Templar Inc. is currently preparing its financial statements for 2020 and is currently working on its cash flow statement. Templar's balance sheets for 2020 is as follows:
| Templar Inc. | ||
| Balance Sheets for the Year Ended | ||
| 12/31/2020 | 12/31/2019 | |
| Assets | ||
| Cash | $ 44,000 | $ 9,000 |
| Accounts receivable | 52,000 | 24,000 |
| Inventory | 27,000 | 40,000 |
| Property, plant, and equipment, net of accumulated depreciation of $42,000 in 2020 and $34,000 in 2019) | 133,000 | 73,000 |
| Prepaid expenses | 4,000 | 2,000 |
| Total assets | $260,000 | $148,000 |
| Liabilities and shareholders' equity | ||
| Accounts payable | $ 25,000 | $ 14,000 |
| Interest payable | 8,000 | 6,000 |
| Income taxes payable | 7,000 | 11,000 |
| Short-term note payable | 37,000 | 32,000 |
| Bonds payable | 75,000 | 50,000 |
| Common stock, $10 par | 75,000 | 25,000 |
| Retained earnings | 33,000 | 10,000 |
| Total liabilities and shareholders' equity | $260,000 | $148,000 |
In addition, during 2020, Templar:
Below, prepare Templar's 2020 full statement of cash flows, including all section headers and subtotals. (Don't worry about precise formatting; for each line, just put the text for that line followed by any amount necessary.) Use the indirect method for the operating cash flows section.
In: Accounting
Computing Partial Period Depreciation under Multiple Depreciation Methods
To demonstrate the computations involved in several methods of depreciating a fixed asset, the following information is provided.
| Cost and residual value | Estimated service life | ||
| Acquisition cost | $62,500 | Years | 5 |
| Residual value | $2,500 | Service hours | 50,000 |
| Productive output (units) | 120,000 |
Required
Compute the annual depreciation using each of the following methods assuming that the asset was purchased on August 1, 2020.
a. Straight-line depreciation: Compute the annual depreciation rate and amount for each year.
| Depreciation rate: | Answer |
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Answer | Answer | Answer | Answer | Answer | Answer |
b. Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amount for the first partial year assuming 4,500 service hours of actual operation.
| Depreciation rate: | Answer |
| 2020 |
|---|
| Answer |
c. Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amount for the first partial year assuming 9,000 units of output.
| Depreciation rate: | Answer |
| 2020 |
|---|
| Answer |
d. Sum-of-the-years’-digits method: Compute the depreciation amount for each year.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Answer | Answer | Answer | Answer | Answer | Answer |
e. Double-declining-balance method: Compute the depreciation amount for each year.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Answer | Answer | Answer | Answer | Answer | Answer |
In: Accounting
On 1 July 2020 Tran’s Hardware Pty Ltd had an accounts receivable ledger balance of $75,000 debit and a credit balance in the allowance for doubtful debts ledger account of $15,000.
On 3 July Tran’s was contacted by Nails and Hammers Pty Ltd to notify that the business had been declared bankrupt and that they would not be able to pay the $5,500 owing to Tran’s Hardware from a previous credit sale made to them in June 2020.
The business received notification from Panda House Pty Ltd on 25 July 2020 that, $1,100 (GST inclusive) that had previously been written off as uncollectible in May 2020 would be paid in full in August 2020.
On 31 July 2020 Management reassessed the allowance for doubtful debts at year end and decided on a closing balance of $12,200 (GST exclusive) under the ageing of receivables approach.
Required:
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General Journal |
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Date |
Account |
Debit |
Credit |
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b. The owners have approached you, the businesses accountant and asked if, for the financial year ending 30 June 2021, you would change to the direct write-off method for recording bad debts. How does changing the measurement of bad debts from the allowance method to the direct write-off method influence the usefulness of financial information? Ensure you reference the fundamental qualitative characteristics of information prescribed by the Conceptual Framework for Financial Reporting in your response.
In: Accounting
On January 1, 2020, Coronado Company purchased at face value, a
$1300, 9% bond that pays interest on January 1. Coronado Company
has a calendar year end.
The entry for the receipt of interest on January 1, 2021 is
Outstanding stock of the Sheridan Corporation included 20800
shares of $5 par common stock and 5100 shares of 6%, $10 par
noncumulative preferred stock. In 2019, Sheridan declared and paid
dividends of $1900. In 2020, Sheridan declared and paid dividends
of $6400. How much of the 2020 dividend was distributed to
preferred shareholders?
