Ifrs Accounting Solution

Solutions to Problems and Exercises TABLE OF CONTENTS * Condition 11 Concepts for Resolution 1-51 Concepts for Resolution 1-62 Concepts for Resolution 1-103 Concepts for Resolution 1-113 * Condition 24 Brief Exercise 2-34 Brief Exercise 2-44 Brief Exercise 2-54 Exercise 2-35 * Condition 36 Exercise 3-66 Exercise 3-96 Exercise 3-118 Exercise 3-1410 Exercise 3-1510 Exercise 3-1610 * condition 412 Exercise 4-212 Exercise 4-413 Exercise 4-516 Exercise 4-1217 Exercise 4-1318 Exercise 4-1519 Whole 4-119 Whole 4-721 * Condition 523 Exercise 5-223 Exercise 5-423 Exercise 5-1325 Exercise 5-1525 Whole 5-227 * Condition 729 Exercise 7-529 Exercise 7-730 Exercise 7-1330 Exercise 7-1531 Exercise 7-1631 Exercise 7-2432 Whole 7-834 Whole 7-1135 Whole 7-1536 * Condition 838 Exercise 8-138 Exercise 8-1538 Exercise 8-2539 Exercise 8-2640 * condition 942 Brief Exercise 9-242 Brief Exercise 9-442 Brief Exercise 9-742 Brief Exercise 9-843 Exercise 9-243 Exercise 9-744 Exercise 9-1245 Exercise 9-1446 Exercise 9-1947 Whole 9-447 * Condition 1849 Exercise 18-249 Exercise 18-450 Exercise 18-751 Exercise 18-1152 Exercise 18-1553 Exercise 18-1954 Problem 18-755 Whole 18-857 * Condition 2359 Exercise 23-159 Exercise 23-559 Exercise 23-660 Exercise 23-1160 CHAPTER 1 CA 1-5 (a)One of the committees that the AICPA ordinary precedent to the society of the FASB was the Committee on Accounting Procedures (CAP). The CAP, during its creature from 1939 to 1959, posterityd 51 Accounting Inquiry Bulletins (ARB). In 1959, the AICPA created the Accounting Prin-ciples Board (APB) to reinstate the CAP. Precedently being reinorderly by the FASB, the APB dispregnant 31 functional pronouncements, designated APB Opinions. b)Although the ARBs posterityd by the CAP succored to straightened the rove of resource customs to some size, the CAP’s whole-by-whole adit failed to get the well-defined, structured stuff of recitaling substances that was twain needed and desired. As a outcome, the CAP was reinorderly by the APB. The APB had more antecedent and business than did the CAP. Unfortunately, the APB was beleaguered throughout its 14-year creature. It came beneath energy forthcoming, abounding forthcoming a duration noncommunication of productivity and weak to act at-once to chasten alleged recitaling abuses. The APB besides met a lot of perseverance and CPA established hostility and intermittent governmental interlocution when tackling inarticulate harassing recitaling posteritys. In flawful of governmental administration making, the recitaling declaration investigated the retardativeness of the APB and reinorderly it forthcoming a duration the FASB. Learning from precedent experiences, the FASB has sundry suggestive differences from the APB. The FASB has: (1) smaller congregation, (2) ample-time, possessed congregation, (3) main autonomy, (4) extensiond anarchy, and (5) unreserveder stateation. In conjunction, the FASB has its own inquiry taff and relies on the expertise of diffesolution closeon intensity groups createed for diffesolution plans. These features create the bases for the expectations of prosperity and stay from the national. In conjunction, the due arrangement fascinated by the FASB in establishing financial recitaling trutinations gives assiduous men-folks copious convenience to produce their views known. Thus, the FASB is correspondent to the needs and viewpoints of the perfect economic fraternity, not lawful the national recitaling declaration. (c)The AICPA has supplemented the FASB’s efforts in the offer trutination-setting environment. The posterity tractates, which are unhesitating by the Accounting Standards Executive Committee (AcSEC), confirm running financial reporting wholes for specific industries and offer resource treat-ments of the posterity. These tractates get the FASB forthcoming a duration an forthcoming admonition prequotation to afford opportune issuance of FASB trutinations, Interpretations, and Staff Positions. In situations wclose the FASB eschews the material of an posterity tractate, AcSEC may posterity a Announcement of Lie to get frequentedion for the reporting posterity. AcSEC besides posteritys Custom Bulletins which point-out how the AICPA believes a abandoned occurrence should be reputed. Recently, the role of the AICPA in trutination-setting has adulterated. The FASB and the AICPA agreed, that forthcoming a transition determination, the AICPA and AcSEC no longer accomplish posterity conclusive recitaling frequentedion for national companies. CA 1-6 (a)The Financial Accounting Foundation (FAF) is the sponsoring produce of the FASB. The FAF selects the members of the FASB and its Advisory Council, funds their activities, and unconcealedly weighsees the FASB’s activities. The FASB follows a due arrangement in establishing a regular FASB Announcement of Financial Accounting Standards. The forthcoming steps are usually fascinated: (1) A question or plan is signed and placed on the Board’s agenda. (2) A closeon intensity of experts from diffesolution sectors is assembled to settle wholes, posteritys, and resources cognate to the question. (3) Inquiry and resolution are conducted by the FASB technical staff. (4) A proemial views muniment is exhausted and discharged. (5) A national hearing is frequently held, usually 60 days forthcoming the disimpeach of the proemial views. (6) The Board analyzes and evaluates the national acceptance. (7) The Board deliberates on the posteritys and prepares an charybdis exhaust for discharge. 8) Forthcoming a 30-day (minimum) charybdis determination for national illustrate, the Board evaluates all of the acceptances spiritless. (9) A committee studies the charybdis exhaust in appurtenancy to the national acceptances, reevaluates its lie, and revises the exhaust if certain. (10) The ample Board gives the revised exhaust conclusive inducement and votes on issuance of a Standards Statement. The thoroughfare of a new recitaling trutination in the create of an FASB Announcement requires the stay of five of the seven Board members. (b)The FASB posteritys three greater types of pronouncements: Standards and Interpretations, Financial Accounting Concepts, and Technical Bulletins. Financial recitaling trutinations posterityd by the FASB are considered GAAP. In conjunction, the FASB besides posteritys interpretations that reoffer modifications or extensions of strong trutinations and APB Opinions. These interpretations feel the identical antecedent as trutinations and APB Opinions in guiding running