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
5. Black Corporation had a 1/1/20 balance in the Allowance for Doubtful Accounts of $21,000. The balance in Accounts Receivable was $420,000 at 1/1 and $504,000 at 12/31. At 12/31/20, Black estimates that 5% of accounts receivable will prove to be uncollectible. What should Black report as its Allowance for Doubtful Accounts at 12/31/20?
6. David Company uses the gross method to record sales made on credit. On June 10, 2020, it sold goods worth $250,000 with terms 2/10, n/30 to Charles Inc. On June 19, 2020, David received payment for 1/2 of the amount due from Charles Inc. David’s fiscal year end is on June 30, 2020. What amount will be reported in the financial statements for the accounts receivable due from Charles Inc.?
7. Becky had net sales (all on account) in 2020 of $8,000,000. At December 31, 2020, before adjusting entries, the balances in accounts receivable was a $1,000,000 debit. Becky estimates that 3% of its accounts receivable will prove to be uncollectible. What is the net amount expected to be collected of the receivables reported on the financial statements at December 31, 2020? (Net A/R)
8. Wellington Corp. has outstanding accounts receivable totaling $1.27 million as of December 31. If the company estimates that 2% of its accounts receivable will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense?
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
Computing EPS: Simple Capital Structure
At the end of 2020, the records of Block Corporation reflected the following.
| Common stock, $5 par, authorized 500,000 shares | ||
| Outstanding January 1, 2020, 400,000 shares | $2,000,000 | |
| Sold and issued April 1, 2020, 2,000 shares | 10,000 | |
| Issued 5% stock dividend, September 30, 2020; 20,100 shares | 100,500 | |
| Preferred stock, 6%, $10 par, nonconvertible, noncumulative, authorized 50,000 shares | ||
| Outstanding during year, 20,000 shares | 200,000 | |
| Paid-in capital in excess of par, common stock | 180,000 | |
| Paid-in capital in excess of par, preferred stock | 100,000 | |
| Retained earnings (after the effects of current preferred dividends declared during 2020) | 640,000 | |
| Bonds payable, 6.5%, nonconvertible, issued at par January 1, 2020 | 1,000,000 | |
| Net income | 164,000 | |
| Income tax rate, 25% |
a. What EPS presentation is required—basic, diluted, or both?
|
Basic |
b. Compute the required EPS amount(s).
| Net Income Available to Common Stockholders |
Weighted Avg. Common Shares Outstanding |
Per Share |
|
|---|---|---|---|
| Basic EPS | Answer | Answer | Answer |
c. Compute the required EPS amount(s), assuming that the preferred stock is cumulative.
| Net Income Available to Common Stockholders |
Weighted Avg. Common Shares Outstanding |
Per Share |
|
|---|---|---|---|
| Basic EPS | Answer | Answer | Answer |
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 January 1, 2020, Perfection Company issued $400,000 of 10%, 6-year bonds dated January 1, 2020, with interest payments every June 30 and December 31. The bonds were issued at $382,762 when the market rate was 11%. Perfection Company amortizes any premium or discount using the EFFECTIVE-INTEREST-RATE method. Round all numbers to the nearest whole number.
1-Using proper formatting (eliminating the date), prepare the journal entry on January 1, 2020 to record the issuance of the bonds.
2-Using proper formatting (eliminating the date), prepare the journal entry on June 30, 2020 to record the first interest payment
3-Determine the amount of interest expense that will be recorded on December 31, 2020. Show your work for full credit and clearly label your answer.
4-Determine the amount of total interest expense that Perfection Company will recognize over the life of the bonds if the bonds are not redeemed until maturity. Show your work for full credit and clearly label your answer. ( IS THE ANSWER FOR THIS PART IS THIS
20,000x12= 240,000
+ 17,238= 257,238 OR 17,238 AND WHY )
5. Determine the amount of interest expense Perfection Company would have recorded on June 30, 2020 (first interest payment) if they had used the STRAIGHT-LINE METHOD to amortize any premium or discount, instead of the effective-interest-rate method, as described above. Show your work for full credit and clearly label your answer.
