The following information has been obtained for Culver Corporation. 1. Prior to 2017, taxable income and pretax financial income were identical. 2. Pretax financial income is $1,649,000 in 2017 and $1,476,000 in 2018. 3. On January 1, 2017, equipment costing $1,140,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 11A.) 4. Interest of $55,000 was earned on tax-exempt municipal obligations in 2018. 5. Included in 2018 pretax financial income is a gain on discontinued operations of $183,000, which is fully taxable. 6. The tax rate is 35% for all periods. 7. Taxable income is expected in all future years. Compute taxable income and income taxes payable for 2018. Taxable income $ Income taxes payable $ Prepare the journal entry to record 2018 income tax expense, income taxes payable, and deferred taxes. (Credit account titles are automatically indented when 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 Titles and Explanation Debit Credit Prepare the bottom portion of Culver’s 2018 income statement, beginning with “Income from continuing operations before income taxes.” (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Culver Corporation Income Statement (Partial) $ $ : $ Indicate how deferred income taxes should be presented on the December 31, 2018, balance sheet. Culver Corporation Balance Sheet $

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2018 ($ in 000s): sales revenue, $16,500; cost of goods sold, $6,800; selling expenses, $1,360; general and administrative expenses, $860; interest revenue, $120; interest expense, $240. Income taxes have not yet been recorded. The company’s income tax rate is 40% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2018 ($ in 000s). All transactions are material in amount. Investments were sold during the year at a loss of $280. Schembri also had unrealized gains of $380 for the year on investments. One of the company’s factories was closed during the year. Restructuring costs incurred were $1,800. During the year, Schembri completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP. The division had incurred a loss from operations of $620 in 2018 prior to the sale, and its assets were sold at a gain of $1,520. In 2018, the company’s accountant discovered that depreciation expense in 2017 for the office building was understated by $260. Negative foreign currency translation adjustment for the year totaled $300. Required: 1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2018, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 400,000 shares were issued on July 1, 2018. 2. Prepare a separate statement of comprehensive income for 2018.

Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2017, for $590,000 in cash. Annual excess amortization of $15,100 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $428,000, and Rambis reported a $260,000 balance. Herbert reported internal net income of $59,250 in 2017 and $76,150 in 2018 and declared $10,000 in dividends each year. Rambis reported net income of $24,900 in 2017 and $41,800 in 2018 and declared $5,000 in dividends each year.

a. Assume that Herbert’s internal net income figures above do not include any income from the subsidiary. If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2018? What would be the amount of consolidated retained earnings on December 31, 2018, if the parent had applied either the initial value or partial equity method for internal accounting purposes?

b. Under each of the following situations, what is the Investment in Rambis account balance on Herbert’s books on January 1, 2018? The parent uses the equity method. The parent uses the partial equity method. The parent uses the initial value method.

c. Under each of the following situations, what is Entry *C on a 2018 consolidation worksheet? The parent uses the equity method. The parent uses the partial equity method. The parent uses the initial value method.

Show less

b

Gross profit method of estimating inventory.

1. Leia completed a physical inventory on 12-31-18. On the basis of her count, Leia determined her ending inventory to be $416,750. In recent years, Leia's gross profit equaled 64% of Leia’s selling price.

Additional information from Leia’s accounting records identified the following:

Inventory, 12-31-17                                                                                                             $320,000

Purchases during 2018                                                                                                     $1,208,000

Purchase returns during 2018                                                                                               $44,000

Purchase discounts during 2018                                                                                            $9,664

Sales during 2018                                                                                                              $3,066,000

Sales returns during 2018                                                                                                   $160,000

Leia suspects some inventory is missing. Leia used the gross profit method to estimate what her ending inventory should be based on historical facts and trends. Prepare the entry, if necessary, to reflect Leia’s estimated loss from any missing inventory.

2. Evan completed a physical inventory on 12-31-18. On the basis of his count, Evan determined his ending inventory at retail selling prices was $306,000. In recent years, Evan's gross profit equaled 80% of Evan’s inventory costs.

Additional information from Evan Additional information from Leia’s accounting records identified the following:

Inventory cost, 12-31-17                                                                                                     $230,000

Net purchases during 2018                                                                                              $1,008,000

Net sales revenue during 2018                                                                                       $1,863,000

Evan suspects some inventory is missing. Evan used the gross profit method to estimate what his ending inventory should be based on historical facts and trends. Prepare the entry, if necessary, to reflect Evan’s estimated loss from any missing inventory.

Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. In 2018, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries were prepared. The income tax rate is 40% for all years.

