Teal Company offers an MP3 download (seven-single medley) as a premium for every 5 candy bar wrappers presented by customers together with $2.90. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each download code to the company is $2.65. In addition, it costs 50 cents to distribute each code. The results of the premium plan for the years 2017 and 2018 are as follows. (All purchases and sales are for cash.)

Prepare the journal entries that should be made in 2017 and 2018 to record the transactions related to the premium plan of the Teal Company. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 1,525.)

Indicate the amounts for each accounts, and classifications of the items related to the premium plan that would appear on the balance sheet and the income statement at the end of 2017 and 2018.

On January 1, 2018, P acquired all of S's outstanding stock for $680,000 cash. At the date of acquisition, copyrights (with a 10-year remaining life) have a $450,000 book value but a fair value of $550,000. P company uses the equity method to account for its investment in S. Investment income is not included in P's Revenues.

Required:

a. As of December 31, 2018, what is the investment in S balance?

b. As of December 31, 2018, what is the consolidated copyright balance?

c. As of December 31, 2018, what is the consolidated Royalty Agreements balance?

d. As of December 31, 2018, what is the consolidated balance for goodwill?

e. For the year ending December 31, 2018, what is the consolidated net income?

roblem 5-3A Record transactions related to accounts receivable (LO5-3, 5-5) [The following information applies to the questions displayed below.] The following events occur for The Underwood Corporation during 2018 and 2019, its first two years of operations. June 12, 2018 Provide services to customers on account for $41,000. September 17, 2018 Receive $25,000 from customers on account. December 31, 2018 Estimate that 45% of accounts receivable at the end of the year will not be received. March 4, 2019 Provide services to customers on account for $56,000. May 20, 2019 Receive $10,000 from customers for services provided in 2018. July 2, 2019 Write off the remaining amounts owed from services provided in 2018. October 19, 2019 Receive $45,000 from customers for services provided in 2019. December 31, 2019 Estimate that 45% of accounts receivable at the end of the year will not be received. References Section BreakProblem 5-3A Record transactions related to accounts receivable (LO5-3, 5-5) 11.value: 0.27 pointsRequired information Problem 5-3A Part 1 Required: 1. Record transactions for each date

You are engaged to audit the Ferrick Corporation for the year ended December 31, 2018. Only merchandise shipped by the Ferrick Corporation to customers up to and including December 30, 2018, has been eliminated from inventory. The inventory as determined by physical inventory count has been recorded on the books by the company’s controller. No perpetual inventory records are maintained. All sales are made on an FOB–shipping point basis. You are to assume that all purchase invoices have been correctly recorded.

The following lists of sales invoices are entered in the sales journal for the months of December 2018 and January 2019, respectively.

Required:

Prepare necessary adjusting entries for the following events.

a. Record the adjusting entry for goods shipped on December 31,included in the physical inventory at the end of last fiscal year.

b. Record the sale of merchandise for sales invoice dated December 31, 2018 goods being shipped on December 13, 2018.

c. Record the sale of merchandise on December 29, 2018 goods being shipped on December 30, 2018.

d. Record the reversal of sale for sales invoice dated December 31, 2018 goods being shipped on January 9, 2018.

e. Record the shipment of merchandise to the consignee.

f. Record the sale of merchandise for sales invoice dated December 31, 2019 goods being shipped on December 30, 2019.

g. Record the sale of merchandise for sales invoice dated January 2, 2019 goods being shipped on January 2, 2019.

h. Record the sale of merchandise for sales invoice dated January 3, 2019 goods being shipped on December 31, 2019.

Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $440,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $615,000 and the fair value of the 20 percent noncontrolling interest was $110,000. No excess fair value over book value amortization accompanied the acquisition.

The following selected account balances are from the individual financial records of these two companies as of December 31, 2018:

Each of the following problems is an independent situation:

a. Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $99,000 in 2017 and $119,000 in 2018. Of this inventory, Seacraft retained and then sold $37,000 of the 2017 transfers in 2018 and held $51,000 of the 2018 transfers until 2019.
Determine balances for the following items that would appear on consolidated financial statements for 2018:

b. Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra-entity transfers were $59,000 in 2017 and $89,000 in 2018. Of this inventory, $30,000 of the 2017 transfers were retained and then sold by Protrade in 2018, whereas $44,000 of the 2018 transfers were held until 2019.
Determine balances for the following items that would appear on consolidated financial statements for 2018:

c. Protrade sells Seacraft a building on January 1, 2017, for $98,000, although its book value was only $59,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value.

Determine balances for the following items that would appear on consolidated financial statements for 2018:

a.Cost of goods sold: ?

Inventory: ?

Net income attributable to noncontrolling interest: ?

b.Cost of goods sold: ?

Inventory: ?

Net income attributable to noncontrolling interest: ?

c.Buildings (net): ?

Operating expenses: ?

Net income attributable to noncontrolling interest: ?

Questions 3–9 of the Self-Study Questions are based on the following data:

HYDRO COMPANY

Balance Sheet

December 31, 2018

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,000 Current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . $ 80,000

Accounts receivable (net). . . . . . . . . . . . 80,000 10% bonds payable . . . . . . . . . . . . . . . . . . . . . . 120,000

Inventory. . . . . . . . . . . . . . . . . . . . . . . . . 130,000 Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000

Plant and equipment (net) . . . . . . . . . . . 250,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 100,000

Total assets . . . . . . . . . . . . . . . . . . . . . . $500,000 Total liabilities and stockholders’ equity . . . . . . . $500,000

Sales revenues for 2018 were $800,000, gross profit was $320,000, and net income was $36,000. The income

tax rate was 40 percent. One year ago, accounts receivable (net) were $76,000, inventory was $110,000, total

assets were $460,000, and stockholders’ equity was $260,000. The bonds payable were outstanding all year and

the 2018 interest expense was $12,000.

