Computing EPS: Simple Capital Structure
At the end of 2020, the records of Block Corporation reflected the following.
| Common stock, $5 par, authorized 500,000 shares | ||
| Outstanding January 1, 2020, 400,000 shares | $2,000,000 | |
| Sold and issued April 1, 2020, 2,000 shares | 10,000 | |
| Issued 5% stock dividend, September 30, 2020; 20,100 shares | 100,500 | |
| Preferred stock, 6%, $10 par, nonconvertible, noncumulative, authorized 50,000 shares | ||
| Outstanding during year, 20,000 shares | 200,000 | |
| Paid-in capital in excess of par, common stock | 180,000 | |
| Paid-in capital in excess of par, preferred stock | 100,000 | |
| Retained earnings (after the effects of current preferred dividends declared during 2020) | 640,000 | |
| Bonds payable, 6.5%, nonconvertible, issued at par January 1, 2020 | 1,000,000 | |
| Net income | 164,000 | |
| Income tax rate, 25% |
a. What EPS presentation is required—basic, diluted, or both?
|
Basic |
b. Compute the required EPS amount(s).
| Net Income Available to Common Stockholders |
Weighted Avg. Common Shares Outstanding |
Per Share |
|
|---|---|---|---|
| Basic EPS | Answer | Answer | Answer |
c. Compute the required EPS amount(s), assuming that the preferred stock is cumulative.
| Net Income Available to Common Stockholders |
Weighted Avg. Common Shares Outstanding |
Per Share |
|
|---|---|---|---|
| Basic EPS | Answer | Answer | Answer |
In: Accounting
Tan Company acquires a new machine (10-year property) on January 15, 2020, at a cost of $200,000. Tan also acquires another new machine (7-year property) on November 5, 2020, at a cost of $40,000. No election is made to use the straight-line method. The company does not make the § 179 election and elects to not take additional first-year depreciation. Determine the total deductions in calculating taxable income related to the machines for 2020.
a.$102,000
b.$24,000
c.$25,716
d.$132,858
Barry purchased a used business asset (seven-year property) on September 30, 2020, at a cost of $200,000. This is the only asset he purchased during the year. Barry did not elect to expense any of the asset under § 179, did not claim additional first-year depreciation, and did not elect straight-line cost recovery. Barry sold the asset on July 17, 2021. Determine the cost recovery deduction for 2021.
a.$19,133
b.$34,438
c.$55,100
d.$24,490
White Company acquires a new machine (seven-year property) on January 10, 2020, at a cost of $620,000. White makes the election to expense the maximum amount under § 179, and wants to take any additional first-year depreciation allowed. No election is made to use the straight-line method. Determine the total deductions in calculating taxable income related to the machine for 2020, assuming that White reports taxable income of $800,000.
a.$568,574
b.$88,598
c.$620,000
d.$301,159
In: Accounting
On 1/1/2016, California Corporation purchased 75% of the outstanding voting stock of San Diego Corporation for $2,400,000 paid in cash. On the date of the acquisition, San Diego’s shareholders’ equity consisted of the following:
Common stock, $10 par $1,000,000
APIC 600,000
Retained Earnings 800,000
Total SE $2,400,000
The excess fair value of the net assets acquired was assigned 10% to undervalued Inventory (sold in 2016), 40% to undervalued PPE assets with a remaining useful life of 8 years, and 50% to Goodwill.
Comparative trial balances of California Corporation and San Diego Corporation at December 31, 2020, are as follows:
|
California |
San Diego |
|
|
Other assets – net |
3,765,000 |
2,600,000 |
|
Investment in San Diego |
2,340,000 |
- |
|
Expenses (including cost of sales) |
3,185,000 |
600,000 |
|
Dividends |
500,000 |
200,000 |
|
9,790,000 |
3,400,000 |
|
|
Common Stock, $10 par value |
(3,000,000) |
(1,000,000) |
|
APIC |
(850,000) |
(600,000) |
|
Retained earnings |
(1,670,000) |
(800,000) |
|
Sales revenues |
(4,000,000) |
(1,000,000) |
|
Income from San Diego |
(270,000) |
- |
|
(9,790,000) |
(3,400,000) |
Required:
Determine the amounts that would appear in the consolidated financial statements of California Corporation and its subsidiary for each of the following items:
In: Finance
On January 1, 2020, Perfection Company issued $400,000 of 10%, 6-year bonds dated January 1, 2020, with interest payments every June 30 and December 31. The bonds were issued at $382,762 when the market rate was 11%. Perfection Company amortizes any premium or discount using the EFFECTIVE-INTEREST-RATE method. Round all numbers to the nearest whole number.
1-Using proper formatting (eliminating the date), prepare the journal entry on January 1, 2020 to record the issuance of the bonds.
2-Using proper formatting (eliminating the date), prepare the journal entry on June 30, 2020 to record the first interest payment
3-Determine the amount of interest expense that will be recorded on December 31, 2020. Show your work for full credit and clearly label your answer.
