Archives: Solution Manual

17–41 PROBLEM 17-3 (Continued) Fair Value Adjustment (Available-for-Sale) ….. 15,751 Unrealized Holding Gain or Loss— Equity ……………………………………………… 15,751 (d) July 1, 2013 Cash ($119,200 + $3,025) ……………………………. 122,225 Debt Investments (Available-for-Sale) ….. 110,000 Interest Revenue ($110,000 X .11 X 3/12) […]

EXERCISE 17-9 (Continued) (b) The unrealized holding gain of $1,500 (including the previous balance of $200) should be reported as an addition to stockholders’ equity and the Fair Value Adjustment (Available-for-Sale) account balance of $1,500 should be added to the […]

17-1 CHAPTER 17 Investments ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Debt securities. 1, 2, 3, 13 1 4, 7 (a) Held-to-maturity. 4, 5, 7, 8, 10, 13, 21 1, 3 2, […]

PROFESSIONAL SIMULATION (Continued) Schedule A *Computation of weighted-average number of shares adjusted for dilutive securities Average number of shares under options outstanding …………… 140,000 Option price per share …………………………………………………………. X $10 Proceeds upon exercise of options ………………………………………. $1,400,000 Market price […]

Copyright © 2011 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 14/e, Solutions Manual (For Instructor Use Only) 16–61 FINANCIAL REPORTING PROBLEM (a) (1) Under P&G’s stock-based compensation plan (Note 7), 37,623,000 options were granted during 2009. (2) At June […]

PROBLEM 16-1 (Continued) Calculations: Common Stock Paid-in Capital in Excess of Par At beginning of year ………………….. 300,000 shares $ 600,000 From stock rights (entry #3) ………. 9,500 shares 209,000 From stock warrants (entry #4) ….. 1,600 shares 44,800 From […]

16–21 EXERCISE 16-8 (10–15 minutes) September 1, 2012 Cash ($3,120,000 + $60,000 – $30,000) ……………….. 3,150,000 Unamortized Bond Issue Costs…………………………. 30,000 (To record the issuance of the bonds) Schedule 1 Premium on Bonds Payable and Value of Stock Warrants Sales […]

16-1 CHAPTER 16 Dilutive Securities and Earnings Per Share ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Convertible debt and preferred stock. 1, 2, 3, 4, 5, 6, 7 1, 2, 3 1, […]

15–74 FINANCIAL STATEMENT ANALYSIS CASES CASE 1 (a) Management might purchase treasury stock to provide to stockholders a tax-efficient method for receiving cash from the corporation. In (b) Earnings per share is calculated by dividing net income by the weighted […]

15–61 PROBLEM 15-12 PENN COMPANY Stockholders’ Equity June 30, 2013 Capital stock 8% preferred stock, $25 par value, cumulative and nonparticipating, 100,000 shares authorized, 40,000 shares issued and outstanding—Note A ……………. $1,000,000 Additional paid-in capital In excess of par-preferred stock […]

15–41 SOLUTIONS TO PROBLEMS PROBLEM 15-1 (a) January 11 Cash (20,000 X $16) …………………………………………. 320,000 Common Stock (20,000 X $10) ………………….. 200,000 Paid-in Capital in Excess of Par—Common Stock …………………………………………………….. 120,000 February 1 Equipment ………………………………………………………. 50,000 Buildings ………………………………………………………… 160,000 Land […]

EXERCISE 15-6 (25–30 minutes) (a) Cash [(5,000 X $45) – $7,000] ………………………………. 218,000 Common Stock (5,000 X $10) ……………………….. 50,000 Paid-in Capital in Excess of Par— Common Stock ………………………………………… 168,000 (b) Land (1,000 X $46) ……………………………………………… 46,000 Common Stock (1,000 […]

15-1 CHAPTER 15 Stockholders’ Equity ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 3. Issuance of shares. 7, 10 1, 2, 6 1, 2, 4, 6, 9 1, 3, 4 4. Noncash stock trans– […]

14–77 FINANCIAL STATEMENT ANALYSIS CASE COMMONWEALTH EDISON CO. (a) Due to the markdown from 99.803 to 99.25, Commonwealth Edison would record a slightly larger discount and, of course, receive and (b) In the same Wall Street Journal article, the following […]

14–61 *PROBLEM 14-12 (a) It is a troubled debt restructuring. (b) 1. No entry. 2. Bad Debt Expense …………………………………………. 237,311* Allowance for Doubtful Accounts …………….. 237,311 *Calculation of loss. (c) Losses are calculated based upon the discounted present value of […]

14–41 Time and Purpose of Problems (Continued) Problem 14-9 (Time 20–25 minutes) Purpose—to provide the student with an opportunity to become familiar with the application of GAAP, involving the exchange of a note, which is payable in equal installments, for […]

