Questions and Answers of Accounting Principles Volume 2

Refer to the information provided for Wong Company in EC-2.Instructions(a) Draw cash receipts and cash payments journals (see Illustrations C-10 and C-12) and a general journal. Use page 1 for each
Refer to the information provided for Wong Company in EC-2.Instructions(a) Draw a sales journal and a purchases journal (see Illustrations C-9 and C-11). Use page 1 for each journal.(b) Record the
Refer to the information provided for Wong Company in EC-2.Instructions(a) Draw cash receipts and cash payments journals (see Illustrations C-5 and C-7) and a general journal. Use page 1 for each
Using the information for the transactions of Wu Limited in EB-1, assume now that Wu uses a periodic inventory system and operates in the province of Ontario, where HST is 13%.InstructionsPrepare the
Using the information for the transactions of Wu Limited in EB-1, assume now that Wu uses a periodic inventory system and operates in the province of Alberta, where PST is not
Using the information for the transactions of Wu Limited in EB-1, assume now that Wu uses a periodic inventory system and operates in the province of Manitoba.InstructionsPrepare the journal entries
In this group activity, your group must decide on the best accounting treatment for a contingency. Your instructor will provide the class with a scenario and each group will be required to decide if
In this group activity, you will work in two groups to improve your understanding of the different depreciation methods. First you will work in “expert” groups in which you will ensure that each
Why might a company not want to have a receivable turnover that is significantly higher than that of its competitors?
When an account receivable that was written off is later collected, two journal entries are usually made. Explain why.
What is an aging schedule? How is the aging schedule used to estimate the amount of uncollectibles?
Under what circumstances is interest normally recorded for an account receivable?
When should a receivable be recorded for a service company? For a merchandising company?
Assume the same information as BEPV.12, except that the interest rate is 9% instead of 8%. What is the annual payment that Marsdon will receive from its customer? Data from BEPV.12Marsdon
Record the return of $500 of the merchandise purchased in BEB.9. Data from BEB.9.Record the purchase on account of $4,100 of merchandise for resale in the province of New Brunswick, where HST is
Comparative data from the balance sheet of Dhaliwal Inc. are shown below.Instructions a. Perform a horizontal percentage of base year analysis using 2022 as the base year. b. Calculate the
The following condensed financial information is available for Kinross Gold Corporation Instructions a. Perform a horizontal percentage of base year analysis of Kinross’s income statement
The following condensed financial information is available for lululemon athletica inc. Instructions a. Perform a horizontal percentage of base year analysis of lululemon’s statement of
Comparative income statement data for Manitou Ltd. and Muskoka Ltd., two competitors, are shown below for the year ended June 30, 2024. Instructions a. Using vertical analysis, calculate
Comparative financial statements for The Rose Packing Corporation are shown below Additional information: 1. All sales were on account. 2. The allowance for doubtful accounts was
Horizontal and vertical analysis of the income statement for a retail company selling women’s clothing is shown below. Instructions a. How effectively has the company controlled its cost
Comparative data from the income statement of Fleetwood Corporation are shown belowInstructions Prepare a vertical analysis for Fleetwood Corporation. Net sales Cost of goods sold Gross
Summary financial information for Talwar Company is as follows. Instructions Calculate the amount and percentage changes in 2024 using horizontal analysis, assuming 2023 is the base year.
Comparative income statement data for Chen Inc. and Chuan Ltd., two competitors, are shown below for the year ended December 31, 2024 Instructions a. Using vertical analysis, calculate the
Comparative data (in thousands) from the balance sheet of Winisk Ltd. are shown below. Using horizontal analysis, calculate the percent of base year, assuming 2021 is the base year.
The comparative statements of Andy’s Art Corporation are presented below. Additional information: 1. All sales were on account. 2. Weighted-average common shares for both years was
In the “All About You” feature, you learned that there are online investment services that provide advice to investors. These services offer stock quotes, company research reports, personal
Comparative data from the balance sheet of Spin Master Corp., which creates children’s entertainment products such as Rubik’s Cube, are shown below.Instructions a. Using horizontal analysis,
Windmill Ltd. reported the following financial results: Profit was $500,000 in 2023, $450,000 in 2024, and $522,000 in 2025. Calculate the horizontal percentage change from (a) 2023 to 2024
Selected vertical percentages of the base amount from Wu Corp.’s vertically analyzed income statement are shown below. Instructions Based on the above vertical percentages, did Wu’s
Comparative financial statements for The Cable Company Ltd. are shown below. Additional information: 1. All sales were on account. 2. The allowance for doubtful accounts was $5,400 in
Selected financial data for Shumway Ltd. are shown below. Instructions a. Calculate the following ratios for each of 2024 and 2023: 1. Receivables turnover 2. Collection
One-half of the shipment described in BEB.2 is returned because the incorrect sizes have been shipped. Record the return of merchandise on the seller’s books. Data from BEB.2Record the sale on
Record the sale on account, for $1,600, of merchandise costing $900 in the province of Quebec. Assume the company uses a perpetual inventory system and the earnings approach to revenue recognition.
