Using Percentage-of-Completion and Completed Contract Methods
Halsey Building Company signed a contract to build an office building for $40,000,000. The scheduled construction costs follow.
| Year | Cost |
|---|---|
| 2016 | $9,000,000 |
| 2017 | 15,000,000 |
| 2018 | 6,000,000 |
| Total | $30,000,000 |
The building is completed in 2018.
For each year, compute the revenue, expense, and gross profit
reported for this construction project using each of the following
methods.
a. Percentage-of-completion method
| 2016 | 2017 | 2018 | |
|---|---|---|---|
| Revenue | Answer | Answer | Answer |
| Expense | Answer | Answer | Answer |
| Gross Profit | Answer | Answer | Answer |
b. Completed contract method
| 2016 | 2017 | 2018 | |
|---|---|---|---|
| Revenue | Answer | Answer | Answer |
| Expense | Answer | Answer | Answer |
| Gross Profit | Answer | Answer | Answer |
In: Accounting
On December 31, 2017, Dow Steel Corporation had 790,000 shares
of common stock and 49,000 shares of 7%, noncumulative,
nonconvertible preferred stock issued and outstanding. Dow issued a
4% common stock dividend on May 15 and paid cash dividends of
$590,000 and $88,000 to common and preferred shareholders,
respectively, on December 15, 2018.
On February 28, 2018, Dow sold 72,000 common shares. In keeping
with its long-term share repurchase plan, 6,000 shares were retired
on July 1. Dow's net income for the year ended December 31, 2018,
was $3,050,000. The income tax rate is 40%.
Required:
Compute Dow's earnings per share for the year ended December 31,
2018
In: Accounting
At the end of 2017, Payne Industries had a deferred tax asset
account with a balance of $30 million attributable to a temporary
book–tax difference of $75 million in a liability for estimated
expenses. At the end of 2018, the temporary difference is $60
million. Payne has no other temporary differences and no valuation
allowance for the deferred tax asset. Taxable income for 2018 is
$235 million and the tax rate is 40%.
Required:
1. Prepare the journal entry(s) to record Payne’s
income taxes for 2018, assuming it is more likely than not that the
deferred tax asset will be realized.
2. Prepare the journal entry(s) to record Payne’s
income taxes for 2018, assuming it is more likely than not that
one-fourth of the deferred tax asset will ultimately be
realized.
In: Accounting
The following information pertains to a bond issue of the Atomic Corporation:
Maturity value: $1,000,000
Maturity date: January 1, 2023
Stated interest rate: 8%
Interest payments are made annually on December 31st
Date of issue: January 1, 2018
The bond is dated January 1, 2018
Effective (market) interest rate: 10%
Required:
• At what price were the bonds issued?
• Using the effective interest method, prepare an amortization schedule showing annual interest expense, annual discount or premium amortization, and carrying value through December 31, 2020.
• Prepare the necessary journal entries on January 1, 2018 and December 31, 2019.
• How should the bonds be shown on Atomic's December 31, 2018 balance sheet?
In: Accounting
The DeVille Company reported pretax accounting income on its
income statement as follows:
| 2018 | $ | 445,000 | |
| 2019 | 365,000 | ||
| 2020 | 435,000 | ||
| 2021 | 475,000 | ||
Included in the income of 2018 was an installment sale of property
in the amount of $68,000. However, for tax purposes, DeVille
reported the income in the year cash was collected. Cash collected
on the installment sale was $27,200 in 2019, $34,000 in 2020, and
$6,800 in 2021.
Included in the 2020 income was $29,000 interest from investments
in municipal bonds.
The enacted tax rate for 2018 and 2019 was 30%, but during 2019 new
tax legislation was passed reducing the tax rate to 25% for the
years 2020 and beyond
Prepare the year-end journal entries to record income taxes for the years 2018–2021.
In: Accounting
On December 31, 2017, Dow Steel Corporation had 700,000 shares of common stock and 40,000 shares of 10%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $500,000 and $79,000 to common and preferred shareholders, respectively, on December 15, 2018. On February 28, 2018, Dow sold 64,000 common shares. In keeping with its long-term share repurchase plan, 6,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2018, was $2,600,000. The income tax rate is 40%. Required: Compute Dow's earnings per share for the year ended December 31, 2018.
In: Accounting
On January 1, 2018, the Stridewell Wholesale Shoe Company hired Sammy Sossa. Sammy is expected to work for 25 years before retirement on December 31, 2042. Annual retirement payments will be paid at the end of each year during his retire ment period, expected to be 20 years. The first payment will be on December 31, 2043 . During 2018 Sammy earned an annual retirement benefit estimated to be $2,500 per year. The company plans to contribute cash to a pension fund that will accumulate to an amount suffic ient to pay Sammy this benefit. Assuming that Stri dewell anticipates earning 6% on all funds invested in the pension plan, how much would the company have to contribute in 2018 to pay for pension benefits earned in 2018?
In: Finance
Universal Foods issued 10% bonds, dated January 1, with a face amount of $170 million on January 1, 2018. The bonds mature on December 31, 2027 (10 years). The market rate of interest for similar issues was 12%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight-line method. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required: 1. Determine the price of the bonds at January 1, 2018.
2. to 4. Prepare the journal entry to record their issuance by Universal Foods on January 1, 2018, interest on June 30, 2018 and interest on December 31, 2025.
In: Accounting
At the end of 2017, Payne Industries had a deferred tax asset
account with a balance of $22 million attributable to a temporary
book–tax difference of $55 million in a liability for estimated
expenses. At the end of 2018, the temporary difference is $50
million. Payne has no other temporary differences and no valuation
allowance for the deferred tax asset. Taxable income for 2018 is
$215 million and the tax rate is 40%.
Required:
1. Prepare the journal entry(s) to record Payne’s
income taxes for 2018, assuming it is more likely than not that the
deferred tax asset will be realized.
2. Prepare the journal entry(s) to record Payne’s
income taxes for 2018, assuming it is more likely than not that
one-fourth of the deferred tax asset will ultimately be
realized.
In: Accounting
Exercise 4-2 Income statement format; single step and multiple step [LO4-1, 4-5]
The following is a partial trial balance for the Green Star
Corporation as of December 31, 2018:
| Account Title | Debits | Credits |
| Sales revenue | 1,350,000 | |
| Interest revenue | 34,000 | |
| Gain on sale of investments | 54,000 | |
| Cost of goods sold | 730,000 | |
| Selling expenses | 180,000 | |
| General and administrative expenses | 79,000 | |
| Interest expense | 44,000 | |
| Income tax expense | 134,000 | |
100,000 shares of common stock were outstanding throughout
2018.
Required:
1. Prepare a single-step income statement for
2018, including EPS disclosures.
2. Prepare a multiple-step income statement for
2018, including EPS disclosures.
In: Accounting