Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several of Mergaronite’s accounts have been omitted. Credit balances are indicated by parentheses. Dividends were declared and paid in the same period.
Mergaronite | Hill | ||||||||
Revenues | $ | (584,000 | ) | $ | (248,000 | ) | |||
Cost of goods sold | 298,000 | 112,000 | |||||||
Depreciation expense | 106,000 | 58,000 | |||||||
Investment income | NA | NA | |||||||
Retained earnings, 1/1/18 | (896,000 | ) | (590,000 | ) | |||||
Dividends declared | 134,000 | 44,000 | |||||||
Current assets | 210,000 | 676,000 | |||||||
Land | 316,000 | 84,000 | |||||||
Buildings (net) | 510,000 | 128,000 | |||||||
Equipment (net) | 208,000 | 256,000 | |||||||
Liabilities | (412,000 | ) | (320,000 | ) | |||||
Common stock | (288,000 | ) | (44,000 | ) | |||||
Additional paid-in capital | (46,000 | ) | (938,000 | ) | |||||
Assume that Mergaronite took over Hill on January 1, 2014, by issuing 7,200 shares of common stock having a par value of $10 per share but a fair value of $100 each. On January 1, 2014, Hill’s land was undervalued by $19,200, its buildings were overvalued by $30,800, and equipment was undervalued by $58,200. The buildings had a 10-year remaining life; the equipment had a 5-year remaining life. A customer list with an appraised value of $104,000 was developed internally by Hill and was to be written off over a 20-year period.
Determine the December 31, 2018, consolidated totals for the following accounts:
In requirement (a), can the consolidated totals be determined without knowing which method the parent used to account for the subsidiary?
If the parent uses the equity method, what consolidation entries would be used on a 2018 worksheet?
In: Accounting
Carlsville Company, which began operations in 2015, invests its idle cash in trading securities. The following transactions are from its short-term investments in trading securities. 2015 Jan. 20 Purchased 800 shares of Ford Motor Co. at $26 per share plus a $125 commission. Feb. 9 Purchased 2,200 shares of Lucent at $44.25 per share plus a $578 commission. Oct. 12 Purchased 750 shares of Z-Seven at $7.50 per share plus a $200 commission. Dec. 31 Fair value of the short-term investments in trading securities is $130,000. 2016 Apr. 15 Sold 800 shares of Ford Motor Co. at $29 per share less a $285 commission. July 5 Sold 750 shares of Z-Seven at $10.25 per share less a $102.50 commission. July 22 Purchased 1,600 shares of Hunt Corp. at $30 per share plus a $444 commission. Aug. 19 Purchased 1,800 shares of Donna Karan at $18.25 per share plus a $290 commission. Dec. 31 Fair value of the short-term investments in trading securities is $160,000. 2017 Feb. 27 Purchased 3,400 shares of HCA at $34 per share plus a $420 commission. Mar. 3 Sold 1,600 shares of Hunt at $25 per share less a $250 commission. June 21 Sold 2,200 shares of Lucent at $42 per share less a $420 commission. June 30 Purchased 1,200 shares of Black & Decker at $47.50 per share plus a $595 commission. Nov. 1 Sold 1,800 shares of Donna Karan at $18.25 per share less a $309 commission. Dec. 31 Fair value of the short-term investments in trading securities is $180,000. Required: 1. Prepare journal entries to record these short-term investment activities for the years shown. On December 31 of each year, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities.(If no entry is required select No journal entry required in the first entry field. Do not round your intermediate calculations.)
In: Accounting
The Hazim Company is a wholesale distributor of automotive replacement parts. For purposes of
this question, assume on January 1, year 3, Hazim Co. adopted the dollar-value LIFO method of
determining inventory costs for financial and income-tax reporting. The following information relates
to this change:
Hazim has continued to use the FIFO method for internal reporting purposes. Hazim's FIFO
inventories at December 31, Year 3, Year 4, and Year 5, were $100,000, $137,500, and $195,000,
respectively.
The FIFO inventory amounts are converted to dollar-value LIFO amounts using a single inventory
pool and annual cost indexes. Hazim uses the annual indexes developed by its industry trade
association: 1.25 for year 4 and 1.50 for year 5.
Calculate Hazim's dollar-value LIFO inventory at December 31, Year 4 and Year 5. Show all
calculations
In: Accounting
Rand Medical manufactures lithotripters. Lithotripsy uses shock
waves instead of surgery to eliminate kidney stones. Physicians’
Leasing purchased a lithotripter from Rand for $2,730,000 and
leased it to Mid-South Urologists Group, Inc., on January 1, 2018.
(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of
$1) (Use appropriate factor(s) from the tables
provided.)
