have moved to, or are in the process of moving to, IFRS. Evidence has shown that it is preferable to adopt IFRS in its entirety, with no deviations from the standards. This chapter shows how much the legal environment affects t
> On May 1, 2017, Jadeja Corporation, a publicly listed corporation, issued $200,000 of five-year, 8% bonds, with interest payable semi-annually on November 1 and May 1. The bonds were issued to yield a market interest rate of 6%. Jadeja uses the effective
> Buchanan Corporation issues $500,000 of 11% bonds that are due in 10 years and pay interest semi- annually. At the time of issue, the market rate for such bonds is 10%. Using time value of money tables, a financial calculator, and computer spreadsheet fu
> At December 31, 2017, Jelena Incorporated has a bond payable with a carrying value of $1,200,000 (based on amortized cost) due September 1, 2018 and a current value of $1,250,000. The interest payable as at December 31, 2017 is $25,000. Show how the abov
> On January 1, 2017, Steinem Corporation established a special purpose entity to buy $1 million of accounts receivable from Steinem. Investors have invested in the special purpose entity to benefit from the return on assets and certain tax advantages. The
> Lawrence Incorporated owes $100,000 to Ontario Bank Inc. on a two-year, 10% note due on December 31, 2017. The note was issued at par. Because Lawrence is in financial trouble, Ontario Bank agrees to extend the maturity date of the note to December 31, 2
> Assume that Theo Limited has a loan that is currently due at year end. The debt is being refinanced with a five-year loan and the deal to refinance the debt is signed two days after year end. How would the original loan be classified in the year-end stat
> Jensen & Jensen Incorporated, a telecommunications equipment manufacturer, has a debt to total assets ratio of 55%, while competing companies of similar size operating in the same industry have an average debt to total assets ratio of 62%. Jensen & Jense
> The following information is in regard to Saverio Corp.’s defined benefit pension plan. Defined benefit obligation, 1/1/17 (before amendment)………………………$239,000 Plan assets, 1/1/17……………………………………………………………………………….155,000 Discount rate……………………………………………………………
> On January 1, 2017, Jamil Incorporated redeemed bonds prior to their maturity date of January 1, 2018. The face value of the bonds was $800,000, and the redemption was performed at 97. As at the redemption date, the unamortized premium was $6,500. Prepar
> Hanson Incorporated issued $1 million of 7%, 10-year bonds on July 1, 2016 at face value. Interest is payable each December 31. The company has chosen to apply the fair value option in accounting for the bonds. A risk assessment at December 31, 2017 show
> BCE Inc., a well-known Canadian telecommunications and media company, has a December 31 year end. Access the company’s 2014 annual report from the company website or from www.sedar.com. Instructions: (a) What per share information has the company provid
> Travel In Style Limited issued $1,000,000 of 9% bonds on September 1, 2017 for $1,058,671. The term of the bonds is September 1, 2017 to September 1, 2025, with interest payable quarterly each December 1, March 1, June 1, and September 1. The company use
> Assume that the bonds in BE14-15 were issued for $644,632 and the effective interest rate was 6%. (a) Prepare the company’s journal entry for the January 1 issuance. (b) Prepare the company’s journal entry for the July 1 interest payment. (c) Prepare the
> On January 1, 2017, Quinton Corporation issued $600,000 of 7% bonds that are due in 10 years. The bonds were issued for $559,229 and pay interest each July 1 and January 1. The company uses the effective interest method. Assume an effective rate of 8%. (
> The City of Fram issued 100 bonds at their face value of $6,000 each plus accrued interest on June 1, 2017. The term of the bonds was January 1, 2017 to January 1, 2023, with interest payable semi-annually each January 1 and July 1 at 6%. Fram uses the e
> Assume that the bonds in BE14-11 were issued at 103. Assume also that Grenier Limited records the amortization using the straight-line method. Prepare the journal entries related to the bonds for (a) January 1, (b) July 1, and (c) December 31. Data from
> Assume that the bonds in BE14-11 were issued at 98. Assume also that Grenier Limited records the amortization using the straight-line method. Prepare the journal entries related to the bonds for (a) January 1, (b) July 1, and (c) December 31. Data from
> Grenier Limited issued $300,000 of 10% bonds on January 1, 2017. The bonds are due on January 1, 2022, with interest payable each July 1 and January 1. The bonds are issued at face value. Grenier uses the effective interest method. Prepare the company’s
> Griseta Limited sponsors a defined benefit pension plan for its employees, which it accounts for under ASPE. The following data relate to the operation of the plan for the year 2017: 1. The actuarial present value of future benefits earned by employees f
> Watson Corporation issued $500,000 of 8%, 10-year bonds on January 1, 2017 at face value. The bonds require annual interest payments each December 31. Costs associated with the bond issuance were $25,000. Watson follows ASPE and uses the straight-line me
> Lamanna Laundry Ltd. is a full-service laundry provider, focusing on high-end clientele. Lamanna Laundry has recently invested in new technology to improve efficiency. In order to finance the new technology, the company issued a 10-year bond on January 1
> Refer to the information for DeGroot Limited in BE13-8. Assume that the amounts include tax. Prepare the entries for DeGroot. Round amounts to the nearest cent. Data from BE13-8: DeGroot Limited conducts all of its business in a province with HST of 13
> Refer to the financial statements of Brookfield Asset Management Inc. for its year ended December 31, 2014, which are reproduced at the end of Volume 2 of this text, and for its year ended December 31, 2013 found at www.sedar.com or on the company’s webs
> DeGroot Limited conducts all of its business in a province with HST of 13%. Prepare the summary journal entry to record DeGroot’s sales for the month of July, during which customers purchased $37,500 of goods on account and a journal entry for the cash p
> Cartwright Springs Brewery Ltd. (CSB) operates a microbrewery and sells beer directly to customers, bars, and restaurants. CSB uses one-liter blue glass refillable bottles featuring a swing-top ceramic lid. The bottles cost CSB $4.90 each. CSB charges cu
> Takemoto Inc. borrowed $60,000 on November 1, 2017 by signing a $61,350, three-month, zero-interest-bearing note. (a) Using a financial calculator or Excel, calculate the effective interest charged on the note. (b) Prepare Takemoto’s November 1, 2017 ent
> Refer to the information for Upland Limited in BE13-4. Assume that Upland uses reversing entries. Prepare the 2018 journal entry(ies) for Upland. Data from BE13-4: Upland Limited borrowed $40,000 on November 1, 2017 by signing a $40,000, three-month, 9
> Upland Limited borrowed $40,000 on November 1, 2017 by signing a $40,000, three-month, 9% note. Prepare Upland’s November 1, 2017 entry; the December 31, 2017 annual adjusting entry; and the February 1, 2018 entry.
> Jupiter Corp. provides at no extra charge a two-year warranty with one of its products, which was first sold in 2017. In that year, Jupiter sold products for $2.5 million and spent $68,000 servicing warranty claims. At year end, Jupiter estimates that an
> The following information is available for Antoine Corporation’s pension plan for the 2017 fiscal year: Defined benefit obligation, 1/1/17, accounting basis, before plan amendment………….$255,000 Fair value of plan assets, 1/1/17………………………………………………………………………
> Cozy Home Inc. offers its customers two furnace maintenance services. One service is for a one-time cleaning and servicing of a home furnace at a cost of $100. Customers can earn a 5% discount from this price if they pay before Cozy’s calendar fiscal yea
> Refer to the information for Lu Corp. in BE13-20 and BE13-21. Assume that the increase in the asset retirement obligation in 2017 related to the production of oil in 2017 was $61,942. Prepare any necessary entries to record the increase in the asset reti
> Refer to the information for Lu Corp. in BE13-20. Prepare any necessary adjusting entries that are associated with the asset retirement obligation and related expenses at December 31, 2017, assuming that Lu follows (a) IFRS, and (b) ASPE. Ignore producti
> Lu Corp. erected and placed into service an offshore oil platform on January 1, 2017 at a cost of $10 million. Lu is legally required to dismantle and remove the platform at the end of its nine-year useful life. Lu estimates that it will cost $1 million
> IFRS allows per share amounts to be reported on items other than earnings. Instructions: (a) Adopt the role of the ethical accountant and write a short essay on the pros and cons of allowing companies to include alternate per share amounts in their annu
> Primeau Inc. pays its officers bonuses based on income. For 2017, the bonuses total $350,000 and are paid on February 15, 2018. Prepare Primeau’s December 31, 2017 adjusting entry and the February 15, 2018 entry. For the payment entry, ignore withholding
> Laurin Corporation offers parental benefits to its staff as a top-up on Employment Insurance benefits so that employees end up receiving 100% of their salary for 12 months of parental leave. Ruzbeh Awad, who earns $74,000 per year, announced that he will
> At December 31, 2017, 30 employees of Kasten Inc. have each earned one week of vacation time. The employees’ average salary is $1,000 per week. Prepare Kasten’s December 31, 2017 adjusting entry.