4-Determine the amount of total interest expense that Perfection Company will recognize over the life of the bonds if the bonds are not redeemed until maturity. Show your work for full credit and clearly label your answer. ( IS THE ANSWER FOR THIS PART IS THIS
20,000x12= 240,000
+ 17,238= 257,238 OR 17,238 AND WHY )
5. Determine the amount of interest expense Perfection Company would have recorded on June 30, 2020 (first interest payment) if they had used the STRAIGHT-LINE METHOD to amortize any premium or discount, instead of the effective-interest-rate method, as described above. Show your work for full credit and clearly label your answer.
In: Accounting
On December 31, 2020, Petra Company invests $26,000 in Valery, a variable interest entity. In contractual agreements completed on that date, Petra established itself as the primary beneficiary of Valery. Previously, Petra had no equity interest in Valery. Immediately after Petra’s investment, Valery presents the following balance sheet:
| Cash | $ | 26,000 | Long-term debt | $ | 114,000 | |||
| Marketing software | 146,000 | Noncontrolling interest | 78,000 | |||||
| Computer equipment | 46,000 | Petra equity interest | 26,000 | |||||
| Total assets | $ | 218,000 | Total liabilities and equity | $ | 218,000 | |||
Each of the amounts represents an assessed fair value at December 31, 2020, except for the marketing software.
The December 31 business fair value of Valery is assessed at $104,000.
If the carrying amount of the marketing software was undervalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements?
If the carrying amount of the marketing software was overvalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements?
If the carrying amount of the marketing software was undervalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements? (Input all amounts as positive values.)
|
If the carrying amount of the marketing software was overvalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements? (Input all amounts as positive values.)
|
In: Accounting
Financial Statement Analysis
The financial statements of Gelato Corporation show the following information:
Statement of Financial Position
December 31, 2020
Assets 2020 2019
Cash $257,000 $263,000
Accounts receivable 128,000 163,000
Fair value through net income investments 120,000 119,000
Inventory 320,000 361,000
Plant assets (net) 398,000 418,500
Intangible assets 102,000 128,500
Total Assets $1,325,000 $1,453,000
Liabilities and Equity
Accounts payable $240,000 $303,500
Long-term debt 60,000 137,500
Share capital 293,000 293,000
Retained earnings 732,000 719,000
Total Liabilities and equity $1,325,000 $ 1,453,000
Income Statement
Year Ended December 31, 2020
2020 2019
Net sales $725,000 $703,000
Cost of goods sold (474,000) (477,000)
Gross profit 251,000 226,000
Selling and admin expenses (126,000) (100,000)
Other expenses, net (106,000) (99,000)
Income before income tax 19,000 27,000
Income tax (5,400) (8,100)
Net income $13,600 $18,900
REQUIRED: Show all calculations. Round percentages to one decimal place.
A. Using horizontal analysis, analyze Gelato Corporation’s change in liquidity, solvency, and profitability in 2020.
B. Using vertical analysis, analyze Gelato Corporation’s decline in net income in 2020
C. Identify at least two profitability ratios that are obtained from the vertical analysis performed in part (b). Is profitability improving or deteriorating based on these ratios? Briefly explain
In: Finance
Except for the earnings per share statistics, the 2019, 2020,
and 2021 income statements for Ace Group Inc. were originally
presented as follows:
Required:
1. Calculate the 11 missing amounts. (Loss should
be indicated by a minus sign.)
Answer is complete and correct.
|
| Shares outstanding on December 31, 2018 | 38,800 | |||||||||
| Purchase and retirement of shares on March 1, 2019 | − | 4,880 | ||||||||
| Sale of shares on June 1, 2019 | + | 16,480 | ||||||||
| Share dividend of 5% on August 1, 2019 | + | 2,520selected answer correct | ||||||||
| Shares outstanding on December 31, 2019 | 52,920selected answer correct | |||||||||
| Sale of shares on February 1, 2020 | + | 7,760 | ||||||||
| Purchase and retirement of shares on July 1, 2020 | − | 2,440 | ||||||||
| Shares outstanding on December 31, 2020 | 58,240selected answer correct | |||||||||
| Sale of shares on March 1, 2021 | + | 20,560 | ||||||||
| Purchase and retirement of shares on September 1, 2021 | − | 6,600 | ||||||||
| Share split of 3:1 on October 1, 2021 | + | |||||||||
| Shares outstanding on December 31, 2021 | ? | |||||||||
|
2. Calculate the weighted-average number of
common shares outstanding during the following years: (Do
not round intermediate calculations. Round your
answers to nearest whole number.)
|
In: Accounting
Use the following charts to answer the questions below:
| Stock Indexes | |||||
| Switzerland | Mexico | India | Japan | France | |
| February, 2015 | 9,014.53 | 44,190/17 | 29,220.12 | 18,797.94 | 4,951.48 |
| February, 2019 | 9,388.94 | 42,823.81 | 35,867.44 | 21,385.16 | 5,240.53 |
| February, 2020 | 9,831.03 | 41,324.31 | 38,297.29 | 21,142.96 |
5,309.90 |
| Exchange-Rates | |||||
| Switzerland (SF/USD) | Mexico (Pesos/USD) | India (Rupees/USD) | Japan (Yen/USD) | France ($/Euro) | |
| February, 2015 | 0.9361 | 14.9170 | 61.9905 | 118.7600 | 1.1350 |
| February, 2019 | 1.0014 | 19.1953 | 71.1739 | 110.4400 | 1.1349 |
| February. 2020 | 0.9762 | 18.8423 | 71.5295 | 110.0295 | 1.0911 |
1. For each country, report the stock index values and ex-rates for February, 2019 and February, 2020.
2. Calculate the annual percentage return for each stock market from February, 2019 - February, 2020, measured in local currency. Use the standard percentage return formula: [(P2 - P1)/P1] x 100.
