On January 1, 2018, the Marjlee Company began construction of an office building to be used as its corporate headquarters. The building was completed early in 2019. Construction expenditures for 2018, which were incurred evenly throughout the year, totaled $7,200,000. Marjlee had the following debt obligations which were outstanding during all of 2018:

Construction loan, 11% $ 1,800,000

Long-term note, 10% 2,400,000

Long-term note, 7% 4,800,000

Calculate the amount of interest capitalized in 2018 for the building using the specific interest method.

On January 1, 2018 ABC Corporation issued a five-year $1,000,000, 7%, at $1,050,000. Interest is paid annually on December 31. The market rate of interest is 6%.

1. Using the effective interest rate method, what is the interest expense at December 31, 2018

Interest Expense at December 31,2018 = $___________________________

2. What is the carrying value of the bond at December 31, 2018?

Carrying value of bond on December 31, 2018 = $ ________________________

3.   What is the carrying value of the bond at January 1, 2023?             

            Carrying value of the bond at January 1, 2023 =$_________________________

XYZ Inc. began 2018 with a balance in the firm’s Investments in Trading Securities account. The original cost of this investment, made in 2017, was $398,000. An account had been established at the end of 2017 to reflect the purchase and the fact that market value of this investment at that time was $366,400. During 2018, a block of shares with an original cost of $45,000 was sold for $54,500 and a second block with an original cost of $30,000 was sold for $27,300. At the end of 2018, the market value of the remaining shares was $341,800. Show the opening balances in any relevant accounts and the required transactions for 2018.

University Inc reported $84,000 in net income in 2018. On 1/1/18 company had 80,000 shares of common stock. On May 1, 2018, 23,000 new shares of common stock were sold for cash. On July 1, 2018, the company declared and distributed 20% of common stock dividend. On October 1, 2018, 7,000 shares of common stock were reacquired as treasury stock. Compute Centrals weighted average common shares outstanding

A 116,150

B 112,300

C 112,650

D 109,150

Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago. During 2017, Skybox sold inventory costing $188,000 to Parkette for $235,000. A total of 13 percent of this inventory was not sold to outsiders until 2018. During 2018, Skybox sold inventory costing $225,320 to Parkette for $262,000. A total of 30 percent of this inventory was not sold to outsiders until 2019. In 2018, Parkette reported cost of goods sold of $577,500 while Skybox reported $365,000. What is the consolidated cost of goods sold in 2018?

Fredo, Inc., purchased 10% of Sonny Enterprises for $1,000,000 on January 1, 2018. Sonny recognized a total of $400,000 net income during 2018, paid $30,000 of dividends to Fredo during 2018, and at December 31, 2018, the market value of the Sonny investment increased to $1,040,000.

Required: Prepare the journal entries necessary to account for the Sonny investment, assuming that Fredo:

(1) Lacks significant influence

(2) Assume that with the 10% purchase Fredo has significant influence over the operating and financial policies of the investee.

Analyzing Segment Disclosures

Raytheon Company disclosed the following data related to segment sales and operating profits for

fiscal 2018.

$ millions

   Total Net Sales Operating Income

2018 2017 2016    2018 2017 2016

Integrated defense systems . . . . . . . . . . . $ 6,180 $ 5,804 $ 5,529 $1,023 $ 935 $971

Intelligence, information and services . . . 6,722 6,177 6,169    538 455 467

Missile systems . . . . . . . . . . . . . . . . . . . . 8,298 7,787 7,096 973 1,010 921

Space and airborne systems . . . . . . . . . . 6,748 6,430 6,182 884 862 808

Forcepoint. . . . . . . . . . . . . . . . . . . . . . . . . 634 608 586 5 33 90

Eliminations . . . . . . . . . . . . . . . . . . . . . . . (1,514)(1423)(1361)

(1,423) (1,361)

Total net sales . . . . . . . . . . . . . . . . . . . . . $27,068 $25,383 $24,201

The company also reported the following on its balance sheet.

$ millions 2018 2017

Receivables, net of allowance for doubtful accounts of $12 and $8. . . . . . . . . . . $1,648 $1,324

Required

a. Which segment is largest in 2018? Has this ranking changed over the three‑year period?

b. Calculate the operating profit margin for each segment and determine which segment is most profit‑

able in 2018 by this measure.

c. Which segment’s sales grew the most in 2018? How does this compare to 2017 sales growth?

d. Calculate the company’s accounts receivable turnover and its days sales outstanding (DSO) for

2018. Does this seem reasonable? What might explain the DSO?

e. Assess the size of the receivables allowance. Does it seem reasonable?

The following is a partial trial balance for General Lighting Corporation as of December 31, 2018:

300,000 shares of common stock were outstanding throughout 2018. Income tax expense has not yet been recorded. The income tax rate is 40%.

Required:
1. Prepare a single-step income statement for 2018, including EPS disclosures.
2. Prepare a multiple-step income statement for 2018, including EPS disclosures.

Prepare a single-step income statement for 2018, including EPS disclosures. (Round EPS answer to 2 decimal places.)

Prepare a multiple-step income statement for 2018, including EPS disclosures. (Round EPS answer to 2 decimal places. Amounts to be deducted should be indicated with a minus sign.)

Presented below are the comparative income and retained earnings statements for Martinez 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.)

MARTINEZ INC.
Retained Earnings Statement
For the Year Ended