Brandlin Company of Anaheim, California, purchases materials from a foreign supplier on December 1, 2017, with payment of 18,000 korunas to be made on March 1, 2018. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2017, Brandlin enters into a forward contract to purchase 18,000 korunas on March 1, 2018. Relevant exchange rates for the koruna on various dates are as follows:

Brandlin’s incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at December 31.

a-1. Assuming that Brandlin designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for these transactions in U.S. dollars.

a-2. Assuming that the purchased parts became a part of the cost of goods sold in 2017, what is the impact on net income in 2017 and in 2018?

a-3. What is the impact on net income over the two accounting periods?

On June 30, 2017, Mischa Auer Company issued $4,200,000 face value of 13%, 20-year bonds at $4,515,964, a yield of 12%. Auer uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.

Instructions

(Round answers to the nearest cent.)

(a)  Prepare the journal entries to record the following transactions.

1.The issuance of the bonds on June 30, 2017.

2.The payment of interest and the amortization of the premium on December 31, 2017.

3.The payment of interest and the amortization of the premium on June 30, 2018.

4.The payment of interest and the amortization of the premium on December 31, 2018.

(b)  

Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2018, balance sheet.

(c)  Provide the answers to the following questions.

1.What amount of interest expense is reported for 2018?

2.Will the bond interest expense reported in 2018 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were used?

3.Determine the total cost of borrowing over the life of the bond.

4.Will the total bond interest expense for the life of the bond be greater than, the same as, or less than the total interest expense if the straight-line method of amortization were used?

As part of its stock-based compensation package, International Electronics granted 28 million stock appreciation rights (SARs) to top officers on January 1, 2018. At exercise, holders of the SARs are entitled to receive stock equal in value to the excess of the market price at exercise over the share price at the date of grant. The SARs cannot be exercised until the end of 2021 (vesting date) and expire at the end of 2023. The $1 par common shares have a market price of $47 per share on the grant date. The fair value of the SARs, estimated by an appropriate option pricing model, is $3 per SAR at January 1, 2018. The fair value reestimated at December 31, 2018, 2019, 2020, 2021, and 2022, is $4, $3, $4, $2.50, and $3, respectively. All recipients are expected to remain employed through the vesting date.
  
Required:

1-a. Will the SARs be reported as debt or equity?
1-b to 4. Prepare the appropriate journal entries pertaining to the SARs on January 1, 2018 and December 31, 2018–December 31, 2021. Assuming the SARs remain unexercised on December 31, 2022, prepare the appropriate entry. Prepare the entry when the SARs are exercised on June 6, 2023, when the share price is $50.

Ben Figgie acquired a passive partnership activity in January of 2013.  His at-risk basis at the beginning of 2017 was $65,000.  Ben Figgie also owns a rental property that generated income of $15,000 in 2017and $12,000 in 2018.  Ben Figgie’s share of income and loss from the partnership activity is:

            2017                            <$95,000>

            2018                              55,000

Complete the following tables.

AT RISK RULES ONLY

FOR 2017

Deductible under at-risk provisions                             ____________________

Adjusted basis at 12/31/17                                           ____________________

Suspended under at-risk provisions                             ____________________

FOR 2018

Deductible under at-risk provisions                             ____________________

Adjusted basis at 12/31/18                                           ____________________

Suspended under at-risk provisions                             ____________________

PASSIVE RULES ONLY

FOR 2017

Deductible under passive loss provisions                     ____________________

Suspended under passive loss provisions                     ____________________

FOR 2018

Deductible under passive loss provisions                     ____________________

Suspended under passive loss provisions                     ____________________

(apply both at risk and passive rules)

FOR 2017

Deductible under at-risk provisions                             ____________________

Adjusted basis at 12/31/17                                           ____________________

Suspended under at-risk provisions                             ____________________

Deductible under passive loss provisions                     ____________________

Suspended under passive loss provisions                     ____________________

FOR 2018

Deductible under at-risk provisions                             ____________________

Adjusted basis at 12/31/18                                           ____________________

Suspended under at-risk provisions                             ____________________

Deductible under passive loss provisions                     ____________________

Suspended under passive loss provisions                     ____________________

Vernon Manufacturing Company was started on January 1, 2018, when it acquired $83,000 cash by issuing common stock. Vernon immediately purchased office furniture and manufacturing equipment costing $9,100 and $24,700, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $3,400 salvage value and an expected useful life of three years. The company paid $11,500 for salaries of administrative personnel and $15,800 for wages to production personnel. Finally, the company paid $10,720 for raw materials that were used to make inventory. All inventory was started and completed during the year. Vernon completed production on 4,100 units of product and sold 3,190 units at a price of $15 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)

1. Determine the amount of net income that would appear on the 2018 income statement. (Round your answer to the nearest dollar amount.)

2. Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet. (Round your answer to the nearest dollar amount.)

3. Determine the amount of total assets that would appear on the December 31, 2018, balance sheet. (Round your answer to the nearest dollar amount.)

The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys equity securities as investments. None of Ornamental’s investments are large enough to exert significant influence on the investee. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017. Mar. 31 Acquired Distribution Transformers Corporation common stock for $590,000. Sep. 1 Acquired $1,185,000 of American Instruments' common stock. Sep. 30 Received a $20,650 dividend on the Distribution Transformers common stock. Oct. 2 Sold the Distribution Transformers common stock for $634,000. Nov. 1 Purchased $1,590,000 of M&D Corporation common stock. Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are: American Instruments common stock $ 1,116,000 M&D Corporation common stock $ 1,669,000 Required: 1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end. 2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments.

Confused how to calculate SPI with lots of info and if is should be using the average of all the info?

Set 2018 as the base year. Calculate the SPI for 2018 and 2019 and find the inflation rate.

Cardinal Industries had the following operating results for 2018: Sales = $35,126; Cost of goods sold = $24,604; Depreciation expense = $6,077; Interest expense = $2,750; Dividends paid = $2,068. At the beginning of the year, net fixed assets were $20,020, current assets were $7,110, and current liabilities were $4,040. At the end of the year, net fixed assets were $24,574, current assets were $8,732, and current liabilities were $4,745. The tax rate for 2018 was 25 percent. a. What is net income for 2018? (Do not round intermediate calculations.) b. What is the operating cash flow for 2018? (Do not round intermediate calculations.) c. What is the cash flow from assets for 2018? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) d-1. If no new debt was issued during the year, what is the cash flow to creditors? (Do not round intermediate calculations.) d-2. If no new debt was issued during the year, what is the cash flow to stockholders? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

• 1
  Record 2016 income taxes.
• 2
  Record 2017 income taxes.
• 3
  Record 2018 income taxes.

The records of the Drori Corporation provided the following summarized data for 2017 (its first year of operations) and 2018: Income Statement for Years Ended on: Dec 31, 2017 Dec 31, 2018 Revenues $ 210,000 $ 218,000 Expenses (excluding income taxes) 120,000 133,000 Pre-tax income $ 90,000 $ 85,000 Additional information: 1. Assume that the income tax rate is 30%, and that 80% of income taxes payable are paid in the current year and 20% on April 15 of the next year. 2. The only temporary differences were: (i) The 2017 tax return includes a $10,000 expense that will be reported in the 2018 financial statements; (ii) The financial statements for 2018 include a $7,000 revenue that is taxable only in 2019. 3. There could be permanent differences in each one of the years. 4. Taxable income shown in the tax returns was $80,000 for 2017 and $85,000 for 2018. Required: a. For each year compute: (i) income taxes payable and (ii) deferred income tax. Provide the journal entries for each year to record income tax expense and payment. Is each deferred income tax a liability or an asset? Explain. b. Show what amounts related to income taxes should be reported each year on the income statement, the balance sheet, and the statement of cash flows.