Faldo Corp. is a public company and has 100,000 common shares
outstanding. In 2020, the company reported income from continuing
operations before income tax of $2,710,000. Additional transactions
not considered in the $2,710,000 are as follows:
| 1. | In 2020, Faldo Corp. sold equipment for $140,000. The machine had originally cost $80,000 and had accumulated depreciation to date of $36,000. | |
| 2. | The company discontinued operations of one of its subsidiaries during the current year at a loss of $290,000 before tax. Assume that this transaction meets the criteria for discontinued operations. The loss on operation of the discontinued subsidiary was $90,000 before tax. The loss from disposal of the subsidiary was $200,000 before tax. | |
| 3. | The sum of $520,000 was received as a result of a lawsuit for a breached 2017 contract. Before the decision, legal counsel was uncertain about the outcome of the suit and Faldo had not established a receivable. | |
| 4. | In 2020, the company reviewed its accounts receivable and determined that $54,000 of accounts receivable that had been carried for years appeared unlikely to be collected. No allowance for doubtful accounts was previously set up. | |
| 5. | An internal audit discovered that amortization of intangible assets was understated by $35,000 (net of tax) in a prior period. The amount was charged against retained earnings. |
Analyze the above information and prepare an income statement for
the year 2020, starting with income from continuing operations
before income tax. Calculate earnings per share as it should be
shown on the face of the income statement. (Assume a total
effective tax rate of 25% on all items, unless otherwise
indicated.) (Round per share answers to 2 decimal
places, e.g. 52.75. Disclose Discontinued operations tax
information separately.)
In: Accounting
Here are comparative statement data for Duke Company and Lord Company, two competitors. All balance sheet data are as of December 31, 2020, and December 31, 2019.
Duke Company | Lord Company | |||||||
|---|---|---|---|---|---|---|---|---|
2020 | 2019 | 2020 | 2019 | |||||
| Net sales | $1,878,000 | $559,000 | ||||||
| Cost of goods sold | 1,100,508 | 296,829 | ||||||
| Operating expenses | 261,042 | 79,937 | ||||||
| Interest expense | 9,390 | 4,472 | ||||||
| Income tax expense | 54,462 | 6,149 | ||||||
| Current assets | 329,000 | $312,100 | 83,200 | $78,300 | ||||
| Plant assets (net) | 519,900 | 501,200 | 139,800 | 124,200 | ||||
| Current liabilities | 65,400 | 74,800 | 34,200 | 29,600 | ||||
| Long-term liabilities | 108,800 | 90,400 | 30,200 | 26,000 | ||||
| Common stock, $10 par | 499,500 | 499,500 | 120,500 | 120,500 | ||||
| Retained earnings | 175,200 | 148,600 | 38,100 | 26,400 | ||||
(a)
Prepare a vertical analysis of the 2020 income statement data for Duke Company and Lord Company. (Round percentages to 1 decimal place, e.g. 12.1%.)
Condensed Income Statement | |||||||
|---|---|---|---|---|---|---|---|
Duke Company | Lord Company | ||||||
Dollars | Percent | Dollars | Percent | ||||
select an income statement item Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues | $enter a dollar amount | enter a percentage number rounded to 1 decimal place % | $enter a dollar amount | enter a percentage number rounded to 1 decimal place % | |||
select an income statement item Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues | enter a dollar amount | enter a percentage number rounded to 1 decimal place % | enter a dollar amount | enter a percentage number rounded to 1 decimal place % | |||
select a summarizing line for the first part Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues | enter a total amount for the first part | enter total percentages rounded to 1 decimal place % | enter a total amount for the first part | enter total percentages rounded to 1 decimal place % | |||
select an income statement item Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues | enter a dollar amount | enter a percentage number rounded to 1 decimal place % | enter a dollar amount | enter a percentage number rounded to 1 decimal place % | |||
select a summarizing line for the second part Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues | enter a total amount for the second part | enter total percentages rounded to 1 decimal place % | enter a total amount for the second part | enter total percentages rounded to 1 decimal place % | |||
select an opening name for the third part Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues | |||||||
select an income statement item Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues | enter a dollar amount | enter a percentage number rounded to 1 decimal place % | enter a dollar amount | enter a percentage number rounded to 1 decimal place % | |||
select a summarizing line for the third part Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues | enter a total amount for all three parts | enter total percentages rounded to 1 decimal place % | enter a total amount for all three parts | enter total percentages rounded to 1 decimal place % | |||
select an income statement item Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues | enter a dollar amount | enter a percentage number rounded to 1 decimal place % | enter a dollar amount | enter a percentage number rounded to 1 decimal place % | |||
select a closing name for this statement Cost of Goods SoldDividendsExpensesGross ProfitIncome Before Income TaxesIncome From OperationsIncome Tax ExpenseInterest ExpenseNet Income / (Loss)Net SalesOperating ExpensesOther Expenses and LossesRevenuesTotal ExpensesTotal Revenues | $enter a total net income or loss amount | enter total percentages rounded to 1 decimal place % | $enter a total net income or loss amount | enter total percentages rounded to 1 decimal place % | |||
In: Accounting
Moonbeam Company manufactures toasters. For the first 8 months
of 2020, the company reported the following operating results while
operating at 75% of plant capacity:
| Sales (341,600 units) | $4,370,000 | ||
| Cost of goods sold | 2,591,280 | ||
| Gross profit | 1,778,720 | ||
| Operating expenses | 836,920 | ||
| Net income | $941,800 |
Cost of goods sold was 70% variable and 30% fixed; operating
expenses were 80% variable and 20% fixed.
