Questions
The following facts pertain to a non-cancelable lease agreement between Alschuler Leasing Company and McKee Electronics,...
The following facts pertain to a non-cancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system.
| Commencement date | October 1, 2017 | ||||||
| Lease term | 6 | years | |||||
| Economic life of leased equipment | 6 | years | |||||
| Fair value of asset at October 1, 2017 | $ 313,043 | ||||||
| Book value of asset at October 1, 2017 | $ 280,000 | ||||||
| Residual value at end of lease term | - | ||||||
| Lessor's implicit rate | 0 | ||||||
| Lessee's incremental borrowing rate | 0 | ||||||
|
Annual lease payment due at the beginning of each year, beginning with October 1, 2017 |
|||||||
| $ 62,700 | |||||||
The collectability of the lease payments is probable by the lessor. The asset will revert to the lessor at the end of the lease term. The straight-line depreciation method is used for all equipment. The following amortization schedule has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a finance lease by the lessee and as a sales-type lease by the lessor.
| Date | Lease Payment / Receipt | Interest (8%) on Unpaid Liability / Receivable | Reduction of Lease Liability / Receivable | Balance of Lease Liability / Receivable |
| 10/01/17 | $ 313,043 | |||
| 10/01/17 | $ 62,700 | - | ||
| 10/01/18 | ||||
| 10/01/19 | ||||
| 10/01/20 | ||||
| 10/01/21 | ||||
| 10/01/22 | ||||
a) Assuming the lessee's accounting period ends on September 30, answer the following questions with respect to this lease agreement.
1. What items and amounts will appear on the lessee's income statement for the year ending September 30, 2018?
2. What items and amounts will appear on the lessee's balance sheet at September 30, 2018?
3. What items and amounts will appear on the lessee's income statement for the year ending September 30, 2019?
4. What items and amounts will appear on the lessee's balance sheet at September 30, 2019?
b) Assuming the lessee's accounting period ends on December 31, answer the following questions with respect to this lease agreement.
1. What items and amounts will appear on the lessee's income statement for the year ending December 31, 2017?
2. What items and amounts will appear on the lessee's balance sheet at December 31, 2017?
3. What items and amounts will appear on the lessee's income statement for the year ending December 31, 2018?
4. What items and amounts will appear on the lessee's balance sheet at December 31, 2018?
In: Accounting
Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $...
Arndt, Inc., reported the following for 2018 and 2019 ($ in
millions):
| 2018 | 2019 | ||||||
| Revenues | $ | 913 | $ | 988 | |||
| Expenses | 770 | 810 | |||||
| Pretax accounting income (income statement) | $ | 143 | $ | 178 | |||
| Taxable income (tax return) | $ | 135 | $ | 200 | |||
| Tax rate: 40% | |||||||
- Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2018 for $60 million. The cost is tax deductible in 2018.
- Expenses include $2 million insurance premiums each year for life insurance on key executives.
- Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2018 and 2019 were $34 million and $31 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were $21 million ($10 million collected in 2017 but not recognized as revenue until 2018) and $29 million, respectively. Hint: View this as two temporary differences—one reversing in 2018; one originating in 2018.
- 2018 expenses included a $12 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold in 2019.
- During 2017, accounting income included an estimated loss of $5 million from having accrued a loss contingency. The loss was paid in 2018 at which time it is tax deductible.
- At January 1, 2018, Arndt had a deferred tax asset of $5 million and no deferred tax liability.
Compute the deferred tax amounts that should be reported on the
2018 balance sheet. (Enter your answers in
millions (i.e., 10,000,000 should be entered as
10).)
In: Accounting
Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $...
Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $ 996 $ 1,031 Expenses 784 824 Pretax accounting income (income statement) $ 212 $ 207 Taxable income (tax return) $ 210 $ 230 Tax rate: 40% Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2018 for $60 million. The cost is tax deductible in 2018. Expenses include $3 million insurance premiums each year for life insurance on key executives. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2018 and 2019 were $36 million and $48 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were $28 million ($10 million collected in 2017 but not recognized as revenue until 2018) and $36 million, respectively. Hint: View this as two temporary differences—one reversing in 2018; one originating in 2018. 2018 expenses included a $22 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold in 2019. During 2017, accounting income included an estimated loss of $5 million from having accrued a loss contingency. The loss was paid in 2018 at which time it is tax deductible. At January 1, 2018, Arndt had a deferred tax asset of $7 million and no deferred tax liability.
2. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule,
prepare the necessary journal entry to record income taxes for 2018.
In: Accounting
Find 2018 financial statements and other financial data (e.g., beta) for the Boeing Company (Stock ticker:...
Find 2018 financial statements and other financial data (e.g., beta) for the Boeing Company (Stock ticker: BA) from Yahoo! Finance, Google Finance, MSN Money, or other sources.
