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1-Identify whether obligations are current liabilities. (LO 1), C Linton Company has these obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability, noncurrent liability, or both. 3-Compute and record sales taxes payable. (LO 3)AP Bluestem Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $10,388. All sales are subject to a 6% sales tax. Compute sales taxes payable and make the entry to record sales taxes payable and sales. 4-Prepare entries for unearned revenues. (LO 3), AP Washburn University sells 3,500 season basketball tickets at $80 each for its 10-game home schedule. Give the entry to record (a) the sale of the season tickets and (b) the revenue recognized after playing the first home game. 10-Prepare journal entries for bonds issued at face value. (LO 5), AP Rooney Corporation issued 3,000 7%, 5-year, $1,000 bonds dated January 1, 2014, at face value. Interest is paid each January 1. (a) Prepare the journal entry to record the sale of these bonds on January 1, 2014. (b) Prepare the adjusting journal entry on December 31, 2014, to record interest expense. (c) Prepare the journal entry on January 1, 2015, to record interest paid. 13-Prepare liabilities section of balance sheet. (LO 7), AP Presented here are liability items for Desmond Inc. at December 31, 2014. Prepare the liabilities section of Desmond's balance sheet. Accounts payable $157,000 Notes payable (due May 1, 2015) 20,000 Bonds payable (due 2018) 900,000 Unearned rent revenue 240,000 Discount on bonds payable 41,000 FICA taxes payable $7,800 Interest payable 40,000 Notes payable (due 2016) 80,000 Income taxes payable 3,500 Sales taxes payable 1,700 2-Prepare entries for interest-bearing notes. (LO 2), AP On May 15, Criqui Outback Clothiers borrowed some money on a 4-month note to provide cash during the slow season of the year. The interest rate on the note was 8%. At the time the note was due, the amount of interest owed was $480. Instructions (a) Determine the amount borrowed by Criqui. (b) Assume the amount borrowed was $18,500. What was the interest rate if the amount of interest owed was $555? (c) Prepare the entry for the initial borrowing and the repayment for the facts in part (a). 3-Prepare entries for interest-bearing notes. (LO 2), AP On June 1, Fancher Company Ltd. borrows $60,000 from First Bank on a 6-month, $60,000, 8% note. The note matures on December 1. Instructions (a) Prepare the entry on June 1. (b) Prepare the adjusting entry on June 30. (c) Prepare the entry at maturity (December 1), assuming monthly adjusting entries have been made through November 30. 5-Journalize payroll entries. (LO 3), AP During the month of March, Olinger Company's employees earned wages of $64,000. Withholdings related to these wages were $4,896 for Social Security (FICA), $7,500 for federal income tax, $3,100 for state income tax, and $400 for union dues. The company incurred no cost related to these earnings for federal unemployment tax but incurred $700 for state unemployment tax. Instructions (a) Prepare the necessary March 31 journal entry to record salaries and wages expense and salaries and wages payable. Assume that wages earned during March will be paid during April. (b) Prepare the entry to record the company's payroll tax expense. 6-Journalize unearned revenue transactions. (LO 3), AP Season tickets for the Wildcats are priced at $320 and include 16 home games. An equal amount of revenue is recognized after each game is played. When the season began, the amount credited to Unearned Ticket Revenue was $1,728,000. By the end of October, $1,188,000 of the Unearned Ticket Revenue had been recognized as revenue. Instructions (a) How many season tickets did the Wildcats sell? (b) How many home games had the Wildcats played by the end of October? (c) Prepare the entry for the initial recording of the Unearned Ticket Revenue. (d) Prepare the entry to recognize the revenue after the first home game had been played. 8-Prepare journal entries for issuance of bonds and payment and accrual of interest. (LO 5), AP On August 1, 2014, Ortega Corporation issued $600,000, 7%, 10-year bonds at face value. Interest is payable annually on August 1. Ortega's year-end is December 31. Instructions Prepare journal entries to record the following events. (a) The issuance of the bonds. (b) The accrual of interest on December 31, 2014. (c) The payment of interest on August 1, 2015. 