Question 7
The following information is available for Skysong Corporation
for 2020.
| 1. | Depreciation reported on the tax return exceeded depreciation reported on the income statement by $124,000. This difference will reverse in equal amounts of $31,000 over the years 2021–2024. | |
| 2. | Interest received on municipal bonds was $9,600. | |
| 3. | Rent collected in advance on January 1, 2020, totaled $59,700 for a 3-year period. Of this amount, $39,800 was reported as unearned at December 31, 2020, for book purposes. | |
| 4. | The tax rates are 40% for 2020 and 35% for 2021 and subsequent years. | |
| 5. | Income taxes of $333,000 are due per the tax return for 2020. | |
| 6. | No deferred taxes existed at the beginning of 2020. |
1. Compute taxable income for 2020.
2. Compute pretax financial income for 2020.
3. Prepare the journal entries to record income tax expense,
deferred income taxes, and income taxes payable for 2020 and 2021.
Assume taxable income was $1,063,000 in 2021. (Credit
account titles are automatically indented when amount is entered.
Do not indent manually. If no entry is required, select "No Entry"
for the account titles and enter 0 for the
amounts.)
4. Prepare the income tax expense section of the income
statement for 2020, beginning with “Income before income taxes.”
(Enter negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g.
(45).)
In: Accounting
Assume the following sales took place during 2020 for a variety of individual capital assets for Ron (all normal capital assets with gains subject to 0%, 15%, or 20% tax rates).
|
Property purchase date |
Property sale date | Adjusted basis | Sale proceeds | Gain/Loss | Character of gain/loss |
| 12/6/2020 | 12/9/2020 | 1,000 | 1,060 | 60 | short term gain |
| 1/7/2000 | 6/15/2020 | 5,000 | 6,200 | 1,200 | long term gain |
| 11/6/2013 | 8/20/2020 | 5,000 | 4,200 | -800 | long term loss |
| 5/1/2020 | 10/31/2020 | 2,500 | 2,200 | -300 | short term loss |
| 6/8/2011 | 3/22/2020 | 8,600 | 10,000 | 1,400 | long term gain |
| 7/10/1999 | 1/19/2020 | 2,000 | 4,100 | 2,100 | long term gain |
| 3/16/2016 | 3/16/2020 | 5,300 | 6,000 | 700 | long term gain |
(I also want to make sure the characters of gain/loss and numbers are correct)
Second enter the information to the Form 8949
Column a: description of property, column b: date acquired, column c: date sold, column d: sales proceeds, column e: cost, column f: codes from instruction, column g:amount of adjustment, column h: gain or loss
In: Accounting
The following data relates to Rogers Company for the year ending December 31, 2020:
Net Income for 2020= $920,000
Preferred Stock= 10,000 shares of $100 par 8% cumulative preferred stock were outstanding throughout the year. The preferred stock is non-convertible
Common Stock= 300,000 shares of common stock were issued and outstanding throughout the year. No shares were issued or repurchased, and there were no stock splits or dividends.
Convertible Bonds= 12% convertible bonds at $4,000,000 face amount. (These bonds were issued in 2015 and they are convertible to a total of 120,000 common shares.
Stock Options=500,000 (These options were issued on July 1, 2020. Each option allows the option holder to purchase one common share for $20. The average market price of the common stock in 2020 was $32 a share.
Other information:
Rogers income tax rate for 2020 is 40%
Rogers did not declare or pay any dividends in 2020
Question:
a. What is Rogers "Income available to common shareholders" for 2020?
b. What is Rogers "Weighted average common shares outstanding" for 2020?
c. Compute Rogers Basic Earnings Per Share for 2020?
d. What will be the "Numerator Effect of the convertible bonds?
e. What will be the "Denominator Effect" of the convertible bonds?
f. What will be the "Numerator Effect" of the stock options?
g. What will be the "Denominator Effect" of the stock options?
h. Compute Rogers Diluted Earnings Per Share for 2020?
In: Accounting
In: Accounting
At January 1, 2020, the credit balance of Whispering Winds Corp.’s Allowance for Doubtful Accounts was $401,000. During 2020, the bad debt expense entry was based on a percentage of net credit sales. Net sales for 2020 were $80 million, of which 90% were on account. Based on the information available at the time, the 2020 bad debt expense was estimated to be 0.75% of net credit sales. During 2020, uncollectible receivables amounting to $508,500 were written off against the allowance for doubtful accounts. The company has estimated that at December 31, 2020, based on a review of the aged accounts receivable, the allowance for doubtful accounts would be properly measured at $530,500.
Prepare a schedule calculating the balance in Whispering Winds
Corp.’s Allowance for Doubtful Accounts at December 31,
2020.
|
Balance, January 1, 2020 |
||
|---|---|---|
|
Bad debt expense accrual |
||
| enter a subtotal of the two previous amounts | ||
|
Uncollectible receivables written off |
||
|
Balance, December 31, 2020 before adjustment |
enter a total amount for the first part | |
|
Allowance adjustment |
||
|
Balance, December 31, 2020 |
Prepare any necessary journal entry at year end to adjust the
allowance for doubtful accounts to the required balance.
(Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
|
enter an account title |
In: Accounting
Chapter 9
In Class Exercises: Depreciation Methods
Scenario: Cost = Useful Life (Years) = Useful Life (Hours) = Salvage Value =
a) Calculate the SL annual rate:
30,000 5 140,000 2,000
1) Depreciable Cost = Cost - Salvage ValueDepreciable Cost = -
2) Calculate the Double DB rate:
SL Rate
x2 -
= Double DB rate
b) Calculate depreciation expense, accumulated depreciation and book value for the life of the
asset.
Depreciable Depreciation Annual Depr Accum.
Year Cost
Rate Exp Depr. Book Value
2010
2011
2012
2013
2014
= Depr. Cost
= Salvage Value
2) Method 2: Units of Activity
a) Calculate the Units of Activity rate:
b) Calculate depreciation expense, accumulated depreciation and book value for the life of the
asset.
Year Activity Rate
Annual Depr Exp
Accum.
Depr. Book Value
SL Rate =
x2 DDB Rate =
Units of Depreciation
2010
2011
2012
2013
2014
30,000
20,000
25,000
40,000
25,000
= Depr. Cost
= Salvage Value
140,000
3) Method 3: Double-Declining Balance
a) Calculate depreciation expense, accumulated depreciation and book value for the life of the asset.
Book Value Depreciation Annual Depr Accum.
Year Beg. Of Year Rate Exp Depr. Book Value
2010
2011
2012
2013
2014
30,000
= Salvage Value
PLUG
= Depr. Cost
In: Accounting
Workers are compensated by firms with “benefits” in addition to wages and salaries. The most prominent benefit offered by many firms is health insurance. Suppose that in 2000, workers at one steel plant were paid $30 per hour and in addition received health benefits at the rate of $6 per hour. Also suppose that by 2010 workers at that plant were paid $31.5 per hour but received $13.5 in health insurance benefits.
a. By what percentage did total compensation (wages plus benefits) change at this plant from 2000 to 2010? Instructions: Round your answer to 2 decimal places. Total compensation by: What was the approximate average annual percentage change in total compensation? Instructions: Round your answer to 2 decimal places.
b. By what percentage did wages change at this plant from 2000 to 2010? Instructions: Enter your answer as a whole number. Wages by: What was the approximate average annual percentage change in wages? Instructions: Round your answer to 1 decimal place.
c. If workers value a dollar of health benefits as much as they value a dollar of wages, by what total percentage will they feel that their incomes have risen over this time period? Instructions: Round your answer to 2 decimal places. What if they only consider wages when calculating their incomes? Incomes by:
d. Is it possible for workers to feel as though their wages are stagnating even if total compensation is rising?
In: Economics
Paper Printing Company purchased a copy machine for
$ 65 comma 000$65,000
on January 1, 2010. The copy machine had an estimated useful life of five years or
1 comma 000 comma 0001,000,000
copies. Paper Printing estimated the copy machine's salvage value to be
$ 5 comma 000$5,000.
The company made
250 comma 000250,000
copies in 2010 and
190 comma 000190,000
copies in 2011.Requirements
LOADING...
1. Calculate the depreciation expense for each year using the straight line method.
|
- |
= |
/ |
= |
Depreciation expense |
|||||
|
- |
= |
/ |
= |
Now we can determine the depreciation per unit. (Round to two decimal places.)
|
/ |
= |
Cost per copy |
||||
|
/ |
= |
Now that the cost per unit has been established we can now depreciate the copy machine based on the number of copies produced.
|
Year |
x |
= |
Depreciation expense |
|||
|
2010 |
x |
= |
||||
|
2011 |
x |
= |
2. Which method portrays the actual use of this asset more accurately? Explain your answer.
When using straight-line depreciation the depreciation expense
▼
is higher at the end of life of the asset
is lower at the end of the life of the asset
remains the same every year
. Straight-line depreciation assumes that the asset will be used
▼
equally
less
more
every year. Activity depreciation is also known as
▼
straight line
units of production
double declining balance
. The activity method depends on the
▼
actual
estimated
number of units produced.
