The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017.

(Hint: Interest must be accrued.)

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.

Complete this question by entering your answers in the tabs below.

• Required 1

• Required 2

Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders' equity in 2018.
  

March 1 Issues 46,000 additional shares of $1 par value common stock for $43 per share.

May 10 Repurchases 4,100 shares of treasury stock for $46 per share.

June 1 Declares a cash dividend of $1.05 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)

July 1 Pays the cash dividend declared on June 1.

October 21 Reissues 2,050 shares of treasury stock purchased on May 10 for $51 per share.
  

Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2018: Common Stock, $100,000; Additional Paid-in Capital, $3,600,000; and Retained Earnings, $1,100,000. Net income for the year ended December 31, 2018, is $510,000.  

Required:

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

Problem 19-12 EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend; options [LO19-4, 19-5, 19-6, 19-7, 19-8, 19-10]

On December 31, 2017, Dow Steel Corporation had 600,000 shares of common stock and 300,000 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 $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2018.

On February 28, 2018, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2018, was $2,100,000. 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 $32 per share during 2018.

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

Sachs Brands' defined benefit pension plan specifies annual retirement benefits equal to: 1.5% × service years × final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2004 and is expected to retire at the end of 2038 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $83,000 at the end of 2018 and the company's actuary projects her salary to be $245,000 at retirement. The actuary's discount rate is 9%. (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.) Required: 1. What is the company's projected benefit obligation at the beginning of 2018 (after 14 years' service) with respect to Davenport? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) 2. Estimate by the projected benefits approach the portion of Davenport's annual retirement payments attributable to 2018 service. 3. What is the company's service cost for 2018 with respect to Davenport? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) 4. What is the company's interest cost for 2018 with respect to Davenport? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) 5. Combine your answers to requirements 1, 3, and 4 to determine the company's projected benefit obligation at the end of 2018 (after 15 years' service) with respect to Davenport. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

The comparative balance sheets for 2018 and 2017 are given below for Surmise Company. Net income for 2018 was $78 million.

Required:
Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2018. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for changes in some account balances. A spreadsheet or T-account analysis will be helpful. (Hint: The right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $7 million are paid at January 1 of each year starting in 2018.) (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

On January 1, 2017, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,680,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $930,000, retained earnings of $480,000, and a noncontrolling interest fair value of $420,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 40 percent of the current year purchases remain in Smashing's inventory.

Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018.

Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing.

Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018.

Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1

Prepare entry *G

2

Prepare entry S

3

Prepare entry A

4

Prepare entry I

5

Prepare entry D

6

Prepare entry E

7

Prepare entry TI

8

Prepare entry G

PLEASE DO ASAP

Witter House is a calendar-year firm with 320 million common shares outstanding throughout 2018 and 2019. As part of its executive compensation plan, at January 1, 2017, the company had issued 40 million executive stock options permitting executives to buy 40 million shares of stock for $14 within the next eight years, but not prior to January 1, 2020. The fair value of the options was estimated on the grant date to be $3 per option. In 2018, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 20 million restricted common shares to senior executives at January 1, 2018. The shares vest four years later. The fair value of the stock was $16 per share on the grant date. The average price of the common shares was $16 and $20 during 2018 and 2019, respectively. The stock options qualify for tax purposes as an incentive plan. The restricted stock does not. The company's net income was $170 million and $180 million in 2018 and 2019, respectively. Its income tax rate is 40%. Required: 1. Compute basic and diluted earnings per share for Witter House in 2018. 2. Compute basic and diluted earnings per share for Witter House in 2019. (For all requirements, do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 10,000,000 should be entered as 10.00).)

Use the information below to answer questions 19-24. Jarvic Company began operations in 2018 and reported the following marketable debt securities at December 31, 2018: Amortized Marketable Debt Securities Cost Market Yellow Bonds $13,500 $15,200 Orange Bonds 16,000 15,600 Beige Bonds 22,000 22,900 All of the bonds in Jarvic’s bond portfolio pay interest on June 30 and December 31, and all of the bonds have yield rates higher than their face rates. For the year ended December 31, 2018, Jarvic received a total of $2,500 of interest from its marketable debt securities, and it amortized a total of $350 of bond discount using the effective interest method. During 2019, Jarvicsold its investments in Yellow, Orange, and Beige for $55,700. The total amortized cost of Jarvic’s marketable debt securities portfolio on the date of sale was $52,200. In answering questions 19-24, assume the marketable debt securities are classified as available for sale. 19. What amount is reported on Jarvis’ December 31, 2018, balance sheet for marketable debt securities? 20. Make one journal entry to record all of the interest income earned for the year ended December 31, 2018? 21. Make the adjusting journal entry to record the unrealized holding gain (loss) for the year ended December 31, 2018. 22. What is the realized gain from selling marketable debt securities in 2019? 23. What is the net amount reported for other comprehensive loss for 2019? 24. What is the unrealized holding gain component that is reported in other comprehensive loss for 2019?

The comparative balance sheets for 2018 and 2017 are given below for Surmise Company. Net income for 2018 was $58 million.

SURMISE COMPANY

Comparative Balance Sheets

December 31, 2018 and 2017

($ in millions)

2018 2017

Assets

Cash $ 90 $ 98

Accounts receivable 78 84

Less: Allowance for uncollectible accounts (15 ) (6 )

Prepaid expenses 10 5

Inventory 121 110

Long-term investment 63 35

Land 76 76

Buildings and equipment 311 215

Less: Accumulated depreciation (103 ) (86 )

Patent 13 15

$ 644 $ 546

Liabilities

Accounts payable $ 7 $ 19

Accrued liabilities 2 8

Notes payable 26 0

Lease liability 89 0

Bonds payable 53 99

Shareholders’ Equity

Common stock 58 50

Paid-in capital—excess of par 247 205

Retained earnings 162 165

$ 644 $ 546

Required:

Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2018. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for changes in some account balances. A spreadsheet or T-account analysis will be helpful. (Hint: The right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $7 million are paid at January 1 of each year starting in 2018.) (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

Earning per share

1. Burns Company reported $752.4 million in net income in 2018. On January 1, 2018, the company had 400 million shares of common stock outstanding. On March 1, 2018, 24 million new shares of common stock were sold for cash. On June 1, 2018, the company's common stock split 2 for 1. On July 1, 2018, 8 million shares were reacquired as treasury stock.

Required: Compute Burns' basic earnings per share for the year ended December 31, 2018.

2. During 20x1, Ellis Corp. had 370,000 shares of $20 par common stock outstanding. On January 1, 20x1, 2,000 bonds (stated rate, 8%) were issued with a maturity value of $1,000 each. To enhance the bond sale, the company offered a conversion of 50 shares of common stock for each bond at the option of the purchaser. Net income for 20x1 was $464,000. The income tax rate was 30 percent. Compute the diluted earnings per share.

3. Venz Company’s net income for 20x1 is $50,000. The only potentially dilutive securities outstanding were 1,000 options issued during 20x0, each exercisable for one share at $6. None has been exercised, and 10,000 shares of common were outstanding during 20x1. The average market price of Venz’s stock during 20x1 was $20.

1) Compute diluted EPS for 20x1.

2) Assume the same facts as those for Part 1), except that the 1,000 options were issued on October 1, 20x1 (rather than in 20x0). The average market price during the last three months of 20x1 was $20.