During its first year of operations, Cupola Fan Corporation issued 37,000 of $1 par Class B shares for $420,000 on June 30, 2018. Share issue costs were $2,200. One year from the issue date (July 1, 2019), the corporation retired 10% of the shares for $43,000.

Required:
1. to 4. Prepare the journal entry to record the issuance of the shares, the declaration of a $2.70 per share dividend on December 1, 2018, the payment of the dividend on December 31, 2018 and the retirement of the shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

(Journal Entries):

Record the issuance of the shares.

Record the declaration of a $2.70 per share dividend on December 1, 2018.

Record the payment of the dividend on December 31, 2018.

Record the retirement of the shares.

Comparative statements of retained earnings for Renn-Dever Corporation were reported in its 2018 annual report as follows.

At December 31, 2015, common shares consisted of the following:

Required:
Infer from the reports the events and transactions that affected Renn-Dever Corporation’s retained earnings during 2016, 2017, and 2018. Prepare the journal entries that reflect those events and transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

(Journal Entries):

Record transfer of net loss to retained earnings.

Record transfer of net income to retained earnings.

Record repurchase of shares for retirement.

Record declaration of cash dividend.

Record payment of cash dividend.

Record transfer of net income to retained earnings

Record issue of stock dividend.

Record declaration of cash dividend.

Record payment of cash dividend.

Prepare the journal entries for all transactions in August

Stacy's Company, owned by F. Stacy, started operations in August and completed the following transactions during the first month of operations.

August 1 F. Stacy invested $75,000 cash in the company

August 2The company purchased $45,000 in office equipment. It paid $15,000 in cash and signed a note payable promising to pay the $10,000 over the next three years

August 2 The company rented office space and paid $8,000 for the August rent

August 6 The company installed a new roof for a customer and immediately collected $9,000

August 7 The company paid a supplier $7,000 for roofing materials used on the August 6th job

August 8 The company purchased a $9,500 copy machine for office use on credit August 9 The company completed work for additional customers on credit in the amount of $26,000

August15 The company paid it's employees' salaries $2,700 for the first half of the month

August17 The company installed a new roof for a customer and immediately collected $3,900

August 20 The company received $10,000 in payments from the customers billed on August 9th

August 28 The company paid $1,500 on the copy machine purchased on August 8th. It will pay the remaining balance in September

August 31 The company paid it's employees' salaries $2,700 for the second half of the month

August 31 The company paid a supplier $5,300 for roofing materials used on the remaining jobs completed during August

August 31 The company paid $850 for this month's utility bill

The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2017:

Required:
1. During 2018, TNL Systems reacquired shares of its common stock and later sold shares in two separate transactions. Prepare the entries for both the purchase and subsequent resale of the shares assuming the shares are (a) retired and (b) viewed as treasury stock.

1. On February 5, 2018, TNL Systems purchased 8 million shares at $12 per share.
2. On July 9, 2018, the corporation sold 2 million shares at $14 per share.
3. On November 14, 2020, the corporation sold 2 million shares at $9 per share.

2. Prepare the shareholders’ equity section of TNL Systems’ balance sheet at December 31, 2020, comparing the two approaches. Assume all net income earned in 2018–2020 was distributed to shareholders as cash dividends.

(1A Journal Entries):

Record the purchase of 8 million shares at $12 per share assuming the shares are retired.

Record the sale of 2 million shares at $14 per share.

Record the sale of 2 million shares at $9 per share.

(1B Journal Entries):

Record the sale of 2 million shares at $9 per share.

Record the sale of 2 million shares at $14 per share

Record the sale of 2 million shares at $9 per share.

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.50 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $366,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 52-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $135.00 (600 square feet @ $22.50 per hundred square feet). Calculate the customer margin earned on this job.

Access the IFRS authoritative literature at the IASB website and after some research answer the following questions: In your initial post, answer what is the authoritative guidance for asset impairments? Briefly discuss the types of transactions to which the standard applies. In your reply post comment on your classmate's initial post and give several examples of events that would cause an asset to be tested for impairment. What is the best evidence of fair value? Describe alternative methods of estimating fair value.

High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:

Management is anxious to assess the profitability of the new camp cot during the month of May.

Required:

1. Assume that the company uses absorption costing.

a. Determine the unit product cost.

b. Prepare an income statement for May.

2. Assume that the company uses variable costing.

a. Determine the unit product cost.

b. Prepare a contribution format income statement for May.

RWP #3 – Taxes

Obtain to the most recent 10-K's for Proctor & Gamble Co and Coca Cola Co and complete the table below for the most recent fiscal year end:

Beacon Company is considering automating its production facility. The initial investment in automation would be $10.49 million, and the equipment has a useful life of 9 years with a residual value of $1,040,000. The company will use straight-line depreciation. Beacon could expect a production increase of 44,000 units per year and a reduction of 20 percent in the labor cost per unit.         