Required: Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2018 related to the situation described. Any tax effects should be adjusted for through Income tax payable or Refund-income tax...

1. Effective January 1, 2018, the company changed the salvage values used in calculating depreciation for its office building. The building cost $604,000 on December 29, 2007, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $120,000. Declining real estate values in the area indicate that the salvage value will be no more than $30,000.

2. At the beginning of 2016, the company purchased a machine at a cost of $680,000. Its useful life was estimated to be ten years with no salvage value. The machine has been depreciated by the double-declining balance method. Its book value on December 31, 2017, was $435,200. On January 1, 2018, the company changed to the straight-line method. 3.Warranty expense is determined each year as 1% of sales. Actual payment experience of recent years indicates that 0.70% is a better indication of the actual cost. Management effects the change in 2018. Credit sales for 2018 are $3,600,000; in 2017 they were $3,300,000.

Yoshi Company completed the following transactions and events involving its delivery trucks. 2016 Jan. 1 Paid $25,015 cash plus $1,785 in sales tax for a new delivery truck estimated to have a five-year life and a $2,150 salvage value. Delivery truck costs are recorded in the Trucks account. Dec. 31 Recorded annual straight-line depreciation on the truck. 2017 Dec. 31 Due to new information obtained earlier in the year, the truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,850. Recorded annual straight-line depreciation on the truck. 2018 Dec. 31 Recorded annual straight-line depreciation on the truck. Dec. 31 Sold the truck for $5,400 cash. Required: 1-a. Calculate depreciation for year 2017. 1-b. Calculate book value and gain (loss) for sale of Truck on December, 2018. 1-c. Prepare journal entries to record these transactions and events

Required 1A Calculate depreciation for year 2017

Total Cost

Less accumulated depreciation (form 2016)

Book value

Less revised salvage value

Remaining cost to be depreciated

Years of life remainining

Total depreciation for 2017

Required 1B Calculate book value and gain (loss) for sale of Truck on December, 2018

Depreciation expense (for 2016)

Depreciation e xpense (for 2017)

Depreciation expense (for 2018)

Accumulated depreciation 12/31/2018

Book value of truck at 12/31/2018

Total Cost

Accumulated depreciation

Book value 12/31/2018

Required 1C Prepare journal entries to record these transactions and events

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,100,000. During 2018, costs of $2,040,000 were incurred, with estimated costs of $4,040,000 yet to be incurred. Billings of $2,548,000 were sent, and cash collected was $2,290,000. In 2019, costs incurred were $2,548,000 with remaining costs estimated to be $3,660,000. 2019 billings were $2,798,000, and $2,515,000 cash was collected. The project was completed in 2020 after additional costs of $3,840,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years. 2a. Prepare journal entries for 2018 to record the transactions described (credit "various accounts" for construction costs incurred). 2b. Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred). 3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018. 3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019.

2018/

2019/

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,100,000. During 2018, costs of $2,040,000 were incurred, with estimated costs of $4,040,000 yet to be incurred. Billings of $2,548,000 were sent, and cash collected was $2,290,000.

In 2019, costs incurred were $2,548,000 with remaining costs estimated to be $3,660,000. 2019 billings were $2,798,000, and $2,515,000 cash was collected. The project was completed in 2020 after additional costs of $3,840,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time.

Required:
1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.
2a. Prepare journal entries for 2018 to record the transactions described (credit "various accounts" for construction costs incurred).
2b. Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred).
3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018.
3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019.

2018/

2019/

Using the appropriate present value table and assuming a 12% annual interest rate, determine the present value on December 31, 2018, of a five-period annual annuity of $6,200 under each of the following situations: (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.)

1.The first payment is received on December 31, 2019, and interest is compounded annually.
2.The first payment is received on December 31, 2018, and interest is compounded annually.
3.The first payment is received on December 31, 2019, and interest is compounded quarterly.
  

Required 1:

i =

PV - 12/31/2018:

Required 2:

Required 3:

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,100,000. During 2018, costs of $2,040,000 were incurred, with estimated costs of $4,040,000 yet to be incurred. Billings of $2,548,000 were sent, and cash collected was $2,290,000.

In 2019, costs incurred were $2,548,000 with remaining costs estimated to be $3,660,000. 2019 billings were $2,798,000, and $2,515,000 cash was collected. The project was completed in 2020 after additional costs of $3,840,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time.

Required:
1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.
2a. Prepare journal entries for 2018 to record the transactions described (credit "various accounts" for construction costs incurred).
2b. Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred).
3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018.
3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019.

2018/

2019/