Do you agree with the High Court's ruling in Sons of Gwalia Ltd v Margaretic (2007) 231 CLR 160 which provides greater protection to shareholders rights? Ordo you prefer the recent amendments to the Corporations Act as provided by the Corporations Amendment (Sons of Gwalia) Act 2010 (Cth)?
In: Accounting
Short Answer - MORAKE
Must Include Supporting Documentation in File Upload portion of
exam. Please label page as "Morake."
The following stockholders' equity section was taken from the books of Morake & Berg, Inc on January 1, 2020.
| Common Stock, $9 par value, 500,000 shares authorized, 300,000 shares issued and outstanding | 2,700,000 |
| Additional paid in capital in excess of par - Common | 1,200,000 |
| Additional paid in capital from Treasury Stock transactions | 0 |
| Additional paid in capital - retired stock | 0 |
| Retained earnings | 1,800,000 |
| Total Stockholders' Equity | 5,700,000 |
| The following transactions occurred in 2020: |
| a) On January 3, 2020, Morake & Berg issued 10,000 new shares of its $9 par value common stock for $20 per share. The company paid the underwriter $7,000 in issue costs. |
| b) On February 5, 2020, Morake & Berg repurchased 50,000 of its shares at a purchase price of $17 per share. |
| c) On April 1, 2020, Morake & Berg reissued 15,000 of its treasury shares at a price of $15 per share. |
| d) On August 1, 2020, Morake & Berg opted to retire 8,000 of the treasury shares. |
| e) On December 31, 2020, Morake & Berg declared a net profit for the year of $1,500,000. |
| f) On December 31, 2020, Morake & Berg declared dividends
of $400,000 to be paid on January 25, 2021. (Note, you are not required to calculate total number shares outstanding since total dollar amount of dividend is given.) |
REQUIRED:
Based on the information above, please answer the following
questions as of December 31, 2020. Your supporting documentation
should clearly show how you arrived at the answers you provide
below given (a) through (f) above. You may opt to show your work
using journal entries, T-accounts, or a clear calculation of what
is increasing/decreasing each account.
1. What is the 12/31/2020 balance of Additional Paid-in-Capital for
Common Stock?
2. What is the 12/31/2020 balance of Treasury Stock?
3. What is the 12/31/2020 balance of Retained Earnings?
In: Accounting
A comparative statement of financial position for Ayayai
Corporation follows:
| AYAYAI CORPORATION Statement of Financial Position |
||||||
| December 31 | ||||||
| Assets | 2020 | 2019 | ||||
| Cash | $48,100 | $21,460 | ||||
| Accounts receivable | 64,380 | 43,660 | ||||
| Inventory | 98,420 | 59,940 | ||||
| FV-OCI investments in shares | 46,620 | 62,160 | ||||
| Land | 48,100 | 76,220 | ||||
| Equipment | 288,600 | 318,200 | ||||
| Accumulated depreciation—equipment | (86,580 | ) | (63,640 | ) | ||
| Goodwill | 91,760 | 128,020 | ||||
| Total | $599,400 | $646,020 | ||||
| Liabilities and Shareholders’ Equity | ||||||
| Accounts payable | $8,880 | $37,740 | ||||
| Dividends payable | 11,100 | 23,680 | ||||
| Notes payable | 162,800 | 247,900 | ||||
| Common shares | 196,100 | 92,500 | ||||
| Retained earnings | 213,120 | 210,160 | ||||
| Accumulated other comprehensive income | 7,400 | 34,040 | ||||
| Total | $599,400 | $646,020 | ||||
Additional information:
| 1. | Net income for the fiscal year ending December 31, 2020, was $14,060. | |
| 2. | In March 2020, a plot of land was purchased for future construction of a plant site. In November 2020, a different plot of land with original cost of $63,640 was sold for proceeds of $70,300. | |
| 3. | In April 2020, notes payable amounting to $103,600 were retired through the issuance of common shares. In December 2020, notes payable amounting to $18,500 were issued for cash. | |
| 4. | FV-OCI investments were purchased in July 2020 for a cost of $11,100. By December 31, 2020, the fair value of Ayayai’s portfolio of FV—OCI investments decreased to $46,620. No FV—OCI investments were sold in the year. | |
| 5. | On December 31, 2020, equipment with an original cost of $29,600 and accumulated depreciation to date of $8,880 was sold for proceeds of $15,540. No equipment was purchased in the year. | |
| 6. | Dividends on common shares of $23,680 and $11,100 were declared in December 2019 and December 2020, respectively. The 2019 dividend was paid in January 2020 and the 2020 dividend was paid in January 2021. Dividends paid are treated as financing activities. | |
| 7. | A loss on impairment was recorded in the year to reflect a decrease in the recoverable amount of goodwill. No goodwill was purchased or sold in the year. |
(a)
Prepare a statement of cash flows using the indirect method for
cash flows from operating activities. (Show amounts
that decrease cash flow with either a - sign e.g. -15,000 or in
parenthesis e.g. (15,000).)
In: Accounting
P5.11 A comparative statement of financial position for Spencer Corporation follows:
Spencer Corporation
Statement of Financial Position
December 31
Assets
2020
2019
Cash
$ 65,000
$ 29,000
Accounts receivable
87,000
59,000
Inventory
133,000
81,000
FV-OCI investments in shares
63,000
84,000
Land
65,000
103,000
Equipment
390,000
430,000
Accumulated depreciation—equipment
(117,000)
(86,000)
Goodwill
124,000
173,000
Total
$810,000
$873,000
Liabilities and Shareholders' Equity
Accounts payable
$ 12,000
$ 51,000
Dividends payable
15,000
32,000
Notes payable
220,000
335,000
Common shares
265,000
125,000
Retained earnings
288,000
284,000
Accumulated other comprehensive income
10,000
46,000
Total
$810,000
$873,000
Additional information:
1. Net income for the fiscal year ending December 31, 2020, was
$19,000.
2. In March 2020, a plot of land was purchased for future
construction of a plant site. In November 2020, a different plot of
land with original cost of $86,000 was sold for proceeds of
$95,000.
3. In April 2020, notes payable amounting to $140,000 were retired
through the issuance of common shares. In December 2020, notes
payable amounting to $25,000 were issued for cash.
4. FV-OCI investments were purchased in July 2020 for a cost of
$15,000. By December 31, 2020, the fair value of Spencer's
portfolio of FV-OCI investments decreased to $63,000. No FV-OCI
investments were sold in the year.
5. On December 31, 2020, equipment with an original cost of $40,000
and accumulated depreciation to date of $12,000 was sold for
proceeds of $21,000. No equipment was purchased in the year.
6. Dividends on common shares of $32,000 and $15,000 were declared
in December 2019 and December 2020, respectively. The 2019 dividend
was paid in January 2020 and the 2020 dividend was paid in January
2021. Dividends paid are treated as financing activities.
7. A loss on impairment was recorded in the year to reflect a
decrease in the recoverable amount of goodwill. No goodwill was
purchased or sold in the year.
Instructions
a. Prepare a statement of cash flows using the indirect method for
cash flows from operating activities along with any necessary note
disclosure.
b. From the perspective of a shareholder, comment in general on the results reported in the statement of cash flows.
In: Accounting
A comparative statement of financial position for Whispering
Winds Corporation follows:
|
WHISPERING WINDS CORPORATION Statement of Financial Position |
||||||
| December 31 | ||||||
| Assets | 2020 | 2019 | ||||
| Cash | $74,100 | $33,060 | ||||
| Accounts receivable | 99,180 | 67,260 | ||||
| Inventory | 151,620 | 92,340 | ||||
| FV-OCI investments in shares | 71,820 | 95,760 | ||||
| Land | 74,100 | 117,420 | ||||
| Equipment | 444,600 | 490,200 | ||||
| Accumulated depreciation—equipment | (133,380 | ) | (98,040 | ) | ||
| Goodwill | 141,360 | 197,220 | ||||
| Total | $923,400 | $995,220 | ||||
| Liabilities and Shareholders’ Equity | ||||||
| Accounts payable | $13,680 | $58,140 | ||||
| Dividends payable | 17,100 | 36,480 | ||||
| Notes payable | 250,800 | 381,900 | ||||
| Common shares | 302,100 | 142,500 | ||||
| Retained earnings | 328,320 | 323,760 | ||||
| Accumulated other comprehensive income | 11,400 | 52,440 | ||||
| Total | $923,400 | $995,220 | ||||
Additional information:
| 1. | Net income for the fiscal year ending December 31, 2020, was $21,660. | |
| 2. | In March 2020, a plot of land was purchased for future construction of a plant site. In November 2020, a different plot of land with original cost of $98,040 was sold for proceeds of $108,300. | |
| 3. | In April 2020, notes payable amounting to $159,600 were retired through the issuance of common shares. In December 2020, notes payable amounting to $28,500 were issued for cash. | |
| 4. | FV-OCI investments were purchased in July 2020 for a cost of $17,100. By December 31, 2020, the fair value of Whispering Winds’s portfolio of FV—OCI investments decreased to $71,820. No FV—OCI investments were sold in the year. | |
| 5. | On December 31, 2020, equipment with an original cost of $45,600 and accumulated depreciation to date of $13,680 was sold for proceeds of $23,940. No equipment was purchased in the year. | |
| 6. | Dividends on common shares of $36,480 and $17,100 were declared in December 2019 and December 2020, respectively. The 2019 dividend was paid in January 2020 and the 2020 dividend was paid in January 2021. Dividends paid are treated as financing activities. | |
| 7. | A loss on impairment was recorded in the year to reflect a decrease in the recoverable amount of goodwill. No goodwill was purchased or sold in the year. |
(a)
Prepare a statement of cash flows using the indirect method for
cash flows from operating activities. (Show amounts
that decrease cash flow with either a - sign e.g. -15,000 or in
parenthesis e.g. (15,000).)
In: Accounting
Martinez Inc. has sponsored a noncontributory, defined benefit pension plan for its employees since 1997. Prior to 2020, cumulative net pension expense recognized equaled cumulative contributions to the plan. Other relevant information about the pension plan on January 1, 2020, is as follows.
| 1. | The company has 200 employees. All these employees are expected to receive benefits under the plan. The average remaining service life per employee is 12 years. | |
| 2. | The projected benefit obligation amounted to $4,948,000 and the fair value of pension plan assets was $2,965,000. The market-related asset value was also $2,965,000. Unrecognized prior service cost was $1,983,000. |
On December 31, 2020, the projected benefit obligation and the
accumulated benefit obligation were $4,772,000 and $4,033,000,
respectively. The fair value of the pension plan assets amounted to
$4,129,000 at the end of the year. A 10% settlement rate and a 10%
expected asset return rate were used in the actuarial present value
computations in the pension plan. The present value of benefits
attributed by the pension benefit formula to employee service in
2020 amounted to $199,000. The employer’s contribution to the plan
assets amounted to $759,000 in 2020. This problem assumes no
payment of pension benefits.
Part 1
Prepare a schedule, based on the average remaining life per employee, showing the prior service cost that would be amortized as a component of pension expense for 2020, 2021, and 2022. (Round answers to 0 decimal places, e.g. 2,525.)
| Prior Service Cost Amortization | ||
| 2020 |
$ |
|
| 2021 |
$ |
|
| 2022 |
$ |
|
Compute pension expense for the year 2020. (Round
answers to 0 decimal places, e.g. 2,525.)
| Pension expense |
$ |
Compute the amount of the 2020 increase/decrease in net gains or
losses and the amount to be amortized in 2020 and 2021.
(Round answers to 0 decimal places, e.g.
2,525.)
| Net gain 12/31/20 |
$ |
|
| Amortization in 2020 |
$ |
|
| Amortization in 2021 |
$ |
Prepare the journal entries required to report the accounting for the company’s pension plan for 2020. (Round answers to 0 decimal places, e.g. 2,525. 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.)
|
Account Titles and Explanation |
Debit |
Credit |
In: Accounting
1. Angelo uses the equity method to account for its investment in Fischer on January 1. On the date of acquisition, Fischer’s land and buildings were undervalued on its balance sheet. During the year following the acquisition, how do these excesses of fair values over book values affect Angelo's Equity Income from Fischer?
a. Building, Decrease; Land, No Effect
b. Building, Decrease; Land, Decrease
c. Building, Increase; Land, Increase
d. Building, Increase; Land, No Effect
2. On January 2, 2020, Campbell, Inc. purchased a 20% interest in Renner Corp. for $2,000,000 cash. During 2020, Renner's net income was $2,500,000 and it paid dividends of $750,000.
