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Ex. 14-65—Note issued for non-cash consideration. On July 1, 2011, Antrim Holdings Ltd. issued a $100,000 face value note due June 30, 2014 with a stated interest rate of 4% to BestBiz Consultants in return for consulting services provided in 2011. The value of the consulting services is not readily determinable.
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Ex. 14-61—Bond issue price and premium amortization. On January 1, 2011, Moffat Corp. issued ten-year, 10% bonds with a face value of $500,000, with interest payable semi-annually on June 30 and December 31. The bonds were sold to yield 12%. Table values are: Present value of 1 for 10 periods at 10%.
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Ex. 13-77—Contingent liabilities. Below are three independent situations. 1. In August, 2011 a worker was injured in the factory in an accident partially the result of his own negligence. The worker has sued his employer, Simon Corp, for $800,000. Simon’s legal counsel believes it is possible that the outcome of the suit.
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Ex. 14-64—Note issued for cash and other rights. Rebecca Land Corp. issued a 5-year, zero-interest-bearing note with a $1,000,000 face value to Lindsay Inc. for $1,000,000 cash. Rebecca also gave Lindsay the right to use a parcel of land for equipment storage for 5 years. Interest rates for notes of this.
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PROBLEMS Pr. 13-80—Accounts and Notes Payable. Below are selected transactions of Canary Co. for 2011: 1. On May 10, the company purchased goods from Jay Corp for $60,000, terms 2/10, n/30. Purchases and accounts payable are recorded at net amounts. The invoice was paid on May 18. 2. On June 1, the company purchased equipment.
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6. Regarding zero-interest-bearing notes, a. they do not have an interest component. b. the debtor receives the future value of the note and pays back the present value. c. any interest is never recognized until the note is repaid. d. the debtor receives the present value of the note and pays back the future.
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Ex. 13-74—Compensated absences. Spock Ltd. began operations on January 2, 2011. The company employs 15 people who work 8- hour days. Each employee earns 10 paid vacation days annually. Vacation days may be taken after January 10 of the year following the year in which they are earned. The average hourly.
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MULTIPLE CHOICE—Conceptual 1. The IASB current proposed definition of a liability is a. an account having a credit balance after closing entries are posted. b. a deferred credit that is recognized and measured in conformity with generally accepted accounting principles. c. a present economic obligation for which the entity is the obligor. d. an obligation.
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Ex. 14-67—Early extinguishment of debt. On August 1, 2009, Shakespeare Inc sold 8%, five year bonds with a maturity value of $1,000,000 for $982,000. Interest on the bonds is payable semi-annually on August 1 and February 1. The bonds are callable at 104 at any time after August 1, 2011. By.
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Ex. 13-73—Payroll entries. The total payroll of Luton Co. was $460,000. Income taxes withheld were $110,000. The employment insurance is 1.73% for the employee and 1.4 times the employee premium for the employer. The CPP/QPP contributions are 4.95% for both. Instructions (a) Prepare the journal entry for the wages and salaries paid. (b) Prepare.
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31) At the beginning of 2016, Peter Dots has the following ledger balances: Accounts receivable Bal $44,000       Allowance for doubtful debts     Bal $8000   Bad debts expense           During the year, credit sales amounted to $810,000. Cash collected on credit sales amounted to $790,000 and $16,000 was written off. At the end of the year, the company adjusted for bad.
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Ex. 14-62—Entries for Bonds Payable. Instructions Prepare journal entries to record the following transactions related to Euro Ltd’s long-term bonds. (a) On April 1, 2010, Euro issued $600,000, 9% bonds (dated January 1, 2010) for $645,442 including accrued interest. Interest is payable annually on January 1, and the bonds mature on January.
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Pr. 13-83—Warranties. Canada Computer Company sells computers for $2,000 each which includes a 3-year warranty that requires the company to perform periodic services and to replace defective parts. During 2011, the company sold 500 computers. Based on past experience, the company has estimated the total 3-year warranty costs as $40 for.
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31. Which of the following may be accrued as a contingent liability? a. Threat of expropriation of assets. b. Pending or threatened litigation. c. Guarantees of indebtedness of others. d. All of the above. 32. According to the Exposure Draft of Proposed Amendments to IAS 37, Provisions, Contingent Liabilities and Contingent Assets a. Only conditional obligations.
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Ex. 14-59—Underwriting for bond issues. Explain the difference between firm underwriting and best efforts underwriting.   Ex. 14-60—Amortization of discount or premium. Sedge Industries Ltd. issued $2,000,000, 8% bonds on May 1, 2011 and received cash proceeds of $1,774,526. The bonds pay interest semi-annually on May 1 and November 1. The maturity date on.
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MULTIPLE CHOICE—CPA Adapted 61. Which of the following is generally associated with current liabilities classified as accounts payable? 62. Included in Lennon Inc’s account balances at December 31, 2011, were the following: 4% note payable issued October 1, 2011, maturing September 30, 2012$250,000 6% note payable issued April 1, 2011, payable in six equal.
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Ex.13-76—Asset Retirement Obligation. Nickel Mines International Ltd discovered a new bauxite deposit, the Flamingo Mine, and began production on January 1, 2011. The province requires mining companies to return the land to its natural state at the end of mining activity. Nickel Mines International Ltd estimates that it will operate the.
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Pr. 13-81—Refinancing of short-term debt. At their last year end, December 31, 2011, the liabilities outstanding of Diamond Corp included the following: 1. Cash dividends on common shares, $100,000, payable on January 15, 2012. 2. Note payable to Manitoba Bank, $850,000, due January 20, 2012. 3. Serial bonds, $2,000,000, of which $500,000 matures during.
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Use the following information for questions 45 through 47: On December 31, 2010, Diaz Corp. is in financial difficulty and cannot pay a $900,000 note with $90,000 accrued interest payable to Cameron Ltd, which is now due. Cameron agrees to accept from Diaz equipment that has a fair value of $435,000,.
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Ex.13-75—Sales taxes. For the month of April, Regina Sales Ltd recorded $140,000 in sales, 40% of which were on account (terms N30), and 60% of which were cash sales. The company is required to charge 6% Provincial Sales Tax (PST) and 5% Goods and Services Tax (GST) on all sales. Instructions Prepare one.
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Pr. 13-86—Asset Retirement Obligation. Extraction Friendly Ltd. specializes in extracting ore. It prides itself for following high environmental standards in the extraction process. On January 1, 2006, Extraction Friendly purchased the rights to use a parcel of land from the province of Quebec. The rights cost $15,000,000 and allowed the company.
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21) The Allowance for doubtful debts has a credit balance of $8000 before the adjusting entry for bad debt expense. After analysing the accounts in the accounts receivable subsidiary ledger using the ageing method, the company's management estimates that uncollectable accounts will be $15,000. What will be the amount of.
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Pr. 13-87—Unredeemed coupons. During 2011 Canadiens Corp. sold 200,000 tickets for hockey games for $60 each under a new sales promotion program. Each ticket contains one coupon. Any person who presents 2 coupons can receive a ticket to a Montreal Allouettes football game for only $2. Canadiens Corp. pays $8.00 per.
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Ex. 14-63—Sale and subsequent buyback of bonds. On July 1, 2011, Markov Corp. issued $400,000 par value, 10%, 10-year bonds dated July 1, 2011, with interest payable semi-annually on January 1 and July 1. The bonds were issued for $454,361. On January 1, 2013, Markov offered to buy back the bonds.
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Ex. 13-78—Premiums. Treble Clef Music gives its customers coupons which are redeemable for a poster plus a Dixie Chicks DVD. One coupon is issued for each dollar of sales. On presentation of 100 coupons and $5.00 cash, the customer receives the poster and DVD. Treble Clef estimates that 80% of the.
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MULTIPLE CHOICE—Computational 37. Binnie Corp. signed a three-month, zero-interest-bearing note on November 1, 2011 for the purchase of $40,000 of inventory. The maturity value of the note was $40,600, based on the bank’s discount rate of 6%. The adjusting entry prepared on December 31, 2011 in connection with this note will.
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26) The following information is from the 2016 records of Armand Camera Shop:   Accounts receivable, 31 December 2016 $45,000 (debit) Allowance for doubtful debts, 31 December 2016 prior to adjustment 1900 (debit) Net credit sales for 2016 178,000 Accounts written off as uncollectable during 2016 19,000 Cash sales during 2016 28,000   Bad debts expense is estimated by the ageing of accounts receivable.
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16. Corporation income taxes payable a. must always be approved by an external auditor. b. are reviewed and approved by Canada Revenue Agency (CRA). c. also apply to proprietorships and partnerships. d. are always the same under GAAP and Canadian tax laws. 17. Which of the following are included in an employer's payroll costs? a. Employee.
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EXERCISES Ex. 14-58—Terms related to long-term debt. Place the letter of the best matching phrase before each term. a. Bonds having unusually long terms. b. Rate set by party issuing the bonds which appears on the bond instrument. c. The stated interest rate is the same as the effective interest at date of issuance. d. Rate.
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Ex. 13-79—Premiums. Rover Corp. includes one coupon in each bag of dog food it sells. In return for three coupons, customers receive a dog toy that the company purchases for $1.20 each. Rover's experience indicates that 60% of the coupons will be redeemed. During 2011, 100,000 bags of dog food were.
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Ex. 14-66—Retirement of bonds. The December 31, 2010 balance sheet of Toews Corp. included the following items: 7.5% bonds payable due December 31, 2018$576,000 The bonds have a face value of $600,000, and were issued on December 31, 2008 at 95. Interest is payable semi-annually on June 30 and December 31. The company.
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Pr. 13-88—Contingencies. You were hired by Oak Corp. to advise them on how to reflect the events below in their financial statements for the year ended December 31, 2011. Event 1: The Division A employees union has been negotiating a new contract with Oak Corp. The union is requesting a 5% wage.
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Exercises Ex. 13-72—Notes payable. On August 31, 2011, Kalamazoo Corp paid the Majestic Bank part of an outstanding $150,000 long term 10% note payable obtained one year ago, by paying $90,000 plus $9,000 interest. In order to do this, Kalamazoo used $26,200 cash and signed a new one-year, zero-interest-bearing $80,000 note discounted.
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MULTIPLE CHOICE—Conceptual 1. Which of the following is NOT generally classified as a long-term liability? a. Stock dividends distributable. b. Pension liabilities. c. Mortgages payable. d. Lease liabilities. 2. A contract representing the covenants and other terms of the agreement between the issuer of bonds and the lender is known as a a. bond debenture. b. bond indenture. c..
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  66. Roswell Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to unearned service contract revenues. This account had a balance of $600,000 at December 31, 2010 before year-end adjustment. Service contract costs.
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26. Using the revenue approach to account for product guarantees and warranty obligations a. the liability is measured at the estimated cost of meeting the obligation. b. there is no effect on future income. c. the liability is measured at the value of the services to be provided. d. the liability is measured at.
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