In: Accounting
|
TravelToday, disclosed the following rounded amounts (in thousands) concerning the Allowance for Doubtful Accounts on its Form 10-K annual report. |
|
SCHEDULE II |
||||||||||||||||
| Allowance for Doubtful Accounts |
Balance at Beginning of Year |
Additions Charged to Bad Debt Expense |
Write-Offs | Balance at End of Year |
||||||||||||
| 2012 | $ | 9,000 | $ | 4,000 | $ | 1,200 | $ | 11,800 | ||||||||
| 2011 | 8,000 | 4,600 | 3,600 | 9,000 | ||||||||||||
| 2010 | 12,500 | 900 | ? | 8,000 | ||||||||||||
| Required: | |
| 1-a. |
Prepare a T-account for the Allowance for Doubtful Accounts and enter into it the 2011 amounts from the above schedule. The balance at the beginning of each year in the Allowance for Doubtful Accounts is a credit balance. (Enter your answers in thousands.) |
| 1-b. |
Write the T-account in equation format to prove that the above items account for the changes in the account. (Enter your answers in thousands.) |
| 2. |
Record summary journal entries for 2012 related to (a) estimating Bad Debt Expense and (b) writing off specific balances. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands.) |
| 3. |
Supply the missing information for 2010. (Enter your answers in thousands.) |
| 4. |
If TravelToday had written off an additional $30 of Accounts Receivable during 2010, by how much would Net Receivables have decreased? How much would Net Income have decreased? (Enter your answers in thousands.) |
In: Accounting
Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $6,039,000 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias’s stockholders’ equity was $2,040,000 including retained earnings of $1,540,000.
At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary:
| Consideration transferred | $ | 6,039,000 | |||||
| Mathias stockholders' equity | 2,040,000 | ||||||
| Excess fair over book value | $ | 3,999,000 | |||||
| to unpatented technology (8-year remaining life) | $ | 864,000 | |||||
| to patents (10-year remaining life) | 2,580,000 | ||||||
| to increase long-term debt (undervalued, 5-year remaining life) | (140,000 | ) | 3,304,000 | ||||
| Goodwill | $ | 695,000 | |||||
Postacquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the business combination, Mathias reports the following income and dividends:
| Income | Dividends | |||
| 2020 | $ | 465,000 | $ | 25,000 |
| 2021 | 930,000 | 50,000 | ||
No asset impairments have occurred since the acquisition date.
Individual financial statements for each company as of December 31, 2021, follow. Parentheses indicate credit balances. Dividends declared were paid in the same period.
| Allison | Mathias | ||||||
| Income Statement | |||||||
| Sales | $ | (6,560,000 | ) | $ | (3,940,000 | ) | |
| Cost of goods sold | 4,612,000 | 2,526,000 | |||||
| Depreciation expense | 915,000 | 301,000 | |||||
| Amortization expense | 450,000 | 115,000 | |||||
| Interest expense | 71,000 | 68,000 | |||||
| Equity earnings in Mathias | (592,000 | ) | 0 | ||||
| Net income | $ | (1,104,000 | ) | $ | (930,000 | ) | |
| Statement of Retained Earnings | |||||||
| Retained earnings 1/1 | $ | (5,420,000 | ) | $ | (1,980,000 | ) | |
| Net income (above) | (1,104,000 | ) | (930,000 | ) | |||
| Dividends declared | 560,000 | 50,000 | |||||
| Retained earnings 12/31 | $ | (5,964,000 | ) | $ | (2,860,000 | ) | |
| Balance Sheet | |||||||
| Cash | $ | 87,000 | $ | 155,000 | |||
| Accounts receivable | 990,000 | 245,000 | |||||
| Inventory | 1,780,000 | 825,000 | |||||
| Investment in Mathias | 6,683,000 | 0 | |||||
| Equipment (net) | 3,780,000 | 2,080,000 | |||||
| Patents | 115,000 | 0 | |||||
| Unpatented technology | 2,165,000 | 1,490,000 | |||||
| Goodwill | 453,000 | 0 | |||||
| Total assets | $ | 16,053,000 | $ | 4,795,000 | |||
| Accounts payable | $ | (889,000 | ) | $ | (235,000 | ) | |
| Long-term debt | (1,000,000 | ) | (1,200,000 | ) | |||
| Common stock | (8,200,000 | ) | (500,000 | ) | |||
| Retained earnings 12/31 | (5,964,000 | ) | (2,860,000 | ) | |||
| Total liabilities and equity | $ | (16,053,000 | ) | $ | (4,795,000 | ) | |
Required:
Determine the fair value in excess of book value for Allison's acquisition date investment in Mathias.
Prepare a worksheet to determine the consolidated values to be reported on Allison’s financial statements.
In: Accounting