Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 9,200 shares of $10 par value common stock. Haynes’s shares had a $15 per share fair value. On that date, Turner reported a net book value of $101,250. However, its equipment (with a five-year remaining life) was undervalued by $6,150 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $30,600, although no value had been recorded on Turner’s books. The customer list had an estimated remaining useful life of 10 years.

The following balances come from the individual accounting records of these two companies as of December 31, 2017:

The following balances come from the individual accounting records of these two companies as of December 31, 2018:

1. a. What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied?

2. b. What is the consolidated net income for the year ending December 31, 2018?

3.        c-1. What is the consolidated equipment balance as of December 31, 2018?

4.        c-2. Would this answer be affected by the investment method applied by the parent?

5. d. Prepare entry *C for the beginning of the Retained Earnings account on a December 31, 2018 by using initial value, partial equity and equity method.

Prepare entry *C if the parent used the initial value method.

Prepare entry *C if the parent used the partial equity method.

Prepare entry *C if the parent used the equity method.

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 (the amounts are rounded to thousands of dollars to simplify):

Transactions during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $13 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $16 cash on July 2, 2018.
3. Issued additional shares of common stock for $6 on July 3.
4. Purchased software on July 4, $2 cash.
5. Purchased supplies on July 5 on account for future use, $8.
6. Recorded revenues on December 6 of $47, including $9 on credit and $38 received in cash.
7. Recognized salaries and wages expense on December 7 of $21; paid in cash.
8. Collected accounts receivable on December 8, $8.
9. Paid accounts payable on December 9, $9.
10. Received a $2 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, $3.
12. Supplies of $2 were counted on December 31, 2018.
13. Depreciation for 2018, $3.
14. Accrued interest of $1 on notes payable.
15. Salaries and wages incurred but not yet paid or recorded, $4.
16. Income tax expense for 2018 was $3 and will be paid in 2019.

5. Post the adjusting entries from requirement 4 and prepare an adjusted trial balance. (Enter your answers in thousands of dollars.)

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 (the amounts are rounded to thousands of dollars to simplify):

Transactions during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $13 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $16 cash on July 2, 2018.
3. Issued additional shares of common stock for $6 on July 3.
4. Purchased software on July 4, $2 cash.
5. Purchased supplies on July 5 on account for future use, $8.
6. Recorded revenues on December 6 of $47, including $9 on credit and $38 received in cash.
7. Recognized salaries and wages expense on December 7 of $21; paid in cash.
8. Collected accounts receivable on December 8, $8.
9. Paid accounts payable on December 9, $9.
10. Received a $2 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, $3.
12. Supplies of $2 were counted on December 31, 2018.
13. Depreciation for 2018, $3.
14. Accrued interest of $1 on notes payable.
15. Salaries and wages incurred but not yet paid or recorded, $4.
16. Income tax expense for 2018 was $3 and will be paid in 2019.

1. 6-a. Prepare an income statement.

2. 6-b. Prepare the statement of retained earnings.

3. 6-c. Prepare the balance sheet.

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 (the amounts are rounded to thousands of dollars to simplify):

Transactions during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $24 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $27 cash on July 2, 2018.
3. Issued additional shares of common stock for $4 on July 3.
4. Purchased software on July 4, $4 cash.
5. Purchased supplies on July 5 on account for future use, $6.
6. Recorded revenues on December 6 of $59, including $10 on credit and $49 received in cash.
7. Recognized salaries and wages expense on December 7 of $32; paid in cash.
8. Collected accounts receivable on December 8, $7.
9. Paid accounts payable on December 9, $8.
10. Received a $4 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, $1.
12. Supplies of $4 were counted on December 31, 2018.
13. Depreciation for 2018, $2.
14. Accrued interest of $1 on notes payable.
15. Salaries and wages incurred but not yet paid or recorded, $2.
16. Income tax expense for 2018 was $5 and will be paid in 2019.

1. 6-a. Prepare an income statement.

2. 6-b. Prepare the statement of retained earnings.

3. 6-c. Prepare the balance sheet.

On January 1, 2017, Fro-Yo Inc. began offering customers a cash rebate of $5.00 if the customer mails in 10 proof-of-purchase labels from its frozen yogurt containers. Based on historical experience, the company estimates that 20% of the labels will be redeemed. During 2017, the company sold 5,000,000 frozen yogurt containers at $1, cash, per container. From these sales, 800,000 labels were redeemed in 2017, 150,000 labels were redeemed in 2018, and the remaining labels were never redeemed.

Required:

Chart of Accounts

General Journal

Prepare the necessary journal entries to record:

PAGE 9

GENERAL JOURNAL

Next Level

Assume that 300,000 labels were redeemed in 2018. Prepare the journal entries related to the cash rebate offer for 2018.

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GENERAL JOURNAL

Fraser Corp. is a traditional retailer that recently also started an Internet-based subsidiary that sells its product online. Its sales in June 2018 were $710,000. Fraser, the company president, is preparing for a meeting with Tom Scott, a loan officer with Anchor Bank, to review quarter end financing requirements. After discussions with the company’s marketing and finance managers, sales over the next three months were forecasted as follows. Sales in July 2018: $1,250,000, sales in August 2018: $2,250,000 and sales in September 2018: $2,500,000.

Fraser’s balance sheet as of the end of June, 2018 was as follows.

