During 2017, Culver Company started a construction job with a contract price of $1,610,000. The job was completed in 2019. The following information is available.

2017
2018
2019
Costs incurred to date       $393,900       $760,380       $1,059,000
Estimated costs to complete       616,100       341,620       –0–
Billings to date       299,000       905,000       1,610,000
Collections to date       268,000       818,000       1,421,000

  
Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.

Gross profit recognized in 2017      
$
Gross profit recognized in 2018      
$
Gross profit recognized in 2019      
$

Prepare all necessary journal entries for 2018.

Titles and Explanation
Debit
Credit

(To record cost of of construction.)

(To record progress billings.)

(To record collections.)

(To recognize revenue.)

Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.

2017
2018
2019
Gross profit      
$
$
$

Fatima, Nouf, and Zainab have the following capital balances; $50,000, $72,000 and $95,000 respectively at the beginning of 2018. Because of a cash shortage Fatima invests an additional $15,000 on May 1st, 2018. Each partner withdraws $1,200 per month. Fatima, Nouf, and Zainab receive a salary of $12,000, $14,000 and $18,000 respectively, for work done during the year. Each partner receives interest of 8% on that partner’s beginning capital balance without regard to normal drawings. Any remaining profits are split 25%, 35%, and 40% respectively. The net income for 2018 is $40,000.

Required:

a. Allocate the $40,000 income among the partners. Show your working.

b. Determine the ending capital balances for each partner at December 31st, 2018. Show your workings.

c. Record the journal entry for the distribution of net income.

Deen Construction began a construction project in 2018. The contract price was $1,250,000, and the estimated costs were $1,000,000. Data for each year of the contract are as follows:

Instructions:

1. Assuming Deen the percentage of completion method:

(a) Prepare a schedule that computes the gross profit for 2018 - 2020

(b) Determine the net amount for construction in progress inventory should be reported on the 2018 balance sheet.

(c) Prepare all the necessary journal entries for 2019

2. Compute the amount of gross profit to be recognized each year, assuming the completed contract method is used.

You must show supporting computations to receive credit.

As of the fiscal 2018 year-end, a company unknowingly overstated its ending inventory.

Required—Indicate how, if at all, the company’s overstatement of its fiscal 2018 ending inventory affected each of the financial statement elements listed below as follows:

• If the element was overstated as a result of the error, enter “OVER” in the blank provided.

• If the element was understated as a result of the error, enter “UNDER” in the blank provided.

• If the element was neither overstated or understated as a result of the error, i.e., if the element

  was correctly stated despite the error, enter “NONE” in the blank provided.

Income Statements:

Balance Sheet:

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $184,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $645,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $1,990,000 in total. Seida's January 1, 2018 book value equaled $1,840,000, although land was undervalued by $139,000. 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 $275,000 and declared and paid dividends of $109,000. Prepare the 2018 journal entries for Milani related to its investment in Seida. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

The Bradford Company issued 8% bonds, dated January 1, with a face amount of $75 million on January 1, 2018 to Saxton-Bose Corporation. The bonds mature on December 31, 2037 (20 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. (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. to 3. Prepare the journal entry to record the purchase of the bonds by Saxton-Bose on January 1, 2018, interest revenue on June 30, 2018 and interest revenue on December 31, 2018 (at the effective rate). (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

On 12th April 2018 Pit Bull Ltd enters into a contract with a New Zealand company, Secure Ltd, whereby Secure Ltd will build a printing machine for Pit Bull Ltd.

The machine has been priced at NZ$850000. The printing machine is completed on 14th June 2019 and shipped FOB Wellington on that date.

The debt remains unpaid at 30th June 2019, which is the end of Pit Bulls Ltd’s financial reporting period.

The exchange rates at the relevant dates are as follows:

12Th April 2018 A$1.00 = NZ$1.20

30th June 2018 A$1.00 = NZ$1.15

14th June 2019 A$1.00 = NZ$1.30

30th June 2019 A$1.00 = NZ$1.25 Required:

Complete the full journal entries for Pit Bull Ltd for the years ending 30th June 2018 and 30th June 2019 to reflect the above events.

(Marks: 20)

Your client, Mr. and Mrs. Smith, have asked you about making a $120,000 cash charitable contribution to their church. They have heard that the new tax law has changed some of the rules about itemized deductions and charitable contribution limits, but they don’t know the details. They have provided you with their expected adjusted gross income (before any itemized or standard deduction) for 2018 which will be $100,000. Their AGI for 2019 will be $50,000 because Mr. Smith is retiring at the end of 2018. They have no other itemized deduction expenses in 2018 and expect none in 2019.

1)Explain to your manager how this contribution will be deducted on the client’s return in 2018 and 2019 and any future years if applicable ,List the code section that applies to charitable contribution limitations  

2)List the code section that applies to charitable contribution limitations  

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. (Do not round intermediate calculations. Enter your answers in thousands.)

Carlson Automotive Company manufactures fuel-injection systems. It manufactured and sold 60,000 units
in 2018 and 64,000 units in 2019 at $25 per unit. In 2018, the firm used 75,000 pounds of alloy TPX–45 at
$7.20 per pound and used 10,000 direct labor hours at an hourly wage rate of $30. In 2019, the firm used
89,600 pounds of alloy TPX–45 at $6.80 per pound and used 10,847 direct labor hours at an hourly wage
rate of $32. The total amount of all other expenses remains the same at $450,000 each year. Jerry Olson,
CEO, was disappointed that although the total sales increased in 2019, operating income declined from
$210,000 in 2018 to $193,616 in 2019.

1. Detailed partition of partial financial productivity.
2. Total productivity for 2018 and 2019 as measured in both units and sales dollars.