Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows:

Crystal Displays Inc. is currently considering establishing a selling price for flat panel displays. The president of Crystal Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 10% return on invested assets.

1. Determine the amount of desired profit from the production and sale of flat panel displays.

2. Assuming that the product cost method is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays. Round your markup percentage and selling price to two decimal places.

3. (Appendix) Assuming that the total cost method is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays. Round your markup percentage and selling price to two decimal places.

6a. Prepare a differential analysis of the proposed sale to Maple Leaf Visual Inc. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter “0”. A colon (:) will automatically appear if required.

1. Han Industries Inc. constructed a building and acquired five assets during the current year.

Construction of Building: Han constructed a building on land that it purchased last year at a cost of $240,000. Construction began on March 1 and was completed on October 1. The payments to the contractor were as follows.

Date          Payment

March 1 $360,000

July 1        275,000

October 1 325,000

Han obtained a $700,000, 8% construction loan on March 1. Han repaid the loan on October 1. Han had $400,000 of other outstanding debt during the year at a borrowing rate of 9%.

Asset 1: Han acquired office furniture by making a $7,500 down payment and issuing a $10,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $5,000 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $16,200.

Asset 2: Han acquired manufacturing equipment by trading in used manufacturing equipment. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows.

Cost of equipment traded in                    $52,000

Accumulated depreciation on equipment

Asset 3: Four computers were acquired by issuing 500 shares of $1 par value common stock. The stock had a market price of $12 per share.

Assets 4 and 5: Han purchased these assets together for a lump sum of $230,000 cash. The following information was gathered.

Initial Cost onDepreciation to Date onBook Value on

DescriptionSeller's Books            Seller's Books            Seller's BooksAppraised Value

Instructions

Record the acquisition of each of these assets.

Fletcher Manufacturing has 7.5 million shares of common stock outstanding. The current share price is $49 and the book value per share is $4. Fletcher Manufacturing also has two bond issues outstanding. The first bond issue has a total face value of $60 million, a coupon rate of 7%, and sells for 93% of par. The second issue has a face value of $50 million, a coupon rate of 6.5%, and sells for 96.5% of par. The first issue matures in 10 years, the second in 6 years. Suppose the company's stock has a beta of 1.2. The risk-free rate is 5.2% and the market risk premium is 7%. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semi-annual payments. The tax rate is 35%

What is the firm's market value weight of equity? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).

What is the firm's market value weight of debt? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).

What is the firm’s cost of equity? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).

What is the firm’s cost of debt? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).

What is the firm’s WACC? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations. When using previous answers, use the rounded answer as it was given in the answer box).

Cannon Construction (Cannon or the “Company”), an SEC registrant, is a construction company that manufactures commercial and residential buildings. On March 1, 2017, the Company entered into an agreement with a customer, Thornock Square Apartments, to construct a residential apartment building for a fixed price of $1.5 million. The Company estimates that it will incur costs of $1 million to complete construction of the apartment building. The apartment building will only transfer to Thornock Square Apartments once the construction of the entire building is complete. In addition, Thornock Square Apartments has various design requirements that would require Cannon to incur significant costs to rework the building prior to selling it to a customer other than Thornock Square Apartments.
To construct the apartment building, Cannon acquires standard materials that it regularly uses in construction contracts for both residential and commercial buildings. These materials are used to manufacture generic component parts for inclusion in Thornock Square Apartments’ residential buildings. These standard materials remain interchangeable with other items until they are deployed in Thornock Square Apartments building. The Company has made the following purchases and incurred the following costs throughout the construction progress:
A. As of June 30, 2017, in total, Cannon has purchased $75,000 of component parts. As of June 30, 2017, $25,000 of component parts remain in inventory and $50,000 have been integrated into the project. Further, Cannon has incurred $12,500 of direct costs to integrate the component parts into the Thornock Square Apartments construction project during the three months ended June 30, 2017.
B. During the three months ended September 30, 2017, Cannon purchased an additional $500,000 of component parts ($575,000 in total). Of the $575,000 of component parts, $325,000 remain in inventory and $200,000 have been integrated into the project during the three months ended September 30, 2017. During the three months ended September 30, 2017, Cannon incurred an additional $50,000 of direct costs to integrate the component parts into the Thornock Square Apartments construction project.
C. As of September 30, 2017, Cannon determined that the project was over budget and revised its cost estimate from $1 million to $1.25 million.
D. As of December 31 2017, the construction project was completed. During the three months ended December 31, 2017, Cannon purchased an additional $425,000 of generic component parts ($1 million in total). Of the $1 million component parts, $0 remain in inventory and $750,000 were integrated into the project during the three months ended December 31, 2017. Cannon has incurred $187,500 of direct costs to integrate the component parts into the Thornock Square Apartments construction project during the three months ended December 31, 2017.
If Thornock Square Apartments cancels the contract, Cannon will be entitled to reimbursement for costs incurred for work completed to date plus a margin of 20 percent, which is considered to be a reasonable margin. Cannon will not be reimbursed for any materials that have been purchased for use in the contract but have not yet been used and are still controlled by Cannon.

Question from scenario:

1)Does the performance obligation meet any of the criteria for recognition of revenue over time? Discuss which criteria (if any) is met and how is met.

2)How should the entity recognize revenue for the satisfaction of its performance obligation? What amount of revenue should be recognized for the following periods: a. The three months ended June 30, 2017? b. The three months ended September 30, 2017? c. The three months ended December 31, 2017?

3) create a schedule summarizing your calculations to arrive at revenue to be recognized each year.

Red Man Construction is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6,400,000 on March 1, $5,280,000 on June 1, and $8,000,000 on December 31. Red Man borrowed $3,200,000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-year, $6,400,000 note payable and an 11%, 4-year, $12,000,000 note payable prepare all entries that are necessary

Net Investment in Capital Assets was $1,200,000 on December 31, 2015. During

2016, the following occurred:
? Issued $1,000,000 bonds for construction of Capital Assets
? Materials, labor, and overhead of $900,000 went into Construction In
Progress. Transferred $850,000 of Construction in Progress to Capital Assets.
? Paid $100,000 principal and $60,000 interest on the bonds.
? Recorded depreciation expense of $125,000
What amount was Net Investment in Capital Assets at December 31, 2016?
A. $1,025,000 B. $1,075,000 C. $1,135,000 D. $1,925,000

How are working capital items forecasted? Why are accounts receivable typically forecasted as a percentage of revenue and accounts payable, and inventories as percentages of the cost of goods sold? Explain.

Vernon Construction Company began operations on January 1, 2019, when it acquired $14,000 cash from the issuance of common stock. During the year, Vernon purchased $2,500 of direct raw materials and used $2,400 of the direct materials. There were 106 hours of direct labor worked at an average rate of $6 per hour paid in cash. The predetermined overhead rate was $3.00 per direct labor hour. The company started construction on three prefabricated buildings. The job cost sheets reflected the following allocations of costs to each building:

The company paid $68 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $236. Vernon completed Jobs 1 and 2 and sold Job 1 for $1,254 cash. The company incurred $140 of selling and administrative expenses that were paid in cash. Over- or underapplied overhead is closed to Cost of Goods Sold.

Required

Record the preceding events in a horizontal statements model. The first event for 2019 has been recorded as an example.

Reconcile all subsidiary accounts with their respective control accounts.

Record the closing entry for over- or underapplied manufacturing overhead in the horizontal statements model, assuming that the amount is insignificant.

Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for 2019.