Company A acquired 100% of Company B's voting stock on January 1, 2018 by issuing 10,000 shares of its $10 par value common stock. Company A's common stock had a fair value of $14 per share at that time. Company B's stockholder's equity was $105,000 at date of acquisition. The trademark was undervalued by $10,000. It has an indefinite life. Equipment (with a 5 year life) was undervalued by $5,000. A customer list that had been created internally had an estimated useful life of 20 years was valued at $20,000.

Below are the financial statements for the two companies for the year ending December 31, 2018. Credit balances are indicated by (parentheses). Complete the trial balance of A Company (calculate income of sub and investment in sub) by using the three different investing accounting methods; Equity, Intial Value, and Partial Equity. Then, continue by preparing a consolidated worksheet for year ended Dec. 31, 2018. Include your consolidation and elimination entries in journal form.

Winslow Manufacturing Company has the following unit data:

Sales price                                                       $600.00

Direct materials                                                   250.00

Direct labor                                                         150.00

Variable overhead                                                 35.00

Fixed overhead (based on 8,000 units)                 30.00        

Marketing and administrative costs:              

Variable                                                                 25.00

Fixed (based on 8,000 units)                                15.00

8,000 units were produced. There were no units in beginning Finished Goods Inventory and 1,500 units in ending Finished Goods Inventory.

Required:

1. Compute the unit product using absorption costing and variable costing.
2. Prepare an income statement using variable costing.
3. Prepare an income statement using absorption costing.
4. Explain the difference in operating income for the absorption and variable costing approaches.

REQUIREMENT: Create THE MASTER BUDGET (Please Include Operating Budget and Financial Budget, please do not include Budget Statement of Cash Flows) for the year ended December 31, 2016 for Fabulous Accessories Inc. ( Please show the calculations)

Estimated Sales:

Wallets: East Region Sales Volume 287,000. West Region Sales Volume 241,000. Unit Selling Price $12.

Handbags: East Region Sales Volume 156,400. West Region Sales Volume 123,600. Unit Selling Price $25.

Estimated Inventory, January 1,2016: Wallet 88,000. Handbags 48,000.

Desired Inventory , December 31, 2016: Wallets 80,000. Handbags 60,000.

Estimated direct material quantity and price for each unit:

Wallet : Leather 0.30 sq. yd.per unit. Lining: 0.10 sq. yd. per unit.

Handbag: Leather 1.25 sq. yd. per unit. Lining: .050 sq.yd. per unit.

Estimated Direct Materials Inventory, January 1, 2016: Leather 18,000 sq. yds. Lining 15,000 sq. yds.

Desired Direct Materials Inventory, December 31, 2016: Leather 20,000 sq. yds. Lining 12,000 sq. yds.

Estimated price per square yard of leather and lining during 2016: Leather $4.50. Lining $1.20

Estimated Direct Labor Quantity and Rate:

Wallet: Cutting Department: 0.10 hr. per unit. Sewing Department: 0.25 hr. per unit

Handbag: Cutting Department: 0.15 hr. per unit. Sewing Department: 0.40 hr. per unit

Hourly rate: Cutting Department $12. Sewing Department $15

Factory Overhead Budget for the year ending December 31, 2016 are as follow:

Indirect factory wages $732,800

Supervisor Salaries: $360,000

Power and light $306,000

Depreciation of plant and equipment $288,000

Indirect materials $182,800

Maintenance $140,280

Insurance and property taxes $79,200. Total factory overhead cost $2,089,080

Estimated Inventory January 1, 2016:

Direct materials: Leather $81,000(18,000 sq. yds. x $4.50)

Lining $18,000(15,000 sq. yds. x $1.20)

Total direct materials $99,000

Work in process $ 214,000. Finished goods $1,095,600

Desired Inventory December 31, 2016:

Direct materials: Leather $90,000(20,000 sq. yds. x $4.50)

Lining $14,400(12,000 sq. yds. x $1.20)

Total direct materials $104,400

Work in process $220,000. Finished goods $1,565,000

Selling and Administrative Expense Budget for the year 2016:

Selling Expenses: Sales salaries expenses $715,000

Advertising expense 360,000

Travel expense 115,000

Total selling expense $1,190,000

Administrative expense: Officers' salaries expense $360,000

Office salaries expense 258,000

Office rent expense 34,500

Office supplies expense 17,500

Miscellaneous administrative expenses 25,000

Total administrative expenses $695,000

Total selling and administrative expenses $1,885,000

Capital Expenditure Budget for the five years ending December 31, 2020:

