Tudor Company acquired $500,000 of Carr Corporation bonds for $487,706.69 on January 1, 2019. The bonds carry an 11% stated interest rate, pay interest semiannually on January 1 and July 1, were issued to yield 12%, and are due January 1, 2022.

Required:

1a. Prepare an investment interest income and discount amortization schedule using the straight-line method.

Amortization Schedule Instructions

1b. Prepare an investment interest income and discount amortization schedule using the effective interest method.

Amortization Schedule Instructions

2a. Prepare the July 1, 2021, journal entry to record the interest income under the straight-line method.

General Journal Instructions

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GENERAL JOURNAL

2b. Prepare the July 1, 2021, journal entry to record the interest income under the effective interest method.

General Journal Instructions

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GENERAL JOURNAL

On December 31, 2017, Sheridan Company acquired a computer from Plato Corporation by issuing a $595,000 zero-interest-bearing note, payable in full on December 31, 2021. Sheridan Company’s credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $75,000 salvage value.

Prepare the journal entry for the purchase on December 31, 2017. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
December 31, 2017

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Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2018. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
December 31, 2018
(To record the depreciation.)
December 31, 2018
(To amortize the discount.)

Schedule of Note Discount Amortization
Date
Debit, Interest Expense Credit,
Discount on Notes Payable
Carrying Amount
of Note
12/31/17 $
$
12/31/18
12/31/19
12/31/20
12/31/21

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Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2019. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
December 31, 2019
(To record the depreciation.)
December 31, 2019
(To amortize the discount.)

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Solomon Manufacturing Company was started on January 1, 2018, when it acquired $81,000 cash by issuing common stock. Solomon immediately purchased office furniture and manufacturing equipment costing $7,700 and $25,800, respectively. The office furniture had an 8-year useful life and a zero salvage value. The manufacturing equipment had a $3,900 salvage value and an expected useful life of three years. The company paid $11,200 for salaries of administrative personnel and $15,600 for wages to production personnel. Finally, the company paid $10,640 for raw materials that were used to make inventory. All inventory was started and completed during the year. Solomon completed production on 4,300 units of product and sold 3,340 units at a price of $15 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)

Required

Determine the total product cost and the average cost per unit of the inventory produced in 2018. (Round "Average cost per unit" to 2 decimal places.)

Determine the amount of cost of goods sold that would appear on the 2018 income statement. (Do not round intermediate calculations.)

Determine the amount of the ending inventory balance that would appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations.)

Determine the amount of net income that would appear on the 2018 income statement.

Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet.

Determine the amount of total assets that would appear on the December 31, 2018, balance sheet.

Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $367,500 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $565,000 and the fair value of the 30 percent noncontrolling interest was $157,500. No excess fair value over book value amortization accompanied the acquisition.

The following selected account balances are from the individual financial records of these two companies as of December 31, 2018:

Each of the following problems is an independent situation:

(A) Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $94,000 in 2017 and $114,000 in 2018. Of this inventory, Seacraft retained and then sold $32,000 of the 2017 transfers in 2018 and held $46,000 of the 2018 transfers until 2019. Determine balances for the following items that would appear on consolidated financial statements for 2018:

(B) Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra-entity transfers were $54,000 in 2017 and $84,000 in 2018. Of this inventory, $25,000 of the 2017 transfers were retained and then sold by Protrade in 2018, whereas $39,000 of the 2018 transfers were held until 2019. Determine balances for the following items that would appear on consolidated financial statements for 2018:

(C) Protrade sells Seacraft a building on January 1, 2017, for $88,000, although its book value was only $54,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value. Determine balances for the following items that would appear on consolidated financial statements for 2018:

On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $260,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $28,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $13,500 in connection with stock issuance costs.

Prior to these transactions, the balance sheets for the two companies were as follows:

Note: Parentheses indicate a credit balance.

In Marshall’s appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary’s books: Inventory by $8,100, Land by $30,000, and Buildings by $34,600. Marshall plans to maintain Tucker’s separate legal identity and to operate Tucker as a wholly owned subsidiary.

1. Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall’s retained earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition.
2. To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $720,000. At the acquisition date, Marmon reported a book value of $500,000, and Albuquerque assessed the fair value of the noncontrolling interest at $30,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses.

At the present time, Marmon reports $550,000 as total stockholders’ equity, which is broken down as follows:

View the following as independent situations:

1. a. & b. Marmon sells 7,000 and 5,000 shares of previously unissued common stock to the public for $40 and $30 per share. Albuquerque purchased none of this stock. What journal entry should Albuquerque make to recognize the impact of this stock transaction?

On December 31, 2017, Vaughn Company acquired a computer from Plato Corporation by issuing a $595,000 zero-interest-bearing note, payable in full on December 31, 2021. Vaughn Company’s credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $75,000 salvage value.

1-Prepare the journal entry for the purchase on December 31, 2017

2-Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2018 (To record the depreciation.) (To amortize the discount.) ( Schedule of note discount amortization)

3-Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2019.(To record the depreciation.)(To amortize the discount.) 3-

Writing Wellman Company acquired 30% of the outstanding common stock of Grinwold Inc. on January 1, 2022, by paying $1,800,000 for 60,000 shares. Grinwold declared and paid a $0.50 per share cash dividend on June 30 and again on December 31, 2022. Grinwold reported a net income of $800,000 for the year. a. Total dividend revenue for 2022 $60,000 b. Revenue from stock investments $240,000 Instructions a. Prepare the journal entries for Wellman Company for 2022, assuming Wellman cannot exercise significant influence over Grinwold. (Use the cost method.) b. Prepare the journal entries for Wellman Company for 2022, assuming Wellman can exercise significant influence over Grinwold. (Use the equity method.) c. The board of directors of Wellman Company is confused about the differences between the cost and equity methods. Prepare a memorandum for the board that explains each method and shows in tabular form the account balances under each method at December 31, 2022.

Albuquerque, Inc., acquired 27,000 shares of Marmon Company several years ago for $900,000. At the acquisition date, Marmon reported a book value of $980,000, and Albuquerque assessed the fair value of the noncontrolling interest at $100,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses.

At the present time, Marmon reports $1,070,000 as total stockholders’ equity, which is broken down as follows:

View the following as independent situations:

1. a. & b. Marmon sells 15,000 and 6,000 shares of previously unissued common stock to the public for $40 and $26 per share. Albuquerque purchased none of this stock. What journal entry should Albuquerque make to recognize the impact of this stock transaction? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations.)

Swann Company sold a delivery truck on April 1, 2016. Swann had acquired the truck on January 1, 2012, for $44,000. At acquisition, Swann had estimated that the truck would have an estimated life of 5 years and a residual value of $3,000. At December 31, 2015, the truck had a book value of $11,200. Required: 1. Prepare any necessary journal entries to record the sale of the truck, assuming it sold for: a. $10,600 b. $7,600 2. How should the gain or loss on disposal be reported on the income statement? 3. Assume that Swann uses IFRS and sold the truck for $10,600. In addition, Swann had previously recorded a revaluation surplus related to this machine of $5,000. What journal entries are required to record the sale?

Prepare the necessary journal entries on April 1, 2016 to record: