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
Maher Inc. reported income from continuing operations before taxes during 2020 of $790,000. Additional transactions occurring in 2020 but not considered in the $790,000 are as follows. 1. The corporation experienced an uninsured flood loss in the amount of $90,000 during the year. 2. At the beginning of 2018, the corporation purchased a machine for $54,000 (salvage value of $9,000) 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 $57,000 (pretax). 4. When its president died, the corporation realized $150,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $46,000 (the gain is nontaxable). 5. The corporation disposed of its recreational division at a loss of $115,000 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 $60,000 and decrease 2019 income by $20,000 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 120,000 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
| Date | Cash interest | Interest revenue | Amortization of discount | Discount balance | Amortized Cost |
| 7/1/2018 | $ 33,367 | $ 666,633 | |||
| 12/31/2018 | $ 42,000 | $ 46,664 | $ 4,664 | 28,703 | 671,297 |
| 6/30/2019 | $ 42,000 | 46,991 | 4,991 | 23,712 | 676,288 |
| 12/31/2019 | $ 42,000 | 47,340 | 5,340 | 18,372 | 681,628 |
| 6/30/2020 | $ 42,000 | 47,714 | 5,714 | 12,658 | 687,342 |
| 12/31/2020 | $ 42,000 | 48,114 | 6,114 | 6,544 | 693,456 |
| 6/30/2021 | $ 42,000 | 48,542 | 6,542 | 2 | 699,998 |
USING THE TABLE ABOVE PLEASE ENTER USING FORMULAS OR ENTER MANUALLY FOR THE FINANCIAL STATEMENT BELOW.
PLEASE EXPLAIN HOW YOU GOT YOUR ANSWER. THANK YOU
| For year ended | ||||
| Income Statement | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 |
| Other revenue and expense | ||||
| Interest revenue | ||||
| Balance Sheet | 12/31/2018 | 12/31/2019 | 12/31/2020 | |
| Assets | ||||
| Investment in Bonds | $ 700,000 | $ 700,000 | $ 700,000 | |
| Less: Unamortized Discount | ||||
| Investment, net | $ 700,000 | $ 700,000 | $ 700,000 | |
| For year ended | ||||
| Statement of Cash Flows, assuming no other transactions | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 |
| Operating Activities - Direct Method | ||||
| Interest Received | ||||
| Net cash flows from operating activities | ||||
|
Operating Activities - Indirect method, assuming interest revenue was only source of income |
||||
| Net Income | ||||
| Less: amortization of discount on Investment in bonds | ||||
| Net cash flows from operating activities | $ - | $ - | $ - | $ - |
| Investing Activities | ||||
| Purchases of Investments in Bonds | - | - | - | |
| Maturities of Investments in Bonds | - | - | - | |
| Net cash flows from investing activities | $ - | $ - | $ - | $ - |
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
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 |
$ |
2,523,000 |
$ |
3,177,000 |
$ |
1,980,000 |
|||
|
Estimated costs to complete as of year-end |
6,177,000 |
1,800,000 |
0 |
||||||
|
Billings during the year |
2,070,000 |
3,630,000 |
4,300,000 |
||||||
|
Cash collections during the year |
1,835,000 |
3,400,000 |
4,765,000 |
||||||
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 |
$ |
2,523,000 |
$ |
3,835,000 |
$ |
3,235,000 |
|||
|
Estimated costs to complete as of year-end |
6,177,000 |
3,135,000 |
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 |
$ |
2,523,000 |
$ |
3,835,000 |
$ |
4,005,000 |
|||
|
Estimated costs to complete as of year-end |
6,177,000 |
4,170,000 |
0 |
||||||
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 | $ | 2,291,000 | $ | 3,555,000 | $ | 2,259,400 | |||||
| Estimated costs to complete as of year-end | 5,609,000 | 2,054,000 | 0 | ||||||||
| Billings during the year | 1,900,000 | 3,946,000 | 4,154,000 | ||||||||
| Cash collections during the year | 1,700,000 | 3,500,000 | 4,800,000 | ||||||||
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 | $ | 2,510,000 | $ | 3,855,000 | $ | 3,210,000 | |||||
| Estimated costs to complete as of year-end | 5,710,000 | 3,210,000 | 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 | $ | 2,510,000 | $ | 3,855,000 | $ | 4,065,000 | |||||
| Estimated costs to complete as of year-end | 5,710,000 | 4,210,000 | 0 | ||||||||
In: Accounting
Selected accounts included in the property, plant, and equipment
section of Sheffield Corporation’s balance sheet at December 31,
2019, had the following balances.
| Land | $432,000 | |
| Land improvements | 201,600 | |
| Buildings | 1,584,000 | |
| Equipment | 1,382,400 |
During 2020, the following transactions occurred.
| 1. | A tract of land was acquired for $216,000 as a potential future building site. | |
| 2. | A plant facility consisting of land and building was acquired from Mendota Company in exchange for 28,800 shares of Sheffield’s common stock. On the acquisition date, Sheffield’s stock had a closing market price of $37 per share on a national stock exchange. The plant facility was carried on Mendota’s books at $158,400 for land and $460,800 for the building at the exchange date. Current appraised values for the land and building, respectively, are $331,200 and $993,600. | |
| 3. | Items of machinery and equipment were purchased at a total cost of $576,000. Additional costs were incurred as follows. |
| Freight and unloading | $18,720 | |
| Sales taxes | 28,800 | |
| Installation | 37,440 |
| 4. | Expenditures totaling $136,800 were made for new parking lots, streets, and sidewalks at the corporation’s various plant locations. These expenditures had an estimated useful life of 15 years. | |
| 5. | A machine costing $115,200 on January 1, 2012, was scrapped on June 30, 2020. Double-declining-balance depreciation has been recorded on the basis of a 10-year life. | |
| 6. | A machine was sold for $28,800 on July 1, 2020. Original cost of the machine was $63,360 on January 1, 2017, and it was depreciated on the straight-line basis over an estimated useful life of 7 years and a salvage value of $2,880. |
(a)
Calculate the balance at December 31, 2020 in each of the following
balance sheet accounts. (Hint: Disregard the related
accumulated depreciation accounts.)
Balance at December 31, 2020
Land
Land Improvements
Buildings
Equipment
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 $ 1,491,000 $ 3,195,000 $ 2,655,400 Estimated costs to complete as of year-end 5,609,000 2,414,000 0 Billings during the year 1,100,000 3,586,000 5,314,000 Cash collections during the year 900,000 2,700,000 6,400,000 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 $ 2,590,000 $ 3,895,000 $ 3,290,000 Estimated costs to complete as of year-end 5,790,000 3,290,000 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 $ 2,590,000 $ 3,895,000 $ 4,185,000 Estimated costs to complete as of year-end 5,790,000 4,290,000 0
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 | $ | 2,016,000 | $ | 2,808,000 | $ | 2,613,600 | |||
| Estimated costs to complete as of year-end | 5,184,000 | 2,376,000 | 0 | ||||||
| Billings during the year | 2,180,000 | 2,644,000 | 5,176,000 | ||||||
| Cash collections during the year | 1,890,000 | 2,500,000 | 5,610,000 | ||||||
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 | $ | 2,016,000 | $ | 3,890,000 | $ | 3,290,000 | |||
| Estimated costs to complete as of year-end | 5,184,000 | 3,190,000 | 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 | $ | 2,016,000 | $ | 3,890,000 | $ | 4,170,000 | |||
| Estimated costs to complete as of year-end | 5,184,000 | 4,280,000 | 0 | ||||||
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 $ 2,604,000 $ 4,032,000 $ 1,940,400 Estimated costs to complete as of year-end 5,796,000 1,764,000 0 Billings during the year 2,040,000 4,596,000 3,364,000 Cash collections during the year 1,820,000 4,000,000 4,180,000 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 $ 2,604,000 $ 3,820,000 $ 3,220,000 Estimated costs to complete as of year-end 5,796,000 3,120,000 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 $ 2,604,000 $ 3,820,000 $ 3,960,000 Estimated costs to complete as of year-end 5,796,000 4,140,000 0
In: Accounting