Cease Corporation issued a bond on January 1, 2018 with a face value of $1,000. The bond's coupon rate is 6 percent and interest is paid annually on December 31. The bond matures in three years. The market interest rate was 8 percent at the time the bond was sold. The amortization schedule of the bond issued is shown below: Cash Interest Payment Interest Expense Amortization Book Value of bonds January 1, 2018 $948 December 31, 2018 $60 $76 $16 964 December 31, 2019 60 77 17 981 December 31, 2020 60 79 19 1,000 Required:
1. What was the bond's issue price?
2. Did the bond sell at a discount or a premium? How much was the premium or discount?
3. What amount(s) should be shown on the balance sheet for bonds payable at the year-end of 2018 and 2019?
4. Show how the following amounts: (a) $60, (b) $77, (c) $17, and (d) $981 were computed for 2019 in the amortization schedule.
In: Accounting
1a) These are selected account balances on December 31, 2018.
Land (location of the corporation’s office building) $120,000
Land (long-term investment, held for future use) 75,000
Corporate Office Building 110,000
Inventory 80,000
Trademark 70,000
Prepaid Insurance 50,000
Accumulated Depreciation 20,000
What is the total amount of property, plant, and equipment that will appear on the balance sheet?
a. $210,000.
b.$230,000.
c.$285,000.
d.$315,000.
The income statement for the month of May, 2018 of Snap Shot, Inc. contains the following information:
|
Revenues Expenses: |
$7,300 |
|
|
Salries and Wages Expense |
$3,000 |
|
|
Rent Expense |
1,300 |
|
|
Advertising Expense |
700 |
|
|
Supplies Expense |
200 |
|
|
Insurance Expense |
100 |
|
|
Total expenses |
5,300 |
|
|
Net income |
$2,000 |
At May 1, 2018, Snap Shot reported owner’s equity of $36,000. The company had no owner drawings during June. At May 31, 2018, the company will report owner’s equity of
a. $30,700.
b.$36,000.
c.$38,000.
d.$43,300.
In: Accounting
The controllers of Metlock, Inc. and Bridgeport Corp. both ask you whether their companies can reclassify short-term obligations as long-term. Here are the facts surrounding both companies’ short-term debt.
Bridgeport Corp. On December 31, 2017, Bridgeport Corp. has $2,400,000 of short-term notes payable to Indiana Bank & Trust. The notes are due on January 31, 2018. Bridgeport retired the notes, along with $160,000 in accrued interest, in full on January 31, 2018. On February 11, 2018, Bridgeport obtained $3,600,000 in long-term financing from Terre Haute Bank & Trust. The new debt bears interest at 5 percent, with interest payments due annually. Bridgeport will issue its December 31, 2017 financial statements on February 28, 2018.
Prepare partial balance sheets for Metlock, Inc. and Bridgeport Corp. at December 31, 2017, showing how both companies’ short-term debt should be presented.
In: Accounting
Gross profit $ and gross profit % for Walgreens
Gross profit for 2018 = Revenue – Cost of Goods Sold = 131,537 – 100,745 = $30,792
Gross profit % for 2018 = Gross profit / total sales * 100 = $30,792 / $131,537 *100 = 23.41%
Gross profit for 2017 = 118,214 – 89,052 = $29,162
Gross profit % for 2017 = $29,162 / $118,214 *100 = 24,67%
Gross profit for 2016 = 117,351 – 87,477 = $29,874
Gross profit % for 2016 = $29,874 / 117,351 *100 = 25,46%
Gross profit $ and gross profit % for CVS
Gross profit for 2018 = 194,579 – 156,447 = $33,132
Gross profit % for 2018 = $33,132 / $194,579 *100 = 17.03%
Gross profit for 2017 =184,786 – 153,448 = $31,338
Gross profit % for 2017 = $31,338 / $184,786 *100 = 16.96%
Gross profit for 2016 = 177,546 – 146,533 = $31,013
Gross profit % for 2016 = $31,013 / $177,546 *100 = 17,47%
What do the results of this calculation mean in the context of Walgreens? How about CVS? Compare the two - why are they different (be as specific as possible).
In: Finance
On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 150,000 FCUs with payment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 150,000 FCUs. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply:
| Date | Spot Rate | Forward Rate (to April 30, 2018) |
||||
| November 1, 2017 | $ | 0.26 | $ | 0.25 | ||
| December 31, 2017 | 0.24 | 0.22 | ||||
| April 30, 2018 | 0.23 | N/A | ||||
Bernard's incremental borrowing rate is 12 percent. The present value factor for four months at an annual interest rate of 12 percent (1 percent per month) is 0.9610.
In: Accounting
ON NOVEMBER 10, 2018, MOSELLE CORP INVESTED $900,000 OF ITS CASH RESERVES EQUALLY IN THREE MARKETABLE SECURITIES.
PENDIX NOTES $300,000
LIMPID SHARES $300,000
CLAMMY NOTES $300,000
ONLY THE PENDIX NOTES WERE DESIGNATED TRADING SECURITIES.