3. For each currency, calculate the annual percentage change from February, 2019 to February, 2020 using the exchange rate exactly as quoted, and for each currency separately, clearly explain in a full sentence or two whether each of the foreign currencies appreciated or depreciated versus the dollar.
4. Calculate the effective, annual US dollar return for a U.S. investor who had invested money in the stock markets of each of the five countries last year (February 2019 - February 2020), using the formula: Effective dollar return = % foreign stock market return +/- %CHG in the foreign currency.
In: Finance
Presented below are the 2020 Income Statement and Balance Sheet for Riggins Online Store. Prepare a Cash Flow Statement as of December 31, 2020.
Additional Information for the 2020 fiscal year includes: 1) Cash dividends of $1,000 were declared and paid. 2) Equipment with a cost of $1,500 and accumulated depreciation of $1,000 was sold for $500.
|
Riggins Online Store |
||||
|
Income Statement |
||||
|
For the Year Ended December 31, 2020 |
||||
|
Sales Revenue |
$ 14,250 |
|||
|
Service Revenue |
3,400 |
|||
|
Total Revenue |
$ 17,650 |
|||
|
Operating Expenses: |
||||
|
Cost of Goods Sold |
5,600 |
|||
|
Depreciation |
1,600 |
|||
|
Selling |
2,400 |
|||
|
General and administrative |
1,500 |
|||
|
Total Operating Expenses |
11,100 |
|||
|
Operating Income |
6,550 |
|||
|
Interest Expense |
200 |
|||
|
Income Before Income Taxes |
6,350 |
|||
|
Income Tax Expense |
2,500 |
|||
|
Net Income |
$ 3,850 |
|||
|
Riggins Online Store |
||||
|
Balance Sheet |
||||
|
As of December 31, 2019 and 2020 |
||||
|
2020 |
2019 |
|||
|
Assets |
||||
|
Cash |
$ 7,350 |
$ 2,200 |
||
|
Accounts Receivable |
2,500 |
2,200 |
||
|
Inventory |
4,000 |
3,000 |
||
|
Prepaid Rent |
150 |
300 |
||
|
Plant and Equipment |
14,500 |
12,000 |
||
|
Less: Accumulated Deprecation |
(5,100) |
(4,500) |
||
|
Total Assets |
$ 23,400 |
$ 15,200 |
||
|
Liabilities and Shareholder's Equity |
||||
|
Accounts Payable |
$ 1,400 |
$ 1,100 |
||
|
Interest Payable |
100 |
- |
||
|
Deferred Service Revenue |
800 |
600 |
||
|
Income Taxes Payable |
550 |
800 |
||
|
Note Payable, due 12,31, 2023 |
5,000 |
- |
||
|
Common Stock |
10,000 |
10,000 |
||
|
Retained Earnings |
5,550 |
2,700 |
||
|
Total Liabilities and Shareholder's Equity |
$ 23,400 |
$ 15,200 |
||
In: Accounting
Problem 5-7
Bramble Inc. had the following balance sheet at December 31, 2019.
|
BRAMBLE INC. |
||||||
| Cash | $ 25,810 | Accounts payable | $ 35,810 | |||
| Accounts receivable | 27,010 | Bonds payable | 46,810 | |||
| Investments | 32,000 | Common stock | 105,810 | |||
| Plant assets (net) | 86,810 | Retained earnings | 29,010 | |||
| Land | 45,810 | $217,440 | ||||
| $217,440 | ||||||
During 2020, the following occurred.
| 1. | Bramble liquidated its available-for-sale debt investment portfolio at a loss of $10,810. | |
| 2. | A tract of land was purchased for $43,810. | |
| 3. | An additional $30,000 in common stock was issued at par. | |
| 4. | Dividends totaling $15,810 were declared and paid to stockholders. | |
| 5. | Net income for 2020 was $40,810, including $17,810 in depreciation expense. | |
| 6. | Land was purchased through the issuance of $35,810 in additional bonds. | |
| 7. | At December 31, 2020, Cash was $76,010, Accounts Receivable was $47,810, and Accounts Payable was $45,810. |
Prepare a statement of cash flows for the year 2020 for Bramble. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Prepare the unclassified balance sheet as it would appear at December 31, 2020. (List Assets in order of liquidity.)
Compute Bramble’s free cash flow and current cash debt coverage for 2020. (Round current cash debt coverage to 2 decimal places, e.g. 0.56. Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
In: Accounting