Metlock Inc., a greeting card company, had the following
statements prepared as of December 31, 2020.
|
METLOCK INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$5,900 |
$7,100 |
||||
|
Accounts receivable |
62,000 |
51,000 |
||||
|
Short-term debt investments (available-for-sale) |
35,000 |
18,100 |
||||
|
Inventory |
40,400 |
59,900 |
||||
|
Prepaid rent |
5,000 |
4,000 |
||||
|
Equipment |
153,300 |
129,100 |
||||
|
Accumulated depreciation—equipment |
(35,000 |
) |
(24,800 |
) |
||
|
Copyrights |
46,300 |
50,300 |
||||
|
Total assets |
$312,900 |
$294,700 |
||||
|
Accounts payable |
$46,500 |
$40,200 |
||||
|
Income taxes payable |
4,100 |
6,100 |
||||
|
Salaries and wages payable |
8,100 |
4,100 |
||||
|
Short-term loans payable |
8,000 |
10,100 |
||||
|
Long-term loans payable |
60,600 |
69,600 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
55,600 |
34,600 |
||||
|
Total liabilities & stockholders’ equity |
$312,900 |
$294,700 |
||||
|
METLOCK INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$338,150 |
|||
|
Cost of goods sold |
175,700 |
|||
|
Gross profit |
162,450 |
|||
|
Operating expenses |
119,400 |
|||
|
Operating income |
43,050 |
|||
|
Interest expense |
$11,300 |
|||
|
Gain on sale of equipment |
2,000 |
9,300 |
||
|
Income before tax |
33,750 |
|||
|
Income tax expense |
6,750 |
|||
|
Net income |
$27,000 |
|||
Additional information:
| 1. | Dividends in the amount of $6,000 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $19,800 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the direct method.
In: Accounting
Sage Inc., a greeting card company, had the following statements
prepared as of December 31, 2020.
|
SAGE INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$6,100 |
$6,900 |
||||
|
Accounts receivable |
62,500 |
51,000 |
||||
|
Short-term debt investments (available-for-sale) |
34,800 |
18,100 |
||||
|
Inventory |
39,600 |
60,200 |
||||
|
Prepaid rent |
4,900 |
4,000 |
||||
|
Equipment |
154,500 |
130,100 |
||||
|
Accumulated depreciation—equipment |
(34,800 |
) |
(25,300 |
) |
||
|
Copyrights |
46,300 |
50,400 |
||||
|
Total assets |
$313,900 |
$295,400 |
||||
|
Accounts payable |
$46,000 |
$40,200 |
||||
|
Income taxes payable |
4,000 |
6,000 |
||||
|
Salaries and wages payable |
8,100 |
4,000 |
||||
|
Short-term loans payable |
8,000 |
10,000 |
||||
|
Long-term loans payable |
59,700 |
69,000 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
58,100 |
36,200 |
||||
|
Total liabilities & stockholders’ equity |
$313,900 |
$295,400 |
||||
|
SAGE INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$339,075 |
|||
|
Cost of goods sold |
175,000 |
|||
|
Gross profit |
164,075 |
|||
|
Operating expenses |
119,900 |
|||
|
Operating income |
44,175 |
|||
|
Interest expense |
$11,300 |
|||
|
Gain on sale of equipment |
2,000 |
9,300 |
||
|
Income before tax |
34,875 |
|||
|
Income tax expense |
6,975 |
|||
|
Net income |
$27,900 |
|||
Additional information:
| 1. | Dividends in the amount of $6,000 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $19,900 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the direct method.
(Show amounts in the investing and financing sections
that decrease cash flow with either a - sign e.g. -15,000 or in
parenthesis e.g. (15,000).)
In: Accounting
Culver Inc., a greeting card company, had the following
statements prepared as of December 31, 2020.
