On December 31, 2017, Berclair Inc. had 400 million shares of common stock and 6 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 30 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Five million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $650 million.

Required:

Compute Berclair's earnings per share for the year ended December 31, 2018. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Problem 4 (Allocation of Cash Dividends to Preference and Ordinary Shareholders)

The Company has the same capital structure (except for retained earnings) for the past five year, see details below:

6% Preference Share Capital, 80,000 shares issued and outstanding, P 50 par                       P4,000,000

Ordinary Share Capital, 200,000 shares issued and outstanding, P 30 par                                     6,000,000

Retained Earnings                                                                                                                                                              5,000,000

No dividends were paid prior to 2020 for two years. On December 10, 2020, the Company declared P 1,500,000 as cash dividends to shareholders of record of December 21, 2020, payable on January 5, 2021.

Requirements:

1. Prepare all the necessary journal entries to record the dividend transactions.
2. Allocate the dividends between ordinary shareholders and preference shareholders if:

                  Case A. Preference share capital is NON-CUMULATIVE and NON-PARTICIPATING

                  Case B. Preference share capital is CUMULATIVE and NON-PARTICIPATING

                  Case C. Preference share capital is NON-CUMULATIVE and FULLY PARTICIPATING

                  Case D. Preference share capital is NON-CUMULATIVE and PARTICIPATING UP TO ADDITIONAL 5%

3. Assuming the dividend declared is P 1,000,000 what will be the allocation of dividends if in case the preference share is CUMULATIVE and FULLY PARTICIPATING

On June 30, 2018, the Esquire Company sold some merchandise to a customer for $56,000. In payment, Esquire agreed to accept a 8% note requiring the payment of interest and principal on March 31, 2019. The 8% rate is appropriate in this situation.
  
Required:
1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2018 interest accrual, and the March 31, 2019 collection.

Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2018 interest accrual, and the March 31, 2019 collection. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record the sale of merchandise.

Record the interest accrual.

Record the cash collection.
2. If the December 31 adjusting entry for the interest accrual is not prepared, by how much will income before income taxes be over-or understated in 2018 and 2019?

If the December 31 adjusting entry for the interest accrual is not prepared, by how much will income before income taxes be over-or understated in 2018 and 2019?

Axel Heckman is the engagement partner for the financial report audit of Sturfolks Equipment Ltd for the year ended 30 June 2018. The following material events or transactions have come to Axel’s attention beforeheisscheduledto issuehisreporton31August 2018:
(a) On 14 July 2018, Sturfolks Equipment settled and paid a personal injury claim of a former employee as a result of an accident that occurred in March 2017. The company has not previously recorded a liabilityfortheclaim. (b)On 17 July 2018, Sturfolks Equipment agreed to purchase for cash the outstanding shares of Recreational Equipment Ltd. This acquisition is likely to double the sales volume of Sturfolks Equipment. (c)On 20 July 2018, the directors became aware of broken glass found in their pre-packaged sandpits. This product had only been on sale for two weeks and had been purchased directly from the manufacturer, NSWPIT Ltd, an unrelated company in Thailand, one week prior to being introduced to the public.
Tutorial Question 3
(d) On 3 August 2018, a plant owned by Sturfolks Equipment was damaged in a flood, resulting in an uninsuredlossofinventory.
Required: For each of the above events or transactions, identify audit procedures that should have brought the item to the auditor’s attention, and determinethe treatmentrequiredinthe financial report fortheyearended30June2018.

Nash Company began operations on January 1, 2018, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2021. The following information is available for the years 2018–2020. Net Income Computed Using Average-Cost Method FIFO Method LIFO Method

2018 $15,980 $19,140 $12,070

2019 18,090 21,090 14,040

2020 20,130 24,990 16,940

(a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2021. Account Titles and Explanation Debit Credit Enter an account title Enter a debit amount Enter a credit amount Enter an account title Enter a debit amount Enter a credit amount

(b) Determine net income to be reported for 2018, 2019, and 2020, after giving effect to the change in accounting principle. Net Income 2018 $Enter a dollar amount 2019 $Enter a dollar amount 2020 $Enter a dollar amount

(c) Assume Nash Company used the LIFO method instead of the average cost method during the years 2018–2020. In 2021, Nash changed to the FIFO method. Prepare the journal entry necessary to record the change in principle.

Suppose Michigan State University's Collegiate Employment Institute found that starting salaries for recipients of bachelor's degrees in business was $50,032 in 2017. The results for a sample of 100 business majors receiving a bachelor's degree in 2018 showed a mean starting salary of $51,285 with a sample standard deviation of $5,200. Conduct a hypothesis test to determine whether the mean starting salary for business majors in 2018 is greater than the mean starting salary in 2017. Use

α = 0.01

as the level of significance.

State the null and alternative hypotheses. (Enter != for ≠ as needed.)

H₀:

H_a:

Find the value of the test statistic. (Round your answer to three decimal places.)

Find the p-value. (Round your answer to four decimal places.)

p-value =

State your conclusion.

Reject H₀. There is sufficient evidence to conclude that the mean starting salary for business majors has increased in 2018.Do not reject H₀. There is insufficient evidence to conclude that the mean starting salary for business majors has increased in 2018.     Do not reject H₀. There is sufficient evidence to conclude that the mean starting salary for business majors has increased in 2018.Reject H₀. There is insufficient evidence to conclude that the mean starting salary for business majors has increased in 2018.

The following facts relate to gift cards sold by Sunbru Coffee Company during 2018. Sunbru’s fiscal year ends on December 31.

(a.) In October 2018, sold $3,500 of gift cards, and redeemed $550 of those gift cards.

(b.) In November 2018, sold $4,500 of gift cards, and redeemed $1,450 of October gift cards and $750 of November gift cards.

(c.) In December 2018, sold $3,500 of gift cards, and redeemed $250 of October gift cards, $2,500 of November gift cards, and $450 of December gift cards.

(d.) Sunbru views a gift card to be “broken” (with a remote probability of redemption) two months after the end of the month in which it is sold. Thus, an unredeemed gift card sold at any time during July would be viewed as broken as of September 30.

Required:
1. Prepare all journal entries appropriate to be recorded only during the month of December 2018 relevant to gift card sales, gift card redemptions, and gift card breakage.
2. Determine the balance of the deferred revenue liability to be reported in the December 31, 2018, balance sheet. Prepare the relevant T-account information to support your answer.

The following information was disclosed during the audit of Elbert Inc.

Question: Prepare the journal entry to record income taxes for 2018.