Pacific Healthcare is an investor-owned hospital chain that owns and operates nine hospitals in Washington, Oregon, and Northern California. You are a recent graduate of a prominent healthcare administration program and have just been hired by Washington Medical Center, Pacific’s largest hospital. Like all new management personnel, you must undergo three months of intensive training at the system level before joining the hospital. You begin by examining Pacific’s annual report to get some basic financial data. You search Yahoo! Finance, CNNMoney, Bloomberg, and MSN Money for current market data as well as analysts’ forecasts for Pacific Healthcare and the market. You discover that Pacific’s stock is currently selling for $8 per share, current dividend is $0.48 per share (paid on December 31, 2019), and the beta coefficient is 1.2. In addition, you learn that the yield on long-term Treasury bonds is 5.0 percent and that a market return of 11 percent is expected. Most analysts forecast that Pacific will grow about 10 percent per year for the next five years (2020-2024) and 4 percent per year thereafter (2025 and beyond). Based on these growth forecasts, you assembled the forecast dividends per share, as shown in the below exhibit. -

Historical Year/Dividends per share 2014/$0.215; 2015/$0.324; 2016/$0.353; 2017/$0.362; 2018/$0.391; 2019/$0.480

Forecast Year/Dividend per Share 2020/$0.528; 2021/$0.581; 2022/$0.639; 2023/$0.703; 2024/$0.773; 2025/$0.804; 2026/$0.836

Excel Problem (Answers to highlighted cells): If investors estimate that Pacific Healthcare will grow about 10 percent per year for the next five years (2020-2024), what constant growth rate (2025+) are they using to price the stock? (Hint: what constant growth rate (2025+) produces an actual December 31, 2019 stock price of $8?)

In January 2019, Miller Construction Corp. contracted to construct a building for $3,600,000. Construction started in early 2019 and was completed in 2020. The following additional information is available:

                                                                                          2019               2020

       Costs incurred...................................................... $1,458,000          $1,620,000

       Estimated costs to complete.................................. 1,560,000                         —

       Billed ……………………………………………….    1,700,000           1,900,000

       Collections during the year.................................... 1,440,000            2,160,000

Miller uses the percentage-of-completion method.

Instructions

Under the contract-based approach for percentage completion,

a) How much revenue should Miller report for 2019 and 2020?

b) Prepare all journal entries for 2019 and 2020 for this contract.

c)    What amounts would be presented on Miller’s December 31, 2019 Balance Sheet?

d)    What is the gross profit on the project for each of 2019 and 2020?

Pronghorn Company’s net income for 2020 is $53,200. The only potentially dilutive securities outstanding were 1,000 options issued during 2019, each exercisable for one share at $6. None has been exercised, and 10,700 shares of common were outstanding during 2020. The average market price of Pronghorn’s stock during 2020 was $25.

(a) Compute diluted earnings per share. (Round answer to 2 decimal places, e.g. $2.55.)

(b) Assume the same facts as those assumed for part (a), except that the 1,000 options were issued on October 1, 2020 (rather than in 2019). The average market price during the last 3 months of 2020 was $25. (Round answer to 2 decimal places, e.g. $2.55.)

On April 1, 2020, Mendoza Company (a U.S.-based company) borrowed 504,000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its first interest payment on the loan on October 1, 2020, and will make a second interest payment on March 31, 2021, when the loan is repaid. Mendoza prepares U.S. dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 euro:

The DeVille Company reported pretax accounting income on its income statement as follows:

   
Included in the income of 2018 was an installment sale of property in the amount of $62,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $24,800 in 2019, $31,000 in 2020, and $6,200 in 2021.

Included in the 2020 income was $26,000 interest from investments in municipal bonds.

The enacted tax rate for 2018 and 2019 was 30%, but during 2019 new tax legislation was passed reducing the tax rate to 25% for the years 2020 and beyond.

Required:
Prepare the year-end journal entries to record income taxes for the years 2018, 2019,  2020 , 2021.

Assume that ACW Corporation has 2020 taxable income of $1,540,000 for purposes of computing the §179 expense. The company acquired the following assets during 2020 (assume no bonus depreciation): (Use MACRS Table 1, Table 2, and Table 5).

1. What is the maximum amount of §179 expense ACW may deduct for 2020?
2. What is the maximum total depreciation that ACW may deduct in 2020 on the assets it placed in service in 2020? (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Greek Tavern Co was established on July 1, 2020 by a cash investment of $100,000. The following is the Trial Balance prepared on September 30, 2020.

During the three month period, the following activities occurred: 1. The physical checkup revealed that $4,000 worth of supplies is still on hand on September 30. 2. The annual depreciation of office equipment is $15,000. The equipment were purchased on August 1, 2020. 3. The unearned revenue was created on September 1, 2020 by an advance payment from a major customer for services extending over the period August 1 till December 31, 2020. 4. The loan was borrowed on July 1, 2020 for 5 years from BOND Bank. The bank charges 9% interest. 5. The firm pays its 5 employees a weekly salary of $6250. The policy is that it pays every Monday of the week for the previous 5 days' work, Monday through Friday. September 30, 2020 is a Tuesday. Last time the firm paid salary was on Monday September 29, 2020 for the week from 22 till 25. 6. Rogelio paid $50,000 cash on July 1, 2020 for 2 years' office rent.

Rogelio Legal Advisory firm follows the fiscal year extending from July 1 till September 30 and adjust Quarterly.

A. Journalize all the necessary adjusting entries on September 30, 2020 showing all the calculations.

B. Compute the Net Income.

KLM Company purchased a Mixer Machine on January 2, 2008, for $14,500. The Mixer was expected to have a useful life of five (5) years and a residual value of $1,000. The company engineers estimated that the Mixer would have a useful life of 7,500 hours. It was used 1,500 hours in 2008, 2625 hours in 2009, 2250 hours in 2010, 750 hours in 2011, and 375 hours in 2012. KLM Company's year end is December 31. Required: 1. Compute the depreciation expense and carrying value for 2008 to 2012, using the following methods: (a) Straight-Line, (b) Production, (c) Double-Declining-Balance. 2. Prepare the adjusting entry to record the depreciation for 2008 that you that you calculated in 1(a), 1(b), and 1(c). (Three separate independent entries.) 3. Show Accumulated Depreciation Account (in T Account form) using all three (3) methods mentioned in 2 from 2008 to 2012. (Three separate independent accounts.) 4. Show the Balance Sheet presentation for the Mixer Machine after the entries in 2, under all three methods, on December 31, 2008. (Three separate independent presentations.) 5. Show the Balance Sheet presentation for the Mixer Machine after the entries in 2, under all three methods, on December 31, 2012. (Three separate independent presentations.) 6. What conclusions can you draw from the patterns of yearly depreciation?

KLM Company purchased a Mixer Machine on January 2, 2008, for $14,500. The Mixer was expected to have a useful life of five (5) years and a residual value of $1,000. The company engineers estimated that the Mixer would have a useful life of 7,500 hours. It was used 1,500 hours in 2008, 2625 hours in 2009, 2250 hours in 2010, 750 hours in 2011, and 375 hours in 2012. KLM Company's year end is December 31. Required:

1. Compute the depreciation expense and carrying value for 2008 to 2012, using the following methods: (a) Straight-Line, (b) Production, (c) Double-Declining-Balance.

2. Prepare the adjusting entry to record the depreciation for 2008 that you that you calculated in 1(a), 1(b), and 1(c). (Three separate independent entries.)

3. Show Accumulated Depreciation Account (in T Account form) using all three (3) methods mentioned in 2 from 2008 to 2012. (Three separate independent accounts.)

4. Show the Balance Sheet presentation for the Mixer Machine after the entries in 2, under all three methods, on December 31, 2008. (Three separate independent presentations.)

5. Show the Balance Sheet presentation for the Mixer Machine after the entries in 2, under all three methods, on December 31, 2012. (Three separate independent presentations.)

6. What conclusions can you draw from the patterns of yearly depreciation?