The following information is available for the first three years of operations for Jefferson Company:

1.   Year                    Taxable Income

      2017                         $500,000

      2018                           375,000

      2019                           400,000

2.   On January 2, 2017, heavy equipment costing $800,000 was purchased. The equipment had a life of 5 years and no salvage value. The straight-line method of depreciation is used for book purposes and the tax depreciation taken each year is listed below:

                                                    Tax Depreciation                                        

              2017              2018                2019                  2020                Total  

           $264,000        $360,000         $120,000           $56,000         $800,000

3.   On January 2, 2018, $360,000 was collected in advance for rental of a building for a three-year period. The entire $360,000 was reported as taxable income in 2018, but $240,000 of the $360,000 was reported as unearned revenue at December 31, 2018 for book purposes.

4.   The enacted tax rates are 40% for all years.

Instructions

(a)    Prepare a schedule comparing depreciation for financial reporting and tax purposes.

(b)    Determine the deferred tax (asset) or liability at the end of 2017.

(c)    Prepare a schedule of future taxable and (deductible) amounts at the end of 2018.

(d)    Prepare a schedule of the deferred tax (asset) and liability at the end of 2018.

(e)    Compute the net deferred tax expense (benefit) for 2018.

(f)     Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2018.

Prepare your solution in Excel, but be sure to label your formulas and not just input the result in the cells. Each step should be properly labeled.  

Ealing Company began operations as a new subsidiary of Fundamental Company, a U.S. Corporation, on January 2, 2018, by issuing common stock for 180,000 foreign currency units (FCU). Ealing immediately borrowed 35,000 FCU with a 10-year, 10% note, interest payable annually on January 1. On the same date, Ealing bought a building for 200,000 FCU. The building was to be depreciated for 20 years on a straight-line basis with a residual value of 40,000 FCU. During the year, the building was rented for 9,000 FCU per month. At year's end, all rent had been collected. On May 1 a repair on the building of 15,000 FCU was completed and paid for. Land for a parking lot was acquired for 30,000 FCU in cash on June 1. A dividend of 20,000 FCU was declared and paid on December 1. Exchange rates for the year were as follows: January 2, 2018 1 FCU = $.30 May 1, 2018 1 FCU = .37 June 1, 2018 1 FCU = .38 November 1, 2018 1 FCU = .41 December 1, 2018 1 FCU = .39 December 31, 2018 1 FCU = .35 average for 2018 1 FCU = .36 Fundamental company determined that the FCU was the functional currency and translation using the current rate method was appropriate for consolidation. Calculate the translation adjustment for 2018. (You might remember that the translation adjustment uses the net assets approach, not the net monetary assets approach.).

LFJ Manufacturing requested the company cost accountant to prepare a cash budget for the four months ending 30 April 2018.

The following sales figures are for the months of November 2017 to June 2018. The figures from January 2018 onward are estimated:

Actual Sales for 2017

November...............60,000

December................64,000

Sales Forecast for 2018

January.............65,000

February............70,000

March...................72,500

April..................76,250

May.................80,000

June................78,750

50% of the sales are usually paid for in the month in which they occur, while the remaining sales are paid for in the month following the sale.

Goods are sold at a mark-up of 25% on the goods purchased one month before sale. Half of the purchases are paid for in the month of purchase while the remainder is paid in full in the following month.

Wages of $12000 per month are paid in the month in which they are earned. It is expected that the wages will be increased by 10% from 1 March 2018.

Rent will cost $60000 per annum payable three monthly in advance in January, April, July and December each year.

The directors have arranged a bank loan of $60000 which would be credited to company’s current account in February 2018

The half-yearly interest on 200000, 8% debentures of $1 each is due to be paid on 15 January 2018.

The ordinary dividend of $12000 for the year 2017 will be paid in March 2018.

The bank balance at 31 December 2017 is $12000.

Required: Prepare a cash budget for the four months ended 30 April 2018.

Give your answers to the nearest dollar

The following information is available for the first three years of operations for Jefferson Company:

1.   Year                    Taxable Income

      2017                         $500,000

      2018                           375,000

      2019                           400,000

2.   On January 2, 2017, heavy equipment costing $800,000 was purchased. The equipment had a life of 5 years and no salvage value. The straight-line method of depreciation is used for book purposes and the tax depreciation taken each year is listed below:

                                                    Tax Depreciation                                        

              2017              2018                2019                  2020                Total  

           $264,000        $360,000         $120,000           $56,000         $800,000

3.   On January 2, 2018, $360,000 was collected in advance for rental of a building for a three-year period. The entire $360,000 was reported as taxable income in 2018, but $240,000 of the $360,000 was reported as unearned revenue at December 31, 2018 for book purposes.

4.   The enacted tax rates are 40% for all years.

Instructions

(a)    Prepare a schedule comparing depreciation for financial reporting and tax purposes.

(b)    Determine the deferred tax (asset) or liability at the end of 2017.

(c)    Prepare a schedule of future taxable and (deductible) amounts at the end of 2018.

(d)    Prepare a schedule of the deferred tax (asset) and liability at the end of 2018.

(e)    Compute the net deferred tax expense (benefit) for 2018.

(f)     Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2018.

