Presented below is the trial balance of Sheridan Corporation at December 31, 2020. Debit Credit Cash $271,400 Sales Revenue $11,178,000 Debt Investments (trading) (at cost, $218,000) 211,600 Cost of Goods Sold 6,624,000 Debt Investments (long-term) 412,160 Equity Investments (long-term) 382,720 Notes Payable (short-term) 124,200 Accounts Payable 627,440 Selling Expenses 2,760,000 Investment Revenue 87,400 Land 358,800 Buildings 1,435,200 Dividends Payable 187,680 Accrued Liabilities 132,480 Accounts Receivable 599,840 Accumulated Depreciation–Buildings 209,760 Allowance for Doubtful Accounts 34,960 Administrative Expenses 1,242,000 Interest Expense 291,640 Inventory 823,400 Gain 110,400 Notes Payable (long-term) 1,242,000 Equipment 828,000 Bonds Payable 1,380,000 Accumulated Depreciation–Equipment 82,800 Franchises 220,800 Common Stock ($5 par) 1,380,000 Treasury Stock 264,040 Patents 269,560 Retained Earnings 107,640 Paid-in Capital in Excess of Par 110,400 Totals $16,995,160 $16,995,160

Compute each of the following:

1. Total current assets $

2. Total property, plant, and equipment $

3. Total assets $

4. Total liabilities $

5. Total stockholders’ equity $

Gaze Co.

Adjusted Trial Balance

at 31 December 2019

                                                                                Debit                        Credit                         

Cash                                                                        € 51,402                           

Accounts receivable                                                 2,400                                

Office supplies                                                         600                                   

Prepaid rent                                                             1,440                                

Office equipment                                                     64,800                              

Accumulated depreciation: office equipment                                        € 42,300

Accounts payable                                                                                      1,680

Interest payable                                                                                           432

Income taxes payable                                                                               2,100

Unearned revenue                                                                                  10,800

Capital stock                                                                                           36,000

Retained earnings                                                                                     9,600

Dividends                                                               1,200                                

Consulting services revenue                                                                   72,000

Office supplies expense                                           726                                   

Depreciation expense: office equipment                  9,900                                

Rent expense                                                          1,212                                

Salaries expense                                                     32,520                              

Interest expense                                                      432                                   

Income taxes expense                                             8,280                                              

Totals                                                                      € 174,912           €174,912

Instructions:

Using Adjusted Trial Balance above, perform the following tasks:

(5) Prepare an after-closing trial balance dated December 31, 2019 (10 points).

(6) Does the company appear to be liquid? Explain. Justify your conclusion with calculation of working capital and current ratio (15 points).

(7) Has the company been profitable in the past? What about this year? Justify your conclusion with calculation of net income percentage and return on equity (15 points).

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $196,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $647,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,050,000 in total. Seida's January 1, 2018 book value equaled $1,900,000, although land was undervalued by $131,000. 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 $342,000 and declared and paid dividends of $102,000. 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.)

On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,330,000. During 2021, costs of $2,110,000 were incurred with estimated costs of $4,110,000 yet to be incurred. Billings of $2,610,000 were sent, and cash collected was $2,360,000.

In 2022, costs incurred were $2,610,000 with remaining costs estimated to be $3,765,000. 2022 billings were $2,860,000 and $2,585,000 cash was collected. The project was completed in 2023 after additional costs of $3,910,000 were incurred. The company’s fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion.

Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022, and 2023 using the percentage of completion method.
2a. Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred).
2b. Prepare journal entries for 2022 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, 2021.
3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2022.

Presented below is the trial balance of Wildhorse Corporation at December 31, 2020.

Compute each of the following:

SECOND QUESTION

Tropicana is a popular family resort. Summer is the resort’s busy season; guests typically pay a deposit at least six months in advance to guarantee their reservations.

The resort is currently seeking new investment capital in order to expand operations. The more profitable Tropicana appears to be, the more interested potential investors will be.

Richard, an accountant employed by the resort, has been asked by his boss to include $2 million of unearned guest deposits in the computation of income for the current year.

Richard explained to his boss that because these deposits had not yet been earned, they should be reported in the balance sheet as liabilities, not in the income statement as revenue. Richard argued that reporting guest deposits as revenue would mislead investors.

Richard’s boss then demanded that he includes $2 million of unearned guest deposits in the computation of income or be fired. He then told Richard in an assuring tone, “Richard, you will never be held responsible for misleading potential investors because you are just following my orders.”

REQUIRED

1. Should Richard overstate the resort’s income in order to keep his job? Discuss.
2. Is Richard’s boss correct in saying that Richard cannot be held responsible for misleading potential investors? Discuss.

On January 1, 2022, the ledger of Crane Company contained these liability accounts. Accounts Payable $44,900 Sales Taxes Payable 9,000 Unearned Service Revenue 21,400 During January, the following selected transactions occurred. Jan. 1 Borrowed $18,000 in cash from Apex Bank on a 4-month, 5%, $18,000 note. 5 Sold merchandise for cash totaling $5,406, which includes 6% sales taxes. 12 Performed services for customers who had made advance payments of $13,600. (Credit Service Revenue.) 14 Paid state treasurer’s department for sales taxes collected in December 2021, $9,000. 20 Sold 740 units of a new product on credit at $49 per unit, plus 5% sales tax. During January, the company’s employees earned wages of $54,000. Withholdings related to these wages were $4,131 for Social Security (FICA), $5,379 for federal income tax, and $1,614 for state income tax. The company owed no money related to these earnings for federal or state unemployment tax. Assume that wages earned during January will be paid during February. No entry had been recorded for wages or payroll tax expense as of January 31.

Suppose in its income statement for the year ended June 30, 2022, The Clorox Company reported the following condensed data (dollars in millions).

Assume a tax rate of 34%.  

Assume the marketing department has presented a plan to increase advertising expenses by $340 million. It expects this plan to result in an increase in both net sales and cost of goods sold of 20%. (Hint: Increase both sales revenue and sales returns and allowances by 25%.) Redo parts (a) and (b) and discuss whether this plan has merit. (Assume a tax rate of 34%, and round all amounts to whole dollars.)

Prepare a multiple-step income statement. (Round answers to 0 decimal places, e.g. 15,222.)

Calculate the gross profit rate and the profit margin. (Round answers to 1 decimal place, e.g. 15.2%.)

(Balance Sheet) Presented below is the trial balance of Hightower Corporation at December 31, 2020.

Instructions

Compute each of the following:

1.   Total current assets

2.   Total property, plant, and equipment

3.   Total assets

4.   Total liabilities

5.   Total stockholders’ equity

All amounts are expressed in Canadian dollars and report normal balance.

1- Calculate total current asset

2- Total non current asset ( consider the net book value at it appears in the table given. The 4,400 depreciation expense has been already added to accumulated depreciation)

3- Income tax payable (30% tax rate)

4- Total current liabilities

5- Total non current liabilities

6- Retained earnings ending balance (Using Ben’s Inc. account balances, assuming the board of directors declared dividends of $28,680, calculate)

7 - Total Shareholders' equity