(1) Estimate the company’s weights of capital (debt, preferred stock, and common stock) in 2018
(2) Estimate the company’s before-tax and after-tax component cost of debt in 2018
(3) Estimate the firm’s component cost of preferred stock in 2018
(4) Estimate the component cost of common equity using CAPM in 2018
(5) Compute the firm’s weighted average cost of capital (WACC) in 2018
Income Statement
All numbers in thousands
| Revenue | 12/31/2018 | 12/31/2017 | 12/31/2016 | 12/31/2015 |
| Total Revenue | 101,127,000 | 94,005,000 | 93,496,000 | 96,114,000 |
| Cost of Revenue | 81,490,000 | 76,612,000 | 79,026,000 | 82,088,000 |
| Gross Profit | 19,637,000 | 17,393,000 | 14,470,000 | 14,026,000 |
| Operating Expenses | ||||
| Research Development | 3,269,000 | 3,179,000 | 3,391,000 | 3,331,000 |
| Selling General and Administrative | 4,525,000 | 4,101,000 | 4,091,000 | 3,525,000 |
| Non Recurring | - | - | - | - |
| Others | - | - | - | - |
| Total Operating Expenses | 89,284,000 | 83,892,000 | 86,508,000 | 88,944,000 |
| Operating Income or Loss | 11,843,000 | 10,113,000 | 6,988,000 | 7,170,000 |
| Income from Continuing Operations | ||||
| Total Other Income/Expenses Net | -239,000 | -6,000 | -1,205,000 | -15,000 |
| Earnings Before Interest and Taxes | 11,843,000 | 10,113,000 | 6,988,000 | 7,170,000 |
| Interest Expense | -475,000 | -360,000 | -306,000 | -275,000 |
| Income Before Tax | 11,604,000 | 10,107,000 | 5,783,000 | 7,155,000 |
| Income Tax Expense | 1,144,000 | 1,649,000 | 749,000 | 1,979,000 |
| Minority Interest | 71,000 | 57,000 | 60,000 | 62,000 |
| Net Income From Continuing Ops | 10,460,000 | 8,458,000 | 5,034,000 | 5,176,000 |
| Non-recurring Events | ||||
| Discontinued Operations | - | - | - | - |
| Extraordinary Items | - | - | - | - |
| Effect Of Accounting Changes | - | - | - | - |
| Other Items | - | - | - | - |
| Net Income | ||||
| Net Income | 10,460,000 | 8,458,000 | 5,034,000 | 5,176,000 |
| Preferred Stock And Other Adjustments | - | - | - | - |
| Net Income Applicable To Common Shares | 10,460,000 | |||
Balance Sheet
| Period Ending | 12/31/2018 | 12/31/2017 | 12/31/2016 | 12/31/2015 |
| Current Assets | ||||
| Cash And Cash Equivalents | 7,637,000 | 8,813,000 | 8,801,000 | 11,302,000 |
| Short Term Investments | 927,000 | 1,179,000 | 1,228,000 | 750,000 |
| Net Receivables | 13,904,000 | 11,088,000 | 8,832,000 | 8,713,000 |
| Inventory | 62,567,000 | 61,388,000 | 43,199,000 | 47,257,000 |
| Other Current Assets | 2,335,000 | 2,417,000 | - | - |
| Total Current Assets | 87,830,000 | 85,194,000 | 62,488,000 | 68,234,000 |
| Long Term Investments | 1,087,000 | 1,260,000 | 1,317,000 | 1,284,000 |
| Property Plant and Equipment | 12,645,000 | 12,672,000 | 12,807,000 | 12,076,000 |
| Goodwill | 7,840,000 | 5,559,000 | 5,324,000 | 5,126,000 |
| Intangible Assets | 3,429,000 | 2,573,000 | 2,540,000 | 2,657,000 |
| Accumulated Amortization | - | - | - | - |
| Other Assets | 2,110,000 | 2,348,000 | 1,748,000 | 1,673,000 |
| Deferred Long Term Asset Charges | 284,000 | 321,000 | 332,000 | 265,000 |
| Total Assets | 117,359,000 | 112,362,000 | 89,997,000 | 94,408,000 |
| Current Liabilities | ||||
| Accounts Payable | 12,916,000 | 12,202,000 | 11,190,000 | 10,800,000 |
| Short/Current Long Term Debt | 2,690,000 | 435,000 | 284,000 | 734,000 |
| Other Current Liabilities | 54,936,000 | 51,260,000 | 27,623,000 | 27,589,000 |
| Total Current Liabilities | 81,590,000 | 74,648,000 | 50,134,000 | 50,412,000 |
| Long Term Debt | 8,670,000 | 8,159,000 | 6,804,000 | 6,875,000 |
| Other Liabilities | 24,702,000 | 26,219,000 | 29,418,000 | 28,869,000 |
| Deferred Long Term Liability Charges | - | - | - | - |
| Minority Interest | 71,000 | 57,000 | 60,000 | 62,000 |
| Negative Goodwill | - | - | - | - |
| Total Liabilities | 116,949,000 | 110,649,000 | 89,120,000 | 88,011,000 |
| Stockholders' Equity | ||||
