menu
bartleby
search
close search
Hit Return to see all results
Subscribe
Sign in

Business
AccountingIntermediate Accounting: Reporting And Analysis3rd Edition

close solutoin list
Chapter 22, Problem 7P
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Solutions

Chapter
Section
Problem 1GI
Problem 2GI
Problem 3GI
Problem 4GI
Problem 5GI
Problem 6GI
Problem 7GI
Problem 8GI
Problem 9GI
Problem 10GI
Problem 11GI
Problem 12GI
Problem 13GI
Problem 14GI
Problem 15GI
Problem 16GI
Problem 17GI
Problem 18GI
Problem 19GI
Problem 20GI
Problem 1MC
Problem 2MC
Problem 3MC
Problem 4MC
Problem 5MC
Problem 6MC
Problem 7MC
Problem 8MC
Problem 9MC
Problem 10MC
Problem 1RE
Problem 2RE
Problem 3RE
Problem 4RE
Problem 5RE
Problem 6RE
Problem 7RE
Problem 8RE
Problem 9RE
Problem 10RE
Problem 11RE
Problem 12RE
Problem 1E
Problem 2E
Problem 3E
Problem 4E
Problem 5E
Problem 6E
Problem 7E
Problem 8E
Problem 9E
Problem 10E
Problem 11E
Problem 12E
Problem 13E
Problem 14E
Problem 15E
Problem 16E
Problem 1P
Problem 2P
Problem 3P
Problem 4P
Problem 5P
Problem 6P
Problem 7P
Problem 8P
Problem 9P
Problem 10P
Problem 11P
Problem 12P
Problem 13P
Problem 14P
Problem 1C
Problem 2C
Problem 3C
Problem 4C
Problem 5C
Problem 6C
Problem 7C
Problem 8C
Problem 9C
Problem 10C
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
1 views

Jackson Company has decided to issue common stock to the public in 2020. This will be the first public sale, and therefore, the company will issue its first publicly available financial statements since it was formed in 2017. The financial statements that it has prepared for its own use follow:

Income Statements

Chapter 22, Problem 7P, Jackson Company has decided to issue common stock to the public in 2020. This will be the first , example 1

Balance Sheets

Chapter 22, Problem 7P, Jackson Company has decided to issue common stock to the public in 2020. This will be the first , example 2

These financial statements are audited for the first time at the beginning of 2020, and the following facts are discovered:

  • The company has not made any allowance for noncollection of accounts receivable. An allowance of 1% of total sales is considered appropriate. Uncollectible accounts of $630 should have been written off in 2019.
  • The notes payable are to officers of the company and have an interest rate of 12%. They were issued on January 1, 2017. No interest has been accrued or paid. (Assume simple interest and no compounding.)
  • The company has been using MACRS over a 5-year life for both financial reporting and income tax purposes. It has been decided that the straight-line method should have been used for financial reporting, based on an economic life of 10 years and a zero residual value, with a full year’s depreciation being recorded in the year of acquisition. No disposals of property, plant, and equipment have occurred.
  • After adjustments, with the exception of depreciation, expenses deducted for financial accounting purposes are the same as those deducted for income tax purposes.
  • The company is subject to a 21% income tax rate and tax’s its taxes at the end of each year.

Required:

  1. 1. Prepare the financial statements for 2017, 2018, and 2019 that the company would issue at the beginning of 2020.
  2. 2. Next Level Describe what method the company would use to account for each item if the financial statements for all 3 years had been publicly issued previously.

1.

To determine

Prepare the comparative financial statements of Company J for 2017, 2018, and 2019 that would be issued at the beginning of 2020.

Explanation

Income statement: The financial statement which reports revenues and expenses from business operations, and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Prepare the comparative income statements of Company J for 2017, 2018, and 2019 that would be issued at the beginning of 2020.

Company J
Comparative Income Statements
For the Years Ended December 31
 201920182017
Sales$180,000$130,000$100,000
Cost of goods sold(65,000)(45,000)(35,000)
Gross profit115,00085,00065,000
Other expenses(77,800)(60,300)(59,500)
Income before income taxes37,20024,7005,500
Income tax expense (21%)(7,812)(5,187)(1,155)
Net income$29,388$19,513$4,345

Table (1)

Working Notes:

Compute other expenses.