9-Prepare journal entries for issuance of bonds and payment and accrual of interest. (LO 5), AP On January 1, Newkirk Company issued $300,000, 8%, 10-year bonds at face value. Interest is payable annually on January 1. Instructions Prepare journal entries to record the following events. (a) The issuance of the bonds. (b) The accrual of interest on December 31. (c) The payment of interest on January 1. 12-Prepare entries for issue of bonds. (LO 5), AN Assume that the following are independent situations recently reported in the Wall Street Journal. 1. General Electric (GE) 7% bonds, maturing January 28, 2015, were issued at 111.12. 2. Boeing 7% bonds, maturing September 24, 2029, were issued at 99.08. 1-Cite advantages and disadvantages of a corporation. (LO 1), K Andrea Hanlin is planning to start a business. Identify for Andrea the advantages and disadvantages of the corporate form of business organization. 2-Journalize issuance of par value common stock. (LO 2), AP On May 10, Paige Corporation issues 2,500 shares of $5 par value common stock for cash at $13 per share. Journalize the issuance of the stock. 5-Prepare entries for a cash dividend. (LO 5), AP Troutman Corporation has 7,000 shares of common stock outstanding. It declares a $1 per share cash dividend on November 1 to stockholders of record on December 1. The dividend is paid on December 31. Prepare the entries on the appropriate dates to record the declaration and payment of the cash dividend. 7-Compare impact of cash dividend, stock dividend, and stock split. (LO 5), K Indicate whether each of the following transactions would increase (+), decrease (−), or not affect (N/A) total assets, total liabilities, and total stockholders' equity. Transaction Assets Liabilities Stockholders' Equity (a) Declared cash dividend. (b) Paid cash dividend declared in (a). (c) Declared stock dividend. (d) Distributed stock dividend declared in (c). (e) Split stock 3-for-1. 1-Journalize issuance of common stock. (LO 2), AP During its first year of operations, Rosa Corporation had these transactions pertaining to its common stock. Jan. 10 Issued 30,000 shares for cash at $5 per share. July 1 Issued 60,000 shares for cash at $7 per share. Instructions (a) Journalize the transactions, assuming that the common stock has a par value of $5 per share. (b) Journalize the transactions, assuming that the common stock is no-par with a stated value of $1 per share. 3-Journalize preferred stock transactions and indicate statement presentation. (LO 4, 7), AP Meranda Corporation is authorized to issue both preferred and common stock. The par value of the preferred is $50. During the first year of operations, the company had the following events and transactions pertaining to its preferred stock. Feb. 1 Issued 40,000 shares for cash at $51 per share. July 1 Issued 60,000 shares for cash at $56 per share. Instructions (a) Journalize the transactions. (b) Post to the stockholders' equity accounts. (Use T-accounts.) (c) Discuss the statement presentation of the accounts. 5-Prepare correct entries for capital stock transactions. (LO 2, 3, 4), AN Garcia Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation's capital stock. Instructions On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions. 7-Compare effects of a stock dividend and a stock split. (LO 5), AP On October 31, the stockholders' equity section of Pele Company's balance sheet consists of common stock $648,000 and retained earnings $400,000. Pele is considering the following two courses of action: (1) declaring a 5% stock dividend on the 81,000 $8 par value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $4 per share. The current market price is $17 per share. Instructions Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. Use these column headings: Before Action, After Stock Dividend, and After Stock Split. 1-Indicate statement presentation of selected transactions. (LO 2), K Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2014. For each item, state how it should be shown in the statement of cash flows for 2014. (a) Issued bonds for $200,000 cash. (b) Purchased equipment for $180,000 cash. (c) Sold land costing $20,000 for $20,000 cash. (d) Declared and paid a $50,000 cash dividend. 2-Classify items by activities. (LO 2), C Classify each item as an operating, investing, or financing activity. Assume all items involve cash unless there is information to the contrary. (a) Purchase of equipment. (b) Sale of building. (c) Redemption of bonds. (d) Depreciation. (e) Payment of dividends. (f) Issuance of capital stock. 