Accounting Long – Flashcards

Scorcese Inc. is involved in a lawsuit at December 31, 2014. 1. Prepare the December 31 entry assuming it is probable that Scorcese will be liable for $917,300 as a result of this suit. 2. Prepare the December 31 entry, if any, assuming it is not probable that Scorcese will be liable for any payment as a result of this suit.

Streep Factory provides a 2-year warranty with one of its products which was first sold in 2014. In that year, Streep spent $90,600 servicing warranty claims. At year-end, Streep estimates that an additional $426,300 will be spent in the future to service warranty claims related to 2014 sales. Prepare Streep's journal entry to record the $90,600 expenditure, and the December 31 adjusting entry, assuming the expenditures are inventory costs.

Kasten Inc. provides paid vacations to its employees. At December 31, 2014, 27 employees have each earned 2 weeks of vacation time. The employees' average salary is $570 per week. Prepare Kasten's December 31, 2014, adjusting entry.

The Colson Company issued $477,000 of 10% bonds on January 1, 2014. The bonds are due January 1, 2020, with interest payable each July 1 and January 1. The bonds are issued at face value. Prepare Colson's journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.

On April 1, 2014, Dougherty Inc. entered into a cost-plus-fixed-fee contract to construct an electric generator for Altom Corporation. At the contract date, Dougherty estimated that it would take 2 years to complete the project at a cost of $1,972,000. The fixed fee stipulated in the contract is $442,000. Dougherty appropriately accounts for this contract under the percentage-of-completion method. During 2014, Dougherty incurred costs of $729,640 related to the project. The estimated cost at December 31, 2014, to complete the contract is $1,242,360. Altom was billed $630,000 under the contract. Prepare a schedule to compute the amount of gross profit to be recognized by Dougherty under the contract for the year ended December 31, 2014. Show supporting computations in good form. 1. 2. 3. 4. 5. 6. 7. 8.

On January 1, 2014, Wetzel Company sold property for $503,000. The note will be collected as follows: $245,000 in 2014, $191,000 in 2015, and $67,000 in 2016. The property had cost Wetzel $347,070 when it was purchased in 2012. (a) Compute the amount of gross profit realized each year, assuming Wetzel uses the cost-recovery method. Year 2014: Year 2015: Year 2016: (b) Compute the amount of gross profit realized each year, assuming Wetzel uses the installment-sales method. Year 2014: Year 2015: Year 2016:

Ace Company had 252,000 shares of common stock outstanding on December 31, 2015. During the year 2016, the company issued 8,000 shares on May 1 and retired 14,000 shares on October 31. For the year 2016, Ace Company reported net income of $296,800 after a casualty loss of $40,900 (net of tax). What earnings per share data should be reported at the bottom of its income statement, assuming that the casualty loss is extraordinary? (Round answers to 2 decimal places, e.g. $2.55.) 1. 2. 3.

In 2013, Chirac Enterprises issued, at par, 75 $1,030, 8% bonds, each convertible into 110 shares of common stock. Chirac had revenues of $20,900 and expenses other than interest and taxes of $8,920 for 2014. (Assume that the tax rate is 40%.) Throughout 2014, 3,190 shares of common stock were outstanding; none of the bonds was converted or redeemed. (a) Compute diluted earnings per share for 2014. (Round answer to 2 decimal places, e.g. $2.55.) (b) Assume the same facts as those assumed for part (a), except that the 75 bonds were issued on September 1, 2014 (rather than in 2013), and none have been converted or redeemed. (Round answer to 2 decimal places, e.g. $2.55.) (c) Assume the same facts as assumed for part (a), except that 25 of the 75 bonds were actually converted on July 1, 2014. (Round answer to 2 decimal places, e.g. $2.55.)

Problem 11-9 Roland Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2013 for $25,300,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2014, new technology was introduced that would accelerate the obsolescence of Roland's equipment. Roland's controller estimates that expected future net cash flows on the equipment will be $15,939,000 and that the fair value of the equipment is $14,168,000. Roland intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Roland uses straightline depreciation. (a) Prepare the journal entry (if any) to record the impairment at December 31, 2014. 1. 2. (b) Prepare the journal entry for the equipment at December 31, 2015. The fair value of the equipment at December 31, 2015, is estimated to be $14,927,000. 1. 2. (c) Prepare the journal entry (if any) to record the impairment at December 31, 2014 and for the equipment at December 31, 2015, assuming that Roland intends to dispose of the equipment and that it has not been disposed of as of December 31, 2015. 1. 2. 3. 4.

