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Calculators |
Notebooks |
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Quantity Produced |
Price of each Calculator |
Quantity Produced |
Price of each Notebook |
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2018 |
5 |
$20 |
15 |
$5 |
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2019 |
6 |
$30 |
25 |
$6 |
In: Economics
Pastina Company sells various types of pasta to grocery chains
as private label brands. The company's fiscal year-end is December
31. The unadjusted trial balance as of December 31, 2018, appears
below.
Account Title | Debits | Credits | ||||
Cash | 29,000 | |||||
Accounts receivable | 39,000 | |||||
Supplies | 1,400 | |||||
Inventory | 59,000 | |||||
Note receivable | 19,000 | |||||
Interest receivable | 0 | |||||
Prepaid rent | 2,400 | |||||
Prepaid insurance | 0 | |||||
Office equipment | 96,000 | |||||
Accumulated depreciation—office equipment | 36,000 | |||||
Accounts payable | 30,000 | |||||
Salaries and wages payable | 0 | |||||
Note payable | 49,000 | |||||
Interest payable | 0 | |||||
Deferred revenue | 0 | |||||
Common stock | 59,000 | |||||
Retained earnings | 35,580 | |||||
Sales revenue | 147,000 | |||||
Interest revenue | 0 | |||||
Cost of goods sold | 69,000 | |||||
Salaries and wages expense | 18,800 | |||||
Rent expense | 13,200 | |||||
Depreciation expense | 0 | |||||
Interest expense | 0 | |||||
Supplies expense | 1,000 | |||||
Insurance expense | 5,880 | |||||
Advertising expense | 2,900 | |||||
Totals | 356,580 | 356,580 | ||||
Information necessary to prepare the year-end adjusting entries
appears below.
Depreciation on the office equipment for the year is $12,000.
Employee salaries and wages are paid twice a month, on the 22nd for salaries and wages earned from the 1st through the 15th, and on the 7th of the following month for salaries and wages earned from the 16th through the end of the month. Salaries and wages earned from December 16 through December 31, 2018, were $1,400.
On October 1, 2018, Pastina borrowed $49,000 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.
On March 1, 2018, the company lent a supplier $19,000 and a note was signed requiring principal and interest at 9% to be paid on February 28, 2019.
On April 1, 2018, the company paid an insurance company $5,880 for a two-year fire insurance policy. The entire $5,880 was debited to insurance expense.
$900 of supplies remained on hand at December 31, 2018.
A customer paid Pastina $1,900 in December for 1,470 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue.
On December 1, 2018, $2,400 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019, at $1,200 per month.
Required:
Prepare the necessary December 31, 2018, adjusting journal entries.(If no entry is required for a transaction/event, select
"No journal entry required" in the first account field. Do not
round intermediate calculations.)
In: Accounting
|
WILDHORSE COMPANY |
||||
|---|---|---|---|---|
|
Assets |
2017 |
2016 |
||
|
Cash |
$ 70,000 |
$ 68,000 |
||
|
Debt investments (short-term) |
51,000 |
40,000 |
||
|
Accounts receivable |
109,000 |
91,000 |
||
|
Inventory |
231,000 |
167,000 |
||
|
Prepaid expenses |
27,000 |
26,000 |
||
|
Land |
134,000 |
134,000 |
||
|
Building and equipment (net) |
264,000 |
186,000 |
||
|
Total assets |
$ 886,000 |
$ 712,000 |
||
|
Liabilities and Stockholders’ Equity |
||||
|
Notes payable |
$ 171,000 |
$ 109,000 |
||
|
Accounts payable |
67,000 |
53,000 |
||
|
Accrued liabilities |
41,000 |
41,000 |
||
|
Bonds payable, due 2017 |
250,000 |
170,000 |
||
|
Common stock, $10 par |
206,000 |
206,000 |
||
|
Retained earnings |
151,000 |
133,000 |
||
|
Total liabilities and stockholders’ equity |
$ 886,000 |
$ 712,000 |
||
|
WILDHORSE COMPANY |
||||
|---|---|---|---|---|
|
2017 |
2016 |
|||
|
Sales revenue |
$ 899,000 |
$ 798,000 |
||
|
Cost of goods sold |
650,000 |
575,000 |
||
|
Gross profit |
249,000 |
223,000 |
||
|
Operating expenses |
192,000 |
168,000 |
||
|
Net income |
$ 57,000 |
$ 55,000 |
||
Additional information:
| 1. | Inventory at the beginning of 2016 was $ 117,000. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. | Accounts receivable (net) at the beginning of 2016 were $ 90,000. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3. | Total assets at the beginning of 2016 were $ 634,000. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4. | No common stock transactions occurred during 2016 or 2017. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5. |
All sales were on account. Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2017, and (2) as of December 31, 2018, after giving effect to the situation. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%. If % change is a decrease show the numbers as negative, e.g. -1.83% or (1.83%).)
2017 2018 % Change
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In: Accounting
Williams-Santana, Inc., is a manufacturer of high-tech
industrial parts that was started in 2006 by two talented engineers
with little business training. In 2018, the company was acquired by
one of its major customers. As part of an internal audit, the
following facts were discovered. The audit occurred during 2018
before any adjusting entries or closing entries were prepared. The
income tax rate is 40% for all years.
A five-year casualty insurance policy was purchased at the beginning of 2016 for $33,000. The full amount was debited to insurance expense at the time.
Effective January 1, 2018, the company changed the salvage values used in calculating depreciation for its office building. The building cost $604,000 on December 29, 2007, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $120,000. Declining real estate values in the area indicate that the salvage value will be no more than $30,000.
On December 31, 2017, merchandise inventory was overstated by $23,000 due to a mistake in the physical inventory count using the periodic inventory system.
The company changed inventory cost methods to FIFO from LIFO at the end of 2018 for both financial statement and income tax purposes. The change will cause a $940,000 increase in the beginning inventory at January 1, 2019.
At the end of 2017, the company failed to accrue $15,100 of sales commissions earned by employees during 2017. The expense was recorded when the commissions were paid in early 2018.
At the beginning of 2016, the company purchased a machine at a cost of $680,000. Its useful life was estimated to be ten years with no salvage value. The machine has been depreciated by the double-declining balance method. Its book value on December 31, 2017, was $435,200. On January 1, 2018, the company changed to the straight-line method.
Warranty expense is determined each year as 1% of sales. Actual payment experience of recent years indicates that 0.70% is a better indication of the actual cost. Management effects the change in 2018. Credit sales for 2018 are $3,600,000; in 2017 they were $3,300,000.
Required:
For each situation:
1. Identify whether it represents an accounting
change or an error. If an accounting change, identify the type of
change. For accounting errors, choose "Not applicable".
2. Prepare any journal entry necessary as a direct
result of the change or error correction as well as any adjusting
entry for 2018 related to the situation described. Any tax effects
should be adjusted for through Income tax payable or Refund income
tax.
In: Accounting
In 2018, the initial year of its existence, Dexter Company's accountant, in preparing both the income statement and the tax return, developed the following list of items causing differences between accounting and taxable income:
1.The company sells its merchandise on an installment contract basis. In 2018, Dexter elected, for tax purposes, to report the gross profit from these sales in the years the receivables are collected. However, for financial statement purposes, the company recognized all the gross profit in 2018. These procedures created a $750,000 difference between book and taxable incomes. The future collection of the installment contracts receivables are expected to result in taxable amounts of $375,000 in each of the next two years. (Note: the company treats installment contracts receivable as a current asset on its balance sheet.)
2.The company has also chosen to depreciate all of its depreciable assets on an accelerated basis for tax purposes but on a straight-line basis for accounting purposes. These procedures resulted in $90,000 excess depreciation for tax purposes over accounting depreciation. The temporary difference due to excess tax depreciation will reverse equally over the three year period from 2019-2021.
3.Dexter leased some of its property to Baker Company on July 1, 2018. The lease was to expire on July 1, 2020 and the monthly rentals were to be $90,000. Baker, however, paid the first year's rent in advance and Dexter reported this entire amount on its tax return. These procedures resulted in a $540,000 difference between book and taxable incomes. (Note: this lease was an operating lease and Dexter classified the unearned rent as a current liability on its balance sheet.)
