Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 3.10BE
To determine
It is a ratio which indicates the relationship between the current assets and current liabilities.
To explain: the effect of changes in current assets and liabilities on current ratio.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Problems 18–25 assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for each problem.Sapporo K.K. was sued by a competitor in late 2017, and company management concluded that there was a 55 percent probability that the company would lose the lawsuit. The best estimate of the loss on December 31, 2017, was 4,000,000 yen. In 2018, the lawsuit is concluded with Sapporo paying its competitor 5,000,000 yen on May 15, 2018.a. Determine the appropriate accounting for this lawsuit for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.
PROBLEM 3As a result of a restructuring agreement on January 1, 2018, First Bank agreed tothe following provisions:
• The principal obligation is reduced to P7,000,000.• The accrued interest of P640,000 is forgiven.• The date of maturity is extended to December 31, 2021.Annual interest of 10% is to be paid for 4 years every December31.The present value of 1 at 8% for 4 periods is 0.735 and the present value of anordinary annuity of 1 at 8% for 4 periods is 3.31.Requirement:a. What is the gain on extinguishment of debt for 2018?b. What is interest expense for 2018?
unit 9Topic 1Consider each of the following situations independently of each other.1. Current ratio increases from one period to the next2. Accounts receivable turnover increases from one period to the next3. Accounts payable turnover increases from one period to the nextQuestion 1Provide one example of when the underlying circumstances may be such that the observed trend is unfavorable.Question 2Provide one example of when the underlying circumstances may be such that the observed trend is favorable.Topic 2Term Project DiscussionResearch and discuss the topics “company value, book, and market.†Then analyze and discuss these topics with regard to our term project company. You must post at least two substantial posts in this thread.unit 10.1200008392334px;”=””>Scroll down and click “Respond” to post your reply to the Discussion questions. Please review the Discussion Board Participation grading rubric on your course syllabus. This is important information that will ensure that…
Chapter 3 Solutions
Intermediate Accounting
Ch. 3 - Prob. 3.1QCh. 3 - Prob. 3.2QCh. 3 - Define current assets and list the typical asset...Ch. 3 - Prob. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Prob. 3.6QCh. 3 - Describe the common characteristics of assets...Ch. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Define the terms paid-in-capital and retained...
Ch. 3 - Disclosure notes are an integral part of the...Ch. 3 - A summary of the companys significant accounting...Ch. 3 - Define a subsequent event.Ch. 3 - Prob. 3.14QCh. 3 - Prob. 3.15QCh. 3 - Prob. 3.16QCh. 3 - Prob. 3.17QCh. 3 - Show the calculation of the following solvency...Ch. 3 - Prob. 3.19QCh. 3 - Prob. 3.20QCh. 3 - (Based on Appendix 3) Segment reporting...Ch. 3 - Prob. 3.22QCh. 3 - Prob. 3.23QCh. 3 - Current versus long-term classification LO32,...Ch. 3 - Balance sheet classification LO32, LO33 The trial...Ch. 3 - Prob. 3.3BECh. 3 - Balance sheet classification LO32, LO33 Refer to...Ch. 3 - Balance sheet classification LO32, LO33 The...Ch. 3 - Balance sheet classification LO32, LO33 You have...Ch. 3 - Balance sheet preparation; missing elements LO32,...Ch. 3 - Financial statement disclosures LO34 For each of...Ch. 3 - Calculating ratios LO38 Refer to the trial...Ch. 3 - Prob. 3.10BECh. 3 - Calculating ratios; solving for unknowns LO38 The...Ch. 3 - Balance sheet; missing elements LO32, LO33, LO38...Ch. 3 - Balance sheet classification LO32, LO33 The...Ch. 3 - Balance sheet classification LO32, LO33 The...Ch. 3 - Balance sheet preparation LO32, LO33 The...Ch. 3 - Balance sheet preparation LO32, LO33 The...Ch. 3 - Balance sheet; Current versus long-term...Ch. 3 - Prob. 3.7ECh. 3 - Prob. 3.8ECh. 3 - Balance sheet preparation LO32, LO33 The...Ch. 3 - Financial statement disclosures LO34 The...Ch. 3 - Prob. 3.11ECh. 3 - Prob. 3.12ECh. 3 - Prob. 3.13ECh. 3 - FASB codification research LO32, LO34 Access the...Ch. 3 - Prob. 3.15ECh. 3 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Calculating ratios; solve for unknowns LO38 The...Ch. 3 - Prob. 3.19ECh. 3 - Effect of management decisions on ratios LO38...Ch. 3 - Prob. 3.21ECh. 3 - Prob. 3.22ECh. 3 - Balance sheet preparation LO32, LO33 Presented...Ch. 3 - Balance sheet preparation; missing elements LO32,...Ch. 3 - Balance sheet preparation LO32, LO33 The...Ch. 3 - Balance sheet preparation LO32, LO33 The...Ch. 3 - Balance sheet preparation LO32, LO33 The...Ch. 3 - Prob. 3.6PCh. 3 - Balance sheet preparation; errors LO32, LO33 The...Ch. 3 - Balance sheet; errors; missing amounts LO32, LO33...Ch. 3 - Balance sheet preparation LO32 , LO33 Presented...Ch. 3 - Prob. 3.10PCh. 3 - Communication Case 31 Current versus long-term...Ch. 3 - Analysis Case 32 Current versus long- term...Ch. 3 - Prob. 3.4BYPCh. 3 - Judgment Case 35 Balance sheet; errors LO32...Ch. 3 - Prob. 3.6BYPCh. 3 - Real World Case 37 Balance sheet and significant...Ch. 3 - Judgment Case 38 Post fiscal year-end e vents ...Ch. 3 - Prob. 3.9BYPCh. 3 - Prob. 3.10BYPCh. 3 - Prob. 3.11BYPCh. 3 - Analysis Case 314 Balance sheet information LO32...Ch. 3 - Prob. 3.15BYPCh. 3 - Ethics Case 316 Segment reporting Appendix 3 You...Ch. 3 - Prob. 1CCTC
