Intermediate Accounting I, ACCT-2154
Chapter 3 Practice Problem Solutions
Exercise 3–3
1.
f
Accrued interest payable
2.
d
Franchise
3. -c
Accumulated depreciation
4.
a
Prepaid insurance, for 2014
5.
g
Bonds payable, due in 10 years
6.
f
Current maturities of long-term debt
7.
f
Note payable, due in 3 months
speculation
8.
b
Long-term receivables
9.
b
Bond sinking fund, will be used to
retire bonds in 10 years
10.
11.
12.
13.
14.
15.
16.
a
c
c
f
d
h
b
Supplies
Machinery
Land, in use
Unearned revenue
Copyrights
Preferred stock
Land, held for
17.
18.
a
f
Cash equivalents
Wages payable
Exercise 3–11
1.
2.
3.
4.
5.
When related-party transactions occur, companies must disclose the nature of
the relationship, provide a description of the transaction, and report the dollar
amounts of the transactions and any amounts due from or to related parties.
When an event that has a material effect on the company’s financial position
occurs after the fiscal year-end, but before the financial statements actually are
issued, the event is disclosed in a subsequent event disclosure note.
The choice of the straight-line method to determine depreciation typically is
disclosed in the company’s summary of significant accounting policies
disclosure note.
This information would be included in a disclosure note describing the
company’s debt.
The choice of the FIFO method to determine value inventory typically is
disclosed in the company’s summary of significant accounting policies
disclosure note.
Exercise 3–5
VALLEY PUMP CORPORATION
Balance Sheet
At December 31, 2013
Assets
Current assets:
Cash ................................................................................
Marketable securities ......................................................
Accounts receivable, net of allowance for
uncollectible accounts of $5,000 ..............................
Inventories ......................................................................
Prepaid expenses ............................................................
Total current assets ...................................................
$ 25,000
22,000
51,000
81,000
32,000
211,000
Investments:
Marketable securities ......................................................
Land ................................................................................
Total investments .....................................................
Property, plant, and equipment:
Land ................................................................................
Buildings ........................................................................
Equipment ......................................................................
Less: Accumulated depreciation .....................................
Net property, plant, and equipment ..........................
$22,000
20,000
42,000
100,000
300,000
75,000
475,000
(125,000)
350,000
Intangible assets:
Copyright ........................................................................
Total assets ............................................................
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable ...........................................................
Interest payable ...............................................................
Unearned revenues .........................................................
Note payable ...................................................................
Current maturities of long-term debt ..............................
Total current liabilities .............................................
Long-term liabilities:
Note payable ...................................................................
Shareholders’ equity:
Common stock ................................................................
Retained earnings ...........................................................
Total shareholders’ equity ........................................
Total liabilities and shareholders’ equity ..............
12,000
$615,000
$ 65,000
10,000
20,000
100,000
50,000
245,000
100,000
$200,000
70,000
270,000
$615,000