Janes Company provided the following information on intangible assets:
a. A patent was purchased from the Lou Company for $1,000,000 on January 1, 2016. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $410,000 when Lou sold it to Janes.
b. During 2018, a franchise was purchased from the Rink Company for $560,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase.
c. Janes incurred research and development costs in 2018 as follows:
Materials and supplies $ 146,000
Personnel 186,000
Indirect costs 66,000
Total $ 398,000
d. Effective January 1, 2018, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years.
Required:
1. Prepare the entries necessary for years 2016 through 2018 to reflect the above information.
2. Prepare a schedule showing the intangible asset section of Janes’s December 31, 2018, balance sheet.
In: Accounting
On January 2, 2018, Johnson Company paid $310 million to acquire 14,000,000 shares of Pets Corp. The investment represented 30% of the total shares outstanding of Pets Corp. and gave Johnson Company the ability to exert significant influence upon the operations of Pets Corp.
During the year ended December 31, 2018, Pets Corp. paid dividends of $1.10 per share (declared and paid on November 12, 2018) and reported income of $245 million. The market value of Pets Corp. stock at December 31, 2018, was $24.50 per share. On the date of the acquisition the book value of Pets Corp. was $950 million and the fair value of the assets at that time were consistent with the book value except for Equipment which was undervalued by $40.0 million, with a remaining life of 10 years. Any excess fair value attributable to the acquisition (over cost of acquisition) was applied to goodwill.
Prepare all journal entries related to the investment for 2018, assuming Johnson uses the equity method to account for acquisition.
Show your work representing the development and allocation of the consideration paid.
In: Accounting
Prat Corp. started the 2018 accounting period with $34,000 of assets (all cash), $14,000 of liabilities, and $19,000 of common stock. During the year, the Retained Earnings account increased by $18,050. The bookkeeper reported that Prat paid cash expenses of $33,000 and paid a $3,400 cash dividend to the stockholders, but she could not find a record of the amount of cash that Prat received for performing services. Prat also paid $8,500 cash to reduce the liability owed to the bank, and the business acquired $7,700 of additional cash from the issue of common stock. Required (Hint: Determine the amount of beginning retained earnings before considering the effects of the current period events. It also might help to record all events under an accounting equation before preparing the statements.)
a-1. Prepare an income statement for the 2018 accounting period.
a-2. Prepare a statement of changes in stockholders’ equity for the 2018 accounting period.
a-3. Prepare a period-end balance sheet for the 2018 accounting period.
a-4. Prepare a statement of cash flows for the 2018 accounting period.
In: Accounting
Tangshang Industries production budget from the 2nd quarter of 2018, projected the following amounts of units to be produced:
April 1,000 units
May 1,200 units
June 1,250 units
Each unit requires 2 parts of component A and 3 parts of component B. Component A cost is $1.25 per unit and component B cost is $.80 per unit.
Each unit requires the following labor:
2 hours in the processing department
1 hour in the assembly department
Processing department labor rate is $4/hour
Assembly department labor rate is $6/hour
Variable Factory overhead is $.60 per unit
Fixed Factory overhead is $1,000 monthly
Using the information from the production budget of Tangshang Industries
1.Calculate total variable overhead cost for May 2018
2.Calculate total variable overhead cost for the quarter April - June 2018
3.Calculate total overhead cost for the quarter April - June 2018
4.Calculate total product cost for the quarter April - June 2018
In: Accounting
Tanner-UNF Corporation acquired as a long-term investment $260
million of 7.0% bonds, dated July 1, on July 1, 2018. Company
management has the positive intent and ability to hold the bonds
until maturity. The market interest rate (yield) was 9% for bonds
of similar risk and maturity. Tanner-UNF paid $230.0 million for
the bonds. The company will receive interest semiannually on June
30 and December 31. As a result of changing market conditions, the
fair value of the bonds at December 31, 2018, was $240.0
million.
Required:
1. & 2. Prepare the journal entry to record
Tanner-UNF’s investment in the bonds on July 1, 2018 and interest
on December 31, 2018, at the effective (market) rate.
3. At what amount will Tanner-UNF report its
investment in the December 31, 2018, balance sheet?
4. Suppose Moody’s bond rating agency downgraded
the risk rating of the bonds motivating Tanner-UNF to sell the
investment on January 2, 2019, for $220.0 million. Prepare the
journal entry to record the sale.