Knowledge Booster
Similar questions
- Providing for doubtful accounts At the end of the current year, the accounts receivable account has a debit balance of 2,950,000 and sales for the year total 27,400,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following assumptions: A. The allowance account before adjustment has a debit balance of 9,500. Bad debt expense is estimated at of 1% of sales. B. The allowance account before adjustment has a debit balance of 9,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of 188,000. C. The allowance account before adjustment has a credit balance of 31,400. Bad debt expense is estimated at 1/2 of 1% of sales. D. The allowance account before adjustment has a credit balance of 31,400. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of 175,000.arrow_forwardPercent of sales method At the end of the current year, Accounts Receivable has a balance of 2,150,000; Allowance for Doubtful Accounts has a debit balance of 10,500; and sales for the year total 51,850,000. Bad debt expense is estimated at 1/4 of 1% of sales. Determine (A) the amount of the adjusting entry for uncollectible accounts; (B) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (C) the net realizable value of accounts receivable.arrow_forwardInvestment reporting O'Brien Industries Inc. is a hook publisher. The comparative unclassified balance sheets for December 31, Year 2 and Year 1 follow. Selected missing balances are shown by letters. Brien Industries Inc. Balance Sheet December 31, Year 2 and Year 1 Dec. 31, Year 2 Dec 31, Year 1 cash 233,000 220,000 Accounts receivable (net) 136,530 138,000 Available for sale investments (at cost)Note 1 a 103,770 Less valuation allowance for available-for-sale investments b. 2,500 Available for-sale investments (fair value) c 101,270 Interest receivable d Investment in Jolly Roger Co. stockNote 2 e. 77,000 Office equipment (net) 115,000 130,000 Total assets f. 666,270 Accounts payable 69.400 65,000 Common stock 70.000 70,000 Excess of issue price over par 225,000 225,000 Retained earnings g 308,770 Unrealized gain (loss) on available for-sale investments h. (2,500) Total liabilities and Stockholders equity i. 666,270 Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows: No. of Shares Cost per Share Total Cost Total Fair Value Bernard Co. stock 2,250 17 38,250 37,500 Chadwick Co. stock 1,260 52 65,520 63,770 103,770 101,270 Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 30% of the outstanding .shares of Jolly Roger Co. The following selected investment transactions occurred during Year 2: May 5. Purchased 3,080 shares of Gozar Inc. at 30 per share including brokerage commission. Gozar Inc. is classified as an available-for-sale security. Oct. 1. Purchased 40,000 of Nightline co. 6%, 10-Year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. 9. Dividends of 12,500 are received on the Jolly Roger co. investment. Dec. 31 Jolly Roger co. reported a total net income of 112,000 for year 2. O'Brien industries Inc. recorded equity earnings for its share of Jolly Roger co. net income. 31. Accrued three months of interest on the Nightline bonds. 31. Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts: Available-for-Sale Investments Fair Value Bernard Co. stock 15,40 per share Chadwick Co. stock 46,00 per share Gozar Inc. stock 32,00 per share Nightline Co. bonds 98 per 100 of face amount Dec. 31. Closed the OBrien Industries Inc. net income of 146,230. O'Brien Industries Inc. paid no dividends during the year. Instructions Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.arrow_forward
