P9-6A Altona Limited purchased delivery equipment on March 1, 2016, for $130,000 cash. At that time, the equipment was estimated to have a useful life of five years and a residual value of $10,000. The equipment was disposed of on November 30, 2018. Altona uses the diminishing-balance method at one time the straight-line depreciation rate, has an August 31 year end, and makes adjusting entries annually. Please show steps.
Instructions
(a) Record the acquisition of equipment on March 1, 2016.
(b) Record depreciation at August 31, 2016, 2017, and 2018.
(c) Record the disposal of the equipment on November 30, 2018, under each of the following independent assumptions:
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 | $ | 2,204,000 | $ | 3,192,000 | $ | 2,424,400 | |||
| Estimated costs to complete as of year-end | 5,396,000 | 2,204,000 | 0 | ||||||
| Billings during the year | 2,140,000 | 3,256,000 | 4,604,000 | ||||||
| Cash collections during the year | 1,870,000 | 3,200,000 | 4,930,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
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.)
In: Accounting
On January 1, 2017, Skysong Company purchased 11% bonds, having
a maturity value of $274,000, for $295,314.87. The bonds provide
the bondholders with a 9% yield. They are dated January 1, 2017,
and mature January 1, 2022, with interest received on January 1 of
each year. Skysong Company uses the effective-interest method to
allocate unamortized discount or premium. The bonds are classified
as available-for-sale category. The fair value of the bonds at
December 31 of each year-end is as follows.
| 2017 | $293,000 | 2020 | $284,700 | |||
|---|---|---|---|---|---|---|
| 2018 | $283,700 | 2021 | $274,000 | |||
| 2019 | $282,800 |
| Q | Prepare the journal entry to record the recognition of fair value for 2018. |
|---|
| Dec 31, 2018 | Unrealized Holding Gain or Loss-Equity | ? | |
| Fair Value Adjustment | ? |
In: Accounting
Quick Fix Ltd is a manufacturing company engaged in the production of adhesives. The company has not performed well over the past three financial years.
In order to improve on the poor past profits, the board approved a R1 000 000 advertising promotion during the year ended 31 December 2018 in order to generate increased sales in the future. The advertising promotion took place (and was paid for) during December 2018.
The accountant insists on recognizing the R1 000 000 payment as an asset at 31 December 2018. His reasoning is that future sales will increase as the number of customers grows due to the advertising campaign.
Required:
Discuss whether you agree with the accountant, making reference to the framework. Provide an alternate treatment if you disagree. (20)
In: Accounting
Martinez, Inc. acquired a patent on January 1, 2017 for $40,500
cash. The patent was estimated to have a useful life of 10 years
with no residual value. On December 31, 2018, before any
adjustments were recorded for the year, management determined that
the remaining useful life was 7 years (with that new estimate being
effective as of January 1, 2018). On June 30, 2019, the patent was
sold for $25,500.
Required:
In: Accounting
On January 1 , 2017, Newyork Capital Corporation purchased 30% of the outstanding common shares of Delta Crating Corp. for $250 million and accounts for this investment under the equity method. The following information is available regarding Delta Crating Corp.
($ in millions)
Net identifiable assets at 1/1/2017 acquisition:
| Fair Value | 700 |
| Book Value | 500 |
| 2017 Net Income | 100 |
| 2017 Dividends declared and paid | 30 |
| 2018 net income | 80 |
| 2018 dividends declared and paid | 20 |
| 12/31/2017 fair value (based on market value) | 1,000 |
| 12/31/2018 fair value (based on market value) | 1,200 |
Two-thirds of the difference between the book value and fair value of Delta's identifiable net assets at acquisition is attributable to depreciable assets having fair value greater than their book value and the remaining one-third is attributable to land having fair value in excess of its book value. The depreciable assets have an average remaining useful life of 10 years and are being depreciated by the straight-line method with zero residual value.
Required:
1. Provide the journal entries that Newyork Capital would make in 2017 and 2018 to account for its investment in Delta Crating under the equity method. Provide supporting details for all calculations needed.
2. Determine the carrying value of Newyork's Investment in Delta Crating account on December 31, 2017, and December 31, 2018, under the equity method.
3. Now assume that Newyork elected the fair value option for the equity method on the January 1, 2017, acquisition date. Repeat requirements 1 and 2.
4. Based on your answers, discuss the impact of the fair value option on Newyork's net profit margin in 2017 and 2018.
In: Accounting
Selected comparative financial statements of Korbin Company
follow.
| KORBIN COMPANY | |||||||||
| Comparative Income Statements | |||||||||
| For Years Ended December 31, 2019, 2018, and 2017 | |||||||||
| 2019 | 2018 | 2017 | |||||||
| Sales | $ | 527,432 | $ | 404,056 | $ | 280,400 | |||
| Cost of goods sold | 317,514 | 252,939 | 179,456 | ||||||
| Gross profit | 209,918 | 151,117 | 100,944 | ||||||
| Selling expenses | 74,895 | 55,760 | 37,013 | ||||||
| Administrative expenses | 47,469 | 35,557 | 23,273 | ||||||
| Total expenses | 122,364 | 91,317 | 60,286 | ||||||
| Income before taxes | 87,554 | 59,800 | 40,658 | ||||||
| Income tax expense | 16,285 | 12,259 | 8,254 | ||||||
| Net income | $ | 71,269 | $ | 47,541 | $ | 32,404 | |||
| KORBIN COMPANY | |||||||||
| Comparative Balance Sheets | |||||||||
| December 31, 2019, 2018, and 2017 | |||||||||
| 2019 | 2018 | 2017 | |||||||
| Assets | |||||||||
| Current assets | $ | 56,623 | $ | 37,898 | $ | 50,661 | |||
| Long-term investments | 0 | 800 | 4,450 | ||||||
| Plant assets, net | 101,986 | 93,058 | 54,049 | ||||||
| Total assets | $ | 158,609 | $ | 131,756 | $ | 109,160 | |||
| Liabilities and Equity | |||||||||
| Current liabilities | $ | 23,157 | $ | 19,632 | $ | 19,103 | |||
| Common stock | 67,000 | 67,000 | 49,000 | ||||||
| Other paid-in capital | 8,375 | 8,375 | 5,444 | ||||||
| Retained earnings | 60,077 | 36,749 | 35,613 | ||||||
| Total liabilities and equity | $ | 158,609 | $ | 131,756 | $ | 109,160 | |||
3. Complete the below table to calculate the
balance sheet data in trend percents with 2017 as base year.
(Round your percentage answers to 2 decimal
places.)
|
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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 $ 2,400,000 $ 3,600,000 $ 2,200,000 Estimated costs to complete as of year-end 5,600,000 2,000,000 0 Billings during the year 2,000,000 4,000,000 4,000,000 Cash collections during the year 1,800,000 3,600,000 4,600,000 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).
3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract.
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. 2018 2019 2020 Cost incurred during the year $ 2,400,000 $ 3,800,000 $ 3,200,000 Estimated costs to complete as of year-end 5,600,000 3,100,000 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. 2018 2019 2020 Cost incurred during the year $ 2,400,000 $ 3,800,000 $ 3,900,000 Estimated costs to complete as of year-end 5,600,000 4,100,000 0
In: Accounting
Problem 18-3A
Condensed balance sheet and income statement data for Landwehr Corporation appear below.
|
LANDWEHR CORPORATION |
|||||||||
|
2018 |
2017 |
2016 |
|||||||
| Cash | $ 25,800 | $ 17,600 | $ 18,700 | ||||||
| Accounts receivable (net) | 50,500 | 44,200 | 47,100 | ||||||
| Other current assets | 89,600 | 94,900 | 63,900 | ||||||
| Investments | 75,300 | 71,000 | 45,100 | ||||||
| Plant and equipment (net) | 400,500 | 370,000 | 358,500 | ||||||
| $641,700 | $597,700 | $533,300 | |||||||
| Current liabilities | $75,500 | $79,800 | $69,400 | ||||||
| Long-term debt | 79,300 | 84,100 | 50,300 | ||||||
| Common stock, $10 par | 368,000 | 316,000 | 304,000 | ||||||
| Retained earnings | 118,900 | 117,800 | 109,600 | ||||||
| $641,700 | $597,700 | $533,300 | |||||||
|
LANDWEHR CORPORATION |
||||||
|
2018 |
2017 |
|||||
| Sales revenue | $738,000 | $705,500 | ||||
| Less: Sales returns and allowances | 39,100 | 49,900 | ||||
| Net sales | 698,900 | 655,600 | ||||
| Cost of goods sold | 417,000 | 400,000 | ||||
| Gross profit | 281,900 | 255,600 | ||||
| Operating expenses (including income taxes) | 212,500 | 223,000 | ||||
| Net income | $ 69,400 | $ 32,600 | ||||
Additional information:
| 1. | The market price of Landwehr’s common stock was $3.00, $6.00, and $7.00 for 2016, 2017, and 2018, respectively. | |
| 2. | All dividends were paid in cash. |
(a)
Compute the following ratios for 2017 and 2018. (Round
Earnings per share to 2 decimal places, e.g. 1.65, and all other
answers to 1 decimal place, e.g. 6.8 or 6.8%.)
|
2017 |
2018 |
|||||||
| (1) | Profit margin | % | % | |||||
| (2) | Asset turnover | times | times | |||||
| (3) | Earnings per share. (Weighted-average common shares in 2018 were 31,800 and in 2017 were 32,900.) | $ | $ | |||||
| (4) | Price-earnings ratio | times | times | |||||
| (5) | Payout ratio | % | % | |||||
| (6) | Debt to assets ratio | % | % | |||||
| Click if you would like to Show Work for this question: |
Open Show Work |
In: Accounting
1.Xonic Corporation issued $8 million of 10-year, 12 percent bonds on April 1, 2018, at 112.5 to yield 10 percent. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2028. Xonic’s fiscal year ends on March 31. What is the interest expense for the year ended March 31, 2019? Please round your answer to the nearest dollar.
2.Xonic Corporation issued $8 million of 10-year, 12 percent bonds on April 1, 2018, at 112.5 to yield 10 percent. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2028. Xonic’s fiscal year ends on March 31. What is net book value reported on the balance sheet on March 31, 2019? Please round your answer to the nearest dollar.
3.Mellilo Corporation issued $5 million of 10-year, 8.5 percent bonds on January 1, 2018 at 90.5 to yield 10 percent. Interest is due on June 30 and December 31 each year, and all of the bonds in the issue mature on December 31, 2028. Mellilo's fiscal year ends on December 31. What is the amount of interest expense reported in 2018? Please round your answer to the nearest dollar.
4.Mellilo Corporation issued $5 million of 10-year, 8.5 percent bonds on January 1, 2018 at 90.5 to yield 10 percent. Interest is due on June 30 and December 31 each year, and all of the bonds in the issue mature on December 31, 2028. Mellilo's fiscal year ends on December 31. What is the amount reported on the balance sheet on December 31, 2018? Please round your answer to the nearest dollar.
In: Accounting