Question: Walco Manufacturing Inc. holds 500 convertible

> The following information applies to Babydoll Company’s defined benefit pension plan at December 31, Year 8: The company’s employees have an average remaining service life of 10 years. The company has no unrecognized

> Tekky Corporation purchased an equity investment in Hui Zu, Ltd. on December 15 for $100,000. Tekky accounts for the equity investment by using market comparables. Hui Zu, Ltd.’s equity is not actively traded, and it does not have a readily determinable

> The following information relates to the pension plan for the employees of Neal Co.: Neal estimates that the average remaining service life is 16 years. Neal’s contribution was $315,000 in Year 5 and benefits paid were $235,000. The am

> For each of the following scenarios, compute the accrued interest and cash received when the bond is issued.

> Giant Jobs, Inc. amended its overfunded pension plan on December 31, Year 7, resulting in the recognition of prior service cost of $700,000. On December 31, Year 7, Giant Job’s employees had an average remaining service life of 20 years. The company has

> The following information applies to Babydoll Company’s defined benefit pension plan: The company’s employees have an average remaining service life of 10 years. The company has no unrecognized net gains or losses. Wh

> Do It Right, Inc.’s actuary provided the company with the following information regarding its defined benefit pension plan for the year ended December 31, Year 7: The company reported net periodic pension cost of $310,000 on its income

> The following information pertains to Burnel Corporation’s defined benefit pension plan for Year 1: What amount should Burnel report as total pension expense in Year 1? a. $250,000 b. $220,000 c. $210,000 d. $180,000

> Gregory’s on Ormond, Inc. grants its president 2,000 stock options on January 1, Year 1, that give him rights to purchase shares of the company for $40 per share on December 31, Year 2. At the time the options were granted, the fair value of the options

> On January 1, Year 1, Sweeney Company granted an employee option to purchase 100 shares of Sweeney’s common stock at $40 per share. The options became exercisable on December 31, Year 1, after the employee had completed 1 year of servic

> Bischoff Enterprises leases office space from Kally-Mack Properties for a term of 30 years. The office space that is available will permit the use of existing office equipment and computer equipment. In addition, Kally-Mack will deliver all maintenance s

> Inc., an IFRS reporter, leases a high-capacity forge from Bleake Metal Works Company for total lease payments of $4,200, which is the fair value of the asset. Under the terms of the agreement, Frankel will make equal payments over the 42-month rental per

> The Davis Group acquired $4,500,000 par value, 4%, 20-year bonds on their date of issue, January 1 of the current year. The market rate at the time of issue was 6%, and interest is paid annually on December 31. Davis will use the effective interest rate

> DC Products, Inc. leases several copy machines from Avenue Office Services. Under the terms of the agreement, DC will pay rentals of $1,000 per month for an eight-month period. The journal entry made each month is:

> You are given the following information for a 4-year lease, with $65,000 payments due at the beginning of each year. The fair value of the underlying asset is $250,000 and the deferred initial indirect costs of the lessor amounted to $15,592. The lessor’

> Balsam Associates issued $600,000 par value, 10-year bonds on January 1, 2018, with a 2% stated interest rate. It will make interest payments semiannually each June 30 and December 31 with the first interest payment at the end of the period on June 30, 2

> Lowe Leasing Company recently leased machinery to Amina Associates. The 8-year lease contract requires rental payments of $11,000 at the beginning of each year. The lease meets at least one of the Group I criteria. The 4% implicit rate on the lease is kn

> Insight Corporation leases equipment for 5 years with annual rentals of $2,000 per year. The agreement also requires that Insight purchase supplies such as oil, fasteners, and filters directly from the lessor and must spend a minimum of $350 per year ove

> Zhou Systems signed a 5-year lease at the beginning of the current year. The leased equipment is from standard dealer stock and has an economic life of 8 years and a fair value of $21,500. Under the terms of the lease, Zhou is required to pay $4,500 at t

> Baxter Brothers, Inc. enters into a four-year equipment lease with annual payments of $700 per year. The lease payments are due at the beginning of each year. The implicit rate of interest is 5% and is known to Baxter. Baxter pays $250 in initial direct

