Question: The following information is taken from the

> LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. ∙ LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swap as a fair value he

> On January 1, 2024, LLB Industries borrowed $200,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. ∙ LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swa

> The accounting system of a company consists of a general journal (GJ), a cash receipts journal (CR), a cash disbursements journal (CD), a sales journal (SJ), and a purchases journal (PJ). For each of the following, indicate which journal should be used t

> When Desoto Water Works purchased equipment at the end of 2023 at a cost of $65,000, the company debited Buildings and credited Cash $65,000. The error was discovered in 2024. What journal entry will Desoto use to correct the error? What other step(s) wo

> A company’s accounting system consists of a general journal (GJ), a cash receipts journal (CR), a cash disbursements journal (CD), a sales journal (SJ), and a purchases journal (PJ). For each of the following, indicate which journal sho

> Refer to E 2–9 and respond to the following requirements. Required: 1. If Microchip’s accountant employed reversing entries for accruals, which adjusting entries would she likely reverse at the beginning of the following year? 2. Prepare the adjusting e

> The employees of Xitrex, Inc., are paid each Friday. The company’s fiscal year-end is June 30, which falls on a Wednesday for the current year. Salaries are earned evenly throughout the five-day work week, and $10,000 will be paid on Friday, July 2. Req

> The December 31, 2024, unadjusted trial balance for the Wolkstein Drug Company is presented below. December 31 is the company’s year-end reporting date. The following year-end adjusting entries are required: a. Depreciation expense for

> Haskins and Jones, Attorneys-at-Law, maintains its books on a cash basis. During 2024, the law firm collected $545,000 for services rendered to its clients and paid out $412,000 in expenses. You are able to determine the following information about accou

> S&J Lawn Service Company maintains its books on a cash basis. However, the company recently borrowed $100,000 from a local bank, and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2024, the follo

> During the course of your examination of the financial statements of the Hales Corporation for the year ended December 31, 2024, you discover net income in 2024 is $30,000 but no adjusting entries have been prepared. To prepare adjusting entries, you dis

> The following transactions occurred during 2024 for the Beehive Honey Corporation: Required: 1. Record each transaction in general journal form. Omit explanations. 2. Prepare any necessary adjusting entries at the year-end on December 31, 2024. No adjust

> The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2024, trial balances contained the following account information: The following information also is known: a. The December income statemen

> Presented below is income statement information of the Schefter Corporation for the year ended December 31, 2024. Required: Prepare the necessary closing entries on December 31, 2024.

> Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the $18 million cost of the patent on a straight-line basis since it was acquired at the beginning of 2020. Due to rapid technological advances in the

> American Chip Corporation’s reporting year-end is December 31. The following is a partial adjusted trial balance as of December 31, 2024. Required: Prepare the necessary closing entries on December 31, 2024.

> The December 31, 2024, adjusted trial balance for the Blueboy Cheese Corporation is presented below. Required: 1. Prepare an income statement for the year ended December 31, 2024, and a classified balance sheet as of December 31, 2024. 2. Prepare the nec

> The Mazzanti Wholesale Food Company’s fiscal year-end is June 30. Prepare the necessary year-end adjusting entries at the end of June 30, 2024, for the following situations. 1. On December 1, 2023, the company paid its annual fire insurance premium of $6

> The Eldorado Corporation’s controller prepares adjusting entries only at the end of the reporting year. The following adjusting entries were prepared on December 31, 2024: Additional information: 1. The company borrowed $120,000 on Marc

> Prepare the necessary adjusting entries on December 31, 2024, for the Microchip Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. 1. On October 1, 2024,

> Prepare the necessary adjusting entries on December 31, 2024, for the Fierro Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. 1. A three-year fire insu

> The following transactions occurred during the month of June 2024 for the Stridewell Corporation. The company owns and operates a retail shoe store. 1. Issued 100,000 shares of common stock in exchange for $500,000 cash. 2. Purchased office equipment at

> Post the journal entries prepared in E 2–2 to T-accounts. Assume that the opening balances in each of the accounts is zero. Prepare a trial balance from the ending account balances.

