At the beginning of 2018, Blue Dragon, a small private company, acquired a mine for $1,925,000. Of this amount, $190,000 was allocated to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists found that approximately 18 million units of ore appear to be in the mine. Blue Dragon had $175,000 of development costs for this mine before any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the minerals have been removed was $70,000. During 2018, 3.0 million units of ore were extracted and 2.10 million of these units were sold.

Calculate the depletion cost per unit for 2018. (Round answer to 3 decimal places, e.g. 52.751.)
Depletion Cost Per Unit: $________

Prepare the required journal entry, if any, for the total amount of depletion for 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Debit Credit

________

________

Prepare the required journal entry, if any, for the total amount that is charged as an expense for 2018 for the cost of minerals sold during 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Account Debit Credit

______

______

Comparative Earnings per Share

Lucas Company reports net income of $5,125 for the year ended December 31, 2016, its first year of operations. On January 4, 2016, Lucas issued 9,000 shares of common stock. On August 2, 2016, it issued an additional 3,000 shares of stock, resulting in 12,000 shares outstanding at year-end.

During 2017, Lucas earned net income of $16,400. It issued 2,000 additional shares of stock on March 3, 2017, and declared and issued a 2-for-1 stock split on November 3, 2017, resulting in 28,000 shares outstanding at year-end.

During 2018, Lucas earned net income of $23,520. The only common stock transaction during 2018 was a 20% stock dividend issued on July 2, 2018.

If required, round your final answers to two decimal places.

Required:

1. Compute the basic earnings per share that would be disclosed in the 2016 annual report.
   $ _____ per share
2. Compute the 2016 and 2017 comparative basic earnings per share that would be disclosed in the 2017 annual report.
   2017:   $ _____ per share
   2016:   $ _____ per share
3. Compute the 2016, 2017, and 2018 comparative basic earnings per share that would be disclosed in the 2018 annual report.
   2018:   $ _____ per share
   2017:   $ _____ per share
   2016:   $ _____ per share

Comparative Earnings per Share

Lucas Company reports net income of $5,125 for the year ended December 31, 2016, its first year of operations. On January 4, 2016, Lucas issued 9,000 shares of common stock. On August 2, 2016, it issued an additional 3,000 shares of stock, resulting in 12,000 shares outstanding at year-end.

During 2017, Lucas earned net income of $16,400. It issued 2,000 additional shares of stock on March 3, 2017, and declared and issued a 2-for-1 stock split on November 3, 2017, resulting in 28,000 shares outstanding at year-end.

During 2018, Lucas earned net income of $23,520. The only common stock transaction during 2018 was a 20% stock dividend issued on July 2, 2018.

If required, round your final answers to two decimal places.

Required:

1. Compute the basic earnings per share that would be disclosed in the 2016 annual report.
   $  per share
2. Compute the 2016 and 2017 comparative basic earnings per share that would be disclosed in the 2017 annual report.
   2017:   $  per share
   2016:   $  per share
3. Compute the 2016, 2017, and 2018 comparative basic earnings per share that would be disclosed in the 2018 annual report.
   2018:   $  per share
   2017:   $  per share
   2016:   $  per share

On February 8, 2018, Holly purchased a residential apartment building. The cost basis assigned to the building is $209,000. Holly also owns another residential apartment building that she purchased on December 15, 2018, with a cost basis of $588,000.

Click here to access the depreciation tables.

If required, round intermediate calculations and final answers to nearest dollar.

a. Calculate Holly's total depreciation deduction for the apartments for 2018 using MACRS.
$

b. Calculate Holly's total depreciation deduction for the apartments for 2019 using MACRS.

$

Calculate the following:

Click here to access the various depreciation tables. If required, round your final answers to the nearest dollar. If your answer is zero, enter "0".

a. The first year of depreciation on a residential rental building costing $200,000 purchased July 2, 2018.
$

b. The second year (2019) of depreciation on a computer costing $5,000 purchased in May 2018, using the half-year convention and accelerated depreciation considering any bonus depreciation taken.
$

c. The first year of depreciation on a computer costing $2,800 purchased in May 2018, using the half-year convention and straight-line depreciation with no bonus depreciation.
$

d. The third year of depreciation on business furniture costing $8,000 purchased in March 2016, using the half-year convention and accelerated depreciation but no bonus depreciation.
$

The Hope Co. sells direct to retail customers and also to wholesalers. On January,
1, 2018 the balance of the retail accounts receivable was P418,000 while the allowance for bad debts with
respect to retail customers was a credit of P15,200.
The following summary pertains only to retail sales since 2015
Credit Sales - Bad Debts Written off - Bad Debts Recoveries
2015 - P2,220,000 P52,000 P4,300
2016 - 2,450,000 59,000 7,500
2017 - 2,930,000 60,000 7,200
2018 - 3,000,000 62,000 8,400
Bad debts are provided for as a percentage of credit sates. The accountant calculates the percentage annually
by using the experience of the three years prior to the current year. The formula is bad debts written off less
recoveries expressed as a percentage of the credit sales for the same period. Total collections from customers
amounted to P2,760,40. This amount included P50,000 for which the goods are to be delivered next year. During
the year. The company recorded the bad debts written off as bad debts expense
Based on the above and the result of your audit, answer the following:
1. The percentage to be used to compute the allowance for bad debt on December 31,2018 is
2. How much is the doubtful accounts expense for 2018?
3. The doubtful accounts expense for 2018 is overstated by
4. The ledger balance of the accounts receivable after necessary adjust on December 31, 2018 was a debit of
5. The ledger balance of the allowance for bad debts after necessary adjustments on December 31, 2018 was
a credit of

ohnson Corporation began 2018 with inventory of 10,000 units of its only product. The units cost $8 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2018:

1. Purchased 50,000 additional units at a cost of $10 per unit. Terms of the purchases were 2/10, n/30, and 100% of the purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b. shipping point and freight charges of $0.50 per unit were paid by Johnson.
2. b. 1,000 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $0.50 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received.
3. Sales for the year totaled 45,000 units at $18 per unit.
4. On December 28, 2018, Johnson purchased 5,000 additional units at $10 each. The goods were shipped f.o.b. destination and arrived at Johnson's warehouse on January 4, 2019.
5. 14,000 units were on hand at the end of 2018.

Requirements

1. Complete the below table to determine the ending inventory and cost of goods sold for 2018.
2. Assuming that operating expenses other than those indicated in the above transactions amounted to $150,000, determine income before income taxes for 2018.

Exercise 19-18 EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options exercised [LO19-5, 19-6, 19-7, 19-8]

On December 31, 2017, Berclair Inc. had 400 million shares of common stock and 8 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 60 million shares of its common stock as treasury stock. Berclair issued a 6% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $400 million.

Also outstanding at December 31 were 45 million incentive stock options granted to key executives on September 13, 2013. The options were exercisable as of September 13, 2017, for 45 million common shares at an exercise price of $50 per share. During 2018, the market price of the common shares averaged $75 per share.

The options were exercised on September 1, 2018.

Required:

Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

The Pyramid Company has used the LIFO method of accounting for inventory during its first two years of operation, 2016 and 2017. At the beginning of 2018, Pyramid decided to change to the average cost method for both tax and financial reporting purposes. The following table presents information concerning the change for 2016–2018. The income tax rate for all years is 40%.

Pyramid issued 49,000 $1 par, common shares for $225,000 when the business began, and there have been no changes in paid-in capital since then. Dividends were not paid the first year, but $12,000 cash dividends were paid in both 2017 and 2018.

Required:
1. Prepare the journal entry to record the change in accounting principle.
2. Prepare the 2018–2017 comparative income statements beginning with income before income taxes.
3. Prepare the 2018–2017 comparative statements of shareholders’ equity. (Hint: The 2016 statements reported retained earnings of $35,760. This is $59,600 – [$59,600 × 40%]).

Compute, Disaggregate, and Interpret ROE and RNOA
Headquartered in Calgary, Alberta, Husky Energy Inc. is a publicly traded, integrated energy company. Selected fiscal year balance sheet and income statement information for Husky Energy follow (Canadian $ millions).

a. Compute the 2018 return on equity (ROE) and the 2018 return on net operating assets (RNOA).
Note: Round percentages to two decimal places (for example, enter 6.66% for 6.6555%).

2018 Return on equity: Answer%
2018 Return on net operating assets: Answer%

b. Disaggregate RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT).
Note: For NOPM and RNOA, round percentages to two decimal places (for example, enter 6.66% for 6.6555%).
Note: For NOAT, round amount to three decimal places (for example, enter 6.776 for 6.77555).

c. Compute the percentage of RNOA to ROE, and compute Husky’s nonoperating return for 2018.
Note: Round percentages to two decimal places (for example, enter 6.66% for 6.6555%).
Percentage of RNOA to ROE: Answer%
Nonoperating return: Answer%

Your broker, the leading sales generator at the firm Dewey, Cheatem and Howe, calls you with an investment opportunity. If you send him $2000 today, he will send back to you $1050 a year from now, and $1300 a year after that. You require a 12% annual return. Based on the present value of these future cash flows, is this a good investment?

Yes

No