Lease Description: | |||
Quarterly lease payments | $ | 193,152—beginning of each period | |
Lease term | 5 years (20 quarters) | ||
No residual value; no purchase option | |||
Economic life of lithotripter | 5 years | ||
Implicit interest rate and lessee's incremental borrowing rate | 16% | ||
Fair value of asset | $ | 2,730,000 | |
Required:
1. How should this lease be classified by Mid-South
Urologists Group and by Physicians' Leasing?
2. Prepare appropriate entries for both Mid-South
Urologists Group and Physicians' Leasing from the beginning of the
lease through the second rental payment on April 1, 2018. Adjusting
entries are recorded at the end of each fiscal year (December
31).
3. Assume Mid-South Urologists Group leased the
lithotripter directly from the manufacturer, Rand Medical, which
produced the machine at a cost of $2.3 million. Prepare appropriate
entries for Rand Medical from the beginning of the lease through
the second lease payment on April 1, 2018.
In: Accounting
In: Accounting
In: Accounting
Part A Instructions: Use the information provided below for Plant A of Big Noizz Corporation to prepare the Statement of Cost of Goods Manufactured, Cost of Goods Sold and Income Statement for 2017.
Sales $20,000
Raw Materials Used $5,000
Direct Labor Costs $2,000
Selling and Administrative Expenses $5,000
Beginning Raw Material Inventory $600
Ending Raw Material Inventory $2,000
Net Income $400
Beginning Work-in-Process Inventory zero
Ending Work-in-Process Inventory $600
Beginning Finished Goods Inventory $1,400
Ending Finished Goods Inventory $800
In: Accounting
Betty DeRose, Inc. operates two departments, the handling department and the packaging department. During April, the handling department reported the following information: % complete % complete units DM conversion work in process, April 1 17,000 46% 77% units completed during April 46,000 work in process, April 30 23,000 29% 14% The cost of beginning work in process and the costs added during April were as follows: DM Conversion Total cost work in process, April 1 $121,279 $203,056 $324,335 costs added during April 363,285 227,619 590,904 total costs 484,564 430,675 915,239 Calculate the total cost of the handling department's work in process inventory at April 30 using the FIFO process costing method.
In: Accounting
Please provide a one page summary of your key learnings chapter 1 Ethical Reasoning: Implications for Accounting
In: Accounting
Dealer Financing On 1/1/X1, Tractor Co. sold a new combine to Jim’s U-Pick farm. The purchase agreement establishes a base price of $100,000, plus a contractual interest rate of 5%, payable in 48 monthly installments of $2,302.93. Control of the combine transferred to Jim when Jim signed the contract and had the combine delivered that same day. If Jim had obtained separate financing (say, a bank loan) for the purchase, his interest rate would have been 6%.
What amount of revenue should Tractor Co. record at the date of sale? What guidance should Tractor Co. apply to the subsequent measurement of its receivable?
Consider the measurement attribute used to record Tractor Co.’s revenues. How does this approach achieve the objective of this measurement attribute?
Hint: You might find it useful to use Microsoft Excel’s formula options: PMT and PV for this example. Excel walks you through how to input numbers into each formula.
In: Accounting
Instructions
CHART OF ACCOUNTS
Assets Revenue
111 Cash 411 Income from Services
112 Accounts Receivable
114 Supplies Expenses
116 Prepaid Insurance 511 Advertising Expense
121 Office Equipment 512 Supplies Expense
122 Accum. Depr., Office Equipment 513 Insurance Expense
123 Tools 514 Utilities Expense
124 Accum. Depr., Tools 515 Salaries Expense
125 Truck 516 Truck Expense
521 Depreciation Expense - Office Equipment
Liabilities 522 Depreciation Expense - Tools
211 Accounts Payable
Owner’s Equity
311 Mike Hammer, Capital
312 Mike Hammer, Drawing
330 Income Summary
Transactions for the month:
You made the following transactions for Mike’s Quality Repair Services during the month of January:
Jan. 1 Invested $15,000 cash, and a truck with a fair market value of $8,500 into the business.
3 Paid $1800 to Liberty Mutual for a 1-year insurance policy. The policy is effective immediately. Ck# 1001
4 Bought tools from Sears on account, $7500, Inv. #X-1357
5 Bought computer system from Ben’s Computer Center, $5000, putting $2500 down and putting the balance on account, Ck. #1002, Inv. #Y-4152.