> The pretax financial income and taxable income of Zeus Corporation were the same for the following years (i.e., there were no permanent or temporary differences): What amount of income tax benefit will Zeus Corporation record in Year 6 under U.S. GAAP,

> The pretax financial income and taxable income of Zeus Corporation were the same for the following years (i.e., there were no permanent or temporary differences): What amount of income tax benefit will Zeus Corporation record in Year 6 under U.S. GAAP,

> At the end of Year 6, the tax effects of temporary differences reported in Maple Company’s year-end financial statements were as follows: A valuation allowance was not considered necessary. Maple anticipates that $40,000 of the deferre

> Samuel Company has the following accounts in its shareholders’ equity section at the beginning of the current year: Required: Prepare the journal entries required to record the following share buyback transactions assuming that Samuel

> On January 1, 2018, Gato Company issued 1,000 shares of $80 par callable preferred shares for $200,000. Gato can call these preferred shares on January 1, 2019, for $200 per share. On June 1, 2019, Gato calls the shares. Required: a. What is the journ

> Two independent situations are described here. Each situation has future deductible amounts and/or future taxable amounts produced by temporary differences: The enacted tax rate is 40% for both situations. Determine the income tax expense for the year.

> Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary diffe The enacted tax rate is 40% for both situations. Determine the deferred tax asset balance at year-end.

> Cavan Company prepared the following reconciliation between book income and taxable income for the current year Cavan’s effective income tax rate for Year 1 is 30%. The depreciation difference will reverse equally over the next 3 years

> Using the information provided in BE14-14, prepare the amortization table for the first 2 years assuming that Stark uses the straight-line method Data from BE14-14: On January 1, 2018, Stark Incorporated issued $1,500,000 par value, 5%, 7-year bonds (i.

> Cavan Company prepared the following reconciliation between book income and taxable income for the current year Cavan’s effective income tax rate for Year 1 is 30%. The depreciation difference will reverse equally over the next 3 years

> On January 2, year 1, Kean Co. purchased a 30% interest in Pod Co. for $250,000. On this date, Pod’s stockholders’ equity was $500,000. The carrying amounts of Pod’s identifiable net assets approximated their fair values, except for land, whose fair valu

> Money for Nothing Enterprises (“MNE”) held the following available-for-sale debt securities during Year 2: What will MNE report as accumulated other comprehensive income on its 12/31/Y2 balance sheet (ignore taxes)?

> Money for Nothing Enterprises (“MNE”) held the following available-for-sale debt securities during year 2 What will MNE report as unrealized gain on available-for-sale debt securities on its Year 2 statement of compreh

> Merlin Enterprises sold the following debt investment on September 30, Year 2: What is the amount of the realized gain or loss on Merlin’s Year 2 income statement, assuming that the investment in Beard Inc. is classified as an available

> Merlin Enterprises sold the following debt investment on September 30, year 2: What is the amount of the realized gain or loss on Merlin’s Year 2 income statement, assuming that the investment in Beard Inc. is classified as a trading d

> Several years ago, Indirect Bookie Company issued 10,000 shares of $2 par value common stock for $24 per share. Since that time, the company entered into several treasury stock transactions. Assume that additional paid-in capital from treasury stock tran

> The following data pertains to Tyne Co.’s investments in marketable debt securities: What amount should Tyne report as net unrealized loss on available-for-sale marketable debt securities at December 31, year 2, in accumulated other com

> Deutsch Imports has three securities in its available-for-sale debt investment portfolio. Information about these securities is as follows: TRR was sold in Year 2 for $127,400. Which of the following statements is correct? i. On its 12/31/Year 2 balanc

> Backdoor Inc. had 200,000 shares of $5 par common stock outstanding. The company declared a stock dividend of 100,000 shares when the market price was $25. By how much did additional paid-in capital increase when the dividend was distributed to the share

> Backdoor Inc. had 200,000 shares of $5 par common stock outstanding. The company declared a stock dividend of 30,000 shares when the market price was $25. By how much did additional paid-in capital increase when the dividend was declared? a. $0 b. $600

