On January 4, 2018, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to excercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $2.00 per share on December 31, 2018, and Lavery reported net income of $160 million for the year ended December 31, 2018. The market value of Lavery's common stock at December 31, 2018 was $31 per share. On the purchase date, the book value of Lavery's net assets was $800 million and:

a. The fair value of Lavery's depreciable assets, with an average remaining useful life of six years, exceeded their book value by $80 million.

b. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required:

1-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under fair value option, and accounts for the Lavery investment in a manner similar to what it would use for securities for which there is not specific influence.

(Record the purchase of Lavery stock for $324 million) (Record Runyan share of Lavery's $160 mil net income)

(Record the receipt of cash dividends of $2 per share on 10 mil shares)

(Record any nec. entry related to depreciation. The fair value of Lavery's depreciable assets, with an average remaining useful life of six years, exceeded their book value by $80 mil) (Record any nec. adj entry to correctly report the investment on the balance sheet. The market value of Lavery's common stock at Dec 31 2018 was $1 per share)

1-b Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.

(Effect on net income)

(Investment)

2-a Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, but uses equity method accounting to account for Lavery's income and dividends, and then records a fair value adjustment at the end of the year that allows it to comply with GAAP.

(Record the purchase of Lavery Labeling stock for $324 mil)

(Record Runyan's share of Lavery's $160 mil net income)

(Record the receipt of cash dividends of $2 per share on 10 mil shares)

(Record any nec entry to related depreciation. The fair value of Lavery's depreciable assets, with an avg remaining useful life of six years, exceeded their book value by $80 mil) (Record any nec adj entry to correctly report the investment on the bal sheet. The market value of Lavery's common stock at Dec 31, 2018 was $1 per share)

2-b Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.

(Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the Dec 31, 2018 balance sheet)

(net income) (Investment)

The partnership of Dennis and Grover reports the following​ information:

• Mike Dennis withdrew cash of $151,000 for personal use.

• Frank Grover withdrew cash of $128,000 during the year.

• Net income is $268,000. The first $134,000 is shared based on the partner capital investments ​(Dennis $108,000 and Grover $160,000​). The next $100,000 is shared based on partner​ service, with Dennis receiving 60 percent and Grover receiving 40 percent. The remainder is shared equally.

Journalize the entries on December 31 to close to each Capital account with the net income to the​ partners, and to close the​ partners' Withdrawal accounts. Explanations are not required. Indicate the amount of increase or decrease in each​ partner's Capital balance. What was the overall effect on partnership​ capital?

Explain computing Earnings & profits and Determined Dividends received by Shareholders?

1-

Direct Materials Variances

Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 450 tablets during December. However, due to LCD defects, the company actually used 500 LCD displays during December. Each display has a standard cost of $6.00. LCD displays were purchased for December production at a cost of $3,150.

Determine the price variance, quantity variance, and total direct materials cost variance for December. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. And, enter your final variance amounts to the nearest whole dollar.

2-

Direct Materials and Direct Labor Variance Analysis

Abbeville Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 70 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

Required:

a. Determine the standard cost per faucet for direct materials and direct labor. Round the cost per unit to two decimal places.

b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

[The following information applies to the questions displayed below.]fNotes with important tax information are provided below

XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current year audited income statement. Notes with important tax information are provided below. Exhibit 16-6.

Notes:

1. XYZ owns 30 percent of the outstanding Hobble Corp. (HC) stock. Hobble Corp. reported $1,000,000 of income for the year. XYZ accounted for its investment in HC under the equity method and it recorded its pro rata share of HC's earnings for the year. HC also distributed a $200,000 dividend to XYZ.
2. Of the $20,000 interest income, $5,000 was from a City of Seattle bond (issued in 2017), $7,000 was from a Tacoma City bond issued in 2015, $6,000 was from a fully taxable corporate bond, and the remaining $2,000 was from a money market account.
3. This gain is from equipment that XYZ purchased in February and sold in December (i.e., it does not qualify as §1231 gain).
4. This includes total officer compensation of $2,500,000 (no one officer received more than $1,000,000 compensation).
5. This amount is the portion of incentive stock option compensation that vested during the year (recipients are officers)
6. XYZ actually wrote off $27,000 of its accounts receivable as uncollectible.
7. Tax depreciation was $1,900,000.
8. In the current year, XYZ did not make any actual payments on warranties it provided to customers.
9. XYZ made $500,000 of cash contributions to qualified charities during the year.
10. On July 1 of this year XYZ acquired the assets of another business. In the process it acquired $300,000 of goodwill. At the end of the year, XYZ wrote off $30,000 of the goodwill as impaired.
11. XYZ expensed all of its organizational expenditures for book purposes. It expensed the maximum amount of organizational expenditures allowed for tax purposes.
12. The other expenses do not contain any items with book-tax differences.
13. This is an estimated tax provision (federal tax expense) for the year. Assume that XYZ is not subject to state income taxes.

