QS 12-19 Indirect: Preparing statement of cash flows LO P1, P2, P3

Additional Information

1. No dividends are declared or paid in 2018.
2. Issued additional stock for $14,700 cash in 2018.
3. Purchased equipment for cash in 2018; no equipment was sold in 2018.

1. Use the above financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2018, using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)
  

Bill is single and has the following information for 2018. What is his AGI after considering all of this information?

• Bill is an executive and has $400,000 of salary income.

• Bill owns 100% of Holtz, Inc. Holtz is a C corporation with $2,000,000 of taxable income for 2018. Bill receives a $75,000 cash dividend.

• Bill owns 100% of Wallace Enterprises. Wallace is an S corporation. Bill does not materially participate in the S corporation. His basis in the stock is $70,000 before considering any of the 2018 transactions. Wallace Enterprises reports the following information for 2018:

  Ordinary loss from business activities	$ (35,000)
  Municipal bond interest income	10,000
  Cash distribution paid by Wallace to Bill	12,000

• Bill owns an interest in Master, LLC, in which he materially participates. The LLC has a loss for 2018, and his share of the LLC’s loss is ($40,000). His basis in the partnership before the loss is $90,000. In addition, the partnership distributes $20,000 to Bill in 2018.

• Bill also owns a limited partnership interest in Kearns Ltd. His basis in the partnership interest is $80,000 before considering any of the 2018 transactions. Bill’s K‑1 shows that his share of the partnership items for 2018 is as follows:

1. Heron, Inc. is a company that re-sells one product, a lawn chair. A contractor makes the product exclusively for Heron, so Heron has no manufacturing costs. Henron sells each chair for $10 per unit, but plans to raise the sales price to $11.00 per unit beginning May 1, 2018 2. The estimated sales (in units) are as follows: Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 12,000 13,000 9,000 10,000 13,000 15,000 18,000 18,000 17,000 3. They expect that 60% of any month’s sales are for cash, and the remaining 40% are on credit. Of the credit sales, they expect to collect 20% in the month of the sale, 70% in the following month, and 10% in the month after that. 4. The firm’s policy regarding inventory is to stock (i.e. have in ending inventory) 30% of the estimated sales for the next month. 5. Each lawn chair costs Henron $6. They plan to pay for 30% of the inventory purchases in the month of purchase, and pay the remaining 70% the following month (i.e. all of the previous month’s Accounts Payable are paid off by the end of any month.)

On January 1, 2018, Oriole Corp. had 459,000 shares of common stock outstanding. During 2018, it had the following transactions that affected the Common Stock account.

Campbell Manufacturing Company was started on January 1, 2018, when it acquired $89,000 cash by issuing common stock. Campbell immediately purchased office furniture and manufacturing equipment costing $7,700 and $26,500, respectively. The office furniture had an 8-year useful life and a zero salvage value. The manufacturing equipment had a $4,000 salvage value and an expected useful life of three years. The company paid $11,600 for salaries of administrative personnel and $15,100 for wages to production personnel. Finally, the company paid $14,300 for raw materials that were used to make inventory. All inventory was started and completed during the year. Campbell completed production on 4,500 units of product and sold 3,550 units at a price of $15 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)

Required

Determine the total product cost and the average cost per unit of the inventory produced in 2018. (Round "Average cost per unit" to 2 decimal places.)

Determine the amount of cost of goods sold that would appear on the 2018 income statement. (Do not round intermediate calculations.)

Determine the amount of the ending inventory balance that would appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations.)

Determine the amount of net income that would appear on the 2018 income statement.

Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet.

Determine the amount of total assets that would appear on the December 31, 2018, balance sheet.

On January 1, 2018, Sweet Corp. had 472,000 shares of common stock outstanding. During 2018, it had the following transactions that affected the Common Stock account.

February 1 Issued 125,000 shares

March 1 Issued a 10% stock dividend

May 1 Acquired 100,000 shares of treasury stock

June 1 Issued a 3-for-1 stock split

October 1 Reissued 63,000 shares of treasury stock

( A ) Determine the weighted-average number of shares outstanding as of December 31, 2018.

The weighted-average number of shares outstanding ___________________________???

( B) Assume that Sweet Corp. earned net income of $3,568,000 during 2018. In addition, it had 101,000 shares of 9%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2018. Compute earnings per share for 2018, using the weighted-average number of shares determined in part (a). (Round answer to 2 decimal places, e.g. $2.55.)

Earnings per share $__________________????

( C) Assume the same facts as in part (b), except that the preferred stock was cumulative. Compute earnings per share for 2018. (Round answer to 2 decimal places, e.g. $2.55.)

Exercise 4-8 Discontinued operations; disposal in subsequent year [LO4-4]

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been unprofitable, and on November 15, 2018, Kandon adopted a formal plan to sell the division. The sale was completed on April 30, 2019. At December 31, 2018, the component was considered held for sale.

On December 31, 2018, the company’s fiscal year-end, the book value of the assets of the horse division was $272,000. On that date, the fair value of the assets, less costs to sell, was $220,000. The before-tax loss from operations of the division for the year was $160,000. The company’s effective tax rate is 40%. The after-tax income from continuing operations for 2018 was $420,000.

Required:

1. Prepare a partial income statement for 2018 beginning with income from continuing operations. Ignore EPS disclosures.

2. Prepare a partial income statement for 2018 beginning with income from continuing operations. Assuming that the estimated net fair value of the horse division’s assets was $440,000, instead of $220,000. Ignore EPS disclosures.

Problem 19-8 Net loss; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; discontinued operations [LO19-5, 19-6, 19-7, 19-13]

On December 31, 2017, Ainsworth, Inc., had 660 million shares of common stock outstanding. Twenty one million shares of 9%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April 30, 2018, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2018. No cash dividends were declared in 2018. For the year ended December 31, 2018, Ainsworth reported a net loss of $145 million, including an after-tax loss from discontinued operations of $410 million.

Required:
1. Compute Ainsworth's net loss per share for the year ended December 31, 2018.
2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2018.
3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2018 and 2017 comparative income statements. Assume EPS was reported in 2017 as $0.70, based on net income (no discontinued operations) of $462 million and a weighted-average number of common shares of 660 million.

Walton Manufacturing Company was started on January 1, 2018, when it acquired $85,000 cash by issuing common stock. Walton immediately purchased office furniture and manufacturing equipment costing $9,100 and $26,400, respectively. The office furniture had an 8-year useful life and a zero salvage value. The manufacturing equipment had a $3,000 salvage value and an expected useful life of three years. The company paid $11,800 for salaries of administrative personnel and $15,900 for wages to production personnel. Finally, the company paid $7,050 for raw materials that were used to make inventory. All inventory was started and completed during the year. Walton completed production on 4,100 units of product and sold 3,100 units at a price of $14 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)

Required

Determine the total product cost and the average cost per unit of the inventory produced in 2018. (Round "Average cost per unit" to 2 decimal places.)

Determine the amount of cost of goods sold that would appear on the 2018 income statement. (Do not round intermediate calculations.)

Determine the amount of the ending inventory balance that would appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations.)

Determine the amount of net income that would appear on the 2018 income statement.

Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet.

Determine the amount of total assets that would appear on the December 31, 2018, balance sheet.

QS 12-19 Indirect: Preparing statement of cash flows LO P1, P2, P3

Additional Information

1. No dividends are declared or paid in 2018.
2. Issued additional stock for $9,400 cash in 2018.
3. Purchased equipment for cash in 2018; no equipment was sold in 2018.

1. Use the above financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2018, using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)