Intermediate Accounting: Reporting and Analysis
2nd Edition
ISBN: 9781285453828
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 6, Problem 9C
To determine
State Company D’s policy in regard to the sales returns under financial reporting and ethical perspective.
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Assume that you are the owner of Campus Connection, which specializes in items that interest students. At the end of January of the current year, you find (for January only) this information:
a. Sales, per the cash register tapes, of $155000, plus one sale on credit (a special situation) of $2500. b. With the help of a friend (who majored in accounting), you determine that all of the goods sold during January cost $70,000 to purchase.
c. During the month, according to the checkbook, you paid $37,000 for salaries, rent, supplies, advertising, and other expenses however, you have not yet paid the $900 monthly utilities for January.
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On the basis of the data given (disregard income taxes), what was the amount of net income for January?
Major League Products provides merchandise carrying the logos of each fan’s favorite major league team. In recent years, the company has struggled to compete against new Internetbased companies selling products at much lower prices. Andrew Ransom, in his second year out of college, was assigned to audit the financial statements of Major League Products. One of the steps in the auditing process is to examine the nature of year-end adjustments. Andrew’s investigation reveals that the company has made several year-end adjustments, including (a) a decrease in the allowance for uncollectible accounts, (b) a reversal in the previous write-down of inventory, (c) an increase in the estimated useful life used to calculate depreciation expense,and (d) a decrease in the liability reported for litigation.Required:1. Classify each adjustment as conservative or aggressive.2. What effect do these adjustments have on expenses in the current year?3. What effect do these adjustments have on the…
Umatilla Bank and Trust is considering giving Novak Corp. a loan. Before doing so, it decides that further discussions with Novak’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $261,940. Discussions with the accountant reveal the following.
1.
Novak shipped goods costing $55,800 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2.
The physical count of the inventory did not include goods costing $97,720 that were shipped to Novak FOB destination on December 27 and were still in transit at year-end.
3.
Novak received goods costing $25,980 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count.
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Novak shipped goods costing $54,080 to Ehler of Canada FOB…
Chapter 6 Solutions
Intermediate Accounting: Reporting and Analysis
Ch. 6 - What are the components of cash? What items may be...Ch. 6 - Prob. 2GICh. 6 - Prob. 3GICh. 6 - How are trade receivables different from nontrade...Ch. 6 - Prob. 5GICh. 6 - Prob. 6GICh. 6 - Prob. 7GICh. 6 - What is a sales return? A sales allowance?...Ch. 6 - Discuss the differences between the allowance...Ch. 6 - Prob. 10GI
Ch. 6 - Prob. 11GICh. 6 - What method of bad debt estimation categorizes...Ch. 6 - Why does the write-off of uncollectible accounts...Ch. 6 - Discuss the difference between a secured borrowing...Ch. 6 - When does a company record the transfer of...Ch. 6 - Prob. 16GICh. 6 - What is a non-interest-bearing note? How does...Ch. 6 - Prob. 18GICh. 6 - How are the cash proceeds determined when a note...Ch. 6 - Under IFRS, what criteria must be satisfied in...Ch. 6 - Prob. 21GICh. 6 - (Appendix 6. 1) What is the purpose of a petty...Ch. 6 - (Appendix 6. 