Details201720182019
Other expenses as prepared by company$62,500$75,000$83,200
Additional bad debt expense:   
 1% of $100,0001,000  
 1% of $130,000 1,300 
 1% of $180,000  1,800
Additional interest expense, 12% of $50,0006,0006,0006,000
Reduced depreciation expense:   
 ($20,000–$10,000)(10,000)  
 ($32,000–$10,000) (22,000) 
 ($19,200–$10,000)+($8,000–$4,000)  (13,200)
Other expenses$59,500$60,300$77,800

Table (2)

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and shareholders (shareholders’ equity) over those resources. The resources of the company are assets which include money contributed by shareholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and shareholders’ equity.

Prepare the comparative balance sheets of Company J for 2017, 2018, and 2019 that would be issued at the beginning of 2020

2.

To determine

Explain the methods Company J would use to accounts for the financial statement items for the prior years.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution
arrow_back
Chapter 22,
Problem 6P
Chapter 22,
Problem 8P
arrow_forward

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 22 Solutions

Show all chapter solutions add
Ch-22 P-1GICh-22 P-2GICh-22 P-3GICh-22 P-4GICh-22 P-5GICh-22 P-6GICh-22 P-7GICh-22 P-8GICh-22 P-9GICh-22 P-10GI
Ch-22 P-11GICh-22 P-12GICh-22 P-13GICh-22 P-14GICh-22 P-15GICh-22 P-16GICh-22 P-17GICh-22 P-18GICh-22 P-19GICh-22 P-20GICh-22 P-1MCCh-22 P-2MCCh-22 P-3MCCh-22 P-4MCCh-22 P-5MCCh-22 P-6MCCh-22 P-7MCCh-22 P-8MCCh-22 P-9MCCh-22 P-10MCCh-22 P-1RECh-22 P-2RECh-22 P-3RECh-22 P-4RECh-22 P-5RECh-22 P-6RECh-22 P-7RECh-22 P-8RECh-22 P-9RECh-22 P-10RECh-22 P-11RECh-22 P-12RECh-22 P-1ECh-22 P-2ECh-22 P-3ECh-22 P-4ECh-22 P-5ECh-22 P-6ECh-22 P-7ECh-22 P-8ECh-22 P-9ECh-22 P-10ECh-22 P-11ECh-22 P-12ECh-22 P-13ECh-22 P-14ECh-22 P-15ECh-22 P-16ECh-22 P-1PCh-22 P-2PCh-22 P-3PCh-22 P-4PCh-22 P-5PCh-22 P-6PCh-22 P-7PCh-22 P-8PCh-22 P-9PCh-22 P-10PCh-22 P-11PCh-22 P-12PCh-22 P-13PCh-22 P-14PCh-22 P-1CCh-22 P-2CCh-22 P-3CCh-22 P-4CCh-22 P-5CCh-22 P-6CCh-22 P-7CCh-22 P-8CCh-22 P-9CCh-22 P-10C

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

At the end of the current year, Accounts Receivable has a balance of 3,750,000, Allowance for Doubtful Accounts...

Financial Accounting

JOURNAL ENTRIES (ACCRUED INTEREST RECEIVABLE) At the end of the year, the following interest is earned, but not...

College Accounting, Chapters 1-27

Periodic inventory using FIFO, LIFO, and weighted average cost methods The units of an item available for sale ...

Accounting

Activity-Based Supplier Costing Bowman Company manufactures cooling systems. Bowman produces all the parts nece...

Managerial Accounting: The Cornerstone of Business Decision-Making

Providing for doubtful accounts At the end of the current year, the accounts receivable account has a debit bal...

Financial & Managerial Accounting

Sales tax A sale of merchandise on account for 36,000 is subject to an 8% sales tax. (A) Should the sales tax b...

Financial And Managerial Accounting

Why should the responsibility for maintaining the accounting records be separated from the responsibility for o...

Corporate Financial Accounting

Which of the following aspects of a cost-benefit study would have the greatest uncertainty as to its precise va...

Accounting Information Systems

Contrast the focus of marketing activities during the five eras of marketing history.

Contemporary Marketing

What is the difference between a committee and a task force?

Foundations of Business (MindTap Course List)

For each of the following characteristics, say whether it describes a perfectly competitive firm, a monopolisti...

Principles of Economics (MindTap Course List)

CAPM AND REQUIRED RETURN HR Industries (HRI) has a beta of 1.6; LR Industries (LRI) beta is 0.8. The risk-free ...

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

What are the two subfields into which economics is divided? Explain what each subfield studies.

Principles of Microeconomics (MindTap Course List)

Miquel Vasquez was proud of his job as a new product manager for a biotechnology start-up, and he loved the hig...

Management, Loose-Leaf Version

Describe the efficient markets hypothesis, and give a piece of evidence consistent with this hypothesis.

Principles of Macroeconomics (MindTap Course List)

Narrative 1: Freshplace Grocery At Freshplace Grocery, customers give their purchases to a sales clerk along wi...

Accounting Information Systems

Is unemployment typically short-term or long-term? Explain.

Brief Principles of Macroeconomics (MindTap Course List)

A survey conducted by Better Homes and Gardens Real Estate LLC showed that one in five U.S. homeowners have eit...

STATISTICS F/BUSINESS+ECONOMICS-TEXT

EXPECTED RETURNS Stocks A and B have the following probability distributions of expected future returns: Probab...

Fundamentals of Financial Management (MindTap Course List)

Progress Report: A Work in Progress. Think about someone who supports your decision to pursue your education an...

Essentials of Business Communication (MindTap Course List)

Explain what makes a tax progressive or proportional or regressive.

Economics:

Suppose there is an external cost, or negative externality, associated with production of a certain good. What'...

ECON MACRO

The following table describes the production possibilities of two cities in the country of Baseballia: a. Witho...

Essentials of Economics (MindTap Course List)

(Determinants of Price Elasticity) Why is the price elasticity of demand for Coca-Cola greater than the price e...

ECON MICRO

Describe the growing importance of mobile research

MKTG 12:STUDENT ED.-TEXT

(Studying Economics) According to the text, economics majors on average make more money than most other majors ...

ECON: MICRO4 (New, Engaging Titles from 4LTR Press)

Return on total assets A company reports the following income statement and balance sheet information for the c...

Accounting (Text Only)

Why is it a good practice to post daily to the accounts receivable or accounts payable ledgers?

College Accounting (Book Only): A Career Approach

Record the following transactions for a perpetual inventory system in general journal form. a. Sold merchandise...

College Accounting (Book Only): A Career Approach

The balance in the equipment account is 28,650,000, and the balance in the accumulated depreciationequipment ac...

Financial Accounting

High-low method Diamond Inc. has decided to use the high-low method to estimate the total cost and the fixed an...

Financial & Managerial Accounting

The following data show the number of rental cars in service for three rental car companies: Hertz, Avis, and D...

Statistics for Business & Economics, Revised (MindTap Course List)

Which of the bonds has the most reinvestment risk? Explain your answer. (Hint: Refer to Table 7.2.) a. 7-year b...

Fundamentals of Financial Management (MindTap Course List)

YIELD CURVES Yields on U.S. Treasury securities were as follows: Term Rate 6 months 5.1% 1 year 5.5 2 years 5.6...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Which of the following goods are scarce? a. garbage b. salt water in the ocean c. clothes d. clean air in a big...

Exploring Economics

Joe Fisher operates Fisher Consulting. A partial work sheet for August 20-- is provided below. Fisher made no a...

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

Explain the relationship between online real-time (OLRT) and immediate mode processing.

Pkg Acc Infor Systems MS VISIO CD

The money supply includes all of the following EXCEPT a. metal coins. b. paper currency. c. lines of credit acc...

Principles of Macroeconomics (MindTap Course List)

Commencing in June, Alan Oldt is eligible to receive monthly payments from a pension fund. What procedure shoul...

PAYROLL ACCT.,2019 ED.(LL)-TEXT

J. C. Penney: Asset turnover ratio J. C. Penney Company, Inc. is a large general merchandise retailer in the Un...

Corporate Financial Accounting

Financial statements Padget Home Services began its operations on January 1, 20Y7 (see Problem 2-3). After its ...

Survey of Accounting (Accounting I)

Bank A finds that many of the loans it extended to individuals are not being paid back. How do the defaults aff...

Economics (MindTap Course List)

What form of countertrade appears to offer the most purchase flexibility? Why?

Purchasing and Supply Chain Management

Predict what will happen to the AD curve as a result of each of the following: a. The money supply rises. b. Ve...

Macroeconomics

Assuming the market equilibrium price for wheat is 5 per bushel, draw the total revenue and the marginal revenu...

Economics For Today

Identify what happens to total revenue as a result of each of the following: a. Price rises and demand is elast...

Microeconomics

Insurance companies wouldnt exist unless customers were willing to pay the price of the insurance and the insur...

Practical Management Science

Kathy Shorts, president of Oliver Company, was concerned with the trend in sales and profitability. The company...

Cornerstones of Cost Management (Cornerstones Series)

Copy each of the following sentences, making essential changes in capitalization. The first question professor ...

Bcom

bartleby
© bartleby 2019