- D Exercise 5-4 (Algo) Present value; single amounts [LO5-3] Determine the present value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) \table[[,Future Amount,i=,n=,Present Value,],[1.,$,34,000,5%,15,],[2.,$,28,000,6%,17,],[3.,$,39,000,10%,18,],[4.,$,54,000,9%,11,]]etermine the present value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) \table[[,Future Amount,i=,n=,Present Value,],[1.,$,36,000,7%,17,],[2.,$,30,000,9%,15,],[3.,$,41,000,12%,15,],[4.,$,56,000,11%,9,]]arrow_forwardProblem 17-5A Comparative ratio analysis LO P3 Skip to question [The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows. BarcoCompany KyanCompany BarcoCompany KyanCompany Data from the current year-end balance sheets Data from the current year’s income statement Assets Sales $ 770,000 $ 897,200 Cash $ 19,000 $ 30,000 Cost of goods sold 594,100 642,500 Accounts receivable, net 34,400 57,400 Interest expense 8,100 18,000 Merchandise inventory 84,740 140,500 Income tax expense 14,800 24,769 Prepaid expenses 5,900 7,150 Net income 153,000 211,931 Plant assets, net 310,000 305,400 Basic earnings per share 4.50 5.41 Total assets $ 454,040 $ 540,450 Cash dividends per share 3.82 3.93 Liabilities and Equity…arrow_forwardProblem 17-5A Comparative ratio analysis LO P3 Skip to question [The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows. BarcoCompany KyanCompany BarcoCompany KyanCompany Data from the current year-end balance sheets Data from the current year’s income statement Assets Sales $ 770,000 $ 882,200 Cash $ 19,000 $ 37,000 Cost of goods sold 593,100 638,500 Accounts receivable, net 36,400 58,400 Interest expense 7,800 18,000 Merchandise inventory 84,440 130,500 Income tax expense 14,800 24,355 Prepaid expenses 5,500 7,150 Net income 154,300 201,345 Plant assets, net 370,000 312,400 Basic earnings per share 4.06 4.09 Total assets $ 515,340 $ 545,450 Cash dividends per share 3.78 3.94 Liabilities and Equity…arrow_forward
- Problem 17-5A Comparative ratio analysis LO P3 Skip to question [The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows. BarcoCompany KyanCompany BarcoCompany KyanCompany Data from the current year-end balance sheets Data from the current year’s income statement Assets Sales $ 770,000 $ 882,200 Cash $ 19,000 $ 37,000 Cost of goods sold 593,100 638,500 Accounts receivable, net 36,400 58,400 Interest expense 7,800 18,000 Merchandise inventory 84,440 130,500 Income tax expense 14,800 24,355 Prepaid expenses 5,500 7,150 Net income 154,300 201,345 Plant assets, net 370,000 312,400 Basic earnings per share 4.06 4.09 Total assets $ 515,340 $ 545,450 Cash dividends per share 3.78 3.94 Liabilities and Equity…arrow_forwardP18–15 VOLUNTARY SETTLEMENTS: PAYMENTS Jacobi Supply Company recently ran into certain financial difficulties that have resulted in the initiation of voluntary settlement procedures. The firm currently has $150,000 in outstanding debts and approximately $75,000 in liquidatable short-term assets. Indicate, for each of the following plans, whether the plan is an extension, a composition, or a combination of the two. Also indicate the cash payments and timing of the payments required of the firm under each plan. Each creditor will be paid ¢50¢ on the dollar immediately, and the debts will be considered fully satisfied. Each creditor will be paid ¢80¢ on the dollar in two quarterly installments of ¢50¢ and ¢30¢. The first installment is to be paid in 90 days. Each creditor will be paid the full amount of its claims in three installments of ¢50¢, ¢25¢, and ¢25¢ on the dollar. The installments will be made in 60-day intervals, beginning in 60 days. A group of creditors with claims of $50,000…arrow_forwardPls answer number 6 with solution On January 1, 20x1, SUNDER BREAK APART Co. obtained a ₱4,000,000, 180-day bank loan at an annual rate of 10%. The loan agreement requires SUNDER to maintain a ₱400,000 compensating balance in its bank account at the lending bank. SUNDER would otherwise maintain a balance of only ₱200,000 in this account. The bank account earns interest at an annual rate of 2%. Based on a 360-day year, what is the effective interest rate on the borrowing? a. 5.21% b. 10.42% c.13.67% d. 12.33%arrow_forward
- Q 17 Compute the present value of $5,800 paid in two years using the following discount rates: 7 percent in the first year, and 6 percent in the second year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) PRESENT VALUE?arrow_forwardCurrent liabilities Bon Nebo Co. sold 25,000 annual subscriptions of Bjorn for 85 during December 20Y5. These new subscribers will receive monthly issues, beginning in January 20Y6. In addition, the business had taxable income of 840,000 during the first calendar quarter of 20Y6. The federal tax rate is 40%. A quarterly tax payment will be made on April 12, 20Y6. Prepare the current liabilities section of the balance sheet for Bon Nebo Co. on March 31, 20Y6.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Corporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Financial AccountingAccountingISBN:9781337398169Author:Carl Warren, Jeff JonesPublisher:Cengage Learning
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Corporate Financial Accounting
Accounting
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Financial Accounting
Accounting
ISBN:9781337398169
Author:Carl Warren, Jeff Jones
Publisher:Cengage Learning
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,