Concept explainers
• LO3–2, LO3–3
You have been asked to review the December 31, 2018, balance sheet for Champion Cleaning. After completing your review, you list the following three items for discussion with your superior:
1. An investment of $30,000 is included in current assets. Management has indicated that it has no intention of liquidating the investment in 2019.
2. A $100,000 note payable is listed as a long-term liability, but you have determined that the note is due in 10, equal annual installments with the first installment due on March 31, 2019.
3. Deferred revenue of $60,000 is included as a current liability even though only two-thirds will be recognized as revenue in 2019, and the other one-third in 2020. Determine the appropriate classification of each of these items.
Want to see the full answer?
Check out a sample textbook solutionChapter 3 Solutions
Intermediate Accounting
- A ezto.mheducation.com mework Chapter 10 Saved Help Sa Thomton Industries began construction of a warehouse on July 1, 2021, The project was completed on March 31, 2022. No new loans were required to fund construction. Thornton does have the following two interest-bearing liabilities that were outstanding throughout the construction period: $3,000, 000, 10% note $7,000, 000, 6% bonds Construction expenditures incurred were as follows: July 1, 2021 September 3e, 2021 November 30, 2021 January 30, 2022 $ 460, 000 660, 000 660, 000 600, 000 Hint The company's fiscal year-end is December 31. Required: Calculate the amount of interest capitalized for 2021 and 2022. terences Complete this question by entering your answers in the tabs below. 2021 2022 Calculate the amount of interest capitalized for 2021. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).) Date Expenditure Weight Average July 1, 2021 %24…arrow_forwardmarch eacg Letter to the correct number answer to the left: 1. Interest 2. Monetary asset 3. Compound interest 4. Simple interest 5. Annuity 6. Present value of a single amount 7. Annuity due 8. Future value of a single amount 9. Ordinary annuity 10. Effective rate or yield 11. Nonmonetary asset 12. Time value of money 13. Monetary liability 1. ______ 2. ______ 3. ______ 4. ______ 5. ______ 6. ______ 7. ______ 8. ______ 9. ______ 10. ______ 11. ______ 12. ______ 13. ______ a. First cash flow occurs one period after agreement begins b. The rate at which money will actually grow during a year c. First cash flow occurs on the first day of the agreement d. The amount of money that a dollar will grow to e. Amount of money paid/received in excess of amount borrowed/lent f. Obligation to pay a sum of cash, the amount of which…arrow_forwardQuestion 6 (this question has 2 parts) Gordon Industries Ltd has provided you with the following information: 2019 2020 2021 Debt to Equity 10.5% 23.4% 36.2% Gross Profit margin 30.2% 36.5% 35.3% Net profit margin 19.5% 17.6% 13% Return on Equity 15.1% 17.5% 16.2% Asset Turnover (times) 0.71 0.82 1.41 Return on Assets 13.8% 14.4% 18.3% Interest coverage ratio 4 times 3 times 2.5 times a) Advise Gordon Industries of the relationship between Return on Assets, Asset Turnover and Net Profit Margin. Comment on the profitability position of Gordon and any advice you consider relevant. b) Advise the shareholders of Gordon Industries on the financial structure of the company.arrow_forward
- Воx Statement creditors buildings furniture borrower 50000 150000 125000 75000 100000 first term 75000 125000 150000 100000 125000 last period 40 Note that withdrawals are 15,000, while additions are 40,000 1/, 1 Required / As the financial accountant of the company, determine the result of the activity from profit or loss for the year 2020 according to the single-entry method.arrow_forwardQuestion 1 You are a newly employed finance manager for Finance Adventure Ltd. The following data is available for the company as of 31 June 2020: Current assets of $293,950 Current liabilities $68,700 Total assets $765,600 Equity $305,890 Required: a) The company’s Management Board required you to evaluate two alternative options of debt funding and equity funding for a new project. What is the job are you doing to complete the task? (referring to one out of 3 important questions of corporate finance for your answer) b) Calculate non-current assets, non-current liabilities and build a balance sheet for the company? c) Calculate the return on assets (ROA) of the company given that return on equity (ROE) is 35%? d) What is the price earnings ratio (PE) of the company, given total number of outstanding ordinary shares is 57,000 and market price of each share is $22?arrow_forwardProblem #5 Accrual of Interest Revenue Melinda Almazan, an angel investor, decided to invest P1,200,000 excess cash in certificate of deposit on April 1, 2019. The certificate carried an 8% annual rate interest and a 1-year term to maturity. Interest will be withdrawn monthly (disregard tax effects). 1. Required: 1. What amount of income will be recognized for the year ending Dec. 31, 2019? 2. What is the effect of the adjusting entry on the accounting equation? 3. What amount of cash will be collected for interest revenue in 2019? 4. What is the amount of interest receivable as of Dec. 31, 2019? 5. What amount of cash will be collected for interest revenue in 2020? 6. What amount of interest revenue will be recognized in 2020? 7. What is the amount of interest receivable as of Dec. 31, 2020?arrow_forward
- Question 1The following information was extracted from the financial statement of Barryfor the year ended 31 December 2020. RMSales 437,500Opening inventories 17,500Closing inventories 26,250Cost of sales 262,500Other income 3,750Expenses 61,250Current liabilities 47,250Trade receivables 39,375Bank 8,750Cash 31,500Required:(a) Show the formulae and compute the value of the following for Barry:(i) Purchases(ii) Gross profit(iii)Net Profitarrow_forwardQuestion Content Area A company reported the following information: Interest receivable, December 31, 2023: $8,000 Interest receivable, December 31, 2022: $11,500 Interest revenue for 2023: $16,000 Interest receivable, December 31, 2023 $8,000 Interest receivable, December 31, 2022 11,500 Interest revenue for 2023 16,000 How much cash was received for interest during 2023?arrow_forwardHomework: - The trial balance of AL Rand Company comes on December 31, 2019 Account name $ Notes Payable Capital 14,400,000 55,110,000 90,000 6,000,000 15,900,000 6,900,000 4,500,000 17,700,000 15,000,000 3,600,000 Reserves Cash Notes Receivable Securities investments Goods for the last period Patent Goodwill Brand Required Activate Windows The preparation of the statement of financial position (balance sheet) as on 31-12-201arrow_forward
- Determine Total Current Liabilities as of December 31, 2023: Select one: a. $27,300 b. $39,900 c. $144,900 d. $132,300 e. $247,350arrow_forwardpart C D QUESTION 1. You are a financial analyst reviewing the draft financial statements of Speedy Coaches Ltd with a view to purchasing the company and have been given the following information. Income statements for the year ended 30 June 2021 2020 £'000 £'000 Revenue 32,800 29,459 Cost of sales (17,855) (15,840) Gross profit 14,945 13,619 Operating expenses (11,680) (10,477) Depreciation (1,198) (1,063) Operating profit 2,067 2,079 Interest (74) (94) Profit before taxation 1,993 1,985 Taxation (634) (601) Profit for the year 1,359 1,384 Statements of financial position as at 30 June 2021 2020 £'000 £'000 ASSETS Non-current assets Property, plant and equipment 10,300 8,720 Current assets Inventories 750 701 Trade receivables 597 436 Cash 407 279 1,754…arrow_forwarde 2018 Cash Co X+ com/quiz/28465383 press Lazada a Agoda.com e Quiz | Edmodo Department of Edu. e Classes | Ec Question 1 5 points You are a financial Manager of Chevron Corp. You need to assess the effectiveness of working capital management of the company for 2018 using the following data. What is t 2018 Receivable turnover? 2017 Account Receivable = 15 3o00 2018 Account Receivable = 15.050,00 2017 Inventory =5585.000 2018 Inventory = 5.704.000 2017 ACcounts Payable = 14.565:.000 2018 Accounts Payable = 10 952 0 2017 Sales = 134,674,000 2018 Sales = 158 902.000 2017 Cost of Saies = 95, 114 CUD 2018 Cost of Sales = 110 997 000 2017 PUtchases = 96 114000 2018 Purchases 123 435 000 10 17 f8 f6arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning