Calculate a price index for 2018, 2019, and 2020 using the following information about prices. Let the market basket consist of the price of one pizza pie, two sodas, and four caffe lattes. Let the year 2018 be the base year (with an index value of 100). See the instruction video, "inflation.ppsm".

A. Calculate the price index for each year. To compute the price index for each year, you must first compute cost of market basket for each year (Show mathematical steps in detail to receive full credits).

B. How much inflation occurred between 2018 and 2019? Between 2018 and 2020? In other words, what is the change in the price index between 2018 vs 2019 and 2018 vs 2020?

1. Show mathematical steps in detail

2. interpret what the computed numbers (inflation rate) indicate in detail

Exercise 22-9

Presented below are the comparative income and retained earnings statements for Headland Inc. for the years 2017 and 2018.

The following additional information is provided:

Prepare the revised retained earnings statement for 2017 and 2018, assuming comparative statements. (Ignore income taxes.)

The following events occur for The Underwood Corporation during 2018 and 2019, its first two years of operations.
  
  

June 12, 2018   Provide services to customers on account for $35,000.
September 17, 2018   Receive $20,000 from customers on account.
December 31, 2018   Estimate that 40% of accounts receivable at the end of the year will not be received.
March 4, 2019   Provide services to customers on account for $50,000.
May 20, 2019   Receive $10,000 from customers for services provided in 2018.
July 2, 2019   Write off the remaining amounts owed from services provided in 2018.
October 19, 2019   Receive $40,000 from customers for services provided in 2019.
December 31, 2019   Estimate that 40% of accounts receivable at the end of the year will not be received.

1. Record transactions for each date. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Post transactions to the following accounts: Cash, Accounts Receivable, and Allowance for Uncollectible Accounts.

3. Calculate the net realizable value of accounts receivable at the end of 2018 and 2019.
  

During 2016 (its first year of operations) and 2017, Segura LLC used the FIFO inventory costing method. At the beginning of 2018, Segura changed to the average cost method.

                Components of income before tax for 2018, 2017, and 2016 were as follows ($ in millions):

                                                                                2018                       2017                       2016

                Revenues                                            $420                       $390                       $380

                Cost of goods sold (FIFO)              (46)                         (40)                        (38)

                Cost of goods sold (average)       (62)                         (56)                        (52)

                Operating expenses                       (254)                      (250)                     (240)

Dividends of $20 million were paid each year. Segura’s fiscal year ends December 31. Ignore income taxes.

Required:

1. Determine the balance in retained earnings at December 31, 2017 (before the change to average cost).

2. Prepare the journal entry at the beginning of 2018 to record the change in inventory accounting method.

3. Prepare the 2018 comparative income statements (including 2017 amounts).

4. What was the effect of the change in inventory method on the company’s 2018 net income?

5. Determine the balance in retained earnings at December 31, 2018.

Soul Ltd is an Australian company that makes and sells small electronic goods and its financial year ends on 30 June. On 1 February 2018, a customer from the United States ordered some goods from Soul Ltd at an invoice cost of US$400,000 on terms FOB destination. On 30 April 2018, the goods were delivered to the customer. The agreed payment arrangements are that 30% of the total amount owing would be paid on delivery, 20% three months after delivery, and the remaining 50% four months after delivery. The end of the reporting period for Soul Ltd is 30 June. The following exchange rates are applicable.

Required:

In accordance with AASB 121, prepare the relevant journal entries of Soul Ltd to account for the above transactions.

Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2018 are as follows:

The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2018, but at the end of 2018, the company amended the pension formula creating a prior service cost of $11 million. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Required:

1. Calculate the pension expense for 2018.
2. Prepare the journal entry to record pension expense, gains or losses, prior service cost, funding, and payment of benefits for 2018.
3. What amount will Electronic Distribution report in its 2018 balance sheet as a net pension asset or net pension liability?

Colah Company purchased $1 million of Jackson, Inc., 5% bonds at par on July 1, 2018, with interest paid semiannually.
Colah determined that it should account for the bonds as an available-for-sale investment. At December
31, 2018, the Jackson bonds had a fair value of $1.2 million. Colah sold the Jackson bonds on July 1, 2019 for
$900,000.

Required:
1. Prepare Colah’s journal entries to record:
a. The purchase of the Jackson bonds on July 1
b. Interest revenue for the last half of 2018
c. Any year-end 2018 adjusting entries
d. Interest revenue for the first half of 2019
e. Any entries necessary upon sale of the Jackson bonds on July 1, 2019, including updating the fair-value
adjustment, recording any reclassification adjustment, and recording the sale
2. Fill out the following table to show the effect of the Jackson bonds on Colah’s net income, other comprehensive
income, and comprehensive income for 2018, 2019, and cumulatively over 2018 and 2019.

2018 2019 Total
Net Income
OCI
Comprehensive Income

On January 1, 2018, HGC Camera Store adopted the dollar-value LIFO retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2018 and 2019 are as follows:

Required:

Required:
Estimate the 2018 and 2019 ending inventory and cost of goods sold using the dollar-value LIFO retail inventory method. (Do not round other intermediate calculations. Round your cost-to-retail percentage calculations to 2 decimal places and final answers to the nearest whole dollar.)

On January 1, 2018, Buffalo Corp. had 488,000 shares of common stock outstanding. During 2018, it had the following transactions that affected the Common Stock account. February 1 Issued 115,000 shares March 1 Issued a 10% stock dividend May 1 Acquired 96,000 shares of treasury stock June 1 Issued a 3-for-1 stock split October 1 Reissued 61,000 shares of treasury stock

a.Determine the weighted-average number of shares outstanding as of December 31, 2018.

b.Assume that Buffalo Corp. earned net income of $3,330,000 during 2018. In addition, it had 105,000 shares of 9%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2018. Compute earnings per share for 2018, using the weighted-average number of shares determined in part (a).

c.Assume the same facts as in part (b), except that the preferred stock was cumulative. Compute earnings per share for 2018.

Colah Company purchased $1.5 million of Jackson, Inc. 8% bonds at par on July 1, 2018, with interest paid semi-annually. When the bonds were acquired Colah decided to elect the fair value option for accounting for its investment. At December 31, 2018, the Jackson bonds had a fair value of $1.75 million. Colah sold the Jackson bonds on July 1, 2019 for $1,350,000.

Required: 1. Prepare Colah's journal entries for the following transactions:

a. The purchase of the Jackson bonds on July 1.

b. Interest revenue for the last half of 2018.

c. Any year-end 2018 adjusting entries.

d. Interest revenue for the first half of 2019.

e. Any entry or entries necessary upon sale of the Jackson bonds on July 1, 2019.

2. Fill out the following table to show the effect of the Jackson bonds on Colah’s net income, other comprehensive income, and comprehensive income for 2018, 2019, and cumulatively over 2018 and 2019: