Alpha Company acquired 40% interest in an associate, VV Company, for P2,500,000 on January 1, 2019. At the acquisition date, there were no differences between fair value and carrying amount of identifiable assets and liabilities. VV reported net income of P1,000,000 for 2019 and P1,500,000 for 2020. Also, VV paid cash dividend of P400,000 and P500,000 for 2019 and 2020, respectively. The following additional events occurred during 2019 and 2020:
• On January 1, 2019, VV sold an equipment costing P250,000 to HH Company for P400,000. The remaining useful life of the equipment is 10 years.
• On December 2019, VV sold inventory to HH Company for P450,000. The cost of the inventory was P300,000. This inventory remained unsold by HH Company on December 31, 2019.
• On July 1, 2020, VV sold a vehicle for P450,000 to HH Company. The carrying amount of the vehicle is P250,000 at the time of sale. The remaining life of the vehicle is 5 years.
• On December 2020, HH sold the inventory from VV Company.
a) Determine the investor’s share in profit for 2019. __________________________
b) Determine the investor’s share in profit for 2020. __________________________
c) Determine the carrying amount of the investment in associate on December 31, 2019. __________________________
d) Determine the carrying amount of the investment in associate on December 31, 2020. __________________________
In: Accounting
A company reported the following accounts in its unadjusted trial balance at December 31, 2020: Dividends ................... $ 14,000 Income Tax Expense .......... $ 25,000 Salaries Expense ............ $ 31,000 Rental Revenue .............. $ 33,000 Cash ........................ $ 36,000 Supplies .................... $ 37,000 Cost of Goods Sold .......... $ 52,000 Unearned Revenue ............ $ 54,000 Accounts Receivable ......... $ 57,000 Land ........................ $ 69,000 Accounts Payable ............ $ 76,000 Trademark ................... $ 88,000 Inventory ................... $ 91,000 Retained Earnings ........... $ 95,000 (at January 1, 2020)Sales Revenue ............... $119,000 Common Stock ................ $123,000 The Company needs to record adjusting entries at December 31, 2020 related to the following three items: 1) A utility bill totaling $16,000 was received in late December. The Company expects to pay the bill in January, 2021. 2) A physical count revealed that supplies costing $15,000 were still on hand as of December 31, 2020. 3) The unearned revenue relates to a $54,000 payment received on July 1, 2020. The payment was from a customer who paid the company for services to be provided each month for 18 months, beginning on July 1, 2020. Calculate Company's total liabilities at December 31, 2020 afterthe appropriate adjusting entries have been recorded and posted.
In: Accounting
At December 31, 2020, the investments in the portfolio of the trading securities of Mac Company included the following:
Atlanta Corp. bonds, 5%, $100,000 face value, purchased on Oct. 1, 2020 at par
Dallas Inc. bonds, 4%, $50,000 face value, purchased on July 1, 2020 at par
Required:
Assume INSTEAD that the above bonds are held as available-for-sale investments. if we assume the bonds are AFS Securities, not Trading Securities. if the accounting for the transaction should change, write the complete corrected journal entry.
In: Accounting
In your audit of Chris Anderson Company, you find that a
physical inventory on December 31, 2020, showed merchandise with a
cost of $439,750 was on hand at that date. You also discover the
following items were all excluded from the $439,750.
| 1. | Merchandise of $63,260 which is held by Anderson on consignment. The consignor is the Max Suzuki Company. | |
| 2. | Merchandise costing $34,870 which was shipped by Anderson f.o.b. destination to a customer on December 31, 2020. The customer was expected to receive the merchandise on January 6, 2021. | |
| 3. | Merchandise costing $44,590 which was shipped by Anderson f.o.b. shipping point to a customer on December 29, 2020. The customer was scheduled to receive the merchandise on January 2, 2021. | |
| 4. | Merchandise costing $76,380 shipped by a vendor f.o.b. destination on December 30, 2020, and received by Anderson on January 4, 2021. | |
| 5. | Merchandise costing $54,450 shipped by a vendor f.o.b. shipping point on December 31, 2020, and received by Anderson on January 5, 2021. |
Based on the above information, calculate the amount that should
appear on Anderson’s balance sheet at December 31, 2020, for
inventory.
| Inventory as on December 31, 2020 | $enter a dollar amount of the Inventory as on December 31, 2017 |
In: Accounting
Presented here are summarized data from the balance sheets and income statements of Wiper Inc.:
| WIPER INC. | |||||||||
| Condensed Balance Sheets | |||||||||
| December 31, 2020, 2019, 2018 | |||||||||
| (in millions) | |||||||||
| 2020 | 2019 | 2018 | |||||||
| Current assets | $ | 798 | $ | 1,031 | $ | 893 | |||
| Other assets | 2,429 | 1,936 | 1,735 | ||||||
| Total assets | $ | 3,227 | $ | 2,967 | $ | 2,628 | |||
| Current liabilities | $ | 593 | $ | 846 | $ | 748 | |||
| Long-term liabilities | 1,611 | 1,079 | 946 | ||||||
| Stockholders’ equity | 1,023 | 1,042 | 934 | ||||||
| Total liabilities and stockholders' equity | $ | 3,227 | $ | 2,967 | $ | 2,628 | |||
| WIPER INC. | ||||||
| Selected Income Statement and Other Data | ||||||
| For the year Ended December 31, 2020 and 2019 | ||||||
| (in millions) | ||||||
| 2020 | 2019 | |||||
| Income statement data: | ||||||
| Sales | $ | 3,066 | $ | 2,929 | ||
| Operating income | 312 | 326 | ||||
| Interest expense | 100 | 81 | ||||
| Net income | 239 | 234 | ||||
| Other data: | ||||||
| Average number of common shares outstanding | 42.9 | 48.3 | ||||
| Total dividends paid | $ | 66.0 | $ | 53.9 | ||
Required:
In: Accounting
The purchasing and supply department needs to forecast the number of tubes of adhesive being ordered. The data for several months is supplied below. Be careful since the data is listed beginning with the most recent. The forecasting method to be used here is exponential smoothing accounting for seasonality with a smoothing constant of 0.35 and a previous forecast (with seasonality) of 635. Please round your forecast to the nearest whole number.