|
CULVER INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$6,100 |
$7,000 |
||||
|
Accounts receivable |
62,200 |
51,500 |
||||
|
Short-term debt investments (available-for-sale) |
34,900 |
17,900 |
||||
|
Inventory |
40,300 |
60,500 |
||||
|
Prepaid rent |
5,000 |
3,900 |
||||
|
Equipment |
153,200 |
131,200 |
||||
|
Accumulated depreciation—equipment |
(35,000 |
) |
(24,700 |
) |
||
|
Copyrights |
46,200 |
49,800 |
||||
|
Total assets |
$312,900 |
$297,100 |
||||
|
Accounts payable |
$46,000 |
$40,000 |
||||
|
Income taxes payable |
4,000 |
6,000 |
||||
|
Salaries and wages payable |
7,900 |
4,000 |
||||
|
Short-term loans payable |
8,100 |
10,100 |
||||
|
Long-term loans payable |
59,800 |
69,200 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
57,100 |
37,800 |
||||
|
Total liabilities & stockholders’ equity |
$312,900 |
$297,100 |
||||
|
CULVER INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$336,150 |
|||
|
Cost of goods sold |
174,100 |
|||
|
Gross profit |
162,050 |
|||
|
Operating expenses |
120,800 |
|||
|
Operating income |
41,250 |
|||
|
Interest expense |
$11,400 |
|||
|
Gain on sale of equipment |
1,900 |
9,500 |
||
|
Income before tax |
31,750 |
|||
|
Income tax expense |
6,350 |
|||
|
Net income |
$25,400 |
|||
Additional information:
| 1. | Dividends in the amount of $6,100 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $20,200 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the indirect method.
(Show amounts that decrease cash flow with either a -
sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
In: Accounting
Crane Company estimates that 300,000 direct labor hours will be
worked during the coming year, 2020, in the Packaging Department.
On this basis, the following budgeted manufacturing overhead cost
data are computed for the year.
|
Fixed Overhead Costs |
Variable Overhead Costs |
|||||
|---|---|---|---|---|---|---|
|
Supervision |
$84,000 |
Indirect labor |
$120,000 |
|||
|
Depreciation |
66,000 |
Indirect materials |
60,000 |
|||
|
Insurance |
24,000 |
Repairs |
30,000 |
|||
|
Rent |
18,000 |
Utilities |
45,000 |
|||
|
Property taxes |
12,000 |
Lubricants |
15,000 |
|||
|
$204,000 |
$270,000 |
|||||
It is estimated that direct labor hours worked each month will
range from 20,000 to 26,000 hours.
During October, 20,000 direct labor hours were worked and the
following overhead costs were incurred.
Fixed overhead costs: Supervision $7,000, Depreciation $5,500,
Insurance $1,975, Rent $1,500, and Property taxes $1,000.
Variable overhead costs: Indirect labor $8,970, Indirect materials,
$3,700, Repairs $1,960, Utilities $3,250, and Lubricants
$1,240.
(a) Prepare a monthly manufacturing overhead
flexible budget for each increment of 2,000 direct labor hours over
the relevant range for the year ending December 31, 2020.
(List variable costs before fixed
costs.)
(b) Prepare a flexible budget report for October. (List variable costs before fixed costs.)
In: Accounting
Crane Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 4 years, with equal annual rental payments of $4,056 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $16,200, a book value to Crane of $9,200, and a useful life of 5 years. 4. At the end of the lease term, Crane and Walsh expect there to be an unguaranteed residual value of $2,300. 5. Crane wants to earn a return of 8% on the lease, and collectibility of the payments is probable. This rate is known by Walsh. Click here to view factor tables. (b) Using the original facts of the lease, show the journal entries to be made by both Crane and Walsh in 2020. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
In: Accounting
On July 1, 2020, Riverbed Corporation purchased Young Company by paying $256,900 cash and issuing a $132,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows.
|
Cash |
$51,400 |
Accounts payable |
$204,000 |
|||
|---|---|---|---|---|---|---|
|
Accounts receivable |
91,500 |
Stockholders’ equity |
241,100 |
|||
|
Inventory |
105,000 |
$445,100 |
||||
|
Land |
40,400 |
|||||
|
Buildings (net) |
75,300 |
|||||
|
Equipment (net) |
69,500 |
|||||
|
Trademarks |
12,000 |
|||||
|
$445,100 |
The recorded amounts all approximate current values except for land
(fair value of $62,200), inventory (fair value of $126,400), and
trademarks (fair value of $15,600).
(a)
(a)
Correct answer iconYour answer is correct.
Prepare the July 1 entry for Riverbed Corporation to record the purchase. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
eTextbook and Media
List of Accounts
Attempts: 1 of 3 used
(b)
(b)
Prepare the December 31 entry for Riverbed Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $3,320. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
|
enter an account titleenter an account title |
enter a debit amountenter a debit amount |
enter a credit amountenter a credit amount |
In: Accounting
Presented below is information related to equipment owned by Swifty Company at December 31, 2020.
| Cost | $9,270,000 | |
| Accumulated depreciation to date | 1,030,000 | |
| Expected future net cash flows | 7,210,000 | |
| Fair value | 4,944,000 |
Swifty intends to dispose of the equipment in the coming year. It
is expected that the cost of disposal will be $20,600. As of
December 31, 2020, the equipment has a remaining useful life of 4
years.
Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
Prepare the journal entry (if any) to record depreciation expense for 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
The asset was not sold by December 31, 2021. The fair value of the equipment on that date is $5,459,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $20,600. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
enter a credit amount |
In: Accounting
Blossom Inc., a greeting card company, had the following
statements prepared as of December 31, 2020.
|
BLOSSOM INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$6,000 |
$6,900 |
||||
|
Accounts receivable |
61,800 |
50,900 |
||||
|
Short-term debt investments (available-for-sale) |
35,200 |
17,900 |
||||
|
Inventory |
40,300 |
60,600 |
||||
|
Prepaid rent |
5,100 |
3,900 |
||||
|
Equipment |
155,100 |
131,300 |
||||
|
Accumulated depreciation—equipment |
(35,200 |
) |
(24,800 |
) |
||
|
Copyrights |
45,800 |
50,400 |
||||
|
Total assets |
$314,100 |
$297,100 |
||||
|
Accounts payable |
$45,600 |
$40,000 |
||||
|
Income taxes payable |
4,000 |
6,000 |
||||
|
Salaries and wages payable |
8,100 |
4,000 |
||||
|
Short-term loans payable |
7,900 |
10,000 |
||||
|
Long-term loans payable |
60,500 |
68,900 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
58,000 |
38,200 |
||||
|
Total liabilities & stockholders’ equity |
$314,100 |
$297,100 |
||||
|
BLOSSOM INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$336,275 |
|||
|
Cost of goods sold |
173,300 |
|||
|
Gross profit |
162,975 |
|||
|
Operating expenses |
121,200 |
|||
|
Operating income |
41,775 |
|||
|
Interest expense |
$11,400 |
|||
|
Gain on sale of equipment |
2,000 |
9,400 |
||
|
Income before tax |
32,375 |
|||
|
Income tax expense |
6,475 |
|||
|
Net income |
$25,900 |
|||
Additional information:
| 1. | Dividends in the amount of $6,100 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $19,900 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the indirect method.
(Show amounts that decrease cash flow with either a -
sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
In: Accounting
On January 1, 2020, Buffalo Company purchased 10% bonds having a maturity value of $420,000, for $453,537.42. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Buffalo Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Jan. 1, 2020 |
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
Prepare a bond amortization schedule. (Round answers to
2 decimal places, e.g. 2,525.25.)
|
Schedule of Interest Revenue and Bond Premium
Amortization |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
|
|
Cash |
Interest |
Premium |
Carrying Amount |
|||||
|
1/1/20 |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/21 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/22 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/23 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/24 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/25 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
Prepare the journal entry to record the interest revenue and the
amortization at December 31, 2020. (Round answers to 2
decimal places, e.g. 2,525.25. Credit account titles are
automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the
amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2020 |
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
Prepare the journal entry to record the interest revenue and the
amortization at December 31, 2021. (Round answers to 2
decimal places, e.g. 2,525.25. Credit account titles are
automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the
amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2021 |
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2021 |
In: Accounting
Grouper Leasing Company agrees to lease equipment to Monty Corporation on January 1, 2020. The following information relates to the lease agreement.
1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years.
2. The cost of the machinery is $500,000, and the fair value of the asset on January 1, 2020, is $659,000.
3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $60,000. Monty estimates that the expected residual value at the end of the lease term will be 60,000. Monty amortizes all of its leased equipment on a straight-line basis.
4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020.
5. The collectibility of the lease payments is probable.
6. Grouper desires a 9% rate of return on its investments. Monty’s incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown.
(Assume the accounting period ends on December 31.)
(d)
| Your answer is partially correct. Try again. | |
Prepare the journal entries Monty would make in 2020 and 2021 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,972. Record journal entries in the order presented in the problem.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
1/1/2012/31/201/1/2112/31/21 |
|||
|
(To record the lease.) |
|||
|
(To record lease payment.) |
|||
|
1/1/2012/31/201/1/2112/31/21 |
|||
|
(To record amortization.) |
|||
|
(To record interest.) |
|||
|
1/1/2012/31/201/1/2112/31/21 |
|||
|
1/1/2012/31/201/1/2112/31/21 |
|||
|
(To record amortization.) |
|||
|
(To record interest.) |
In: Accounting