Prepare your solution in Excel, but be sure to label your formulas and not just input the result in the cells. Each step should be properly labeled.  

Problem 18-10

On March 1, 2017, Sandhill Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,310,000. The building was completed by October 31, 2019. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2017, 2018, and 2019 are given below:

(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.)

2017

Costs to date (12/31/17)    $________

Estimated Costs to Complete $________

Estimated Total Costs $________

Percent Complete ________%

Revenue Recognized $________

Costs Incurred $________

Profit/(Loss) Recognized in 2017 $________

2018

Costs to date (12/31/18) $________

Estimated Costs to Complete $________

Estimated Total Costs $________

Percent Complete ________%

Revenue Recognized in 2018 $________

Costs Incurred in 2018 $________

Profit/ (Loss) Recognized in 2018 $________

2019

_______________? $________

Total Revenue Recognized $________

Total Profit on Contract $________

Less: Profit Previously Recognized $________

Profit/(Loss) Recognized in 2019 $________

(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.)

2017 $________

2018 $________

2019 $________

Ealing Company began operations as a new subsidiary of Fundamental Company, a U.S. Corporation, on January 2, 2018, by issuing common stock for 180,000 foreign currency units (FCU). Ealing immediately borrowed 35,000 FCU with a 10-year, 10% note, interest payable annually on January 1. On the same date, Ealing bought a building for 200,000 FCU. The building was to be depreciated for 20 years on a straight-line basis with a residual value of 40,000 FCU.
During the year, the building was rented for 9,000 FCU per month. At year's end, all rent had been collected.
On May 1 a repair on the building of 15,000 FCU was completed and paid for. Land for a parking lot was acquired for 30,000 FCU in cash on June 1.
A dividend of 20,000 FCU was declared and paid on December 1.

Exchange rates for the year were as follows:
January 2, 2018 1 FCU = $.30

May 1, 2018 1 FCU = .37

June 1, 2018 1 FCU = .38

November 1, 2018 1 FCU = .41

December 1, 2018 1 FCU = .39

December 31, 2018 1 FCU = .35

average for 2018 1 FCU = .36

Fundamental company determined that the FCU was the functional currency and translation using the current rate method was appropriate for consolidation. Calculate the translation adjustment for 2018. (You might remember that the translation adjustment uses the net assets approach, not the net monetary assets approach.)

Calculate the monthly returns for 08/01/2015 – 08/31/2019 period for

(i) S&P 500:

Ray Inc. sponsors a defined benefit pension plan for its employees. At January 1, 2018, Ray Inc. has unrecognized prior service cost of $24 million (amortized $4 per year) and net gains in AOCI of $30 million (amortized over 10 years). Ray Inc. reported Net Pension Asset of $10 million on its balance sheet as of December 31, 2017. Additional information for Ray’s pension plan follows (the fiscal year ends in December):

Record the journal entry for pension expense for 2018. Write step by step

Record the journal entry for gain or losses in PBO for 2018 if necessary. Write no entry if unnecessary.

Record the journal entry for gain or losses in plan assets for 2018 if necessary. Write no entry if unnecessary.

Record the journal entry for cash contribution to plan assets for 2018 if necessary. Write no entry if unnecessary.

Record the journal entry for benefits paid to employees for 2018 if necessary. Write no entry if unnecessary.

What is the balance of Net gain–AOCI at December 31, 2018 and what will be the “amortization of net gain–OCI” amount in 2019?

Please explain step by step.

On October 1, 2018, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business:

Enter the following transactions on Page 2 of the two-column journal:

Required:

1. Journalize and insert the posting references for each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. For a compound transaction, if an amount box does not require an entry, leave it blank.

2. Post (in chronological order) the journal to a ledger of four-column accounts, inserting appropriate posting references in the general journal as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. If an amount box does not require an entry, leave it blank.

Feedback

1. Identify which accounts are affected in each transaction. Keep in mind that every transaction involves at least two accounts. Determine whether the account increases or decreases and record each increase or decrease following the rules of debit and credit. Use the Posting Reference column to enter the corresponding account number from the general ledger account. Remember total debits should equal total credits in your entries.

2. See the illustration in Exhibit 4 below. The 4-column accounts ledger is a more formal presentation of the T accounts. The Posting Reference column should have the page number from the journal where the transaction is found. The debits and credits for each journal entry are posted to the accounts in the order in which they occur in the journal. After each entry, subtotal the 4-column ledger, making sure to maintain the correct normal balance and double-checking any non-normal balances to see if they are valid or possible.

Learning Objective 1, Learning Objective 2, Learning Objective 3 and Learning Objective 4.

3. Prepare an unadjusted trial balance for Intrex Designs as of October 31, 2018. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses.For those boxes in which no entry is required, leave the box blank. The first two account titles are filled in as an example.

4. Determine the excess of revenues over expenses for October.
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• Why do corporations issue convertible securities?

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• What are the disadvantages of using restricted stock to compensate employees?

• What are some reasons that employees might prefer this type of compensation?

• Skim through the major tenets of the PwC Stock-based compensation. In March 2016, the FASB issued Accounting Standards Update (ASU) 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which amends ASC 718. What are a few of the improvements to employee share-based payment accounting discussed in the report?