Fredo, Inc., purchased 10% of Sonny Enterprises for $1,000,000 on January 1, 2018. Sonny recognized a total of $400,000 net income during 2018, paid $30,000 of dividends to Fredo during 2018, and at December 31, 2018, the market value of the Sonny investment increased to $1,040,000.

Required: Prepare the journal entries necessary to account for the Sonny investment, assuming that Fredo:

(1) Lacks significant influence

(2) Assume that with the 10% purchase Fredo has significant influence over the operating and financial policies of the investee.

Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,192,500 in manufacturing overhead cost at an activity level of 559,000 machine-hours. The company spent the entire month of January working on a large order for 12,800 custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow: Raw materials purchased on account, $319,000. Raw materials used in production, $252,000 (80% direct materials and 20% indirect materials). Labor cost accrued in the factory, $156,000 (one-third direct labor and two-thirds indirect labor). Depreciation recorded on factory equipment, $62,800. Other manufacturing overhead costs incurred on account, $84,800. Manufacturing overhead cost was applied to production on the basis of 40,720 machine-hours actually worked during the month. The completed job for 12,800 custom-made machined parts was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor, and applied overhead.) Required: 1. Prepare journal entries to record items (a) through (f) above [ignore item (g) for the moment]. 2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T-accounts. 3. Prepare a journal entry for item (g) above. 4. If 10,300 of the custom-made machined parts are shipped to the customer in February, how much of this job’s cost will be included in cost of goods sold for February?

Timberly Construction negotiates a lump-sum purchase of several assets from a company that is going out of business. The purchase is completed on January 1, 2017, at a total cash price of $830,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $485,100; land, $297,000; land improvements, $39,600; and four vehicles, $168,300. The company’s fiscal year ends on December 31. Required: 1-a. Prepare a table to allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the depreciation expense for year 2017 on the building using the straight-line method, assuming a 15-year life and a $32,000 salvage value. 3. Compute the depreciation expense for year 2017 on the land improvements assuming a five-year life and double-declining-balance depreciation.

Compute the depreciation expense for year 2017 on the land improvements assuming a five-year life and double-declining-balance depreciation.

	Depreciation expense on land improvements

Compute the depreciation expense for year 2017 on the building using the straight-line method, assuming a 15-year life and a $32,000 salvage value. (Round your answers to the nearest whole dollar.)

	Depreciation expense on building

     In the first year of operations in 2017, the pretax accounting income of Lisle Company was$16,000. Included in pretax accounting income were the following:

     (2) $33,000 of sales revenue that will not be recognized for tax purposes until it is collected;

(3) $32,000 in warranty expense that was recognized as product sales were made according to GAAP, but will be deductible for tax purposes only when the actual disbursements are made; and.

(1) $4,000 expense for a premium for life insurance covering the firm’s president, with Lisle named as beneficiary, which is not deductible for tax purposes.

     The temporary differences are expected to reverse in the following pattern:

            

                                                     Installment                         Warranty

                                 Year            Collections                        Payments

                               2017                   8,300                            18,200

                               2018                 12,800                            10,300

                                2019                 11,900                              3,500

                                                      $33,000                          $32,000

    

     In addition, Lisle records $12,000 more depreciation for tax purposes than for accounting financial statements, and it is not expected to start reversing in the near future.

     The enacted tax rate for 2017 is 35%; in 2017, due to a significant change in the tax law, the enacted tax rate for corporations became 21% for 2018 and future years.

     Required:

1. Calculate taxable income for 2017, and prepare the journal entry necessary to record income taxes at the end of 2017. How would any deferred tax amounts be reported on a classified balance sheet? Show how taxable income, income tax expense, and net income would be reported on the income statement.

2. Assume that 2018 pretax accounting income is $8,000, the insurance premium is the same as for 2017, and Lisle records an additional $12,000 more depreciation expense for tax purposes than for accounting financial statements. The portions of previous differences expected to reverse in 2018 do reverse exactly as estimated. Prepare the journal entry necessary to record income taxes at the end of 2018. How would any deferred tax amounts be reported on the 2018 balance sheet? Show how taxable income, income tax expense, and net income would be reported on the 2018 income statement.

The business manufactures custom patios made of concrete, brick, fiberglass, and lumber- depending upon customer preference. The company's fiscal year is the calendar year. At the beginning of July, selected balances were as follows:

Direct Materials Inventory, July 1	$4200
Work-In-Process Inventory, July 1	5540*
Manufacturing Overhead Applied to Date	32640
Actual Manufacturing Overhead to Date	31650

*Details for Work in Process

	Job 85		Job 86		Job 87		Total
Direct Materials	$600		800		900
Direct Labor	320		540		580
Manufacturing Overhead	400		675		725
=	1320	+	2015	+	2205	=	5540

(the last row are the separate columns added together and then totaled at the end).

During July, total direct materials purchased were $4900. Overhead costs incurred were $3800. Direct materials and direct labor used were as follows:

	Materials Requested Amounts	Labor Time Ticket Amounts
Job 85	$1100	$840
Job 86	500	360
Job 87	1300	1200
Job 88	2000	800

The Company uses conventional overhead application with overhead charged to jobs at the rate of $1.25 per dollar of direct labor cost. The patios for Jobs 85 and 87 were completed during July and sold at cost plus a 30 percent markup.

Prepare an Excel Spreadsheet that determines the cost of each job at the end of July. Then program cells that determine end of July balance of direct materials inventory, end of July balance of work in process inventory, end of July balance of finished goods, sales for July, cost of goods sold for July, and gross profit margin for July. On the lower part of the spreadsheet: Prepare a formal cost of goods manufactured schedule for the month of July.

(the company only deals with underapplied or overapplied overhead at the end of December therefore it is not needed in July).

Alexi's bought a home for $1,000,000 during year 1. She made a $200,000 down payment and financed the other $800,000. This home is her only residence. Assume that by year 10 her home had appreciated to $1,5000,000 and the balance on her mortgage was down to $600,000, interest rates had gone down and Alexis refinanced her home. She borrowed $1,000,000 and paid off her first mortgage. She used the remaining $400,000 for projects unrelated to her home. How much is her qualifying home-related debt for tax purposes?

The country its been taxed on is irrelevant

Yoshi Company completed the following transactions and events involving its delivery trucks.

2016

Jan.		1		Paid $22,015 cash plus $1,485 in sales tax for a new delivery truck estimated to have a five-year life and a $2,000 salvage value. Delivery truck costs are recorded in the Trucks account.
Dec.		31		Recorded annual straight-line depreciation on the truck.

2017

Dec.

31

Due to new information obtained earlier in the year, the truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,850. Recorded annual straight-line depreciation on the truck.

2018

Dec.		31		Recorded annual straight-line depreciation on the truck.
Dec.		31		Sold the truck for $5,400 cash.

Required:

1-a. Calculate depreciation for year 2017.
1-b. Calculate book value and gain (loss) for sale of Truck on December, 2018.
1-c. Prepare journal entries to record these transactions and events.

Calculate depreciation for year 2017.

	Total cost Less accumulated depreciation (from 2016) Book value Less revised salvage value Remaining cost to be depreciated Years of life remaining Total depreciation for 2017

Calculate book value and gain (loss) for sale of Truck on December, 2018.

	Depreciation expense (for 2016) Depreciation expense (for 2017) Depreciation expense (for 2018) Accumulated depreciation 12/31/2018 0 Book value of truck at 12/31/2018 Total cost Accumulated depreciation Book value 12/31/2018

• 1

  Record the total cost of the new delivery truck.

• 2

  Record the year-end adjusting entry for the depreciation expense of the delivery truck.

• 3

  Record the year-end adjusting entry for the depreciation expense of the delivery truck.

• 4

  Record the year-end adjusting entry for the depreciation expense of the delivery truck.

• 5

  Record the sale of the delivery truck for $5,400 cash.

A machine costing $209,400 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 476,000 units of product during its life. It actually produces the following units: 122,000 in 1st year, 122,500 in 2nd year, 121,000 in 3rd year, 120,500 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.)

  
Required:

Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method. (Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar.)

Compute depreciation for each year (and total depreciation of all years combined) for the machine under each Double-declining-balance.

	DDB Depreciation for the Period End of Period Year Beginning of Period Book Value Depreciation Rate Depreciation Expense Accumulated Depreciation Book Value 1 $209,400 % $209,400 2 % 0 3 % 0 4 % 0 $0

. A partially completed pension spreadsheet showing the relationships among the elements that constitute Carney, Inc.’s defined benefit pension plan follows. At the end of 2018, Carney revised its pension formula and incurred a prior service cost of $100 million. At the end of 2019, the pension formula was amended again, creating an additional prior service cost of $200 million. At the beginning of 2020, $400 million prior service cost was incurred. At the beginning of 2021, $300 million prior service cost was incurred. In 2018 - 2021, the actuary’s discount rate remained 10%, and the average remaining service life of the active employee group remained 10 years. The expected rate of return on assets was 10% in 2019, and increased by 1% each year.

1. Fill in blanks in the 2019 pension spreadsheet.

2019 Pension spreadsheet ($ in millions)	(PBO)	Plan Assets	Prior Service Cost–AOCI	Net Loss (Gain) –AOCI	Pension Expense	Cash	Net Pension (Liability) / Asset
Balance, Jan. 1, 2019	(25,000)	20,000	100	4,500			(5,000)
Service cost	(800)
Interest cost
Prior Service Cost
Expected return on assets
Adjust for: Gain (loss) on assets
Amortization of: "Prior service cost-AOCI"
Amortization of: "Net Loss (Gain)-AOCI"
Gain (Loss) on PBO	7000
Cash funding						(1,000)
Retiree benefits	950
Bal., Dec. 31, 2019		22,450	290	(3,100)	1,510

The following incorrect income statement was prepared by the accountant of the Axel Corporation:

AXEL CORPORATION Income Statement For the Year Ended December 31, 2021
Revenues and gains:
Sales revenue				$	760,000
Interest revenue					49,000
Gain on sale of investments					96,000
Total revenues and gains					905,000
Expenses and losses:
Cost of goods sold	$	410,000
Selling expense		76,000
Administrative expense		96,000
Interest expense		33,000
Restructuring costs		72,000
Income tax expense		54,500
Total expenses and losses					741,500
Net Income				$	163,500
Earnings per share				$	1.64

Required:
Prepare a multiple-step income statement for 2021 applying generally accepted accounting principles. The income tax rate is 25%. (Amounts to be deducted should be indicated with a minus sign. Round EPS answer to 2 decimal places.)
  

Liabilities can be listed as both long-term and short-term, based on the time frame for paying them. You have a notes payable which was issued to purchase inventory and it was issued on 10/15 and is for 90 days. Determine how to report this on balance sheet and support your reason for this reporting.

The company knows they cannot pay this note in 90 days and is working to convert it to be payable over 15 months. Does this change the method you report on the balance sheet? Why or why not?

What are unsecured notes? Why would they carry a relatively high interest rate? What are convertible securities? Why are they good for the investor and for the company? Why would they carry a relatively low interest rate? What does callable mean? What advantage does this feature give a company?

On February 8, 2018, Holly purchased a residential apartment building. The cost basis assigned to the building is $209,000. Holly also owns another residential apartment building that she purchased on December 15, 2018, with a cost basis of $588,000.

Click here to access the depreciation tables.

If required, round intermediate calculations and final answers to nearest dollar.

a. Calculate Holly's total depreciation deduction for the apartments for 2018 using MACRS.
$

b. Calculate Holly's total depreciation deduction for the apartments for 2019 using MACRS.

$

Calculate the following:

Click here to access the various depreciation tables. If required, round your final answers to the nearest dollar. If your answer is zero, enter "0".

a. The first year of depreciation on a residential rental building costing $200,000 purchased July 2, 2018.
$

b. The second year (2019) of depreciation on a computer costing $5,000 purchased in May 2018, using the half-year convention and accelerated depreciation considering any bonus depreciation taken.
$

c. The first year of depreciation on a computer costing $2,800 purchased in May 2018, using the half-year convention and straight-line depreciation with no bonus depreciation.
$

d. The third year of depreciation on business furniture costing $8,000 purchased in March 2016, using the half-year convention and accelerated depreciation but no bonus depreciation.
$

Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $55,000 has today. (The real value of his retirement income will decline annually after he retires.) His retirement income will begin the day he retires, 10 years from today, at which time he will receive 24 additional annual payments. Annual inflation is expected to be 3%. He currently has $65,000 saved, and he expects to earn 8% annually on his savings. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.

Open spreadsheet

Required annuity payments
Retirement income today	$55,000
Years to retirement	10
Years of retirement	25
Inflation rate	3.00%
Savings	$65,000
Rate of return	8.00%
Calculate value of savings in 10 years:			Formulas
Savings at t = 10			#N/A
Calculate value of fixed retirement income in 10 years:
Retirement income at t = 10			#N/A
Calculate value of 25 beginning-of-year retirement payments at t =10:
Retirement payments at t = 10			#N/A
Calculate net amount needed at t = 10:
Value of retirement payments			#N/A
Value of savings			#N/A
Net amount needed			#N/A
Calculate annual savings needed for next 10 years:
Annual savings needed for retirement			#N/A

How much must he save during each of the next 10 years (end-of-year deposits) to meet his retirement goal? Do not round your intermediate calculations. Round your answer to the nearest cent.

$