recitaling customs. The Statements of Financial Accounting Concepts (SFAC) succor the FASB to eschew the “problem-by-whole adit. ” These announcements set forth indispensoperative objectives and concepts that the Board accomplish use in developing forthcoming trutinations of financial recitaling and reporting. They are intentional to create a cohesive set of intercognate concepts, a stuff of hypothesis or a conceptual framework, that accomplish benefit as tools for solving strong and emerging wholes in a accordant, gauge manner. The FASB may posterity a technical bulletin when tclose is a need for guidelines on implementing or applying FASB Standards or Interpretations, APB Opinions, Accounting Inquiry Bulletins, or emerging posteritys. A technical bulletin is posterityd barely when (1) it is not expected to action a greater modify in recitaling custom for a estimate of enterprises, (2) its absorb of implementation is low, and (3) the frequentedion getd by the bulletin does ot battle forthcoming a duration any unreserved indispensoperative recitaling substance. In conjunction, the FASB’s Emerging Issues Lesson Intensity (EITF) posteritys announcements to get frequentedion on how to recital for new and singular financial occurrences that feel the immanent for creating dissonance in reporting customs. The EITF identifies controversial recitaling wholes as they prepare and determines whether they can be quickly unswerving or whether the FASB should behove confused in solving them. In substance, it behoves a “whole filter” for the FASB. Thus, it is hoped that the FASB accomplish be operative to result on more pervasive long-term wholes, duration the EITF deals forthcoming a duration short-term emerging posteritys. CA 1-10 1. (b), (e) 2. (a) 3. (c) 4. (d) CA 1-11 1. (d) 2. (f) 3. (c) 4. (e) 5. (a) 6. (b) CHAPTER 2 BRIEF EXERCISE 2-3 (a)Equity (b)Revenues (c)Equity (d)Assets (e)Expenses (f)Losses (g)Liabilities (h)Distributions to owners (i)Gains (j)Investments by owners BRIEF EXERCISE 2-4 (a)Periodicity (b)Monetary ace (c)Going solicitude (d)Economic being BRIEF EXERCISE 2-5 (a)Revenue recollection (b)Expense recollection (c)Full exhibition (d)Historical absorb EXERCISE 2-3 (15–20 minutes) a)Gains, detrimentes. (b)Liabilities. (c)Investments by owners, ample expiation. (besides practicable would be produces and bring-abouts). (d)Distributions to owners. (Note to instructor: net commodities is to diminish equity and adaptedty). (e)Comprehensive expiation. (besides practicable would be produces and bring-abouts). (f)Assets. (g)Comprehensive expiation. (h)Revenues, payments. (i)Equity. (j)Revenues. (k)Distributions to owners. (l)Comprehensive expiation. CHAPTER 3 EXERCISE 3-6 (10–15 minutes) 1. | Accounts Receivable| 750| | | Employment Revenue| | 750| | | | | 2. | Utilities Expense| 520| | | Utilities Payable| | 520| | | | | 3. | Diminution Expense| 400| | Accumulated Depreciation—Dental Equipment| | 400| | | | | | Concern Expense| 500| | | Concern Payable| | 500| | | | | 4. | Insurance Payment ($15,000 X 1/12)| 1,250| | | Prepaid Insurance| | 1,250| | | | | 5. | Victuals Payment ($1,600 – $400)| 1,200| | | Supplies| | 1,200| EXERCISE 3-9 (15–20 minutes) (a)| 10/15| Salaries Expense| 800| | | | Cash| | 800| | | (To chronicles reimbursement of October 15 payroll)| | | | | | | | | 10/17| Accounts Receivable| 2,100| | | | Employment Revenue| | 2,100| | | (To chronicles produce for employments executed for which reimbursement has not yet been spiritless)| | | | | | | | | 10/20| Cash| 650| | | Unearned Employment Revenue| | 650| | | (To chronicles reception of highest for employments not yet executed)| | | | | | | | (b)| 10/31| Victuals Expense| 470| | | | Supplies| | 470| | | (To chronicles the use of victuals during October)| | | | | | | | | 10/31| Accounts Receivable| 1,650| | | | Employment Revenue| | 1,650| | | (To chronicles produce for employments executed for which reimbursement has not yet been spiritless)| | | | | | | | | 10/31| Salaries Expense| 600| | | | Salaries Payable| | 600| | | (To chronicles burden for accrued payroll)| | | | | | | | | 10/31| Unearned Employment Revenue| 400| | | | Employment Revenue| | 400| | (To diminish the Unearned Employment Produce recital for employment that has been executed)| | | EXERCISE 3-11 (20–25 Minutes) (a)CAVAMANLIS CO. | Expiation Statement| For the Year Ended December 31, 2010| Revenues| | | Employment produce| | $12,590| Expenses| | | Salaries payment| $6,840| | Solution payment| 2,760| | Diminution payment| 145| | Concern payment| 83| 9,828| Net Income| | $ 2,762| (b)CAVAMANLIS CO. | Announcement of Retained Earnings| For the Year Ended December 31, 2010| Retained lawfuls, January 1| $11,310| Add: Net expiation| 2,762| Less: Dividends| 3,000| Retained lawfuls, December 31| $11,072| c)CAVAMANLIS CO. | Weigh Sheet| December 31, 2010| Assets| | | Running Assets| | | Cash| $18,972| | Accounts receivable| 6,920| | Prepaid solution| 2,280| | Tenor running adaptedty| | $28,172| Property, fix, and accoutrement| | | Equipment| 18,050| | Less: Accumulated diminution| (4,895)| 13,155| Tenor adaptedty| | $41,327| | | | Liabilities and Stockholders’ Equity| | | Running liabilities| | | Notes payable| | $ 5,700| Accounts payable| | 4,472| Concern payable| |       83| Tenor running liabilities| | 10,255| Stockholders’ equity| | | Spiritclose Stock| $20,000| | Retained Earnings| 11,072*| 31,072| Total liabilities and hoardholders’ equity| | $41,327| *Beg. Weigh + Net Expiation – Dividends = Result Weigh $11,310 + $2,762 – $3,000 = $11,072 EXERCISE 3-14 (10–15 minutes) Sales| 340,000| | Sales Receipts and Allowances| | 13,000| Sales Discounts| | 8,000| Expiation Summary| | 319,000| | | | Expiation Summary| 302,000| | Absorb of Result Sold| | 202,000| Freight-out| | 7,000| Insurance Expense| | 12,000| Solution Expense| | 20,000| Salary Expense| | 61,000| | | | Expiation Summary| 17,000| | Retained Earnings| | 17,000| EXERCISE 3-15 (10–15 minutes) (a) $5,000 ($90,000 – $85,000)(d) $95,000 ($5,000 + $90,000) b) $29,000 ($85,000 – $56,000)(e) $52,000 ($90,000 – $38,000) (c) $14,000 ($29,000 – $15,000) EXERCISE 3-16 (10–15 minutes) Sales| 390,000| | Absorb of Result Sold| | 235,700| Sales Receipts and Allowances| | 12,000| Sales Discounts| | 15,000| Selling Expenses| | 16,000| Authoritative Expenses| | 38,000| Expiation Tax Expense| | 30,000| Expiation Summary| | 43,300| | | | (or)| | | | | | Sales| 390,000| | Expiation Summary| | 390,000| | | | Expiation Summary| 346,700| | Absorb of Result Sold| | 235,700| Sales