Yoshi Company completed the following transactions and events involving its delivery trucks.

2016

2017

2018

Required:

1-a. Calculate depreciation for year 2017.
1-b. Calculate book value and gain (loss) for sale of Truck on December, 2018.
1-c. Prepare journal entries to record these transactions and events.

Calculate depreciation for year 2017.

Calculate book value and gain (loss) for sale of Truck on December, 2018.

1

Record the total cost of the new delivery truck.

2

Record the year-end adjusting entry for the depreciation expense of the delivery truck.

3

Record the year-end adjusting entry for the depreciation expense of the delivery truck.

4

Record the year-end adjusting entry for the depreciation expense of the delivery truck.

5

Record the sale of the delivery truck for $5,600 cash.

Question:

Please show calculations:

                                                                                2017                           2018

BALANCE SHEETS:

Assets:

                      Cash                                                  74,181                        66,301

                      Accounts Receivable                         35,673                        48,995

                      Inventory                                          4,855                          3,986

                       Other Current Assets                       13,936                        12,057

                       Fixed Assets, net                              33,783                        41,304

                      Investments                                     212,891                      233,082

                      Total Assets                                     375,319                      405,725

Liabilities and Equity:

                      Accounts Payable                             44,242                        55,888

                       Other Current Liabilities                   50,226                        55,416

                      Long-Term Debt                               103,703                      102,519

                       Other Noncurrent Liabilities              43,251                        48,209

                      Common Stock                                 35,567                        33,293

                      Retained Earnings                             98,330                        110,400

                      Total Liabilities and Equity              375,319                      405,725

INCOME STATEMENT:

                                                                                                        FY 2018

           Revenue                                                                                265,595

           Cost of Goods Sold                                                               163,756

           General and Administrative                                                   14,793

           Depreciation Expense                                                            10,903

           Earnings Before Interest and Taxes                                       76,143

           Interest Expense                                                                    3,240

           Pretax Net Income                                                                 72,903

           Income Taxes                                                                         13,372

           Net Income                                                                            59,531

A. What was Apple's Equity Multiplier for 2018?

B. What was Apple's Return on Equity for 2018 (For balance sheet accounts, use the average of the beginning and end-of-year balances)?

C. If Apple had an average of 4,337 million common shares outstanding during 2018 and its stock is currently worth $175 per share, what is its Price : Earnings (PE) ratio?

D. If the analysts who follow Apple project 2019 sales to increase by 7.4% over 2018, its after-tax profit margin to remain the same, and anticipate a 60% dividend payout ratio, what are the projected retained earnings by the end of 2019?

E. Assuming that Apple's net working capital is expected to vary directly with sales, based on a projected 7.4% sales increase in 2019, what is the projected accounts receivable balance at the end of 2019?

F. If the management of Apple projects that by the end of 2018, it was operating at 62% of capacity, what is its full level capacity of sales?

7.

Sweet Sixteen has two classes of stock authorized: $100 par value preferred and $1 par value common. Sweet Sixteen has the following beginning balances in its stockholders' equity accounts on January 1, 2018: preferred stock, $100,000, common stock, $20,000; paid-in capital, $380,000; and retained earnings, $450,000. Net income for the year ended December 31, 2018, is $65,000. The following transactions affect stockholders' equity during 2018:

March 1 Issue 3,000 additional shares of common stock for $22 per share.
April 1 Issue 5,000 additional shares of preferred stock for $110 per share.
June 1 Declare a cash dividend on common stock of $1 per share and a cash dividend on preferred stock of $5 per share to all stockholders of record on June 15.
June 30 Pay the cash dividends declared on June 1.
August 1 Purchase 2,000 shares of common treasury stock for $18 per share.
October 1 Reissue 1,000 shares of treasury stock purchased on August 1 for $20 per share.

Taking into consideration the beginning balances and all the transactions during 2018, respond to the following for Sweet Sixteen:

Required:

Prepare the statement of stockholders’ equity for the year ended December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)

Prepare the stockholders’ equity section of the balance sheet as of December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)
  
   

On December 31, 2017, Dow Steel Corporation had 720,000 shares of common stock and 42,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $520,000 and $81,000 to common and preferred shareholders, respectively, on December 15, 2018.

On February 28, 2018, Dow sold 66,000 common shares. Also, as a part of a 2017 agreement for the acquisition of Merrill Cable Company, another 19,000 shares (already adjusted for the stock dividend) are to be issued to former Merrill shareholders on December 31, 2019, if Merrill's 2019 net income is at least $620,000. In 2018, Merrill's net income was $750,000.

In keeping with its long-term share repurchase plan, 8,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2018, was $2,700,000. The income tax rate is 40%.

As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:

The market price of the common stock averaged $38 per share during 2018.

On July 12, 2016, Dow issued $1,000,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 20 common shares (adjusted for the stock dividend).

Required:
Compute Dow's basic and diluted earnings per share for the year ended December 31, 2018. (Enter your answers in thousands.)