| Misc. Stocks Options Warrants | - | - | - | - |
| Redeemable Preferred Stock | - | - | - | - |
| Preferred Stock | - | - | - | - |
| Common Stock | 5,061,000 | 5,061,000 | 5,061,000 | 5,061,000 |
| Retained Earnings | 55,941,000 | 49,618,000 | 40,714,000 | 38,756,000 |
| Treasury Stock | -67,431,000 | -59,827,000 | -49,720,000 | -42,316,000 |
| Capital Surplus | 6,768,000 | 6,804,000 | 4,762,000 | 4,834,000 |
| Other Stockholder Equity | -15,083,000 | -16,373,000 | -13,623,000 | -12,748,000 |
| Total Stockholder Equity | 339,000 | 1,656,000 | 817,000 | 6,335,000 |
| Net Tangible Assets | -10,930,000 | |||
Statement of Cash Flows
| Period Ending | 12/31/2018 | 12/31/2017 | 12/31/2016 | 12/31/2015 |
| Net Income | 10,460,000 | 8,458,000 | 5,034,000 | 5,176,000 |
| Operating Activities, Cash Flows Provided By or Used In | ||||
| Depreciation | 2,114,000 | 2,047,000 | 1,889,000 | 1,833,000 |
| Adjustments To Net Income | 464,000 | 589,000 | 651,000 | 559,000 |
| Changes In Accounts Receivables | -2,621,000 | -2,440,000 | 1,118,000 | -1,069,000 |
| Changes In Liabilities | 2,638,000 | 4,830,000 | -740,000 | 954,000 |
| Changes In Inventories | 568,000 | -1,403,000 | 4,004,000 | -1,110,000 |
| Changes In Other Operating Activities | 1,879,000 | 609,000 | -726,000 | 2,543,000 |
| Total Cash Flow From Operating Activities | 15,322,000 | 13,346,000 | 10,496,000 | 9,363,000 |
| Investing Activities, Cash Flows Provided By or Used In | ||||
| Capital Expenditures | -1,722,000 | -1,739,000 | -2,613,000 | -2,450,000 |
| Investments | 291,000 | 38,000 | -513,000 | 554,000 |
| Other Cash flows from Investing Activities | -11,000 | 6,000 | 7,000 | 39,000 |
| Total Cash Flows From Investing Activities | -4,621,000 | -2,058,000 | -3,378,000 | -1,846,000 |
| Financing Activities, Cash Flows Provided By or Used In | ||||
| Dividends Paid | -3,946,000 | -3,417,000 | -2,756,000 | -2,490,000 |
| Sale Purchase of Stock | - | - | - | - |
| Net Borrowings | 1,365,000 | 1,124,000 | -34,000 | 861,000 |
| Other Cash Flows from Financing Activities | 35,000 | 35,000 | -24,000 | 157,000 |
| Total Cash Flows From Financing Activities | -11,722,000 | -11,350,000 | -9,587,000 | -7,920,000 |
| Effect Of Exchange Rate Changes | -53,000 | 80,000 | -33,000 | -28,000 |
| Change In Cash and Cash Equivalents | -1,074,000 | |||
In: Finance
Determine the effect on Adrian s gross income for 2018 and 2019.
Adrian was awarded an academic scholarship to State University for the 2018-2019 academic year. He received $6,500 in August and $7,200 in December 2018. Adrian had enough personal savings to pay all expenses as they came due. Adrian’s expenditures for the relevant period were as follows:
Tuition, August 2018 ........................$3,700
Tuition, January 2019 .........................3,750
Room and board
August-December 2018 ....................2,800
January-May 2019 ..............................2,500
Books and educational supplies
August-December 2018 ....................1,000
January-May 2019 ..............................1,200
Determine the effect on Adrian s gross income for 2018 and 2019.
In: Accounting
2 The following information is available for Barone Corporation in 2018 with Net Income of $20,250,000....
2 The following information is available for Barone Corporation in 2018 with Net Income of $20,250,000. The company also had Preferred Stock, 6%, $50 par value with 150,000 shares authorized and 135,000 issued and outstanding. The full dividend was paid this year. January 1, 2018 Shares outstanding 4,000,000 April 1, 2018 Shares issued 640,000 July 1, 2018 Treasury shares purchased 240,000 October 1, 2018 Shares issued in a 30% stock dividend November 1, 2018 2::1 Split
Compute the basic EPS. (Please show all of your work)
In: Accounting
Interpret these Financial liquidity Ratios for Home Depot and Lowes over 2017-2019 .Identify any trends ....