____________________________________________________________________

Fraser Corporation                                                              

Balance Sheet as of June 30, 2018 (in $ Thousands)

____________________________________________________________________

Cash                              $ 50                               Accounts payable         $   10                          

Accounts receivable         710                               Notes payable                  800

Inventories                       600                               Long-term debt               400

Net fixed assets               750                                  Total liabilities          1,210

                                                                                       Equity                           900

          Total assets          $2,110                                       Total                  $2,110

     ____________________________________________________________________

All sales are made on credit terms of net 30 days and are collected the following month and no bad debts are anticipated. The accounts receivable on the balance sheet at the end of June thus will be collected in July. The July sales will be collected in August, and so on The amount of Inventory on hand represents the operating level which the company intends to maintain (i.e., not percentage of sales). Cost of goods sold average 70 percent of sales. Inventory is purchased in the month of sale and paid for in cash. Other cash expenses average 7 percent of sales. Assume taxes are paid monthly and the effective income tax rate is 40 percent for planning purposes. Fraser is planning to purchase a small warehouse in September 2018 for $100,000. Depreciation is $10,000 per month including depreciation expenses for the warehouse.

      The annual interest rate on outstanding long term debt and notes payable is 12% per annum. There are no capital expenditures planned during the period, and no dividends will be paid. The company’s desired end-of-month cash balance is $90,000. The president hopes to meet any cash shortages during the period by borrowing (short term) from the bank at the end of the month. The interest rate on the new bank loans will be 12% per annum. All interest expenses are based on previous month’s debt.

Prepare monthly pro forma income statements for July, August, and September 2018.                                                                                                                                        

                                                                                                                                        .

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 (the amounts are rounded to thousands of dollars to simplify):

Transactions during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $27 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $30 cash on July 2, 2018.
3. Issued additional shares of common stock for $4 on July 3.
4. Purchased software on July 4, $4 cash.
5. Purchased supplies on July 5 on account for future use, $6.
6. Recorded revenues on December 6 of $62, including $10 on credit and $52 received in cash.
7. Recognized salaries and wages expense on December 7 of $35; paid in cash.
8. Collected accounts receivable on December 8, $7.
9. Paid accounts payable on December 9, $8.
10. Received a $4 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, $1.
12. Supplies of $4 were counted on December 31, 2018.
13. Depreciation for 2018, $2.
14. Accrued interest of $1 on notes payable.
15. Salaries and wages incurred but not yet paid or recorded, $2.
16. Income tax expense for 2018 was $5 and will be paid in 2019.

1. 6-a. Prepare an income statement.

2. 6-b. Prepare the statement of retained earnings.

3. 6-c. Prepare the balance sheet.

The following list of accounts and their balances represents the unadjusted trial balance of Alt Company at December 31, 2018:

Additional Data:

The balance in the Insurance Expense account contains the premium costs of three policies:

Policy 1, remaining cost of $2,550, 1-yr. term, taken out on May 1, 2017;

Policy 2, original cost of $10,800, 3-yr. term, taken out on Oct. 1, 2018;

Policy 3, original cost of $1,300, 1-yr. term, taken out on Jan. 1, 2018.

On September 30, 2018, Alt received $21,600 rent from its lessee for an eighteen month lease beginning on that date.

The regular rate of depreciation is 8% per year. Acquisitions and retirements during a year are depreciated at half this rate. There were no purchases during the year. On December 31, 2017, the balance of the Plant and Equipment account was $220,000.

On December 28, 2018, the bookkeeper incorrectly credited Sales Revenue for a receipt on account in the amount of $20,000.

At December 31, 2018, salaries and wages accrued but unpaid were $4,200.

Alt estimates that 2% of gross accounts receivable will become uncollectible.

On August 1, 2018, Alt purchased, as a short-term investment, 60 $1,000, 5% bonds of Allen Corp. at par. The bonds mature on August 1, 2019. Interest payment dates are July 31 and January 31.

On April 30, 2018, Alt rented a warehouse for $3,000 per month, paying $36,000 in advance.

Instructions

Record the necessary correcting and adjusting entries.

Indicate which of the adjusting entries may be reversed at the beginning of the next accounting period.

Alfred E. Old and Beulah A. Crane, each age 42, married on September 7, 2016. Alfred and Beulah will file a joint return for 2018. Alfred’s Social Security number is 111-11- 1112. Beulah’s Social Security number is 123-45-6789, and she adopted “Old” as her married name. They live at 211 Brickstone Drive, Atlanta, GA 30304.

Alfred was divorced from Sarah Old in March 2016. Under the divorce agreement, Alfred is to pay Sarah $1,250 per month for the next 10 years or until Sarah’s death, whichever occurs first. Alfred pays Sarah $15,000 in 2018. In addition, in January 2018, Alfred pays Sarah $50,000, which is designated as being for her share of the marital property. Also, Alfred is responsible for all prior years’ income taxes. Sarah’s Social Security number is 123-45-6788.

Alfred’s salary for 2018 is $150,000, and his employer, Cherry, Inc. (Federal I.D. No. 98-7654321), provides him with group term life insurance equal to twice his annual salary. His employer withheld $24,900 for Federal income taxes and $8,000 for state income taxes. The proper amounts were withheld for FICA taxes. Beulah recently graduated from law school and is employed by Legal Aid Society, Inc. (Federal I.D. No. 11-1111111), as a public defender. She receives a salary of $42,000 in 2018. Her employer withheld $7,500 for Federal income taxes and $2,400 for state income taxes. The proper amounts were withheld for FICA taxes.

Alfred and Beulah had interest income of $500. They receive a $1,900 refund on their 2017 state income taxes. They itemized deductions on their 2017 Federal income tax return (total of $15,000). Alfred and Beulah pay $4,500 interest and $1,450 property taxes on their personal residence in 2018. Their charitable contributions total $2,400 (all to their church). They paid sales taxes of $1,400, for which they maintain the receipts. Both spouses had health insurance for all months of 2018 and do not want to contribute to the Presidential Election Campaign. Compute the Olds’ net tax payable (or refund due) for 2018. If you use tax forms for your solution, you will need Form 1040 and Schedules A