Tony’s favorite memories of his childhood were the times he spent with his dad at camp. Tony was daydreaming of those days a bit as he and Suzie jogged along a nature trail and came across a wonderful piece of property for sale. He turned to Suzie and said, “I’ve always wanted to start a camp where families could get away and spend some quality time together. If we just had the money, I know this would be the perfect place.” On November 1, 2022, Great Adventures purchased the land by issuing a $500,000, 6%, 10-year installment note to the seller. Payments of $5,551 are required at the end of each month over the life of the 10-year loan. Each monthly payment of $5,551 includes both interest expense and principal payments (i.e., reduction of the loan amount). Late that night Tony exclaimed, “We now have land for our new camp; this has to be the best news ever!” Suzie said, “There’s something else I need to tell you. I’m expecting!” They decided right then, if it was a boy, they would name him Venture. Required: 1. Complete the first three rows of an amortization schedule. 2. Record the purchase of land with the issuance of a long-term note payable on November 1, 2022. 3. Record the first two payments on November 30, 2022, and December 31, 2022, and calculate the remaining balance of the note payable as of December 31, 2022. 4. The 12 monthly payments in 2023 (following year) will reduce the note’s balance by an additional $38,014. How would the remaining balance of the note payable be reported in the balance sheet as of December 31, 2022? The Great Adventures continuing problem also can be assigned using the General Ledger software in Connect. Students will be given an existing trial balance and asked to prepare: (1) the journal entries for the transactions above in 2022, (2) financial statements, and (3) closing entries.
> Attached is a schedule of five proposed changes at the end of the year. Required: 1. Indicate whether each of the proposed changes is conservative, aggressive, or neutral. 2. Indicate whether the total effect of all the changes is conservative, aggressiv
> Dwight’s Trophy Shop is considering the following accounting changes: a. Increase the allowance for uncollectible accounts. b. When costs are going up, change from LIFO to FIFO. c. Change from the straight-line method of depreciation to declining-balance
> Shaquille Corporation has operating income of $1.7 million, a loss on write-down of inventory of $200,000, and income tax expense of $425,000 for the year ended December 31, 2021, before considering the following item: a $275,000 gain, after tax, from th
> LeBron’s Bookstores has two divisions: books and electronics. The electronics division had another great year in 2021 with net sales of $11 million, cost of goods sold of $6.5 million, operating expenses of $3 million, and income tax expense of $375,000.
> As an auditor for Bernard and Thomas, you are responsible for determining the proper classification of income statement items in the audit of California Sports Grill. a. One of the company’s restaurants was destroyed in a forest fire that raged through S
> The Tony Hawk Skate Park was built in early 2021. The construction was financed by a $3,000,000, 7% note due in 6 years, with payments of $51,147 required each month. The first year has not been as profitable as hoped. The discussion at the executive boa
> The income statement for Stretch-Tape Corporation reports net sales of $540,000 and net income of $65,700. Average total assets for the year are $900,000. Stockholders’ equity at the beginning of the year was $600,000, and $30,000 was paid to stockholder
> Match (by letter) the following items with the description or example that best fits. Each letter is used only once. Descriptions a. A company’s ability to pay its current liabilities. b. Accounting choices that result in reporting lowe
> Software Distributors reports net income of $65,000. Included in that number is depreciation expense of $15,000 and a loss on the sale of land of $6,000. A comparison of this year’s and last year’s balance sheets reveals a decrease in accounts receivable
> Hardware Suppliers reports net income of $165,000. Included in net income is a gain on the sale of land of $20,000. A comparison of this year’s and last year’s balance sheets reveals an increase in accounts receivable of $35,000, an increase in inventory
> Technology Solutions’ format for the statement of cash flows was corrupted by a computer virus, as follows: Required: Prepare a correct format for Technology Solutions to use in preparing the statement of cash flows.
> Refer to the transactions between Ernie’s Electronics and Bert’s Bargain House recorded in E11–5. Required: Analyze each of the four transactions from the perspective of Bert’s Bargain House. Indicate in which section of the statement of cash flows each
> Ernie’s Electronics had the following transactions with Bert’s Bargain House: 1. Ernie sold Bert land, originally purchased for $180,000, at a sales price of $195,000, resulting in a gain on sale of land of $15,000. 2. Ernie borrowed $100,000 from Bert,
> Wi-Fi, Inc., has the following selected transactions during the year. 1. Issues $20 million in bonds. 2. Purchases equipment for $80,000. 3. Pays a $20,000 account payable. 4. Collects a $15,000 account receivable. 5. Exchanges land for a new patent. Bot
> Analysis of an income statement, balance sheet, and additional information from the accounting records of Gadgets, Inc., reveals the following items. 1. Purchase of a patent. 2. Depreciation expense. 3. Decrease in accounts receivable. 4. Issuance of a n
> Consider the four independent situations below. Required: 1. Calculate cash paid for operating expenses. 2. Prepare the summary journal entry for each situation.
> Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. Calculate the debt to equity ratio for American Eagle and Buc
> Discount Computers is in its second year of business providing computer repair services in the local community and reselling used computers on the Internet. The company is owned by 10 investors, each investing $100,000. Justin Lake was hired as president
> Consider the four independent situations below. Required: 1. Calculate cash paid to suppliers. 2. Prepare the summary journal entry for each situation.
> Consider the three independent situations below (amounts are $ in millions): Required: 1. Calculate cash received from customers. 2. Prepare the summary journal entry for each situation.
> The income statement for Electronic Wonders reports net sales of $91,758 million and cost of goods sold of $69,278 million. An examination of balance sheet amounts indicates accounts receivable increased $1,733 million, inventory increased $883 million,
> Mega Screens, Inc., reports net sales of $3,200,000, cost of goods sold of $2,000,000, and income tax expense of $150,000 for the year ended December 31, 2021. Selected balance sheet accounts are as follows: Required: Calculate cash received from custome
> Refer to the information provided for Peach Computer in E11–11. Required: Prepare the operating activities section of the statement of cash flows for Peach Computer using the direct method.
> Zoogle has the following selected data ($ in millions): Required: 1. Calculate the return on assets. 2. Calculate the cash return on assets. 3. Calculate the cash flow to sales ratio and the asset turnover ratio.
> Refer to the information in E11–12. Required: Calculate net cash flows from financing activities.
> Dristell Inc. had the following activities during the year (all transactions are for cash unless stated otherwise): a. A building with a book value of $400,000 was sold for $500,000. b. Additional common stock was issued for $160,000. c. Dristell purchas
> Portions of the financial statements for Peach Computer are provided below. Required: Prepare the operating activities section of the statement of cash flows for Peach Computer using the indirect method.
> Financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. Calculate the debt to equity ratio for the past two years. Did the ratio increase or decrease in the more recent year? 2. Calculate the return on assets for
> The balance sheets for Plasma Screens Corporation, along with additional information, are provided below: Required: Prepare the statement of cash flows using the indirect method.
> Match (by letter) the following items with the description or example that best fits. Each letter is used only once. Descriptions a. Begins with net income and then lists adjustments to net income in order to arrive at operating cash flows. b. Item inclu
> Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders’ equity in 2
> On March 15, American Eagle declares a quarterly cash dividend of $0.125 per share payable on April 13 to all stockholders of record on March 30. Required: Record American Eagle’s declaration and payment of cash dividends for its 210 million shares.
> Refer to the information in E10–6. In its first year of operations, Finishing Touches has net income of $160,000 and pays dividends at the end of the year of $94,500 ($1 per share) on all common shares outstanding and $2,400 on all preferred shares outst
> Finishing Touches has two classes of stock authorized: 8%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2021, its first year of operations: January 2 Issues 100,000 shares of common stock for $
> Italian Stallion has the following transactions during the year related to stockholders’ equity. February 1 Issues 6,000 shares of no-par common stock for $16 per share. May 15 Issues 700 shares of $10 par value preferred stock for $13 per share. October
> Nathan’s Athletic Apparel has 2,000 shares of 5%, $100 par value preferred stock the company issued at the beginning of 2020. All remaining shares are common stock. The company was not able to pay dividends in 2020, but plans to pay dividends of $22,000
> Clothing Frontiers began operations on January 1 and engages in the following transactions during the year related to stockholders’ equity. January 1 Issues 700 shares of common stock for $50 per share. April 1 Issues 110 additional shares of common stoc
> Your friend, Jonathon Fain, is an engineering major with an entrepreneurial spirit. He wants to start his own corporation and needs your accounting expertise. He has no idea what the following terms mean: (1) authorized stock, (2) issued stock, (3) outst
> Financial information for American Eagle is presented in Appendix A at the end of the book. Required: 1. Calculate the debt to equity ratio for the past two years. Did the ratio increase or decrease the more recent year? 2. Calculate the return on assets
> On January 1, 2021, the general ledger of Grand Finale Fireworks includes the following account balances: During January 2021, the following transactions occur: January 2 Issue an additional 2,000 shares of $1 par value common stock for $40,000. January
> Financial information for Forever 18 includes the following selected data: Required: 1. Calculate earnings per share in 2020 and 2021. Did earnings per share increase in 2021? 2. Calculate the price-earnings ratio in 2020 and 2021. In which year is the s
> The financial statements of Friendly Fashions include the following selected data (in millions): Required: 1. Calculate the return on equity in 2021. 2. Calculate the dividend yield in 2021. 3. Calculate earnings per share in 2021. 4. Calculate the price
> United Apparel has the following balances in its stockholders’ equity accounts on December 31, 2021: Treasury Stock, $850,000; Common Stock, $600,000; Preferred Stock, $3,600,000; Retained Earnings, $2,200,000; and Additional Paid-in Capital, $8,800,000.
> Indicate whether each of the following transactions increases (+), decreases (−), or has no effect (NE) on total assets, total liabilities, and total stockholders’ equity. The first transaction is completed as an examp
> Refer to the information in E10–9. Power Drive Corporation has the following beginning balances in its stockholders’ equity accounts on January 1, 2021: Common Stock, $100,000; Additional Paid-in Capital, $5,500,000; a
> Refer to the information in E10–9. Power Drive Corporation has the following beginning balances in its stockholders’ equity accounts on January 1, 2021: Common Stock, $100,000; Additional Paid-in Capital, $5,500,000; and Retained Earnings, $3,000,000. Ne
> On September 1, the board of directors of Colorado Outfitters, Inc., declares a stock dividend on its 10,000, $1 par, common shares. The market price of the common stock is $30 on this date. Required: 1. Record the stock dividend assuming a small (10%) s
> Match (by letter) the following terms with their definitions. Each letter is used only once. Definitions a. Shareholders can lose no more than the amount they invest in the company. b. Corporate earnings are taxed twice—at the corporate
> On January 1, 2021, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 8%, the bonds will issue at $549,482.
> On January 1, 2021, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 10%, the bonds will issue at $457,102.
> On January 1, 2021, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 9%, the bonds will issue at $500,000.
> On June 30, 2021, Exploration Inc. signs a lease requiring quarterly payments each year for the next five years. Each of the 20 quarterly payments is $29,122.87, with the first lease payment beginning September 30. The company’s normal borrowing rate is
> On June 1, 2021, Florida National leased a building. The lease agreement calls for Florida National to make lease payments of $3,618.18 each month for the next two years, with the first lease payment beginning June 30. The company’s normal borrowing rate
> Coney Island enters into a lease agreement for a new ride. The lease payments have a present value of $2 million. Prior to this agreement, the company’s total assets are $25 million and its total liabilities are $15 million. Required: 1. Calculate total
> On January 1, 2021, Jalen Company purchased land costing $800,000. Instead of paying cash at the time of purchase, Jalen plans to make four installment payments of $215,221.64 on June 30 and December 31 in 2021 and 2022. The payments include interest at
> On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: During January 2021, the following transactions occur: January 1 Borrow $100,000 from Captive Credit Corporation. The installment note bears interest at
> Two online travel companies, E-Travel and Pricecheck, provide the following selected financial data: Required: 1. Calculate the debt to equity ratio for E-Travel and Pricecheck. Which company has the higher ratio? 2. Calculate the times interest earned r
> On January 1, 2021, Tropical Paradise borrows $50,000 by agreeing to a 6%, six-year note with the bank. The funds will be used to purchase a new BMW convertible for use in promoting resort properties to potential customers. Loan payments of $828.64 are d
> On January 1, 2021, Water World issues $26 million of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Water World intends to use the funds to build the world’s largest water avalanche and the “tornado”—
> Quattro Technologies, a hydraulic manufacturer in the aeronautics industry, has reported steadily increasing net income over the past few years. The company reported net income of $120 million in 2019 and $140 million in 2020. The stock is receiving incr
> On January 1, 2021, Frontier World issues $41 million of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new ride that combines a roller coaster, a water ride, a dar
> On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 6% and the bonds issued at $644,632. Required: 1. Using a
> On January 1, 2021, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 10% and the bonds issued at $457,102. Required: 1. Using
> On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year. Required: Assuming the market interest rate on the issue date is 6%, the bonds will issue at $644,161. 1. Complete the
> On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year. Required: Assuming the market interest rate on the issue date is 8%, the bonds will issue at $559,740. 1. Complete the
> On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year. Required: Assuming the market interest rate on the issue date is 7%, the bonds will issue at $600,000. Record the bond
> On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 6%, the bonds will issue at $644,632.
> On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 8%, the bonds will issue at $559,229.
> On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 7%, the bonds will issue at $600,000.
> Penny Arcades, Inc., is trying to decide between the following two alternatives to finance its new $35 million gaming center: a. Issue $35 million, 7% note. b. Issue 1 million shares of common stock for $35 per share. Required: 1. Assuming the note or sh
> Western Manufacturing is involved with several potential contingent liabilities. Your assignment is to draft the appropriate accounting treatment for each situation described below. Western’s fiscal year-end is December 31, 2021, and the financial statem
> Barth Interior provides decorating advice to its clients. Three recent transactions of the company include a. Providing decorating services of $500 on account to one of its clients. b. Paying $1,200 for an employee’s salary in the current period. c. Purc
> Airline Temporary Services (ATS) pays employees monthly. Payroll information is listed below for January, the first month of ATS’s fiscal year. Assume that none of the employees exceeds the federal unemployment tax maximum salary of $7,
> During January, Luxury Cruise Lines incurs employee salaries of $3 million. Withholdings in January are $229,500 for the employee portion of FICA, $450,000 for federal income tax, $187,500 for state income tax, and $30,000 for the employee portion of hea
> Aspen Ski Resorts has 100 employees, each working 40 hours per week and earning $20 an hour. Although the company does not pay any health or retirement benefits, one of the perks of working at Aspen is that employees are allowed free skiing on their days
> The following selected transactions relate to liabilities of Rocky Mountain Adventures. Rocky Mountain’s fiscal year ends on December 31. January 13 Negotiate a revolving credit agreement with First Bank that can be renewed annually upon bank approval. T