4

Required:
1-a. Complete the following table showing the totals. (Enter all answers in whole dollars.)

         

1-b. Does Beacon Company favor automation?

        

2. Determine the project's accounting rate of return. (Round your answer to 2 decimal places.

3. Determine the project's payback period. (Round your answer to 2 decimal places.

7.

4. Using a discount rate of 14 percent, calculate the net present value (NPV) of the proposed investment. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollar. Round the final answer to nearest whole dollars.)

8.

value:
1.53 points

Required information

5. Recalculate the NPV using a 9% discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollar. Round the final answer to nearest whole dollars.)

D- Some construction company has bought a product for $200,000 with a life of three years, and a salvage value of $10,000. Tabulate depreciation and book value using MACRS, Double Declining Balance and straight-line methods. Which method gives the company the largest depreciation after two years? please show and explain all steps

The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company:

Additional Information

• Amortization expense resulting from Foreman’s excess acquisition-date fair value is $34,000 per year.
• Burks has convertible preferred stock outstanding. Each of these 8,000 shares is paid a dividend of $5 per year. Each share can be converted into five shares of common stock.
• Stock warrants to buy 16,000 shares of Foreman are also outstanding. For $15, each warrant can be converted into a share of Foreman’s common stock. The fair value of this stock is $20 throughout the year. Burks owns none of these warrants.
• Foreman has convertible bonds payable that paid interest of $44,000 (after taxes) during the year. These bonds can be exchanged for 25,000 shares of common stock. Burks holds 20 percent of these bonds, which it bought at book value directly from Foreman.

Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimal places.)

Below is Salem Company’s income statement for 2018 that was prepared by an inexperienced accountant. Salem Company Income Statement As of December 31, 2018 Revenues: Sales revenue ……………..…………………………………… $298,000 Wages payable…………..……………………………………….. 4,000 Gain on sale of investment…………………………………….. 5,250 Deferred revenue………………………………………………. 2,500 Interest payable………………………………………………… 1,000 Accumulated depreciation……………………………………… 10,000 Total revenues ………………………………………………….. $320,750 Less operating expenses: Selling expenses….……………………… …………………. $32,250 Research and development expense………………….…….. 4,750 Prepaid advertising …….…………………………………. 3,000 Indirect manufacturing labor cost..………………………… 16,200 Utilities expense..…. .....................………………………… 10,200 Direct manufacturing labor cost. ………………………..… 41,000 Factory equipment………………………………………….. 40,000 Insurance expense…………………….………………. …… 3,500 Restructuring costs………………………………………….. 4,000 Direct materials purchased………………………………..... 93,000 Interest expense……………………………………………. 1,750 Rent expense…..…………….………………. …………….. 18,000 Other factory indirect costs…………………………………. 3,000 Dividend paid………………………………………………. 1,500 Administrative expenses………………….…………………. 40,400 Short-term investment……………………………………… . 19,000 Total operating expenses …………………………………….. 331,550 Net operating loss …………………………………………….. ($10,800) a. Seventy percent (70%) of utilities expense and 80% of insurance expense are for factory operations. Apply the remaining utilities and insurance expenses equally to selling expense and administrative expenses. b. Sixty percent (60%) of the rent expense is associated with factory operations. Allocate the remaining rent equally to selling expense and administrative expenses. c. Factory equipment was purchased January 1, 2017. It was estimated that the useful life of the equipment is 10 years and the residual value, $4,000. The $10,000 accumulated depreciation above is for 2017. No depreciation was charged for 2018. The company uses the double-declining balance method of depreciation. d. Inventory balances are: January 1, 2018 December 31, 2018 Direct materials……………… $5,000 $6,600 Work-in-process …………….. $8,000 $10,000 Finished goods ……………… $25,000 $28,000 e. The company’s tax rate is 21%. The president is disappointed with the results of operations and has asked you to review the income statement and make a recommendation as to whether the company should look for a buyer for its assets. Required: 1. As one step in gathering data for the president, prepare a corrected schedule of cost of goods manufactured for the year ended December 31, 2018. 2. As a second step, prepare a new multiple-step income statement for the year ended December 31, 2018. 3. Calculate the cost of producing one unit if the company produced 120,000 units in 2018 (round your answer to two decimal points).

The following letter was sent to the SEC and the FASB by leaders of the business community.

Dear Sirs:

The FASB has been struggling with accounting for derivatives and hedging for many years. The FASB has now developed, over the last few weeks, a new approach that it proposes to adopt as a final standard. We understand that the Board intends to adopt this new approach as a final standard without exposing it for public comment and debate, despite the evident complexity of the new approach, the speed with which it has been developed and the significant changes to the exposure draft since it was released more than one year ago. Instead, the Board plans to allow only a brief review by selected parties, limited to issues of operationality and clarity, and would exclude questions as to the merits of the proposed approach.

As the FASB itself has said throughout this process, its mission does not permit it to consider matters that go beyond accounting and reporting considerations. Accordingly, the FASB may not have adequately considered the wide range of concerns that have been expressed about the derivatives and hedging proposal, including concerns related to the potential impact on the capital markets, the weakening of companies’ ability to manage risk, and the adverse control implications of implementing costly and complex new rules imposed at the same time as other major initiatives, including the Year 2000 issues and a single European currency. We believe that these crucial issues must be considered, if not by the FASB, then by the Securities and Exchange Commission, other regulatory agencies, or Congress.

We believe it is essential that the FASB solicit all comments in order to identify and address all material issues that may exist before issuing a final standard. We understand the desire to bring this process to a prompt conclusion, but the underlying issues are so important to this nation’s businesses, the customers they serve and the economy as a whole that expediency cannot be the dominant consideration. As a result, we urge the FASB to expose its new proposal for public comment, following the established due process procedures that are essential to acceptance of its standards, and providing sufficient time to affected parties to understand and assess the new approach.

We also urge the SEC to study the comments received in order to assess the impact that these proposed rules may have on the capital markets, on companies’ risk management practices, and on management and financial controls. These vital public policy matters deserve consideration as part of the Commission’s oversight responsibilities.

We believe that these steps are essential if the FASB is to produce the best possible accounting standard while minimizing adverse economic effects and maintaining the competitiveness of U.S. businesses in the international marketplace.

Answer the following questions.

1. Explain the “due process” procedures followed by the FASB in developing a financial reporting standard.

2. What is meant by the term “economic consequences” in accounting standard-setting?

3. What economic consequences arguments are used in this letter?

4. What do you believe is the main point of the letter?

5. Why do you believe a copy of this letter was sent by the business community to influential members of the U.S. Congress?

On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,295,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $880,000, retained earnings of $430,000, and a noncontrolling interest fair value of $555,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 50 percent of the current year purchases remain in Smashing's inventory.

1. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018.
2. Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing.

1. Purchases and Cash Payments Journals

   Happy Tails Inc. has a September 1, 20Y4 accounts payable balance of $815, which consists of $520 due Labradore Inc. and $295 due Meow Mart Inc. Transactions related to purchases and cash payments completed by Happy Tails Inc. during the month of September 20Y4 are as follows:

   Sept. 4.	Purchased pet supplies from Best Friend Supplies Inc. on account, $350.
   Sept. 6.	Issued Check No. 345 to Labradore Inc. in payment of account, $520.
   Sept. 13.	Purchased pet supplies from Poodle Pals Inc., $1,005.
   Sept. 18.	Issued Check No. 346 to Meow Mart Inc. in payment of account, $295.
   Sept. 19.	Purchased office equipment from Office Helper Inc. on account, $3,435.
   Sept. 23.	Issued Check No. 347 to Best Friend Supplies Inc. in payment of account from purchase made on September 4.
   Sept. 27.	Purchased pet supplies from Meow Mart Inc. on account, $535.
   Sept. 30.	Issued Check No. 348 to Sanders Inc. for cleaning expenses, $75.

   Happy Tails Inc. uses the following accounts:

   Cash	11
   Pet Supplies	14
   Office Equipment	18
   Accounts Payable	21
   Cleaning Expense	54

   a. Prepare a purchases journal and a cash payments journal to record these transactions in chronological order. If an amount box does not require an entry, leave it blank.

   If no entry is required in "Other Accounts Dr." then select "No entry required".

   PURCHASES JOURNAL							PAGE 16
   DATE	Account Credited	Post. Ref.	Accounts Payable Cr.	Pet Supplies Dr.	Other Accounts Dr.	Post. Ref.	Amount
   20Y4
   		✔
   		✔
   		✔
   		✔
   			()	()

   CASH PAYMENTS JOURNAL						PAGE 22
   DATE	Ck. No.	Account Debited	Post. Ref.	Other Accounts Dr.	Accounts Payable Dr.	Cash Cr.
   20Y4
   			✔
   			✔
   			✔
   					()	()

   b. Prepare a listing of accounts payable creditor balances on September 30, 20Y4. Verify that the total of the accounts payable creditor balances equals the balance of the accounts payable controlling account on September 30, 20Y4.

   Happy Tails Inc.
   Accounts Payable Creditor Balances
   September 30, 20Y4
   Meow Mart Inc.	$
   Poodle Pals Inc.
   Office Helper Inc.
   Total creditor (supplier) accounts	$

   c. Happy Tails Inc. uses a subsidiary ledger for accounts payable for all of the following reasons EXCEPT: