The following information is available for Sheffield Corporation
for 2020.
| 1. | Depreciation reported on the tax return exceeded depreciation reported on the income statement by $126,000. This difference will reverse in equal amounts of $31,500 over the years 2021–2024. | |
| 2. | Interest received on municipal bonds was $10,500. | |
| 3. | Rent collected in advance on January 1, 2020, totaled $65,100 for a 3-year period. Of this amount, $43,400 was reported as unearned at December 31, 2020, for book purposes. | |
| 4. | The tax rates are 40% for 2020 and 35% for 2021 and subsequent years. | |
| 5. | Income taxes of $326,000 are due per the tax return for 2020. | |
| 6. | No deferred taxes existed at the beginning of 2020. |
a. Compute taxable income for 2020.
b. Compute pretax financial income for 2020.
c. Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2020 and 2021. Assume taxable income was $480,000 in 2021.
d. Prepare the income tax expense section of the income statement for 2020, beginning with “Income before income taxes.”
In: Accounting
Recording Treasury Stock Transactions
On January 2, 2020, Liberty Corporation was authorized to issue 300,000 shares of $5 par value common stock. Liberty issued 60,000 shares of common stock on January 15, 2020, at $15 per share.
Required
a. Record the entry on June 30, 2020, for purchase of 6,600 common shares for the treasury at $18 per share.
b. Record the entry on September 20, 2020, for sale of 2,400 treasury shares at $21 per share.
c. Record the entry on November 3, 2020, for sale of 1,500 treasury shares at $17 per share.
d. Record the entry on December 15, 2020, for sale of 1,200 treasury shares at $13 per share.
Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order.
e. Determine the number of shares issued and the number of shares outstanding on the following dates (after transactions have been recorded): June 30, 2020; September 20, 2020; November 3, 2020; and December 15, 2020.
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
Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)
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3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract. (Do not round intermediate calculations.)
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In: Accounting
Required information
[The following information applies to the questions
displayed below.]
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 | $ | 2,550,000 | $ | 4,250,000 | $ | 1,870,000 | |||
| Estimated costs to complete as of year-end | 5,950,000 | 1,700,000 | 0 | ||||||
| Billings during the year | 2,050,000 | 4,750,000 | 3,200,000 | ||||||
| Cash collections during the year | 1,825,000 | 4,100,000 | 4,075,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
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.)
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,550,000 | $ | 3,825,000 | $ | 3,975,000 | |||
| Estimated costs to complete as of year-end | 5,950,000 | 4,150,000 | 0 | ||||||
In: Accounting
In: Finance
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 $2,624,000 $3,690,000 $2,074,600
Estimated costs to complete as of year-end 5,576,000 1,886,000 0
Billings during the year 2,200,000 4,114,000 3,686,000
Cash collections during the year 2,000,000 3,800,000 4,200,000
Westgate Construction uses the completed contract method of
accounting for long-term construction contracts.
Required:
1. Calculate the amount of revenue and gross
profit (loss) to be recognized in each of the three years.
2-a. In the journal below, complete the necessary
journal entries for the year 2018 (credit "Various accounts" for
construction costs incurred).
2-b. In the journal below, complete the necessary
journal entries for the year 2019 (credit "Various accounts" for
construction costs incurred).
2-c. In the journal below, complete the necessary
journal entries for the year 2020 (credit "Various accounts" for
construction costs incurred).
In: Accounting
Candid, Inc., is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2020, the company incurred $800,000 on direct materials and $805,000 on conversion costs, for a total manufacturing cost of $1,605,000.
In: Accounting
Culver Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $6,000,000 on January 1, 2020. Culver expected to complete the building by December 31, 2020. Culver has the following debt obligations outstanding during the construction period.
| Construction loan-14% interest, payable semiannually, issued December 31, 2019 | $2,400,000 | |
| Short-term loan-12% interest, payable monthly, and principal payable at maturity on May 30, 2021 | 1,680,000 | |
| Long-term loan-13% interest, payable on January 1 of each year. Principal payable on January 1, 2024 | 1,200,000 |
1. Assume that Culver completed the office and warehouse building on December 31, 2020, as planned at a total cost of $6,240,000, and the weighted-average amount of accumulated expenditures was $4,320,000. Compute the avoidable interest on this project.
2. Compute the depreciation expense for the year ended December 31, 2021. Culver elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $360,000.
In: Accounting
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Based on Exercise 18-33 |
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During 2020, Kingbird Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. |
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| 2020 | 2021 | 2022 | |||||||||||||
| Costs incurred to date | $393,900 | $760,380 | $1,059,000 | ||||||||||||
| Estimated costs to complete | 616,100 | 341,620 | –0– | ||||||||||||
| Billings to date | 299,000 | 905,000 | 1,610,000 | ||||||||||||
| Collections to date | 268,000 | 818,000 | 1,421,000 | ||||||||||||
| 2. Prepare journal entries for all 3 years. |
| 2020 | 2021 | 2022 | |
| Contract Price | $1,610,000 | $1,610,000 | $1,610,000 |
| Cost incurred to date | $393,900 | $760,380 | $1,059,000 |
| Estimated cost yet to be incurred to complete the contract | $616,100 | $341,620 | $0 |
| Total cost | $1,010,000 | $1,102,000 | $1,059,000 |
| % of completion | 39% | 69% | 100% |
| Revenue to date | $627,900 | $1,110,900 | $1,610,000 |
| Revenue previous year | $0 | $627,900 | $1,110,900 |
| Net revenue this year | $627,900 | $483,000 | $499,100 |
| Cost to date | $393,900 | $760,380 | $1,059,000 |
| Cost to date of previous year | $0 | $393,900 | $760,380 |
| Net cost of the year | $393,900 | $366,480 | $298,620 |
| Gross Profit | $234,000 | $116,520 | $200,480 |
In: Accounting
Rottweiler Corporation issued 100, $1,000 par value bonds on February 24, 2019. The original bonds' maturity was 20 years, and they have a six percent coupon. Rottweiler used the money to purchase 150 Really Adorable Puppies. The firm hopes to double production of Really Adorable Puppies in the next five to ten years. The company makes all payments on a semiannual basis.
1. What is the value of the bond on February 24, 2020, if the interest rate on comparable debt is 6 percent? What is the current yield? What is the yield to maturity?
2. What is the value of the bond on February 24, 2020, if the interest on comparable debt is 10 percent? What is the current yield? What is the yield to maturity?
3. What is the value of the bond on February 24, 2020, if the interest on comparable debt is 4 percent? What is the current yield? What is the yield to maturity?
4. Draw the time path of value graph (be sure to label all points of interest) of a 6 percent coupon, $1,000 par value bond when interest rates are 4 percent, 6 percent, and 10 percent.
In: Finance