EXERCISE 14-8 (Continued) (c) Carrying amount of bonds on June 30, 2012 ………………. $562,500 Effective-interest rate for the period from June 30 to October 31, 2012 (.10 X 4/12) ……………………………….. X.033333 Interest expense to be recorded on October 31, 2012 […]

14-1 CHAPTER 14 Long-Term Liabilities ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Long-term liability; classification; definitions. 1, 10, 14, 22 1, 2 10, 11 1, 2 4. Retirement and refunding of debt. […]

13–74 PROFESSIONAL SIMULATION Journal Entries (a) Unearned Sales Revenue ……………………………………….. 400,000 Sales Revenue ……………………………………………….. 400,000 (To record subscriptions earned during 2012) (b) No entry should be made to accrue for an expense, because the absence of insurance coverage does not […]

13–61 FINANCIAL REPORTING PROBLEM (Continued) Purchase Commitments We have purchase commitments for materials, supplies, services and property, plant and equipment as part of the normal course of business. Commitments made under take-or-pay obligations are as Operating Leases We lease certain […]

13–41 PROBLEM 13-7 (Continued) Expense warranty accrual method: As of 12/31/12 the balance sheet would disclose a current liability in the amount of $117,000 for Warranty Liability. (d) In the case of Alvarado Company, the expense warranty accrual method reflects […]

13–21 EXERCISE 13-7 (5–7 minutes) June 30 EXERCISE 13-8 (10–15 minutes) Salaries and Wages Expense ………………………………….. 480,000 Withholding Taxes Payable …………………………….. 80,000 FICA Taxes Payable* ………………………………………. 28,040 Union Dues Payable ……………………………………….. 9,000 Cash ……………………………………………………………… 362,960 *[($480,000 – $140,000) X 7.65% […]

13-1 CHAPTER 13 Current Liabilities and Contingencies ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Concept of liabilities; definition and classification of current liabilities. 1, 2, 3, 4, 6, 8 1, 16 1, […]

12–41 CA 12-2 (Continued) The amount of interest cost for the first nine months of 2012 is the measure of the 2012 loss resulting from the tornado. The extension of the construction period to October 2012 because of the tornado […]

12–21 EXERCISE 12-10 (Continued) (b) 2011 Patents ………………………………………………………. 12,400 Cash ………………………………………………………. 12,400 Amortization Expense …………………………………………….. 2,575 Patents ($1,000 + $1,575) ………………………….. 2,575 2012 Amortization Expense …………………………………………….. 2,700 Patents ($32,400 ÷ 12) ………………………….. 2,700 (c) 2013 and 2014 Amortization Expense …………………………………………….. […]

12-1 CHAPTER 12 Intangible Assets ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Intangible assets; concepts, definitions; items comprising intangible assets. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, […]

11–61 CA 11-1 (Continued) If Burnitz is not profitable now, it would not benefit from higher deductions now and should CA 11-2 (a) (1) The unit method of recording depreciation involves the treatment of plant assets or substantial additions thereto […]

11–41 PROBLEM 11-3 (a) Depreciation Expense …………………………………………….. 3,900 Accumulated Depreciation—Machinery (A) (5/55 X [$46,000 – $3,100]) ………………………….. 3,900 Accumulated Depreciation—Machinery (A) ……………… 35,100 Machinery (A) ($46,000 – $13,000) …………………… 33,000 Gain on Disposal of Machinery ……………………….. 2,100 (b) Depreciation Expense […]

11–21 EXERCISE 11-5 (20–25 minutes) (a) ($150,000 – $24,000) = $25,200/yr. = $25,200 X 5/12 = $10,500 5 2012 Depreciation—Straight line = $10,500 (c) Machine Allocated to Year Total 2012 2013 1 5/15 X $126,000 = $42,000 $17,500* $24,500** 2 […]

11-1 CHAPTER 11 Depreciation, Impairments, and Depletion ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Depreciation methods; meaning of depreciation; choice of depreciation methods. 1, 2, 3, 4, 5, 6, 10, 14, 20, […]

10–72 CA 10-5 (Continued) (d) Client B Treatment if the exchange has commercial substance In this situation, the full $30,000 gain would be recognized on this year’s income statement. The new asset would go on the books at its fair […]

10–61 PROBLEM 10-10 (Continued) (c) Has Commercial Substance Marshall Construction 1. Equipment ($98,000 + $102,000)…………………. 200,000 Accumulated Depreciation—Equipment …….. 50,000 Equipment………………………………………… 140,000 Brigham Manufacturing 2. Cash ……………………………………………………….. 102,000 Inventory …………………………………………………. 98,000 Sales Revenue …………………………………. 200,000 Cost of Goods Sold ………………………………….. […]

TIME AND PURPOSE OF PROBLEMS Problem 10-1 (Time 35–40 minutes) Purpose—to provide a problem involving the proper classification of costs related to property, plant, and equipment. Property, plant, and equipment must be segregated into land, buildings, leasehold improvements, and machinery […]