3. The current ratio of Hydro Company at December 31, 2018, calculated using the above data, was

3.13 and the company’s working capital was $170,000. Which of the following would happen if the

firm paid off $20,000 of its current liabilities on January 1, 2019?

a. Both the current ratio and working capital would decrease.

b. Both the current ratio and working capital would increase.

c. The current ratio would increase, but working capital would remain the same.

d. The current ratio would increase, but working capital would decrease.

4. What was the firm’s inventory turnover for 2018?

a. 6.67 c. 6

b. 4 d. 3.69

5. What was the firm’s return on common stockholders’ equity for 2018?

a. 25.7 percent c. 17.1 percent

b. 12.9 percent d. 21.4 percent

6. What was the firm’s average collection period for 2018?

a. 36.5 days c. 35.6 days

b. 37.4 days d. 18.3 days

7. What was the firm’s times-interest-earned ratio for 2018?

a. 4 c. 5

b. 3 d. 6

8. What was the firm’s return on sales for 2018?

a. 4.0 percent c. 5.0 percent

b. 4.5 percent d. 5.5 percent

9. What was the firm’s return on assets for 2018?

a. 6.0 percent c. 7.5 percent

b. 7.0 percent d. 8.0 percent

Diaz Company issued $82,000 face value of bonds on January 1, 2018. The bonds had a 7 percent stated rate of interest and a ten-year term. Interest is paid in cash annually, beginning December 31, 2018. The bonds were issued at 96. The straight-line method is used for amortization.

Required

1. Use a financial statements model like the one shown below to demonstrate how (1) the January 1, 2018, bond issue and (2) the December 31, 2018, recognition of interest expense, including the amortization of the discount and the cash payment, affect the company’s financial statements.

2. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, 2018.

3. Determine the amount of interest expense reported on the 2018 income statement.

4. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, 2019.

5. Determine the amount of interest expense reported on the 2019 income statement.

Use a financial statements model like the one shown below to demonstrate how (1) the January 1, 2018, bond issue and (2) the December 31, 2018, recognition of interest expense, including the amortization of the discount and the cash payment, affect the company’s financial statements. (Use + for increase, − for decrease, and NA for not affected. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA) and if there is no effect, leave the cell blank.)

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Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, 2018.
Determine the amount of interest expense reported on the 2018 income statement.
Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, 2019.
Determine the amount of interest expense reported on the 2019 income statement.

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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 2,800 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 $30 per share.

May 15 Purchase 600 shares of treasury stock for $23 per share.

July 10 Reissue 100 shares of treasury stock purchased on May 15 for $28 per share.

October 15 Issue 100 shares of preferred stock for $33 per share.

December 1 Declare a cash dividend on both common and preferred stock of $0.85 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, $28; Additional Paid-in Capital, $64,000; and Retained Earnings, $24,500. Net income for the year ended December 31, 2018, is $9,600.

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

Required:

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.)

Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $420,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $715,000 and the fair value of the 30 percent noncontrolling interest was $180,000. No excess fair value over book value amortization accompanied the acquisition. The following selected account balances are from the individual financial records of these two companies as of December 31, 2018: Protrade Seacraft Sales $ 830,000 $ 550,000 Cost of goods sold 385,000 292,000 Operating expenses 169,000 124,000 Retained earnings, 1/1/18 930,000 370,000 Inventory 365,000 129,000 Buildings (net) 377,000 176,000 Investment income Not given 0 Each of the following problems is an independent situation: a.Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $109,000 in 2017 and $129,000 in 2018. Of this inventory, Seacraft retained and then sold $47,000 of the 2017 transfers in 2018 and held $61,000 of the 2018 transfers until 2019. Determine balances for the following items that would appear on consolidated financial statements for 2018: b.Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra-entity transfers were $69,000 in 2017 and $99,000 in 2018. Of this inventory, $40,000 of the 2017 transfers were retained and then sold by Protrade in 2018, whereas $54,000 of the 2018 transfers were held until 2019. Determine balances for the following items that would appear on consolidated financial statements for 2018: c.Protrade sells Seacraft a building on January 1, 2017, for $118,000, although its book value was only $69,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value. Determine balances for the following items that would appear on consolidated financial statements for 2018:

Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $367,500 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $565,000 and the fair value of the 30 percent noncontrolling interest was $157,500. No excess fair value over book value amortization accompanied the acquisition.

The following selected account balances are from the individual financial records of these two companies as of December 31, 2018:

Each of the following problems is an independent situation:

(A) Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $94,000 in 2017 and $114,000 in 2018. Of this inventory, Seacraft retained and then sold $32,000 of the 2017 transfers in 2018 and held $46,000 of the 2018 transfers until 2019. Determine balances for the following items that would appear on consolidated financial statements for 2018:

(B) Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra-entity transfers were $54,000 in 2017 and $84,000 in 2018. Of this inventory, $25,000 of the 2017 transfers were retained and then sold by Protrade in 2018, whereas $39,000 of the 2018 transfers were held until 2019. Determine balances for the following items that would appear on consolidated financial statements for 2018:

(C) Protrade sells Seacraft a building on January 1, 2017, for $88,000, although its book value was only $54,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value. Determine balances for the following items that would appear on consolidated financial statements for 2018: