Recording Entries under the Fair Value Option—Equity Method

Assume that Fireside Inc. purchased 30% of the common stock of Theater Supplies Corporation on January 1, 2020, for $270,000. Fireside Inc. elected to account for its investment using the fair value option. During the year, Fireside Inc. reported net income of $216,000 and declared and paid dividends of $40,500. The fair value of Fireside’s investment in Theater Supplies common stock is $283,500. Assume that Fireside Inc. has significant influence over Theater Supplies Corporation.

a. What amount would Fireside Inc. report on its balance sheet on December 31, 2020, for its investment in Theater Supplies Corporation?

b. What amount would Fireside Inc. report in its income statement for the year ended December 31, 2020, for its investment in Theater Supplies Corporation?

Note: Use a negative sign to indicate a loss.

Option #1: NFP financial reporting

The Four Corners Theater’s mission is to increase access to the arts for the community of Four Corners. The Theater group owns a debt-financed theater and puts on several plays throughout the year, as well as providing facilities for many other activities. Four Corner’s Theater is a well-established, not-for profit organization exempt under IRC Sec. 501(c)(3).

Identify whether the following activities would be subject to unrelated business income tax (UBIT) and explain why or why not.

1. Rental of the facility to the high school drama club.
2. Fees for summer acting classes for primary school students.
3. Sale of tickets to plays put on by the Four Corner’s Theater group.
4. Sale of season ticket membership list to a local book store.
5. Rental of two apartments in the facility.
6. Rental of meeting space to other local 501(c)(3) organizations for their monthly meetings.
7. Internet sales of gift shop items with the Four Corner’s Theater logo.
8. Lease of the facility’s parking lot to the local university on football game days.

Use the above information from the tables to work out the following missing entries, and then calculate the company’s return on equity. Note: Turnover and the average collection period are calculated using start-of-year, not average, values. (Enter your answers in millions. Round intermediate calculations and final answers to 2 decimal places.)

Long-term debt ratio 0.3 Times interest earned 8.0 Current ratio 1.4 Quick ratio 1.0 Cash ratio 0.4 Inventory turnover 4.0 Average collection period 73 days Use the above information from the tables to work out the following missing entries, and then calculate the company’s return on equity. Note: Turnover and the average collection period are calculated using start-of-year, not average, values. (Enter your answers in millions. Round intermediate calculations and final answers to 2 decimal places.)

COMPLETE THE INCOME STATEMENT

Net Sales?

Cost of Goods sold?

selling, general and administrative expenses = 16.00

depreciation = 26.00

EBIT?

Interest Expense?

income before tax?

tax (35% of income before tax)?

Net Income?

COMPLETE THE BALANCE SHEET

Balance Sheet
Figures in Milliions    this year last year
Assets
Cash and marketable securities ? $26
accounts receivable ? 40
inventories ? 32
Total current assets ? $98
net property, plant, and equipment ? $129
Liabilities and shareholders equity
Accounts payable $20.00 $15
Notes payable 30 $35
total current liabilities ? $50
long term debt ? $26
shareholders equity ? $53
total liabilities and shareholders equity $175.00 $129

Harper Theater is located in Midtown Mall. The cashier’s booth is near the entrance to the theater. Two cashiers are employed. Once works from 1-5 p.m., the other from 5-9 P.M.   Each cashier is bonded. The cashiers receive cash from customers and operate a machine that ejects serially numbered tickets. The rolls of tickets are inserted and locked into the machine by the theater manager at the beginning of each cashier’s shift.

After purchasing a ticket, the customer takes the ticket to an usher stationed at the entrance to the theater lobby some 60 feet from the cashier’s booth. The usher tears the ticket in half, admits the customer, and returns the ticket stub to the customer. The other half of the ticket is dropped into a locked box by the usher.

At the end of each cashier’s shift, the theater manager removes the ticket roll from the machine and makes a cash count. The cash count sheet is initialed by the cashier. At the end of the day, the manager deposits the receipts in total in a bank night deposit vault located in the mall. The manager also sends copies of the deposit slip and the initialed cash count sheets to the theater company treasurer for verification and to the company’s accounting department. Receipts from the first shift are stored in a safe located in the manager’s office.

1.) Identify the internal control procedures and their application to the cash receipts transactions of the Harper Theater. You will find the Internal Control Procedures on pages 433 through 435 of your textbook. For each Internal Control Procedure described in your textbook, identify any Internal Control Procedures that Harper Theater has in place and/or is missing. Be specific and use at least 300 words for your answer.
Be specific and use at least 300 words for your answer.

2.) If the usher and cash decide to collaborate to misappropriate cash, what actions might they take? For each action, what internal control might be employed to stop the misappropriation of cash? Be specific and use at least 200 words for your answer.

3.) Use complete sentences and good grammar.  

People have been using Cameras for private daily use since the 1880s and the first Kodak camera cost a lot of money in those days. Today we wish to see if the size of the camera can be used to predict the cost. The data is given below:

Y = cost in dollars X = weight in ounces y {300, 250, 350, 400, 150, 180, 140, 300, 300, 200} X {6, 5, 7, 5, 6, 6, 4, 6, 6, 5} The following information is available for you to use in the analysis of this topic. n=10 x̄= 5.6 ȳ= 257 SSxy = 248 SSxx = 6.4 SSyy = 69010

Find the least squares prediction equation. a)Ŷ = -300 + 100X1 b)Ŷ = 0 + 50X1 c)Ŷ = 40 + 38.75X1 d)none of these

A local real estate investor in Orlando is considering five alternative investments: a day spa, a theater, a restaurant, a motel, or a gift shop. Profits from the day spa, theater, gift shop or restaurant will be affected by the cost of gasoline; profits from the restaurant will be relatively stable under any condition.
The following payoff table shows the profit or loss that could result from each investment.
Determine the best investment using the minimax regret decision criterion.

Group of answer choices

Restaurant

Day Spa

Gift Shop

Theater

Motel

Next

Accorsi & Sons specializes in selling upscale home theater systems. As a package deal, Accorsi sells a premium home theater package that includes a projector and a one year subscription to premium cable channels for $2,100. Accorsi sells individual projectors for $2,000 and sells individual one-year subscriptions to premium cable channels for $500.

On March 1, 2018, Accorsi delivers a premium home theater package to Valley Hills Nursing Home, which includes the projector and the one-year subscription to the premium cable channels at a price of $2,100. On April 15, 2018, Accorsi receives $2,100 from Valley Hills Nursing Home.

Required:

1. Identify the performance obligation(s) in the premium home theater package?

2. How much revenue will be allocated to each performance obligation?

3. What journal entry (if any) will Accorsi record on March 1, 2018 to record the revenue from the sale of the premium home theater package?

4. What journal entry (if any) will Accorsi record on March 31, 2018?

5. What journal entry will Accorsi record when they receive payment from Valley Hills Nursing Home?

Suppose that we randomly select 50 billing statements from each of the computer databases of the Hotel A, the Hotel B, and the Hotel C chains, and record the nightly room rates. The means and standard deviations for the data are given in the table.

(a) Find a 95% confidence interval for the difference in the average room rates for the Hotel A and the Hotel B chains. (Use Hotel A − Hotel B. Round your answers to two decimal places.)

$______ to $______

(b)Find a 99% confidence interval for the difference in the average room rates for the Hotel B and the Hotel C chains. (Use Hotel B − Hotel C. Round your answers to two decimal places.)

$______ to $______

Suppose that we randomly select 50 billing statements from each of the computer databases of the Hotel A, the Hotel B, and the Hotel C chains, and record the nightly room rates. The means and standard deviations for the data are given in the table.

(a) Find a 95% confidence interval for the difference in the average room rates for the Hotel A and the Hotel B chains. (Use Hotel A − Hotel B. Round your answers to two decimal places.)

$______ to $______

(b)Find a 99% confidence interval for the difference in the average room rates for the Hotel B and the Hotel C chains. (Use Hotel B − Hotel C. Round your answers to two decimal places.)

$______ to $______