Problem 20-11 Error correction; change in depreciation method [LO20-6]

The Collins Corporation purchased office equipment at the beginning of 2016 and capitalized a cost of $2,180,000. This cost included the following expenditures:

The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2016 and 2017.

In 2018, after the 2017 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company’s controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment.

Required:
1 & 2. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2018 and any 2018 journal entry(s) related to the change in depreciation methods. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Complete the following questions. In addition to answering the items below, you must submit an analysis of the assignment. Analyze the specific outcomes and write an analysis directed toward the team at Coco Inc. describing what the numbers mean and how they relate to the business. Submit journal entries in an Excel file and written segments in an MS Word document. For written answers, please make sure your responses are well-written, formatted per CSU-Global Guide to Writing and APA (Links to an external site.)Links to an external site. and have proper citations, where applicable.

Assume that the following facts pertain to a non-cancelable lease agreement between Coco Inc. and Bubs Corp, a Lessee.

The lessee assumes responsibility for all executory costs, which are expected to amount to $4,000 per year. The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line depreciation method for all equipment.

1. Using the spreadsheet Lease Amort Schedule, prepare an amortization schedule that would be suitable for the lessee for the lease term.
2. Using the spreadsheet Journal Entries, prepare the journal entries for the lessee for 2018 and 2019 to record the lease agreement and all expenses related to the lease. Assume the Lessee’s annual accounting period ends on December 31 and that reversing entries are used when appropriate.
3. Prepare journal entries for the lessor of the transaction.

Select one type of retailer from each of the 3 categories (food, general merchandise, and service-NOTE: there are other service examples that you can choose from like urgent doctor or dental care, hair salon etc.).

Store name and location/place:

Type of retailer:

Product assortment:

Pricing strategy:

Promotion strategy:

General evaluation: (from your viewpoint as a consumer of this retailer)

Need answer please!!

At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $30 million attributable to a temporary book - tax difference of $75 million in a liability for estimated expenses. At the end of 2018, the temporary difference is $70 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2018 is $180 million and the tax rate is 40%.

Required: 1.) Prepare the journal entry(s) to record Payne's income taxes for 2018, assuming it is more likely than not that the deferred tax asset will be realized.

1.a) Record the valuation allowance

2.) Prepare the journal entry(s) to record Payne's income taxes for 2018, assuming it is more likely than not that 1/4 of the deferred tax asset will ultimately be realized.

The next three questions are based on the following information.

The Low Knock Oil Company produces two grades of cut-rate gasoline for industrial distribution. The grades, regular and economy, are produced by refining a blend of two types of crude oil, type X100 and type X220. Each crude oil differs not only in cost per barrel, but in composition as well. The following table indicates the percentage of crucial ingredients found in each of the crude oils and the cost per barrel for each:

Weekly demand for the regular grade of Low Knock gasoline is at least 25,000 barrels, and demand for the economy is at least 32,000 barrels per week. At least 45% of each barrel of regular must be ingredient A. At most 50% of each barrel of economy should contain ingredient B. While the gasoline yield from one barrel of crude depends on the type of crude and the type of processing used, we will assume for the sake of this example that one barrel of crude oil will yield 0.46 barrel of gasoline.

Hint: You may refer to the Low Knock Oil Company example analyzed on page 326-327 in the textbook (Program 8.9), and simply adjust your constraints for the demands accordingly.

1. At the optimal production, does the company just make enough regular gasoline to meet the demand? Does the company just make enough economy gasoline to meet the demand?

1. Yes, yes
2. Yes, no
3. No, yes
4. No, no

1. To minimize the production cost, the optimal amount of X100 crude oil used in producing economy gasoline is __________ barrels, and the optimal amount of X220 crude oil used in producing economy gasoline is____________ barrel. (Please round to the closest integer and include no units.)

The appendix of the textbook provides a grid of Relevant Professional Auditing Standards. Please research three of the given topics and discuss the differences between U.S. auditing standards (PCAOB and AICPA) and international standards (IASB).

4. February 1, 2018, Salisbury Company purchased land for the future factory location at a cost of $102,000.  The dilapidated building that was on the property was demolished so that construction could begin on the new factory building. The new factory was completed on November 1, 2018. Costs incurred during this period were:

Using this information, how much should be recorded as the cost of the land?

5. On January 1, 2017, Frostburg Company purchased for $68,500, equipment having a service life of six years and an estimated residual value of $4,000. Frostburg has recorded depreciation of the equipment using the straight-line method. On December 31, 2019, before making any annual adjusting entries, the equipment was exchanged for new machinery having a fair value of $35,000. The transaction has commercial substance. Use this information to prepare all General Journal entries (without explanation) required to record the events for December 31, 2019.

The E.N.D. partnership has the following capital balances as of the end of the current year:

Pineda $ 170,000

Adams 150,000

Fergie 140,000

Gomez 130,000

Total capital $ 590,000

Answer each of the following independent questions:

a. Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $168,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners?

b. Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $330,000 based on the terms of the original partnership agreement. If the bonus method is used, what is the capital balance of the remaining three partners? (Do not round your intermediate calculations. Round your final answers to the nearest dollar amounts.)

Direct Method

Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments:

The company has decided to simplify its method of allocating support service costs by switching to the direct method.

Required:

1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations.

Allocation ratios:

2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)

The Prince-Robbins partnership has the following capital account balances on January 1, 2018:

Prince, Capital $ 150,000

Robbins, Capital 140,000

Prince is allocated 60 percent of all profits and losses with the remaining 40 percent assigned to Robbins after interest of 6 percent is given to each partner based on beginning capital balances.

On January 2, 2018, Jeffrey invests $85,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 6 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50 percent), Robbins (30 percent), and Jeffrey (20 percent). In 2018, the partnership reports a net income of $24,000.

a. Prepare the journal entry to record Jeffrey’s entrance into the partnership on January 2, 2018.

b. Determine the allocation of income at the end of 2018.

22.) bob and sally transferred property to new in exchange for 100% of news stock but failed to attach a 351 election to the corporate tax return the failure to elect will trigger recognition of any gains reazlied?

True OR False

23.) bob and ted transferred property to new in return for 67% if news common stock. In the same transaction carol received 33% of new cos stock in return for legal services. Bob and teds transfers will qualify for 351 treatment however carols will not?

True OR False

24.)Janice transferred property with a FMV of 100,000 basis 25,000 in return for 50% of news stock. In the same transaction jerry received 50% of news stock in return for property with a FMV if 15,000 plus marketing services he will provide over the next three months. The transactions will qualify for 351 treatment?

True OR False

1. Research has shown that for a company’s toy truck every increase of $0.10 in the price will

result in 200 fewer sales. At one point, when the price was $2.35, the company sold 18,500

trucks. A reasonable employee of the company wondered aloud what price would maximize

the revenue generated by the sale of the trucks for the company.

a.) Determine the formula of the function N(x) that gives the number of trucks sold when

the price is x dollars. Draw a graph of the function N(x).

b.) Determine the formula for the function R(x) that gives the revenue generated when

the price is x dollars. Graph y=R(x).

c.) Determine algebraically the price that yields the maximum revenue. How much

revenue is generated? How many trucks are sold at this price?

d.) Let’s say that the company wants to sell 20,000 trucks. How much should they

charge and how much revenue is generated?

e.) What is the average rate of change in revenue from x=$2.50 to x=$2.85? What is the

average rate of change from x=$3.00 to $3.25? What units are associated with the

average rate of change? Interpret each average rate of change in the context of the

given situation. What do these average rates of change tell you about the shape of the

graph of R(x)?