Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 1, Problem 1.4BE
Basic assumptions and principles
• LO1–7 through LO1–9
Identify the accounting concept that was violated in each of the following situations.
1. Astro Turf Company recognizes an expense, cost of goods sold, in the period the product is manufactured.
2. McCloud Drug Company owns a patent that it purchased three years ago for $2 million. The controller recently revalued the patent to its approximate market value of $8 million.
3. Philips Company pays the monthly mortgage on the home of its president, Larry Crosswhite, and charges the expenditure to miscellaneous expense.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Read the following information to answer questions 2.1 - 2.2.
LA Fashion has credit sales of $6,400,000 for the financial year ending June 30, 2021, and estimates
at the end of the financial year that five per cent of accounts receivable will not be received.
Accounts receivable total $3,100,000. The corporation uses the allowance method to account for
bad debts, based on the percentage of receivables approach.
You discovered the following errors in connection with your examination of the
Chapter 6 - Correction of Errors
PROBLEM 6-2 Counterbalancing Errors
You discovered the following errors in connection with your examination of the
financial statements of Jane Corporation:
Accrued rent expense of P10,000 was not recorded at the end of 2020.
2) Accrued interest receivable of P15.000 was not recorded at the end of 2020.
3)
1)
S) The company paid one-year insurance premium of P24,000 effective April 1
2020. The entire amount was debited to expense account and no adjustment
was made at the end of 2020.
4) The company leased a portion of its building for P48,000. The term of the
lease is one year ending April 30, 2021. Collection of rent was credited to rent
revenue account. At the end of 2020, no entry was made to take up the
unearned portion of the amount collected.
The following data were extracted from the financial statements of Jane
Corporation:
2020
2021
100,000
300,000
100,000
Net income…
ACCT 102
Please show calculations, thank you!
Chapter 1 Solutions
Intermediate Accounting
Ch. 1 - Prob. 1.1QCh. 1 - What is meant by the phrase efficient allocation...Ch. 1 - Identify two important variables to be considered...Ch. 1 - What must a company do in the long run to be able...Ch. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Prob. 1.15QCh. 1 - Explain what is meant by: The benefits of...Ch. 1 - Prob. 1.17QCh. 1 - Briefly define the financial accounting elements:...Ch. 1 - Prob. 1.19QCh. 1 - What is the going concern assumption?Ch. 1 - Prob. 1.21QCh. 1 - Prob. 1.22QCh. 1 - What are two advantages to basing the valuation of...Ch. 1 - Describe how revenue recognition relates to...Ch. 1 - What are the four different approaches to...Ch. 1 - In addition to the financial statement elements...Ch. 1 - Briefly describe the inputs that companies should...Ch. 1 - Prob. 1.28QCh. 1 - Prob. 1.29QCh. 1 - Prob. 1.30QCh. 1 - Prob. 1.31QCh. 1 - Prob. 1.32QCh. 1 - Accrual accounting LO12 Cash flows during the...Ch. 1 - Financial statement elements LO17 For each of the...Ch. 1 - Prob. 1.3BECh. 1 - Basic assumptions and principles LO17 through...Ch. 1 - Prob. 1.5BECh. 1 - Prob. 1.6BECh. 1 - Accrual accounting LO12 Listed below are several...Ch. 1 - Accrual accounting LO12 Listed below are several...Ch. 1 - Prob. 1.3ECh. 1 - Prob. 1.4ECh. 1 - Prob. 1.5ECh. 1 - Financial statement elements LO17 For each of the...Ch. 1 - Concepts; terminology; conceptual framework LO17...Ch. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Basic assumptions and principles LO18, LO19...Ch. 1 - Prob. 1.12ECh. 1 - Prob. 1.13ECh. 1 - Prob. 1.14ECh. 1 - Prob. 1.15ECh. 1 - Prob. 1.1BYPCh. 1 - Research Case 12 Accessing SEC information through...Ch. 1 - Prob. 1.3BYPCh. 1 - Prob. 1.4BYPCh. 1 - Ethics Case 18 The auditors responsibility LO14...Ch. 1 - Prob. 1.9BYPCh. 1 - Judgment Case 110 GAAP, comparability, and the...Ch. 1 - Prob. 1.11BYPCh. 1 - Prob. 1.12BYPCh. 1 - Analysis Case 113 Expense recognition LO19...Ch. 1 - Prob. 1.14BYPCh. 1 - Real World Case 115 Elements; disclosures; The...Ch. 1 - Prob. 1.16BYPCh. 1 - Target Case LO19 Target Corporation prepares its...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Asap Exercise 7-4 (Algo) Direct write-off method LO P1 Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $10,000 of its accounts receivable from Leer Company. March 29 Leer Company unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions.arrow_forwardSpectra Fashion has credit sales of $6,400,000 for the final year ending June 30, 2020, and estimates at the end of the final year that four per cent of accounts receivable will not be received. Accounts receivable total $3,100,000. The corporation uses the allowance method to account for bad debts, based on the percentage of receivables approach.arrow_forwardExercise 7-4 (Algo) Direct write-off method LO P1 Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $10,000 of its accounts receivable from Leer Company. March 29 Leer Company unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions.arrow_forward
- QUESTION: 67 At the beginning of the year, Mitchum Enterprises has an allowance for doubtful accounts of $13,600. During the year, bad debts expense based on sales is $30,000. and $15,800 are written off as uncollectable. a. Record the write-off to doubtful accounts. b. Following the write-off, what is the balance of the Allowance for doubtful Accounts?arrow_forward5 2 Solstice Company determines on October 1 that it cannot collect $57,000 of its accounts receivable from its customer, P. Moore. It uses the direct write-off method to record this loss as of October 1. On October 30, P. Moore unexpectedly pays his account in full to Solstice Company. Record Solstice's entries for recovery of this bad debt. inBook Hint Prad References Mc Graw View transaction list Journal entry worksheet 1 Record the reinstatement of the account previously written off. 2 Note: Enter debits before credits Date October 30 Despedent General Journal Debit Next >arrow_forwardA bhaliyaarrow_forward
- 1 U 4 pardo Problem 5-20 (AICPA Adapted) From inception of operations, Comprehensive Company provided for uncollectible accounts expense under the allowance method using the percentage of sales method. No year-end adjustments to the allowance account were made. The balance in the allowance for doubtful accounts was P1,000,000 at the beginning of current year. During the current year, credit sales totaled P20,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, bad debts of P200,000 were written off, and recoveries of accounts previously written off amounted to P50,000. An aging of accounts receivable was made for the first time on December 31. 000 293 800.000 Aging Balance Uncollectible 0- 60 6,000,000 10% 61 180 2,000,000 20% 181 360 1,500,000 Over 360 500,000 30% 30 50% 20 Based on the review of collectibility of the account balances in the "over 360 days" aging category, additional accounts totaling P100,000 are to be written off on December 31.…arrow_forwardDon't give answer in image formatarrow_forwardSubject-accountingarrow_forward
- Here is the questions?arrow_forwardP 7-4 Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2020 balance sheet disclosed the following: Uncollectible accounts • LO7-5, LO7-6 Current assets: $432,000 Receivables, net of allowance for uncollectible accounts of $30,000 During 2021, credit sales were $1,750,000, cash collections from customers $1,830,000, and $35,000 in accounts receivable were written off. In addition, $3,000 was collected from a customer whose account was writ- ten off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following: Percentage of Year-End Receivables in Group Percent Age Group Uncollectible 0-60 days 65% 4% 61-90 days 91-120 days Over 120 days 15 10 25 40 Required: 1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previ- ously written off. 2. Prepare the year-end adjusting entry…arrow_forwardWhat is the error correction (requiring retroactive restatement)?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License