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 $ 2,044,000 $ 2,628,000 $ 2,890,800 Estimated costs to complete as of year-end 5,256,000 2,628,000 0 Billings during the year 2,170,000 2,502,000 5,328,000 Cash collections during the year 1,885,000 2,600,000 5,515,000 Westgate recognizes revenue over time according to percentage of completion. Required:
In: Accounting
Norr and Caylor established a partnership on January 1, 2019. Norr invested cash of $100,000 and Caylor invested $30,000 in cash and equipment with a book value of $40,000 and fair value of $50,000. For both partners, the beginning capital balance was to equal the initial investment. Norr and Caylor agreed to the following procedure for sharing profits and losses:
12% interest on the yearly beginning capital balance
$10 per hour of work that can be billed to the partnership's clients
the remainder divided in a 3:2 ratio
The Articles of Partnership specified that each partner should withdraw no more than $1,000 per month, which is accounted as direct reduction of that partner’s capital balance. For 2019, the partnership's income was $70,000. Norr had 1,000 billable hours, and Caylor worked 1,400 billable hours. In 2020, the partnership's income was $24,000, and Norr and Caylor worked 800 and 1,200 billable hours respectively. Each partner withdrew $1,000 per month throughout 2019 and 2020.
Determine the amount of net income allocated to each partner for 2019.
Determine the balance in both capital accounts at the end of 2019.
Determine the amount of net income allocated to each partner for 2020. (Round all calculations to the nearest whole dollar).
Determine the balance in both capital accounts at the end of 2020 to the nearest dollar.
In: Accounting
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that date, Abernethy has the following trial balance:
Debit CreditAccounts payable $55,100Accounts receivable$44,700 Additional paid-in capital 50,000Buildings (net) (4-year remaining life) 163,000 Cash and short-term investments 83,750 Common stock 250,000Equipment (net) (5-year remaining life) 207,500 Inventory 122,000 Land 85,500 Long-term liabilities (mature 12/31/23) 162,500Retained earnings, 1/1/20 202,150Supplies 13,300 Totals$719,750 $719,750
During 2020, Abernethy reported net income of $105,000 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $136,750 while declaring and paying dividends of $36,000.
Assume that Chapman Company acquired Abernethy’s common stock for $605,600 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $101,800, its buildings were valued at $227,400, and its equipment was appraised at $164,500. Chapman uses the equity method for this investment.
Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
In: Accounting
Big Construction Company signs a contract on 1 July 2019, agreeing to build a warehouse for Buyer Corporation Ltd at a fixed contract price of $10 million. Buyer Ltd will be in control of the asset throughout the construction process. Big Construction Company estimates that construction costs will be as follows: 2019 2.5 million 2020 $4 million 2021 $1.5 million The contract provides that Buyer Corporation Ltd will make payments on 31 December each year as follows: 2019 $2 million 2020 $5 million 2021 $3 million The contract is completed and accepted on 31 December 2021. Assume that actual costs and cash collections coincide with expectations and that cost (an input measure) is used as the basis for assessing progress on the construction contract. Big Construction Company has a financial year ending 31 December. Required: a) Using the above data, compute the gross profit to be recognised for each of the three years, assuming that the outcome of the contract can be reliably estimated. (1.5 marks) b) Prepare the journal entries for 2019, 2020 and 2021 financial year to recognise revenue on the assumption that the measure of progress on the contract can be reliably estimated. c) Prepare the journal entries for 2019, 2020 and 2021 financial year, assuming that the measure of progress on the contract cannot be reliably assessed. (3.5 marks
In: Accounting
Delta Corporation's capital structure consists of 20,000 common shares at December 31. At December 31, 2020 an analysis of the accounts and discussions with company officials revealed the following information:
Sales................................................................................................. $1,300,000
Inventory, January 1, 2020.............................................................. 150,000
Purchases......................................................................................... 728,000
Purchase discounts........................................................................... 18,000
Inventory, December 31, 2020........................................................ 130,000
Tornado loss (net after $18,000 tax) .............................................. 42,000
Selling expenses.............................................................................. 148,000
Cash................................................................................................. 60,000
Accounts receivable........................................................................ 90,000
Common shares............................................................................... 200,000
Accumulated depreciation............................................................... 180,000
Dividend revenue............................................................................. 22,000
Unearned service revenue................................................................ 4,400
Accrued interest payable................................................................. 1,000
Land................................................................................................. 370,000
Patents.............................................................................................. 100,000
Retained earnings, January 1, 2020................................................. 350,000
Interest expense............................................................................... 15,000
Prior years cumulative effect of change from straight-line to accelerated
depreciation (net after $15,000 tax)..................................................... 45,000
General and administrative expenses.............................................. 172,000
Dividends declared.......................................................................... 52,750
Allowance for doubtful accounts..................................................... 5,000
Notes payable (maturity July 1, 2021)............................................. 200,000
Machinery and equipment............................................................... 450,000
Materials and supplies inventory....................................................... 40,000
Accounts payable............................................................................ 60,000
Unless indicated otherwise, you may assume a 25% income tax rate.
Required:
a) Prepare, in good form, a multiple-step income statement
b) Prepare, in good form, a retained earnings statement.
In: Accounting
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In: Accounting
(a) The 2018 New Zealand Conceptual Framework states that “an asset is a present economic resource controlled by the entity as a result of past events.”
Discuss this statement in relation to inventory items that are in transit between the buyer and seller.
(b) Raymond Traders is a small business, and it undertakes
periodical stock-takes to determine its inventory value. On 30 June
2020, Raymond Traders completed a physical stock-take, and
inventory on hand as at 30 June 2020 had a cost of $39,600.
However, some of the inventory items were deemed to be obsolete and
Net Realisable value was determined to be $36,000.
(i) Based on the information above, what inventory management system is Raymond Traders currently using? Outline one advantage and one disadvantage of the inventory management system.
(ii) Advice Raymond Traders on the value of inventories
to be shown in the Statement of Financial Position as at 30 June
2020, with reference to NZ IAS 2. Explain.
(iii) In light of your answer (ii) above, prepare a
journal entry to record any required adjustments on 30 June
2020.
(c) NZ IAS 2, paragraph 36 requires companies to make
disclosures to present inventory fairly in their financial
statements. List six disclosures that companies must include in the
financial statements as additional disclosures.
In: Accounting
Deitz Corporation is projecting a cash balance of $36,900 in its
December 31, 2019, balance sheet. Deitz’s schedule of expected
collections from customers for the first quarter of 2020 shows
total collections of $227,550. The schedule of expected payments
for direct materials for the first quarter of 2020 shows total
payments of $52,890. Other information gathered for the first
quarter of 2020 is sale of equipment $3,690; direct labor $86,100,
manufacturing overhead $43,050, selling and administrative expenses
$55,350; and purchase of securities $17,220. Deitz wants to
maintain a balance of at least $30,750 cash at the end of each
quarter.
Prepare a cash budget for the first quarter.
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In: Accounting
Suppose the first population is all face-to-face meetings held in March 2020, the second population is all Zoom meetings held in March 2020, and the parameter of interest is μ1 – μ2 = the difference in the mean length of all face-to-face meetings and the mean length of all Zoom meetings. The meeting lengths are measured in minutes. For both face-to-face meetings and Zoom meetings the distributions of meeting times are skewed heavily to the right due to some meetings that are very long.
(a). Of interest is to test the hypothesis that the mean length of all face-to-face meetings and the mean length of all Zoom meetings are the same, versus the alternative hypothesis that the mean length of all face-to-face meetings is less than the mean length of all Zoom meetings. State the appropriate null and alternative hypotheses that should be tested.
(b). A simple random sample of 83 face-to-face meetings held in March 2020 was selected, and the mean length of this sample of 83 meetings was 46 minutes with a standard deviation of 13.6 minutes. An independent simple random sample of 81 Zoom meetings held in March 2020 was selected, and the mean length of this sample of 81 meetings was 51 minutes with a standard deviation of 11.6 minutes. If appropriate, use this information to test the hypotheses stated in part (a) at the a = .10 level of significance.
In: Statistics and Probability
Suppose the first population is all face-to-face meetings held in March 2020, the second population is all Zoom meetings held in March 2020, and the parameter of interest is μ1 – μ2 = the difference in the mean length of all face-to-face meetings and the mean length of all Zoom meetings. The meeting lengths are measured in minutes. For both face-to-face meetings and Zoom meetings the distributions of meeting times are skewed heavily to the right due to some meetings that are very long.
(a). Of interest is to test the hypothesis that the mean length of all face-to-face meetings and the mean length of all Zoom meetings are the same, versus the alternative hypothesis that the mean length of all face-to-face meetings is less than the mean length of all Zoom meetings. State the appropriate null and alternative hypotheses that should be tested.
(b). A simple random sample of 47 face-to-face meetings held in March 2020 was selected, and the mean length of this sample of 47 meetings was 51 minutes with a standard deviation of 15.6 minutes. An independent simple random sample of 41 Zoom meetings held in March 2020 was selected, and the mean length of this sample of 41 meetings was 54 minutes with a standard deviation of 14.0 minutes. If appropriate, use this information to test the hypotheses stated in part (a) at the α = .01 level of significance.
In: Statistics and Probability