4.Dexter owns $300,000 of bonds issued by the State of Oregon upon which 5% interest is paid annually. In 2018, Dexter showed $15,000 of income from the bonds on its income statement but did not show any of this amount on its tax return. (Note: these bonds are classified as long-term investments on Dexter's balance sheet.)
5.In 2018, Dexter insured the lives of its chief executives. The premiums paid amounted to $18,000 and this amount was shown as an expense on the income statement. However, this amount was not deducted on the tax return. The company is the beneficiary.
Instructions
Assuming that the income statement of Dexter Company showed "Income before income taxes" of $1,500,000; that the enacted tax rates are 30% for all years; and that no other differences between book and taxable incomes existed, except for those mentioned above:
1.Compute the income taxes payable.
2.Prepare a schedule of future taxable and (deductible) amounts at the end of 2018.
3.Prepare a schedule of deferred tax (asset) and liability at the end of 2018.
4.Compute the net deferred tax expense (benefit) for 2018.
In: Accounting
Please urgent, Patient Care Instruments uses a manufacturing costing system with one direct cost category (direct materials) and three indirect cost categories: The management of Patient Care Instruments wants to evaluate whether value engineering has succeeded in reducing the target manufacturing cost per unit of one of its products, HJ6, by 20%
In response to competitive pressures at the end of 2017, Patient Care Instruments used value-engineering techniques to reduce manufacturing costs. Actual information for 2017and 2018 is:
|
2017 |
2018 |
|
|
Setup, production order, and materials-handling costs per batch |
$8,700 |
$8,000 |
|
Total manufacturing-operations cost per machine-hour |
62 |
54 |
|
Cost per engineering change |
33,750 |
22,500 |
Catagories:
|
a. |
Setup, production order, and materials-handling costs that vary with the number of batches |
|
b. |
Manufacturing operations costs that vary with machine-hours |
|
c. |
Costs of engineering changes that vary with the number of engineering changes made |
Actual results
|
Actual Results for 2017 |
Actual Results for 2018 |
|
|
Units of HJ6 produced |
7,500 |
9,000 |
|
Direct material cost per unit of HJ6 |
$3,000 |
$1,600 |
|
Total number of batches required to produce HJ6 |
60 |
70 |
|
Total machine-hours required to produce HJ6 |
48,750 |
43,200 |
|
Number of engineering changes made |
10 |
8 |
Requirements 1 and 2. Calculate the manufacturing cost per unit of HJ6 in 2017 and then in 2018. (Round your answers to the nearest dollar.)
|
2017 |
|
|
cost per unit |
|
|
Direct materials |
|
|
Batch-level costs |
|
|
Mfg. operations costs |
|
|
Engineering change costs |
|
|
Total |
|
2018 |
|
cost per unit |
Requirement 3. Did Patient Care Instruments achieve the target manufacturing cost per unit for HJ6 in 2018? Explain. Begin by computing the target manufacturing cost per unit for HJ6 in 2018. Determine the formula, and then complete the computation. (Enter any ratios used in decimal form to two decimal places, .XX. Round your final answer to the nearest whole dollar.)
|
|
|
Target manufacturing |
||
|
x |
= |
cost per unit |
||
|
x |
= |
Patient Care Instruments ▼ did or did not achieve its target manufacturing cost per unit.
Requirement 4. Explain how Patient Care
Instruments reduced the manufacturing cost per unit of HJ6 in 2018. Select each of the actions taken by Patient Care Instruments to reduce the manufacturing cost per unit of HJ6 in 2018. (Leave any unused cells blank.)
In: Accounting
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $495,000 in cash. The subsidiary's stockholders' equity accounts totaled $479,000 and the noncontrolling interest had a fair value of $55,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $47,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (six-year remaining life).
Brey reported net income from its own operations of $81,000 in 2016 and $97,000 in 2017. Brey declared dividends of $27,500 in 2016 and $31,500 in 2017.
| Year | Cost to Brey | Transfer Price to Pitino | Inventory Remaining at Year-End (at transfer price) | ||||||
| 2016 | $ | 86,000 | $ | 200,000 | $ | 42,000 | |||
| 2017 | 110,000 | 220,000 | 54,000 | ||||||
| 2018 | 147,000 | 245,000 | 45,000 | ||||||
At December 31, 2018, Pitino owes Brey $33,000 for inventory acquired during the period.
The following separate account balances are for these two companies for December 31, 2018, and the year then ended.
Note: Parentheses indicate a credit balance.
| Pitino | Brey | ||||||
| Sales revenues | $ | (896,000 | ) | $ | (451,000 | ) | |
| Cost of goods sold | 532,000 | 226,000 | |||||
| Expenses | 187,100 | 92,000 | |||||
| Equity in earnings of Brey | (119,970 | ) | 0 | ||||
| Net income | $ | (296,870 | ) | $ | (133,000 | ) | |
| Retained earnings, 1/1/18 | $ | (522,000 | ) | $ | (312,000 | ) | |
| Net income (above) | (296,870 | ) | (133,000 | ) | |||
| Dividends declared | 146,000 | 53,000 | |||||
| Retained earnings, 12/31/18 | $ | (672,870 | ) | $ | (392,000 | ) | |
| Cash and receivables | $ | 163,000 | $ | 115,000 | |||
| Inventory | 340,000 | 221,000 | |||||
| Investment in Brey | 634,410 | 0 | |||||
| Land, buildings, and equipment (net) | 981,000 | 345,000 | |||||
| Total assets | $ | 2,118,410 | $ | 681,000 | |||
| Liabilities | $ | (845,540 | ) | $ | (3,000 | ) | |
| Common stock | (600,000 | ) | (286,000 | ) | |||
| Retained earnings, 12/31/18 | (672,870 | ) | (392,000 | ) | |||
| Total liabilities and equity | $ | (2,118,410 | ) | $ | (681,000 | ) | |
What was the annual amortization resulting from the acquisition-date fair-value allocations?
Were the intra-entity transfers upstream or downstream?
What intra-entity gross profit in inventory existed as of January 1, 2018?
What intra-entity gross profit in inventory existed as of December 31, 2018?
What amounts make up the $119,970 Equity Earnings of Brey account balance for 2018?
What is the net income attributable to the noncontrolling interest for 2018?
What amounts make up the $634,410 Investment in Brey account balance as of December 31, 2018?
Prepare the 2018 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances.
Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.
In: Accounting
[The following information applies to the questions displayed below.]
Selected comparative financial statements of Korbin Company follow:
| KORBIN COMPANY | |||||||||
| Comparative Income Statements | |||||||||
| For Years Ended December 31, 2018, 2017, and 2016 | |||||||||
| 2018 | 2017 | 2016 | |||||||
| Sales | $ | 444,857 | $ | 340,797 | $ | 236,500 | |||
| Cost of goods sold | 267,804 | 215,043 | 151,360 | ||||||
| Gross profit | 177,053 | 125,754 | 85,140 | ||||||
| Selling expenses | 63,170 | 47,030 | 31,218 | ||||||
| Administrative expenses | 40,037 | 29,990 | 19,630 | ||||||
| Total expenses | 103,207 | 77,020 | 50,848 | ||||||
| Income before taxes | 73,846 | 48,734 | 34,292 | ||||||
| Income tax expense | 13,735 | 9,990 | 6,961 | ||||||
| Net income | $ | 60,111 | $ | 38,744 | $ | 27,331 | |||
| KORBIN COMPANY | |||||||||
| Comparative Balance Sheets | |||||||||
| December 31, 2018, 2017, and 2016 | |||||||||
| 2018 | 2017 | 2016 | |||||||
| Assets | |||||||||
| Current assets | $ | 46,886 | $ | 36,682 | $ | 49,036 | |||
| Long-term investments | 0 | 900 | 3,460 | ||||||
| Plant assets, net | 89,807 | 95,152 | 57,474 | ||||||
| Total assets | $ | 136,693 | $ | 132,734 | $ | 109,970 | |||
| Liabilities and Equity | |||||||||
| Current liabilities | $ | 19,957 | $ | 19,777 | $ | 19,245 | |||
| Common stock | 64,000 | 64,000 | 46,000 | ||||||
| Other paid-in capital | 8,000 | 8,000 | 5,111 | ||||||
| Retained earnings | 44,736 | 40,957 | 39,614 | ||||||
| Total liabilities and equity | $ | 136,693 | $ | 132,734 | $ | 109,970 | |||
Required:
1. Complete the below table to calculate each year's current ratio.
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2. Complete the below table to calculate income statement data in common-size percents. (Round your percentage answers to 2 decimal places.)
