On January 2, 2018, Baltimore Company purchased 18,000 shares of the stock of Towson Company at $12 per share. Baltimore obtained significant influence as the purchase represents a 35% ownership stake in Towson Company. On August 1, 2018, Towson Company paid cash dividends of $19,000. Baltimore Company intended this investment to a long-term investment. On December 31, 2018, Towson Company reported $55,000 of net income for FY 2018. Additionally, the current market price for Towson Company's stock increased to $18 per share at the end of the year. Use this information to determine, how much Baltimore Company should report for its investment in Towson Company on December 31, 2018. (Round to the nearest dollar.)

On January 4, 2018, Runyan Bakery paid $362 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $4 per share on December 15, 2018, and Lavery reported net income of $340 million for the year ended December 31, 2018. The market value of Lavery's common stock on December 31, 2018, was $33 per share. On the purchase date, the book value of Lavery's net assets was $990 million and:

The fair value of Lavery's depreciable assets, with an average remaining useful life of [a(27)] years, exceeded their book value by $90 million.

The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.

Required:
1-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, and accounts for the Lavery investment in a manner similar to what it would use for securities for which there is no significant influence.
1-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.
2-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, but uses equity method accounting to account for Lavery’s income and dividends, and then records a fair value adjustment at the end of the year that allows it to comply with GAAP.
2-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.

On January 4, 2018, Runyan Bakery paid $326 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $4 per share on December 15, 2018, and Lavery reported net income of $160 million for the year ended December 31, 2018. The market value of Lavery's common stock at December 31, 2018, was $30 per share. On the purchase date, the book value of Lavery's net assets was $810 million and:

The fair value of Lavery's depreciable assets, with an average remaining useful life of [a(27)] years, exceeded their book value by $40 million.

The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.

Required:
1-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, and accounts for the Lavery investment in a manner similar to what it would use for securities for which there is not significant influence.
1-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.
2-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, but uses equity method accounting to account for Lavery’s income and dividends, and then records a fair value adjustment at the end of the year that allows it to comply with GAAP.
2-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.

The problem to be resolved:

Baltic Supplies Unadjusted Trial Balance as at December 31^st, 2018 is as follows:

Account Name Debit Credit

Cash 620,000

Accounts Receivable 410,000

Merchandise Inventory 480,000

Store supplies 144,800

Prepaid Insurance expense 840,000

Building and equipment 2,000,000

Accumulated depreciation-Building and equipment 976,000  

Accounts Payable 680,000

Traveling expense payable -   

unearned sales revenue    450,000   

Note payable-Long term 213,800

Baltic capital 1,700,000

Baltic withdrawal 35,000   

Sales revenue earned 2,550,500

sales discount 45,100

Sales returns allowance 62,500

Cost of Goods sold 401,000

Salaries expense 430,000

telephone expense 85,000

Depreciation expense- Building and equipment -

Insurance expense 630,000

store supplies expense 130,000

electricity expense 105,000   

Bad debt expense 65,400

Travelling expense 25,000

Interest expense 61,500

The following additional information was made available at December 31, 2018

1. Unearned sales revenue, still NOT earned at December 31, 2018 amounted $65,500.
2. The prepaid insurance of $840,000 was paid on July 1, 2018 for 8-months to February 2019.
3. The Building and Equipment has an estimated life of ten (10) years and is being depreciated on the double declining balance method of depreciation, down to a residual value of $10,000.
4. Accrued travelling expense amounted to $8,800 at December 31, 2018.
5. A physical count of inventory at December 31, 2018, reveals $485,000 worth of inventory on hand.

Required:

1. Prepare the necessary adjusting entries on December 31, 2018.

2. Prepare the company’s Multiple-step Income Statement for the year ended December 31, 2018.

3. Prepare the company’s Statement of Owner’s Equity for the year ended December 31, 2018.

4. Prepare the company’s classified Balance Sheet at December 31, 2018.

Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,450,000. The project began in 2018 and was completed in 2019. Data relating to the contract are summarized below: 2018 2019 Costs incurred during the year $ 336,000 $ 1,870,000 Estimated costs to complete as of 12/31 1,344,000 0 Billings during the year 446,000 1,710,000 Cash collections during the year 268,000 1,795,000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming this project does not qualify for revenue recognition over time.

Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion

Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time.

Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion.

Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming this project does not qualify for revenue recognition over time.

On January 1, 2018, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $14,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $99,000 and were expected to have a useful life of Five years with no residual value. Both firms record amortization and depreciation semi-annually. (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:
Prepare the appropriate entries for both the lessee and the lessor from the beginning of the lease through the end of 2018.

a. record the beginning of the lease for Nath-Langstrom Services (Jan 1, 2018)

b. record the lease payment and interest expense for Nath-Langstrom Services (Jun 30. 2018)

c. record the amortization expense for Nath-Langstrom Services. (Jun 30, 2018)

d. record the lease payment and interest expense for Nath-Langstrom Services.(Dec 31, 2018)

e. record the amortization expense for Nath-Langstrom Services. (Dec 31)

f. record the lease revenue received by ComputerWorld Leasing (Jun 30. 2018

g. record the Depreciation expense for ComputerWorld Leasing. (Jun 30, 2018)

h. record the lease revenue received by ComputerWorld Leasing. (dec 31, 2018)

i. record the Depreciation expense for ComputerWorld Leasing. (Dec 31, 2018)

I was given wrong answer last time I asked. So please can someone help me ):

On January 4, 2018, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $2.00 per share on December 15, 2018, and Lavery reported net income of $160 million for the year ended December 31, 2018. The market value of Lavery's common stock at December 31, 2018, was $31 per share. On the purchase date, the book value of Lavery's net assets was $800 million and:

The fair value of Lavery's depreciable assets, with an average remaining useful life of six years, exceeded their book value by $80 million.

The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.

Required:
1-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, and accounts for the Lavery investment in a manner similar to what it would use for securities for which there is not significant influence.
1-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.
2-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, but uses equity method accounting to account for Lavery’s income and dividends, and then records a fair value adjustment at the end of the year that allows it to comply with GAAP.
2-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.

1. Dr. Godwin decides to open a real estate company which he names, Comfort Realty, Inc. The following transactions were made over the period:

1. On September 1, 2018, Dr. Godwin invested $15,000 cash in the business
2. On September 3, 2018, Comfort Realty purchases computer equipment for $7,000 cash.
3. On September 4, 2018, Comfort realty purchases for $1,600 from ACME supply company computer paper and other supplies exacted to last several months. ACME agrees to allow Comfort Realty to pay this bill in October
4. On September 10, 2018, Comfort realty receives $1,200 cash from customers for rental services it has provided
5. September 11, 2018, Comfort realty receives a bill for $250 from the daily News for advertising but postpones payment until a later date
6. September 12, 2018, Comfort realty provides $3,500 real estate services for customers. The company receives cash of $1,500 from customers, and it bills the balance of $2,000 on account
7. September 23, 2018, Comfort realty pays its $250 Daily News bill in cash
8. September 28, Comfort realty receives $600 in cash from customers who had been billed for services (item vi)
9. September 29, 2018, Dr. Godwin withdrawals $1,300 in cash from the business for a friend.
10. On September 30, 2018, Comfort Realty pays the following expenses in cash for September: store rent $600, salaries of employees $900, and utilities $200

            As the accountant of the company, you have been asked to do the following:

1. Prepare a summary of transaction. You are to show their effects on the three components of the basic balance sheet accounting equation and specific items within each component
2. Present the income statement, owners’ equity statement, and the balance sheet for the month ended September 30, 2018

Talbot Riding Stables provides stables, care for animals, and grounds for riding and showing horses. The account balances at the beginning of 2018 were:

Problem Set B Enlarge Image During 2018, the following transactions occurred: Talbot provided animal care services, all on credit, for $210,300. Talbot rented stables to customers for $20,500 cash. Talbot rented its grounds to individual riders, groups, and show organizations for $41,800 cash.

There remains $15,600 of accounts receivable to be collected at December 31, 2018.

Feed in the amount of $62,900 was purchased on credit and debited to the supplies account.

Straw was purchased for $7,400 cash and debited to the supplies account.

Wages payable at the beginning of 2018 were paid early in 2018. Wages were earned and paid during 2018 in the amount of $112,000.

The income tax payable at the beginning of 2018 was paid early in 2018. Payments of $73,000 were made to creditors for supplies previously purchased on credit. One year's interest at 9% was paid on the notes payable on July 1, 2018. During 2018, Jon Talbot, a principal shareholder, purchased a horse for his wife, Jennifer, to ride. The horse cost $7,000, and Talbot used his personal credit to purchase it. Property taxes were paid on the land and buildings in the amount of $17,000. Dividends were declared and paid in the amount of $7,200. The following data are available for adjusting entries: Supplies (feed and straw) in the amount of $30,400 remained unused at year-end. Annual depreciation on the buildings is $6,000. Annual depreciation on the equipment is $5,500. Wages of $4,000 were unrecorded and unpaid at year-end. Interest for six months at 9% per year on the note is unpaid and unrecorded at year-end. Income taxes of $16,500 were unpaid and unrecorded at year-end.