Question: Under its executive stock option plan, National

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This material is also available under the Investor Relations li

> 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, 2017, are available in Connect. This m

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This material is also available under the Investor Relations li

> 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, 2017, are available in Connect. This m

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This material is also available under the Investor Relations li

> 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, 2017, are available in Connect. This m

> Refer to the facts described in BE 4–16. Show the DuPont framework’s calculation of the three components of the 2021 return on equity for Anderson TV and Appliance. Data from BE 4-16: The 2021 income statement for Anderson TV and Appliance reported net

> On July 1, 2021, Apache Company, a real estate developer, sold a parcel of land to a construction company for $3,000,000. The book value of the land on Apache’s books was $1,200,000. Terms of the sale required a down payment of $150,000 and 19 annual pay

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This material is also available under the Investor Relations li

> 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, 2017, are available in Connect. This m

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This material also is available under the Investor Relations li

> 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, 2017, are available in Connect. This m

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This material also is available under the Investor Relations li

> 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, 2017, are available in Connect. This m

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This material is also available under the Investor Relations li

> 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, 2017, are provided in Connect. This ma

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This material is also available under the Investor Relations li

> 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, 2017, are provided in Connect. This ma

> The 2021 income statement for Anderson TV and Appliance reported net sales of $420,000 and net income of $65,000. Average total assets for 2021 was $800,000. Shareholders’ equity at the beginning of the year was $500,000, and $20,000 was paid to sharehol

> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This material is also available under the Investor Relations li

> EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, performs automated collection, validation, indexing, and forwarding of submissions by companies and others who are required by law to file forms with the U.S. Securities and Exchange C

> In negotiating and effecting a troubled debt restructuring, the creditor usually incurs various legal costs. The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required:

> GlaxoSmithKline is a global pharmaceutical and consumer health-related products company located in the United Kingdom. The company prepares its financial statements in accordance with International Financial Reporting Standards. Required: 1. Use the Inte

> Carter Containers sold marketable equity securities, land, and common stock for $30 million, $15 million, and $40 million, respectively. Carter also purchased treasury stock, equipment, and a patent for $21 million, $25 million, and $12 million, respecti

> On July 15, 2021, M.W. Morgan Distribution sold land for $35 million that it had purchased in 2016 for $22 million. What would be the amount(s) related to the sale that Morgan would report in its statement of cash flows for the year ended December 31, 20

> On January 1, 2021, the Merit Group issued to its bank a $41 million, five-year installment note to be paid in five equal payments at the end of each year. Installment payments of $10 million annually include interest at the rate of 7%. What would be the

> Refer to the situation described in BE 21–5. What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2021, if it uses the indirect method? Data from BE 21-5: Agee Technology,

> Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $400 million on July 1, 2021, at a price of $380 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semi-annually on June 30 and Decemb

> Refer to the situation described in BE 21–9. What amount should Carter report as net cash from financing activities? Data from BE 21-9: Carter Containers sold marketable equity securities, land, and common stock for $30 million, $15 million, and $40 mil

> During 2021, 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 2021 income s

> When DeSoto Water Works purchased equipment at the end of 2020 at a cost of $65,000, the company debited Buildings and credited Cash $65,000. The error was discovered in 2021. What journal entry will DeSoto use to correct the error? What other step(s) wo

> 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 2017. Due to rapid technological advances in the

> In 2020, Quapau 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

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

> 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 2021? Da

> Irwin, Inc. constructed a machine at a total cost of $35 million. Construction was completed at the end of 2017 and the machine was placed in service at the beginning of 2018. The machine was being depreciated over a 10-year life using the sum-of-the-yea

> In 2021, J J Dishes changed its method of valuing inventory from the FIFO method to the LIFO method. At December 31, 2020, J J’s inventories were $96 million (FIFO). J J’s records were insufficient to determine what inventories would have totaled if dete

> In 2021, Adonis Industries changed its method of valuing inventory from the average cost method to the FIFO method. At December 31, 2020, Adonis’s inventories were $47.6 million (average cost). Adonis’s records indicated that the inventories would have t

> In 2021, the internal auditors of Development Technologies, Inc., discovered that (a) 2020 accrued salaries of $2 million were not recognized until they were paid in 2021 and (b) a $3 million purchase of merchandise in 2021 was recorded as a debit to Pur

> Refer to the situation described in BE 20–10. Assume the error was discovered in 2023, after the 2022 financial statements are issued. Ignoring income taxes, what journal entry will PKE use to correct the error? Data from BE 20-10: In 2021, internal aud

> 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. Data from BE 3-5: The following is a December 31, 2021, post-closing trial balance for Culver City Li

> In 2021, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2018. The machine’s useful life was expected to be five years with no residual value. Straight-line d

> In 2021, the Barton and Barton Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2020, B & B’s inventories were $32 million (FIFO). B & B’s records indicated that the inventories would have t

> Refer to the situation described in BE 19–8. Suppose that after one year, Farmer estimates that it is not probable that divisional revenue will increase by 5% in three years. What journal entry will be needed to account for the options in 2022? Data fro

> On January 1, 2021, Farmer Fabrication issued stock options for 100,000 shares to a division manager. The options have an estimated fair value of $6 each. To provide additional incentive for managerial achievement, the options are not exercisable unless

> Refer to the situation described in BE 19–3. Suppose that the options expire without being exercised. What journal entry will National record? Data from BE 19-3: Under its executive stock option plan, National Corporation granted 12 million options on J

> Refer to the situation described in BE 19–3. Suppose that the options are exercised on April 3, 2024, when the market price is $19 per share. What journal entry will National record? Data from BE 19-3: Under its executive stock option plan, National Cor

> On January 1, 2021, Hugh Morris Comedy Club (HMCC) granted 1 million stock options to key executives exercisable for 1 million shares of the company’s common stock at $20 per share. The stock options are intended as compensation for the next three years.

> Refer to the situation described in BE 19–3. Suppose that unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. What is the effect on earnings in 2022? In 2023? Data from BE 19-3: Under its executive stock option plan, Nation

> Niles Company granted 9 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $5 per share on January 1, 2020, the grant date of the restricted st

> Use the following information from the balance sheet of Raineer Plumbing to determine the missing amounts.

> At December 31, 2020 and 2021, 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 2020 o

> On January 1, 2021, Farmer Fabrication issued stock options for 100,000 shares to a division manager. The options have an estimated fair value of $6 each. To provide additional incentive for managerial achievement, the options are not exercisable unless

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

> The shareholders’ equity of MLS Enterprises includes $200 million of no-par common stock and $400 million of 6% cumulative preferred stock. The board of directors of MLS declared cash dividends of $50 million in 2021 after paying $20 million cash dividen

> Following is a recent Microsoft press release: REDMOND, Wash. — Nov. 29, 2017 — Microsoft Corp. on Wednesday announced that its board of directors declared a quarterly dividend of $0.42 per share. The dividend is payable March 8, 2018, to shareholders of

> On January 1, 2021, Medical Transport Company’s accumulated postretirement benefit obligation was $25 million. At the end of 2021, retiree benefits paid were $3 million. Service cost for 2021 is $7 million. Assumptions regarding the trend of future healt

> 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 2021, Jim Lukawitz is 31. He was hired

> Major Medical reported a net loss—AOCI in last year’s balance sheet. This year, the company revised its estimate of future salary levels causing its PBO estimate to decline by $4 million. Also, the $8 million actual return on plan assets fell short of th

> Differences between pretax accounting income and taxable income were as follows during 2021: The cumulative temporary difference as of the end of 2021 is $40 million (also the future taxable amount). The enacted tax rate is 25%. What is the deferred tax

> VeriFone Systems is a provider of electronic card payment terminals, peripherals, network products, and software. In its 2015 annual report, the company reported deferred tax assets totaling about $398 million. The company also reported valuation allowan

> You have been asked to review the December 31, 2021, balance sheet for Champion Cleaning. After completing your review, you list the following three items for discussion with your superior: 1. An investment of $30,000 is included in current assets. Manag

> At the end of the year, the deferred tax asset account had a balance of $4 million attributable to a temporary difference of $16 million in a liability for estimated expenses. Taxable income is $60 million. No temporary differences existed at the beginni

> Refer to the situation described in BE 16–5. Suppose the deferred portion of the rent collected was $40 million at the end of 2022. Taxable income is $200 million. Prepare the appropriate journal entry to record income taxes in 2022. Data from BE 16-5:

> In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy rental property. For tax reporting, the rent is taxed

> A company reports pretax accounting income of $10 million, but because of a single temporary difference, taxable income is $12 million. No temporary differences existed at the beginning of the year, and the tax rate is 25%. Prepare the appropriate journa

> Milo Manufacturing uses straight-line depreciation for financial statement reporting and is able to deduct 100% of the cost of equipment in the year the equipment is purchased for tax purposes. Four years after its purchase, one of Milo’s manufacturing m

> First Bank has some questions as to the tax-free nature of $5 million of governmental bonds held in its investment portfolio. This amount is excluded from First Bank’s taxable income of $55 million. Management has determined that there is a 65% chance th

> Insure Corporation 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 In

> During its first year of operations, Nive.com reported a net operating loss of $15 million for financial reporting and tax purposes. The enacted tax rate is 25%. Prepare the journal entry to recognize the income tax benefit of the net operating loss.

