Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2018, 200 shares of preferred stock and 3,600 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2018:

March 1 Issue 1,000 shares of common stock for $38 per share.

May 15 Purchase 600 shares of treasury stock for $31 per share.

July 10 Reissue 100 shares of treasury stock purchased on May 15 for $36 per share.

October 15 Issue 100 shares of preferred stock for $41 per share.

December 1 Declare a cash dividend on both common and preferred stock of $0.70 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.)

December 31 Pay the cash dividends declared on December 1.

Donnie Hilfiger has the following beginning balances in its stockholders’ equity accounts on January 1, 2018: Preferred Stock, $200; Common Stock, $36; Additional Paid-in Capital, $72,000; and Retained Earnings, $28,500. Net income for the year ended December 31, 2018, is $10,400.

Taking into consideration the beginning balances on January 1, 2018 and all the transactions during 2018, respond to the following for Donnie Hilfiger:

1. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)

2. Prepare the statement of stockholders’ equity for the year ended December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)

As of January 1, 2018, Room Designs, Inc. had a balance of $4,800 in Cash, $2,650 in Common Stock, and $2,150 in Retained Earnings. These were the only accounts with balances in the ledger on January 1, 2018. Further analysis of the company’s cash account indicated that during the 2018 accounting period, the company had (1) net cash inflow from operating activities of $5,250, (2) net cash outflow for investing activities of $13,300, and (3) net cash inflow from financing activities of $10,300. All revenue and expense events were cash events. The following accounts and balances represent the general ledger of Room Designs, Inc. as of December 31, 2018, before closing.

Required

a. Assume that the net cash inflow from financing activities of $10,300 was caused by three events. Based on the information above, identify these events and determine the cash flow associated with each event.

b. What did the company purchase that resulted in the cash outflow from investing activities?

c-1. Prepare an income statement for the year ended December 31, 2018.

c-2. Prepare a statement of changes in stockholders’ equity for the year ended December 31, 2018.

c-3. Prepare a balance sheet as of December 31, 2018.

c-4. Prepare a statement of cash flows for the year ended December 31, 2018.

The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys equity securities as investments. None of Ornamental’s investments are large enough to exert significant influence on the investee. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017.

Required:
1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end.
2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments.

Question text

Inventory Costing Methods—Perpetual Method

Chou Sales Corporation uses the perpetual inventory system. On January 1, 2018, Chen had 1,000 units of product A with a unit cost of $20 per unit. A summary of purchases and sales during 2018 follows:

Required
a. Assume that Chou uses the first-in, first-out method. Compute the cost of goods sold for 2018 and the ending inventory balance at December 31, 2018, for product A.

b. Assume that Chou uses the last-in, first-out method. Compute the cost of goods sold for 2018 and the ending inventory balance at December 31, 2018, for product A.

c. Assume that Chou uses the weighted-average cost method. Compute the cost of goods sold for 2018 and the ending inventory balance at December 31, 2018, for product A. Do not round until your final answers. Round to the nearest dollar.

Benson Manufacturing Company was started on January 1, 2018, when it acquired $81,000 cash by issuing common stock. Benson immediately purchased office furniture and manufacturing equipment costing $7,000 and $34,400, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $3,600 salvage value and an expected useful life of four years. The company paid $11,100 for salaries of administrative personnel and $15,700 for wages to production personnel. Finally, the company paid $7,800 for raw materials that were used to make inventory. All inventory was started and completed during the year. Benson completed production on 4,000 units of product and sold 3,050 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

1. 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.)

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

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

4. Determine the amount of net income that would appear on the 2018 income statement. (Round your answer to the nearest dollar amount.)

5. Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet. (Round your answer to the nearest dollar amount.)

6. Determine the amount of total assets that would appear on the December 31, 2018, balance sheet. (Round your answer to the nearest dollar amount.)

Lacy Construction has a noncontributory, defined benefit pension plan. At December 31, 2018, Lacy received the following information:

The expected long-term rate of return on plan assets was 10%. There were no AOCI balances related to pensions on January 1, 2018. At the end of 2018, Lacy amended the pension formula creating a prior service cost of $34 million.

Required:
1. Determine Lacy's pension expense for 2018.
2. Prepare the journal entry(s) to record Lacy’s pension expense, gains or losses, prior service cost, funding, and payment of retiree benefits for 2018

Determine Lacy's pension expense for 2018.

Prepare the journal entry(s) to record Lacy’s pension expense, gains or losses, prior service cost, funding, and payment of retiree benefits for 2018. (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).)

1. Record the pension expense.

2. Record the gain or loss on plan assets.

3. Record the prior service cost.

4. Record the funding.

5. Record the payment of benefits.

Long-term Contracts

Koolman Construction Company began work on a contract in 2017. The contract price is $3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows:

Required:

1. Compute the gross profit or loss recognized in 2017 and 2018.

2. Prepare the appropriate sections of the income statement for each year.

Prepare the appropriate sections of the ending balance sheet for the year 2017.

Prepare the appropriate sections of the ending balance sheet for 2018.

Long-term Contracts

Koolman Construction Company began work on a contract in 2017. The contract price is $3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows:

2017 2018
Costs incurred during the year $ 600,000 $ 700,000
Estimated costs to complete, December 31 $1,400,000 $1,200,000
Billings during the year $500,000 $850,000
Collections during the year $400,000 $800,000

Required:

1. Compute the gross profit or loss recognized in 2017 and 2018.

KOOLMAN CONSTRUCTION COMPANY
Gross Profit / Loss
2017 and 2018
                                                             2017           2018         
Construction costs incurred to date $_______ $ _______
Estimated costs to complete $ ________ $ ________
Total estimated costs $ _________ $ __________
Percentage completed %_________ %________
Revenue to date $_________ $ __________
Revenue recognized in current year $_______ $ _________
Costs incurred in current year __________    __________
Profit (loss) recognized $________ $ _________

2. Prepare the appropriate sections of the income statement for each year.

KOOLMAN CONSTRUCTION COMPANY
Partial Income Statement
For the Years Ended December 31, 2017 and 2018
                                        2017                     2018
Construction revenue $ ________ $_____________
Construction expense __________    ____________
Gross profit (loss) $___________    $____________

Prepare the appropriate sections of the ending balance sheet for the year 2017.

KOOLMAN CONSTRUCTION COMPANY
Partial Balance Sheet
December 31, 2017
Current Assets:

Accounts receivable: $__________
Inventory:

Construction in progress $___________
Less: Partial billings    $_____________
Costs and recognized profit not yet billed   $__________

Prepare the appropriate sections of the ending balance sheet for 2018.

KOOLMAN CONSTRUCTION COMPANY
Partial Balance Sheet
December 31, 2018
Current Assets:
Accounts receivable: $________________
Inventory:
Construction in progress $____________
Less: Partial billings _________________
Costs and recognized profit not yet billed ______________

Baird Manufacturing Company was started on January 1, 2018, when it acquired $81,000 cash by issuing common stock. Baird immediately purchased office furniture and manufacturing equipment costing $9,800 and $24,900, respectively. The office furniture had an 8-year useful life and a zero salvage value. The manufacturing equipment had a $3,300 salvage value and an expected useful life of three years. The company paid $11,500 for salaries of administrative personnel and $15,800 for wages to production personnel. Finally, the company paid $16,360 for raw materials that were used to make inventory. All inventory was started and completed during the year. Baird completed production on 4,800 units of product and sold 3,880 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. a. total product cost? average cost per unit? b. cost of good sold? c. ending inventory? d. net income? e. retained earning? f. total asset?

On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,625,400 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $2,060,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $252,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $608,125 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger.

During the two years following the acquisition, Sellinger reported the following net income and dividends:

Show Palka’s journal entry to record its January 1, 2018, acquisition of an additional 25 percent ownership of Sellinger Company shares.

Prepare a schedule showing Palka’s December 31, 2018, equity method balance for its Investment in Sellinger account.

A. Record the acquisition of an additional 25 percent ownership of Sellinger Company shares on January 01, 2018

B.  Prepare a schedule showing Palka’s December 31, 2018, equity method balance for its Investment in Sellinger account. (Amounts to be deducted should be indicated with a minus sign.)

Initial Value for Acuqisition

Adjusted subsidiary net income 2017

Subsidiary dividends 2017

Adjusted fair value of newly acquired shares

Adjusted subsidiary 2018 net income

Subsidiary dividends 2018

Investment in Sellinger 12/13/18