> Using the information provided in BE14-14, determine the issue price of the bonds assuming that the market rate of interest is 4%, and prepare the amortization table for the first 2 years assuming that Stark uses the effective interest rate method. Data

> On January 1, Year 1, Black Dog Corp. began operations and issued 30,000 shares of $5 par common stock for $9 per share. On June 30, the company bought back 10,000 shares for $8 per share. Then, on September 15, the company resold 5,000 shares for $12 pe

> Classic Cars Corp. has 50,000 shares of $10 par common stock and 20,000 shares of $15 par fully participating 10% cumulative preferred stock. If the company declares cash dividends of $100,000 during the current year and there are no dividends in arrears

> On September 1, Year 1, Royal Corp., a newly formed company, had the following stock issued and outstanding: • Common stock, no par, $1 stated value, 5,000 shares originally issued for $15 per share. • Preferred stoc

> McCarty Company issued 100,000 shares of its $10 par common stock at $11 per share. During the current year, McCarty acquired 30,000 shares of its common stock at $16 per share and accounted for them using the cost method. Subsequently, these

> Boone Corporation’s outstanding capital stock on December 15 consisted of the following: • 30,000 shares of 5% cumulative preferred stock, par value $10 per share, fully participating as to dividends. No dividends were in arrears. • 200,000 shares of c

> Paragon Stores Company’s weekly payroll amounts to $400,000. Paragon is responsible for paying its share of Social Security tax. The company is also responsible for federal and state unemployment taxes. The state unemployment tax rate is 4.7%, but Parago

> On December 30, Year 1, Wayne Corporation issued 1,000 of its 10-year, 8%, $1,000 face value bonds with detachable stock warrants at par. Each bond carried a detachable warrant for one share of Wayne’s common stock at a specified option price of $25 per

> On July 1, Year 1, after recording interest and amortization, Wake Company’s shareholders converted $1,000,000 of its 10% convertible bonds into 50,000 shares of its $1 par value common stock. On the conversion date, the carrying amount of the bonds was

> Clothes Horse Corp. (CHC) issued $500,000 bonds due in 10 years on January 1, Year 1, at a premium for $567,105. On January 1, Year 6, when the carrying value of the bond was $539,940, CHC redeemed the bonds at 102. What amount of gain should CHC record

> On January 1, Year 1, Congo.com issued $1,000,000 of its 10-year, 9% bonds (interest paid annually) to yield 8%. The present value of $1 at 9% for 10 years is 0.4224, and the present value of an ordinary annuity of $1 at 9% for 10 years is 6.4177. The pr

> Using the information provided in BE14-14, prepare the amortization table for the first 2 years assuming that Stark uses the straight-line method. Data from BE14-14: On January 1, 2018, Stark Incorporated issued $1,500,000 par value, 5%, 7-year bonds (i

> On November 1, Year 1, Dixon Corporation issued $800,000 of its 10-year, 8% term bonds dated October 1, Year 1. The bonds were sold to yield 10% with total proceeds of $700,000 plus accrued interest. Interest is paid every April 1 and October 1. What amo

> On July 1, Year 1, Planet Corporation sold Ken Company 10-year, 8% bonds with a face amount of $500,000 for $520,000. The market rate was 6%. The bonds pay interest semiannually on June 30 and December 31. For the 6 months ended December 31, Year 1, what

> On July 1, Year 1, Cobb Company issued 9% bonds in the face amount of $1,000,000 that mature in 10 years. The bonds were issued for $939,000 to yield 10%, resulting in a bond discount of $61,000. Cobb uses the effective interest method of amortizing bond

> Use the information provided in MC14-9 except that immediately after issuance, the market value of each warrant was $120. In its December 31, Year 1, balance sheet, what amount should Wayne report as the book value of bonds payable? a. $880,000 b. $900

> The stockholders’ equity section of DRB plc’s balance sheet at December 31, 2018, was as follows: Required: a. Prepare the journal entry required on January 9, 2019, if on that date DRB repurchased 50,000 shares of

> During the fourth quarter ended December 31, Year 1, Lighting Fixtures Inc. (LFI) had average outstanding revolving bank loans of $1.2 million. Assume that the quarterly interest charges associated with these loans was $7,500. If LFI makes the interest p

> On June 30 of the current year, Huff Corp. issued 1,000 of its 8%, $1,000 bonds at 99. The bonds were issued through an underwriter to whom Huff paid bond issue costs of $35,000. On June 30 of the current year, Huff should report the bond liability on it

> Medical Services Inc. allows employees at the end of the year to carry forward up to 40 hours of paid time off at their current salary. James is a full-time employee who has unused vacation time of 80 hours, and Marcia, also a full-time employee, has unu

> Specialty Appliances and More, Inc. (SAM) has a 3-year warranty on its solar refrigerators for defects. Warranty costs are estimated at 2% of sales in Year 1 (the year of the sale) and 5% of sales in each of the following 2 years. The warranty expires at

> Far Out Producers is involved in two product liability lawsuits and a third lawsuit that the company brought against a competitor for patent infringement. At December 31, Year 1, the company’s attorneys informed management of the following: • It is prob

> In June, Year 1, Westchase Corporation became involved in product litigation. As a result of this litigation, it is probable that Westchase will have to pay $900,000. In August, a competitor commenced a suit against Westchase alleging violation of antitr

> On January 1, 2018, Stark Incorporated issued $1,500,000 par value, 5%, 7-year bonds (i.e., there were 1,500 of $1,000 par value bonds in the issue). Interest is payable semiannually each January 1 and July 1 with the first interest payment due at the en

> Fredrick Wilson Company determined that one of its finite-life intangible assets is impaired. The asset’s net carrying value on the date of the impairment is $905,000. Fredrick Wilson does not use a separate accumulated amortization acc

> On December 31, an entity analyzed a finite life trademark with a net carrying value of $750,000 for impairment. The entity determined the following: Fair value (less costs to sell) $ 700,000 Present value of future cash flows 710,000 What is the impairm

> Sumrall Corporation owns machinery that was purchased 20 years ago. The machinery, which originally cost $2,000,000, has been depreciated using the straight-line method using a 40-year useful life and no salvage value and has a current carrying amount of

> Using the information provided in E15-5, prepare the journal entries to record the acquisition of the treasury stock assuming that it is immediately retired. Also, prepare the journal entries to record the loss and the dividend transactions as well as th

> On December 31, Star Corp. had a reporting unit that had a book value of $950,000, including goodwill of $130,000. As part of the company’s annual review of goodwill impairment, Star determined that the fair value of the reporting unit was $890,000. Star

> On December 31, an entity analyzed a finite life trademark with a net carrying value of $750,000 for impairment. The entity determined the following: Fair value $700,000 Undiscounted future cash flows $740,000 What is the impairment loss that will be rep

> SMC Research Associates reports the following intangible assets on its December 31 balance sheet: It does not use a separate accumulated amortization account for the intangible assets (i.e., it deducts the amount of amortization directly from the intang

> Derrick’s Domino Manufacturing Company learned that one of its cutting machines is obsolete. Although the company will continue to use this machinery in the future, management believes that an impairment write-down is required. The foll

> Use the same information from E12-1 except now assume the following cash-flow projections: Required: a. Compute the impairment loss for the current year, if any. b. Prepare the journal entry to record the impairment loss, if needed. Data from E12-1:

> Henne Optical Corporation reported the following information regarding long-term operating assets for its Lens Manufacturing Operations: Recent advances in technology have rendered the company’s lens manufacturing operations nearly obs

> Prepare the operating activities section of the statement of cash flows for Michael Hart Associates in E22-7 using the indirect method assuming that Michael Hart Associates reports under IFRS. Hart begins the operating activities section with operating i

> Prepare the cash flow statement under the direct format for Michael Hart Associates using the data provided in E22-7. Data from E22-7:

> West Fork Corporation issued $100,000 par value, 6%, 4-year bonds (i.e., there were 100 of $1,000 par value bonds in the issue). Interest is payable annually with the first interest payment made at the end of the period. West Fork paid $1,800 in underwri

> Michael Hart Associates closed its books for the current year. The firm provided the following comparative balance sheets and income statement. Additional Information: The company sold its indefinite-life intangible assets at their carrying value. Cash

> The following shareholders’ equity section was taken from the books of Aubry Corporation at the beginning of the current year: Required: a. Prepare the journal entries required to record each of the following events: â€&c

> Using the information provided in E22-5, prepare the cash flow statement for SuperView Company using the direct method. Provide all required disclosures.