> OS Environmental provides cost-effective solutions for managing regulatory requirements and environmental needs specific to the airline industry. Assume that on July 1 the company issues a one-year note for the amount of $6 million. Interest is payable a
> On August 1, 2021, Trico Technologies, an aeronautic electronics company, borrows $21 million cash to expand operations. The loan is made by FirstBanc Corp. under a short-term line of credit arrangement. Trico signs a six-month, 9% promissory note. Inter
> On August 1, 2021, Trico Technologies, an aeronautic electronics company, borrows $21 million cash to expand operations. The loan is made by FirstBanc Corp. under a short-term line of credit arrangement. Trico signs a six-month, 9% promissory note. Inter
> On November 1, 2021, Aviation Training Corp. borrows $60,000 cash from Community Savings and Loan. Aviation Training signs a three-month, 7% note payable. Interest is payable at maturity. Aviation’s year-end is December 31. Required: 1. Record the note p
> On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: During January 2021, the following transactions occur: January 2 Sold gift cards totaling $8,000. The cards are redeemable for merchandise within one year
> Selected financial data regarding current assets and current liabilities for Queen’s Line, a competitor in the cruise line industry, is provided: Required: 1. Calculate the current ratio and the acid-test ratio for Queenâ€
> A very helpful site to learn about individual publicly traded companies is finance.yahoo.com. Go to this website and look up a well-known publicly traded company. Once you find the company page, perform the following tasks. Required: 1. Click on “Basic C
> Dow Chemical Company provides chemical, plastic, and agricultural products and services to various consumer markets. The following excerpt is taken from the disclosure notes of Dow’s annual report. Required: 1. Does the excerpt describe
> Lindy Appliance begins operations in 2021 and offers a one-year warranty on all products sold. Total appliance sales in 2021 are $1,600,000, and Lindy estimates future warranty costs in 2022 to be 2% of current sales. Actual warranty costs in 2022 are $2
> Computer Wholesalers restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous
> Pacific Cruise Lines is a defendant in litigation involving a swimming accident on one of its three cruise ships. Required: For each of the following scenarios, determine the appropriate way to report the situation. Explain your reasoning and record any
> Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product
> Vail is one of the largest ski resorts in the United States. Suppose that on October 1, 2021, Vail sells gift cards (lift passes) for $100,000. The gift cards are redeemable for one day of skiing during the upcoming winter season. The gift cards expire o
> Apple Inc. is the number one online music retailer through its iTunes music store. Apple sells iTunes gift cards in $15, $25, and $50 increments. Assume Apple sells $21 million in iTunes gift cards in November, and customers redeem $14 million of the gif
> Match (by letter) the correct reporting method for each of the items listed below.
> Sub Sandwiches of America made the following expenditures related to its restaurant: 1. Replaced the heating equipment at a cost of $250,000. 2. Covered the patio area with a clear plastic dome and enclosed it with glass for use during the winter months.
> Listed below are several terms and phrases associated with operational assets. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
> Eugene Wright is CFO of Caribbean Cruise Lines. The company offers luxury cruises. It’s near year-end, and Eugene is feeling kind of queasy. The economy is in a recession, and demand for luxury cruises is way down. Eugene doesn’t want the company’s curre
> Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: During your year-end review of the accounts related to intangibles, you discover that the company has capitalized al
> Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $30,000,000 in cash. The book values and fair values of Iceberg’s assets and liabilities were as follows: Required: Calculate the
> Brick Oven Corporation made the following expenditures during the first month of operations: Required: Record the $131,500 in cash expenditures.
> The Donut Stop purchased land and a building for $2 million. To maximize the company’s tax deduction for depreciation, management allocated only 10% of the purchase price to land and 90% of the purchase price to the building. A more reasonable allocation
> Red Rock Bakery purchases land, building, and equipment for a single purchase price of $600,000. However, the estimated fair values of the land, building, and equipment are $175,000, $455,000, and $70,000, respectively, for a total estimated fair value o
> 21 On January 1, 2021, the general ledger of TNT Fireworks includes the following account balances: During January 2021, the following transactions occur: January 1 Purchase equipment for $19,500. The company estimates a residual value of $1,500 and a