Presented below is information related to equipment owned by Suarez Company at December 31, 2014. Cost $ 10,089,000 Accumulated depreciation to date 1,121,000 Expected future net cash flows 7,847,000 Fair value 5,380,800 Assume that Suarez will continue to use this asset in the future. As of December 31, 2014, the equipment has a remaining useful life of 4 years. a. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2014. b. Prepare the journal entry to record depreciation expense for 2015. c. The fair value of the equipment at December 31, 2015, is $5,717,100. Prepare the journal entry (if any) necessary to record this increase in fair value.

Fernandez Corporation purchased a truck at the beginning of 2014 for $111,500. The truck is estimated to have a salvage value of $4,460 and a useful life of 356,800 miles. It was driven 51,290 miles in 2014 and 69,130 miles in 2015. Compute depreciation expense for 2014 and 2015. a. Depreciation expense for 2014 b. Depreciation expense for 2015

Lockard Company purchased machinery on January 1, 2014, for $97,360. The machinery is estimated to have a salvage value of $9,736 after a useful life of 8 years. Compute 2014 depreciation expense using the straight-line method. a. Depreciation expense Compute 2014 depreciation expense using the straight-line method assuming the machinery was purchased on September 1, 2014. b. Depreciation expense

11-5 Robert Parish Corporation purchased a new machine for its assembly process on August 1, 2014. The cost of this machine was $120,258. The company estimated that the machine would have a salvage value of $13,158 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 21,900 hours. Year-end is December 31. Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (a) Straight-line depreciation for 2014 (b) Activity method for 2014, assuming that machine usage was 860 hours (c) Sum-of-the-years'-digits for 2015 (d) Double-declining-balance for 2015 $Entry field with correct answer

Oxford Corporation began operations in 2014 and reported pretax financial income of $227,400 for the year. Oxford's tax depreciation exceeded its book depreciation by $38,910. Oxford's tax rate for 2014 and years thereafter is 30%. In its December 31, 2014, balance sheet, what amount of deferred tax liability should be reported? Deferred tax liability to be reported

Oxford Corporation began operations in 2014 and reported pretax financial income of $220,290 for the year. Oxford's tax depreciation exceeded its book depreciation by $38,590. Oxford's tax rate for 2014 and years thereafter is 30%. Assume this is the only difference between Oxford's pretax financial income and taxable income. a. Prepare the journal entry to record the income tax expense, deferred income taxes, and income taxes payable. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) 1. 2 3. b. Show how the deferred tax liability will be classified on the December 31, 2014, balance sheet. Deferred tax liability should be classified as a _____ with correct answer on the December 31, 2014, balance sheet.

At December 31, 2014, Suffolk Corporation had an estimated warranty liability of $115,400 for accounting purposes and $0 for tax purposes. (The warranty costs are not deductible until paid.) The effective tax rate is 30%. Compute the amount Suffolk should report as a deferred tax asset at December 31, 2014. Deferred tax asset at December 31, 2014

For 2012, Campbell Soup Company had pension expense of $73 million and contributed $71 million to the pension fund. Prepare Campbell Soup Company's journal entry to record pension expense and funding. 1. 2. 3.

At December 31, 2014, Besler Corporation had a projected benefit obligation of $518,030, plan assets of $339,190, and prior service cost of $133,140 in accumulated other comprehensive income. Determine the pension asset/liability at December 31, 2014. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Pension asset/liability at December 31, 2014

Hawkins Corporation has the following balances at December 31, 2014. Projected benefit obligation $2,870,520 Plan assets at fair value 2,239,410 Accumulated OCI (PSC) 1,115,840 What is the amount for pension liability that should be reported on Hawkin's balance sheet at December 31, 2014? Pension liability balance at December 31, 2014

Foley Corporation has seven industry segments with total revenues as follows. Penley $817 Cheng $213 Konami 816 Takuhi 211 KSC 258 Molina 968 Red Moon 231 Based only on the revenues test, which industry segments are reportable? Penley: Cheng: Konami: Takuhi KSC: Molina: Red Moon: