On 12/31/2020, Heaton Industries Inc. reported retained earnings of $275,000 on its balance sheet, and it reported that it had $172,500 of net income during the year. On its previous balance sheet, at 12/31/2019, the company had reported $555,000 of retained earnings. No shares were repurchased during 2020. How much in dividends did Heaton pay during 2020?

elect the correct answer.

11

Green Company sells its product for $11100 per unit. Variable costs per unit are: manufacturing, $5600; and selling and administrative, $125. Fixed costs are: $51000 manufacturing overhead, and $61000 selling and administrative. There was no beginning inventory at 1/1/18. Production was 34 units per year in 2018–2020. Sales were 34 units in 2018, 30 units in 2019, and 38 units in 2020. Income under absorption costing for 2020 is

E11.3  

(LO 1, 2 ) (Depreciation Computations—SYD, DDB—Partial Periods) Judds Company purchased a new plant asset on April 1, 2020, at a cost of $711,000. It was estimated to have a service life of 20 years and a salvage value of $60,000. Judds' accounting period is the calendar year.

Instructions

a.  

Compute the depreciation for this asset for 2020 and 2021 using the sum-of-the-years'-digits method.

b.  

Compute the depreciation for this asset for 2020 and 2021 using the double-declining-balance method.

Problem One:

On March 1, 2019, Mark Company acquired real estate on which it planned to construct a small office building. The company paid $75,000 in cash. An old warehouse on the property was razed at a cost of $6,400; the salvaged materials were sold for $1,200. Additional expenditures before construction began included $800 attorney’s fee for work concerning the land purchase, $3,800 real estate broker’s fee, $5,800 architect’s fee, and $11,000 to put in driveways and a parking lot.

Instructions

1. Determine the amount to be reported as the cost of the land.

2. For each cost not used in part (a), indicate the account to be debited.

Problem Two:

Younger Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2018, at a cost of $188,000. Over its 4-year useful life, the bus is expected to be driven 100,000 miles. Salvage value is expected to be $8,000.

Instructions

1. Compute the depreciation cost per unit.

2. Calculate the depreciation expense, accumulated depreciation, and book value for 2018, 2019, 2020, and 2021 assuming actual mileage was: 2018, 27,000; 2019, 34,000; 2020, 24,000; and 2021, 18,000.

Year           Depreciation Expense               Accumulated Depreciation                    Book Value

2018

2019

2020

2021

Problem Three:

Kinder Company purchased a new machine on October 1, 2018, at a cost of $145,000.  The company estimated that the machine will have a salvage value of $25,000.The machine is expected to be used for 20,000 working hours during its 5-year life.

Instructions

Compute the depreciation expense under the following methods for the year indicated.

1. Straight-line for 2018 and 2019.

2. Units-of-activity for 2018 and 2019, assuming machine usage was 3,400 hours for 2018 and 12,200 for 2019.

3. Declining-balance using double the straight-line rate for 2018 and 2019.

4. Assuming the straight-line method.
   1. Prepare the journal entry to record 2018 depreciation.

2. Show how the truck would be reported in the December 31, 2018, balance sheet.

Problem Four:

On January 1, 2019, Jaime Inc. invested $900,000 in a mine estimated to have 1,200,000 tons of ore of uniform grade. During the 2019, 100,000 tons of ore were mined and sold.

Instructions

1. Prepare the journal entry to record depletion expense.

2. Assume that the 100,000 tons of ore were mined, but only 80,000 units were sold. How are the costs applicable to the 20,000 unsold units reported?

Problem Five:

The following are selected 2019 transactions of Penaflok Corporation.  

Jan. 1    Purchased a small company and recorded goodwill of $200,000. Its useful life is indefinite.

May 1   Purchased for $120,000 a patent with an estimated useful life of 5 years and a legal life of 20 years.

Instructions

Prepare necessary adjusting entries at December 31 to record amortization required by the events above.

In September 2017, the company acquired Blue River Technology (Blue River), which is based in Sunnyvale, California. Blue River has designed and integrated computer vision and machine learning technology to optimize the use of farm inputs. Machine learning technologies could eventually be applied to a wide range of the company's products. The fair values assigned to the assets and liabilities related to the acquired entity were approximately $1 million of trade receivables, $2 million of property and equipment, $193 million of goodwill, $125 million of identifiable intangible assets, $1 million of accounts payable and accrued expenses, and $36 million of deferred tax liabilities. The identifiable intangibles were primarily related to in-process research and development, which will not be amortized until the research and development efforts are complete or end. The goodwill is not expected to be deducted for tax purposes.

(a) Assuming that Blue River has never acquired another company, what were the assets on its balance sheet before acquisition by John Deere?

(b) The exhibits tell us that the fair value of Blue River’s net identifiable assets is $91 million. What is the amount of cash paid for Blue River?

On January 1, 2020, a company had 700,000 shares of common stock outstanding. On March 1, it issued a 3-for-1 stock split. On July 1 it Issued 50,000 shares. On September 1 it Issued a 20% stock dividend. Determine the weighted-average number of shares outstanding as of December 31, 2020.

Company had the following account balances, in random order, on December 31, 2020.

Additional Information:

• During the year, Sam Chiang invested $15,000 into the business.
• $7,500 of the notes payable is due this year.

Required:

1. Prepare an income statement for the company for the year ended December 31, 2020.
2. Prepare a statement of owner’s equity for the company for the year ended December 31, 2020.
3. Prepare a classified balance sheet at December 31, 2020.

1. Prepare income statement

2. Prepare statement of owner’s equity

3. Prepare balance sheet

• On October 1, 2020, Philly Company purchased inventory from a German supplier for 80,000 Euros due on January 31, 2021.
• Simultaneously, Philly entered into a forward contract for 80,000 Euros for delivery on January 31, 2020.
• Payment was made to the foreign supplier on 1/31/2021.
• Spot rates on October 1, December 31, and January 31, were $1.62, $1.51, and $1.45, respectively.
• Forward rates on October 1 and December 31 were $1.33 and $1.39 respectively.

Required: Prepare all journal entries related to the above transactions on October 1, 2020, December 31, 2020, and January 31, 2021.