Suppose that on Jan 6, 2018, Excel Motors paid $240,000,000 for its 45% investment in Dynamic Motors. Excel has significant influence over Dynamic after the purchase. Assume Dynamic earned net income of $10,000,000 and paid cash dividens of $15,000,000 to all outstanding stockholders during 2018.

What method should Excel Motors use to account for the investment in Dynamic Motors? Give your reasoning.

Excel Motors should use the (available for sale, consolidation, equity, held-to-maturity) method to account for its investment in Dynamic Motors.

Journalize the following:

Excel motors paid $240,000,000 for its 45% investment in Dynamic Motors

Dynamic paid cash dividens of $15,000,000 to all outstanding shareholders during 2018

Dynamic earned net income of $10,000,000 during 2018

Post all 2018 transactions to the investment T-account. What is its balance after all the transactions are posted? ow would this balance be classified on the balance sheet dated Dec 21, 2018?

The cash flow to creditors for 2018 is ______ while the cash flow to stockholders for 2018 is _____.
A. -$640; $705
B. -$175; $255
C. $175; $255
D. $175; $450
E. $640; $450

Explain the whole process, please!

During the course of your examination of the financial statements of the Hales Corporation for the year ended December 31, 2018, you discover the following: a. An insurance policy covering three years was purchased on January 1, 2018, for $6,600. The entire amount was debited to insurance expense and no adjusting entry was recorded for this item. b. During 2018, the company received a $850 cash advance from a customer for merchandise to be manufactured and shipped in 2019. The $850 was credited to sales revenue. No entry was recorded for the cost of merchandise. c. There were no supplies listed in the balance sheet under assets. However, you discover that supplies costing $900 were on hand at December 31. d. Hales borrowed $25,000 from a local bank on October 1, 2018. Principal and interest at 12% will be paid on September 30, 2019. No accrual was recorded for interest. e. Net income reported in the 2018 income statement is $40,000 before reflecting any of the above items.    Required: Determine the proper amount of net income for 2018.

Colah Company purchased $1.8 million of Jackson, Inc., 8% bonds at par on July 1, 2018, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2018, the Jackson bonds had a fair value of $2.08 million. Colah sold the Jackson bonds on July 1, 2019 for $1,620,000.

The purchase of the Jackson bonds on July 1.

Interest revenue for the last half of 2018.

Any year-end 2018 adjusting entries.

Interest revenue for the first half of 2019.

Any entries necessary upon sale of the Jackson bonds on July 1, 2019, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.

Required:
1. Prepare Colah’s journal entries for above transaction.
2. Fill out the following table to show the effect of the Jackson bonds on Colah’s net income, other comprehensive income, and comprehensive income for 2018, 2019, and cumulatively over 2018 and 2019.

Eye Deal Optometry leased vision-testing equipment from Insight Machines on January 1, 2018. Insight Machines manufactured the equipment at a cost of $350,000 and lists a cash selling price of $437,810. Appropriate adjusting entries are made quarterly. (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.) Related Information: Lease term 5 years (20 quarterly periods) Quarterly lease payments $26,250 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter. Economic life of asset 5 years Interest rate charged by the lessor 8% Required: 1. Prepare appropriate entries for Eye Deal to record the arrangement at its beginning, January 1, 2018, and on March 31, 2018. 2. Prepare appropriate entries for Insight Machines to record the arrangement at its beginning, January 1, 2018, and on March 31, 2018.

Colah Company purchased $1.9 million of Jackson, Inc., 7% bonds at par on July 1, 2018, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2018, the Jackson bonds had a fair value of $2.19 million. Colah sold the Jackson bonds on July 1, 2019 for $1,710,000. The purchase of the Jackson bonds on July 1. Interest revenue for the last half of 2018. Any year-end 2018 adjusting entries. Interest revenue for the first half of 2019. Any entries necessary upon sale of the Jackson bonds on July 1, 2019, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.

Required: 1. Prepare Colah’s journal entries for above transaction.

2. Fill out the following table to show the effect of the Jackson bonds on Colah’s net income, other comprehensive income, and comprehensive income for 2018, 2019, and cumulatively over 2018 and 2019.

NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2018. NutraLabs manufactured the machine at a cost of $4.75 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $401,337, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2018. NutraLabs’ implicit interest rate is 12%.

1. Determine the price at which NutraLabs is “selling” the equipment (present value of the lease payments) at September 30, 2018.
2. What pretax amounts related to the lease would NutraLabs report in its balance sheet at December 31, 2018?
3. What pretax amounts related to the lease would NutraLabs report in its income statement for the year ended December 31, 2018?
4. What pretax amounts related to the lease would NutraLabs report in its statement of cash flows for the year ended December 31, 2018?

Exercise 22-11

Bridgeport Co. purchased a equipment on January 1, 2015, for $511,500. At that time, it was estimated that the equipment would have a 10-year life and no salvage value. On December 31, 2018, the firm’s accountant found that the entry for depreciation expense had been omitted in 2016. In addition, management has informed the accountant that the company plans to switch to straight-line depreciation, starting with the year 2018. At present, the company uses the sum-of-the-years’-digits method for depreciating equipment.

Prepare the general journal entries that should be made at December 31, 2018, to record these events. (Ignore tax effects.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Diaz Company issued $101,000 face value of bonds on January 1, 2018. The bonds had a 8 percent stated rate of interest and a ten-year term. Interest is paid in cash annually, beginning December 31, 2018. The bonds were issued at 99. The straight-line method is used for amortization.

Required

1. Use a financial statements model like the one shown below to demonstrate how (1) the January 1, 2018, bond issue and (2) the December 31, 2018, recognition of interest expense, including the amortization of the discount and the cash payment, affect the company’s financial statements.

2. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, 2018.

3. Determine the amount of interest expense reported on the 2018 income statement.

4. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, 2019.

5. Determine the amount of interest expense reported on the 2019 income statement.

For each of the two companies, analyse their ability to successfully manage each of their categories of expenses in 2019 as compared to 2018. Use three profit margin ratios to support your answer and explain any change in the ability of each company to control costs. Note: ensure that you analyse in this question, not just describe the ratio values. (300 words)