| Jul 2020: 588 | Jun 2020: 508 | May 2020: 689 | Apr 2020: 500 | Mar 2020: 689 | Feb 2020: 540 |
| Jan 2020: 568 | Dec 2019: 680 | Nov 2019: 695 | Oct 2019: 565 | Sep 2019: 680 | Aug 2019: 514 |
| Jul 2019: 696 | Jun 2019: 516 | May 2019: 629 | Apr 2019: 671 | Mar 2019: 686 | Feb 2019: 506 |
| Jan 2019: 589 | Dec 2018: 555 | Nov 2018: 605 | Oct 2018: 538 | Sep 2018: 607 | Aug 2018: 540 |
| Jul 2018: 650 | Jun 2018: 599 | May 2018: 528 | Apr 2018: 681 | Mar 2018: 679 | Feb 2018: 535 |
| Jan 2018: 587 | Dec 2017: 566 |
In: Statistics and Probability
Review the following information pertaining to Denzel Company.
Note: When answering the following questions, do not round until your final answer. Round your final answer to the nearest whole number.
Required
a. What is the carrying value of intangible assets on December 31, 2020? Assume no impairment losses were recognized in prior periods.
$Answer
b. What is amortization expense for 2020?
$Answer
In: Accounting
On January 1, 2020, Lawrence Co. began construction of
a building to be used as its office headquarters. The building is
expected to be completed on December 31, 2020. Expenditures on this
project during 2020 were as follows:
January 1st $
160,000
March
1st
420,000
June
1st
270,000
October
31st
165,000
On Jan. 1, 2020, the company obtained a $600,000 specific
construction loan with a 7% interest rate. The loan was outstanding
during the entire construction period. The company’s other
interest-bearing debts included two long-term notes of $480,000 and
$900,000 with interest rates of 10% and 11%, respectively. Both
notes were outstanding during the entire construction period.
Instruction:
(a) Determine the amount of interest capitalized for 2020. Please
show your work (i.e. the weighted average accumulated expenditure,
the actual interest, the weighted average interest rate, and the
avoidable interest) to support your final answer. Please round the
WA interest rate to four decimal places when
necessary.
Answer: The amount of interest
capitalized for 2020
is
.
(b) Regardless your answer in (a), determine the amount of
avoidable interest for 2020 assuming that the weighted average
accumulated expenditure is $534,000 (other things being
equal).
In: Accounting
The Eserine Wood Corporation manufactures desks. Most of the company’s desks are standard models that are sold at catalogue prices. At December 31, 2020, the following finished desks appear in the company’s inventory:
| Finished Desks | Type A | Type B | Type C | Type D | |||||||||
| 2020 catalogue selling price | $460 | $490 | $890 | $1,040 | |||||||||
| FIFO cost per inventory list, Dec. 31, 2020 | 410 | 450 | 830 | 960 | |||||||||
| Estimated current cost to manufacture (at Dec. 31, 2020, and early 2021) |
460 | 440 | 790 | 1,000 | |||||||||
| Sales commissions and estimated other costs of disposal | 40 | 65 | 95 | 130 | |||||||||
| 2021 catalogue selling price | 575 | 650 | 780 | 1,420 | |||||||||
| Quantity on hand | 15 | 117 | 113 | 110 | |||||||||
The 2020 catalogue was in effect through November 2020, and the
2021 catalogue is effective as of December 1, 2020. All catalogue
prices are net of the usual discounts. Generally, the company tries
to obtain a 20% gross margin on the selling price and it has
usually been successful in achieving this.
a) Explain the rationale for using the lower of cost and net realizable rule for inventories.
b) Explain the impact if inventory was valued at lower of cost and net realizable value on a total basis.
In: Accounting
David Wong, the product manager of KiKi Company, was reviewing the production schedule for the last quarter of 2020. He noted that the company planned to sell 4,000 units during the year and keep a minimum closing inventory level at 100 units on 31 December 2020. As at 30 September 2020, the following data was reported.
Units
Inventory, 1 January 2020 0
Production 3,000
Sales 2,700
Inventory, 30 September 2020 300
At the beginning of the year, the company rented a warehouse that could store its inventory up to 1,250 units. The company had a maximum production capacity of 2,300 units per quarter.
Required:
(a) Assume that KiKi Company adopted marginal costing,
(i) what is the minimum units that the company should produce
during the last quarter of 2020?
(ii) will the number of units produced affect the company’s profit or loss for the year? Explain.
(b) Assume that the company adopted absorption costing and David was given an annual bonus based on the company’s reported profit. If David wanted to maximize his bonus in 2020, how many units would he produce? Explain.
(c) Advise the management of the company on the costing method that should be chosen to determine David’s bonus?
In: Accounting