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3. Complete the below table to calculate the balance sheet data in trend percents with 2016 as the base year. (Round your percentage answers to 2 decimal places.)
|
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In: Accounting
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $495,000 in cash. The subsidiary's stockholders' equity accounts totaled $479,000 and the noncontrolling interest had a fair value of $55,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $47,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (six-year remaining life).
Brey reported net income from its own operations of $81,000 in 2016 and $97,000 in 2017. Brey declared dividends of $27,500 in 2016 and $31,500 in 2017.
| Year | Cost to Brey | Transfer Price to Pitino | Inventory Remaining at Year-End (at transfer price) | ||||||
| 2016 | $ | 86,000 | $ | 200,000 | $ | 42,000 | |||
| 2017 | 110,000 | 220,000 | 54,000 | ||||||
| 2018 | 147,000 | 245,000 | 45,000 | ||||||
At December 31, 2018, Pitino owes Brey $33,000 for inventory acquired during the period.
The following separate account balances are for these two companies for December 31, 2018, and the year then ended.
Note: Parentheses indicate a credit balance.
| Pitino | Brey | ||||||
| Sales revenues | $ | (896,000 | ) | $ | (451,000 | ) | |
| Cost of goods sold | 532,000 | 226,000 | |||||
| Expenses | 187,100 | 92,000 | |||||
| Equity in earnings of Brey | (119,970 | ) | 0 | ||||
| Net income | $ | (296,870 | ) | $ | (133,000 | ) | |
| Retained earnings, 1/1/18 | $ | (522,000 | ) | $ | (312,000 | ) | |
| Net income (above) | (296,870 | ) | (133,000 | ) | |||
| Dividends declared | 146,000 | 53,000 | |||||
| Retained earnings, 12/31/18 | $ | (672,870 | ) | $ | (392,000 | ) | |
| Cash and receivables | $ | 163,000 | $ | 115,000 | |||
| Inventory | 340,000 | 221,000 | |||||
| Investment in Brey | 634,410 | 0 | |||||
| Land, buildings, and equipment (net) | 981,000 | 345,000 | |||||
| Total assets | $ | 2,118,410 | $ | 681,000 | |||
| Liabilities | $ | (845,540 | ) | $ | (3,000 | ) | |
| Common stock | (600,000 | ) | (286,000 | ) | |||
| Retained earnings, 12/31/18 | (672,870 | ) | (392,000 | ) | |||
| Total liabilities and equity | $ | (2,118,410 | ) | $ | (681,000 | ) | |
What was the annual amortization resulting from the acquisition-date fair-value allocations?
Were the intra-entity transfers upstream or downstream?
What intra-entity gross profit in inventory existed as of January 1, 2018?
What intra-entity gross profit in inventory existed as of December 31, 2018?
What amounts make up the $119,970 Equity Earnings of Brey account balance for 2018?
What is the net income attributable to the noncontrolling interest for 2018?
What amounts make up the $634,410 Investment in Brey account balance as of December 31, 2018?
Prepare the 2018 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances.
Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.
In: Accounting
Williams-Santana, Inc., is a manufacturer of high-tech
industrial parts that was started in 2006 by two talented engineers
with little business training. In 2018, the company was acquired by
one of its major customers. As part of an internal audit, the
following facts were discovered. The audit occurred during 2018
before any adjusting entries or closing entries were prepared. The
income tax rate is 40% for all years.
Required:
For each situation:
1. Identify whether it represents an accounting
change or an error. If an accounting change, identify the type of
change. For accounting errors, choose "Not applicable".
2. Prepare any journal entry necessary as a direct
result of the change or error correction as well as any adjusting
entry for 2018 related to the situation described. Any tax effects
should be adjusted for through Income tax payable or Refund income
tax.
In: Accounting