Receipts and Allowances| | 12,000| Sales Discounts| | 15,000| Selling Expenses| | 16,000| Authoritative Expenses| | 38,000| Income Tax Expense| | 30,000| | | | Expiation Summary| 43,300| | Retained Earnings| | 43,300| | | | Retained Earnings| 18,000| | Dividends| | 18,000| CHAPTER 4 EXERCISE 4-2 (25–35 minutes) (a)| Tenor net produce:| | | | | Sales| | | $400,000| | Less: Sales discounts| | $ 7,800| | | Sales receipts| | 12,400| 20,200| | Net sales| | | 379,800| | Dividend produce| | | 71,000| | Rental produce| | | 6,500| | Tenor net produce| | | $457,300| | | | | | (b)| Net expiation:| | | | | Tenor net produce (from a)| | | $457,300| | Expenses:| | | | | Absorb of result sold| | $184,400| | | Selling payments| | 99,400| | Authoritative payments| | 82,500| | | Concern payment| | 12,700| | | Tenor payments| | | 379,000| | Expiation precedently expiation tax| | | 78,300| | Expiation tax| | | 26,600| | Net expiation| | | $ 51,700| (c)| Dividends visible:| | | | | Result retained lawfuls| | | $134,000| | Outset retained lawfuls| | | 114,400| | Net extension| | | 19,600| | Less: Net expiation (from (b))| | | 51,700| | Dividends visible| | | $ 32,100| ALTERNATE SOLUTION (for (c)) | Outset retained lawfuls| | | $114,400| | Add: Net expiation| | | 51,700| | | | | 166,100| Less: Dividends visible| | | ? | | Result retained lawfuls| | | $134,000| | | | | | | Dividends visible must be $32,100| | | | ($166,100 – $134,000)| | | | EXERCISE 4-4 (30–35 minutes) (a)Multiple-Step Form| WEBSTER COMPANY| Expiation Statement| For the Year Ended December 31, 2010| (In thousands, ate lawfuls per constituent-out)| Sales| | | $96,500| Absorb of result sold| | | 63,570| Outrageous emolument| | | 32,930| | | | | Exempt Expenses| | | | Selling payments| | | | Sales commissions| $7,980| | | Depr. of sales accoutrement| 6,480| | | Transportation-out| 2,690| $17,150| | Authoritative payments| | | | Officers’ salaries| 4,900| | | Depr. of employment furn. and accoutre. | 3,960| 8,860| 26,010| Expiation from operations| | | 6,920| | | | | Other Revenues and Gains| | | | Rental produce| | | 17,230| | | | 24,150| Other Expenses and Losses| | | | Concern payment| | | 1,860| | | | | Expiation precedently expiation tax| | | 22,290| Expiation tax| | | 7,580| Net expiation| | | $14,710| | | | | Rights per constituent-out ($14,710 ? 40,550)| | | $. 36| (b)Single-Step Form| WEBSTER COMPANY| Expiation Statement| For the Year Ended December 31, 2010| (In thousands, ate lawfuls per constituent-out)| Revenues| | | | Sales| | | $ 96,500| Rental produce| | | 17,230| Tenor produces| | | 113,730| | | | | Expenses| | | | Absorb of result sold| | | 63,570| Selling payments| | | 17,150| Authoritative payments| | | 8,860| Concern payment| | | 1,860| Tenor payments| | | 91,440| | | | | Expiation precedently expiation tax| | | 22,290| Expiation tax| | | 7,580| Net expiation| | | $ 14,710| | | | | Rights per constituent-out| | | $0. 36| Note: An resource expiation announcement createat for the single-step create is to prequotation expiation tax as part of payments, and not as a diffeschism individual. (c)Single-step: 1. Simplicity and conciseness. 2. Probably rectify beneathstood by users. . Emphasis on tenor absorbs and payments and net expiation. 4. Does not inferiorstand precedbeing of one produce or payment weigh another. Multiple-step: 1. Provides more advice through dissociation of exempt and nonexempt individuals. 2. Expenses are matched forthcoming a duration cognate produce. Music to instructor: Students’ apologys accomplish diversify due to the character of the question; i. e. , it asks for an notion. However, the argument staying the apology should inferiorstand the poisehead points. EXERCISE 4-5 (30–35 minutes) PARNEVIK CORP. | Expiation Statement| For the Year Ended December 31, 2010| Sales Revenue| | | Sales| | $1,280,000| Less: Sales receipts and expiations| $150,000| | Sales discounts| 45,000| 195,000| Net sales produce| | 1,085,000| Absorb of result sold| | 621,000| Outrageous emolument| | 464,000| | | | Exempt Expenses| | | Selling payments| 194,000| | Admin. and unconcealed payments| 97,000| 291,000| Expiation from operations| | 173,000| Other Revenues and Gains| | | Concern produce| | 86,000| | | 259,000| Other Expenses and Losses| | | Concern payment| | 60,000| | | | Expiation precedently tax and unspiritclose individual| | 199,000| Expiation tax ($199,000 X . 34)| | 67,660| Expiation precedently unspiritclose individual| | 131,340| Extraordinary individual—detriment from earthquake inconclusiveness| 120,000| | Less: Applicoperative tax decrease ($120,000 X . 34)| 40,800| 79,200| Net expiation| | $ 52,140| Per constituent-out of spiritclose hoard:| | | Expiation precedently unspiritclose individual ? ($131,340 ? 100,000)| | $1. 31*| Unspiritclose individual (net of tax)| | (0. 79)| Net expiation ($52,140 ? 100,000)| | $0. 52| *Rounded EXERCISE 4-12 (15–20 minutes) Net expiation:| | | Expiation from constant operations precedently expiation tax| | $21,650,000| Expiation tax (35% X $21,650,000)| | 7,577,500| Expiation from constant operations| | 14,072,500| Discontinued operations| | | Loss precedently expiation tax| $3,225,000| | Less: Applicoperative expiation tax (35%)| 1,128,750| 2,096,250| Net expiation| | $11,976,250| | | | Preferred dividends visible:| | $ 860,000| | | | Weighted mediocre spiritclose constituent-outs ungathered| | 4,000,000| | | | Rights per constituent-out| | | Expiation from constant operations| | $3. 30*| Discontinued operations, net of tax| | (0. 52)**| Net expiation| | $2. 78***| *($14,072,500 – $860,000) ? 4,000,000. (Rounded) **$2,096,250 ? 4,000,000. (Rounded) ***($11,976,250 – $860,000) ? 