Earnings per Share and Multiple-Step Income Statement
The following summarized data relate to Bowden Corporation’s current operations:

Required
Prepare a multiple-step income statement for Bowden Corporation for the year. Include earnings per share disclosure at the bottom of the income statement.

Do not use negative signs with any of your answers below.

Exercise 20-23 (Algo) Error correction; three errors [LO20-6]

Below are three independent and unrelated errors.

1. On December 31, 2020, Wolfe-Bache Corporation failed to accrue salaries expense of $2,300. In January 2021, when it paid employees for the December 27–January 2 workweek, Wolfe-Bache made the following entry:
   

2. On the last day of 2020, Midwest Importers received a $100,000 prepayment from a tenant for 2021 rent of a building. Midwest recorded the receipt as rent revenue. The error was discovered midway through 2021.
3. At the end of 2020, Dinkins-Lowery Corporation failed to accrue interest of $9,000 on a note receivable. At the beginning of 2021, when the company received the cash, it was recorded as interest revenue.

Required:
For each error:

1. What would be the effect of each error on the income statement and the balance sheet in the 2020 financial statements?

error A

error B

error C

2. Prepare any journal entries each company should record in 2021 to correct the errors.

Balance sheet data for Kilroy Company for 2022 appears below:

                               January 1, 2022     December 31, 2022
ASSETS:
  Cash                             27,000               43,000
  Accounts receivable              39,000               26,000
  Inventory                        42,000               88,000
  Prepaid insurance                21,000               29,000
  Land                             37,000               72,000
  Equipment                        61,000               94,000
  Accumulated depreciation        <14,000>             <25,000>

LIABILITIES + EQUITY:
  Accounts payable                 33,000               41,000
  Income taxes payable             21,000               15,000
  Unearned revenue                 25,000               39,000
  Notes payable                    51,000               75,000
  Common stock                     34,000               93,000
  Retained earnings                49,000               64,000

Kilroy Company's 2022 income statement is given below:

  Sales revenue                               329,000
  Cost of goods sold                          242,000
  Depreciation expense                         11,000
  Insurance expense                            16,000
  Loss on sale of land                         22,000
  Income tax expense                           10,000
  Net income                                   28,000

Kilroy Company purchased land for $69,000 cash during 2022.

Calculate the net cash flow from investing activities reported by
Kilroy Company in its 2022 statement of cash flows. If your answer
is negative, place a minus sign in front of your answer with no
spaces in between (e.g., -1234).

1. At a given quantity of a product demanded, an increase in demand for the product results in a rise in marginal revenue and hence the marginal revenue product of labor and demand for labor.

Select one:

a. TRUE

b. FALSE

2. The "trilemma" concept refers to the fact that a nation may simultaneously select a combination of any two, but not all three, of the following:

Select one:

a. a managed, dirty float for the exchange rate; a non-independent monetary policy; closure of domestic markets to financial capital flows.

b. flexible bilateral and cross exchange rates; independent, discretionary foreign exchange market interventions; open, liberalized markets for cross-border trade of merchandise and services.

c. fixed bilateral and cross exchange rates; non-independent foreign exchange market interventions; closure of markets to cross-border trade of merchandise and services.

d. fixed exchange rates; an independent, discretionary monetary policy; open, liberalized markets for financial capital.

3. An example of a sterilized foreign exchange market intervention is a purchase of foreign exchange reserves that is exactly matched by an open market purchase.

Select one:

a. TRUE

b. FALSE

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $31 per job, and the actual mobile lab operating expenses for February were $8,770. The company expected to work 130 jobs in February, but actually worked 136 jobs.

Required:

Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $34 per job, and the actual mobile lab operating expenses for February were $8,280. The company expected to work 110 jobs in February, but actually worked 114 jobs.

Required:

Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,500,000. During 2018, costs of $2,200,000 were incurred, with estimated costs of $4,200,000 yet to be incurred. Billings of $2,740,000 were sent, and cash collected was $2,450,000.

In 2019, costs incurred were $2,740,000 with remaining costs estimated to be $3,900,000. 2019 billings were $2,990,000, and $2,675,000 cash was collected. The project was completed in 2020 after additional costs of $4,000,000 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.

Question 1 (1 point)

Equity-method investments (20%-50% ownership) are generally shown at their fair market value on the Balance Sheet.

A: True

B: False

Question 2 (1 point)

For Equity-Method investments (20-50% ownership), dividends received from the investee company will result in the following journal entry:

A: Dr. Cash and Cr. Investment

B: Dr. Investment and Cr. Cash

C: Dr. Investment and Cr. Dividend Revenue

D: Dr. Cash and Cr. Dividend Revenue

Question 3 (1 point)

On 1/1/20, Hershey Corporation purchases 20,000 of the 60,000 outstanding shares of CC Confectioneer for $40 per share. During 2020, CC Confectioneer reports net income of $600,000 and pays total dividends to common shareholders of $300,000. Hershey's 2020 pre-tax Net Income will be ________ because of this investment.

A: $600,000 higher

B: $200,000 higher

C: $100,000 higher

D: $300,000 higher

Question 4 (1 point)

There is usually more uncertainty about the accuracy of Level 3 investment valuations than Level 1 investment valuations.

A: True

B: False

Emmet Property Management entered into a 2-year contract on June 1, 2016, to build an apartment building. The contract starts on July 1, 2016. Under the terms of the contract, Emmet will be paid a fixed fee of $1,500,000 and will receive an additional 10% of the fixed fee provided that building is ready to occupy at the end of the two years. Emmet estimates a 60% chance it will meet the completion date. The total costs of the project are expected to be $1,200,000, and the costs to date (at the end of 2016) are $400,000.

1. Under Option A, Emmet uses the expected value approach to calculate variable consideration. What is the expected total transaction price for the full contract under Option A?
2. And how much revenue should Emmet recognize on this contract in 2016 under option A? (Assume the cost-to-cost method.)
3. Under Option B, Emmet uses the most-likely method to calculate the variable consideration. What is the expected total transaction price for the full contract under Option B?
4. And how much revenue should Emmet recognize on the contract in 2016 under Option B? (Assume the cost-to-cost method.)
5. So, which option (A or B) results in a higher amount of net income in 2016?

A list of accounts follows:

Prepare a classified statement of financial position in good form, without specific amounts. (List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Land, Buildings and Equipment.)