On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:

Dreamworld had $5,300,000 in 13% bonds outstanding through both years.

The average accumulated expenditures for 2019 by the end of the construction period was:

Exercise 9-27

Presented below is information related to Sandhill Corporation. Price Index LIFO Cost Retail Inventory on December 31, 2017, when dollar-value LIFO is adopted 100 $36,600 $69,100 Inventory, December 31, 2018 110 ? 95,260 Compute the ending inventory under the dollar-value LIFO method at December 31, 2018. The cost-to-retail ratio for 2018 was 60%. Ending inventory under the dollar-value LIFO method at December 31, 2018

Compute and Interpret Altman's Z-scores

Following is selected financial information for Netflix, for 2018 and 2017.

Compute and interpret Altman Z-scores for the company for both years. (Do not round until your final answer; then round your answers to two decimal places.)
2018 z-score = Answer

2017 z-score = Answer

Which of the following best describes the company's likelihood to go bankrupt given the z-score in 2017 compared to 2018.

The z-score in 2018 increased. Z-scores for both years are in the gray area indicating some risk of bankruptcy.

The z-score in 2018 increased, which suggests the company's risk of bankruptcy has increased.

The z-score in 2018 increased. Z-scores for both years indicate low bankruptcy potential in the short term.

The z-score in 2018 decreased, which suggests the company's risk of bankruptcy has decreased.

On January 1, 2018, Coronado Corp. had 491,000 shares of common stock outstanding. During 2018, it had the following transactions that affected the Common Stock account.

February 1 Issued 114,000 shares

March 1 Issued a 10% stock dividend

May 1 Acquired 103,000 shares of treasury stock

June 1 Issued a 3-for-1 stock split

October 1 Reissued 60,000 shares of treasury stock

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

b. Assume that Coronado Corp. earned net income of $3,619,000 during 2018. In addition, it had 98,000 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.

d. Assume the same facts as in part (b), except that net income included a loss from discontinued operations of $431,000 (net of tax). Compute earnings per share for 2018.

4. Innovation Incorporated had operating income before interest and taxes in 2018 of $350 million. The firm was expected to generate this level of operating income indefinitely. The firm had depreciation expense of $25 million that same year. Capital spending totaled $40 million during 2018. At the end of 2017 and 2018, working capital totaled $90 and $70 million, respectively. The firm’s combined marginal state, local, and federal tax rate was 30% and its debt outstanding had a market value of $0.50 billion. The 10-year Treasury bond rate is 3% and the borrowing rate for companies exhibiting levels of creditworthiness similar to Innovation, Inc. is 8%. The historical risk premium for stocks over the risk-free rate of return is 4.5%. No Growth’s beta was estimated to be 1.2. The firm had 3 million common shares outstanding at the end of 2018. Innovation’s target debt to total capital ratio is 40%.

1. Estimate free cash flow to the firm in 2018.
2. Estimate the firm’s cost of capital.
3. Estimate the value of the firm (i.e., includes the value of equity and debt) at the end of 2018, assuming that it will generate the value of free cash flow estimated in (a) indefinitely.
4. Estimate the value of the equity of the firm at the end of 2018.

Estimate the value per share at the end of 2018.                                                                  

An aging analysis of Yamoto Limited’s accounts receivable at December 31, 2018 and 2017, showed the following:

Additional information:

1. At December 31, 2017, the unadjusted balance in Allowance for Doubtful Accounts was a credit of $9,000.

2. In 2018, $42,000 of accounts were written off as uncollectible and $3,000 of accounts previously written off were recovered.

Required:

a. Prepare an aging schedule to calculate the estimated uncollectible accounts at December 31, 2017 and 2018. Note that the estimated percentage uncollectible are the same for both years.

b. Record the adjusting entry relating to bad debts on December 31,2017.

c. Record the write off of uncollectible accounts in 2018.

d. Record the collection of accounts previously written off in 2018.

e. Prepare the adjusting entry relating to bad debts on December 31, 2018.

f. Calculate the carrying amount (net realizable value) of Yamoto’s accounts receivable at December 31, 2017 and 2018.

An aging analysis of Yamoto Limited’s accounts receivable at December 31, 2018 and 2017, showed the following:

Additional information:

1. At December 31, 2017, the unadjusted balance in Allowance for Doubtful Accounts was a credit of $9,000.

2. In 2018, $42,000 of accounts were written off as uncollectible and $3,000 of accounts previously written off were recovered.

Required:

a. Prepare an aging schedule to calculate the estimated uncollectible accounts at December 31, 2017 and 2018. Note that the estimated percentage uncollectible are the same for both years.

b. Record the adjusting entry relating to bad debts on December 31,2017.

c. Record the write off of uncollectible accounts in 2018.

d. Record the collection of accounts previously written off in 2018.

e. Prepare the adjusting entry relating to bad debts on December 31, 2018.

f. Calculate the carrying amount (net realizable value) of Yamoto’s accounts receivable at December 31, 2017 and 2018.

On December 31, 2017, Ainsworth, Inc., had 800 million shares of common stock outstanding. Twenty five million shares of 6%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April 30, 2018, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2018. No cash dividends were declared in 2018. For the year ended December 31, 2018, Ainsworth reported a net loss of $165 million, including an after-tax loss from discontinued operations of $450 million. Required: 1. Compute Ainsworth's net loss per share for the year ended December 31, 2018. 2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2018. 3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2018 and 2017 comparative income statements. Assume EPS was reported in 2017 as $0.65, based on net income (no discontinued operations) of $520 million and a weighted-average number of common shares of 800 million.

On December 31, 2017, Ainsworth, Inc., had 800 million shares of common stock outstanding. Twenty five million shares of 6%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April 30, 2018, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2018. No cash dividends were declared in 2018. For the year ended December 31, 2018, Ainsworth reported a net loss of $165 million, including an after-tax loss from discontinued operations of $450 million. Required: 1. Compute Ainsworth's net loss per share for the year ended December 31, 2018. 2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2018. 3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2018 and 2017 comparative income statements. Assume EPS was reported in 2017 as $0.65, based on net income (no discontinued operations) of $520 million and a weighted-average number of common shares of 800 million.

On December 31, 2017, Ainsworth, Inc., had 820 million shares of common stock outstanding. Thirty three million shares of 6%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April 30, 2018, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2018. No cash dividends were declared in 2018. For the year ended December 31, 2018, Ainsworth reported a net loss of $205 million, including an after-tax loss from discontinued operations of $530 million. Required: 1. Compute Ainsworth's net loss per share for the year ended December 31, 2018. 2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2018. 3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2018 and 2017 comparative income statements. Assume EPS was reported in 2017 as $0.75, based on net income (no discontinued operations) of $615 million and a weighted-average number of common shares of 820 million.