Interpret these Financial liquidity Ratios for Home Depot and Lowes over 2017-2019 .Identify any trends . answer question with analytical response
Account Payable turnover ratio:
Home Depot
| 2017 | 8.9 | |
| 2018 | 9.19 | |
| 2019 | 9.16 |
Lowes
| 2017 | 6.4 |
| 2018 | 6.86 |
| 2019 | 5.85 |
Quick Ratio:
Home Depot
| 2017 | 0.37 |
| 2018 | 0.38 |
| 2019 | 0.28 |
Lowes
| 2017 | 0.13 |
| 2018 | 0.11 |
| 2019 | 0.12 |
Current Ratio:
Home Depot
| 2017 | 1.25 |
| 2018 | 1.17 |
| 2019 | 1.11 |
Lowes
| 2017 | 1.00 |
| 2018 | 1.06 |
| 2019 | 0.98 |
In: Finance
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after...
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2018 with a refund liability of $300,000. During 2018, Halifax sold merchandise on account for $11,500,000. Halifax's merchandise costs it 65% of merchandise selling price. Also during the year, customers returned $450,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2018, and the rest being merchandise sold during 2018. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year.
Required:
1. Prepare entries to (a) record actual returns in 2018 of merchandise that was sold prior to 2018; (b) record actual returns in 2018 of merchandise that was sold during 2018; and (c) adjust the refund liability to its appropriate balance at year end.
2. What is the amount of the year-end refund liability after the adjusting entry is recorded?
1 Record the actual sales return of merchandise sold prior to 2018.
2 Record the cost of merchandise returned for goods sold prior to 2018
3 Record the actual sales return of merchandise sold during 2018
4 Record the cost of merchandise returned for goods sold during 2018.
5 Record the year-end adjusting entry for estimated returns.
6 Record the adjusting entry for the estimated return of merchandise to inventory.
In: Accounting
n 2018, Tom and Amanda Jackson (married filing jointly) have $240,000 of taxable income before considering...
n 2018, Tom and Amanda Jackson (married filing jointly) have $240,000 of taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.) On May 12, 2018, they sold a painting (art) for $115,000 that was inherited from Grandma on July 23, 2016. The fair market value on the date of Grandma’s death was $92,500 and Grandma’s adjusted basis of the painting was $26,000. They applied a long-term capital loss carryover from 2017 of $10,500. They recognized a $12,250 loss on the 11/1/2018 sale of bonds (acquired on 5/12/2008). They recognized a $4,300 gain on the 12/12/2018 sale of IBM stock (acquired on 2/5/2018). They recognized a $18,200 gain on the 10/17/2018 sale of rental property (the only §1231 transaction) of which $8,800 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,400 is subject to the 0/15/20 percent maximum rates (the property was acquired on 8/2/2012). They recognized a $12,500 loss on the 12/20/2018 sale of bonds (acquired on 1/18/2018). They recognized a $7,250 gain on the 6/27/2018 sale of BH stock (acquired on 7/30/2009). They recognized an $11,500 loss on the 6/13/2018 sale of QuikCo stock (acquired on 3/20/2011). They received $700 of qualified dividends on 7/15/2018. After completing the required capital gains netting procedures, what will be the Jacksons’ 2018 tax liability? (Do not round intermediate calculations.)
In: Accounting
Consider a firm, Firm A, who needs to purchase bushels of corn in December of 2018....
Consider a firm, Firm A, who needs to purchase bushels of corn in December of 2018. The current price per bushel of corn is $3.60. Assume the firm cannot pass on any increased costs due to changes in price to their customers.
(a) What type(s) of derivative contract(s) could Firm A use to hedge its price risk for all future prices of corn? What position should Firm A take (buy/long or sell/short)?
(b) What type(s) of derivative contract(s) could Firm A use to hedge its price risk for a specific range of prices? Be specific. What position should Firm A take (buy/long or sell/short)?
(c) Describe some advantages and disadvantages of each in part (a) and (b).
A single futures contract for corn is for 5,000 bushels, but prices are quoted per bushel. For example, the total payment at maturity for one May 2018 contract would be $18,400 (5,000 bushels x $3.68 per bushel). Contracts are available that expire in March (14 Mar 2018), May (14 May 2018), July (13 Jul 2018), September (14 Sept 2018) and December (14 Dec 2018) of this year.
| Maturity Date | Futures Price |
| MAY 2018 | $3.68 |
| JUL 2018 | $3.76 |
| SEP 2018 | $3.83 |
| DEC 2018 | $3.92 |
| MAR 2019 | $4.00 |
(d) Suppose Firm A needs to purchase 11,000 bushels on December 1, 2018. Can Firm A completely hedge its price risk with futures contracts? Explain why or why not.
In: Finance