Marigold, Inc. has 3100 shares of 4%, $50 par value, cumulative preferred stock and 62000 shares of $1 par value common stock outstanding at December 31, 2019. The board of directors declared and paid a $2700 dividend in 2019. In 2020, $18100 of dividends are declared and paid. What are the dividends received by the preferred and common shareholders in 2020?
Chenard, Jennings, and Blair share profits and losses is 2:3:5, respectively. The balance sheet is:
CHENARD, JENNINGS, AND BLAIR PARTNERSHIP
Balance Sheet
December 31, 2020
Assets Liabilities and Owners'
Equity
Cash $ 37700
Liabilities $141000
Noncash assets 283000 Chenard,
Capital 59500
Jennings,
Capital 89400
Blair,
Capital 30800
Total
$320700
Total
$320700
If the partnership is liquidated by selling the noncash assets for $384000, and creditors are paid in full, what is the total amount of cash that Chenard will receive in the distribution of cash to partners?
In: Accounting
Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows:
| Cost | Retail | |||||
| Gross purchases | $ | 224,310 | $ | 450,000 | ||
| Purchase returns | 6,100 | 24,000 | ||||
| Purchase discounts | 4,600 | |||||
| Gross sales | 408,500 | |||||
| Sales returns | 5,000 | |||||
| Employee discounts | 5,500 | |||||
| Freight-in | 27,500 | |||||
| Net markups | 21,000 | |||||
| Net markdowns | 24,000 | |||||
Sales to employees are recorded net of discounts.
1. Estimate ending inventory for 2019 using the
conventional retail method. (Amounts to be deducted should
be indicated with a minus sign.)
2. Estimate ending inventory for 2019 assuming
Raleigh Department Store used the LIFO retail method.
(Amounts to be deducted should be indicated with a minus
sign.)
3. Assume Raleigh Department Store adopts the
dollar-value LIFO retail method on January 1, 2020. Estimating
ending inventory for 2020 and 2021.
In: Accounting
Crane Company sells tablet PCs combined with Internet service,
which permits the tablet to connect to the Internet anywhere and
set up a Wi-Fi hot spot. It offers two bundles with the following
terms.
(A):Prepare any journal entries to record the revenue arrangement
for Crane Bundle A on January 2, 2020, and December 31, 2020.
(B) Prepare any journal entries to record the revenue arrangement for Crane Bundle B on July 1, 2020, and December 31, 2020.
(C)Repeat the requirements for part (a), assuming that Crane Company has no reliable data with which to estimate the standalone selling price for the Internet service.
| 1. | Crane Bundle A sells a tablet with 3 years of Internet service. The price for the tablet and a 3-year Internet connection service contract is $488. The standalone selling price of the tablet is $252 (the cost to Crane Company is $178). Crane Company sells the Internet access service independently for an upfront payment of $285. On January 2, 2020, Crane Company signed 90 contracts, receiving a total of $43,920 in cash. | |
| 2. | Crane Bundle B includes the tablet and Internet service plus a service plan for the tablet PC (for any repairs or upgrades to the tablet or the Internet connections) during the 3-year contract period. That product bundle sells for $597. Crane Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $154. Crane Company signed 190 contracts for Crane Bundle B on July 1, 2020, receiving a total of $113,430 in cash. |
In: Accounting
On January 1, 2020, Jordan Inc. purchased 30% of the outstanding common stock of Melody Corporation at a cost of $600,000. Melody Corporation had 800,000 shares of common stock outstanding. At the date of purchase, the book value of Melody’s net assets was $1,500,000. Book value and fair value of net assets were the same for all balance sheet items except for machinery and inventory. The fair value exceeded the book value by $200,000 for machinery and $50,000 for the Inventory.
The estimated useful life of machinery is 15 years and all inventory acquired was sold during 2020. Both companies have a January through December fiscal year. Melody Corporation reported net income of $250,000 and paid cash dividend of $80,000 during 2020. Market value of Melody Corporation was $2.50 per share at December 31, 2020.
1- Prepare the entry to record the original investment in Mountain.
2-Compute the amount of goodwill (if any) on the acquisition.
3-Prepare the necessary entries (other than acquisition) for 2020.
4-Assume that on January 10, 2020 Jordan Inc. sold 50% of its investment in Melody Corporation for $290,000. Prepare the journal entry to record the sale of investment.
5-Assume that subsequent to selling 50% of the investment, Melody Corporation reported income of $300,000 and paid dividend of $100,000 for 2021. Market value of Melody Corporation’s common stock was $3 per share at December 31, 2021. Prepare the journal entries (if any) for Jordan Inc. for its investment in Melody Corporation for 2021.
In: Accounting
In 2018, the Westgate Construction Company entered into a
contract to construct a road for Santa Clara County for
$10,000,000. The road was completed in 2020. Information related to
the contract is as follows:
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,604,000 | $ | 4,032,000 | $ | 1,940,400 | |||
| Estimated costs to complete as of year-end | 5,796,000 | 1,764,000 | 0 | ||||||
| Billings during the year | 2,040,000 | 4,596,000 | 3,364,000 | ||||||
| Cash collections during the year | 1,820,000 | 4,000,000 | 4,180,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
rev: 09_15_2017_QC_CS-99734
4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)
| 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost incurred during the year | $ | 2,604,000 | $ | 3,820,000 | $ | 3,220,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Estimated costs to complete as of year-end | 5,796,000 | 3,120,000 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5. Calculate the amount of revenue and gross
profit (loss) to be recognized in each of the three years assuming
the following costs incurred and costs to complete information.
(Do not round intermediate calculations and round your
final answers to the nearest whole dollar amount. Loss amounts
should be indicated with a minus sign.)
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In: Accounting
Tan Company acquires a new machine (10-year property) on January 15, 2020, at a cost of $200,000. Tan also acquires another new machine (7-year property) on November 5, 2020, at a cost of $40,000. No election is made to use the straight-line method. The company does not make the § 179 election and elects to not take additional first-year depreciation. Determine the total deductions in calculating taxable income related to the machines for 2020.
a.$102,000
b.$24,000
c.$25,716
d.$132,858
Barry purchased a used business asset (seven-year property) on September 30, 2020, at a cost of $200,000. This is the only asset he purchased during the year. Barry did not elect to expense any of the asset under § 179, did not claim additional first-year depreciation, and did not elect straight-line cost recovery. Barry sold the asset on July 17, 2021. Determine the cost recovery deduction for 2021.
a.$19,133
b.$34,438
c.$55,100
d.$24,490
White Company acquires a new machine (seven-year property) on January 10, 2020, at a cost of $620,000. White makes the election to expense the maximum amount under § 179, and wants to take any additional first-year depreciation allowed. No election is made to use the straight-line method. Determine the total deductions in calculating taxable income related to the machine for 2020, assuming that White reports taxable income of $800,000.
a.$568,574
b.$88,598
c.$620,000
d.$301,159
In: Accounting
On 1/1/2016, California Corporation purchased 75% of the outstanding voting stock of San Diego Corporation for $2,400,000 paid in cash. On the date of the acquisition, San Diego’s shareholders’ equity consisted of the following:
Common stock, $10 par $1,000,000
APIC 600,000
Retained Earnings 800,000
Total SE $2,400,000
The excess fair value of the net assets acquired was assigned 10% to undervalued Inventory (sold in 2016), 40% to undervalued PPE assets with a remaining useful life of 8 years, and 50% to Goodwill.
Comparative trial balances of California Corporation and San Diego Corporation at December 31, 2020, are as follows:
|
California |
San Diego |
|
|
Other assets – net |
3,765,000 |
2,600,000 |
|
Investment in San Diego |
2,340,000 |
- |
|
Expenses (including cost of sales) |
3,185,000 |
600,000 |
|
Dividends |
500,000 |
200,000 |
|
9,790,000 |
3,400,000 |
|
|
Common Stock, $10 par value |
(3,000,000) |
(1,000,000) |
|
APIC |
(850,000) |
(600,000) |
|
Retained earnings |
(1,670,000) |
(800,000) |
|
Sales revenues |
(4,000,000) |
(1,000,000) |
|
Income from San Diego |
(270,000) |
- |
|
(9,790,000) |
(3,400,000) |
Required:
Determine the amounts that would appear in the consolidated financial statements of California Corporation and its subsidiary for each of the following items:
In: Finance