Machinery-Cutting Department: 2016:$400,000. 2019:$280,000. 2020:$360,000

Machinery-Sewing Department: 2016:$274,000. 2017: $260,000. 2018: $560,000. 2019:$200,000

Office equipment:2017: $90,000. 2020: $60,000

Total: 2016: $674,000. 2017: $350,000. 2018: $560,000. 2019: $480,000. 2020: $420,000

Cutting Machine-to be purchased in January 2016

Cutting Machine-to be purchased in April 2016

Cash Budget:

Estimated cash receipts: receipts from sales on account: From prior month's sales on account 40% - From current month's sales on account 60%

Estimated cash payments: payments of manufacturing costs on account: From prior month's manufacturing costs 25%- From current month's manufacturing costs 75%

Budget Balance Sheet: December 31, 2015:

Current Assets: Cash $225,000. Account Receivable $480,000. Direct Materials Inventory $99,000. Work in Process Inventory $214,400. Finished Goods Inventory $1,095,600. Land $1,000,000. Building and Equipment 1,000,000. Accumulated depreciation -400,000. Total $3,714,000.

Liabilities and Stockholders' Equity: Current Liabilities: Account Payable 190,000. Income Taxes Payable 150,000

Stockholders' Equity : Common Stock, 100,000 shares outstanding $10-par $1,000,000. Retained earnings $2,374,000. Total $3,714,000

Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2017 with three assets: cash of 23,600 dinars, accounts receivable of 81,100 dinars, and land that cost 211,000 dinars when acquired on April 1, 2016. On January 1, 2017, Zugar has a 161,000 dinar note payable, and no other liabilities. On May 1, 2017, Zugar renders services to a customer for 131,000 dinars, which was immediately paid in cash. On June 1, 2017, Zugar incurred a 111,000 dinar operating expense, which was immediately paid in cash. No other transactions occurred during the year. Currency exchange rates for 1 dinar follow:

1. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the dinar is the subsidiary’s functional currency. What is the translation adjustment for this subsidiary for the year 2017?

2. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the U.S. dollar is the subsidiary’s functional currency. What is the remeasurement gain or loss for 2017?

3. Assume that Zugar is a foreign subsidiary of a U.S. multinational company. On the December 31, 2017, balance sheet, what is the translated value of the Land account? On the December 31, 2017, balance sheet, what is the remeasured value of the Land account?

A friend of yours is working toward a master of business administration (MBA) degree. He e-mails you the following note:

"Hey! How are things going? I need your help! We are studying income taxes in my Financial Accounting class and just finished talking about deferred taxes. I think the professor said something about adjusting the value of deferred taxes when it's an asset but not when it's a liability. When I looked at my homework problem, the balance sheet shows both a deferred tax asset and a deferred tax liability. Shouldn't it be one or the other? And why would one need the value adjusted for one, but not the other? Help!"

You want to help your friend, but you remember having some questions yourself:

• Analyze why FASB requires companies to report both deferred tax assets and deferred tax liabilities instead of netting them.
• Examine why the FASB requires valuation adjustments for deferred tax assets but does not for deferred tax liabilities.

INSTRUCTIONS:

1. The maximum number of pages is TEN (10), excluding references and the cover page.
2. The minimum number of references is FIVE (5) (including textbooks, journal articles, and other sources)

QUESTION

The Zambian economy has been facing significant macroeconomic challenges as reflected in low growth, high fiscal deficits; rising inflation and debt service obligations as well as low international reserves. The outbreak of Coronavirus (COVID-19) pandemic has compounded the situation, resulting in unprecedented global public health and economic crises. Although the full impact of the COVID-19 shock on public health and the economy cannot be determined at the moment, indications are that it will be unprecedented. The Bank of Zambia has introduced a number of measures to address the impact of the pandemic on the economy.

The Monetary Policy Committee (MPC), at its May 18 -20, 2020 meeting, decided to lower the policy rate by 225 basis points to 9.25%. The Bank has also introduced a K10 billion stimulus package to give the economy a boost.

Required: Critically analyse the performance of the downward revision of monetary policy in May 2020 and the Targeted Medium-term Refinancing Facility on the Zambian financial markets.