> Prepare journal entries to record each of the transactions listed in E 2–1.

> For each of the following situations, state whether you agree or disagree with the financial reporting practice employed, and briefly explain the reason for your answer. 1. The controller of the Dumars Corporation increased the carrying value of land fro

> In 2023, Quapaw Products introduced a new line of hot water heaters that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 5% of sales revenue. First-year sales of the heat

> For each of the following situations, indicate whether you agree or disagree with the financial reporting practice employed and state the accounting concept applied (if you agree) or violated (if you disagree). 1. Wagner Corporation adjusted the valuatio

> On July 15, 2024, the Niche Car Company purchased 1,000 tires from the Treadwell Company for $50 each. The terms of the sale were 2/10, n/30. Niche uses a perpetual inventory system and the gross method of accounting for purchase discounts. Required: 1.

> The Phoenix Corporation’s fiscal year ends on December 31. Phoenix determines inventory quantity by a physical count of inventory on hand at the close of business on December 31. The company’s controller has asked for your help in deciding if the followi

> The December 31, 2024, year-end inventory balance of the Almond Corporation is $210,000. You have been asked to review the following transactions to determine if they have been correctly recorded. 1. Goods shipped to Almond f.o.b. destination on December

> The Kwik Company’s inventory balance on December 31, 2024, was $165,000 (based on a 12/31/2024 physical count) before considering the following transactions: 1. Goods shipped to Kwik f.o.b. destination on December 20, 2024, were received on January 4, 20

> A company has the following information in its records. Certain data have been intentionally omitted ($ in thousands). Required: Determine the missing numbers. Show computations where appropriate.

> The following information is available for a company: Required: Applying both a perpetual and a periodic inventory system, prepare the journal entries that summarize the transactions that created these balances. Include all end-of-period adjusting entri

> The June 30, 2024, year-end trial balance for Askew Company contained the following information: In addition, you determine that the June 30, 2024, inventory balance is $40,000. Required: Calculate the cost of goods sold for the Askew Company for the ye

> On January 1, 2024, the general ledger of Tripley Company included the following account balances: The $30,000 beginning balance of inventory consists of 300 units, each costing $100. During January 2024, the company had the following transactions: Requ

> On January 1, 2024, Displays Incorporated had the following account balances: From January 1 to December 31, the following summary transactions occurred: a. Purchased inventory on account for $330,000. b. Sold inventory on account for $570,000. The cost

> Three programmers at Fee nix Computer Storage, Inc., write an operating systems control manual for Hill McGraw Publishing, Inc., for which Fee nix receives royalties equal to 12% of net sales. Royalties are payable annually on February 1 for sales the pr

> Mercury Company has only one inventory pool. On December 31, 2024, Mercury adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO method was $200,000. Inventory data are as follows: Required: Compute the i

> On January 1, 2024, a company adopted the dollar-value LIFO method for its one inventory pool. The pool’s value on this date was $660,000. The 2024 and 2025 ending inventory valued at year-end costs were $690,000 and $760,000, respectively. The appropria

> The table below contains selected information from recent financial statements of The Home Depot, Inc., and Lowe’s Companies, Inc., two companies in the home improvement retail industry ($ in millions): Required: Calculate the gross pr

> 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 nine-digit Codification citation (XXX-XX-XXX-X) that describes the disclosure req

> The Churchill Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 20,000 units consisted of the following, listed in chronological order of acquisition: During 2024, inventory quanti

> The Mega Mart Company began 2024 with inventory of 10,000 units at a cost of $7 per unit. During 2024, 50,000 units were purchased for $8.50 each. Sales for the year totaled 54,000 units leaving 6,000 units on hand at the end of 2024. Mega Mart uses a pe

> AmerisourceBergen is an American drug wholesale company. The company uses the LIFO inventory method for external reporting but maintains its internal records using FIFO. The following information was included in a recent annual report: Inventories are co

> Mogul Processing maintains its internal inventory records using average cost under a perpetual inventory system. The following information relates to its inventory during the year: Required: 1. Determine the amount Mogul would calculate internally for e

> Specialty Store uses a periodic inventory system. The following are some inventory transactions for the month of May: 1. Specialty Store purchased inventory on account for $5,000. Freight charges of $300 were paid in cash. 2. Specialty Store returned som

> To more efficiently manage its inventory, Telnex Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information relates to its inventory during the year: Required: 1. D

> Refer to the situation described in BE 20–4. Suppose Irwin has been using the straight-line method and switches to the sum-of-the-years’-digits method. Ignoring income taxes, what journal entry(s) should Irwin record relating to the machine for 2024?

