Questions and Answers of Accounting Principles Volume 2

Here are the basic elements of financial statements that we learned about in earlier chapters: 1. Assets 2. Liabilities 3. Equity 4. Revenues 5. Expenses Each statement
In 2024, Weisman Company had the following transactions related to the purchase of a property. All transactions are for cash unless otherwise stated.Feb. 7 Purchased real estate for $575,000, paying
Kamloops Company is a grocery wholesaler and is planning to expand its operations. The company has asked the bank for a loan to finance the expansion. Alphonzo, the company’s manager, has prepared
P In its first year of business, Solinger Company purchased land, a building, and equipment on November 5, 2023, for $700,000 in total. The land was valued at $262,500, the building at $337,500, and
In 2024, Kadlec Company had the following transactions related to the purchase of a property. All transactions were for cash unless otherwise stated. Jan. 12 Purchased real estate for a future
Glans Company purchased equipment on account on April 6, 2022, at an invoice price of $442,000. On April 7, 2022, it paid $4,000 for delivery of the equipment. A one-year, $3,000 insurance policy on
Payne Company purchased equipment on account on September 3, 2022, at an invoice price of $210,000. On September 4, 2022, it paid $4,400 for delivery of the equipment. A one-year, $1,975 insurance
Sugden Company has a December 31 fiscal year end and follows IFRS. The following selected transactions are related to its property, plant, and equipment in 2024: Jan. 22 Performed an annual
Refer to the data given for Surkis Company in BE9.5. Assume instead that the company uses the diminishing-balance method and that the diminishing-balance depreciation rate is double the straight-line
Natalie is thinking of buying a van that will be used only for business. She estimates that she can buy the van for $28,400. Natalie would spend an additional $3,000 to have the van painted. As well,
Slope Style Snowboarding Company, a public company, purchased equipment on January 10, 2020, for $750,000. At that time, management estimated that the equipment would have a useful life of 10 years
SE Parts Supply Company purchased an industrial robot on July 1, 2022, for $395,000. It paid $100,000 in cash and signed a 5% note payable for the balance. The industrial robot was estimated to have
Rottino Company purchased a new machine on October 1, 2024, at a cost of $150,000. The company estimated that the machine will have a residual value of $12,000. The machine is expected to be used for
NW Tool Supply Company purchased land and a building on April 1, 2022, for $385,000. The company paid $115,000 in cash and signed a 5% note payable for the balance. At that time, it was estimated
At January 1, 2024, Hamsmith Corporation, a public company, reported the following property, plant, and equipment accounts Hamsmith uses straight-line depreciation for buildings and equipment
On January 3, 2023, Ajax Argyle purchased a piece of equipment for $125,000. The equipment’s estimated useful life is either four years or 12,000 units, with a residual value of $18,000. The
Lindy Weink, the new controller of Lafrenière Company, has reviewed the expected useful lives and residual values of selected depreciable assets at December 31, 2024. (Depreciation for 2024 has not
On December 27, 2021, Wolcott Windows purchased a piece of equipment for $107,500. The estimated useful life of the equipment is either four years or 60,000 units, with a residual value of $10,500.
Express Co. purchased equipment on March 1, 2022, for $95,000 on account. The equipment had an estimated useful life of five years, with a residual value of $5,000. The equipment is disposed of on
At January 1, 2024, Jaina Company, a public company, reported the following property, plant, and equipment accounts: a. Jaina uses straight-line depreciation for buildings and equipment, and its
Walker Co. purchased furniture on February 4, 2022, for $70,000 on account. At that time, it was expected to have a useful life of five years and a $1,000 residual value. The furniture was disposed
The intangible assets and goodwill reported by Ip Company at December 31, 2023, follow: Patent #1 was acquired in January 2022 and has an estimated useful life of 10 years. Copyright #1 was
The intangible assets and goodwill section of Ghani Corporation’s balance sheet at December 31, 2023, is as follows: The copyright was acquired in January 2022 and has an estimated useful life
Due to rapid turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by Riley Co. in the year ended December 31, 2024: 1. Riley
The unadjusted trial balance of LeBrun Company at its year end, July 31, 2024, is as follows: Adjustment information: 1. The July 31 bank statement reported debit memos for service charges
Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were recorded in a questionable way by Hahn Company in the year ended August 31,
Refer to the financial statements of Aritzia Inc. and the Notes to the Financial Statements in Appendix A. Instructions Answer the following questions about the company’s current and
Motzer Company had the following selected transactions. Feb. 2 Purchases supplies from Supplies R Us on account for $2,500. 10 Cash register sales total $43,200, plus 5% GST and 7% PST.
Peter’s Mini Putt was opened on March 1 by Peter Palazzi. The following selected transactions occurred during March: Mar. 1 Purchased golf balls and other supplies for $550 from Stevenson
The current liabilities section of the December 31, 2023, balance sheet of Livestream Company included notes payable of $14,000 and interest payable of $490. The note payable was issued to Tanner
MileHi Mountain Bikes markets mountain-bike tours to clients vacationing in various locations in the mountains of British Columbia. The current liabilities section of the October 31, 2023, balance
Scoot Scooters has four employees who are paid on an hourly basis, plus time and a half for hours in excess of 40 hours a week. Payroll data for the week ended February 17
On January 31,Cardston Company had the following payroll liability accounts in its ledgerIn February, the following transactions occurred: Feb. 4 Sent a cheque to the union treasurer for union
In the “All About You” feature, you learned who is responsible for remitting income tax, CPP, and EI to the Canada Revenue Agency (CRA) if you are an employee or self-employed. You also learned
Sure Value Hardware has four employees who are paid on an hourly basis, plus time and a half for hours worked in excess of 40 hours a week. Payroll data for the week ended March 14,
On March 31, Babb Company had the following payroll liability accounts in its ledger:In April, the following transactions occurred: Apr. 4 Sent a cheque to the union treasurer for union
Johan Company and Nordlund Company are competing businesses that follow ASPE. Both began operations six years ago and they are quite similar. The current balance sheet data for the two companies are
Seaboard Company receives its annual property tax bill of $24,000 for the 2024 calendar year on May 31, 2024, and it is payable on July 31, 2024. Seaboard has a December 31 fiscal year
Suncor Energy Inc. reported the following current assets and current liabilities (in millions) at December 31, 2019:Accounts payable and accrued liabilities...................................
Cecilia Hernandez earned $60,100 in 2021 and was paid monthly. She worked for HillSide Tours for all of 2021. Using the formulas, what were her CPP and EI deductions in (a) January 2021
In 2021, Viktor Petska was paid a gross salary of $1,000 on a weekly basis. For the week ended May 17, 2021: (a) Calculate his CPP and EI deductions.(b) Use the excerpts in Illustration 10A.5 to
Describe the conceptual framework of accounting and explain how it helps financial reporting.
Indicate which of the following statements are true or false.a. ______ The conceptual framework includes recommendations on how to analyze financial statements. b. ______ The conceptual
Eugene Company is a small private company that sells computers and provides consulting services. The owner of the company, Eugene, wants to expand and has asked you to become his business partner.
On January 1, 2024, Shumway Software Company’s general ledger contained these liability accounts: Accounts payable ……………………………………………………………
Brilliance Holiday Light Services offers commercial and residential lighting services for the holiday season. Brilliance charges a standard rate of $100 per hour. The company also offers a wide
McCain Foods Limited is a large multinational private company with sales in excess of $10 billion. It produces both frozen and non-frozen food products and is the world’s largest manufacturer of
Presented below are selected qualitative characteristics of financial information. 1. Relevance 2. Neutrality 3. Verifiability 4. Timeliness Instructions 5. Faithful
Satterfield publishes a monthly sports magazine, Hockey Hits. Subscriptions to the magazine cost $18 per year. During November 2024, Satterfield sells 15,000 subscriptions beginning with the December
Short Track Speed Skating, a public company, purchased equipment on January 10, 2020, for $600,000. At that time, management estimated that the equipment would have a useful life of 10 years and a
On January 2, 2024, Evers Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $48,000. Related expenditures also paid in
In the “All About You” feature, you learned about actions that were taken to strengthen Canada’s copyright law and the radical changes in technology that drove the need to update the law. You
Surkis Company acquires equipment at a cost of $42,000 on January 3, 2024. Management estimates the equipment will have a residual value of $6,000 at the end of its four-year useful life. Assume the
On January 1, 2024, Sigma Company purchased the following two computer servers for use in its operations Rack Server: The cash price of this server was $52,000. Related expenditures also paid in
Arnison Company has a December 31 fiscal year end and follows ASPE. The following selected transactions are related to its property, plant, and equipment in 2024:Jan. 12 All of the company’s light
Long Trucking Corporation is a medium-sized trucking comIn the “All About You” feature, you learned about actions that were taken to strengthen Canada’s copyright law and the radical changes in
In its first year of business, ChalkBoard purchased land, a building, and equipment on March 5, 2023, for $650,000 in total. The land was valued at $275,000, the building at $343,750, and the
Refer to the financial statements and the Notes to Consolidated Statements for Aritzia Inc., which are reproduced in Appendix A. Instructions a. For each type of property and equipment that
Pandora Pants Company acquires a delivery truck on April 6, 2024, at a cost of $38,000. The truck is expected to have a residual value of $6,000 at the end of its four-year life. Pandora uses the
Cypress Timber Company has a December 31 fiscal year end. The following information is related to its Westerlund tract of timber land: 1. Cypress purchased a 50,000-hectare tract of timber land
On January 1, 2024, the ledger of Accardo Company contains the following liability accounts. Accounts Payable
Caribou County Service Station started a customer loyalty program at the beginning of 2023 in which customers making cash purchases of gasoline at the gas bar are issued rewards in the form of
One-Stop Department Store has a loyalty program where customers are given OneStop “Money” for cash or debit card purchases. The amount they receive is equal to 2% of the pre-tax sales total.
Big Fork Company, a private company that follows ASPE, is preparing its financial statements for the year ended December 31, 2024. It is now February 15, 2025, and the following situations are being
Charleswood Musical Theatre’s season begins in November and ends in April, with a different play each month. In October 2024, Charleswood sold 100 season tickets for the 2024–25 season, for $210
Mega Company, a public company, is preparing its financial statements for the year ended December 31, 2024. It is now January 31, 2025, and the following situations are being reviewed to determine
In 2024, Song Company introduces a new product that includes a two-year warranty on parts. During 2024, 4,400 units are sold for $450 each. The cost of each unit was $175. The company estimates that
Marshall rings up sales plus sales taxes on its cash register. September 5, the register total for sales is $120,000. Instructions Journalize the transactions assuming the sales were made
Save-Always Stores started a customer loyalty program at the beginning of 2023 in which customers making cash purchases of gasoline at Save-Always Gas Bars are issued rewards in the form of grocery
Dresner Company has a December 31 fiscal year end. It receives a $9,600 property tax bill for the 2024 calendar year on March 31, 2024. The bill is payable on June 30. Prepare entries for March 31,
Your roommate says, “Sales taxes are reported as an expense in the income statement.” Do you agree? Explain.
What is a certain liability? List some examples.