Equity Investment balance should Campbell report at December 31, 2020?
a. $2,500,000
b. $ 500,000
c. $2,350,000
d. $2,150,000
3. On December 31, 2020, Park Inc. paid $500,000 for all of the common stock of Smith Corp. On that date, Smith had assets and liabilities with book values of $400,000 and $100,000; and fair values of $450,000 and $125,000, respectively.
What amount of goodwill will be reported on the December 31, 2020 balance sheet?
a. $ 50,000
b. $100,000
c. $200,000
d. $175,000
4. Francis, Inc. acquired 40% of Park's voting stock on January 1, 2020 for $420,000. During 2020, Park earned $120,000 and paid dividends of $60,000. During 2021, Park earned $160,000 and paid dividends of $50,000 on April 1 and $40,000 on December 1. On July 1, 2021, Francis sold half of its stock in Park for $275,000 cash.
The Equity Investment balance at December 31, 2020 is:
a. $420,000
b. $444,000
c. $408,000
d. $492,000
5. On January 1, 2020, Cracker Co. purchased 40% of Dallas Corp.'s common stock at book value of net assets. The balance in Cracker's Equity Investment account was $820,000 at December 31, 2020. Dallas reported net income of $500,000 for the year ended December 31, 2020, and paid dividends totaling $150,000 during 2020.
How much did Cracker pay for its 40% interest in Dallas?
a. $680,000
b. $500,000
c. $560,000
d. $760,000
In: Accounting
Show work and solution. Also include correct notation.
At the end of 2016, the average number of businesses per county in Nebraska was 1,640. The businesses benefit from a state unemployment rate that is historically lower than the nation as a whole. Below is a partial list of counties in Nebraska and the respective number of businesses in operation at the end of 2016:
County # of Businesses
Custer 1,126
Sherman 279
Howard 454
Hall 5,085
Adams 2,794
Buffalo 3,992
Kearney 611
Phelps 1,008
Dawson 1,975
a) Compute and interpret the mean.
b) Compute the range.
c) Compute the variance.
d) Compute the standard deviation.
e) Compute the coefficient of variation for the scores.
f) A sample of counties in Nebraska from 2010 provided a sample
mean of 1,331
businesses and a sample standard deviation of 1,151 businesses.
What comparisons can
you make between the number of businesses/county in 2016 and 2010
based on these
descriptive statistics?
In: Statistics and Probability
Sales of roof material, by quarter, for 2010 through 2016, by Carolina Home Construction Inc. are shown below (in $000). Quarter Year I II III IV 2010 69 241 211 220 2011 85 236 249 222 2012 100 284 253 256 2013 117 298 275 268 2014 113 305 309 299 2015 120 311 325 296 2016 130 327 210 183 Click here for the Excel Data File Determine the typical seasonal patterns for sales using the ratio-to-moving-average method. (Round your answers to 4 decimal places.) Deseasonalize the data and determine the trend equation. (Round your answers to 3 decimal places.) Project sales for 2017 using the trend equation and seasonally adjust these values to find the predicted sales for each quarter. (Round your answers to 4 decimal places.)
In: Statistics and Probability
4. The table below presents the historical P/E ratio for Apple Inc. The P/E ratio increased from 2002 to 2003, and then decreased for a few years. a. Please explain how the increase and decrease of P/E ratio reflect investor view about Apple. (2 points) b. The current P/E ratio of Apple is 33.7. If we use the past 10 years average P/E ratio (from 2010-2019) as a benchmark, is Apple currently underpriced, fairly priced or overpriced? Please explain. (3 points)
Year P/E ratio
2002 80.6
2003 109.1
2004 52.4
2005 32.5
2006 32.6
2007 38.0
2008 20.7
2009 20.1
2010 18.4
2011 13.6
2012 14.9
2013 11.9
2014 15.5
2015 11.9
2016 13.5
2017 16.6
2018 18.8
2019 18.2
In: Economics