Alton Corp. purchased ten $ 1000 7​% bonds of Galvan Corporation when the market rate of interest was 14​%. Interest is paid​ semiannually, and the bonds will mature in five year.

I need the Present value of the bonds?

Required information

Problem 14-3A Schedule of cost of goods manufactured and income statement; inventory analysis LO P2, A1

[The following information applies to the questions displayed below.]
   

The following calendar year-end information is taken from the December 31, 2019, adjusted trial balance and other records of Leone Company.
   

Problem 14-3A Part 2

2. Prepare the company’s 2019 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.
  

Pronghorn Corporation issued 392 shares of $10 par value common stock and 128 shares of $50 par value preferred stock for a lump sum of $17,424. The common stock has a market price of $20 per share, and the preferred stock has a market price of $90 per share.

Prepare the journal entry to record the issuance.

Culver, Inc. began work on a $6,391,000 contract in 2017 to construct an office building. During 2017, Culver, Inc. incurred costs of $1,867,020, billed its customers for $1,209,000, and collected $908,000. At December 31, 2017, the estimated additional costs to complete the project total $3,178,980.

Prepare Culver’s 2017 journal entries using the percentage-of-completion method.

Problem 7-26 Restructuring a Segmented Income Statement [LO7-4]

Millard Corporation is a wholesale distributor of office products. It purchases office products from manufacturers and distributes them in the West, Central, and East regions. Each of these regions is about the same size and each has its own manager and sales staff.

The company has been experiencing losses for many months. In an effort to improve performance, management has requested that the monthly income statement be segmented by sales region. The company’s first effort at preparing a segmented income statement for May is given below.

The cost of goods sold and shipping expense are both variable. All other costs are fixed.

Required:

3. Prepare a new contribution format segmented income statement for May. (Round percentage answers to 1 decimal place.)

Ethical Issues

Jeremiah Wedgewood, the CFO, is adamant that the company needs to move ahead with the new line. While Josey also thinks that the new line is a good idea, she is a little worried about how it is going to affect their financial statements in the short run. After carefully considering what was likely to happen, Josey scheduled an appointment to visit with Jeremiah about her concerns.

"Josey!" Jeremiah said as she came into his office. "How are you doing today?" Josey smiled. Nothing ever seemed to really bother Jeremiah.

"I'm doing well, thanks, Uncle Jerry. Just a little worried about our new line."

"Worried?" Jeremiah asked. "About what?"

"Well, let me just start by saying that I agree that adding these new candles is a great idea. I think we have a really good idea of how much we can charge for them to break into the market and stay competitive in the long run. I also think while our costs will be high while we get the new line started, they will come down over time as we get settled. But I'm a little concerned about what the line will do to our profits for the next couple of years. The profits won't be nearly as good as they are for our traditional candles for at least two years."

"Well, Josey," Jeremiah replied, "keep in mind that this is a family-owned business, so that's not going to be a big deal. I mean, we don't have investors messing up our stock prices with every little piece of news. However," he paused, looking out his window for a moment as he thought about the changes. "We did just open up a new line of credit with our bank and our interest rate is contingent on maintaining profitability in each segment. Shoot! I didn't think about the new line when I signed that deal. They offered such a low rate that I wanted to make sure I locked it in." He looked at Josey. "We don't have to show a large profit, just a profit. What do you think our chances are of just being above zero with the new line?"

Josey shook her hand back and forth. "About 50-50, at least for the first year."

"That's not good enough," Jeremiah said, shaking his head. "What is we adjust the overhead allocation so that both lines show a profit?" Josey frowned. "Now, don't write me off as a bad guy, Josey. This wouldn't be right if we were a public company because we would be misleading investors, but, as I said, we don't have any investors, just the family.

"What about the bank?" Josey asked.

"Well think about it," Jeremiah said, a smile again forming on his lips. "They really just want to make sure that we pay them back, or that we have the cash to pay them back. What I'm talking about won't affect our cash flows at all. We're just shifting overhead from one line to another. Companies do that all the time."

Josey looked at Jeremiah and pondered. She was confident that the new line would be profitable soon, probably in just a year or two. And overhead is applied on a somewhat arbitrary basis, especially when using a single, plant-wide rate, or departmental rates. She chose all of those numbers anyway, after all. There was no way to really know if the amount of overhead being applied to any product was the "real" amount. Activity- based costing would get them closer to an actual cost, but she hadn't had time to get into that yet. And Jeremiah was certainly right; the last thing they needed now was for the bank to raise the interest rates over a bookkeeping technicality. Perhaps they could make a change to their overhead allocations...

Questions

1. Make a list of pros and cons of applying overhead strictly on the basis of specific departmental rates versus "adjusting" the allocations to keep each line profitable.

2. Review the four principles and four standards of the IMA's Statement of Ethical Professional Practice. Based on these principles and standards, do you believe that there are any ethical violations in Jeremiah's proposal? Explain which, if any, of the principles and/or standards Jeremiah's suggestion will violate. Does it matter that this is a family-owned company instead of one with outside investors? If there were no bank loan and Jeremiah wanted to do this just for internal reporting, would it change your answer?

Question 25

On February 1, 2017, Marsh Contractors agreed to construct a building at a contract price of $5,940,000. Marsh estimated total construction costs would be $4,112,000 and the project would be finished in 2019. Information relating to the costs and billings for this contract is as follows:

Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and for completed-contract accounting, show the gross profit that should be recorded for 2017, 2018, and 2019.

Explain 302(b)(2)'s requirement of "substantially disproportionate with respect to the shareholder" for a redemption to be treated as an exchange (aka stock ownership testes).

Use these transactions to create an Income Statement, Balance Sheet, and Cash Flow Statement.

Vertical Analysis of Income Statement

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

b. The vertical analysis indicates that the cost of goods sold as a percent of sales   by 6 percentage points, while selling expenses  by 3 percentage points, and administrative expenses   by 2 percentage points. Thus, net income as a percent of sales   by 3 percentage points.

Brett operates a business that locates and purchases specialized items for clients, among other activities. Brett uses the accrual method of accounting but he doesn’t keep any significant inventories of the items that he sells. Brett reported the following financial information for his business activities during the year. For each of the following items determine the effect on the taxable business income.

a.      Brett paid $380 for entertaining a visiting out-of-town client. The client didn’t discuss business with Brett during this visit, but Brett wants to maintain good relations to encourage additional business next year.

b.      Brett paid a visit to his parents in Dallas over the Christmas holidays. While he was in the city, Brett spent $250 to attend a half-day business symposium. Brett paid $500 for airfare, $70 for meals during the symposium, and $30 on cab fare to the symposium.

c.       At the end of the year, Brett’s business reports $12,000 of accounts receivable. Based upon past experience, Brett believes that at least $3,000 of his new receivables will be uncollectible.

d.      In December of this year, Brett rented equipment to complete a large job. Brett paid $4,000 in December because the rental agency required a minimum rental of four months ($1,000 per month). Brett completed the job before year-end, but he returned the equipment at the end of the lease.

e.       Brett has signed a contract to sell gadgets to the city. The contract provides that sales of gadgets are dependent upon a test sample of gadgets operating successfully. In December, Brett delivers $22,000 worth of gadgets to the city that will be tested in March. Brett purchased the gadgets especially for this contract and paid $15,500.

Samuel is the owner of a 2018 Toyota corolla. After a standard service he was informed that the rings in the engine are damaged. There is nothing visibly wrong with the car, the performance is good and there is no excessive smoke. Samuel decides to sell the car without having it repaired. He sells the car to peter for the purchase price of N$ 4000 without disclosing the fact the vehicles is in need of repair. Shortly afterwards the car breaks down. The garage owner tells him the rings were damaged and the cost of the repair would be N$ 3000. Advise Peter as to his rights and the remedies he may against Samuel.

Claire Corporation’s trial balance includes the following expenses:

Assuming no change in the work in process and finished goods inventory balances for the year, what total amount should Claire report as a product expense?

Select one:

a. $171,500

b. $185,500

c. $186,500

d. $236,500

Explain and provide an example of the judicial principle of continuity of business enterprise.

A company is considering a project that requires an initial investment of $607,500 and has a useful life of 9 years. Expected cash receipts from the project will be $185,000 each year. The salvage value of the assets used in the project will be $70,000. The company’s tax rate is 30%. For tax purposes, the entire initial investment (without any reduction for salvage value) will be depreciated over 9 years. The company uses a discount rate of 16%.

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