> 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 2021. The only difference between accounting and taxable income is estimated product warranty costs of $9,000 for sales in 2021. Warranty payments are expected to be

> At the end of 2021, 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 this transaction

> Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $800,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10%

> A company reports 2021 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 January 1, 2021, Jasperse 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

> Able Equipment entered into an arrangement to provide M. T. Bin Wholesale’s data center with Able’s newest server model. Due to security processes in place for its customer data, M. T. Bin requires access to the equipment and the ability to direct its us

> Financial Machinery entered into an arrangement to provide Viable Bank with equipment for the bank’s data center. The contract does not explicitly identify the equipment to be used to fulfill the contract. Financial Machinery has several data centers tha

> On January 1, 2021, Nantucket Ferry borrowed $14,000,000 cash from BankOne and issued a four-year, $14,000,000, 6% note. Interest was payable annually on December 31. Prepare the journal entries for both firms to record interest at December 31, 2021.

> AI Tool and Dye issued 8% bonds with a face amount of $160 million on January 1, 2021. The bonds sold for $150 million. For bonds of similar risk and maturity the market yield was 9%. Upon issuance, AI elected the option to report these bonds at their fa

> Consider the following liabilities of Future Brands, Inc., at December 31, 2021, 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, 2025. The notes are cal

> 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 2021. $4,000 of cards were redeemed in September 2021, $3,000 in October, $2,500 in

> On December 12, 2021, Pace Electronics received $24,000 from a customer toward a cash sale of $240,000 of diodes to be completed on January 16, 2022. What journal entries should Pace record on December 12 and January 16?

> Newman Consulting Company maintains its records on a cash basis. During 2021 the following cash flows were recorded: cash received for services rendered to clients, $420,000; and cash paid for salaries, utilities, and advertising, $240,000, $35,000, and

> At March 13, 2022, 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, 2021, and its financia

> Fleener Company is in the process of refinancing some long-term debt. Its fiscal year ends on December 31, 2021, and its financial statements will be issued on March 15, 2022. 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, 2021, and its financial statements will be issued on March 15, 2022. Under current U.S. GAAP, how would the debt be classified if the refinancing i

> Assume the same facts as in BE 12–8, but that Fowler intends to hold the bonds until maturity. How much unrealized gain or loss would Fowler include in 2021 net income with respect to the bonds? Data from BE 12-8: Fowler Inc. purchased $75,000 of bonds

> Fowler Inc. purchased $75,000 of bonds on January 1, 2021. The bonds pay interest semiannually and mature in 20 years, at which time the $75,000 principal will be paid. The bonds do not pay any amounts other than interest and principal. Fowler’s intentio

> For several years Fister Links Products has held Microsoft bonds, considered by the company to be securities available-for-sale. The bonds were acquired at a cost of $500,000. At the end of 2021, their fair value was $610,000 and their amortized cost was

> S&L Financial buys and sells securities that it typically classifies as available-for-sale. On December 27, 2021, S&L purchased Coca-Cola bonds at par for $875,000 and sold the bonds on January 3, 2022, for $880,000. At December 31, the bonds had a fair

> Refer to P 2–3 and complete the following steps: 1. Enter the unadjusted balances from the trial balance into T-accounts. 2. Post the adjusting entries prepared in P 2–3 to the accounts. 3. Prepare an adjusted trial ba

> On January 1, 2021, Labtech Circuits borrowed $100,000 from First Bank by issuing a three-year, 8% note, payable on December 31, 2023. Labtech wanted to hedge the risk that general interest rates will decline, causing the fair value of its debt to increa

> CMOS Chips is hedging a 20-year, $10 million, 7% bond payable with a 20-year interest rate swap and has designated the swap as a fair value hedge. The agreement called for CMOS to receive payment based on a 7% fixed interest rate on a notional amount of

> On January 1, 2021, Labtech Circuits borrowed $100,000 from First Bank by issuing a three-year, 8% note, payable on December 31, 2023. Labtech wanted to hedge the risk that general interest rates will decline, causing the fair value of its debt to increa

> Portions of the financial statements for Hawkeye Company are provided below. Required: 1. Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the direct method. 2. Prepare the cash flows from

> Portions of the financial statements for Parnell Company are provided below Required: 1. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method. 2. Prepare the cash flows from o

> For the Coca-Cola bonds described in BE 12–4, prepare journal entries to record (a) any unrealized gains or losses occurring in 2021 and (b) the sale of the bonds in 2022, including recognition of any unrealized gains in 2022 prior to sale and reclassifi

> The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Macrosoft Corporation. Required: Prepare the cash flows from operating activities section of the statement of cash flows (direct met

> The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Mike Roe Computers. Required: 1. Calculate each of the following amounts for Mike Roe Computers: a. Cash received from customers dur