Vacation Villas had the following selected transactions. Feb. 1 Signs a $30,000, eight-month, 5%-interest-bearing note payable to CountryBank and receives $30,000 in cash. 8 Sales on
The Brampton Bullet hockey team sold 2,000 tickets at $120 each for its six-game home schedule. Prepare the entry to record (a) The sale of the season’s tickets and (b) The revenue
Loblaw Companies Limited (which owns Shoppers Drug Mart) reported the following information about contingencies in the notes (partial) to its December 28, 2019, financial
On January 1, 2024, the ledger of Edmiston Software Company contains the following liability accounts: Accounts Payable ..................................... $42,500 GST Payable
In providing accounting services to small businesses, you encounter the following independent situations: 1. Sainsbury rang up $13,200 of sales, plus HST of 13%, on its cash register on April
On January 1, 2022, Logue Company began a warranty program to stimulate sales. It is estimated that 5% of the units sold will be returned for repair at an estimated cost of $25 per unit. Sales and
On January 1, 2022, Hopewell Company began a warranty program to stimulate sales. It is estimated that 5% of the units sold will be returned for repair at an estimated cost of $30 per unit. Sales and
Natalie has had much success with her smoothies business over the past number of months. Some customers have shown an interest in purchasing gift certificates from Natalie. Natalie is considering
Backyard Shed Solutions sells its largest shed for $1,800 plus HST of 13%. On May 10, 2024, it sold 40 of these sheds. On May 17, 2024, the company sold 95 of these sheds. All sales are cash sales.
On January 1, 2024, Zaur Company’s general ledger had these liability accounts: Accounts payable ....................................................... $63,700 Unearned revenue—loyalty
Satterfield publishes a monthly music magazine, DiscOver. Subscriptions to the magazine cost $18 per year. During November 2024, Satterfield sells 15,000 subscriptions beginning with the December
Udala Uke’s had the following transactions involving notes payable. July 1, 2024 Borrows $50,000 from First National Bank by signing a nine-month, 8% note. Nov. 1, 2024 Borrows $60,000
Green Apple Tree Farm has a December 31 fiscal year end. The company has six notes payable outstanding on December 31, 2024, as follows: 1. A 10-month, 5%, $50,000 note payable issued on August
Rabbitt Enterprises borrows $60,000 from LowLand Trust Co. on July 1, 2024, signing a 4%, one-year note payable. Interest is to be paid at maturity. Prepare journal entries for Rabbitt Enterprises to
The Calgary Panthers sold 5,000 season football tickets at $80 each for the six-game home schedule. What entries should be made (a) When the tickets were sold and (b) After each game?
Juniper Bush Farm has a December 31 fiscal year end. The company has six notes payable outstanding on December 31, 2024, as follows: 1. A nine-month, 5%, $25,000 note payable issued on July 1,
The Show Time movie theatre sells thousands of gift certificates every year. The certificates can be redeemed at any time because they have no expiry date. Some of them may never be redeemed (because
Blue Robin Retail has one store in Ottawa and one in Regina. All sales in Ontario are subject to 13% HST; all sales in Saskatchewan are subject to 5% GST and 6% PST. On March 12, 2024, the Ottawa
Slovak Plumbing Company pays its support staff weekly and its plumbers on a semimonthly basis. The following support staff payroll information is available for the week ended May 14, 2021: The
Western Electric Company pays its support staff weekly and its electricians on a semimonthly basis. The following support staff payroll information is available for the week ended June 11, The
The following selected account balances are from Creative Carpentry’s adjusted trial balance at March 31, 2024: Accounts payable ........................................................... $
Gametime Inc. began selling game consoles on November 1, 2024. The company offers a 60-day warranty for defective merchandise. Based on past experience with other similar products, Gametime
For each of the following independent situations, indicate whether it should be (1) Recorded, (2) Disclosed, or (3) Neither recorded nor disclosed. Explain your reasoning and indicate
AP Torstar Corporation is a media company that publishes newspapers and digital media. The company reports the following current assets and current liabilities at December 31, 2019 (in
BCE Inc., whose offerings include Bell Canada, reports the following current assets and current liabilities at December 31, 2019 (in millions of dollars): Cash $
What are the differences between certain, estimated, and contingent liabilities?
Steig’s Sports Store has a customer loyalty program in which it issues points to customers for every cash purchase that can be applied to future purchases. For every dollar spent, a customer
Ahmad Company has the following data for the weekly payroll ended May 31:Employees are paid 1.5 times the regular hourly rate for all hours worked over 40 hours per week. Ahmad Company must make

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