During FY 2018, Adelphi Company reported sales of $400,000, a contribution margin of $7.00 per unit, fixed costs of $100,000, and net income of $25,000. Use this information to determine the number of units Adelphi sold during FY 2018. (Round answer to nearest whole number)

The financial statements of Lee Steel Fabricators are shown below, with the actual results for 2017 and the projections for 2018. Free cash flow is expected to grow at a 6% rate after 2018. The weighted average cost of capital is 11%.   Assume a tax rate of 25% for 2018.

Find operating capital as of 12/31/2017 and 2018. What is the free cash

flow for 12/31/2018?

What is the horizon value as of 12/31 /2018?

What is the value of operations as of 12/31/2017?

What is the total value of the company as of 12/31/2017?

What is the price per share for 12/31/2017?

Income Statements for the Year Ending December 31

(Millions of Dollars Except for Per Share Data)

Balance Sheets for December 31 (Millions of Dollars)

1. Use the following information to work Problems (a) and (b). Show all your workings.

Michael is an Internet service provider. On 31 December 2018, he bought an existing business with servers and a building worth $400,000. During his first year of operation, his business grew, and he purchased new servers for $500,000. The market value of some of his older servers fell by $100,000.

(a)What was Michael’s gross investment, depreciation, and net investment during 2019?

(b)What is the value of Michael’s capital at the end of 2019?

2. Use the following data to work Problems (a) and (b).

The Australian dollar exchange rate increased from $US0.85 in June 2018 to $US1.07 in June 2019, and it increased from 70 euro cents in June 2018 to 74 euro cents in June 2019.

(a)Did the Australian dollar appreciate or depreciate against the U.S. dollar? Did the Australian dollar appreciate or depreciate against the euro? Explain your answers.

(b)What was the value of the U.S. dollar in terms of Australian dollars in June 2018 and June 2019? Did the U.S. dollar appreciate or depreciate against the Australian dollar over the year June 2018 to June 2019? Explain your answers.

3. The Australian Bureau of Statistics reported the following data for Australia in November 2019:

Labour force: 12,092,900

Employment: 11,457,100

Working-age population: 18,462,440

Calculate the

1. Unemployment rate.
2. Labor force participation rate.
3. Employment-to-population ratio.

4. Use the following information to work Problems (a) and (b). Show all your workings.

The people on Coral Island buy only juice and cloth. The CPI basket contains the quantities bought in 2018. The average household spent $60 on juice and $30 on cloth in 2018 when the price of juice was $2 a bottle and the cost of cloth was $5 a meter. In 2019, the juice is $4 a bottle, and cloth is $6 a meter.

(a)Calculate the CPI basket and the percentage of the household’s budget spent on juice in 2018.

(b)Calculate the CPI and the inflation rate in 2019.

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2017:

Transactions during 2018 were as follows:

On January 2, 2018, machinery and equipment were purchased at a total invoice cost of $260,000, which included a $5,500 charge for freight. Installation costs of $27,000 were incurred.

On March 31, 2018, a small storage building was donated to the company. The person donating the building originally purchased it three years ago for $25,000. The fair value of the building on the day of the donation was $17,000.

On May 1, 2018, expenditures of $50,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather.

On November 1, 2018, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common stock that had a market price of $38 per share. Pell paid legal fees and title insurance totaling $23,000. Shortly after acquisition, the building was razed at a cost of $35,000 in anticipation of new building construction in 2019.

On December 31, 2018, Pell purchased a small storage building by giving $15,250 cash and an old automobile purchased for $18,000 on January 1, 2017. Depreciation on the old automobile recorded through December 31, 2018, totaled $13,500. The fair value of the old automobile was $3,750.

Required:

For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2018, using the following depreciation methods and useful lives:

Land improvements—Straight line; 15 years.
Building—150% declining balance; 20 years.
Machinery and equipment—Straight line; 10 years.
Automobiles—150% declining balance; 3 years.

Depreciation is computed to the nearest month and no residual values are used. (Do not round intermediate calculations and round your final answers to 2 decimal places.)

Required information

[The following information applies to the questions displayed below.]

Drs. Glenn Feltham and David Ambrose began operations of their physical therapy clinic, called Northland Physical Therapy, on January 1, 2017. The annual reporting period ends December 31. The trial balance on January 1, 2018, was as follows:

Transactions during 2018 follow:

1. Borrowed $28 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $31 cash on July 2, 2018.
3. Issued additional shares of common stock for $5 on July 3.
4. Purchased software on July 4, $3 cash.
5. Purchased supplies on July 5 on account for future use, $7.
6. Recorded revenues on December 6 of $61, including $8 on credit and $53 received in cash.
7. Recognized salaries and wages expense on December 7 of $36; paid in cash.
8. Collected accounts receivable on December 8, $9.
9. Paid accounts payable on December 9, $10.
10. Received a $3 cash deposit on December 10 from a hospital for a contract to start January 5, 2019.

Data for adjusting journal entries on December 31:

11. Amortization for 2018, $2.
12. Supplies of $3 were counted on December 31, 2018.
13. Depreciation for 2018, $4.
14. Accrued interest of $1 on notes payable.
15. Salaries and wages incurred but not yet paid or recorded, $3.
16. Income tax expense for 2018 was $4 and will be paid in 2019.

The long-term liabilities section of CPS Transportation’s December 31, 2017, balance sheet included the following: (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.)

a. A lease liability with 13 remaining lease payments of $16,000 each, due annually on January 1:

  
The incremental borrowing rate at the inception of the lease was 11% and the lessor’s implicit rate, which was known by CPS Transportation, was 10%.
  
b. A deferred income tax liability due to a single temporary difference. The only difference between CPS Transportation’s taxable income and pretax accounting income is depreciation on a machine acquired on January 1, 2017, for $580,000. The machine’s estimated useful life is five years, with no salvage value. Depreciation is computed using the straight-line method for financial reporting purposes and the MACRS method for tax purposes. Depreciation expense for tax and financial reporting purposes for 2018 through 2021 is as follows:

The enacted federal income tax rates are 35% for 2017 and 40% for 2018 through 2021. For the year ended December 31, 2018, CPS’s income before income taxes was $980,000.

On July 1, 2018, CPS Transportation issued $680,000 of 9% bonds. The bonds mature in 10 years and interest is payable each January 1 and July 1. The bonds were issued at a price to yield the investors 10%. CPS records interest at the effective interest rate.

Required:
1. Determine CPS Transportation’s income tax expense and net income for the year ended December 31, 2018.
2. Determine CPS Transportation’s interest expense for the year ended December 31, 2018.
3. Prepare the long-term liabilities section of CPS Transportation's December 31, 2018, balance sheet.

QUESTION 5. Account balances from the ledger of Summer Company on December 31, 2018, are as follows:

Accounts Payable .................................................................................. $ 23,000

Accounts Receivable ............................................................................. 38,000

Accumulated Depreciation--Equipment ................................................. 64,000

Allowance for Doubtful Accounts ........................................................... 2,000

Patent .................................................................................................... 8,400

Capital Stock, $10 par ........................................................................... 100,000

Cash ...................................................................................................... 60,260

Inventory ................................................................................................ 105,000

Sales Supplies Inventory ....................................................................... 900

Interest Expense .................................................................................... 6,600

Inventory, December 31, 2017 .............................................................. 104,850

Contributed Capital in Excess of Par Value ........................................... 15,000

Long-Term Note Receivable, 14% ......................................................... 12,000

Mortgage Payable, 12% ......................................................................... 60,000

Investment Revenue ......... .................................................................... 1,120

Accumulated Depreciation-Equipment ................................................... 64,000

Rent Revenue ........................................................................................ 3,000

Retained Earnings, December 31, 2017 ................................................ 32,440

Sales ...................................................................................................... 700,000

Cost of Goods Sold ................................................................................ 380,000

Selling Expenses ................................................................................... 164,400

General and Administrative Expenses .................................................. 55,000

Equipment ............................................................................................. 180,000

Adjustments required on December 31, 2018:

(a) Estimated bad debt loss rate is 1/4 percent of credit sales. Credit sales for the year amounted to $200,000.

(b) Interest on the long-term note receivable was last collected August 31, 2018.

(c) Estimated life of the equipment is 10 years, with a residual value of $20,000. Allocate 10 percent of depreciation expense to general and administrative expense and the remainder to selling expenses. Use straight-line depreciation.

(d) Estimated economic life of the patent is 14 years (from January 1, 2018) with no residual value. Straight-line amortization is used. Depreciation expense is classified as selling expense.

(e) Interest on the mortgage payable was last paid on November 30, 2018.

(f) On June 1, 2018, the company rented some office space to a tenant for one year and collected $3,000 rent in advance for the year; the entire amount was credited to rent revenue on this date.

(g) On December 31, 2018, the company received a statement for calendar year 2018 property taxes amounting to $1,300. The payment is due February 15, 2019. Assume that the payment will be made on February 15, 2019.

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2017:

Transactions during 2018 were as follows:

On January 2, 2018, machinery and equipment were purchased at a total invoice cost of $285,000, which included a $6,000 charge for freight. Installation costs of $32,000 were incurred.

On March 31, 2018, a small storage building was donated to the company. The person donating the building originally purchased it three years ago for $30,000. The fair value of the building on the day of the donation was $19,400.

On May 1, 2018, expenditures of $55,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather.

On November 1, 2018, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell’s common stock that had a market price of $43 per share. Pell paid legal fees and title insurance totaling $25,500. Shortly after acquisition, the building was razed at a cost of $40,000 in anticipation of new building construction in 2019.

On December 31, 2018, Pell purchased a small storage building by giving $16,500 cash and an old automobile purchased for $20,500 on January 1, 2017. Depreciation on the old automobile recorded through December 31, 2018, totaled $15,375. The fair value of the old automobile was $4,000.

Required:

For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2018, using the following depreciation methods and useful lives:

Land improvements—Straight line; 15 years.
Building—150% declining balance; 20 years.
Machinery and equipment—Straight line; 10 years.
Automobiles—150% declining balance; 3 years.

Depreciation is computed to the nearest month and no residual values are used. (Do not round intermediate calculations and round your final answers to 2 decimal places.)

Arnold Industries has pretax accounting income of $40 million for the year ended December 31, 2018. The tax rate is 40%. The only difference between accounting income and taxable income relates to an operating lease in which Arnold is the lessee. The inception of the lease was December 28, 2018. An $20 million advance rent payment at the inception of the lease is tax-deductible in 2018 but, for financial reporting purposes, represents prepaid rent expense to be recognized equally over the four-year lease term.

Required:
1. Complete the following table given below and prepare the appropriate journal entry to record Arnold’s income taxes for 2018.

Complete the following table given below to record Arnold’s income taxes for 2018. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Record 2018 income taxes

2. Prepare the appropriate journal entry to record Arnold’s income taxes for 2019. Pretax accounting income was $60 million for the year ended December 31, 2019.

3. Assume a new tax law is enacted in 2019 that causes the tax rate to change from 40% to 30% beginning in 2018. Complete the following table given below and prepare the appropriate journal entry to record Arnold’s income taxes for 2019.

Assume a new tax law is enacted in 2019 that causes the tax rate to change from 40% to 30% beginning in 2018. Complete the following table given below to record Arnold’s income taxes for 2019. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Statement of cash flows (indirect method).
The net changes in the balance sheet accounts of Keating Corporation for the year 2018 are shown below.

An analysis of the Retained Earnings—Unappropriated account follows:

1. On January 2, 2018 short-term investments (classified as available-for-sale) costing $121,000 were sold for $155,000.
2. The company paid a cash dividend on February 1, 2018.
3. Accounts receivable of $16,200 and $19,400 were considered uncollectible and written off in 2018 and 2017, respectively.
4. Major repairs of $33,000 to the equipment were debited to the Accumulated Depreciation account during the year. No assets were retired during 2018.
5. The wholly owned subsidiary reported a net loss for the year of $25,000. The loss was recorded by the parent.
6. At January 1, 2018, the cash balance was $166,000.

Instructions
Prepare a statement of cash flows (indirect method) for the year ended December 31, 2018. Keating Corporation has no securities which are classified as cash equivalents.