35) The following aging information pertains to Jacobsen Co.'s accounts receivable at December 31, 2021:

During 2021, Jacobsen wrote off $18,000 in receivables and recovered $6,000 that had been written off in prior years. Jacobsen's December 31, 2020, allowance for uncollectible accounts was $40,000. Using the balance sheet approach, what amount of allowance for uncollectible accounts should Jacobsen report at December 31, 2021?

A) $55,400.

B) $28,000.

C) $49,400.

D) $31,400.

Problem 1

Beavis Construction Company was the low bidder on a construction project to build an earthen dam for $1,800,000. The project was begun in 2020 and completed in 2021. Cost and other data are presented below:

                                                                          2020                           2021

Costs incurred during the year                    $ 450,000                  $1,100,000

Estimated costs to complete                       1,050,000                                  0

Billings during the year                                400,000                    1,400,000

Cash collections during the year                   300,000                    1,500,000

Assume that Beavis recognizes revenue on this contract over time according to percentage of completion.

Required:

1. Prepare all journal entries to record costs, billings, collections, and profit recognition for

    2020

2. Prepare all journal entries to record costs, billings, collections, profit recognition and     

     completion of the project for 2021

The following list of accounts is taken from the December 31, 2020, unadjusted trial balance of Perdu Sales, a business that is owned by Eldon Perdu.

Additional information:
Accrued sales salaries amount to $3,200. Prepaid selling expenses of $5,200 have expired. Depreciation for the period is $2,500.

Required:
Assuming a perpetual inventory system, complete the following:

a. Journalize the adjusting journal entries.

b. Prepare a classified multiple-step income statement for the year ended December 31, 2020.

Analysis Component:
Assume that for the year ended December 31, 2019, net sales were $600,000; operating expenses were $344,000; and there was a loss of $14,000. Calculate the company’s gross profit ratios for 2019 and 2020. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

2019= gross profit %

2020= gross profit%

On January 1, 2018, Pomegranate Company acquired 90% of the voting stock of Starfruit Company for $91,700,000 in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was $6,300,000. Starfruit’s book value was $13,000,000 at the date of acquisition. Starfruit’s assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by $25,000,000. Starfruit Company had previously unreported intangible assets, with a market value of $40,000,000 and 5-year life, straight-line, which were capitalized following GAAP.

Additional information: Pomegranate uses the complete equity method to account for its investment in Starfruit on its own books. Goodwill recognized in this acquisition was impaired by a total of $2,000,000 in 2018 and 2019, and by $500,000 in 2020. It is now December 31, 2020, the accounting year-end.

Here is Starfruit Company’s trial balance at December 31, 2020:

Dr (Cr)

Current assets $28,200,000

Plant & equipment, net 188,000,000

Intangibles 2,000,000

Liabilities (180,000,000)

Capital stock (1,000,000)

Retained earnings, January 1 (29,500,000)

Acumulated other comprehensive income, January 1 (500,000)

Dividends 400,000

Sales revenue (24,000,000)

Cost of goods sold 10,000,000

Operating expenses 6,500,000

Other comprehensive income (100,000)

Question:

On the 2020 consolidated income statement, the noncontrolling interest in net income of Starfruit is

$150,000

$175,000

$200,000

$750,000

On January 1, 2018, Pomegranate Company acquired 90% of the voting stock of Starfruit Company for $91,700,000 in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was $6,300,000. Starfruit’s book value was $13,000,000 at the date of acquisition. Starfruit’s assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by $25,000,000. Starfruit Company had previously unreported intangible assets, with a market value of $40,000,000 and 5-year life, straight-line, which were capitalized following GAAP.

Additional information:

Pomegranate uses the complete equity method to account for its investment in Starfruit on its own books. Goodwill recognized in this acquisition was impaired by a total of $2,000,000 in 2018 and 2019, and by $500,000 in 2020. It is now December 31, 2020, the accounting year-end. Here is Starfruit Company’s trial balance at December 31, 2020:

On the 2020 consolidation working paper, eliminating entry (R) reduces the Investment in Starfruit by

$ 3,600,000

$64,800,000

$68,200,000

$81,000,000

Larsen’s Creamery has a costing system with two direct cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor-hours (DLH). At the beginning of 2020 Larsen adopted the following manufacturing cost standards. Input Cost per Output Unit Direct materials 3 lb. at $5 per lb. $15.00 Direct manufacturing labor 5 hours at $15 per hour $75.00 Manufacturing overhead Variable $6 per DLH $30.00 Fixed $8 per DLH $40.00 Standard manufacturing cost per output unit $160.00 The denominator level for total manufacturing overhead per month in 2020 is 40,000 direct manufacturing labor-hours. Larsen’s flexible budget for March 2020 was based on this denominator level. The records for March 2020 indicated the following: Direct materials purchased 25,000 lb. at $5.20 per lb. Direct materials used 23,100 lb. Direct manufacturing labor 40,100 hours at $14.60 per hour Actual fixed manufacturing overhead $350,000 Actual variable manufacturing overhead $250,000 Actual production 7,800 output units

Write a memo to managers about the issues you see and what actions you would recommend. Comment on how sustainability issues would influence your recommendation.

Question 11

The following facts pertain to a non-cancelable lease agreement between Carla Vista Leasing Company and Tamarisk Company, a lessee.

The collectibility of the lease payments by Carla Vista is probable.

1. Discuss the nature of this lease to Tamarisk

a) operating b) finance c) sales type

2. Discuss the nature of this lease to Carla Vista.

a) operating b) finance c) sales type

3. Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2020 and 2021. Tamarisk’s annual accounting period ends on December 31. Reversing entries are used by Tamarisk. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15. Record journal entries in the order presented in the problem.)

Splish Corp. has 150,240 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1,210,400. Additional transactions not considered in the $1,210,400 are as follows.

Analyze the above information and prepare an income statement for the year 2020, starting with income from continuing operations before income tax. Compute earnings per share as it should be shown on the face of the income statement. (Assume a total effective tax rate of 19% on all items, unless otherwise indicated.) (Round earnings per share to 2 decimal places, e.g. 1.47.)

Presented below is information that relates to Halifax Limited for 2020:

Accounts Payable 49,000

Accounts Receivable 78,000

Bond Payable 600,000

Cash dividends declared on common shares 34,000

Collections of credit sales $1,100,000

Cost of goods sold 1,100,000

Equipment 85,000

Gain from transactions in foreign currencies (pre-tax) 220,000

Inventory 120,000

Loss on sale of equipment 350,000

Loss from early debt repayment 340,000

Loss resulting from calculation error on depreciation charge in 2019 460,000

Other expenses 120,000

Other revenues 180,000

Proceeds from issue of Halifax common shares 60,000

Retained earnings, January 1, 2020 800,000

Sales 1,900,000

Selling and administrative expenses 290,000

Unrealized Gain FV-NI 20,000

Additional information to be included: On September 1, 2020, Halifax sold one of its segments (product line) to Best Industries for a gain (pre-tax) of $550,000. During the period January 1 to August 31, the discontinued segment incurred an operating loss (pre-tax) of $480,000. This loss is not included in any of the numbers shown above.

Instructions In good form, prepare a multiple-step income statement for 2020. Assume a 20% income tax rate and that 20,000 common shares were outstanding during the year. Include Earnings Per Share.