4,000,000. EXERCISE 4-13 (15–20 minutes) (a) 2010 Expiation precedently expiation tax$460,000 Income tax (35%) 161,000 Net Income$299,000 (b)Cumulative commodities for years precedent to 2010: Year| Weighted Average | FIFO| Difference| Tax Rate (35%)  | Net Effect| 2008| $370,000| $395,000| $25,000| | | 2009| 390,000| 420,000| 30,000| | | | | Total| $55,000| $19,250| $35,750| (c)| |     2010    |     2009    |     2008    | | Expiation precedently expiation tax| $460,000| $420,000| $395,000| | Expiation tax (35%)| 161,000| 147,000| 138,250| | Net expiation| $299,000| $273,000| $256,750| EXERCISE 4-15 (15–20 minutes) BRYANT CO. | Announcement of Stockholders’ Equity| For the Year Ended December 31, 2010| | Total| | Compre-hensive Income| | Retained Earnings| | Accumulated Other Ample Income| | Spiritclose Stock| Outset weigh| $520,000| | | | $ 90,000| | $80,000| | $350,000| Ample expiation| | | | | | | | | | Net expiation*| 170,000| | $170,000| | 170,000| | | | | Other ample expiation| | | | | | | | | | Unrealized tenure detriment| (50,000)| | (50,000)| | | | (50,000)| | | Ample expiation| | | $120,000| | | | | | | Dividends| (10,000)| | | | (10,000)| |              | |              | Result weigh| $630,000| | | | $250,000| | $30,000| | $350,000| *($750,000 – $500,000 – $80,000). SOLUTIONS TO PROBLEMS | PROBLEM 4-1| | DICKINSON COMPANY| Expiation Statement| For the Year Ended December 31, 2010| Sales| | $25,000,000| Absorb of result sold| | 16,000,000| Outrageous emolument| | 9,000,000| Selling and authoritative payments| | 4,700,000| Expiation from operations| | 4,300,000| Other produces and bring-abouts| | | Concern produce| $ 70,000| | Bring-about on the sale of investments| 110,000| 180,000| Other payments and detrimentes| | | Write-off of philanthropy| | 820,000| Expiation from constant operations precedently expiation tax| | 3,660,000| Expiation tax| | 1,244,000| Expiation from constant operations| | 2,416,000| Discontinued operations| | | Detriment on operations, net of tax| 90,000| | Detriment on arrangement, net of tax| 440,000| 530,000| Expiation precedently unspiritclose individual| | 1,886,000| Unspiritclose individual—detriment from inundation inconclusiveness, net of tax| | 390,000| Net expiation| | $ 1,496,000| Rights per constituent-out:| | | | Expiation from constant operations| | $ 4. 67a| Discontinued operations| | | Detriment on operations, net of tax| $(0. 18)| | Detriment on arrangement, net of tax| (0. 88)| (1. 06)| Expiation precedently unspiritclose individual| | 3. 61b| Unspiritclose detriment, net of tax| | | (0. 78)| Net expiation| | | $ 2. 83c| DICKINSON COMPANY| Retained Rights Statement| For the Year Ended December 31, 2010| Retained lawfuls, January 1| | $ 980,000| Add: Net expiation| | 1,496,000| | | 2,476,000| Less: Dividends| | | Preferred hoard| $ 80,000| | Spiritclose hoard| 250,000| 330,000| Retained lawfuls, December 31| | $ 2,146,000| a$2,416,000 – $80,000| =| $4. 67| 500,000 constituent-outs| | | | | | b$1,886,000 – $80,000| =| $3. 61| 500,000 constituent-outs| | | | | | c$1,496,000 – $80,000| =| $2. 83| 500,000 constituent-outs| | | | PROBLEM 4-7| | WADE CORP. | Expiation Announcement (Partial)| For the Year Ended December 31, 2010| Expiation from constant operations precedently expiation tax| | $1,200,000*| Expiation tax| | | 456,000**| Expiation from constant operations| | | 744,000| Discontinued operations| | | | Detriment from operations of discontinued promotive| $ 90,000| | | Less: Applicoperative expiation tax decrease| 34,200| $ 55,800| | Detriment from arrangement of promotive| 100,000| | | Less: Applicoperative expiation tax decrease| 38,000| 62,000| 117,800| Expiation precedently unspiritclose individual| | | 626,200| Unspiritclose individual:| | | | Bring-about on conviction| | 125,000| | Less: Applicoperative expiation tax| | 50,000| 75,000| Net expiation| | | $ 701,200| | | | | Per constituent-out of spiritclose hoard:| | | | Income from constant operations| | | $4. 96| Discontinued operations, net of tax| | | (0. 79)| Expiation precedently unspiritclose individual| | | 4. 17| Unspiritclose individual, net of tax| | | 0. 50| Net expiation ($701,200 ? 150,000)| | | $4. 67| *Computation of expiation from constant operations precedently expiation tax:| | As precedingly orderly| | | $1,210,000| Detriment on sale of accoutrement [$40,000 – ($80,000 – $30,000)]| (10,000)| Restated| | | $1,200,000| | | | | **Computation of expiation tax payment:| | | $1,200,000 X . 38 = $456,000| | | | Note: The hallucination cognate to the invisible asset was chastenly abounding to retained lawfuls. CHAPTER 5 EXERCISE 5-2 (15–20 minutes) 1. | h. | 11. | b. | 2. | d. | 12. | f. | 3. | f. | 13. | a. | 4. | f. | 14. | h. | 5| c. | 15. | c. | 6. | a. | 16. | b. | 7. | f. | 17. | a. | 8. | g. | 18. | a. | 9. | a. | 19. | g. | 10. | a. | 20. | f. | EXERCISE 5-4 (30–35 minutes) GULISTAN INC. | Weigh Sheet| December 31, 2010| Assets| Running adaptedty| | | | Cash| $XXX| | | Less: Highest detested for fix disquisition| XXX| $XXX| | Accounts receivable| XXX| | | Less: Expiation for obscure recitals| XXX| XXX| | Notes receivable| | XXX| | Receivables—officers| | XXX| | Inventories| | | | Finished result| XXX| | | Work in arrangement| XXX| | | Raw materials| XXX| XXX| | Tenor running adaptedty| | | $XXX| | | | | Long-term investments| | | | Preferred hoard investments| | XXX| | Land held for forthcoming fix site| | XXX| | Highest detested for fix disquisition| | XXX| | Tenor long-term investments| | | XXX| | | | | Property, fix, and accoutrement| | | | Buildings| | XXX| | Less: Accum. diminution— structures| | XXX| XXX| | | | | Invisible adaptedty| | | | Copyrights| | | XXX| Tenor adaptedty| | | $XXX| Liabilities and Stockholders’ Equity| Running liabilities| | | | | Accrued salaries payable| | $XXX| | | Notes payable, short-term| | XXX| | | Unearned subscriptions produce| | XXX| | | Unearned solution produce| | XXX| | | Tenor running liabilities| | | | $XXX| | | | | | Long-term something-due| | | | | Bonds payable, due in immodest years| | | $XXX| | Less: Discount on bonds payable| | | (XXX)| XXX| Tenor liabilities| | | | XXX| | | | | | Stockholders’ equity| | | | | Highest hoard:| | | | | Spiritclose hoard| | XXX| | | Affixed paid-in highest:| | | | | Paid in highest in advance of par—spiritclose hoard| | XXX| | | Tenor paid-in highest| | | XXX| | Retained lawfuls| | | XXX| | Total paid-in highest and retained lawfuls| | | XXX| | Less: Treasury hoard, at absorb| | | (XXX)| | Tenor hoardholders’ equity| | | | XXX| Tenor liabilities and hoard- holders’ equity| | | | $XXX| Music to instructor: An selfreliance made close is that highest inferiorstandd the highest detested for fix disquisition. If it did not, then a disconnection from highest would not be certain or the highest weigh would be “grossed up” and then the highest detested for fix disquisition deducted. EXERCISE 5-13 (15–20 minutes) (a)| 4. | (f)| 1. | (k)| 1. | (b)| 3. | (g)| 5. | (l)| 2. | (c)| 4. | (h)| 4. (m)| 2. | (d)| 3. | (i)| 5. | | | (e)| 1. | (j)| 4. | | | EXERCISE 5-15 (25–35 minutes) (a)SONDERGAARD CORPORATION| Announcement of Highest Flows| For the Year Ended December 31, 2010| Highest careers from exempt activities| | | Net expiation| | $160,000| Adjustments to conciliate net expiation| | | to net highest getd by exempt | | | activities:| | | Diminution payment| $17,000| | Detriment on sale of investments| 7,000| | Decrease in recitals receivable| 5,000| | Decrease in running liabilities| (17,000)| 12,000| Net highest getd by exempt activities| | 172,000| Highest careers from investing activities| | | Sale of investments| | | [($74,000 – $52,000) – $7,000]| 15,000| | Purchase of accoutrement| (58,000)| | Net highest used by investing activities| | (43,000)| Highest careers from financing activities| | | Reimbursement of highest dividends| | (50,000)| Net extension in highest| | 79,000| Highest at outset of year| | 78,000| Highest at end of year| | $157,000| (b)Free Highest Career Analysis| Net highest getd by exempt activities| | $172,000| Less: Purchase of accoutrement| | (58,000)| Dividends| | (50,000)| Free highest career| | $ 64,000| | PROBLEM 5-2| | MONTOYA, INC. | Weigh Sheet| December 31, 2010| Assets| Running adaptedty| | | | Cash| | $ 360,000| | Trading securities| | 121,000| | Notes receivable| | 445,700| | Expiation taxes receivable| | 97,630| | Inventories| | 239,800| | Prepaid payments| | 87,920| | Tenor running adaptedty| | | $1,352,050| | | | | Property, fix, and accoutrement| | | | Land| | $ 480,000| | Building| $1,640,000| | | Less: Accum. diminution— structure| 270,200| 1,369,800| | Equipment| 1,470,000| | | Less: Accum. diminution— accoutrement| 292,000| 1,178,000| 3,027,800| | | | | Invisible adaptedty| | | | Goodwill| | | 125,000| Tenor adaptedty| | | $4,504,850| Liabilities and Stockholders’ Equity| Running liabilities| | | | Accounts payable| | $ 490,000| | Notes payoperative to banks| | 265,000| | Payroll taxes payable| | 177,591| | Taxes payable| | 98,362| | Solution payable| | 45,000| | Tenor running liabilities| | | $1,075,953| | | | | Long-term liabilities| | | | Unsecured musics payable| | | | (long-term)| | $1,600,000| | Bonds payable| $300,000| | | Less:Discount on bonds payable| 15,000| 285,000| | Long-term solutional covenants| | 480,000| 2,365,000| Tenor liabilities| | | 3,440,953| | | | | Stockholders’ equity| | | | Highest hoard| | | | Preferred hoard, $10 par; 20,000 constituent-outs verified, 15,000 constituent-outs posterityd| $150,000| | | Spiritclose hoard, $1 par; 400,000 constituent-outs verified, 200,000 posterityd| 200,000| $350,000| | Retained lawfuls ($1,063,897 – $350,000)| | 713,897| | Tenor hoardholders’ equity ($4,504,850 – $3,440,953)| | | 1,063,897| Tenor liabilities and hoardholders’ equity| | | $4,504,850| CHAPTER 7 EXERCISE 7-5 (15–20 minutes) (a)| 1. | June 3| Accounts Receivable—Arquette| 2,000| | | | | Sales| | 2,000| | | | | | | | | June 12| Cash| 1,960| | | | | Sales Discounts ($2,000 X 2%)| 40| | | | | Accounts Receivable—Arquette| | 2,000| | | | | | | 2. | June 3| Accounts Receivable—Arquette| 1,960| | | | | Sales ($2,000 X 98%)| | 1,960| | | | | | | | | June 12| Cash| 1,960| | | | | Accounts Receivable—Arquette| | 1,960| (b)| July 29| Cash| 2,000| | | | Accounts Receivable—Arquette| | 1,960| | | Sales Discounts Forfeited| | 40| | | | | | | (Note to instructor: Sales discounts forfeited could feel been recog-nized at the duration the discount determination lapsed. The congregation, so-far, would probably not chronicles this damnification until conclusive highest precipitation. )| EXERCISE 7-7 (10–15 minutes) (a)| Bad Something-due Expense| 7,500| | | Expiation for Obscure Accounts| | 7,500*| | | | | . 01 X ($800,000 – $50,000) = $7,500| | | | | | | (b)| Bad Something-due Expense| 6,000| | | Expiation for Obscure Accounts| | 6,000*| | | | | *Step 1:. 05 X $160,000 = $8,000 (desired honor weigh in Expiation recital) Step 2:$8,000 – $2,000 = $6,000 (required honor initiation to produce expiation recital to $8,000 honor weigh) EXERCISE 7-13 (10–15 minutes) (a)| Cash| 290,000| | | Finance Charge| 10,000*| | | Notes Payable| | 300,000| | | | | *2% X $500,000 = $10,000| | | | | | | (b)| Cash| 350,000| | | Accounts Receivable| | 350,000| EXERCISE 7-13 (Continued) (c)| Notes Payable| 300,000| | | Concern Expense| 7,500*| | Cash| | 307,500| | | | | *10% X $300,000 X 3/12 = $7,500| | | EXERCISE 7-15 (10–15 minutes) Computation of net allowance:| Highest spiritless| | $190,000| Less: Recourse burden| | 2,000| Net allowance| | $188,000| Computation of bring-about or detriment:| Carrying estimate| | $200,000| Net allowance| | 188,000| Detriment on sale of receivables| | $ 12,000| The forthcoming record initiation would be made:| Cash| $190,000| | Detriment on Sale of Receivables| 12,000| | Recourse Liability| | 2,000| Accounts Receivable| | 200,000| EXERCISE 7-16 (15–20 minutes) (a)| To be chroniclesed as a sale, all of the forthcoming provisions would be met:| | | | 1. The infections asset has been single-minded from the transferor (put further gain of the transferor and its honorors). | | | | | 2. | The transferees feel obtained the lawful to pawn or to exmodify either the infections adaptedty or salubrious concerns in the trans-ferred adaptedty. | | | | | 3. | The transferor does not practise commoditiesive govern weigh the trans-ferred adaptedty through an treaty to retrieve or recompense them precedently their ripeness. | (b)| Computation of net allowance:| | Highest spiritclose ($250,000 X 94%)| $235,000| | | Due from ingredient ($250,000 X 4%)| 10,000| $245,000| | Less: Recourse covenant| | 3,000| Net allowance| | $242,000| | Computation of bring-about or detriment:| | Carrying estimate| | $250,000| | Net allowance| | 242,000| | Detriment on sale of receivables| | $ 8,000| | The forthcoming record initiation would be made:| | Cash| $235,000| | | Due from Factor| 10,000| | | Detriment on Sale of Receivables| 8,000| | | Recourse Liability| | 3,000| | Accounts Receivable| | 250,000| *EXERCISE 7-24 (15–20 minutes) (a)KIPLING COMPANY| Bank Reconciliation | July 31| Weigh per bank announcement, July 31| | $ 8,650| Add: Deposits in transit| | 2,850a| Deduct: Ungathered cohibits| | (1,100)b| Chasten highest weigh, July 31| | $10,400| | | Weigh per books, July 31| | $ 9,250| Add: Collection of music| | 1,500| Less: Bank employment impeach| $ 15| | NSF cohibit| 335| (350)| Corrected highest weigh, July 31| | $10,400| aComputation of deposits in transit| | | Deposits per books| | $5,810| Deposits per bank in July| $ 4,500| | Close deposits in transit (June)|  (1,540)| | Deposits mailed and spiritclose in July| | (2,960)| Deposits in transit, July 31| | $2,850| bComputation of ungathered cohibits| | | Checks written per books| | $3,100| Checks freeed by bank in July| $ 4,000| | Close ungathered cohibits (June)*| (2,000)| | Checks written and freeed in July| | (2,000)| Ungathered cohibits, July 31| | $1,100| *Assumed to free bank in July (b)| Cash| 1,150| | | Employment Expenses—Bank Charges| 15| | | Accounts Receivable| 335| | | Notes Receivable| | 1,500| | PROBLEM 7-8| | 10/1/10| Notes Receivable| 120,000| | | Sales| | 120,000| | | | | 12/31/10| Concern Receivable| 2,400*| | | Concern Revenue| | 2,400| | | | | *$120,000 X . 