5-Compute net cash provided by operating activities—indirect method. (LO 4), AP Manuel, Inc. reported net income of $2.5 million in 2014. Depreciation for the year was $160,000, accounts receivable decreased $350,000, and accounts payable decreased $280,000. Compute net cash provided by operating activities using the indirect approach. 8-Determine cash received from sale of equipment. (LO 4), AN The T-accounts for Equipment and the related Accumulated Depreciation—Equip. for Coldsmith Company at the end of 2014 are shown here. Equipment Accum. Depr.—Equip. Beg. bal. 80,000 Disposals 22,000 Disposals 5,100 Beg. bal. 44,500 Acquisitions 41,600 Depr. exp. 12,000 End. bal. 99,600 End. bal. 51,400 1-Classify transactions by type of activity. (LO 2), C Putnam Corporation had these transactions during 2014. (a) Purchased a machine for $30,000, giving a long-term note in exchange. (b) Issued $50,000 par value common stock for cash. (c) Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000. (d) Declared and paid a cash dividend of $13,000. (e) Sold a long-term investment with a cost of $15,000 for $15,000 cash. (f) Collected $16,000 of accounts receivable. (g) Paid $18,000 on accounts payable. Instructions Analyze the transactions and indicate whether each transaction resulted in a cash flow from operating activities, investing activities, financing activities, or noncash investing and financing activities. 5-Prepare the operating activities section—indirect method. (LO 4), AP The current sections of Sanford Inc.'s balance sheets at December 31, 2013 and 2014, are presented here. Sanford's net income for 2014 was $153,000. Depreciation expense was $27,000. 2014 2013 Current assets Cash $105,000 $ 99,000 Accounts receivable 80,000 89,000 Inventory 168,000172,000 Prepaid expenses 27,000 22,000 Total current assets $380,000 $382,000 Current liabilities Accrued expenses payable $ 15,000 $ 5,000 Accounts payable 85,000 92,000 Total current liabilities $100,000 $ 97,000 Instructions Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2014, using the indirect method. 7-Prepare partial statement of cash flows—indirect method. (LO 4), AN The three accounts shown below appear in the general ledger of Lauber Corp. during 2014. Instructions From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of plant assets was $8,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.) 1-Prepare a discontinued operations section of an income statement. (LO 2), AP On June 30, Reyes Corporation discontinued its operations in Mexico. On Sep-tember 1, Reyes disposed of the Mexico facility at a pretax loss of $640,000. The applicable tax rate is 25%. Show the discontinued operations section of Reyes's income statement. 2-Prepare a corrected income statement with an extraordinary item. (LO 2), AP An inexperienced accountant for Fielder Corporation showed the following in Fielder's 2014 income statement: Income before income taxes $300,000; Income tax expense $72,000; Extraordinary loss from flood (before taxes) $80,000; and Net income $168,000. The extraordinary loss and taxable income are both subject to a 30% tax rate. Prepare a corrected income statement beginning with “Income before income taxes.” 3-Indicate how a change in accounting principle is reported. (LO 2), C On January 1, 2014, Jenner Inc. changed from the LIFO method of inventory pricing to the FIFO method. Explain how this change in accounting principle should be treated in the company's financial statements. 7-Calculate percentage of change. (LO 4), AP Net income was $500,000 in 2012, $485,000 in 2013, and $518,400 in 2014. What is the percentage of change from (a) 2012 to 2013, and (b) from 2013 to 2014? Is the change an increase or a decrease? 9-Analyze change in net income. (LO 4), AP Horizontal analysis (trend analysis) percentages for Roswell Company's sales revenue, cost of goods sold, and expenses are listed here. Horizontal Analysis 2014 2013 2012 Sales revenue 96.2% 104.8% 100.0% Cost of goods sold 101.0 98.0 100.0 Expenses 105.6 95.4 100.0 Explain whether Roswell's net income increased, decreased, or remained unchanged over the 3-year period. See Questions below 1-Identify whether obligations are current liabilities. (LO 1), C Linton Company has these obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability, noncurrent liability, or both. 3-Compute and record sales taxes payable. (LO 3)AP Bluestem Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $10,388. All sales are subject to a 6% sales tax. Compute sales taxes payable and make the entry to record sales taxes payable and sales. 