Estimated tax information:

XYZ made four equal estimated tax payments totaling $480,000. Assume for purposes of estimated tax penalties, assume XYZ reported a tax liability of $800,000 in 2017. During 2018, XYZ determined its taxable income at the end of each of the four quarters as follows:

Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

a. Compute XYZ’s taxable income.

ANSWER FOR A IS 1,868,360

b. Compute XYZ’s income tax liability.

Denzel Brooks opened a Web consulting business called Venture Consultants and completes the following transactions in March.

Required:
1. Prepare general journal entries to record these transactions using the following titles: Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Common Stock (307); Dividends (319); Services Revenue (403); and Utilities Expense (690).
2. Post the journal entries from part 1 to the ledger accounts.
3. Prepare a trial balance as of the end of March.

Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products far exceeds its manufacturing capacity. The bottleneck (or constriant) in the production process is upholstery labor-hours. Information concerning three of Portsmouth's upholstered chairs appears below:

Required:

1. Portsmouth is considering paying its upholstery laborers additional compensation to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime premium per hour should the company be willing to pay to keep the upholstery shop open after normal working hours?

2. A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $34 per hour. The management of Portsmouth is confident that this upholstering company’s work is high quality and their craftsmen can work as quickly as Portsmouth’s own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additional contribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats?

3. Should Portsmouth hire the nearby upholstering company?

The case study of Pure Organic food and Juice Bar :

The four key questions that should drive your analysis are :

1. What are the goals and objectives of Graham and Buob?

2. What are some of the challenges facing Pure? What explains their low-profit levels? What is the main problem Pure faces?

3. How would you characterize Pure's competitive market?

4. How does Pure create value for the consumer? What differentiates this restaurant from the competition?

Instructions:

1. Maximum Four pages for analysis including the appendix (you decide if to use the appendix or not)

On January 1, 2018 you bought a zero coupon bond with 5 years to maturity at $ 675. On January 1, 2019 this bond traded at $ 731. What would be your taxable income from holding this bond in 2018, if straight-line method for interest deduction were used?

a. $ 67.25

b. $ 56

c. $ 32.5

d. $ 65

e. $ 0

Tami Tyler opened Tami’s Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler’s personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University.

Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter.

At this point, Ms. Tyler is manufacturing only one product—a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow:

Required:

1. Complete the following:

a. Compute the unit product cost under absorption costing.

b. What is the company’s absorption costing net operating income (loss) for the quarter?

c. Reconcile the variable and absorption costing net operating income (loss) figures.

3. During the second quarter of operations, the company again produced 33,200 units but sold 38,200 units. (Assume no change in total fixed costs.)

a. What is the company’s variable costing net operating income (loss) for the second quarter?

b. What is the company’s absorption costing net operating income (loss) for the second quarter?

c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter.

Preparing a Trial Balance, Closing Journal Entry, and Post-Closing Trial Balance. The following information applies to the questions displayed below.] Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit or credit balances. Assume the year ended on September 30, 2018.

Accounts Payable $ 602

Accounts Receivable 302

Accumulated Depreciation 902

Cash 302

Common Stock 202

Deferred Revenue 202

Depreciation Expense 302

Equipment 3,202

Income Tax Expense 302

Interest Revenue 102

Notes Payable (long-term) 202

Notes Payable (short-term) 502

Prepaid Rent 102

Rent Expense 402

Retained Earnings 1,502

Salaries and Wages Expense 2,202

Service Revenue 6,206

Supplies 502

Supplies Expense 202

Travel Expense 2,602

How to prepare an adjusted trial balance at September 30, 2018?

Is the Retained Earnings balance of $1,502 the amount that would be reported on the balance sheet as of September 30, 2018? Yes or No??

Harry’s Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mr. Wilson, the banker, will finance construction if the firm can present an acceptable three-month financial plan for January through March. The following are actual and forecast sales figures: Actual Forecast Additional Information November $240,000 January $320,000 April forecast $360,000 December 260,000 February 360,000 March 370,000 Of the firm’s sales, 60 percent are for cash and the remaining 40 percent are on credit. Of credit sales, 30 percent are paid in the month after sale and 70 percent are paid in the second month after the sale. Materials cost 30 percent of sales and are purchased and received each month in an amount sufficient to cover the following month’s expected sales. Materials are paid for in the month after they are received. Labor expense is 40 percent of sales and is paid for in the month of sales. Selling and administrative expense is 15 percent of sales and is paid in the month of sales. Overhead expense is $22,000 in cash per month. Depreciation expense is $10,200 per month. Taxes of $8,200 will be paid in January, and dividends of $3,000 will be paid in March. Cash at the beginning of January is $84,000, and the minimum desired cash balance is $79,000.

a. Prepare a schedule of monthly cash receipts for January, February, and March.

b. Prepare a schedule of monthly cash payments for January, February, and March.

c. Prepare a monthly cash budget with borrowings and repayments for January, February, and March. (Negative amounts should be indicated by a minus sign. Assume the January beginning loan balance is $0.)

what are the different types of dividends? What are the accounting issues?