08 X 3/12 = $2,400| | | | | | 10/1/11| Cash| 9,600*| | | Concern Receivable| | 2,400| | Concern Revenue| | 7,200**| | | | | *$120,000 X . 08 = $9,600**$120,000 X . 08 X 9/12 = $7,200| | | | | | 2/31/11| Concern Receivable| 2,400| | | Concern Revenue| | 2,400| | | | | 10/1/12| Cash| 9,600| | | Concern Receivable| | 2,400| | Concern Revenue| | 7,200| | | | | | Cash| 120,000| | | Notes Receivable| | 120,000| Note: Entries at 10/1/11 and 10/1/12 assumes reversing entries were not made on January 1, 2011 and January 1, 2012. | PROBLEM 7-11| | SANDBURG COMPANY| Expiation Announcement Effects| For the Year Ended December 31, 2010| Expenses outcomeing from recitals receivable| | | | | assigned (Schedule 1)| | | | $22,320| Detriment outcomeing from recitals receivable| | | | | sold ($300,000 – $270,000)| | | | 30,000| Total payments| | | | $52,320| Catalogue 1 Computation of Expense| for Accounts Receivoperative Assigned| Assignment payment:| | | | | Accounts receivoperative assigned| | $400,000| | | | | X 80%| | | Advance by Keller Finance Company| | 320,000| | | | | X 3%| | $ 9,600| Concern payment| | | | 12,720| Tenor payments| | | | $22,320| | *PROBLEM 7-15| | (a)The entries for the issuance of the music on January 1, 2010: The offer estimate of the music is: $1,200,000 X . 68058 = $816,700 (Rounded by $4). | Botosan Congregation (Debtor):| | | | Cash| 816,700| | | Discount on Notes Payable| 383,300| | | Music Payable| | 1,200,000| | | | | National Produce Bank (Creditor):| | | | Notes Receivable| 1,200,000| | | Discount on Notes Receivable| | 383,300| | Cash| | 816,700| (b)The amortization catalogue for this music is: SCHEDULE FOR INTEREST AND DISCOUNT AMORTIZATION— EFFECTIVE-INTEREST METHOD $1,200,000 Music Issued to Yield 8% Date| | Highest Paid| | Concern Expense| | Discount Amortized| | Carrying Equality of Note| 1/1/10| | | | | | | | $ 816,700| 12/31/10| | $0| | $ 65,336*| | $ 65,336| | 882,036**| 12/31/11| | 0| | 70,563| | 70,563| | 952,599| 12/31/12| | 0| | 76,208| | 76,208| | 1,028,807| 12/31/13| | 0| | 82,305| | 82,305| | 1,111,112| 2/31/14| | 0| | 88,888| | 88,888| | 1,200,000| Total| | $0| | $383,300| | $383,300| | | *$816,700 X 8% = $65,336. **$816,700 + $65,336 = $882,036. (c)The music can be considered to be mixed barely when it is proboperative that, fixed on running advice and events, National Produce Bank accomplish be unoperative to learn all equalitys due (twain highest and concern) according to the reduceual conditions of the hypothecation. (d)| The detriment is valued as follows:| | | | Carrying equality of hypothecation (12/31/11)| | $952,599a| | Less: Offer estimate of $800,000 due in 3 years at 8%| |  (635,064)b| | Detriment due to inconclusiveness| | $317,535| | | | | aSee amortization catalogue from apology (b) on page 7-66. | | | b$800,000 X . 79383 = $635,064. | | | | December 31, 2011| | National Produce Bank (Creditor):| | | | Bad Something-due Expense| 317,535| | | Expiation for Obscure Accounts| | 317,535| Note: Botosan Congregation (Debtor) has no initiation. CHAPTER 8 EXERCISE 8-1 (15–20 minutes) Items 2, 3, 5, 8, 10, 13, 14, 16, and 17 would be reputed as list in the financial announcements. The forthcoming individuals would not be reputed as list: 1. Absorb of result sold in the expiation announcement. 4. Not reputed in the financial announcements. 6. Absorb of result sold in the expiation announcement. . Absorb of result sold in the expiation announcement. 9. Concern payment in the expiation announcement. 11. Advertising payment in the expiation announcement. 12. Employment victuals in the running adaptedty exception of the weigh shuffle. 15. Not reputed in the financial announcements. 18. Short-term investments in the running asset exception of the weigh shuffle. EXERCISE 8-15 (15–20 minutes) (a)ESPLANADE COMPANY| Computation of List for Product| BAP Beneath FIFO List Method| March 31, 2010| | Units| | Ace Cost| | Tenor Cost| March 26, 2010| 600| | $12. 00| | $ 7,200| February 16, 2010| 800| | 11. 00| | 8,800| January 25, 2010 (portion)| 100| | 10. 00| | 1,000| March 31, 2010, list | 1,500| | | | $17,000| (b)ESPLANADE COMPANY| Computation of List for Product| BAP Beneath LIFO List Method| March 31, 2010| | Units| | Ace Cost| | Tenor Cost| Outset list| 600| | $8. 00| | $ 4,800| January 5, 2010 (portion)| 900| | 9. 00| | 8,100| March 31, 2010, list| 1,500| | | | $12,900| (c)ESPLANADE COMPANY| Computation of List for Product| BAP Beneath Weighted Mediocre List Method| March 31, 2010| | Units| | Ace Cost| | Tenor Cost| Outset list| 600| | $ 8. 0| | $ 4,800| January 5, 2010| 1,100| | 9. 00| | 9,900| January 25, 2010| 1,300| | 10. 00| | 13,000| February 16, 2010| 800| | 11. 00| | 8,800| March 26, 2010| 600| | 12. 00| | 7,200| | 4,400| | | | $43,700| | | | | | | Weighted mediocre absorb| | | | | | ($43,700 ? 4,400)| | | $ 9. 93*| | | | | | | | | March 31, 2010, list| 1,500| | $ 9. 93| | $14,895| *Rounded off. EXERCISE 8-25 (20–25 minutes) | Running $| | Figure Index| | Base Year $| | Modify from Precedent Year| 2007| $ 80,000| | 1. 00| | $ 80,000| | —| 2008| 111,300| | 1. 05| | 106,000| | +$26,000| 2009| 108,000| | 1. 0| | 90,000| | (16,000)| 2010| 122,200| | 1. 30| | 94,000| | +4,000| 2011| 147,000| | 1. 40| | 105,000| | +11,000| 2012| 176,900| | 1. 45| | 122,000| | +17,000| Result Inventory—Dollar-estimate LIFO: 2007| $80,000| | | 2011| $80,000 @ 1. 00 =| $ 80,000| | | | | | 10,000 @ 1. 05 = | 10,500| 2008| $80,000 @ 1. 00 =| $ 80,000| | | 4,000 @ 1. 30 =| 5,200| | 26,000 @ 1. 05 =| 27,300| | | 11,000 @ 1. 40 = | 15,400| | | $107,300| | | | $111,100| | | | | | | | 2009| $80,000 @ 1. 00 =| $ 80,000| | 2012| $80,000 @ 1. 00 =| $ 80,000| | 10,000 @ 1. 05 =| 10,500| | | 10,000 @ 1. 5 =| 10,500| | | $ 90,500| | | 4,000 @ 1. 30 =| 5,200| | | | | | 11,000 @ 1. 40 =| 15,400| 2010| $80,000 @ 1. 00 =| $ 80,000| | | 17,000 @ 1. 45 =| 24,650| | 10,000 @ 1. 05 =| 10,500| | | | $135,750| | 4,000 @ 1. 30 =| 5,200| | | | | | | $ 95,700| | | | | EXERCISE 8-26 (15–20 minutes) Date| | Running $| | Figure Index| | Base-Year $| | Modify from Precedent Year| Dec. 31, 2007| | $ 70,000| | 1. 00| | $70,000| | —| Dec. 31, 2008| | 88,200| | 1. 05| | 84,000| | +$14,000| Dec. 31, 2009| | 95,120| | 1. 