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?
In: Accounting
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.
In: Accounting
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?
In: Accounting
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In: Accounting
The following is a partial trial balance for General Lighting
Corporation as of December 31, 2018:
| Account Title | Debits | Credits |
| Sales revenue | 3,300,000 | |
| Interest revenue | 99,000 | |
| Loss on sale of investments | 32,000 | |
| Cost of goods sold | 1,380,000 | |
| Loss from write-down of inventory due to obsolescence | 390,000 | |
| Selling expenses | 490,000 | |
| General and administrative expenses | 245,000 | |
| Interest expense | 98,000 | |
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.)
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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.)
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In: Accounting
Presented below are the comparative income and retained earnings statements for Martinez Inc. for the years 2017 and 2018.
|
2018 |
2017 |
|||||
| Sales | $334,000 | $264,000 | ||||
| Cost of sales | 217,000 | 144,000 | ||||
| Gross profit | 117,000 | 120,000 | ||||
| Expenses | 95,200 | 50,700 | ||||
| Net income | $21,800 | $69,300 | ||||
| Retained earnings (Jan. 1) | $121,700 | $76,300 | ||||
| Net income | 21,800 | 69,300 | ||||
| Dividends | (31,400 | ) | (23,900 | ) | ||
| Retained earnings (Dec. 31) | $112,100 | $121,700 | ||||
The following additional information is provided:
| 1. | In 2018, Martinez Inc. decided to switch its depreciation method from sum-of-the-years’ digits to the straight-line method. The assets were purchased at the beginning of 2017 for $106,500 with an estimated useful life of 4 years and no salvage value. (The 2018 income statement contains depreciation expense of $31,950 on the assets purchased at the beginning of 2017.) | |
| 2. | In 2018, the company discovered that the ending inventory for 2017 was overstated by $24,200; ending inventory for 2018 is correctly stated. |
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
| 2018 | 2017 | |
| RETAINED EARNINGS, JANUARY 1, UNADJUSTED | ||
| LESS: CORRECTION OF ERROR FOR INVENTORY OVERSTATEMENT | ||
| RETAINED EARNINGS, JANUARY 1, ADJUSTED | ||
| ADD: NET INCOME | ||
| LESS: DIVIDENDS | ||
|
RETAINED EARNING, DECEMBER 31 |
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In: Accounting
In: Accounting
Presented below are the comparative income and retained earnings statements for Martinez Inc. for the years 2017 and 2018.
|
2018 |
2017 |
|||||
| Sales | $334,000 | $264,000 | ||||
| Cost of sales | 217,000 | 144,000 | ||||
| Gross profit | 117,000 | 120,000 | ||||
| Expenses | 95,200 | 50,700 | ||||
| Net income | $21,800 | $69,300 | ||||
| Retained earnings (Jan. 1) | $121,700 | $76,300 | ||||
| Net income | 21,800 | 69,300 | ||||
| Dividends | (31,400 | ) | (23,900 | ) | ||
| Retained earnings (Dec. 31) | $112,100 | $121,700 | ||||
The following additional information is provided:
| 1. | In 2018, Martinez Inc. decided to switch its depreciation method from sum-of-the-years’ digits to the straight-line method. The assets were purchased at the beginning of 2017 for $106,500 with an estimated useful life of 4 years and no salvage value. (The 2018 income statement contains depreciation expense of $31,950 on the assets purchased at the beginning of 2017.) | |
| 2. | In 2018, the company
discovered that the ending inventory for 2017 was overstated by
$24,200; ending inventory for 2018 is correctly stated.
Prepare the revised retained earnings statement for 2017 and 2018, assuming comparative statements. (Ignore income taxes.) MARTINEZ INC. |
2017 2018
| 2017 | ||
| RETAINED EARNINGS, JANUARY 1, UNADJUSTED | ||
| LESS: CORRECTION OF ERROR FOR INVENTORY OVERSTATEMENT | ||
| RETAINED EARNINGS, JANUARY 1, ADJUSTED | ||
| ADD: NET INCOME | ||
| LESS: DIVIDENDS | ||
|
RETAINED EARNING, DECEMBER 31 |
In: Accounting
Vita Dental Agencies current fiscal year ended on December 31, 2018. For the year then ended, the company has reported an unadjusted net income of $100,000. The owner has some doubt about this figure and has asked you to review his accounting records.
Required: Make adjusting entries as at December 31, 2018 for the following information uncovered in your review (show your calculations for full marks):
a) Vita occupied their new building for the first time on May 1, 2018. The building has an estimated 15-year useful life and annual amortization is 40,000. No amortization has been recorded for 2018.
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b) The Dental Supplies account showed an opening balance of $1,900 on January 1, 2018. During the year, the owner used Dental Supplies asset account to record the purchase of another $2,985 of supplies. The year-end physical count of office supplies inventory only showed $0 unused Dental Supplies on hand.
c) The Prepaid Insurance account showed an opening balance on January 1st, 2018 of $1,200 representing the 3 months remaining on a 1-year insurance policy bought on April 1, 2017. At the expiration of this policy on March 31, 2018, the owner paid $6,000 for another 1 year policy. At year end, the accounting manager incorrectly debited Insurance Expense instead of Prepaid Insurance to record the purchase of this renewal on March 31, 2018.
In: Accounting
On June 30, 2018, Singleton Computers issued 8% stated rate
bonds with a face amount of $200 million. The bonds mature on June
30, 2033 (15 years). The market rate of interest for similar bond
issues was 7% (3.5% semiannual rate). Interest is paid semiannually
(4.0%) on June 30 and December 31, beginning on December 31, 2018.
(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of
$1) (Use appropriate factor(s) from the tables
provided.)
Required:
1. Determine the price of the bonds on June 30,
2018.
2. Calculate the interest expense Singleton
reports in 2018 for these bonds using the effective interest
method.
Determine the price of the bonds on June 30, 2018. (Enter your
answers in whole dollars. Round percentage answers to one decimal
place. Round your final answers to nearest whole dollar
amount.)
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Calculate the interest expense Singleton reports in 2018 for these bonds using the effective interest method. (Enter your answers in whole dollars. Round your final answers to nearest whole dollar amount.)
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In: Accounting