7) Why are actual expenses, rather...Ch. 6 - Prob. 24GICh. 6 - Prob. 25GICh. 6 - Prob. 1MCCh. 6 - Prob. 2MCCh. 6 - A company is in its first year of operations and...Ch. 6 - Prob. 4MCCh. 6 - Prob. 5MCCh. 6 - Prob. 6MCCh. 6 - A method of estimating bad debts that focuses on...Ch. 6 - When the accounts receivable of a company are sold...Ch. 6 - Prob. 9MCCh. 6 - Prob. 10MCCh. 6 - Prob. 11MCCh. 6 - On December 31, Harrison Company reports the...Ch. 6 - Lindley Enterprises sells hand woven rugs. Paige...Ch. 6 - Long Corporation is a fabric manufacturing...Ch. 6 - Prob. 4RECh. 6 - Prob. 5RECh. 6 - Prob. 6RECh. 6 - Prob. 7RECh. 6 - On December 1 of the current year, Jordan Inc....Ch. 6 - On December 1 of the current year, Jordan Inc....Ch. 6 - On December 1, Newton Enterprises sells 100,000 of...Ch. 6 - Kaseys Cake Shop made 20,000 in sales of wedding...Ch. 6 - On June 1, Phillips Corporation sold, with...Ch. 6 - Prob. 13RECh. 6 - Prob. 1ECh. 6 - Prob. 2ECh. 6 - Journal Entry to Separate Receivables An...Ch. 6 - Prob. 4ECh. 6 - Prob. 5ECh. 6 - Prob. 6ECh. 6 - Prob. 7ECh. 6 - Prob. 8ECh. 6 - Prob. 9ECh. 6 - Aging Analysis of Accounts Receivable Cowens, a...Ch. 6 - Bradford Companys accounting records on December...Ch. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Transfer of Accounts Receivable Inder Corporation...Ch. 6 - Prob. 16ECh. 6 - Prob. 17ECh. 6 - Computing the Proceeds from the Sale of Notes...Ch. 6 - Recording the Sale of Notes Receivable Singer...Ch. 6 - Prob. 20ECh. 6 - Prob. 21ECh. 6 - Prob. 22ECh. 6 - Prob. 23ECh. 6 - Prob. 24ECh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - From inception of operations to December 31, 2015,...Ch. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - Prob. 10PCh. 6 - Factoring and Assignment of Accounts Receivable...Ch. 6 - Recording Note Transactions The following...Ch. 6 - Notes Receivable Transactions The following notes...Ch. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 1CCh. 6 - Prob. 2CCh. 6 - Bad Debt Expense When a company has a policy of...Ch. 6 - Prob. 4CCh. 6 - Prob. 5CCh. 6 - Components of Cash Cash is an important asset of a...Ch. 6 - Prob. 7CCh. 6 - Transfer of Accounts and Notes Receivable Tidal...Ch. 6 - Prob. 9CCh. 6 - Prob. 10CCh. 6 - Researching GAAP Situation Hamilton Company...
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- On December 1, 2019, AwakcAllNight Inc. sells 5,000 super caffeinated candy bars to Campus Grocers. The candy bars sell for 3 per bar. In addition, AwakcAllNight pays Campus Grocers a 900placement fee to ensure that its candy bars are always stocked prominently by the cash register. The 900 is paid at the end of each month based on the results of random inspections of Campus Grocers by AwakcAllNight to ensure that the terms of the contract are being followed. Required: 1. Determine the transaction price for Awake AllNights revenue contract. 2. Prepare AwakeAllNights journal entries to recognize sales revenue and pay Campus Grocers the placement fee.arrow_forwardYou work as an audit junior for Smith Holidays Co, a firm that specialises in luxury holidays. The auditor's opinion on the financial statements is likely to be modified this year. Just before the end of the current audit, the finance director of Smith Holidays Co offers each member of the audit team a discount of 75% on the price of a holiday. At the end of the audit, the financial director also gives a box of chocolates to each member of her finance team and also to each member of the audit team as she has done in previous years as a token of appreciation for everyone's hard work. Required: Explain whether this situation presents any threats to independence and if so, explain the threats and describe the possible safeguards that could be implemented to mitigate the threats.arrow_forwardConcord Corp. follows IFRS and sells its products in expensive, reusable containers that can be tracked. The customer is charged a deposit for each container that is delivered and receives a refund for each container that is returned within two years after the year of delivery. When a container is not returned within the time limit, Concord accounts for the container as being sold at the deposit amount and credits the account Container Sales Revenue. Information for 2023 is as follows: Containers held by customers at December 31, 2022, from deliveries in: Containers delivered in 2023 Containers returned in 2023 from deliveries in: Liability for Reusable Containers $ eTextbook and Media List of Accounts 2021 2022 There would be 2021 $118,000 2022 291,300 315,000 $177,200 418,700 2023 Calculate the total amount that Riverbed should report as a liability for returnable deposits at December 31, 2023. Had Riverbed followed ASPE, would any of your answers in above parts be different?…arrow_forward
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Ethical Decision Making in Management; Author: GreggU;https://www.youtube.com/watch?v=6UrBO-cL27Q;License: Standard Youtube License