Cathcart Corporation had the following inventory balances on January 1, 2020: Raw Materials Inventory $10,000 Work in Process Inventory $20,000 Finished Goods Inventory $28,000 During 2020, the following transactions occurred: 1. Purchased $60,000 of raw materials on account. 2. $40,000 of raw materials were issued to the factory of which $35,000 are considered to be direct materials. 3. Total factory labor charges included 10,000 direct labor hours paid at $8 per hour and $20,000 of indirect labor charges. 4. Other factory overhead costs incurred included $8,000 of factory depreciation, $1,000 of expired factory insurance, $3,000 of accrued factory property taxes, and $4,000 of miscellaneous factory costs paid in cash. 5. Units with a total cost of $154,000 were completed. 6. Units with a total cost of $140,000 were sold for $200,000 cash. Cathcart Company uses an actual costing system. REQUIRED: A. Complete a cost-flow T-account diagram. B. Prepare all of the necessary journal entries. C. Prepare a manufacturing statement and a partial (through gross profit) income statement

1. The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2020, its first year of operations. The enacted income tax rate is 20% for all years. Pretax accounting income $800,000 Excess tax depreciation (480,000) Litigation accrual 70,000 Unearned rent revenue deferred on the books but appropriately recognized in taxable income 60,000 Interest income from New York municipal bonds (20,000) Taxable income $430,000

1. Excess tax depreciation will reverse equally over a four-year period, 2021-2024.

2. It is estimated that the litigation liability will be paid in 2024.

3. Rent revenue will be recognized during the last year of the lease, 2024.

4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2024.

(c)   Since this is the first year of operations, there is no beginning deferred tax asset or liability. Compute the net deferred tax expense (benefit).

(d)   Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2020.

Streamland SA started producing a new mini series featuring super heroes with useless powers. The management board considered various financing options. The CFO, Sam Yang, suggested to issue convertible bonds, an instrument that had not been used by the company before. The other board members were hesitant at first but eventually agreed that convertible bonds were the best option to finance this production. Therefore, Streamland SA issued €18,000,000 of 8%, 5-year convertible bonds on January 1, 2020, at 95 with interest payable on December 31. Each of the 18,000 €1,000 bonds is convertible into 10 ordinary shares (par value of €1). Using the prevailing market interest rates at the issuance date for similar non-convertible bonds, the bonds would have been sold at 90. Any bond premium or discount is amortized annually using the effective-interest method.

At maturity, the bond has been repurchased. Prepare the schedule of bond amortization for the convertible bonds for all years (2020 to 2024) and the journal entry(ies) for the last year of the bond schedule. (15p)

but how do i know the market interest rate?

The following data were taken from the records of Vaughn Company for the fiscal year ended June 30, 2020.

Prepare a cost of goods manufactured schedule. (Assume all raw materials used were direct materials.)

Prepare an income statement through gross profit.

Prepare the current assets section of the balance sheet at June 30, 2020. (List Current Assets in order of liquidity.)

Publishing Inc. was established on February 21, 2020. is authorized to issue 800,000 shares of $2.00 par value common stock and by December 31, 2020, Stafford had 200,000 shares issued & outstanding and Paid-In Capital of $1,800,000. On January 3, 2021, when the common stock was trading for $15/share, Stafford declared a 14% stock dividend.  Which of the following would be included in the journal entry to record the declaration and payment of the stock dividend?

For Larry’s company this year’s cash flow statement reports net operating cash flows $30,000; net investing cash flows ($50,000); and net financing cash flows $80,000. Last year’s balance sheet reported cash was $40,000. What amount of cash will be reported in the current year’s balance sheet?

Consider the following account balances of the Law Firm at the end of the year:

How many of these accounts would appear in year-end income statement?

P15.7 (LO2,3) (Cash Dividend Entries) The books of Conchita SA carried the following  account balances as of December 31, 2019.

The company decided not to pay any dividends in 2019.

The board of directors, at their annual meeting on December 21, 2020, declared the following: "The current year dividends shall be 6% on the preference and R$0.30 per share on the ordinary. The dividends in arrears shall be paid by issuing 1,500 treasury shares." At the date of declaration, the preference is selling R$80 at per share, and the ordinary at R$12 per share. Net income for 2020 is estimated at R$77,000.

Instructions

a. Prepare the journal entries required for the dividend declaration and payment, assuming that they occur simultaneously.

b. Could Conchita SA give the preference shareholders 2 years' dividends and ordinary shareholders a 30 cents per share dividend, all in cash?

The condensed income statement for the Oriole and Paul partnership for 2020 is as follows.

A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are variable.

Oriole has proposed a plan to get the partnership “out of the red” and improve its profitability. She feels that the quality of the product could be substantially improved by spending $0.25 more per unit on better raw materials. The selling price per unit could be increased to only $5.25 because of competitive pressures. Oriole estimates that sales volume will increase by 25%. What effect would Oriole’s plan have on the profits and the break-even point in dollars of the partnership? (Round intermediate calculations to 4 decimal places, e.g. 15.2515 and final answers to 0 decimal places, e.g. 2,520.)

Consider the following information which relates to dividends per share (DPS) for a given company:

Today, we are in 2020. Management is in the process of deciding whether to expand or not to expand the firm’s branches. Below, is a set of inputs associated with each scenario:

Scenario #1 – Do Not Expand: Dividend by the end of 2020 is expected to grow at the historical annual growth rate for the period 2015−2019, which is currently undetermined. This period adds up to four years based upon starting at time zero. Once determined, this rate is expected to continue in the future. Under this scenario, the required return on common stock is 14.36%.

Scenario #2 – Expand: Dividend in 2021 is expected to be $2.13 per share, which will grow at an annual rate of 14.12% for two years (2022 and 2023), and then, the dividend would grow at the same unknown rate in the first scenario from 2024 thereafter. Under this scenario, the required return on common stock is 17.58%.

Required: What is the dollar difference in the present value per share of common stock between both scenarios?

At the end of its fiscal year 2019, an analyst made the following forecast for ABC, Inc. (in millions of dollars):

ABC has a net debt of $823. Assume that free cash flow will grow at 4 percent per year after 2023. ABC had 300 million shares outstanding at the end of 2019, trading at $75 per share. Using a required return of 10 percent, calculate the following for ABC at the end of 2019 (You have to fill in the table below to show your working process):

1. The enterprise value                                                                          

[5 marks]

2. Equity value                                                                                       

[2 marks]

3. Equity value per share                                                                                   

[2 marks]

4. Based on your estimate, should investors buy the share of this company?

[1 mark]

Consider the following information which relates to dividends per share (DPS) for a given company:

Today, we are in 2020. Management is in the process of deciding whether to expand or not to expand the firm’s branches. Below, is a set of inputs associated with each scenario:

Scenario #1 – Do Not Expand: Dividend by the end of 2020 is expected to grow at the historical annual growth rate for the period 2015−2019, which is currently undetermined. This period adds up to four years based upon starting at time zero. Once determined, this rate is expected to continue in the future. Under this scenario, the required return on common stock is 14.49%.

Scenario #2 – Expand: Dividend in 2021 is expected to be $2.17 per share, which will grow at an annual rate of 14.42% for two years (2022 and 2023), and then, the divided would grow at the same unknown rate in the first scenario from 2024 thereafter. Under this scenario, the required return on common stock is 16.65%.

Required: What is the dollar difference in the present value per share of common stock between both scenarios?