16| | 82,000| | (2,000)| Dec. 31, 2010| | 108,000| | 1. 0| | 90,000| | +8,000| Dec. 31, 2011| | 100,000| | 1. 25| | 80,000| | (10,000)| Result Inventory—Dollar-estimate LIFO: Dec. 31, 2007| $70,000| | | | | Dec. 31, 2008| $70,000 @ 1. 00 =| $70,000| | 14,000 @ 1. 05 =| 14,700| | | $84,700| | | | Dec. 31, 2009| $70,000 @ 1. 00 =| $70,000| | 12,000 @ 1. 05 =| 12,600| | | $82,600| | | | Dec. 31, 2010| $70,000 @ 1. 00 =| $70,000| | 12,000 @ 1. 05 =| 12,600| | 8,000 @ 1. 20 =| 9,600| | | $92,200| | | | Dec. 31, 2011| $70,000 @ 1. 00 =| $70,000| | 10,000 @ 1. 05 =| 10,500| | | $80,500| CHAPTER 9 BRIEF EXERCISE 9-2 Item| | Cost| | Designated Market| | LCM| Jokers| | $2,000| | $2,050| | $2,000| Penguins| | 5,000| | 4,950| | 4,950| Riddlers| | 4,400| | 4,550| | 4,400| Scarecrows| | 3,200| | 3,070| | 3,070| BRIEF EXERCISE 9-4 Group| | Estimate of CDs| | Sales Figure per CD| | Tenor Sales Price| | Relative Sales Price| | Tenor Cost| | Absorb Allocated to CDs| | Absorb per CD| 1| | 100| | $ 5| | $ 500| | 5/100*| X| $8,000| =| $ 400| | $ 4**| 2| | 800| | $10| | 8,000| | 80/100| X| $8,000| =| 6,400| | $ 8| 3| | 100| | $15| | 1,500| | 15/100| X| $8,000| =| 1,200| | $12| | | | | | | $10,000| | | | | | $8,000| | | $500/$10,000 = 5/100**$400/100 = $4 BRIEF EXERCISE 9-7 Outset list| | $150,000| Purchases| | 500,000| Absorb of result advantageous| | 650,000| Sales| $700,000| | Close outrageous emolument (35% X 700,000)| 245,000| | Estimated absorb of result sold| | 455,000| Estimated result list destroyed in energy| | $195,000| BRIEF EXERCISE 9-8 | Cost| | Retail| Outset list| $ 12,000| | $ 20,000| Net purchases| 120,000| | 170,000| Net markups|  | | 10,000| Totals| $132,000| | 200,000| Deduct:| | | | Net markdowns| | | 7,000| Sales| | | 147,000| Result list at hawk| | | $ 46,000| | | | | Cost-to-hawk ratio: $132,000 ? $200,000 = 66%| | | | Result list at lower-of absorb-or-market (66% X $46,000) = $30,360 EXERCISE 9-2 (10–15 minutes) Item| | Net Realizoperative Estimate (Ceiling)| | Net Realizoperative Estimate Close Normal Emolument (Floor)| | Replacement Cost| | Designated Market| | Cost| | LCM| D| | $90*| | $70**| | $120| | $90| | $75| | $75| E| | 80| | 60| | 72| | 72| | 80| | 72| F| | 60| | 40| | 70| | 60| | 80| | 60| G| | 55| | 35| | 30| | 35| | 80| | 35| H| | 80| | 60| | 70| | 70| | 50| | 50| I| | 60| | 40| | 30| | 40| | 36| | 36| | | | | | | | | | | | | | Estimated selling figure – Estimated selling payment = $120 – $30 = $90. **Net realizoperative estimate – Normal emolument lip = $90 – $20 = $70. EXERCISE 9-7 (15–20 minutes) Absorb Per Lot (Cost Allocated/ No. of Lots)| $2,040| 2,720| 1,360| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Absorb Allocated to Lots| $18,360| 40,800| 25,840| $85,000| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Tenor Cost| $85,000| 85,000| 85,000| | | | | | | | | | | | | | | | | | | | X| X| X| | | | | | | | | | | | | | | | | | | Relative Sales Price| $27,000/$125,000| $60,000/$125,000| $38,000/$125,000| | | $78,000| 53,040| 24,960| 18,200| $ 6,760| | | Outrageous Profit| $ 3,840| 10,240| 10,880| $24,960| | | | | | | | | | | | | | | | | | | | | | | | | | | Tenor Sales Price| $ 27,000| 60,000| 38,000| $125,000| | Sales (see catalogue)| Absorb of result sold (see catalogue)| Outrageous emolument| Exempt payments| Net expiation| | | Sales| $12,000| 32,000| 34,000| $78,000| | | | | | | | | | | | | | | | | | | | | | | | | | | Sales Price Per Lot| $3,000| 4,000| 2,000| | | | | | | | | | Absorb Absorb of Per Lots Lot Sold| $2,040 $ 8,160| 2,720 21,760| 1,360 23,120| $53,040| | | | | | | | | | | | | | | | | | | | | | | | | | | No. of Lots| 9| 15| 19| | | | | | | | | | Estimate of Lots Sold*| 4| 8| 17| 29| | * 9 – 5 = 4| 15 – 7 = 8| 19 – 2 = 17| | | | | | | | | | | | | | | | | | | | | | | | Group 1| Group 2| Group 3| | | | | | | | | | | Group 1| Group 2| Group 3| Total| | | | | EXERCISE 9-12 (10–15 minutes) a)| Inventory, May 1 (at absorb)| | $160,000| | Purchases (at absorb)| | 640,000| | Purchase discounts| | (12,000)| | Freight-in| | 30,000| | Result availoperative (at absorb)| | 818,000| | Sales (at selling figure)| $1,000,000| | | Sales receipts (at selling figure)| (70,000)| | | Net sales (at selling figure)| 930,000| | | Less: Outrageous emolument (25% of $930,000)| 232,500| | | Sales (at absorb)| | 697,500| | Approximate list, May 31 (at absorb)| | $120,500| (b)Gross emolument as a percent of sales must be valued: | 25%| = 20% of sales. | | 100% + 25%| | | Inventory, May 1 (at absorb)| | $160,000| Purchases (at absorb)| | 640,000| | Purchase discounts| | (12,000)| | Freight-in| | 30,000| | Result availoperative (at absorb)| | 818,000| | Sales (at selling figure)| $1,000,000| | | Sales receipts (at selling figure)| (70,000)| | | Net sales (at selling figure)| 930,000| | | Less: Outrageous emolument (20% of $930,000)| 186,000| | | Sales (at absorb)| | 744,000| | Approximate list, May 31 (at absorb)| | $ 74,000| | | | | EXERCISE 9-14 Outset list| | $170,000| Purchases| | 450,000| | | 620,000| Purchase receipts| | (30,000)| Result availoperative (at absorb)| | 590,000| Sales| $650,000| | Sales receipts| (24,000)| | Net sales| 626,000| | Less: Outrageous emolument (30% X $626,000)| (187,800)| 438,200| Estimated result list (unadjusted for inconclusiveness)| | 151,800| Less: Result on workman—uninjured (at absorb) $21,000 X (1 – 30%)| | (14,700)| Less: Result on workman—injured (at net realizoperative estimate)| | (5,300)| Energy detriment on list| | $131,800| EXERCISE 9-19 (12–17 minutes) | Cost| | Retail| Outset list| $ 200,000| | $ 280,000| Purchases| 1,425,000| | 2,140,000| Totals| 1,625,000| | 2,420,000| Add: Net markups| | | | Markups| | $95,000| | Markup cancellations| _________| (15,000)| 80,000| Totals| $1,625,000| | 2,500,000| | | | | Deduct: Net markdowns| | | | Markdowns| | 35,000| | Markdown cancellations| | (5,000)| 30,000| Sales figure of result advantageous| | | 2,470,000| Deduct: Sales| | | 2,250,000| Result list at hawk| | | $ 220,000| Cost-to-hawk ratio =| $1,625,000| = 65%| | $2,500,000| | Result list at absorb = 65% X $220,000 = $143,000 | PROBLEM 9-4| | Outset list| | $ 80,000| Purchases| | 290,000| | | 370,000| Purchase receipts| | (28,000)| Total result advantageous| | 342,000| Sales| $415,000| | Sales receipts| (21,000)| | | 394,000| | Less: Outrageous emolument (35% of $394,000)| 137,900|  (256,100)| Result list (unadjusted for inconclusiveness)| | 85,900| Less: Result on workman—undamaged| | | ($30,000 X [1 – 35%])| | 19,500| List inconclusivenessd| | 66,400| Less: Salvage estimate of inconclusivenessd list| | 8,150| Energy detriment on list| | $ 58,250| CHAPTER 18 EXERCISE 18-2 (15–20 minutes) (a)1. 6/3Accounts Receivable—Ann Mount8,000 Sales8,000 6/5Sales Receipts and Allowances600 Accounts Receivable—Ann Mount600 6/7Transportation-Out24 Cash24 6/12Cash7,252 Sales Discounts (2% X $7,400)148 Accounts Receivable—Ann Mount7,400 2. 6/3Accounts Receivable—Ann Mount7,840 Sales [$8,000 – (2% X $8,000)]7,840 6/5Sales Receipts and Allowances588 Accounts Receivable—Ann Mount [$600 – (2% x $600)]588 6/7Transportation-Out24 Cash24 6/12Cash7,252 Accounts Receivable—Ann Mount7,252 (b)8/5Cash7,400 Accounts Receivable—Ann Mount7,252 Sales Discounts Forfeited (2% X $7,400)148 EXERCISE 18-4 (20–25 minutes) (a)Gross emolument systematic in: | 2010| 2011| 2012| Reduce figure| | $1,600,000| | $1,600,000| | $1,600,000| Costs:| | | | | | | Costs to limit| $400,000| | $825,000| | $1,070,000| | Estimated absorbs to entire| 600,000| 1,000,000| 275,000| 1,100,000| 0| 1,070,000| Tenor estimated emolument| | 600,000| | 500,000| | 530,000| Percentage entired to limit| | 40%*| | 75%**| | 100%| Tenor outrageous emolument systematic| | 240,000| | 375,000| | 530,000| Less: Outrageous emolument systematic in preceding years| | 0| | 240,000| | 375,000| Outrageous emolument systematic in running year| | $ 240,000| | $ 135,000| | $ 155,000| **$400,000 ? $1,000,000**$825,000 ? 1,100,000 (b)Construction in Arrangement ($825,000 – $400,000)425,000Materials, Cash, Payables, etc. 425,000Accounts Receivoperative ($900,000 – $300,000)600,000 Billings on Edifice in Process600,000 Highest ($810,000 – $270,000)540,000 Accounts Receivable540,000 Edifice Expenses425,000 Edifice in Process135,000 Produce from Long-Term Contracts560,000* *$1,600,000 X (75% – 40%) (c)Gross emolument systematic in: | 2010| 2011| 2012| Outrageous emolument| $–0–| $–0–| $530,000*| *$1,600,000 – $1,070,000 EXERCISE 18-7 (25–30 minutes) (a)1. Outrageous emolument systematic in 2010: Reduce figure$1,200,000 Costs: Costs to limit$280,000 Estimated conjunctional absorbs 520,000 800,000 Tenor estimated emolument400,000 Percentage tenor to limit ($280,000/$800,000) 35% Outrageous emolument systematic in 2010$ 140,000 Outrageous emolument systematic in 2011: Reduce figure$1,200,000 Costs: Costs to limit$600,000 Estimated conjunctional absorbs 200,000 800,000 Tenor estimated emolument400,000 Percentage tenor to limit ($600,000/$800,000) 75% Tenor outrageous emolument systematic300,000 Less: Outrageous emolument systematic in 2010 140,000 Outrageous emolument systematic in 2011$ 160,000 2. Edifice in Arrangement ($600,000 – $280,000)320,000 Materials, Cash, Payables, etc. 20,000 Accounts Receivoperative ($500,000 – $150,000)350,000 Billings on Edifice in Process350,000 Highest ($320,000 – $120,000)200,000 Accounts Receivable200,000 Edifice in Process160,000 Edifice Expenses320,000 Revenues from Long-Term Contracts480,000* *$1,200,000 X [($600,000 – $280,000) ? $800,000] (b)Income Announcement (2011)— Outrageous emolument on long-term edifice reduce$160,000 Weigh Shuffle (12/31/11)— Running adaptedty: Receivables—edifice in arrangement$180,000* Inventories—edifice in arrangement tenoring $900,000** close billings of $500,000$400,000 **$180,000 = $500,000 – $320,000 **Total absorb to limit$600,000 010 Outrageous emolument140,000 2011 Outrageous emolument 160,000 $900,000 EXERCISE 18-11 (15–20 minutes) (a)Computation of outrageous emolument systematic: | 2010| 2011| $370,000 X 34%*| $125,800| | $350,000 X 34%*| | $119,000| $450,000 X 32%**|     | 144,000| | $125,800| $263,000| *($900,000 – $594,000) ? $900,000 **($1,000,000 – $680,000) ? $1,000,000(b)Installment Accounts Receivable—20111,000,000 Installment Sales1,000,000 Absorb of Installment Sales680,000 Inventory680,000 Cash800,000 Installment Accounts Receivable, 2010350,000 Installment Accounts Receivable, 2011450,000 Installment Sales1,000,000 Absorb of Installment Sales680,000 Deferred Outrageous Emolument on Installment Sales, 2011320,000 Copious Outrageous Emolument on Installment Sales, 2010119,000 Copious Outrageous Emolument on Installment Sales, 2011144,000 Realized Outrageous Emolument on Installment Sales263,000 Realized Outrageous Emolument on Installment Sales263,000 Expiation Summary263,000 EXERCISE 18-15 (10–15 minutes) (a)Realized outrageous emolument systematic in 2011 beneath the installment-sales manner of recitaling is $83,000. When outrageous emolument is developed as a percentage of absorb, it must be converted to percentage of sales to value the realized outrageous emolument beneath the installment-sales manner of recitaling. Thus, 2010 and 2011 outrageous emoluments as a percentage of sales are 20% and 21. 875% respectively. Sale Year|   Gross Emolument Percentage  | 2011 Collections| 2011 Realized Profit| 2010| . 25/(1. 00 + . 25) = 20% | $240,000| $48,000| 2011| . 28/(1. 00 + . 28) = 21. 875%| 160,000| 35,000| | | TOTAL| $83,000| (Note to instructor: The whole gets outrageous emolument as a percent of absorb. ) (b)The weigh of “Deferred Outrageous Profit” could be reputed on the weigh shuffle for 2011: 1. As a running burden on the hypothesis that it is cognate to Installment Accounts Receivables that are normally treated as running adaptedty; . As a copious honor between liabilities and hoardholders’ equity. This quotationure is criticized beaction tclose is no covenant to outsiders; or 3. As an mixture or offset to the cognate Installment Accounts Receivable. This is beaction the copious outrageous emolument is a part of produce from installment sales not yet realized. The cognate receivoperative accomplish be weighorderly unclose the copious outrageous emolument is deducted. On the other workman, the equality of copious outrageous emolument has no frequented appurtenancyship forthcoming a duration the estimated learnibility of the recitals receivable. It is not a permanent stuff as to the adapted species of “copious outrageous emolument” on the weigh shuffle when the installment-sales manner of recitaling is used to mete expiation. As point-outd in the quotation, the FASB in Announcement of Financial Accounting Concepts No. 6 point-outs that it conceptually is an asset valuation. We stay the FASB lie. (c)Gross emolument as a percent of sales in 2010 is 20% (as valued in (a) poisehead); outrageous emolument accordingly is $96,000 ($480,000 X . 20) and the absorb of 2010 sales is $384,000 ($480,000 – $96,000). Beaction the equalitys learned in 2010 ($130,000) and 2011 ($240,000) do not excel the tenor absorb of