1) Use the following information to prepare adjusting entries for Gilbert Holdings

2) Then make an adjusted trial balance, income statement & balance sheet for the information

a. On April 1, 2019, Gilbert Holdings signed a 4.30% bank loan due in 4 years. This is the only outstanding note payable.

b. Prepaid insurance represents a 4-month insurance policy purchased on December 1.

c. On Oct 1, 2019, Gilbert Holdings paid $11,880 for a 9-month lease for office space.

d. Unearned revenue represents a 12-month contract for consulting services. The payment was received on July 1, 2019.

e. Supplies on hand total $10,480.

f. Equipment is depreciated on a straight-line basis; residual value is estimated to be $15,000 with an estimated service life of 10 years. The assets were held the entire year.

g. On Nov 1, Gilbert Holdings issued Monroe Supplies an 3-month note receivable at a 8.2% annual interest rate.

h. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The aging schedule of accounts receivable must be completed to determine management's desired balance for 2019.

i. Accrued wages totaling $35,838 were unpaid and unrecorded at December 31, 2019.

j. Utility costs incurred but unrecorded for the month of December were estimated to be $2,561.

Problem 6-20 CVP Applications: Break-Even Analysis; Cost Structure; Target Sales [LO6-1, LO6-3, LO6-4, LO6-5, LO6-6, LO6-8]

Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost.

Last year, the company sold 30,500 of these balls, with the following results:

Required:

1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year’s sales level.

2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls?

3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $98,000, as last year?

4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs?

5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company’s new CM ratio and new break-even point in balls?

6. Refer to the data in (5) above.

a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $98,000, as last year?

b. Assume the new plant is built and that next year the company manufactures and sells 30,500 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage.

Graham Potato Company has projected sales of $14,400 in September, $17,000 in October, $24,400 in November, and $20,400 in December. Of the company's sales, 25 percent are paid for by cash and 75 percent are sold on credit. Experience shows that 40 percent of accounts receivable are paid in the month after the sale, while the remaining 60 percent are paid two months after. Determine collections for November and December.
  
Also assume Graham’s cash payments for November and December are $20,500 and $13,000, respectively. The beginning cash balance in November is $5,000, which is the desired minimum balance.

a. Prepare a cash receipts schedule for November and December.

b. Prepare a cash budget with borrowing needed or repayments for November and December. (Negative amounts should be indicated by a minus sign. Assume the November beginning loan balance is $0.)

Please Answer All of Them Please !

1. Presented below is the stockholders' equity section of Coronado Industries at December 31, 2020:

During 2021, the following transactions occurred relating to stockholders' equity:

2900 shares were reacquired at $28 per share.
3400 shares were reacquired at $35 per share.
1700 shares of treasury stock were sold at $31 per share.

For the year ended December 31, 2021, Coronado reported net income of $449000. Assuming Coronado accounts for treasury stock under the cost method, what should it report as total stockholders' equity on its December 31, 2021, balance sheet?

2. Sheridan Company, has 4150000 shares of common stock outstanding on December 31, 2020. An additional 809000 shares of common stock were issued on April 1, 2021, and 410000 more on July 1, 2021. On October 1, 2021, Sheridan issued 19100, $1,000 face value, 8% convertible bonds. Each bond is convertible into 20 shares of common stock. No bonds were converted into common stock in 2021. What is the number of shares to be used in computing basic earnings per share and diluted earnings per share, respectively?

Using the financial statements for the Snider Corporation, calculate the 13 basic ratios found in the chapter.   
   

*Includes $37,300 in lease payments.

Using the above financial statements for the Snider Corporation, calculate the following ratios.

a. Profitability ratios. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)
  

b. Assets utilization ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
   

c. Liquidity ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
  

d. Debt utilization ratios. (Do not round intermediate calculations. Input your debt to total assets answer as a percent rounded to 2 decimal places. Round your other answers to 2 decimal places.)
  