> Super View Company’s comparative balance sheets and its current income statement follow. Additional Information : • SuperView did not sell any plant or intangible assets during the current year. It acquired equipment

> Sansa Accessories, Inc. reported the following comparative balance sheets and income statement for the current year. Sansa Accessories purchased new equipment for $948 and sold equipment with a net book value of $320. Both events were cash transactions.

> Acerler Fixtures, Inc. reported the following comparative balance sheets and income statement for the current year. Acerler Fixtures purchased new equipment for $258 and sold equipment with a net book value of $45. Both events were cash transactions. It

> Use the information from E22-1 assuming that Hockey Apparel Providers, Inc. is an IFRS reporter. Compute cash flows from operating activities for the firm under the indirect reporting format assuming that Hockey reconciles income before taxes to operatin

> Using the information provided in E22-15, prepare Cuthbert’s current-year statement of cash flows under the direct reporting format. Data from E22-15:

> Cuthbert Cookware Distributors, Inc. is a wholesale distributor of brand-name cookware products. The company’s current-year comparative balance sheets and income statement follow. Additional information: • All dividen

> Using the information provided in E22-12, prepare the statement of cash flows for Ferragosto Services, Ltd. under the indirect method. Use operating income as the starting point. Assume that interest expense and dividends paid are financing activities an

> Using the information provided in E22-12, prepare the statement of cash flows for Ferragosto Services, Ltd. under the direct method. Data from E22-12:

> Using the information from BE14-11, determine the issue price of the bonds assuming that the market rate of interest is 6%, and prepare the journal entry to record the bond issue. Data From BE14-11: On January 1, Plum Company issued $800,000 par value,

> Using the information provided in E15-3, prepare the journal entry to record the acquisition of the new computer system assuming that the system is a standardized product with a current retail value of $1,470,000 Data from E15-3: Liberty Associates rece

> Ferragosto Services, Ltd. provided the following comparative balance sheets and income statement for the current year. Additional Information: • Ferragosto included the $24,150 loss on disposal of investments in selling, general, and a

> Complete the requirements of E22-10 using the direct method. Data from E22-10: Prepare the cash flow statement for Starland Corporation for the current year using the indirect method. Provide all required disclosures

> Starland Corporation provided the following comparative balance sheets and income statement. Additional Information: • Starland did not acquire any additional plant assets during the current year. • Starland sold equ

> Hockey Apparel Providers, Inc. provided the following information for the current year. Required: a. Compute cash flows from operating activities for Hockey Apparel Providers under the indirect reporting format. b. Compute cash flows from operating ac

> Tuscany Timber Company incorrectly recorded inventory in 2017. Rather than recording ending inventory as $2,200, Tuscany’s accounting manager entered $2,500. An inventory summary for 2017 and 2018 follows Required: a. Prepare an analy

> Lombardo Lumber Company incorrectly recorded inventory in 2017. Rather than recording ending inventory as $500, Lombardo’s accounting manager entered $560, overstating ending inventory by $60. An inventory summary for 2017 and 2018 as a

> Feinstein and Company completed an internal audit of its bookkeeping system that uncovered several errors. It discovered the errors on December 31 before the books were closed. a. A $45,000 payment for advertising was recorded as an asset in the account

> Hi-Lo Corporation elected to change its method of depreciation from the double-declining balance method to the straight-line method on January 1, of the current year. It acquired the equipment 2 years ago on January 1 for $300,000. The original estimated

> Corrnuto Equipment Manufacturers, Inc. (CEM) reported the net book value of a plant asset at $2,600,000 on January 1 of the current year. There is a $500,000 expected residual value, and the estimated useful life is 25 years. On January 1 of the current

> Winthur Stores began operations on January 1, 2014, and adopted the FIFO method of accounting for its inventory for book and tax purposes. In 2017, it is considering a change to the average-cost method basis for book purposes only. Winthur provided the f