Kane Candy Company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $1.80; in addition it costs $1.20 to mail each mug. The results of the premium plan for the years 2017 and 2018 are as follows (assume all purchases and sales are for cash):

Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the Kane Candy Company balance sheet and income statement at the end of 2017 and 2018.

Balance Sheet

Income Statement

Following is the information of Huntington Co. income statement

                                      2018 2019
Sales                        $15.000 $12.300
COGS                          12.000 7.500
Gross profit                3.000 5.000
Operating expenses 2.000 3.000
Income before taxes 1.000 2.000
Income taxes (30%) 300 700
Net income                 700 1.400
In 2018 Huntington applied FIFO method for its inventory, and starting in 2019 Huntington
decised to change the method to the average method. Following is the inventory in 2018
according to FIFO and average:
                       31/12/2018
                      FIFO Average
Inventory $3.400 $3.600

On 1 January 2018 retained earnings balance was reported $ 1.750

Instructions:
a. Compute the inventory available for sale in 2018 according to FIFO and average,
determine the effect to the COGS (average).
b. Prepare the restatement the 2018 income statement.
c. Prepare the correction journal needed in 1/1/2019.
d. Prepare the restatement of retained earnings.

Deal Leasing leased equipment to Hand Company on January 1, 2018. The lease payments were calculated to provide the lessor a 8% return. Eight annual lease payments of $57,000 are due at the beginning of each year beginning January 1, 2018. The present value of an annuity due of $1 at 8 for Eight periods is 6.20637.

Required: Consider this to be a finance lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.) 1. Prepare the journal entries to record the lease by Hand (lessee) at January 1, 2018.

-Record the lease January 01, 2018

-Record the cash payment January 01,2018 2.

2. Prepare the journal entries to record the lease by Hand (lessee) at December 31, 2018, the end of the first reporting period

-Record accrued interest December 31, 2018

-Record the amortization expense December 31, 2018

2.  Suppose that a hypothetical “consumer market basket” consists only

of goods B and C, in the quantities:  B = 10 and C = 5.  

Use 2018 as a base year (i.e., 2018 = 100).

                                                                   Year 2017      Year 2018     Year 2019

Quantity of Good A                                            3                      4                     5

Price of Good A                                                 $9                  $10                $11

Quantity of Good B                                          10                    10                   10

Price of Good B                                                 $2                    $4                   $6

Quantity of Good C                                            2                      4                      6

Price of Good C                                                 $5                    $6                    $7

e.  If an individual’s nominal income rises 50% from 2018 to 2019, what is the growth rate of their real income?

f.  If the base year is 2017 (instead of 2018), what will be the new CPI values for all three years?

g.  With the “updated” CPI values from question “f”, will the inflation rates for 2017 - 2018, and 2018 - 2019 change, or stay the same?  Justify your answer.

Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $398,000. Amortization associated with this acquisition is $17,700 per year. In 2018, Lindman earns an income of $206,000 and declares cash dividends of $51,500. Previously, in 2017, Lindman had sold inventory costing $32,900 to Matthew for $47,000. Matthew consumed all but 20 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $46,200 to Matthew for $70,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019.

1. What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman?

2. What is the equity method balance in the Investment in Lindman account at the end of 2018?

Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $341,000. Amortization associated with this acquisition is $17,400 per year. In 2018, Lindman earns an income of $159,000 and declares cash dividends of $53,000. Previously, in 2017, Lindman had sold inventory costing $47,200 to Matthew for $59,000. Matthew consumed all but 25 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $60,800 to Matthew for $80,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019.

1. What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman?

2. What is the equity method balance in the Investment in Lindman account at the end of 2018?

Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $427,000. Amortization associated with this acquisition is $9,600 per year. In 2018, Lindman earns an income of $145,000 and declares cash dividends of $72,500. Previously, in 2017, Lindman had sold inventory costing $41,600 to Matthew for $52,000. Matthew consumed all but 25 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $60,800 to Matthew for $80,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019.

1. What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman?

2. What is the equity method balance in the Investment in Lindman account at the end of 2018?

Question 2
ROA Limited purchased the following trading securities on 1 January 2018. Cost and fair values are shown below:

Required:
a. Calculate total cost on 1 January 2018, total fair value on 31 December 2018 and total fair value on 31 December 2019.

b. Prepare the journal entry to record the purchase of the equity investments on 1 January 2018.

c. Prepare the journal entry to record the fair value adjustment on 31 December 2018.

d. Prepare the journal entry to record the fair value adjustment on 31 December 2019.

Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $409,000. Amortization associated with this acquisition is $11,400 per year. In 2018, Lindman earns an income of $83,000 and declares cash dividends of $41,500. Previously, in 2017, Lindman had sold inventory costing $50,400 to Matthew for $72,000. Matthew consumed all but 25 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $59,400 to Matthew for $90,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019.

1. What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman?

2. What is the equity method balance in the Investment in Lindman account at the end of 2018?

a. Equity income

b.Investment in Lindman account.

Furtastic manufactures imitation fur garments. On June 1, 2018, Furtastic made a sale to Willett’s Department Store under terms that require Willett to pay $170,000 to Furtastic on June 30, 2018. In a separate transaction on June 15, 2018, Furtastic purchased brand advertising services from Willett for $16,000. The fair value of those advertising services is $7,000. Furtastic expects that 2% of all sales will prove uncollectible.

Required:
1. to 3. Prepare the journal entries to record the transactions above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. Record the Furtastic’s sale on June 1, 2018.

2. Record the Furtastic’s purchase of advertising services from Willett on June 15, 2018. Assume all of the advertising services are delivered on June 15, 2018.

3. Record the Furtastic’s receipt of $170,000 from Willett on June 30, 2018.