On January 1, 2020, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of Bowden, Inc., for $978,000 in cash and began to use the equity method for the investment. The price paid represented a $66,000 payment in excess of the book value of Fisher's share of Bowden's underlying net assets. Fisher was willing to make this extra payment because of a recently developed patent held by Bowden with a 15-year remaining life. All other assets were considered appropriately valued on Bowden's books.
Bowden declares and pays a $102,000 cash dividend to its stockholders each year on September 15. Bowden reported net income of $396,000 in 2020 and $360,000 in 2021. Each income figure was earned evenly throughout its respective years.
On July 1, 2021, Fisher sold 10 percent (20,000 shares) of Bowden's outstanding shares for $334,000 in cash. Although it sold this interest, Fisher maintained the ability to significantly influence Bowden's decision-making process.
Prepare the journal entries for Fisher for the years of 2020 and 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)
1 Record the acquisition of Bowden's shares.
2 Record the annual dividend declared and received from Bowden.
3 Record the accrual of income for 2020.
4 Record amortization for 2020.
5 Record the accrual of income through 07/01/21.
6 Record amortization through 07/01/21.
7 Record the sale of the shares.
8 Record annual dividend declared and received.
9 Record the accrual of income for the second half of the year.
10 Record the amortization for the second half of the year.
In: Accounting
The unadjusted trial balance of
Lady
Ltd. at
October
31,
2020,
appears in the solution step below. The adjustment data at
October
31,
2020,
is provided.
LOADING...
(Click the icon to view the month-end adjustment data.)Requirements
LOADING...
Requirement 1. Using the worksheet, prepare the adjusted trial balance of
Lady
Ltd. at
October
31,
2020.
The unadjusted balances have been entered for you. Key each adjusting entry by letter.
Calculate the adjusted balance of each account, and then total the debit and credit columns in the adjusted trial balance. (Leave unused cells blank. Round your answers to the nearest whole number.)
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Lady Ltd. |
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Trial Balance Worksheet |
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October 31, 2020 |
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Trial Balance |
Adjustments |
||||||
|
Account |
Debit |
Credit |
Debit |
Credit |
|||
|
Cash |
8,400 |
||||||
|
Accounts receivable |
10,000 |
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Accrued service revenue |
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|
Prepaid rent |
2,400 |
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|
Supplies |
2,700 |
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Furniture |
37,800 |
||||||
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Accumulated depreciation |
3,500 |
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|
Accounts payable |
11,000 |
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Salary payable |
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|
Share capital |
23,000 |
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|
Retained earnings |
12,300 |
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Dividends |
4,400 |
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Service revenue |
20,000 |
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Salary expense |
3,000 |
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Rent expense |
|||||||
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Utilities expense |
1,100 |
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Depreciation expense |
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Supplies expense |
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Total |
69,800 |
69,800 |
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Choose from any list or enter any number in the input fields and then click Check Answer.
Adjustment data at
October
31,
2020.
|
a. |
Accrued service revenue at
October 31, $1,600. |
|
b. |
Prepaid rent expired during the month. The unadjusted prepaid
balance of
$2,400 relates to the periodOctober throughDecember. |
|
c. |
Supplies used during
October, $2,700. |
|
d. |
Depreciation on furniture for the month. The estimated useful
life of the furniture is
three years. |
|
e. |
Accrued salary expense at
October 31 for Monday, Tuesday, and Wednesday. The five-day weekly payroll of$4,800 will be paid on Friday,November 2. |
In: Accounting
Carina Ltd has acquired all the shares of Finn Ltd on 1 July 2019 for $ 225 000. The accountant for Carina Ltd, having studied the requirements of AASB 3 Business Combinations, realises that all the identifiable assets and liabilities of Finn Ltd must be recognised in the consolidated financial statements at fair value. Although he is happy about the valuation of these items, he is unsure of a number of other matters including pre-acquisition entries and business combination valuation reserves associated with accounting for these assets and liabilities. He has approached you and asked for your advice.
