During 2016 (its first year of operations) and 2017, Batali
Foods used the FIFO inventory costing method for both financial
reporting and tax purposes. At the beginning of 2018, Batali
decided to change to the average method for both financial
reporting and tax purposes.
Income components before income tax for 2018, 2017, and 2016 were
as follows ($ in millions):
| 2018 | 2017 | 2016 | |||||||
| Revenues | $ | 490 | $ | 460 | $ | 450 | |||
| Cost of goods sold (FIFO) | (53 | ) | (47 | ) | (45 | ) | |||
| Cost of goods sold (average) | (76 | ) | (70 | ) | (66 | ) | |||
| Operating expenses | (282 | ) | (278 | ) | (270 | ) | |||
Dividends of $26 million were paid each year. Batali’s fiscal year
ends December 31.
Required:
1. Prepare the journal entry at the beginning of
2018 to record the change in accounting principle. (Ignore income
taxes.)
2. Prepare the 2018–2017 comparative income
statements.
3. & 4. Determine the balance in retained
earnings at January 2017 as Batali reported using FIFO method and
determine the adjustment of balance in retained earnings as on
January 2017 using average method instead of FIFO method.
In: Accounting
Given the following information for Nester Company, answer the questions shown below:
|
December |
January |
February |
March |
||
|
Sales |
$500,000 |
$550,000 |
$450,000 |
$600,000 |
|
|
Purchases |
$120,000 |
$140,000 |
$115,000 |
$150,000 |
|
Twenty percent of purchases are paid in cash at the time of purchase. The remaining balance is paid in the month following the purchase.
Monthly operating expenses are as follows:
|
Sales salaries |
$10,000 |
|
|
Depreciation expense |
$2,500 |
|
|
Property taxes |
$2,000 |
paid at the end of each calendar quarter |
|
Sales commissions |
1.5% |
paid in the month following the sale |
Each question should have one amount in the answer field.
You must enter your answer in the following format: $x,xxx
Total cash payments for inventory purchases for the quarter ending March 31, 2018
Total cash payments for sales salaries for the quarter ending March 31, 2018
Total cash payments for property tax for the quarter ending March 31, 2018
Total cash cash payments for sales commissions for the quarter ending March 31, 2018
Total cash payments for depreciation for the quarter ending March 31, 2018
In: Accounting
|
Cardinal Industries had the following operating results for 2018: Sales = $34,217; Cost of goods sold = $24,163; Depreciation expense = $5,987; Interest expense = $2,705; Dividends paid = $1,987. At the beginning of the year, net fixed assets were $19,930, current assets were $7,047, and current liabilities were $3,986. At the end of the year, net fixed assets were $24,493, current assets were $8,678, and current liabilities were $4,664. The tax rate for 2018 was 21 percent. |
| a. | What is net income for 2018? (Do not round intermediate calculations.) |
| b. | What is the operating cash flow for 2018? (Do not round intermediate calculations.) |
| c. | What is the cash flow from assets for 2018? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) |
| d-1. | If no new debt was issued during the year, what is the cash flow to creditors? (Do not round intermediate calculations.) |
| d-2. | If no new debt was issued during the year, what is the cash flow to stockholders? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) |
In: Finance
| Just Dew It Corporation reports the following balance sheet information for 2017 and 2018. |
| JUST DEW IT CORPORATION 2017 and 2018 Balance Sheets |
||||||||||||||||
| Assets | Liabilities and Owners’ Equity | |||||||||||||||
| 2017 | 2018 | 2017 | 2018 | |||||||||||||
| Current assets | Current liabilities | |||||||||||||||
| Cash | $ | 4,350 | $ | 9,800 | Accounts payable | $ | 48,000 | $ | 49,800 | |||||||
| Accounts receivable | 11,550 | 14,200 | Notes payable | 10,350 | 18,600 | |||||||||||
| Inventory | 58,350 | 75,800 | ||||||||||||||
| Total | $ | 74,250 | $ | 99,800 | Total | $ | 58,350 | $ | 68,400 | |||||||
| Long-term debt | $ | 42,000 | $ | 34,000 | ||||||||||||
| Owners’ equity | ||||||||||||||||
| Common stock and paid-in surplus | $ | 45,000 | $ | 45,000 | ||||||||||||
| Retained earnings | 154,650 | 252,600 | ||||||||||||||
| Net plant and equipment | $ | 225,750 | $ | 300,200 | Total | $ | 199,650 | $ | 297,600 | |||||||
| Total assets | $ | 300,000 | $ | 400,000 | Total liabilities and owners’ equity | $ | 300,000 | $ | 400,000 | |||||||
|
In: Finance
2.) Scheeler Company has the following comparative balance sheet data available:
|
12/31/2018 |
12/31/2017 |
|
|
Cash |
$30,000 |
$80,000 |
|
Accounts Receivable, net |
160,000 |
100,000 |
|
Inventory |
100,000 |
70,000 |
|
Prepaid Rent |
20,000 |
10,000 |
|
Total Current Assets |
$310,000 |
$260,000 |
|
Equipment |
$400,000 |
$200,000 |
|
Accumulated Depreciation |
(60,000) |
(50,000) |
|
Total Assets |
$650,000 |
$410,000 |
|
Accounts Payable |
$50,000 |
$40,000 |
|
Salaries Payable |
40,000 |
40,000 |
|
Bonds Payable |
0 |
50,000 |
|
Common Stock, $10 par |
300,000 |
100,000 |
|
Additional Paid-in Capital |
50,000 |
0 |
|
Retained Earnings |
210,000 |
180,000 |
|
Total Liabilities & Stockholders' Equity |
$650,000 |
$410,000 |
Additional information:
1. The company reports net income of $100,000 and depreciation expense of $20,000 for the year ending December 31, 2018.
2. Dividends declared and paid in 2018, $70,000.
3. Equipment with a cost of $20,000 and accumulated depreciation of $10,000 was sold for $3,000.
4. New equipment was purchased for cash.
5. No common stock was retired during 2018.
Using the indirect method, prepare the statement of cash flows for the year ending December 31, 2018
In: Accounting
Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $199,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $655,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $1,980,000 in total. Seida's January 1, 2018 book value equaled $1,830,000, although land was undervalued by $130,000. 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 $282,000 and declared and paid dividends of $119,000. 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.)
1. Record acquisition of Seida stock.
2. Record income for the year: 40% of the $282,000 reported income.
3. Record 2018 amortization for trademark excess fair value.
4. Record dividend declaration from Seida.
5. Record collection of dividend from investee.
In: Accounting
Tanner-UNF Corporation acquired as a long-term investment $225
million of 8% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 10% for bonds of similar risk and
maturity. Tanner-UNF paid $180 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management has classified the bonds as available-for-sale
investments. As a result of changing market conditions, the fair
value of the bonds at December 31, 2018, was $190 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. Prepare any additional journal entry necessary
for Tanner-UNF to 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 $170 million. Prepare the
journal entries necessary to record the sale, including updating
the fair-value adjustment, recording any reclassification
adjustment, and recording the sale.
In: Accounting
Tanner-UNF Corporation acquired as a long-term investment $300
million of 7% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 8% for bonds of similar risk and
maturity. Tanner-UNF paid $280 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management has classified the bonds as available-for-sale
investments. As a result of changing market conditions, the fair
value of the bonds at December 31, 2018, was $285 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. Prepare any additional journal entry necessary
for Tanner-UNF to 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 $260 million. Prepare the
journal entries necessary to record the sale, including updating
the fair-value adjustment, recording any reclassification
adjustment, and recording the sale.
In: Accounting
The controller of Neptune Corporation has provided you with the
following information:
Neptune Corporation
Income Statement
For the Year Ended December 31, 2018
| Sales Revenue | $77,500 |
| Cost of Goods Sold | 53,500 |
| Gross Profit | 24,000 |
| Depreciation expense | 16,500 |
| Gain on Sale of Equipment |
6,500 |
| Net Income | 14,000 |
Neptune Corporation
Comparative Account Information
Relating to Operations
For the Year Ended December 31
| Assets | 2018 | 2017 |
| Cash | 29,500 | 30,000 |
| Accounts Receivable | 17,000 | 12,000 |
| Capital Assets | 138,500 | 123,500 |
| Accumultaed Depreciation | (89,000) | (83,500) |
| Total Assets | 96,000 | 82,000 |
| Liabilities AND shareholders Equity | ||
| Bonds Payable | 24,500 | 23,000 |
| Dividends Payable | 4,000 | 2,500 |
| Common Shares | 15,500 | 11,000 |
| Retained Earnings | 52,000 | 45,500 |
| Total Liabilities AND Shareholders Equity | 96,000 | 82,000 |
Additional Information:
During 2018, equipment costing 20,000 was sold for cash.
During 2018, $10,000 bonds payable were issued in exchange for
capital assets. There was no amortization of bond discount or
premium.
Required
In good form, generate the Statement of Cash Flows for the year
ended December 31, 2018, using the indirect method.
In: Accounting
On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $190,000 in cash. The equipment had originally cost $171,000 but had a book value of only $104,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method.
Ackerman reported $470,000 in net income in 2018 (not including any investment income) while Brannigan reported $154,100. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $5,700 per year.
a. What is consolidated net income for 2018?
b. What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan?
c. What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream?
d. What is the consolidated net income for 2019 if Ackerman reports $490,000 (does not include investment income) and Brannigan $165,800 in income? Assume that Brannigan is a wholly owned subsidiary and the equipment transfer was downstream.
In: Accounting