> Refer to the information for Whirled Inc. in BE13-15. Assume now that the employer is required to match every dollar of the CPP contributions of its employees and to contribute 1.4 times the EI withholdings. (a) Prepare the journal entry to record Whirle
> Whirled Inc.’s weekly payroll of $23,000 included employee income taxes withheld of $3,426, CPP withheld of $990, EI withheld of $420, and health insurance premiums withheld of $250. Prepare the journal entry to record Whirled’s weekly payroll.
> The following information is available for Huntley Corporation’s pension plan for the year 2017: Plan assets, January 1, 2017………………………………………………………………………$400,000 Actual return on plan assets……………………………………………………………………………17,000 Benefits paid to retirees………
> At December 31, 2017, Parew Corporation has a long-term debt of $700,000 owing to its bank. The existing debt agreement imposes several covenants related to Parew’s liquidity and solvency. At December 31, 2017, Parew was not in compliance with the covena
> Refer to the information about Clausius Ltd. in BE13-11. Assume instead that the tax return indicated 2017 income tax of $10,200. (a) Prepare the adjusting year-end entry to recognize the 2017 income tax. (b) Identify any yearend statement of financial p
> Clausius Ltd. made four quarterly payments of $3,200 each to the CRA during 2017 as instalment payments on its estimated 2017 corporate tax liability. At year end, Clausius’s controller completed the company’s 2017 tax return, which showed income tax of
> Louise Inc. operates in Alberta, where it is subject to GST of 5%. In August, Louise purchased $29,400 of merchandise inventory, and had sales of $45,000 on account. Louise uses a periodic inventory system. Prepare (a) the summary entry to record the pur
> Wellson Ltd. has current assets, including cash, accounts receivable, and inventory, and current liabilities, including accounts payable and short-term notes payable. Wellson manages its working capital by focusing on management of current assets. Wellso
> Molson Coors Brewing Company has a December 31 year end. Access the company’s 2014 annual report from the company website (www.molsoncoors.com). Instructions: (a) What types of earnings per share information does the company provide? (b) Does the compa
> Access IAS 34 (Interim Financial Reporting), and the interim financial report for the six-month period ended June 30, 2015, for Nestlé SA from the company’s website (www.nestle.com). Instructions: (a) Identify what specific financial statements and the
> Yuen Corporation shows the following financial position and results for the three years ended December 31, 2017, 2018, and 2019 (in thousands): For each year, calculate the current ratio, quick ratio, and days payables outstanding ratio, and comment on
> Siddle Corp. was recently sued by a competitor for patent infringement. Lawyers have determined that it is probable (and very likely) that Siddle will lose the case, and that Siddle will have to pay between $100,000 and $250,000 in damages. Siddle follow
> At December 31, 2017, Lawton & Border Inc. (L&B) is involved in a lawsuit. Under existing standards in IAS 37, (a) prepare the December 31 entry assuming it is probable (and very likely) that L&B will be liable for $700,000 as a result of this suit. (b)
> Kea Limited provides a defined contribution pension plan for its employees. The plan requires the company to deduct 5% of each employee’s gross pay for each payroll period as the employee contribution. The company then contributes 7% of the gross pay for
