LCD Industries purchased a supply of electronic components from Entel Corporation on November 1, 2018. In payment for the $25.7 million purchase, LCD issued a 1-year installment note to be paid in equal monthly payments at the end of each month. The payments include interest at the rate of 12%. (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. & 2. Prepare the journal entry for LCD’s purchase of the components on November 1, 2018 and the first installment payment on November 30, 2018.
- Record the purchase of the components.
- Record the first installment payment.
3. What is the amount of interest expense that LCD will report in its income statement for the year ended December 31, 2018?
- 2018 Interest Expense: ________
In: Accounting
On January 1, 2018, Whittington Stoves issued $820 million of its 6% bonds for $756 million. The bonds were priced to yield 8%. Interest is payable semiannually on June 30 and December 31. Whittington records interest at the effective rate and elected the option to report these bonds at their fair value. One million dollars of the increase in fair value was due to a change in the general (risk-free) rate of interest. On December 31, 2018, the fair value of the bonds was $772 million as determined by their market value on the NYSE.
Required: 1. Prepare the journal entry to record interest on June 30, 2018 (the first interest payment).
2. Prepare the journal entry to record interest on December 31, 2018 (the second interest payment).
3. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2018, balance sheet.
In: Accounting
Abbott and Abbott has a noncontributory, defined benefit pension
plan. At December 31, 2018, Abbott and Abbott received the
following information:
| Projected Benefit Obligation | ($ in millions) | ||||
| Balance, January 1 | $ | 160 | |||
| Service cost | 24 | ||||
| Interest cost | 16 | ||||
| Benefits paid | (11 | ) | |||
| Balance, December 31 | $ | 189 | |||
| Plan Assets | |||||
| Balance, January 1 | $ | 80 | |||
| Actual return on plan assets | 11 | ||||
| Contributions 2018 | 24 | ||||
| Benefits paid | (11 | ) | |||
| Balance, December 31 | $ | 104 | |||
The expected long-term rate of return on plan assets was 10%. There
was no prior service cost and a negligible net loss–AOCI on January
1, 2018.
Required:
1. Determine Abbott and Abbott’s pension expense
for 2018.
2. Prepare the journal entries to record Abbott
and Abbott’s pension expense, funding, and payment for 2018.
In: Accounting
Problem 17-6 Determine the PBO; plan assets; pension expense; two years [LO17-3, 17-4, 17-6]
Stanley-Morgan Industries adopted a defined benefit pension plan
on April 12, 2018. The provisions of the plan were not made
retroactive to prior years. A local bank, engaged as trustee for
the plan assets, expects plan assets to earn a 10% rate of return.
A consulting firm, engaged as actuary, recommends 6% as the
appropriate discount rate. The service cost is $250,000 for 2018
and $360,000 for 2019. Year-end funding is $260,000 for 2018 and
$270,000 for 2019. No assumptions or estimates were revised during
2018.
Required:
Calculate each of the following amounts as of both December 31, 2018, and December 31, 2019: (Enter your answers in thousands (i.e., 200,000 should be entered as 200).)
In: Accounting
WILL RATE.
The records for Bosch Co. show this data for 2018:
| ● | Gross profit on installment sales recorded on the books was $480,000. Gross profit from collections of installment receivables was $320,000. | |
| ● | Life insurance on officers was $3,800. | |
| ● | Machinery was acquired in January for $300,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Bosch may deduct 14% for 2018. | |
| ● | Interest received on tax exempt Iowa State bonds was $9,000. | |
| ● | The estimated warranty liability related to 2018 sales was $21,600. Repair costs under warranties during 2018 were $13,600. The remainder will be incurred in 2019. | |
| ● |
Pretax financial income is $700,000. The tax rate is 30%. Prepare a schedule starting with pretax financial income and compute taxable income. Prepare the journal entry to record income taxes for 2018. |
In: Accounting
The Prince-Robbins partnership has the following capital account balances on January 1, 2018: Prince, Capital $ 170,000 Robbins, Capital 160,000 Prince is allocated 70 percent of all profits and losses with the remaining 30 percent assigned to Robbins after interest of 10 percent is given to each partner based on beginning capital balances. On January 2, 2018, Jeffrey invests $97,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 10 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50 percent), Robbins (30 percent), and Jeffrey (20 percent). In 2018, the partnership reports a net income of $45,000. Prepare the journal entry to record Jeffrey’s entrance into the partnership on January 2, 2018 . Determine the allocation of income at the end of 2018.
In: Accounting
On January 1, 2018, Whittington Stoves issued $810 million of its 10% bonds for $746 million. The bonds were priced to yield 12%. Interest is payable semiannually on June 30 and December 31. Whittington records interest at the effective rate and elected the option to report these bonds at their fair value. One million dollars of the increase in fair value was due to a change in the general (risk-free) rate of interest. On December 31, 2018, the fair value of the bonds was $762 million as determined by their market value on the NYSE.
Required:
1. Prepare the journal entry to record interest on June 30, 2018
(the first interest payment).
2. Prepare the journal entry to record interest on December 31,
2018 (the second interest payment).
3. Prepare the journal entry to adjust the bonds to their fair
value for presentation in the December 31, 2018, balance sheet.
In: Accounting
The following selected account balances were taken from ABC Company's accounting records during 2018: January 1, 2018 December 31, 2018 Inventory 69,000 35,000 Accounts payable 47,000 41,000 Long-term notes payable 165,000 130,000 Income tax payable 11,000 7,000 Investments 89,000 68,000 Accounts receivable 77,000 84,000 Land 60,000 89,000 Common stock 100,000 175,000 Retained earnings 26,000 41,000 The following information was taken from ABC Company's 2018 income statement: Sales revenue $422,000 Cost of goods sold 361,000 Gain on sale of investments 11,000 Income tax expense 22,000 Net income $ 50,000 Calculate the net cash flow from financing activities for 2018. If your answer is negative, place a minus sign in front of your answer (e.g., -1234).
In: Accounting
In 2018, Borland Semiconductors entered into the transactions described below. In 2015, Borland had issued 175 million shares of its $1 par common stock at $30 per share.
Required: Assuming that Borland retires shares it reacquires, record the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
On January 2, 2018, Borland reacquired 9 million shares at $28.00 per share.
On March 3, 2018, Borland reacquired 9 million shares at $33 per share.
On August 13, 2018, Borland sold 1 million shares at $38 per share.
On December 15, 2018, Borland sold 2 million shares at $33 per share.
In: Accounting
Hall Corp. purchases a new machine on October 1, 2018. Year end is December 31.
Purchase price 100,000
Residual Value 5,000
Useful life 3 years
Estimated working hours during useful life 7,500
Machine usage in 2018 1,500
Machine usage in 2019 3,750
Machine usage in 2020 2,250
1. Calculate depreciation expense using the activity method for 2018
2. Prepare Hall Corp's journal entry to record 2018 depreciation on December 31, 2018
3. Calculate depreciation expense using the activity method for 2019
4. Prepare Hall Corp's journal entry to record 2019 depreciation on December 31, 2019
5. Calculate depreciation expense using the activity method for 2020
6. Prepare Hall's journal entry to record 2020 depreciation on December 31, 2020
In: Accounting