Problem 10A-10 Comprehensive Standard Cost Variances [LO10-1, LO10-2, LO10-3, LO10-4] "Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well,” said Kim Clark, president of Martell Company. “Our $20,825 overall manufacturing cost variance is only .5% of the $4,165,000 standard cost of products made during the year. That's well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year." The company produces and sells a single product. The standard cost card for the product follows: Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) × (2) Direct materials 3.50 feet $ 4.30 per foot $ 15.05 Direct labor 2.2 hours $ 9 per hour 19.80 Variable overhead 2.2 hours $ 2.20 per hour 4.84 Fixed overhead 2.2 hours $ 4.50 per hour 9.90 Total standard cost per unit $ 49.59 The following additional information is available for the year just completed: The company manufactured 20,000 units of product during the year. A total of 69,000 feet of material was purchased during the year at a cost of $4.50 per foot. All of this material was used to manufacture the 20,000 units produced. There were no beginning or ending inventories for the year. The company worked 45,500 direct labor-hours during the year at a direct labor cost of $8.85 per hour. Overhead is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costs follow: Denominator activity level (direct labor-hours) 40,000 Budgeted fixed overhead costs $ 180,000 Actual variable overhead costs incurred $ 113,750 Actual fixed overhead costs incurred $ 177,100 Required: 1. Compute the materials price and quantity variances for the year. 2. Compute the labor rate and efficiency variances for the year. 3. For manufacturing overhead compute: a. The variable overhead rate and efficiency variances for the year. b. The fixed overhead budget and volume variances for the year. (For all requirements, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Renew Energy Ltd. (REL) manufactures and sells directly to customers a special long-lasting rechargeable battery for use in digital electronic equipment. Each battery sold comes with a guarantee that the company will replace free of charge any battery that is found to be defective within six months from the end of the month in which the battery was sold. On June 30, 2020, the Warranty Liability account had a balance of $45,000, but by December 31, 2020, this amount had been reduced to $5,000 by charges for batteries returned.

REL has been in business for many years and has consistently experienced an 7% return rate. However, effective October 1, 2020, because of a change in the manufacturing process, the rate increased to a total of 9%. Each battery is stamped with a date at the time of sale so that REL has developed information on the likely pattern of returns during the six-month period, starting with the month following the sale. (Assume no batteries are returned in the month of sale.)

For example, for January sales, 20% of the returns are expected in February, 30% in March, and so on. Sales of these batteries for the second half of 2020 were:

REL’s warranty also covers the payment of the freight cost on defective batteries returned and on new batteries sent as replacements. This freight cost is 10% of the sales price of the batteries returned. The manufacturing cost of a battery is roughly 60% of its sales price, and the salvage value of the returned batteries averages 14% of the sales price. Assume that REL follows IFRS and that it uses the expense approach to account for warranties.

Calculate the warranty expense that will be reported for the July 1 to December 31, 2020 period.

eTextbook and Media

Calculate the amount of the accrual that you would expect in the Warranty Liability account as at December 31, 2020, based on the above likely pattern of returns.

eTextbook and Media

Would your answer to any of the above situations change if REL followed ASPE?

Choose the answer from the menu in accordance to the question statement                                                                      YesNo

For December 31, 20X1, the balance sheet of Baxter Corporation was as follows:
  

Sales for 20X2 were $320,000, and the cost of goods sold was 50 percent of sales. Selling and administrative expense was $32,000. Depreciation expense was 8 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 10 percent, while the interest rate on the bonds payable was 12 percent. This interest expense is based on December 31, 20X1 balances. The tax rate averaged 40 percent.

$4,000 in preferred stock dividends were paid, and $7,000 in dividends were paid to common stockholders. There were 10,000 shares of common stock outstanding.

During 20X2, the cash balance and prepaid expenses balances were unchanged. Accounts receivable and inventory increased by 10 percent. A new machine was purchased on December 31, 20X2, at a cost of $55,000.

Accounts payable increased by 25 percent. Notes payable increased by $8,000 and bonds payable decreased by $20,000, both at the end of the year. The preferred stock, common stock, and capital paid in excess of par accounts did not change.
  
a. Prepare an income statement for 20X2. (Round EPS answer to 2 decimal places.)
  

  
b. Prepare a statement of retained earnings for 20X2.
  

  
c. Prepare a balance sheet as of December 31, 20X2. (Amounts to be deducted should be indicated with parentheses or a minus sign.)
  

Consider a 5-year project with an initial fixed asset investment of $324,000, straight-line depreciation to zero over the project's life, a zero salvage value, a selling price of $34, variable costs of $17, fixed costs of $189,700, a sales quantity of 94,000 units, and a tax rate of 21 percent. What is the sensitivity of OCF to changes in the sales price?

• $59,470 per $1 of sales

• $61,600 per $1 of sales

• $78,700 per $1 of sales

• $74,260 per $1 of sales

• $68,850 per $1 of sales