On January 1, 2017, Alison, Inc., paid $83,600 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $279,500 and liabilities of $118,500. A patent held by Holister having a $6,800 book value was actually worth $42,800. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2017, Holister earned income of $33,500 and declared and paid dividends of $11,000. In 2018, it had income of $68,000 and dividends of $16,000. During 2018, the fair value of Allison’s investment in Holister had risen from $92,900 to $103,200.

a. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2018?

b. Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2018?

Patrick Corporation issued 5% bonds on January 1, 2018, with a face amount of $1,000,000, the market rate for bonds of similar risk and maturity was 4%. The bonds mature in 20 years and pay interest semi­ annually on June 30 and December 31.

Create an Excel spreadsheet to answer the following requirements and submit a printout of your Excel formulas as well as a handwritten copy of your solutions to the requirements listed below.

Required:

1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record the issuance of the bonds on January 1, 2018.
3. Prepare a complete amortization schedule that determines interest at the effective rate each period using the format listed below:

Amortization Schedule

Date      Cash Interest    Effective Interest    Decrease in Balance   Outstanding Balance

4. Prepare the journal entry to record interest on June 30, 2018.
5. Prepare the appropriate journal entry when the bonds mature in 20 years.

2.        The following note appeared in the 2018 annual report of Roca Company:

Inventories

Inventories valued at LIFO comprised approximately 44% and 42% of inventories at December 31, 2018 and 2017, respectively.

Assume final goods produced in country AAA in 2017,2018,and 2019 and  their prices are shown as follows:  

1. Calculate nominal GDP in years 2017, 2018, and 2019.
2. Calculate Real GDP for years 2017,2018, and 2019 using Year 2017 as the base year.
3. Using the real GDP figures calculated in (b) above, calculate annual growth rate of output for years 2018 and 2019.
4. Calculate GDP deflator for years 2017I to 2019 using Year 2017 as the base year.
5. Calculate CPI price index for years 2017 to 2019 using Year 2017 as the base year.
6. Calculate inflation rate for years 2018 and 2019 using both GDP deflators and CPI indexes calculated in parts (d) and (e).

Winkin, Blinkin, and Nod are equal shareholders in SleepEZ, an S corporation. In the conditions listed below, how much income should each report from SleepEZ for 2018 under both the daily allocation and the specific identification allocation method? Refer to the following table for the timing of SleepEZ’s income.

(Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

a. There are no sales of SleepEZ stock during the year.

b. On April 4, 2018, Blinkin sells his shares to Nod.

c. On April 4, 2018, Winkin and Nod each sell their shares to Blinkin.

On January 1, 2017, Alison, Inc., paid $70,500 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $224,500 and liabilities of $96,500. A patent held by Holister having a $13,300 book value was actually worth $41,800. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2017, Holister earned income of $51,500 and declared and paid dividends of $17,000. In 2018, it had income of $70,500 and dividends of $22,000. During 2018, the fair value of Allison’s investment in Holister had risen from $85,700 to $93,300.

a. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2018?

b. Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2018

Charles and Joan Thompson file a joint return. In 2017, they had taxable income of $92,370 and paid tax of $14,571. Charles is an advertising executive, and Joan is a college professor. During the fall 2018 semester, Joan is planning to take a leave of absence without pay. The Thompsons expect their taxable income to drop to $70,000 in 2018. They expect their 2018 tax liability will be $8,022, which will be the approximate amount of their withholding. Joan anticipates that she will work on academic research during the fall semester.

During September, Joan decides to perform consulting services for some local businesses. Charles and Joan had not anticipated this development. Joan is paid a total of $35,000 during October, November, and December for her work. Use the appropriate Tax Rate Schedules.

a. What estimated tax payments are Charles and Joan required to make, if any, for tax year 2018? (Round your final answer to 2 decimal places.)

Kingbird Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2016 for $12,400,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2017, new technology was introduced that would accelerate the obsolescence of Kingbird’s equipment. Kingbird’s controller estimates that expected future net cash flows on the equipment will be $7,812,000 and that the fair value of the equipment is $6,944,000. Kingbird intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Kingbird uses straight-line depreciation.

Prepare the journal entry (if any) to record the impairment at December 31, 2017.

Prepare the journal entry for the equipment at December 31, 2018. The fair value of the equipment at December 31, 2018, is estimated to be $7,316,000.

Prepare the journal entry (if any) to record the impairment at December 31, 2017 and for the equipment at December 31, 2018, assuming that Kingbird intends to dispose of the equipment and that it has not been disposed of as of December 31, 2018.

Jessica purchased a home on January 1, 2018 for $580,000 by making a down payment of $230,000 and financing the remaining $350,000 with a 30-year loan, secured by the residence, at 6 percent. During 2018 and 2019, Jessica made interest-only payments on this loan of $21,000 (each year). On July 1, 2018, when her home was worth $580,000 Jessica borrowed an additional $145,000 secured by the home at an interest rate of 8 percent. During 2018, she made interest-only payments on the second loan in the amount of $5,800. During 2019, she made interest only on the second loan in the amount of $11,600. What is the maximum amount of the $32,600 interest expense Jessica paid during 2019 may she deduct as an itemized deduction if she used the proceeds of the second loan to finish the basement in her home and landscape her yard? (Assume not married filing separately.)

$0. $11,600. $30,682. $7,200. $32,600.

1. What is the net change (net purchase or sale) in Property, Plant and Equipment account in 2018 given the following information?

2017 Net Property, Plant and Equipment Balance = 14,300,000

2018 Net Property, Plant and Equipment Balance = 12,850,000

2018 Total Accumulated Depreciation Balance = 5,650,000

2018 Depreciation Expense = 1,150,000

Group of answer choices

a. 1,450,000 net purchase

b. 1,450,000 net sale

c. 300,000 net purchase

d. 300,000 net sale

2. Using the balance sheet accounts below, what is the firm's Long Term Debt Ratio?

Cash = 12,300,000

Accounts Receivable = 6,700,000

Inventory = 5,000,000

Fixed Assets = 21,000,000

Current Portion of Long Term Debt = 3,900,000

Accounts Payable = 1,700,000

Long Term Bonds = 29,000,000

Common Stock = 6,000,000

Retained Earnings = 4,400,000

Group of answer choices

a. 73.60%

b. 76.89%

c. 75.98%

d. 64.44%