In: Accounting
On December 31, 2020, Petra Company invests $26,000 in Valery, a variable interest entity. In contractual agreements completed on that date, Petra established itself as the primary beneficiary of Valery. Previously, Petra had no equity interest in Valery. Immediately after Petra’s investment, Valery presents the following balance sheet:
| Cash | $ | 26,000 | Long-term debt | $ | 114,000 | |||
| Marketing software | 146,000 | Noncontrolling interest | 78,000 | |||||
| Computer equipment | 46,000 | Petra equity interest | 26,000 | |||||
| Total assets | $ | 218,000 | Total liabilities and equity | $ | 218,000 | |||
Each of the amounts represents an assessed fair value at December 31, 2020, except for the marketing software.
The December 31 business fair value of Valery is assessed at $104,000.
If the carrying amount of the marketing software was undervalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements?
If the carrying amount of the marketing software was overvalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements?
If the carrying amount of the marketing software was undervalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements? (Input all amounts as positive values.)
|
If the carrying amount of the marketing software was overvalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements? (Input all amounts as positive values.)
|
In: Accounting
Financial Statement Analysis
The financial statements of Gelato Corporation show the following information:
Statement of Financial Position
December 31, 2020
Assets 2020 2019
Cash $257,000 $263,000
Accounts receivable 128,000 163,000
Fair value through net income investments 120,000 119,000
Inventory 320,000 361,000
Plant assets (net) 398,000 418,500
Intangible assets 102,000 128,500
Total Assets $1,325,000 $1,453,000
Liabilities and Equity
Accounts payable $240,000 $303,500
Long-term debt 60,000 137,500
Share capital 293,000 293,000
Retained earnings 732,000 719,000
Total Liabilities and equity $1,325,000 $ 1,453,000
Income Statement
Year Ended December 31, 2020
2020 2019
Net sales $725,000 $703,000
Cost of goods sold (474,000) (477,000)
Gross profit 251,000 226,000
Selling and admin expenses (126,000) (100,000)
Other expenses, net (106,000) (99,000)
Income before income tax 19,000 27,000
Income tax (5,400) (8,100)
Net income $13,600 $18,900
REQUIRED: Show all calculations. Round percentages to one decimal place.
A. Using horizontal analysis, analyze Gelato Corporation’s change in liquidity, solvency, and profitability in 2020.
B. Using vertical analysis, analyze Gelato Corporation’s decline in net income in 2020
C. Identify at least two profitability ratios that are obtained from the vertical analysis performed in part (b). Is profitability improving or deteriorating based on these ratios? Briefly explain
In: Finance
Except for the earnings per share statistics, the 2019, 2020,
and 2021 income statements for Ace Group Inc. were originally
presented as follows:
Required:
1. Calculate the 11 missing amounts. (Loss should
be indicated by a minus sign.)
Answer is complete and correct.
|
| Shares outstanding on December 31, 2018 | 38,800 | |||||||||
| Purchase and retirement of shares on March 1, 2019 | − | 4,880 | ||||||||
| Sale of shares on June 1, 2019 | + | 16,480 | ||||||||
| Share dividend of 5% on August 1, 2019 | + | 2,520selected answer correct | ||||||||
| Shares outstanding on December 31, 2019 | 52,920selected answer correct | |||||||||
| Sale of shares on February 1, 2020 | + | 7,760 | ||||||||
| Purchase and retirement of shares on July 1, 2020 | − | 2,440 | ||||||||
| Shares outstanding on December 31, 2020 | 58,240selected answer correct | |||||||||
| Sale of shares on March 1, 2021 | + | 20,560 | ||||||||
| Purchase and retirement of shares on September 1, 2021 | − | 6,600 | ||||||||
| Share split of 3:1 on October 1, 2021 | + | |||||||||
| Shares outstanding on December 31, 2021 | ? | |||||||||
|
2. Calculate the weighted-average number of
common shares outstanding during the following years: (Do
not round intermediate calculations. Round your
answers to nearest whole number.)
|
In: Accounting