Transaction data for Mark’s Music are available in PB.1. Assume that the company uses a periodic inventory system instead of a perpetual inventory system, uses the earnings approach for revenue
Using the information for the transactions of Triton Company in EB.4, assume instead that Triton operates in the province of Alberta, where PST is not applicable. Instructions Prepare the
Using the information for the transactions of Triton Company in EB.4, assume instead that Triton operates in the province of Ontario, where HST is 13%. Instructions Prepare the journal
What base amount is usually assigned a 100% value in a vertical analysis of (a) The balance sheet (b) The income statement?
Can vertical analysis be used to compare two companies of different sizes, such as Walmart and Amazon.com, both dominant competitors in the retail industry? Explain.
Big Game Inc. operates gaming stores across the country. Selected comparative financial statement data are shown below Instructions a. Calculate the following liquidity ratios for 2024 and
Nebula Limited is a merchant operating in the province of Manitoba, where the PST rate is 7%. Nebula uses a perpetual inventory system and the earnings approach to revenue recognition. Transactions
Selected comparative information (in thousands) is available for Halpenny Corporation.Halpenny wishes to calculate ratios for 2024 and 2023. (a) Calculate the average amounts to be used for
McCain Foods and Cavendish Farms are both private companies in the food-processing industry. McCain Foods uses IFRS and Cavendish Farms uses ASPE. What impact might these differing standards have
Canada Goose Holdings Inc. reported the following items in its consolidated statement of earnings (in millions of dollars) for 2020 and 2019. a. Calculate the (1) Gross profit
Nordstrom, Inc. has select stores across Canada that compete against Hudson’s Bay Company and other higher-end retailers. Selected hypothetical financial data (in millions) for the two companies’
Comparative financial statements for Click and Clack Ltd. are shown below. Additional information: 1. Seventy-five percent of the sales were on account. 2. The allowance for doubtful
Selected data (in thousands) from the income statement of JTI Inc. are shown below. Perform a vertical analysis and calculate the percentage of the base amount for the current year. Net sales
(a) What do liquidity ratios measure? (b) What types of users would be most interested in liquidity ratios?
The following selected ratios are available for Pampered Pets Inc.: Instructions a. Has the company’s collection of its receivables improved or weakened over the past three years? b.
For each of the following liquidity ratios, indicate whether the change would be viewed as an improvement or deterioration: a. A decrease in the receivables turnover b. A decrease in the
A high current ratio does not always indicate that a company has a strong liquidity position. Explain why this may be the case.
Presented here are an incomplete income statement and balance sheet for Schwenke Corporation. Additional information: 1. The gross profit margin is 40%. 2. The income tax rate is
At year end, the price-earnings ratio of General Motors was 9.6, and the price-earnings ratio of Microsoft was 33.59. Which company did the stock market favor? Explain.
The following is a selected list of ratios comparing Long Inc. and Circular Corporation for a recent year Instructions a. Classify each of the above ratios as a liquidity (L), solvency (S),
For each of the following profitability ratios, indicate whether the change would be viewed as an improvement or deterioration: a. An increase in the gross profit margin b. A decrease in
Culleye Corporation reported the following solvency ratios:a. Identify if each of the above solvency ratios is better or worse in 2024 compared with 2023. b. Has Culleye’s overall solvency
(a) What do profitability ratios measure? (b) What types of users would be most interested in profitability ratios?
Nike, Inc. and Skechers USA, Inc. reported the following investor-related information recentlyInstructions a. Based on the above information, can you tell which company is more
The following selected information is for Xtreme Corporation: Instructions a. Calculate the gross profit margin, profit margin, asset turnover, return on assets, and return on equity ratios
Dollarama Inc. reported the following selected financial data (in thousands) for a recent year: Interest expense ......................................................... $ 100,605 Income
Wong Ltd. reported a debt to total assets ratio of 37% and an interest coverage ratio of 3 times in the current year. Its nearest competitor has a debt to total assets ratio of 39% and an interest
For each of the following solvency ratios, indicate whether the change would be viewed as an improvement or deterioration: a. A decrease in debt to total assets b. A decrease in interest
Selected comparative statement data for Slaymaker Products Inc. are presented below. All balance sheet data are as at December 31. Instructions Calculate the following ratios for
(a) What do solvency ratios measure? (b) What types of users would be most interested in solvency ratios?
The following data are from the income statements of Haskin Company. a. Calculate for each year (1) the inventory turnover (2) the days sales in inventory. b. What conclusions
The following selected ratios are available for Ice Inc.:Instructions a. Has the debt to total assets improved or weakened over the past three years? b. Has the interest coverage improved
The following data are taken from the financial statements of Rai Company.a. Calculate for each year (1) The receivables turnover (2) The collection period. At the end of 2022, accounts
The following selected information (in thousands) is available for Osborne Inc.:a. Calculate the following solvency ratios of Osborne Inc. for 2024 and 2023. 1. Debt to total assets 2. Free
What is the difference between the current ratio and the acid-test ratio?