In September, Moonbeam receives a special order for 15,000 toasters
at $7.50 each from Luna Company of Ciudad Juarez. Acceptance of the
order would result in an additional $2,900 of shipping costs but no
increase in fixed costs.
In: Accounting
On April 5, 2020 Company A sell merchandise to Company L for P50,000 under the terms: 2/10, n/30 FOB Shipping point freight prepaid. Company A being the shipper paid the freight amounting to P2,000. On April 12, Company L paid in full the account amounting to P50,960. Company A notify Company L that the amount to be paid is not P50,960 but P51,000. Whose claim do you think is correct A or L? Explain
ABC Enterprise is a grocery store that sells high volume but relatively low-priced items. The entity has a computerized system (point-of-sale scanner) to account efficiently all items sold. The accountant decided to use the periodic inventory system because the entity sells high volume and low-priced items, anyway at the end of the period a physical count of goods has to be made to establish the unsold items (merchandise inventory end). Do you agree with the accountant? If Yes why, if No support your answer.
In: Accounting
Company A on 1 January 2014 issued a bond that required it to
pay an annual coupon of €800 in
arrears and to repay the principal of €10,000 on 31 December 2023.
By 2019, Company A was in
significant financial difficulties and was unable to pay the coupon
due on 31 December 2019. On 1
January 2020, Company X estimates that the holder could expect to
receive a single payment of
€4,000 at the end of 2021. It acquires the bond at an arm’s length
price of €3,000. Company X
determines that the debt instrument is credit-impaired on initial
recognition, because of evidence of
significant financial difficulty of Company A and because the debt
instrument was purchased at a
deep discount.
Requirements :
a. Calculate the EIR using the estimated cash flows of the
instrument
b. Calculate the interest income would be recognised on the
instrument during 2020
c. Determine the carrying amount at the end of the year 2020
d. Assumed that at the end of the year based on reasonable and
supportable evidence, the
cash flow expected to be received on the instrument had increase to
€4,250 (still to be
received at the end of 2021), determine the carrying amount and
impairment gain/loss.
e. Assumed that at the end of the year based on reasonable and
supportable evidence, the
cash flow expected to be received on the instrument had increase to
€3,500 (still to be
received at the end of 2021), determine the carrying amount and
impairment gain/loss.
In: Accounting
Hook's Boat Supplies Limited has planned the following sales and inventory purchases for the next three months: July August September Budgeted sales un 75,000 $ 60,000 S 80,000 Inventory purchases $ 35,000 $ 28,000 $ 40,000 Sales are made 20% for cash & 80% on account. From experience the company has learned that a month's sales on account are collected according to the following: Month of sale First month following sale Second month following sale Uncollectible 60% 30% 596 5% I The company requires a minimum cash balance of $5,000 at the end of each month The beginning cash balance is budgeted to be $10,000 on September 1, 2020, The company purchases all inventory on account and 50% are paid for in the month of purchases; the remainder are paid in the following month. Additional information for September, 2020: Operating expenses (all paid in September) Depreciation expense included in above operating expenses Dividends paid in September Fquipment to be purchased in September 36,000 6,000 8,000 25,000 The company has an agreement with the local bank that allows the company to borrow up to $40,000. The budgeted balance of loans at August 31 is $0. All borrowing is done at the beginning of the month and the interest rate on the loan is 8% per year, Required: Prepare a cash budget for the month of September 2020 only.
In: Accounting
Identify whether the following create substantial transaction, operating, and/or translationexposure (or no exposure at all) for a U.S. company, and how the company will be affected if theforeign currency depreciates. The examples will typically create more than one type of exposure.
c) IBM issues Swiss franc-denominated bonds in Zurich.
In: Finance
Consider the prospect of new equity owners and explain why this is important for company expansion throughout the U.S and ultimately-expanding globally for freeing up cash flow to raise more capital.
In: Finance
You are consultants who have been called in to address a significant security breach in a medium sized manufacturing company. Detailed in the following link the organization was forced to halt the production of boots because a dismissed IT employee took steps to sabotage. https://www.bleepingcomputer.com/news/security/sysadmin-gets-18-months-in-prison-for-shutting-down-former-employers-network/ Your goal is to recommend a security policy and associated implementation of this policy (procedures supported by standards and guidelines) that limits or eliminates the security risks associated with departing employees.
task is to “slam the door shut”. You need to recommend immediate implementation measures. This will be primarily described in a procedures document supported by standards and guidelines.
In: Computer Science
Suppose that you know several women who earn lower salaries than comparable men in the same company, yet they don’t seem very upset by the discrepancy. How would you explain why they are not angry? What similar process operates when a woman considers the gap in the amount of housework and child care that she and her husband perform?
Imagine that you are a 25-year-old woman and that you have decided to return to your former job after the birth of your first baby. Suppose that a neighbor tells you that your child will probably develop psychological problems if you work outside the home. Cite evidence to defend your decision.
In: Psychology