Digital Telephony issued 10% bonds, dated January 1, with a face amount of $42 million on January 1, 2018. The bonds mature in 2028 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Digital recorded the issue as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):

Digital also leased switching equipment to Midsouth Communications, Inc., on September 30, 2018. Digital purchased the equipment from MDS Corp. at a cost of $5 million. The five-year lease agreement calls for Midsouth to make quarterly lease payments of $326,290, payable each September 30, December 31, March 31, and June 30, with the first payment on September 30, 2018. Digital's implicit interest rate is 12%.

Required:
1. What would be the amount(s) related to the bonds that Digital would report in its statement of cash flows for the year ended December 31, 2018, under the direct method?
2. What would be the amounts related to the lease that Midsouth would report in its statement of cash flows for the year ended December 31, 2018, under the direct method?
3. What would be the amounts related to the lease that Digital would report in its statement of cash flows for the year ended December 31, 2018, under the direct method?
4. Assume MDS manufactured the equipment at a cost of $4 million and that Midsouth leased the equipment directly from MDS. What would be the amounts related to the lease that MDS would report in its statement of cash flows for the year ended December 31, 2018?

Splish Inc. was organized in late 2015 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported net incomes.

^a Includes a $10,000 increase because of change in bad debt experience rate.
^b Includes a gain of $30,000.

The company has decided to expand operations and has applied for a sizable bank loan. The bank officer has indicated that the records should be audited and presented in comparative statements to facilitate analysis by the bank. Splish Inc. therefore hired the auditing firm of Check & Doublecheck Co. and has provided the following additional information.

3. In 2018, the auditor discovered that:

(b) Present net income as reported in comparative income statements for the years 2015 to 2018.

     In the first year of operations in 2017, the pretax accounting income of Lisle Company was$16,000. Included in pretax accounting income were the following:

     (2) $33,000 of sales revenue that will not be recognized for tax purposes until it is collected;

(3) $32,000 in warranty expense that was recognized as product sales were made according to GAAP, but will be deductible for tax purposes only when the actual disbursements are made; and.

(1) $4,000 expense for a premium for life insurance covering the firm’s president, with Lisle named as beneficiary, which is not deductible for tax purposes.

     The temporary differences are expected to reverse in the following pattern:

                                                     Installment                         Warranty

                                 Year            Collections                        Payments

                               2017                   8,300                            18,200

                               2018                 12,800                            10,300

                                2019                 11,900                              3,500

                                                      $33,000                          $32,000

     In addition, Lisle records $12,000 more depreciation for tax purposes than for accounting financial statements, and it is not expected to start reversing in the near future.

     The enacted tax rate for 2017 is 35%; in 2017, due to a significant change in the tax law, the enacted tax rate for corporations became 21% for 2018 and future years.

     Required:

1. Calculate taxable income for 2017, and prepare the journal entry necessary to record income taxes at the end of 2017. How would any deferred tax amounts be reported on a classified balance sheet? Show how taxable income, income tax expense, and net income would be reported on the income statement.

2. Assume that 2018 pretax accounting income is $8,000, the insurance premium is the same as for 2017, and Lisle records an additional $12,000 more depreciation expense for tax purposes than for accounting financial statements. The portions of previous differences expected to reverse in 2018 do reverse exactly as estimated. Prepare the journal entry necessary to record income taxes at the end of 2018. How would any deferred tax amounts be reported on the 2018 balance sheet? Show how taxable income, income tax expense, and net income would be reported on the 2018 income statement.

Yoshi Company completed the following transactions and events involving its delivery trucks.

2016

2017

2018

Required:

1-a. Calculate depreciation for year 2017.
1-b. Calculate book value and gain (loss) for sale of Truck on December, 2018.
1-c. Prepare journal entries to record these transactions and events.

Calculate depreciation for year 2017.

Calculate book value and gain (loss) for sale of Truck on December, 2018.

• 1

  Record the total cost of the new delivery truck.

• 2

  Record the year-end adjusting entry for the depreciation expense of the delivery truck.

• 3

  Record the year-end adjusting entry for the depreciation expense of the delivery truck.

• 4

  Record the year-end adjusting entry for the depreciation expense of the delivery truck.

• 5

  Record the sale of the delivery truck for $5,400 cash.

The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2018 and 2017:

On October 15, 2018, Jackson entered into a tentative agreement to sell the assets of one of its divisions. The division qualifies as a component of an entity as defined by GAAP. The division was sold on December 31, 2018, for $5,600,000. Book value of the division’s assets was $4,800,000. The division’s contribution to Jackson’s operating income before-tax for each year was as follows:

Assume an income tax rate of 30%.

Required: (In each case, net any gain or loss on sale of division with annual income or loss from the division and show the tax effect on a separate line)
1. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
2. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $5,600,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
3. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $4,100,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.

Problem 4-2 Discontinued operations [LO4-4]

The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2018 and 2017:

On October 15, 2018, Jackson entered into a tentative agreement to sell the assets of one of its divisions. The division qualifies as a component of an entity as defined by GAAP. The division was sold on December 31, 2018, for $5,090,000. Book value of the division’s assets was $4,460,000. The division’s contribution to Jackson’s operating income before-tax for each year was as follows:

Assume an income tax rate of 20%.

Required: (In each case, net any gain or loss on sale of division with annual income or loss from the division and show the tax effect on a separate line)
1. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
2. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $5,090,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
3. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $3,930,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.