On December 1, 2017, ABC Company paid its vendor $24,000 for its annual license, which covers the twelve-month period beginning on January 1, 2018. Assume ABC Company prepares monthly financial statements at the end of each calendar month.
1. What journal entry should ABC Company record on December 1, 2017?
2. What journal entry should ABC Company record for the accounting license for the month ending January 31, 2018?
For questions 3-4, assume now the same factors as above, but ABC Company did not pay the license vendor until February 1, 2018.
3. What is the journal entry that should be recorded as of December 31, 2017?
4. What is the journal entry that should be recorded as of January 31, 2018?
In: Accounting
Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $187,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $640,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,060,000 in total. Seida's January 1, 2018 book value equaled $1,910,000, although land was undervalued by $132,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an 8-year remaining life. During 2018, Seida reported income of $258,000 and declared and paid dividends of $101,000. Prepare the 2018 journal entries for Milani related to its investment in Seida.
In: Accounting
At December
31, 2018 before any year-end adjustments, the Accounts Receivable balance of Daulat Inc is $300,000. Credit sales for the 2018 are $900,000, and allowance for bad debt has a $10,000 beginning credit balance. Daulat Inc prepares the following aging schedule for accounts receivable
(age, amount, estimated uncollectible)
0-30 Days
$150,000
1%
31- 60 Days
$100,000
4%
61 -90 Days
$40,000
10%
Over 90 Days
$10,000
40%
1.
Calculate the balance in the allowance for bad debt on December 31, 2018 assuming Daulat Inc estimates that 2% of credit sales will be uncollectible
2.
What is the bad debt expense for 2018 assuming Daulat Inc uses the aging of accounts method
In: Accounting
At the end of 2019, Headland Company has $174,800 of cumulative
temporary differences that will result in reporting the following
future taxable amounts.
| 2020 |
$58,100 |
|
| 2021 |
48,000 |
|
| 2022 |
38,500 |
|
| 2023 |
30,200 |
|
|
$174,800 |
Tax rates enacted as of the beginning of 2018 are:
| 2018 and 2019 | 40 | % | |
| 2020 and 2021 | 30 | % | |
| 2022 and later | 25 | % |
Headland’s taxable income for 2019 is $310,600. Taxable income is
expected in all future years.
(a) Prepare the journal entry for Headland to
record income taxes payable, deferred income taxes, and income tax
expense for 2019, assuming that there were no deferred taxes at the
end of 2018.
(b) Prepare the journal entry for Headland to
record income taxes payable, deferred income taxes, and income tax
expense for 2019, assuming that there was a balance of $21,600 in a
Deferred Tax Liability account at the end of 2018
In: Accounting
Question Determining the present value of bonds payable and journalizing
using the effective-interest amortization method
Relaxation, Inc. is authorized to issue 7%, 10-year bonds payable. On January 1, 2018,
when the market interest rate is 12%, the company issues $300,000 of the bonds. The
bonds pay interest semiannually.
Requirements
1. How much cash did the company receive upon issuance of the bonds payable?
(Round to the nearest dollar.)
2. Prepare an amortization table for the bond using the effective-interest method,
through the first two interest payments. (Round to the nearest dollar.)
3. Journalize the issuance of the bonds on January 1, 2018, and the first and second
payments of the semiannual interest amount and amortization of the bonds on
June 30, 2018, and December 31, 2018. Explanations are not required.
In: Accounting
Babe’s Batting Cages projects the following income statement for 2018:
Sales $ 241,745
Operating costs
excl.depr. & amort. 140,212
EBITDA 101,533
Depr. & Amort. 16,000
EBIT 85,533
Interest 2,200
EBT 83,333
Taxes (40%) 33,333
Net Income $ 50,000
2018 Balance Sheet Assumptions:
Accounts receivable increase by $5,000
Inventory decreases by $2,000
Accounts payable increases by $2,000
Accruals increase by $1,000
Net fixed assets increase by $20,000
Notes payable increase by $2,500
Long-term debt increases by $20,000
Retained earnings increase by $40,000
Create a cash flow statement for 2018 through the net change in cash. (Show your work; 2 points)
What is the Free Cash Flow for 2018? (Show your work; 1 point)
In: Accounting
On January 1, 2018, Wright Transport sold four school buses to
the Elmira School District. In exchange for the buses, Wright
received a note requiring payment of $524,000 by Elmira on December
31, 2020. The effective interest rate is 9%. (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. How much sales revenue would Wright
recognize on January 1, 2018, for this transaction?
2. Prepare journal entries to record the sale of
merchandise on January 1, 2018 (omit any entry that might be
required for the cost of the goods sold), the December 31, 2018,
interest accrual, the December 31, 2019, interest accrual, and
receipt of payment of the note on December 31, 2020.
In: Accounting
The average annual expenses on housing loans for people aged 40 and below during the year 2015 and 2018 is RM15745 and RM16834 respectively. Population standard deviation is known to be RM1990 in 2015 and RM2160 in 2018. Meanwhile the sample size is 200 for the year 2015 and 250 in 2018. The annual expenses on housing loan is assumed to be normally distributed.
a)
Assess at 1% significance level whether the population mean of
annual expenses on housing loans in 2018 is higher than the
expenses in 2015.
b)
Suppose that in 2017, a smaller scale research was conducted on 25 adults aged
40 and below. Based on the data, the sample and population standard
deviation is RM3885 and RM2010 respectively. Assess at 95% level of
significance if the standard deviation of annual expenses on
housing loans in 2017 is different from RM2010.
In: Statistics and Probability
Analyzing and Determining the Amount of a Liability
For each of the following situations, indicate the liability amount, if any, which is reported on the balance sheet of Hirst, Inc., at December 31, 2018.
| a. Hirst owes $110,000 at year-end 2018 for its inventory purchases. | |
| b. Hirst agreed to purchase a $28,000 drill press in January 2019. | |
| c. During November and December of 2018, Hirst sold products to a firm with a 90-day warranty | |
| against product failure. Estimated 2019 costs of honoring this warranty are $2,200. | |
| d. Hirst provides a profit-sharing bonus for its executives equal to 5% of its reported pretax annual income. | |
| The estimated pretax income for 2018 is $600,000. Bonuses are not paid until January of the following year. |
Subject: Financial Accounting
In: Accounting
Computing Basic and Diluted Earnings per Share
Zeller Corporation began 2018 with 120,000 shares of common
stock and 16,000 shares of convertible preferred stock outstanding.
On March 1 an additional 10,000 shares of common stock were issued.
On August 1, another 16,000 shares of common stock were issued. On
November 1, 6,000 shares of common stock were acquired for the
treasury. The preferred stock has a $2 per-share dividend rate, and
each share may be converted into one share of common stock. Zeller
Corporation’s 2018 net income is $501,000.
Required
a. Compute basic earnings per share for 2018. Round to two
decimal places.
$
b. Compute diluted earnings per share for 2018. Round to
two decimal places.
$
In: Accounting