In: Accounting
|
Sales |
$600,000 |
|
Cost of goods sold |
($375,000) |
|
Rent |
($37,500) |
|
Salaries |
($37,500) |
|
Interest |
($7,500) |
|
Depreciation |
($22,500) |
|
Gain on sale of assets |
$7,500 |
|
Net income |
$127,500 |
The balance sheets as of December 31, 2017 and 2018 were:
|
Description |
2018 |
2017 |
||
|
Cash |
$112,500 |
$24,000 |
||
|
Accounts Receivable |
$45,000 |
$39,000 |
||
|
Inventory |
$60,000 |
$57,000 |
||
|
Prepaid rent |
$15,000 |
$18,000 |
||
|
Property, Plant & Equipment |
$300,000 |
$285,000 |
||
|
Less: Accumulated Depreciation |
($97,500) |
($82,500) |
||
|
Total Assets |
$435,000 |
$340,500 |
||
|
Accounts Payable |
$67,500 |
$60,000 |
||
|
Notes Payable |
$58,500 |
$51,000 |
||
|
Common Stock |
$187,500 |
$180,000 |
||
|
Retained Earnings |
$121,500 |
$49,500 |
||
|
Total Liabilities and Equity |
$435,000 |
$340,500 |
||
One machine included in Property, Plant & Equipment was sold on 1/1/2018. The original cost of the asset was $37,500.
Prepare a cash flow statement for the year ended December 31, 2018. Use the indirect approach for the operating cash flow section of the statement.
In: Accounting
Harris Company borrowed $60,000 on a two-year, 8% note dated October 1, 2016.Interest is payable annually on October 1, 2017, and October 1, 2018, the maturity date of the note.The company prepares its financial statements on a calendar year basis.Prepare all journal entries relating to the note for 2016, 2017, and 2018.
On January 1, 2017, Roma Company leased a tractor. The lease agreement qualifies as a capital lease and calls for payments of $10,000 per year (payable each year on January 1, starting in 2018) for eight years. The annual interest rate on the lease is 10%. Roma Company uses a calendar-year reporting period.
Prepare the journal entry for January 1, 2017, to record the leasing of the tractor:
Prepare the journal entry for December 31, 2017, to recognize the interest expense for the year 2017.
Prepare the journal entry to record the first lease payment.
Prepare the journal entry for December 31, 2018, to recognize the interest expense for the year 2018.
Prepare the journal entry to record the January 1, 2019 lease payment.
In: Accounting
Tuscany Statuary Company manufactures bust statues of famous historical
figures. All statues are the same size, and each statue requires the
same amount of resources. Tuscany employs a standard costing system
and has the following standards in order to produce one statue:
standard quantity standard price
direct materials 7 pounds $12 per pound
direct labor 5 hours $23 per hour
During 2018, Tuscany produced 7,000 statues using a total of 41,000
direct labor hours. Tuscany had no beginning inventories of any type
for 2018. During 2018, Tuscany purchased 59,000 pounds of direct
materials at a total cost of $784,700. At December 31, 2019, Tuscany
had 6,000 pounds of direct materials in its inventory. The total cost
of direct labor for Tuscany during 2018 was $861,000.
Calculate Tuscany's total direct labor variance for 2018. If the
variance is favorable, place a minus sign in front of your answer
(i.e., -5000). If the variance is unfavorable, simply enter your
answer as a number (i.e., 5000).In: Accounting
During 2018, Dana Company decided to begin investing its idle cash in marketable securities. The information contained below relates to Dana’s 2018 marketable security transactions: Apr. 1 Purchased $20,000 face value of Solomon Inc. 12% bonds at par plus accrued interest; interest on the bonds is payable each June 30 and December 31 June 30 Received the semiannual interest on the Solomon bonds. Nov. 1 Purchased $30,000 face value of Edwards Company 11% bonds at par plus accrued interest; interest on the bonds is payable each June 1 and December 1. Dec. 1 Received the interest on the Edwards bonds and sold the bonds for $30,300. Dec. 31 Received the interest on the Solomon bonds. At year-end, the market price of the Solomon bonds was $20,200. Required: 1. Record Dana’s investment transactions for 2018. 2. Show the items of income or loss on temporary investments Dana reports on its 2018 income statement. 3. Show the carrying value of Dana’s investment account on its December 31, 2018, balance sheet.
In: Accounting
Measuring Ability to Pay Liabilities
LeBronson's Companies Balance Sheet May 31, 2018 and 2017 LeBronson's companies has 10,000 common shares outstanding during 2018
| Assets | Liabilities | ||||
| 2018 | 2017 | 2018 | 2017 | ||
| Cash | 2,400 | 900.00 | Total Current Liabilties | 28,000 | 13,200 |
| Short-Term Investments | 28,000 | 9,000 | Long-Term Liabilities | 13,900 | 10,300 |
| Accounts Receivable | 7,500 | 5,200 | Total Liabilities | 41,900 | 23,500 |
| Merchandise Inventory | 6,900 | 8,600 | Stockholder's Equity | ||
| Other Current Assets | 8,000 | 1,500 | Common Stock | 11,000 | 11,000 |
| Total Current Assets | 52,800 | 25,200 | Retained Earnings | 29,900 | 19,700 |
| All Other Assets | 30,000 | 29,000 | Total Equity | 40,900 | 30,700 |
| Total Assets | 82,800 | 54,200 | Total Liabilities and Equity | 82,800 | 54,200 |
Calculating these objectives
A. Calculate the debt ratio and the debt to equity ratio at May 31, 2018, for LeBronson's Companies.
B. Is LeBronson's ability to pay its liabilities good or bad? Explain your decision or findings.
In: Accounting