ON DECEMBER 31, 2018, THE SECURITES’ FAIR VALUES WERE AS FOLLOWS:
PENDIX $270,000
LIMPID $280,000
CLAMMY $320,000
Present appropriate journal entries to account for the securities on December 31, 2018
ON APRIL 15, 2019, MOSELLE SOLD 10% OF ITS HOLDINGS OF EACH SECURITY FOR THE FOLLOWING AMOUNTS:
PENDIX $26,000
LIMPID $31,000
CLAMMY $31,000
Present appropriate journal entries to account for the securities on APRIL 15, 2019
ON DECEMBER 31, 2019, THE SECURITES’ FAIR VALUES WERE AS FOLLOWS:
PENDIX $250,000
LIMPID $250,000
CLAMMY $250,000
Present appropriate journal entries to account for the securities on December 31, 2019
Present the effects of the securities on the 2018 income statement.
Present the effects of the securities on the 2019 income statement.
In: Accounting
Alquist Company uses the retail method to estimate its ending
inventory. Selected information about its year 2018 operations is
as follows:
January 1, 2018, beginning inventory had a cost of $120,000 and a retail value of $170,000.
Purchases during 2018 cost $1,332,000 with an original retail value of $2,170,000.
Freight costs were $12,000 for incoming merchandise.
Net additional markups were $100,000 and net markdowns were $170,000.
Based on prior experience, shrinkage due to shoplifting was estimated to be $17,000 of retail value.
Merchandise is sold to employees at a 20% of selling price discount. Employee sales are recorded in a separate account at the net selling price. The balance in this account at the end of 2018 is $270,000.
Sales to customers totaled $1,710,000 for the year.
Required:
1. Estimate ending inventory and cost of goods
sold using the conventional retail method.
2. Estimate ending inventory and cost of goods
sold using the LIFO retail method. (Assume stable
prices.)
In: Accounting
Alquist Company uses the retail method to estimate its ending
inventory. Selected information about its year 2018 operations is
as follows:
January 1, 2018, beginning inventory had a cost of $162,000 and a retail value of $210,000.
Purchases during 2018 cost $1,502,000 with an original retail value of $2,380,000.
Freight costs were $16,000 for incoming merchandise.
Net additional markups were $210,000 and net markdowns were $390,000.
Based on prior experience, shrinkage due to shoplifting was estimated to be $21,000 of retail value.
Merchandise is sold to employees at a 25% of selling price discount. Employee sales are recorded in a separate account at the net selling price. The balance in this account at the end of 2018 is $330,000.
Sales to customers totaled $1,700,000 for the year.
Required:
1. Estimate ending inventory and cost of goods
sold using the conventional retail method.
2. Estimate ending inventory and cost of goods
sold using the LIFO retail method. (Assume stable prices.)
In: Accounting
On January 1, 2017, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies for the years of 2017 and 2018 follows:
| 2017 | 2018 | |||||
| Abbey Company: | ||||||
| Sales | $ | (500,000 | ) | $ | (700,000 | ) |
| Operating expenses | 300,000 | 400,000 | ||||
| Intra-entity gross profits in ending inventory (included in above figures) | (120,000 | ) | (150,000 | ) | ||
| Dividend income—Benjamin Company | (18,000 | ) | (36,000 | ) | ||
| Benjamin Company: | ||||||
| Sales | (210,000 | ) | (270,000 | ) | ||
| Operating expenses | 130,000 | 170,000 | ||||
| Dividends paid | (20,000 | ) | (40,000 | ) | ||
Assume that a tax rate of 35 percent is applicable to both companies.
A. On consolidated financial statements for 2018, what are the income tax expense and the income tax currently payable if Abbey and Benjamin file a consolidated tax return as an affiliated group?
Income Tax Expense:
Income Tax Payable:
B. On consolidated financial statements for 2018, what are the income tax expense and income tax currently payable if they choose to file separate returns?
Income Tax Expense:
Income Tax Payable:
In: Accounting
On January 1, 2018, Red Flash Photography had the following
balances: Cash, $13,000; Supplies, $8,100; Land, $61,000; Deferred
Revenue, $5,100; Common Stock $51,000; and Retained Earnings,
$26,000. During 2018, the company had the following
transactions:
| 1. | February | 15 | Issue additional shares of common stock, $21,000. | |
| 2. | May | 20 | Provide services to customers for cash, $36,000, and on account, $31,000. | |
| 3. | August | 31 | Pay salaries to employees for work in 2018, $24,000. | |
| 4. | October | 1 | Purchase rental space for one year, $13,000. | |
| 5. | November | 17 | Purchase supplies on account, $23,000. | |
| 6. | December | 30 |
Pay dividends, $2,100. |
The following information is available on December 31, 2018:
1. Employees are owed an additional $4,100 in salaries.
2. Three months of the rental space has expired.
3. Supplies of $5,100 remain on hand.
4. All of the services associated with the beginning deferred
revenue have been performed.
In: Accounting