The financial statements of Finn Ltd showed the equity of Finn Ltd at acquisition date to be:
Share capital — 20 000 $5.10 shares $102 000
General reserve 40 000
Retained earnings 60 000
All the assets and liabilities of Finn Ltd were recorded at amounts equal to their fair values at that date.
During the year ending 30 June 2020, Finn Ltd undertook the following actions:
• On 10 September 2019, paid a dividend of $20 000 from the profits earned prior to 1 July 2019.
• On 28 June 2020, declared a dividend of $20 000 to be paid on 15 August 2020.
Required
Write a report for the accountant at Carina Ltd advising on the following issues:
1. Should the adjustments to fair value be made in the consolidation worksheet or in the accounts of Finn Ltd?
2. What is the purpose of the pre-acquisition entries in the preparation of consolidated financial statements? Explain.
3. How to prepare the pre-acquisition entries at 1 July 2019.
4. How to prepare the pre-acquisition entries at 30 June 2020.
In: Accounting
Accounting for Consolidation
Carina Ltd has acquired all the shares of Finn Ltd on 1 July 2019
for $ 225 000. The accountant for Carina Ltd, having studied the
requirements of AASB 3 Business Combinations, realises that all the
identifiable assets and liabilities of Finn Ltd must be recognised
in the consolidated financial statements at fair value. Although he
is happy about the valuation of these items, he is unsure of a
number of other matters including pre-acquisition entries and
business combination valuation reserves associated with accounting
for these assets and liabilities. He has approached you and asked
for your advice.
The financial statements of Finn Ltd showed the equity of Finn Ltd
at acquisition date to be:
Share capital — 20 000 $5.10 shares $102 000
General reserve 40 000
Retained earnings 60 000
All the assets and liabilities of Finn Ltd were recorded at amounts
equal to their fair values at that date.
During the year ending 30 June 2020, Finn Ltd undertook the
following actions:
• On 10 September 2019, paid a dividend of $20 000 from the profits
earned prior to 1 July 2019.
• On 28 June 2020, declared a dividend of $20 000 to be paid on 15
August 2020.
• On 1 January 2020, transferred $15 000 from the general reserve
existing at 1 July 2019 to retained earnings.
Required
Write a report for the accountant at Carina Ltd advising on the
following issues:
1. Should the adjustments to fair value be made in the
consolidation worksheet or in the accounts of Finn Ltd?
2. What is the purpose of the
pre-acquisition entries in the preparation of consolidated
financial statements? Explain.
3. How to prepare the pre-acquisition
entries at 1 July 2019.
4. How to prepare the pre-acquisition
entries at 30 June 2020.
In: Accounting
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In: Accounting
|
1. Journalize the listed transactions for the years 2020 and 2023. (Record entries in the order displayed in the problem statement. 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. 5,275.)
2. Assume that the fair value of the bonds at December 31, 2020, was $1,709,400. These bonds are classified as available-for-sale securities. Prepare the adjusting entry to record these bonds at fair value. (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.)
3. Based on your analysis in part (b), show the balance sheet presentation of the bonds and interest receivable at December 31, 2020. Assume the investments are considered long-term. Indicate where any unrealized gain or loss is reported in the financial statements.
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 | $ | 2,640,000 | $ | 2,300,000 | $ | 2,926,000 | |||
| Estimated costs to complete as of year-end | 6,160,000 | 2,660,000 | 0 | ||||||
| Billings during the year | 2,080,000 | 2,860,000 | 5,060,000 | ||||||
| Cash collections during the year | 1,840,000 | 2,800,000 | 5,360,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
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 | $ | 2,640,000 | $ | 3,840,000 | $ | 3,240,000 | |||
| Estimated costs to complete as of year-end | 6,160,000 | 3,140,000 | 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 | $ | 2,640,000 | $ | 3,840,000 | $ | 4,020,000 | |||
| Estimated costs to complete as of year-end | 6,160,000 | 4,180,000 | 0 | ||||||
In: Accounting
Silly Inc. reported income from continuing operations before taxes during 2020 of $802,600. Additional transactions occurring in 2020 but not considered in the $802,600 are as follows.
| 1. | The corporation experienced an uninsured flood loss in the amount of $92,900 during the year. | |
| 2. | At the beginning of 2018, the corporation purchased a machine for $72,000 (salvage value of $12,000) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2018, 2019, and 2020, but failed to deduct the salvage value in computing the depreciation base. | |
| 3. | Sale of securities held as a part of its portfolio resulted in a loss of $64,900 (pretax). | |
| 4. | When its president died, the corporation realized $145,400 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $45,700 (the gain is nontaxable). | |
| 5. | The corporation disposed of its recreational division at a loss of $122,760 before taxes. Assume that this transaction meets the criteria for discontinued operations. | |
| 6. | The corporation decided to change its method of inventory pricing from average-cost to the FIFO method. The effect of this change on prior years is to increase 2018 income by $65,920 and decrease 2019 income by $20,100 before taxes. The FIFO method has been used for 2020. The tax rate on these items is 30%. |
Prepare an income statement for the year 2020 starting with income
from continuing operations before taxes. Compute earnings per share
as it should be shown on the face of the income statement. Common
shares outstanding for the year are 128,830 shares. (Assume a tax
rate of 30% on all items, unless indicated otherwise.)
(Round earnings per share to 2 decimal places, e.g.
1.48 and all other answers to 0 decimal places, e.g.
5,275.)
In: Accounting
1)
Calculation of ending retained earnings
The records of Biloxi Corp. for calendar 2020 reflected the following correct pre-tax amounts: gain from discontinued operations, $50,000; cash dividends declared and paid, $45,000; retained earnings, January 1, 2020, $275,000, correction of accounting error, $35,000 debit; income before income taxes and before discontinued operations, $165,000. The average income tax rate of 40% applies to all items except the dividends.
Instructions
Calculate the December 31, 2020 ending balance of retained earnings.
2)
Statement of financial position presentation
The following statement of financial position was prepared by the bookkeeper for Badger Corp. at December 31, 2020.
Badger Corp.
Statement of Financial Position
December 31, 2020
Cash $ 90,000 Accounts payable $75,000
Accounts receivable (net) 52,200 Long-term liabilities 110,000
Inventories 57,000 Shareholder's equity 208,500
Investments 76,300
Equipment (net) 86,000
Patents 32,000
$393,500 $393,500
The following additional information is provided:
1. "Cash" includes prepaid insurance of $9,400; as well, a bank overdraft of $1,500 has been deducted.
2. The net accounts receivable balance includes:
(a) accounts receivable–debit balances $62,000;
(b) accounts receivable–credit balances $5,000;
(c) allowance for doubtful accounts $4,800.
3. Inventories do not include goods costing $5,000 shipped out on consignment. Receivables of $5,000 were recorded on these goods.
4. Investments include investments in common shares, trading $24,000 and long-term $43,300, and franchises $9,000.
5. Equipment costing $8,000 with accumulated depreciation $6,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.
Instructions
Prepare a statement of financial position in good form (shareholders' equity details can be omitted.)
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 | $ | 2,100,000 | $ | 3,150,000 | $ | 2,475,000 | |||
| Estimated costs to complete as of year-end | 5,400,000 | 2,250,000 | 0 | ||||||
| Billings during the year | 2,150,000 | 3,100,000 | 4,750,000 | ||||||
| Cash collections during the year | 1,875,000 | 3,100,000 | 5,025,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
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 | $ | 2,100,000 | $ | 3,875,000 | $ | 3,275,000 | |||
| Estimated costs to complete as of year-end | 5,400,000 | 3,175,000 | 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 | $ | 2,100,000 | $ | 3,875,000 | $ | 4,125,000 | |||
| Estimated costs to complete as of year-end | 5,400,000 | 4,250,000 | 0 | ||||||
Please help, i am so confused.....
In: Accounting