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Problem D-1 CurrentLiabilities In each box of cereal that it produces, Snoopy Cereal Corp. includes a special coupon.The purchaser may redeem 10 coupons for a cheese grater (premium).Each grater costsSnoopy $0.90. During2017, Snoopy purchased 6,000 gratersand sold 200,000 boxes of cereal @ $3.50 per box. Based on past experience, Snoopy estimates that.
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PROBLEMS Pr. 14-78Bond interest and discount amortization On June 1, 2017, Santa Ana Corp. sold 10-year, $500,000 (face value) bonds for $438,800. The bonds have a stated interest rate of 8% and a yield of 10%, and pay interest annually on May 31 of each year. The bonds are to be accounted.
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    Problem E-2DeferredIncome Taxes In 2017, the first year of its existence, Spider Ltd.'s accountant, in preparing both the income statement and the tax return, developed the following list of items creating differences between accounting and taxable income: 1.The company sells its merchandise on an installment contract basis. In 2017,Spider elected, for tax.
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Problem F-2 Statement of Cash Flows (Indirect Method) BIRCH CORPORATION Comparative Statements of Financial Position December 31 20172016 Cash........................................$     43,000$     24,000 Accounts receivable, net........................31,00038,000 Inventory.....................................118,00082,000 Land........................................120,000190,000 Building......................................200,000200,000 Accumulated depreciation.......................(50,000)(40,000) Equipment...................................1,030,000600,000 Accumulated depreciation....................... (118,000)   (94,000) $1,374,000$1,000,000 Accounts payable..............................$   115,000$   100,000 4% Bonds payable.............................320,000-0- Common shares...............................750,000750,000 Retained earnings.............................   189,000   150,000 $1,374,000$1,000,000 Additional data: 1.Net income for the year was $84,000. 2.Cash dividends were paid. 3.Land was sold for $80,000. 4.Old equipment was sold for $70,000.This.
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____11.The cost model of accounting for PP&E assets a.should be applied to investment property only. b.should be applied to other PP&E assets only. c.can be applied to all classes of PP&E including investment property. d.is not appropriate under current Canadian GAAP. ____12.When an investor is using the equity method and the investee reports net income,.
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  Problem E-1 Accounting Changes and Error Corrections Thor Corp.’s reported pretax incomes for 2017 and the previous two years as follows: 201720162015 $150,000$125,000$95,000 2017’s income was correctly determined after taking into account the following accounting changes and error corrections made during the year (the errors were made in previous years but were not discovered.
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  Exercises Ex. 14-64 Underwriting for bond issues Explain the difference between firm underwriting and best efforts underwriting. Ex. 14-65 Terms related to long-term debt Place the letter of the best matching phrase before each term.      1.Debenture     6.Debt to total assets ratio      2.Bearer bonds     7.Term bonds      3.Income bonds     8.Leverage      4.Carrying value     9.Callable bonds      5.Stated rate     10.Market rate a)Bonds that mature on a single date. b)Rate set by.
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Pr. 13-82Refinancing of short-term debt At their last year end, December 31, 2017, the liabilities outstanding of Copper Corp. included the following: 1.Cash dividends on common shares, $100,000, payable on January 15, 2018 2.Note payable to Manitoba Bank, $850,000, due January 20, 2018 3.Serial bonds, $2,000,000, of which $500,000 matures during 2018 4.Note payable to.
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Problem D-7 Basic and Diluted Earnings per Share The following data relate to Schroeder Ltd. for the calendar year 2017: Net income (30% tax rate)...............................$3,250,000 Average number of common shares outstanding during 2017.............................1,200,000shares 8%, cumulative convertible preferred shares: convertible into 90,000 common shares.................$1,800,000 6% convertible bonds; convertible into 60,000 common shares....................................$2,000,000 Stock options, exercisable at $30 per share.................105,000shares All.
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Problem B-2 Definitions and Key Concepts Provide clear, concise answers for the following: 1.What are cash and cash equivalents and how are they reported? 2.Identify the main differences between ASPE and IFRS with respect to the accounting for receivables. 3.Identify the inventory categories of a manufacturing company and describe how they are related. Problem B-3.
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  Problem A-6 Income and Retained Earnings Statements Peanut Corporation is a private corporation using ASPE.At December 31, 2017, an analysis of the accounts and discussions with company officials included the following account balances and other information: Accounts receivable.............................................$  102,000 Accrued interest payable..........................................1,000 Dividend revenue................................................9,000 Sales.........................................................600,000 Purchase discounts..............................................9,000 Purchases.....................................................360,000 Accounts payable...............................................30,000 Loss from fire (net of $7,000 tax)...................................21,000 Selling expenses................................................64,000 Common shares.
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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.Restrictions included in restricted covenants do NOT generally include a) working capital restrictions. b) limits on executive compensation. c) dividend restrictions. d) limitations on incurring additional debt. 3.A contract representing the covenants and other.
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21.Which of the following is generally NOT used as a basis for calculating bonuses or profit-sharing amounts? a) a percentage of the employees’ regular pay rates b) the company’s pre-tax income c) productivity increases d) gross sales 22.Under IFRS, a provision is a) a special fund set aside to pay long-term debt. b) unearned revenue. c) a liability.
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  Problem C-5Depreciation Methods A machine costing $180,000 has an estimated residual value of $15,000 and an estimated service life of ten years.What is the annual depreciation for each of the first two full years under the following methods? 1.Doubledeclining-balance: a.Year one$______________ b.Year two$______________ 2.Units of production.Lifetime production is estimated at 110,000 units; the machine produced.
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Ex. 14-66 Amortization of discount or premium On May 1, 2014, Salinas Industries Ltd. issued $2,000,000, 8% bonds and received cash proceeds of $1,774,526. The bonds pay interest semi-annually on May 1 and November 1. The maturity date on these bonds is November 1, 2026. Salinas uses the effective-interest method of.
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31.The times interest earned ratio is calculated by dividing a) net income by interest expense. b) income before taxes by interest expense. c) income before income taxes and interest expense by interest expense. d) net income and interest expense by interest expense. 32.The debt to total assets ratio is calculated by dividing a) total liabilities by.
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Ex. 14-76 Accounting for a troubled debt restructuring On December 31, 2014, Riverside Inc. is in financial difficulty and cannot pay a $350,000 note (with $35,000 accrued interest payable) to Stockton Corp. Stockton agrees to forgive the accrued interest, extend the maturity date to December 31, 2016, and reduce the interest.
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    Problem C-2Assignment of Costs Match the following cost items with the appropriate accounts: a.Landc.Land Improvements b.Buildingsd.Other ____              1.Interest cost incurred during building construction. ____              2.Back taxes on land purchased to be used for building site. ____              3.Assessment by city for drainage system. ____              4.Building permits. ____              5.Landscaping shrubs planted after building has been constructed. ____              6.Demolition costs of building.
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Ex. 14-75Accounting for a troubled debt settlement At December 31, 2014, Oscar Ltd. owes Wilde Corp. for a $300,000 note payable, plus accrued interest of $27,000. Oscar is now in financial difficulty and cannot repay Wilde. To settle the debt, Wilde agrees to accept from Oscar equipment with a fair value.
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Problem D-4 Stock Dividends and Stock Splits Stock dividends and stock splits are common forms of corporate share distribution to shareholders. Consider each of the numbered statements below, and decide whether it: A.Applies to both stock dividends and stock splits. B.Applies to stock splits only. C.Applies to stock dividends only. D.Applies to neither. (In each instance,.
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11.Which of the following may be classified as a current liability? a) stock dividends distributable b) accounts receivable credit balances c) losses expected to be incurred within the next twelve months in excess of the company's insurance coverage d) tenant’s rent deposit not returnable until the end of a long-term lease 12.Accounting for GST includes a).
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51.What is the amount of vacation pay expense that should be reported on Silver’s income statement for 2017? a) $37,800 b) $36,120 c) $34,440 d) $0 52.What is the amount of the Vacation Wages Payable that should be reported at December 31, 2019? a) $39,900 b) $45,360 c) $47,460 d) $47,880 53. Information regarding Oxygen Inc.’s payroll for the period.
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  Problem E-3 PensionCalculations and Accounting On January 1, 2017, HulkLtd. reported the following balances relating to their defined benefit pension plan: Defined benefit obligation......................$1,600,000 Fair value of plan assets.......................1,600,000 Other data related to the pension plan for calendar 2017 are: Current service cost...........................70,000 Contributions to the plan.......................102,000 Benefits paid................................100,000 Actual return on plan assets....................96,000 Interest (discount) rate.........................9% Instructions a.Calculate the defined.
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Problem B-4Journal Entries for Perpetual and Periodic Inventory Systems Lime Corporation is a supplier of electronic components used in the manufacture of computers. The company uses the FIFO cost flow method. During the month of September 2017, Lime’s inventory records for part LIM-0325, showed the following transactions: DateTransactionUnitsUnitUnitsUnit PurchasedCostSoldSelling Price Sep 1Balance900$1.65 Sep 8Purchase400$1.67 Sep 17Sale(800)$4.25 Sep 23Sale(250)$4.30 Sep.
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31.Under current IFRS requirements, a provision is recognized if a) the amount of the loss can be reliably measured and it is probable that an asset has been impaired or a liability incurred as of the financial statement date. b) the amount of the loss cannot be measured reliably but it is.
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  Problem F-1 Multiple Choice (Various Topics) Choose the best answer for each of the following questions and enter the identifying letter in the space provided. ____1.In preparing a statement of cash flows, which of the following transactions would be considered a financing activity? a.purchasing new equipment b.recording net income c.selling common shares d.purchasing inventory ____2.Which of the.
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Ex. 13-77Premiums Modern Music gives its customers coupons which are redeemable for a poster plus a Hens and 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. Modern estimates that 80% of the coupons.
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Problem B-1 Multiple Choice (Various Topics) For each of the following questions, select the letter of the statement which best answers the question and write it on the line to the left of the question. ___1.When a customer account is recognized as uncollectible and written off, under the allowance method a.it is always.
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Ex. 14-77 Accounting for troubled debt a)What are the general rules for measuring and recognizing gain or loss by the debtor on a settlement of troubled debt, which includes the transfer of non-cash assets? b)What are the general rules for measuring and recognizing a gain and for recording future payments by the.
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Ex. 13-75Compensated absences Sycamore Ltd. began operations on January 2, 2017. 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 wage.
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PROBLEMS Pr. 13-80Common types of current liabilities Define and identify common types of current liabilities and how they are valued. Pr. 13-81Accounts and Notes Payable Below are selected transactions of Blackbird Ltd. for 2017: 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.
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11.If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a a) debit to Interest Payable. b) credit to Interest Receivable. c) credit to Interest Expense. d) credit to Unearned Interest. 12.When the interest payment dates of a bond are May 1 and November 1, and a.
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  Problem C-1 Multiple Choice (Various Topics) Choose the best answer for each of the following questions and enter the identifying letter in the space provided. ____1.When the declining-balance method is used, depreciation expense for a given asset will a.decline by a constant amount each year. b.be the same each year. c.decrease rapidly at first, then.
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  Problem B-6Gross Profit Method On December 31, 2017, the entire inventory of Clementine Corp.was destroyed by a flood. Sales and purchases for the year had been $2.6 million and $1.2 million, respectively. The beginning inventory (Jan 1, 2017) was $450,000.In the past,Clementine’s gross profit has averaged 40%.Clementine uses the periodic inventory.
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Pr. 13-83Employee-related liabilities Identify and account for the major types of employee-related liabilities Pr. 13-84Asset Retirement Obligation Extraction Friendly Ltd. (EFL) specializes in extracting ore. It prides itself for following high environmental standards in the extraction process. On January 1, 2013, EFL purchased the rights to use a parcel of land from the.
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    Problem F-4 Segmented Reporting Pine Ltd. is a diversified corporation and has developed the following information about its five segments:     A       B       C     D       E     Total sales$180,000$  625,000$125,000$   190,000$  260,000 Operating profit (loss)(125,000)140,00020,000(130,000)(15,000) Total assets780,0002,400,000525,0001,650,0002,650,000 Instructions Identify which segments would be considered as reportable segments by applying the following tests: i.revenue test iioperating profit or loss test iii.assets test Do.
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Problem F-3Statement of Cash Flows (Direct Method) SYCAMORE CORPORATION Comparative Statements of Financial Position December 31 20172016 Cash.......................................$     43,000$     24,000 Accounts receivable, net.......................35,00038,000 Inventory....................................114,00082,000 Land.......................................120,000190,000 Building.....................................200,000200,000 Accumulated depreciation......................   (50,000)(40,000) Equipment...................................1,030,000600,000 Accumulated depreciation......................   (118,000)  (94,000) ...........................................$1,374,000$1,000,000 Accounts payable (merchandise purchases only)....$   115,000$   100,000 Salaries payable..............................20,000-0- 4% Bonds payable............................300,000-0- Common shares..............................750,000750,000 Retained earnings............................   189,000   150,000 ...........................................$1,374,000$1,000,000 SYCAMORE CORPORATION Income Statement For year ended December 31, 2017 Sales........................................$  1,075,000 Cost of goods sold.............................640,000 Depreciation expense...........................  94,000 Salaries expense..............................140,000 Rent expense.................................72,000 Other.
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41.On February 10, 2017, after issuance of its financial statements for calendar 2016, Diogenes Corp. entered into a financing agreement with Gigantic Bank, allowing Diogenes Corp. to borrow up to $6,000,000 at any time through 2019. Amounts borrowed under the agreement bear interest at 2% above the bank's prime interest.
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Pr. 13-86Warranties Alaska 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 2017, Alaska sold 500 computers on account. Based on past experience, the company has estimated the total 3-year warranty costs at $80.
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MULTIPLE CHOICE—Conceptual 1.According to the existing IFRS and the CICA Handbook Part II guidelines, which of the following is NOT an essential characteristic of a liability? a) It embodies a duty or responsibility. b) The transaction or event that obliges the entity has occurred. c) The obligation is enforceable on the other party. d) The.
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