6 Bought supplies-Office Mart, $850, Ck. #1003.
7 Performed services for cash, $1,650.
10 Performed services on account, $1275.
12 Received and paid telephone bill, $420, ck#1004.
13 Bought supplies on account from Office Mart, $900, Inv. AB1477.
15 Received and paid the utility bill, $600, Ck. #1005.
15 Paid salary for office clerk, 1/1-1/15-$1000, Ck# 1006.
20 Received The Times Review bill for advertising for the month, $410, Inv. #TR198.
(Note that you did not PAY the bill – you only received it).
21 Performed services $7,250, received $2,250 cash, with the balance due in 30 days.
27 Received from clients $1,275, for work completed on January 10.
28 Paid for oil change on truck, $90, ck#1007.
29 Withdrew cash for personal use, $1500, Ck. #1008.
30 Paid salary for office clerk, 1/16-1/30, $1000, ck#1009.
30 Made partial payment of $500 to Office Mart for supplies purchased on January 13th, Ck#1010.
In: Accounting
Montoure Company uses a perpetual inventory system. It entered
into the following calendar-year purchases and sales
transactions
Date | Activities | Units Acquired at Cost | Units Sold at Retail | |||||||||
Jan. | 1 | Beginning inventory | 600 | units | @ $60 per unit | |||||||
Feb. | 10 | Purchase | 480 | units | @ $57 per unit | |||||||
Mar. | 13 | Purchase | 120 | units | @ $42 per unit | |||||||
Mar. | 15 | Sales | 785 | units | @ $80 per unit | |||||||
Aug. | 21 | Purchase | 180 | units | @ $65 per unit | |||||||
Sept. | 5 | Purchase | 470 | units | @ $63 per unit | |||||||
Sept. | 10 | Sales | 650 | units | @ $80 per unit | |||||||
Totals | 1,850 | units | 1,435 | units | ||||||||
Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 600 units from beginning inventory, 380 from the February 10 purchase, 120 from the March 13 purchase, 130 from the August 21 purchase, and 205 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.)
Compute gross profit earned by the company for each of the four costing methods
In: Accounting
EZ-Seat, Inc., manufactures two types of reclining chairs, Standard and Ergo. Ergo provides support for the body through a complex set of sensors and requires great care in manufacturing to avoid damage to the material and frame. Standard is a conventional recliner, uses standard materials, and is simpler to manufacture. EZ-Seat’s results for the last fiscal year are shown in the statement below.
EZ-SEAT, INC. Income Statement |
|||||||||
Ergo | Standard | Total | |||||||
Sales revenue | $ | 2,000,000 | $ | 5,000,000 | $ | 7,000,000 | |||
Direct materials | 600,000 | 1,500,000 | 2,100,000 | ||||||
Direct labor | 400,000 | 500,000 | 900,000 | ||||||
Overhead costs | |||||||||
Administration | 540,000 | ||||||||
Production setup | 435,000 | ||||||||
Quality control | 304,000 | ||||||||
Distribution | 738,000 | ||||||||
Operating profit | $ | 1,983,000 | |||||||
EZ-Seat currently uses labor costs to allocate all overhead, but management is considering implementing an activity-based costing system. After interviewing the sales and production staff, management decides to allocate administrative costs on the basis of direct labor costs but to use the following bases to allocate the remaining costs:
Activity Level | |||
Activity Base | Cost Driver | Ergo | Standard |
Setting up | Number of production runs | 50 | 100 |
Performing quality control | Number of inspections | 190 | 190 |
Distribution | Number of units shipped | 1,800 | 6,400 |
Required:
a. Complete the income statement using the preceding activity bases. (Do not round intermediate calculations.)
|
c. Restate the income statement for EZ-Seat using direct labor costs as the only overhead allocation base. (Do not round intermediate calculations.)
|
Thanks for your help!
In: Accounting
Cheese Ahead Frankie’s Homemade Cheese Shop (“Frankie’s”) signed an advertising agreement with Simmons Boards (“Owner”) for billboard advertising rights along Route 33 in the town of Hampton. Frankie’s has the right to select and display advertising copy on billboard panels numbered 10 and 12 (panel numbers correspond to designated billboard locations) for a 3-year period from Jan. 1, 20X1, to Dec. 31, 20X3. In consideration for these rights, Frankie’s agrees to pay $10,000 in year 1, $12,000 in year 2, and $13,000 in year 3. Assume that Frankie’s is required to pay the annual fee on Jan. 1 of each contract year. Assuming Frankie’s incremental borrowing rate is 5%, what are the entries Frankie should record at inception of the contract, then at the end of years 1, 2, and 3?
In: Accounting
Mervin March and George Gamble are equal partners. On January 1, 2018, each had an adjusted basis in the partnership of $10,000. During 2018, the partnership borrowed $15,000, for which the partners are liable, and had an operating loss for the year of $20,000. What is the basis of each partner's interest at the end of 2018?
In: Accounting