> A company began 2024 with 10,000 units of inventory on hand. The cost of each unit was $5.00. During 2024, an additional 30,000 units were purchased at a single unit cost, and 20,000 units remained on hand at the end of 2024 (20,000 units therefore were

> Alta Ski Company’s inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Required: 1. Which method, FIFO or LIFO, will result in the highest cost of goods so

> Altira Corporation provides the following information related to its inventory during the month of August 2024: Required: Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 202

> Altira Corporation provides the following information related to its inventory during the month of August 2024: Required: Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 202

> Altira Corporation provides the following information related to its inventory during the month of August 2024: Required: Using calculations based on a periodic inventory system, determine the inventory balance Altira would report in its August 31, 2024

> 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 describes the meaning of cos

> Comfort Company purchased 100 units of inventory on November 17, 2024. The units have a list price of $500 each, but Comfort was given a 30% trade discount. The terms of the sale were 2/10, n/30. Comfort uses a perpetual inventory system. Required: 1. P

> On July 15, 2024, the Niche Car Company purchased 1,000 tires from the Treadwell Company for $50 each. The terms of the sale were 2/10, n/30. Nixon uses a perpetual inventory system and the net method of accounting for purchase discounts. Required: 1. P

> Specialty Store uses a perpetual inventory system. The following are some inventory transactions for the month of May: 1. Specialty Store purchased inventory on account for $5,000. Freight charges of $300 were paid in cash. 2. Specialty Store returned so

> Irwin, Inc. constructed a machine at a total cost of $35 million. Construction was completed at the end of 2020 and the machine was placed in service at the beginning of 2021. The machine was being depreciated over a 10-year life using the sum-of-the-yea

> Halifax Manufacturing allows its customers to return merchandise for any reason and receive a credit to their accounts. All of Halifax’s sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $3

> Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax’s sales are for credit (no cash is collected at the time of sale). The company began 2024

> Harwell Company manufactures automobile tires. On July 15, 2024, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the net method of accounting for cash discounts. Required: 1. Prepar

> Harwell Company manufactures automobile tires. On July 15, 2024, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the gross method of accounting for cash discounts. Required: 1. Prep

> Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2024. The units have a list price of $600 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30. Required: 1. Prepare th

> Parker Inc. has the following cash balances: Required: 1. Prepare the current assets and current liabilities section of Parker’s 2024 balance sheet, assuming Parker reports under U.S. GAAP. 2. Prepare the current assets and current lia

> On January 1, 2024, the general ledger of 3D Family Fireworks includes the following account balances: During January 2024, the following transactions occur: The following information is available on January 31, 2024. 1. At the end of January, $5,000 of

> At January 1, 2024, Clayton Hoists Inc. owed Third Banc Corp $12 million, under a 10% note due December 31, 2025. Interest was paid last on December 31, 2022. Clayton was experiencing severe financial difficulties and asked Third Banc Corp to modify the

> Harrison Company maintains a checking account at the First National City Bank. The bank provides a bank statement along with canceled checks on the last day of each month. The July 2024 bank statement included the following information: The company&acirc

> Jansen Company’s general ledger showed a checking account balance of $23,820 at the end of May 2024. The May 31 cash receipts of $2,340, included in the general ledger balance, were placed in the night depository at the bank on May 31 and were processed

> In 2024, J J Dishes changed its method of valuing inventory from the FIFO method to the LIFO method. At December 31, 2023, J J’s inventories were $96 million (FIFO). J J’s records were insufficient to determine what inventories would have totaled if dete

> The petty cash fund of Ricco’s Automotive contained the following items at the end of September 2024: The petty cash fund was established at the beginning of September with a transfer of $150 from cash to the petty cash account. Requir

> Loucks Company established a $200 petty cash fund on October 2, 2024. The fund is replenished at the end of each month. At the end of October 2024, the fund contained $37 in cash and the following receipts: Required: Prepare the necessary general journa

> The current asset section of the Moorcroft Outboard Motor Company’s balance sheet reported the following amounts: The average collection period for 2024 is 50 days. Required: Determine net sales for 2024.

> Microsoft Corporation reported the following information in its financial statements for three successive quarters ($ in millions): Required: Compute the receivables turnover ratio and the average collection period for Q4 and Q3. Assume that each quarte

> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Required: Indicate the specific seven-digit Codification citation (XXX-XX-XX) for each of the following items: 1. Accounts receiv

> Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2024: Required: 1. Prepare journal entries for each of the above transactions (round all calculations

> Listed below are several terms and phrases associated with cash and receivables. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.

> Selkirk Company obtained a $15,000 note receivable from a customer on January 1, 2024. The note, along with interest at 10%, is due on July 1, 2024. On February 28, 2024, Selkirk discounted the note at Unionville Bank. The bank’s discount rate is 12%. R

> This is a variation of E 7–25 modified to focus on factoring with recourse under IFRS. Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made with recours

> Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. W

> In 2024, Adonis Industries changed its method of valuing inventory from the average cost method to the FIFO method. At December 31, 2023, Adonis’s inventories were $47.6 million (average cost). Adonis’s records indicated that the inventories would have t

> Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivabl

> On June 30, 2024, the High Five Surfboard Company had outstanding accounts receivable of $600,000. On July 1, 2024, the company borrowed $450,000 from the Equitable Finance Corporation and signed a promissory note. Interest at 10% is payable monthly. The

> On January 1, 2024, the Apex Company exchanged some shares of common stock it had been holding as an investment for a note receivable. The note principal plus interest is due on January 1, 2025. The 2024 income statement reported $2,200 in interest reven

> On January 1, 2024, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $515,000 by Elmira on December 31, 2026. The effective interest rate is 8%. Required: 1. Ho

> On June 30, 2024, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $30,000 on March 31, 2025. The fair value of the merchandise exchanged is $28,200. Esquire views the fi

> Delta Automotive Corporation has the following assets listed in its 12/31/2024 trial balance: Required: 1. Determine the correct balance of cash and cash equivalents to be reported in the current asset section of the 2024 balance sheet. 2. For each of t

> On June 30, 2024, the Esquire Company sold some merchandise to a customer for $30,000. In payment, Esquire agreed to accept a 6% note requiring the payment of interest and principal on March 31, 2025. The 6% rate is appropriate in this situation. Require

> General Mills reported the following information in its 2020 financial statements ($ in millions): A note disclosed that the allowance for uncollectible accounts had a balance of $33.2 million and $28.8 million at the end of 2020 and 2019, respectively.

> Castle Company provides estimates for its uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $17,280 at the beginning of 2024 and a $22,410 credit balance at the end of 2024 (after adjusting entries). If the direct w

> Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2024, accounts receivable totaled $625,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balanc

> In 2024, the internal auditors of Development Technologies, Inc., discovered that (a) 2023 accrued salaries of $2 million were not recognized until they were paid in 2024 and (b) a $3 million purchase of merchandise in 2024 was recorded as a debit to Pur

> Zuo Software categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due = $400,000; estimated uncollectible = 8%. 2. Accounts 1–30 days past due = $50,000; estimat

> Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due = $180,000; estimated uncollectible = 10%. 2. Accounts 1–45 days past due = $25,000; e

> Ervin Company uses the allowance method to account for uncollectible accounts receivable. The allowance account is adjusted based on bad debt expense as a percentage of credit sales. For 2024, net credit sales totaled $4,500,000, and the estimated bad de

> 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