The following ratios are available for Amazon.com, Inc. and Apple Inc. for a recent year: Instructions a. Which company is more liquid? Explain. b. Which company is more solvent?
These selected condensed data are taken from recent balance sheets of Sally Sewing Ltd. (in thousands). InstructionsCompute the current ratio for each year and comment on your results.
Selected hypothetical comparative financial data (in thousands, except for share price) for Cineplex Inc. are shown below. Instructions a. Calculate the following ratios for 2024: 1.
Name the ratio(s) that should be used to help answer each of the following questions. a. How efficient is a company at using its assets to produce sales? b. What is the company’s ability
Selected comparative statement data for Bluesky Corporation are presented below. All balance sheet data are as at December 31. Calculate the following for 2024: (a) Asset turnover, (b)
Rinker Corporation’s comparative balance sheet is presented below Rinker’s 2024 income statement included net sales of $120,000, cost of goods sold of $70,000, and profit of
(a) Indicate whether each of the following ratios is a liquidity (L) ratio, a solvency (S) ratio, or a profitability (P) ratio.(b) Indicate whether a higher or lower result is normally
Name the ratio(s) that should be used to help answer each of the following questions. a. How efficient is a company at using its assets to produce sales? b. What is the company’s ability
Triton Company is a retailer operating in the province of Manitoba, where the PST rate is 7%. Triton uses a periodic inventory system and the earnings approach to revenue recognition. Transactions
Manny Lee, L.L.B., is a lawyer operating as a sole proprietor in the province of Alberta. Alberta does not charge provincial sales taxes and the GST rate is 5%. Transactions for the business are
Leon Cheng is a sole proprietor providing accounting services in the province of British Columbia, where PST is charged at the rate of 7% and GST is at the rate of 5%. Transactions for the business
Ruby Gordon, L.L.B. is a sole proprietor providing legal services in the province of Newfoundland and Labrador, where the HST rate is 15%. Transactions for the business are shown below: June 8
Tsung Company signs a contract to sell the use of its patented manufacturing technology to Herlitz Corp. for 12 years. The contract for this transaction stipulates that Herlitz pays Tsung $21,000 at
If the market rate of interest in BEPV.19 was 10%, what option would you choose? Data from BEPV.19As CFO of a small manufacturing firm, you have been asked to determine the best financing for
As CFO of a small manufacturing firm, you have been asked to determine the best financing for the purchase of a new piece of equipment. If the vendor is offering repayment options of $10,000 per year
Using a financial calculator, provide a solution to each of the following situations. a. Lisa Okoye owes a debt of $42,000 from the purchase of her new sport utility vehicle. The debt bears
You would like to purchase a car that costs $32,000, and the dealer offers financing over a five-year period at 3%. If repayments are to be made annually, what would your annual payments be?
The municipality of Lansdown issued a three-year, 5% mortgage note payable for $185,000 to finance the purchase of three salt trucks. The terms provide for equal quarterly blended principal plus
Phang Ltd. issues a six-year, $1,058,871 mortgage note on January 1, 2024, to obtain financing for new equipment. The terms provide for semi-annual instalment payments of $112,825. What is the
Using a financial calculator, solve for the unknowns in each of the following situations. a. On June 1, 2024, Ada Diya purchases lakefront property from her neighbor, Josh Bello, and agrees to
Assume the same information as in BEPV.9, except that the market interest rate is 6% instead of 5%. In this case, how much can New Line expect to receive from the sale of these bonds? Data from
New Line Railroad Co. is about to issue $100,000 of 10-year bonds that pay a 5.5% annual interest rate, with interest payable semi-annually. The market interest rate is 5%. How much can New Line
Tarzwell Ltd. is considering investing in an annuity contract that will return $25,000 at the end of each year for 15 years. What amount should Tarzwell pay for this investment if it earns a 6%
Using a financial calculator, answer the following: a. What is the present value of $25,000 due nine periods from now, discounted at 10%? b. What is the present value of $25,000 to be
If Jin Fei invests $3,152 now, she will receive $10,000 at the end of 15 years. What annual rate of interest will Jin earn on her investment? Round your answer to the nearest whole percent.
Wong Ltd. is considering purchasing an investment that will return a lump sum of $600,000 five years from now. What amount should Wong pay for this investment in order to earn a 4% return?
Record two payments: one cheque to the Receiver General for Canada for GST and one to the Minister of Finance of British Columbia for PST. The balances in the accounts are as follows: GST Payable
At December 31, 2024, the trading investments for Yanik Inc. are as follows: Instructions a. Prepare the adjusting entries required at December 31 to report the above investments at fair
Rockwell Corporation issued $2 million of 5-year, 3% bonds dated January 1, 2024, at 100. Interest is payable semi-annually on January 1 and July 1. Rockwell has a December 31 year end. a.
You are provided with the following transactions that took place during a recent fiscal year: Instructions Assuming the company is reporting under IFRS, complete the above table for each of
Presented in alphabetical order, the following data are from the accounting records of Stinson Corporation, a public company, at April 30, 2024: Accounts payable

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