Question

On January 4, Year 1, Barber Company purchased 7,500 shares of Convell Company for $84,500 plus a broker's fee of $1,500. Convell Company has a total of 37,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $97,000 and $92,000 for Year 1 and Year 2, respectively. What is the book value of Barber's investment in Convell at the end of Year 2?

A) $111,050.

B) $86,000.

C) $122,800.

D) $73,250.

E) $123,800.

The Ballentine Company expects sales for June, July, and August of $67,000, $73,000, and $63,000, respectively. Experience suggests that 40% of sales are for cash and 60% are on credit. The company collects 55% of its credit sales in the month following sale, 40% in the second month following sale, and 5% are not collected. What are the company's expected cash receipts for August from its current and past sales?

A) $121,800.

B) $40,170.

C) $65,370.

D) $92,150.

E) $84,000.

Current information for the Healey Company follows:

Beginning raw materials inventory	$	25,200
Raw material purchases		70,000
Ending raw materials inventory		26,600
Beginning work in process inventory		32,400
Ending work in process inventory		38,000
Direct labor		52,800
Total factory overhead		40,000

All raw materials used were traceable to specific units of product. Healey Company's Cost of Goods Manufactured for the year is:

A) $167,000.

B) $155,800.

C) $159,000.

D) $158,600.

E) $161,400.

Answer 1

Question 1: option A - 111,050 is correct

Particulars	100%	20% share
Puchase price		84500
Add brokers fee		1500
Total cost		86000
Year 1:
Add share of net income	97000	19400
Less dividends received		-6375
Year 2:
Add share of net income	92000	18400
Less dividends received		-6375
Closing balance		111050

Second question - 40,170 is correct

Particulars	Amount
40% of August total sales	25200
40% of june credit sales	16080
55% of july credit sales	24090
Total collections	40170

Third question - 155,800 is correct

Schedule of cost of goods manufactured
Particulars	Amount	Amount
Materials:
Opening balance	25,200
Add: purchases	70,000
Materials available	95,200
Less: closing inventory	26,600
Total materials used		68,600
Direct labor		52,800
Manufacturing overhead applied		40,000
Total manufacturing costs		1,61,400
Add: beginning WIP		32,400
Less: closing WIP		38,000
Cost of goods manufactured		1,55,800