4-Prepare entries for unearned revenues. (LO 3), AP Washburn University sells 3,500 season basketball tickets at $80 each for its 10-game home schedule. Give the entry to record (a) the sale of the season tickets and (b) the revenue recognized after playing the first home game. 10-Prepare journal entries for bonds issued at face value. (LO 5), AP Rooney Corporation issued 3,000 7%, 5-year, $1,000 bonds dated January 1, 2014, at face value. Interest is paid each January 1. (a) Prepare the journal entry to record the sale of these bonds on January 1, 2014. (b) Prepare the adjusting journal entry on December 31, 2014, to record interest expense. (c) Prepare the journal entry on January 1, 2015, to record interest paid. 13-Prepare liabilities section of balance sheet. (LO 7), AP Presented here are liability items for Desmond Inc. at December 31, 2014. Prepare the liabilities section of Desmond's balance sheet. Accounts payable $157,000 Notes payable (due May 1, 2015) 20,000 Bonds payable (due 2018) 900,000 Unearned rent revenue 240,000 Discount on bonds payable 41,000 FICA taxes payable $7,800 Interest payable 40,000 Notes payable (due 2016) 80,000 Income taxes payable 3,500 Sales taxes payable 1,700 2-Prepare entries for interest-bearing notes. (LO 2), AP On May 15, Criqui Outback Clothiers borrowed some money on a 4-month note to provide cash during the slow season of the year. The interest rate on the note was 8%. At the time the note was due, the amount of interest owed was $480. Instructions (a) Determine the amount borrowed by Criqui. (b) Assume the amount borrowed was $18,500. What was the interest rate if the amount of interest owed was $555? (c) Prepare the entry for the initial borrowing and the repayment for the facts in part (a). 3-Prepare entries for interest-bearing notes. (LO 2), AP On June 1, Fancher Company Ltd. borrows $60,000 from First Bank on a 6-month, $60,000, 8% note. The note matures on December 1. Instructions (a) Prepare the entry on June 1. (b) Prepare the adjusting entry on June 30. ( c ) Prepare the entry at maturity (December 1), assuming monthly adjusting entries have been made through November 30. 5-Journalize payroll entries. (LO 3), AP During the month of March, Olinger Company's employees earned wages of $64,000. Withholdings related to these wages were $4,896 for Social Security (FICA), $7,500 for federal income tax, $3,100 for state income tax, and $400 for union dues. The company incurred no cost related to these earnings for federal unemployment tax but incurred $700 for state unemployment tax. Instructions ( a ) Prepare the necessary March 31 journal entry to record salaries and wages expense and salaries and wages payable. Assume that wages earned during March will be paid during April. ( b ) Prepare the entry to record the company's payroll tax expense. 6-Journalize unearned revenue transactions. (LO 3), AP Season tickets for the Wildcats are priced at $320 and include 16 home games. An equal amount of revenue is recognized after each game is played. When the season began, the amount credited to Unearned Ticket Revenue was $1,728,000. By the end of October, $1,188,000 of the Unearned Ticket Revenue had been recognized as revenue. Instructions (a) How many season tickets did the Wildcats sell? (b) How many home games had the Wildcats played by the end of October? (c) Prepare the entry for the initial recording of the Unearned Ticket Revenue. (d) Prepare the entry to recognize the revenue after the first home game had been played. 8-Prepare journal entries for issuance of bonds and payment and accrual of interest. (LO 5), AP On August 1, 2014, Ortega Corporation issued $600,000, 7%, 10-year bonds at face value. Interest is payable annually on August 1. Ortega's year-end is December 31. Instructions Prepare journal entries to record the following events. (a) The issuance of the bonds. (b) The accrual of interest on December 31, 2014. (c) The payment of interest on August 1, 2015. 9-Prepare journal entries for issuance of bonds and payment and accrual of interest. (LO 5), AP On January 1, Newkirk Company issued $300,000, 8%, 10-year bonds at face value. Interest is payable annually on January 1. Instructions Prepare journal entries to record the following events. (a) The issuance of the bonds. (b) The accrual of interest on December 31. (c) The payment of interest on January 1. 12-Prepare entries for issue of bonds. (LO 5), AN Assume that the following are independent situations recently reported in the Wall Street Journal. 1. General Electric (GE) 7% bonds, maturing January 28, 2015, were issued at 111.12. 2. Boeing 7% bonds, maturing September 24, 2029, were issued at 99.08. 1-Cite advantages and disadvantages of a corporation. (LO 1), K Andrea Hanlin is planning to start a business. Identify for Andrea the advantages and disadvantages of the corporate form of business organization. 2-Journalize issuance of par value common stock. (LO 2), AP On May 10, Paige Corporation issues 2,500 shares of $5 par value common stock for cash at $13 per share. Journalize the issuance of the stock. 5-Prepare entries for a cash dividend. (LO 5), AP Troutman Corporation has 7,000 shares of common stock outstanding. It declares a $1 per share cash dividend on November 1 to stockholders of record on December 1. The dividend is paid on December 31. Prepare the entries on the appropriate dates to record the declaration and payment of the cash dividend. 7-Compare impact of cash dividend, stock dividend, and stock split. (LO 5), K Indicate whether each of the following transactions would increase (+), decrease (−), or not affect (N/A) total assets, total liabilities, and total stockholders' equity. Transaction Assets Liabilities Stockholders' Equity (a) Declared cash dividend. (b) Paid cash dividend declared in (a). (c) Declared stock dividend. (d) Distributed stock dividend declared in (c). (e) Split stock 3-for-1. 1-Journalize issuance of common stock. (LO 2), AP During its first year of operations, Rosa Corporation had these transactions pertaining to its common stock. Jan. 10 Issued 30,000 shares for cash at $5 per share. July 1 Issued 60,000 shares for cash at $7 per share. Instructions (a) Journalize the transactions, assuming that the common stock has a par value of $5 per share. (b) Journalize the transactions, assuming that the common stock is no-par with a stated value of $1 per share. 3-Journalize preferred stock transactions and indicate statement presentation. (LO 4, 7), AP Meranda Corporation is authorized to issue both preferred and common stock. The par value of the preferred is $50. During the first year of operations, the company had the following events and transactions pertaining to its preferred stock. Feb. 1 Issued 40,000 shares for cash at $51 per share. July 1 Issued 60,000 shares for cash at $56 per share. Instructions (a) Journalize the transactions. (b) Post to the stockholders' equity accounts. (Use T-accounts.) (c) Discuss the statement presentation of the accounts. 5-Prepare correct entries for capital stock transactions. (LO 2, 3, 4), AN Garcia Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation's capital stock. Instructions On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions. 7-Compare effects of a stock dividend and a stock split. (LO 5), AP On October 31, the stockholders' equity section of Pele Company's balance sheet consists of common stock $648,000 and retained earnings $400,000. Pele is considering the following two courses of action: (1) declaring a 5% stock dividend on the 81,000 $8 par value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $4 per share. The current market price is $17 per share. Instructions Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. Use these column headings: Before Action, After Stock Dividend, and After Stock Split. 1-Indicate statement presentation of selected transactions. (LO 2), K Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2014. For each item, state how it should be shown in the statement of cash flows for 2014. (a) Issued bonds for $200,000 cash. (b) Purchased equipment for $180,000 cash. (c) Sold land costing $20,000 for $20,000 cash. (d) Declared and paid a $50,000 cash dividend. 2-Classify items by activities. (LO 2), C Classify each item as an operating, investing, or financing activity. Assume all items involve cash unless there is information to the contrary. (a) Purchase of equipment. (b) Sale of building. (c) Redemption of bonds. (d) Depreciation. (e) Payment of dividends. (f) Issuance of capital stock. 5-Compute net cash provided by operating activities—indirect method. (LO 4), AP Manuel, Inc. reported net income of $2.5 million in 2014. Depreciation for the year was $160,000, accounts receivable decreased $350,000, and accounts payable decreased $280,000. Compute net cash provided by operating activities using the indirect approach. 8-Determine cash received from sale of equipment. (LO 4), AN The T-accounts for Equipment and the related Accumulated Depreciation—Equip. for Coldsmith Company at the end of 2014 are shown here. Equipment Accum. Depr.—Equip. Beg. bal. 80,000 Disposals 22,000 Disposals 5,100 Beg. bal. 44,500 Acquisitions 41,600 Depr. exp. 12,000 End. bal. 99,600 End. bal. 51,400 1-Classify transactions by type of activity. (LO 2), C Putnam Corporation had these transactions during 2014. (a) Purchased a machine for $30,000, giving a long-term note in exchange. (b) Issued $50,000 par value common stock for cash. (c) Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000. (d) Declared and paid a cash dividend of $13,000. (e) Sold a long-term investment with a cost of $15,000 for $15,000 cash. (f) Collected $16,000 of accounts receivable. (g) Paid $18,000 on accounts payable. Instructions Analyze the transactions and indicate whether each transaction resulted in a cash flow from operating activities, investing activities, financing activities, or noncash investing and financing activities. 5-Prepare the operating activities section—indirect method. (LO 4), AP The current sections of Sanford Inc.'s balance sheets at December 31, 2013 and 2014, are presented here. Sanford's net income for 2014 was $153,000. Depreciation expense was $27,000. 2014 2013 Current assets Cash $105,000 $ 99,000 Accounts receivable 80,000 89,000 Inventory 168,000 172,000 Prepaid expenses 27,000 22,000 Total current assets $380,000 $382,000 Current liabilities Accrued expenses payable $ 15,000 $ 5,000 Accounts payable 85,000 92,000 Total current liabilities $100,000 $ 97,000 Instructions Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2014, using the indirect method. 7-Prepare partial statement of cash flows—indirect method. (LO 4), AN The three accounts shown below appear in the general ledger of Lauber Corp. during 2014. Instructions From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of plant assets was $8,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.) 1-Prepare a discontinued operations section of an income statement. (LO 2), AP On June 30, Reyes Corporation discontinued its operations in Mexico. On Sep-tember 1, Reyes disposed of the Mexico facility at a pretax loss of $640,000. The applicable tax rate is 25%. Show the discontinued operations section of Reyes's income statement. 2-Prepare a corrected income statement with an extraordinary item. (LO 2), AP An inexperienced accountant for Fielder Corporation showed the following in Fielder's 2014 income statement: Income before income taxes $300,000; Income tax expense $72,000; Extraordinary loss from flood (before taxes) $80,000; and Net income $168,000. The extraordinary loss and taxable income are both subject to a 30% tax rate. Prepare a corrected income statement beginning with “Income before income taxes.” 3-Indicate how a change in accounting principle is reported. (LO 2), C On January 1, 2014, Jenner Inc. changed from the LIFO method of inventory pricing to the FIFO method. Explain how this change in accounting principle should be treated in the company's financial statements. 7-Calculate percentage of change. (LO 4), AP Net income was $500,000 in 2012, $485,000 in 2013, and $518,400 in 2014. What is the percentage of change from (a) 2012 to 2013, and (b) from 2013 to 2014? Is the change an increase or a decrease? 9-Analyze change in net income. (LO 4), AP Horizontal analysis (trend analysis) percentages for Roswell Company's sales revenue, cost of goods sold, and expenses are listed here. Horizontal Analysis 2014 2013 2012 Sales revenue 96.2% 104.8% 100.0% Cost of goods sold 101.0 98.0 100.0 Expenses 105.6 95.4 100.0 Explain whether Roswell's net income increased, decreased, or remained unchanged over the 3-year period.

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1-Identify whether obligations are current liabilities.
(LO 1), C
Linton Company has these obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability, noncurrent liability, or both.

a. Noncurrent liability
b. Current liability of 20,000 and remaining is Noncurrent Liability
c. Current liability
d. Current liability

3-Compute and record sales taxes payable.
(LO 3)AP
Bluestem Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $10,388. All sales are subject to a 6% sales tax. Compute sales taxes payable and make the entry to record sales taxes payable and sales.

Cash 10,388
Sales 9,800 <10,388/ 1...
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