Rick Hall owns a card shop, Hall’s Cards. The following cash information is available for the month of August 2018:

As of August 31, the bank statement shows a balance of $10,565. The August 31 unadjusted balance in the Cash account of Hall’s Cards is $7,309. A review of the bank statement revealed the following information:

1. A deposit of $1,910 on August 31, 2018, does not appear on the August bank statement.

2. It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $3,740 but was recorded on the books as $4,640.

3. When checks written during the month were compared with those paid by the bank, three checks amounting to $4,345 were found to be outstanding.

4. A debit memo for $79 was included in the bank statement for the purchase of a new supply of checks.

Required

Prepare a bank reconciliation at the end of August showing the true cash balance.

2. On January 1, 2018, Kendall Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:

Kendall borrowed $600,000 on a construction loan at 8% interest on January 1, 2018. This loan was outstanding throughout the construction period. The company had $2,000,000 in 5% bonds payable outstanding in 2018 and 2019. Kendall used the specific interest method.

Interest capitalized for 2018 was:

a. 48,000

b. 40,000

c. 32,000

d. 30,000

3. Pam & Co. exchanged land and $9,000 cash for equipment. The book value and the fair value of the land were $90,000 and $106,000, respectively.

Assuming that the exchange has commercial substance, Lowell would record equipment and a gain/(loss) of:

a. Equipment: 90,000

Gain/loss: (25,000)

b. Equipment: 99,000

Gain/loss: (16,000)

c. Equipment: 106,000

gain/loss: 25,000

d. Equipment: 115,000

gain/loss: 16,000

Blossom Ltd. purchased a new machine on April 4, 2014, at a cost of $ 197,600. The company estimated that the machine would have a residual value of $ 14,000. The machine is expected to be used for 10,200 working hours during its four-year life. Actual machine usage was 1,500 hours in 2014; 2,300 hours in 2015; 2,200 hours in 2016; 2,100 hours in 2017; and 2,100 hours in 2018. Blossom has a December 31 year end.

Calculate depreciation for the machine under each of the following methods: (Round expense per unit to 2 decimal places, e.g. 2.75 and final answers to 0 decimal places, e.g. 5,275.)

(1) Straight-line for 2014 through to 2018.

2014 Expense

2015 Expense

2016 Expense

2017 Expense

2018 Expense

(2) Diminishing-balance using double the straight-line rate for 2014 through to 2018.

2014 Expense

2015 Expense

2016 Expense

2017 Expense

2018 Expense

(3) Units-of-production for 2014 through to 2018.

2014 Expense

2015 Expense

2016 Expense

2017 Expense

2018 Expense

The fiscal year of Queens County ends on December 31. Property taxes are due March 31 of the year in which they are levied. Queens county engaged the following transacctions in 2017 and 2018: a. On January 15, 2017, the county council levied property taxes of $170 million for the year endingDecember 31, 2017. Officials estimated that 1 percent would be uncollectible. b. During 2017 it collected $120 million. c. In January and February 2018, prior to preparing its 2017 financial statements, it collected an additional$45 million in 2017 taxes. It reclassified as delinquent the $5 million of 2017 taxes not yet collected. d. In January 2018, the county levied property taxes of $190 million, of which officials estimated1.1 percent would be uncollectible. e. During the remainder of 2018 the county collected $2.5 million more in taxes relating to 2017,$160 million relating to 2018, and $1.9 million (in advance) applicable to 2019 .f. In December 2018 it wrote off $1 million of 2017 taxes that it determined would be uncollectible. Q: What is the deferred inflow reported in the Fund Financial Statement as of 12/31/2018?

Problem 17-5

Lincoln Industries adopted a defined benefit pension plan on March 19, 2017. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of return. A consulting firm, engaged as actuary, recommends 4% as the appropriate discount rate. The service cost is $125,000 for 2017 and $260,000 for 2018. Actual rate of return on plan assets is 10% in both 2017 and 2018. Year-end funding is $140,000 for 2017 and $150,000 for 2018. There were no plan amendments, changes in actuarial estimates, and assumptions regarding the PBO in 2017. On January 1, 2018, the company amended the pension formula and made the change retroactive, creating a prior service cost of $55,000. Amortization of prior service cost for 2018 is $2,500. No retiree benefits were paid in 2017, but $15,000 was paid to retirees in 2018.

Required:

1. Calculate each of the following amounts as of both December 31, 2017:

1. Projected benefit obligation        $_____________     

2. Plan assets                                 $_____________     

3. Pension expense                        $_____________     

4. Net pension asset or liability     $_____________     

2. Prepare ALL necessary 2018 journal entries to record pension activity.

Exercise 18-14

Bramble Corporation purchased equipment very late in 2017. Based on generous capital cost allowance rates provided in the Income Tax Act, Bramble Corporation claimed CCA on its 2017 tax return but did not record any depreciation as the equipment had not yet been put into use. This temporary difference will reverse and cause taxable amounts of $25,800 in 2018, $36,400 in 2019, and $45,200 in 2020. Bramble’s accounting income for 2017 is $232,800 and $192,800 in each of 2018 and 2019, and the tax rate is 32%. There are no deferred tax accounts at the beginning of 2017. BrambleCorporation was informed on December 31, 2018 that the enacted rate for 2019 and subsequent years is 27%.

a. Calculate the deferred tax balances at December 31, 2018 and 2019.

b.Calculate taxable income and income tax payable for 2018 and 2019.

c.Prepare the journal entries to record income taxes for 2018 and 2019

d. Prepare the income tax expense section of the income statement for 2018, beginning with the line “Income before income tax.”

e. Prepare the income tax expense section of the income statement for 2019, beginning with the line “Income before income tax.”

The company has the following information for 2018

1. Compute basic and diluted EPS for 2018 (to the nearest tenth of a cent).
2. Compute basic and diluted EPS for 2018 assuming the stock options were granted on March 1, 2018.
3. Compute basic and diluted EPS for 2018 assuming the stock options were granted on March 1, 2018 and the debt was issued on July 1, 2018 (don’t forget to adjust net income).

Prepare an amortization schedule first

Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camerrand. The denomination of all transactions with these companies is alaries (AL), the Camerrand currency. During 2017, Benjamin acquires 45,000 widgets at a price of 8 alaries per widget. It will pay for them when it sells them. Currency exchange rates for 1 AL are as follows:

Assume that Benjamin acquired the widgets on December 1, 2017, and made payment on March 1, 2018. What is the effect of the exchange rate fluctuations on reported income in 2017 and in 2018?

Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on December 1, 2017. What is the effect of the exchange rate fluctuations on reported income in 2017?

Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on March 1, 2018. What is the effect of the exchange rate fluctuations on reported income in 2017 and in 2018?

Mariner, Inc.

Comparative Income Statement

Years Ended December 31, 2019 and 2018

Dollars in thousands

                                                                2019              2018                          2017

Net Sales Revenue                             $177,000           $154,000

Cost of Goods Sold                              94,000              87,500

Selling and Administrative Expenses   47,000                 39,500

Interest Expense                                8,500                 11,500

Income Tax Expense                   12,500                    9,500

Net Income                                 $15,000                     $6,000

Additional data:

Total Assets                                    $202,000            $191,000           $171,000

Common Stockholders' Equity          94,500                86,500               80,000

Preferred Dividends                         2,000                       2,000                  0

Common Shares Outstanding During the Year            25,000            25,000     20,000