Intermediate Accounting

Brief Exercise 7-15

Grouper Company designated Jill Holland as petty cash custodian and established a petty cash fund of $260. The fund is reimbursed when the cash in the fund is at $23, which it is. Petty cash receipts indicate funds were disbursed for office supplies $98 and miscellaneous expense $136. Prepare journal entries for the establishment of the fund and the reimbursement. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Exercise 9-4

Teal Company began operations in 2017 and determined its ending inventory at cost and at LCNRV at December 31, 2017, and December 31, 2018. This information is presented below.

(a) Prepare the journal entries required at December 31, 2017, and December 31, 2018, assuming inventory is recorded at LCNRV and a perpetual inventory system using the cost-of-goods-sold method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

(b) Prepare journal entries required at December 31, 2017, and December 31, 2018, assuming inventory is recorded at cost and a perpetual system using the loss method. (Use Recovery of Loss Inventory account.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

(c) Which of the two methods above provides the higher net income in each year?

Brief Exercise 13-5

Kingbird Corporation made credit sales of $43,800 which are subject to 7% sales tax. The corporation also made cash sales which totaled $18,618 including the 7% sales tax.

Warning

Ok   Cancel  

Prepare the entry to record Kingbird’s credit sales. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Warning

Ok   Cancel  

Prepare the entry to record Kingbird’s cash sales. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Brief Exercise 13-10

Sheridan Inc. is involved in a lawsuit at December 31, 2017.

Warning

Ok   Cancel  

Prepare the December 31 entry assuming it is probable that Sheridan will be liable for $896,500 as a result of this suit. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Warning

Ok   Cancel  

Prepare the December 31 entry, if any, assuming it is not probable that Sheridan will be liable for any payment as a result of this suit. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Brief Exercise 14-3

The Splish Company issued $370,000 of 7% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds were issued at 96. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Splish Company records straight-line amortization semiannually. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

Brief Exercise 14-14

Sweet Corporation has elected to use the fair value option for one of its notes payable. The note was issued at an effective rate of 12% and has a carrying value of $19,000. At year-end, Sweet’s borrowing rate (credit risk) has declined; the fair value of the note payable is now $21,000.

Warning

Ok   Cancel  

Determine the unrealized holding gain or loss on the note. (Enter loss using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).)

Warning

Ok   Cancel  

Prepare the entry to record any unrealized holding gain or loss. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Exercise 21-1

On January 1, 2017, Waterway Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Waterway to make annual payments of $8,634 at the beginning of each year, starting January 1, 2017. The machine has an estimated useful life of 6 years and a $4,900 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Waterway uses the straight-line method of depreciation for all of its plant assets. Waterway’s incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown. Click here to view factor tables

Warning

Ok   Cancel  

Compute the present value of the minimum lease payments. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

Warning

Ok   Cancel  

Prepare all necessary journal entries for Waterway for this lease through January 1, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,971.)