10–21 EXERCISE 10-6 (Continued) 2. Equipment ………………………………………………………. 25,000 Cash ………………………………………………………. 2,000 Notes Payable ……………………………………………….. 23,000 EXERCISE 10-7 (20–25 minutes) (a) Avoidable Interest Weighted-Average Accumulated Expenditures X Interest Rate = Avoidable Interest $2,000,000 12% $240,000 1,800,000 10.38% 186,840 $3,800,000 $426,840 Weighted-average […]

10-1 CHAPTER 10 Acquisition and Disposition of Property, Plant, and Equipment ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Valuation and classification of land, buildings, and equipment. 1, 2, 3, 4, 6, 7, […]

9-74 FINANCIAL STATEMENT ANALYSIS CASE 2 (a) There are probably no finished goods because gold is a highly liquid commodity, and so it can be sold as soon as processing is complete. (b) Sales are recorded as follows: Accounts Receivable […]

9-61 *PROBLEM 9-13 (a) Cost Retail Inventory (beginning) …………………. $ 15,800 $ 24,000 Purchases …………………………………. 116,200 184,000 Markups ……………………………………. 12,000 Totals ……………………………….. $132,000 220,000 Cost-to-retail ratio = $132,000 = 60% $220,000 Ending inventory at cost (60% X $39,500) $ 23,700 […]

9-21 EXERCISE 9-5 (Continued) * Jan. 31 Feb. 28 Mar. 31 Apr. 30 Inventory at cost $15,000 $15,100 $17,000 $14,000 Inventory at the lower-of-cost- or-market 14,500 12,600 15,600 13,300 Allowance amount needed to $1,400 – $700 = $700 (b) Jan. […]

9-1 CHAPTER 9 Inventories: Additional Valuation Issues ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Lower-of-cost-or-market. 1, 2, 3, 4, 5, 6 1, 2, 3 1, 2, 3, 4, 5, 6 1, 2, […]

8-60 Time and Purposes of Concepts for Analysis (Continued) CA 8-10 (Time 30–35 minutes) Purpose—to provide the student with an opportunity to analyze the effect of changing from the FIFO method to the LIFO method on items such as ending […]

8-41 PROBLEM 8-4 (a) Purchases Total Units Sales Total Units April 1 (balance on hand) 100 April 5 300 April 4 400 April 12 200 Assuming costs are not computed for each withdrawal: 1. First-in, first-out. Date of Invoice No. […]

EXERCISE 8-10 (10–15 minutes) Current Year Subsequent Year 1. Working capital No effect No effect Current ratio Overstated* No effect Retained earnings No effect No effect Net income No effect No effect 2. Working capital Overstated No effect Current ratio […]

8-1 CHAPTER 8 Valuation of Inventories: A Cost-Basis Approach ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Inventory accounts; determining quantities, costs, and items to be included in inventory; the inventory equation; balance […]

7-73 FINANCIAL STATEMENT ANALYSIS CASE 2 Part 1 (a) Cash equivalents are short-term, highly liquid investments that can be (b) (in millions) Microsoft Oracle (1) Current ratio $49,280 = 1.82 $18,581 = 2.03 $27,034 $9,149 (2) Working capital $49,280 – […]

7-61 SOLUTIONS TO CONCEPTS FOR ANALYSIS CA 7-1 (a) The direct write-off method overstates the trade accounts receivable on the balance sheet by reporting them at more than their net realizable value. Furthermore, because the write-off often occurs in a […]

7-41 PROBLEM 7-3 (a) The Allowance for Doubtful Accounts should have a balance of $45,000 at year-end. The supporting calculations are shown below: Days Account Outstanding Amount Expected Percentage Uncollectible Estimated Uncollectible 0–15 days $300,000 .02 $ 6,000 The accounts […]

EXERCISE 7-3 (Continued) Investments Advance to subsidiary company ……………………… 91,000 *This classification assumes that these receivables are collectible within the operating cycle of the business. **These items could be separately classified, if considered material. EXERCISE 7-4 (10–15 minutes) Computation of […]

7-1 CHAPTER 7 Cash and Receivables ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Accounting for cash. 1, 2, 3, 4, 22 1 1, 2 1 4. Assignment and factoring of accounts receivable. […]

PROBLEM 6-10 1. Purchase. Time diagrams: Installments i = 10% PV – OA = ? R = $350,000 $350,000 $350,000 $350,000 $350,000 0 1 2 3 4 5 n = 5 Property taxes and other costs i = 10% PV […]

6-41 PROBLEM 6-2 (a) Time diagram: i = 8% FV – OA = $90,000 R R R R R R R R R = ? ? ? ? ? ? ? ? 0 1 2 3 4 5 6 7 […]