INTERMEDIATE ACCOUNTING <CUSTOM LL>
10th Edition
ISBN: 9781260887068
Author: SPICELAND
Publisher: MCG CUSTOM
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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.
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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.
Problem 6-4: The Northrock Corporation
The Northrock Corporation produced the following summary of its historical experience of write offs of Accounts Receivable (A/R) on
October 31, 2021:
Year
A/R at Year end
Uncollectible and written off in subsequent years
2018
14000
700
2019
10000
1000
2020
12000
600
2021
4000
200
Required
1. Calculate the percentage loss on Accounts Receivable for the period 2018 to 2021 by calculating total write offs over the period as a % of
total A/R. Round your calculation to two decimal places.
2. Compute the balance for the Allowance for Doubtful accounts (rounded to the nearest $) on October 31, 2021 if Accounts Receivable on
that date were 16000. Apply the % ending A/R method using the percentage calculated in part 1.
3. Scenario A: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 160 credit. Prepare an adjusting entry to obtain the
amount that you calculated in part 2.
4. Scenario B: On October 31, 2021 the unadjusted Allowance for…
Chapter 1 Solutions
INTERMEDIATE ACCOUNTING <CUSTOM LL>
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. 1.1DMPCh. 1 - Research Case 12 Accessing SEC information through...Ch. 1 - Prob. 1.7DMPCh. 1 - Prob. 1.8DMPCh. 1 - Prob. 1.9DMPCh. 1 - Prob. 1.10DMPCh. 1 - Real World Case 115 Elements; disclosures; The...Ch. 1 - Prob. 1.12DMPCh. 1 - Target Case LO19 Target Corporation prepares its...
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- 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_forward1 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_forwardQS 9-3 (Algo) Recovering a bad debt LO P1 Solstice Company determines on October 1 that it cannot collect $55,000 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.arrow_forward
- Here is the questions?arrow_forwardAccounting Problem 9. A taxpayer deducted P500 interest expense in 2017 but failed to pay the same due to financial difficulty. The lender condoned the interest in 2021. Data are as follows: 2017 2018 2019 2020 2021 Income before interest P100 (P130) P80 (P160) P300 (Interest Expense)/ Condonation of interest (500) 500 Q1. What is the taxable income in 2021? Q2. What is last year to apply P160 NOLCO incurred in 2020?arrow_forwardWhat is the error correction (requiring retroactive restatement)?arrow_forward
- Show the solution in good accounting formarrow_forwardRequired information Exercise 7-7 (Algo) Other accrued liabilities—payroll taxes LO 4 Skip to question [The following information applies to the questions displayed below.]At March 31, 2019, the end of the first year of operations at Lukancic Inc., the firm’s accountant neglected to accrue payroll taxes of $6,370 that were applicable to payrolls for the year then ended. Exercise 7-7 (Algo) Part c c. Assume that when the payroll taxes were paid in April 2019, the payroll tax expense account was charged. Assume that at March 31, 2020, the accountant again neglected to accrue the payroll tax liability, which was $6,587 at that date. Determine the income statement and balance sheet effects of not accruing payroll taxes at March 31, 2020.Effect on net income for year ended March 31, 2020:arrow_forwardCan you solve step 6?arrow_forward
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