At December 31, 2020, the available-for-sale debt portfolio for Crane, Inc. is as follows.

On January 20, 2021, Crane, Inc. sold security A for $16,100. The sale proceeds are net of brokerage fees.

Crane, Inc. reports net income in 2020 of $124,000 and in 2021 of $147,000. Total holding gains (including any realized holding gain or loss) equal $43,000 in 2021.

Prepare a statement of comprehensive income for 2020, starting with net income.

Prepare a statement of comprehensive income for 2021, starting with net income.

CRANE, INC
Statement of Comprehensive Income
                                                                      For the Year Ended December 31, 2021For the Month Ended December 31, 2021December 31, 2021

                                                                      Comprehensive IncomeNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainsUnrealized Holding Loss

$

                                                                      Comprehensive IncomeNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainsUnrealized Holding Loss

                                                                      Comprehensive IncomeNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainsUnrealized Holding Loss

$

                                                                      Add Less:                                                                       Comprehensive IncomeNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainsUnrealized Holding Loss

                                                                      Comprehensive IncomeNet IncomeOther Comprehensive IncomeReclassification Adjustment for Gain Included in Net IncomeReclassification Adjustment for Loss Included in Net IncomeUnrealized Holding GainsUnrealized Holding Loss

$

                                                                      Current Period Other Comprehensive income accumulated Other Comprehensive IncomeBeginning Balance, January 1, 2021Ending Balance, December 31, 2021Amount Reclassified from Accumulated Other Comprehensive IncomeUnrealized Holding Gains

                                                                      Beginning Balance, January 1, 2021Amount Reclassified from Accumulated Other Comprehensive IncomeCurrent Period Other Comprehensive incomeEnding Balance, December 31, 2021Accumulated Other Comprehensive IncomeUnrealized Holding Gains

$

                                                                      Accumulated Other Comprehensive IncomeCurrent Period Other Comprehensive income amount Reclassified from Accumulated Other Comprehensive IncomeEnding Balance, December 31, 2021Beginning Balance, January 1, 2021Unrealized Holding Gains

$

                                                                      Beginning Balance, January 1, 2021Unrealized Holding GainsAccumulated Other Comprehensive IncomeAmount Reclassified from Accumulated Other Comprehensive IncomeEnding Balance, December 31, 2021Current Period Other Comprehensive income

                                                                      Accumulated Other Comprehensive IncomeEnding Balance, December 31, 2021Unrealized Holding GainsAmount Reclassified from Accumulated Other Comprehensive IncomeBeginning Balance, January 1, 2021Current Period Other Comprehensive income

                                                                      Amount Reclassified from Accumulated Other Comprehensive IncomeEnding Balance, December 31, 2021Current Period Other Comprehensive income accumulated Other Comprehensive IncomeBeginning Balance, January 1, 2021Unrealized Holding Gains

$

1. Today corporations are required to send their stockholders an annual report. Assume that you are a prospective investor trying to decide if you should invest in a specific corporation. What type of information is contained in an annual report that would help you decide if this is the right investment for you?
2. Why are current assets listed before fixed assets on the balance sheet?
3. What are the differences between managerial accounting and financial accounting? From a career standpoint, which type do you prefer and why?
4. Write the accounting equation. Then define each term.

Cheryl Montoya picked up the phone and called her boss, Wes Chan, the vice president of marketing at Piedmont Fasteners Corporation: “Wes, I’m not sure how to go about answering the questions that came up at the meeting with the president yesterday.”

"What's the problem?"

“The president wanted to know the break-even point for each of the company’s products, but I am having trouble figuring them out.”

“I’m sure you can handle it, Cheryl. And, by the way, I need your analysis on my desk tomorrow morning at 8:00 sharp in time for the follow-up meeting at 9:00.”

Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. Data concerning these products appear below:

Total fixed expenses are $257,000 per year.

All three products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptable numbers of customers.

The company has an extremely effective lean production system, so there are no beginning or ending work in process or finished goods inventories.

Required:  

1. What is the company’s overall break-even point in dollar sales? (Round CM ratio to 4 decimal places and final answer to the nearest whole dollar.)

2. Of the total fixed expenses of $257,000, $17,500 could be avoided if the Velcro product is dropped, $103,200 if the Metal product is dropped, and $77,600 if the Nylon product is dropped. The remaining fixed expenses of $58,700 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by going out of business entirely.

a. What is the break-even point in unit sales for each product? (Do not round intermediate calculations.)

b. If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company? (Do not round intermediate calculations.)

Financial data for Windsor, Inc. for last year appear below:

C. Windor's CFO has heard about EVA and is curious about whether it might be a better measure to use for evaluating division managers. Windsor's long term debt trades at book value, with interest rate of 10% while its equity has a market value of $1,200,000. The company's cost of equity is 12%. Windsor's income tax rate is 40%. Calculate each of the following components of EVA for the company, as well as the final EVA figure:

a. Weighted average cost of capital

b. Investment, as measured for EVA calculations

Why are the long-lived assets and inventory assertions of existence said to have an inherent risk of material misstatement that is higher than that of the account payable?

On January 2, 2018, Athol Company bought a machine for use in operations. The machine has an estimated useful life of eight years and an estimated residual value of $1,500. The company provided the following information:

1. Invoice price of the machine, $73,150.
2. Freight paid by the vendor per sales agreement, $770.
3. Installation costs, $1,670 cash.
4. Cost of cleaning up the supplies, boxes, and other garbage that remained after the installation of the machine, $80 cash.
5. Payment of the machine's price was made as follows:

January 2:

• Issued 1,080 common shares of Athol Company at $5 per share.
• Signed a $42,000 note payable due April 16, 2018, plus 12 percent interest.
• Balance of the invoice price to be paid in cash. The invoice allows for a 2 percent cash discount if the cash payment is made by January 11.

January 15: Paid the balance of the invoice price in cash.

April 16: Paid the note payable and interest in cash.

6. On June 30, 2020, the company completed the replacement of a major part of the machine that cost $12,350. This expenditure is expected to reduce the machine’s operating costs, increase its estimated useful life by two years, and decrease its estimated residual value to $1,000.
7. Assume that on October 1, 2025, the company decided to replace the machine with a newer, more efficient model. It then sold the machine to Sako Ltd. on that date for $25,400 cash.

1. Compute the acquisition cost of the machine.

2. Prepare the journal entries to record the purchase of the machine and subsequent cash payments on January 15 and April 16, 2018. (Do not round intermediate calculations and round your final answers to the nearest dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

January 2, 2018: Record purchase of machine by issuing shares, signing a note and the balance on account.

January 2, 2018: Record payment of machine installation costs.

January 15, 2018: Record payment made after discount period.

April 16, 2018: Record payment of note and interest

3. Compute the depreciation expense for each of the years 2018, 2019, and 2020, assuming the company’s fiscal year ends on December 31. Use the straight-line depreciation method. (Do not round intermediate calculations and round your final answers to the nearest dollar amount.)

4. Prepare the journal entry to record the sale of the machine on October 1, 2025. (Hint: First determine the balance of the accumulated depreciation account on that date.) (Do not round intermediate calculations and round your final answers to the nearest dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

The Welding Department of Healthy Company has the following production and manufacturing cost data for February 2017. All materials are added at the beginning of the process. Manufacturing Costs Production Data Beginning work in process Beginning work in process 15,000 units, 1/10 complete Materials $18,000 Units transferred out 54,600 Conversion costs 14,360 $32,360 Units started 50,900 Materials 200,129 Ending work in process 11,300 units, 1/5 complete Labor 67,500 Overhead 84,171 Prepare a production cost report for the Welding Department for the month of February. (Round unit costs to 2 decimal places, e.g. 2.25 and all other answers to 0 decimal places, e.g. 1,225.)

Part III: Account for notes payable and accrued interest

__current liabilities____ are notes payable due within one year (or operating cycle if longer).

At the end of each year, a company reclassifies the portion of its long-term debt principal payments that must be paid in the next year from long-term debt to a current _current liability__.

Part IV: Account for accrued liabilities and unearned revenue

The major operating expense for a merchandising company is payroll. True or false?

false

What payroll liabilities does salary expense create?

Employee Income Tax Payable, Gross pay, FICA Tax Payable

Salary Payable, Employee Income Tax Payable, Union dues

Employee Income Tax Payable, FICA Tax Payable, Salary Payable

Healthcare, Salary Payable, FICA Tax Payable

Every expense accrual, including payroll, has the same effect: ____________________ and __________________________ because of the expense.

When is a company required to record warranty expense?

Part V: Account for contingent liabilities

A contingent liability is a potential liability that depends on the _________________ outcome of _________ events.

Part VI: Account for bonds payable and interest expense with straight-line amortization

______________________________ are groups of debt securities issued to multiple lenders, called bondholders.

You have been examining the books of a new client. Included on their previously unaudited financial statements was a balance of $299,032 for a long-term Patent as of 12/31/2017. When examining the ledger, you found these entries:

• An “acquisition” entry of $274,982:
• Legal costs incurred in the preparation of the application for the patent: $6,450 during 2016
• Leal costs incurred in successfully defending the validity of the patent: $17,600 during 2017

• There have been no amortization expenses reported for the patent. There were no other entries to the account during 2018.

  In discussions with the president of the firm, you learned that this patent was developed by an employee specifically hired to work on the development of the president’s initial concept for the product. After 3 years of work, the patent was granted at the end of 2016. The patented product has resulted in a 50% increase in sales from 12/31/2016 to 12/31/2018. The president expects the product to continue being very marketable over the company’s 3 year strategic plan from 2018 through 2020.

  Instructions: As the outside auditor for the company, prepare a memo as of 12/31/2018 to the president of the company discussing:

• The GAAP rules governing the accounting of patents, using appropriate citations from the codification. (Provide the appropriate references to the FASB Codification. Do NOT copy and paste the codification sections.)
• The previous mistakes in accounting for the patent. Suggest correcting journal entries, if appropriate.

Landscaping ​Equipment's accountants assembled the following data for the year ended June ​30, 2018.

Prepare Landscaping ​Equipment's statement of cash flows for the year ended June ​30, 20182018​, using the indirect method. The cash balance for Landscaping ​Equipment, Inc., at June​30, 2017​, was $ 21,000.

Begin by completing the cash flows from operating activities.

Landscaping Equipment, Inc. Statement of Cash Flows Year Ended June 30, 2018

Cash flows from operating activities:

Adjustments to reconcile net income to

net cash provided by operating activities:

Net cash provided by (used for) operating activities

The balance sheet for The Itex Corporation on December 31, 2014, includes the following cash and receivables balances.

Cash – First Security Bank…………………………………………………………………………………………………………….                              $45,000

Currency on hand…………………………………………………………………………………………………………………………                                16,000

Petty cash fund…………………………………………………………………………………………………………………………….                                  1,000

Cash in bond sinking fund…………………………………………………………………………………………………………….                                15,000

Notes receivable (including notes discounted with recourse, $15,500)………………………………………........                                36,500

Accounts receivable……………………………………………………………………………………………………………………..      $85,600

Less: Allowance for bad debts………………………………………………………………………………………………………           4,150           81,450

Interest receivable……………………………………………………………………………………………………………………….                                      525

Current liabilities reported in the December 31, 2014, balance sheet included:

Obligation on discounted notes receivable………………………………………………………………………………..….                               $15,500

Transactions during 2015 included the following:

(a)    Sales on account were $767,000.

(b)    Cash collected on accounts totaled $576,500, including accounts of $93,000 with cash discounts of 2%.

(c)     Notes received in settlement of accounts totaled $82,500.

(d)    Notes receivable discounted as of December 31, 2014, were paid at maturity with the exception of one $3,000 note on which the company had to pay the bank $3,090, which included interest and protest fees. It is expected that recovery will be made on this note early in 2016.

(e)    Customer notes of $58,500 were discounted with recourse during the year, proceeds from their transfer being $58,500. (All discounting transactions were recorded as loans). Of this total, $48,000 matured during the year without notice of protest.

(f)      Customer accounts of $8,720 were written off during the year as worthless.

(g)    Recoveries of bad debts written off in prior years were $2,020.

(h)    Notes receivable collected during the year totaled $27,000 and interest collected was $2,450.

(i)      On December 31, accrued interest on notes receivable was $630.

(j)      Uncollectible accounts are estimated to be 5% of the December 31, 2015, Accounts Receivable balance.

(k)    Cash of $35,000 was borrowed from First Security Bank with accounts receivable of $40,000 being pledged on the loan. Collections of $19,500 had been made on these receivables [included in the total given in transaction (b)], and this amount was applied on December 31, 2015, to payment of accrued interest on the loan of $600, and the balance to partial payment of the loan.

(l)      The petty cash fund was reimbursed (meaning that cash was removed from the bank account and placed in the petty cash fund) based on the following analysis of expenditure vouchers:

     Travel expense………………………………………..   $112

     Entertainment expense…………………………..       78

     Postage expense……………………………………..       93

     Office supplies expense…………………………..     173

     Cash short and over (a revenue account)....          6

(m)  Cash of $3,000 was added to a bond retirement fund.

(n)    Currency on hand at December 31, 2015, was $12,000.

(o)    Total cash payments for all expenses during the year were $680,000. Charge to General Expenses.

Instructions:

1.       Prepare journal entries summarizing the preceding transactions and information.

2.       Prepare a summary of current cash and receivables for balance sheet presentation.

Imagine you are the accounting manager for a manufacturing company's fixed assets department. The CFO is assessing the benefits of acquiring a new John Deere Tractor and Elite Combine and disposing of similar used equipment. The CFO has asked you to do the following: Explain the effect of each transaction on the financial statements. Explain how the substance and asset and/or monetary exchange affects the reporting of the transaction and the financial statements. Be sure to elaborate on your thinking and provide examples.

The cost of the fine European mixers is expected to increase. Natalie has just negotiated new terms with the owner of Kzinski Supply Company, which will include shipping costs in the negotiated purchase price (mixers will be shipped free on board (FOB) destination). Assume that Natalie has decided to use a periodic inventory system and now must choose a cost flow assumption for her mixer inventory. The transactions listed below occur in February to May 2020.

Feb. 2: Natalie buys two deluxe mixers on account from Mixer Supply Company for $1,200 ($600 each), FOB destination, terms n/30.

Feb. 16: She sells one deluxe mixer for $1,150 cash.

Feb. 25: She pays the amount owed to Mixer Supply Company.

Mar. 2: She buys one deluxe mixer on account from Mixer Supply Company for $618, FOB destination, terms n/30.

Mar. 30 : Natalie sells two deluxe mixers for a total of $2,300 cash. Mar. 31: She pays the amount owed to Kzinski Supply Company.

Apr. 1 : She buys two deluxe mixers on account from Mixer Supply Company for $1,224 ($612 each), FOB destination, terms n/30.

Apr. 13: She sells three deluxe mixers for a total of $3,450 cash.

Apr. 30: Natalie pays the amount owed to Mixer Supply Company.

May 4: She buys three deluxe mixers on account from Mixer Supply Company for $1,875 ($625 each), FOB destination, terms n/30.

May 27: She sells one deluxe mixer for $1,150 cash.

For Part II, determine the cost of goods available for sale. You will recall from Chapter 5 (see Part I above) that at the end of January, Cookie Creations had three mixers on hand at a cost of $575 each. For Part II of the assignment, you will calculate the following items: ·

ending inventory,

cost of goods sold,

gross profit,

and gross profit rate under each of the following methods: last-in,

first-out (LIFO);

first-in, first-out (FIFO);

and average cost.

(If anyone can help me with part II that will be great)

Harmer Inc. is now a successful company. In the early days (before it became profitable), it issued ISOs to its employees. Now Harmer is trying to decide whether to issue NQOs or ISOs to its employees. Initially, Harmer would like to give each employee 20 options (each option allows the employee to acquire one share of Harmer stock). For purposes of this problem, assume that the options are exercised in three years (three years from now) and that the underlying stock is sold in five years (five years from now). Assume that taxes are paid at the same time the income generating the tax is recognized. Also assume the following facts: (Leave no answer blank. Enter zero if applicable.) The after-tax discount rate for both Harmer Inc. and its employees is 10 percent. The Corporate tax rate is 21 percent. The Personal (employee) ordinary income rate is 37 percent. The Personal (employee) long-term capital gains rate is 20 percent. The Exercise price of the options is $7. The Market price of Harmer at date of grant is $5. The Market price of Harmer at date of exercise is $25. The Market price of Harmer at date of sale is $35. Answer the following questions: Problem 12-32 Part a a. Considering these facts, which type of option plan, NQO or ISO, should Harmer Inc. prefer?

b. Assuming Harmer issues NQOs, what is Harmer’s tax benefit from the options for each employee in the year each employee exercises the NQOs? (Round your final answer to nearest whole dollar amount.)

e. What is the present value of each employee’s after-tax cash flows from year 1 through year 5 if the employees receive ISOs? Use Exhibit 3.1. (Round your intermediate calculations and final anwser to 2 decimal places.)

f. What is the present value of each employee’s after-tax cash flows from year 1 through year 5 if the employees receive NQOs? Use Exhibit 3.1. (Round your intermediate calculations and final anwser to 2 decimal places.)
g. How many NQOs would Harmer have to grant to keep its employees indifferent between NQOs and 20 ISOs? (Do not round intermediate calculations. Round up your final answer to the next whole number.)

Wolfpack Company is a merchandising company that is preparing a budget for the month of July. It has provided the following information:

Budgeting Assumptions:

1. All sales are on account. Thirty percent of the credit sales are collected in the month of sale and the remaining 70% are collected in the month subsequent to the sale. The accounts receivable at June 30 will be collected in July.
2. All merchandise purchases are on account. Twenty percent of merchandise inventory purchases are paid in the month of the purchase and the remaining 80% is paid in the month after the purchase. The accounts payable at June 30 will be paid in July.
3. The budgeted inventory balance at July 31 is $19,800.
4. Depreciation expense is $3,300 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred.
5. The company’s cash budget for July shows expected cash collections of $96,300, expected cash disbursements for merchandise purchases of $72,000, and cash paid for selling and administrative expenses of $16,100.

Required:

Requirement 1a.

Calculate the budgeted sales for month of July.

Requirement 1b.

Calculate the budgeted merchandise purchases for month of July.

Requirement 1c.

Calculate the budgeted cost of goods sold for month of July.

Requirement 1d.

Calculate the budgeted net operating income for month of July.

Requirement 2.

Prepare a budgeted balance sheet as of July 31.