Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions
| Date | Activities | Units Acquired at Cost | Units Sold at Retail | |||||||||
| Jan. | 1 | Beginning inventory | 600 | units | @ $40 per unit | |||||||
| Feb. | 10 | Purchase | 360 | units | @ $37 per unit | |||||||
| Mar. | 13 | Purchase | 150 | units | @ $25 per unit | |||||||
| Mar. | 15 | Sales | 765 | units | @ $80 per unit | |||||||
| Aug. | 21 | Purchase | 200 | units | @ $45 per unit | |||||||
| Sept. | 5 | Purchase | 580 | units | @ $42 per unit | |||||||
| Sept. | 10 | Sales | 780 | units | @ $80 per unit | |||||||
| Totals | 1,890 | units | 1,545 | units | ||||||||
Compute the cost assigned to ending inventory using weighted average. (Round your average cost per unit to 2 decimal places.)
Compute the cost assigned to ending inventory using weighted average. (Round your average cost per unit to 2 decimal places.)
Compute the cost assigned to ending inventory using specific
identification. For specific identification, units sold consist of
600 units from beginning inventory, 260 from the February 10
purchase, 150 from the March 13 purchase, 150 from the August 21
purchase, and 385 from the September 5 purchase. (Round
your average cost per unit to 2 decimal places.)
In: Accounting
CA5-5 WRITING (Cash Flow Analysis) The partner in charge of the
Kappeler Corporation audit comes by your desk and leaves
a letter he has started to the CEO and a copy of the cash flow
statement for the year ended December 31, 2017. Because he must
leave
on an emergency, he asks you to finish the letter by explaining:
(1) the disparity between net income and cash flow, (2) the
importance
of operating cash flow, (3) the renewable source(s) of cash flow,
and (4) possible suggestions to improve the cash position.
Date
President Kappeler, CEO
Kappeler Corporation
125 Wall Street
Middleton, Kansas 67458
Dear Mr. Kappeler:
I have good news and bad news about the financial statements for
the year ended December 31, 2017. The good news is that net
income of $100,000 is close to what we predicted in the strategic
plan last year, indicating strong performance this year. The
bad
news is that the cash balance is seriously low. Enclosed is the
Statement of Cash Flows, which best illustrates how both of
these
situations occurred simultaneously . . .
Instructions
Complete the letter to the CEO, including the four components
requested by your boss.
In: Accounting
Stellar Company reports pretax financial income of $66,100 for
2020. The following items cause taxable income to be different than
pretax financial income.
| 1. | Depreciation on the tax return is greater than depreciation on the income statement by $14,800. | |
| 2. | Rent collected on the tax return is greater than rent recognized on the income statement by $23,900. | |
| 3. | Fines for pollution appear as an expense of $10,600 on the income statement. |
Stellar’s tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2020.
Compute taxable income and income taxes payable for
2020.
|
Taxable income |
$enter a dollar amount | |
|---|---|---|
|
Income taxes payable |
$enter a dollar amount |
Prepare the journal entry to record income tax expense, deferred
income taxes, and income taxes payable for 2020.
(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 title | enter a debit amount | enter a credit amount |
| enter an account title | enter a debit amount | enter a credit amount |
| enter an account title | enter a debit amount | enter a credit amount |
| enter an account title | enter a debit amount | enter a credit amount |
Prepare the income tax expense section of the income statement
for 2020, beginning with the line “Income before income taxes.”
(Enter negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g.
(45).)
| Stellar Company Income Statement (Partial) choose the accounting period December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020 |
||
|---|---|---|
| select an income statement item
CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues |
$enter a dollar amount | |
| select an opening section name
CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues |
||
| select an income statement item
Current Deferred Dividends Expenses Income before Income Taxes Income Tax Expense Net Income / (Loss) Retained Earnings, January 1 Retained Earnings, December 31 Revenues Total Expenses Total Revenues |
$enter a dollar amount | |
| select an income statement item
Current Deferred Dividends Expenses Income before Income Taxes Income Tax Expense Net Income / (Loss) Retained Earnings, January 1 Retained Earnings, December 31 Revenues Total Expenses Total Revenues |
enter a dollar amount | |
| enter a subtotal of the two previous amounts | ||
| select a closing name for this statement
CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues |
$enter a total net income or loss amount | |
Compute the effective income tax rate for 2020.
(Round answer to 1 decimal places, e.g.
25.5%.)
| Effective income tax rate | enter the Effective income tax rate in percentages rounded to 1 decimal place | % |
In: Accounting
Exercise 11-10A Prepare a statement of cash flows—indirect method (LO11-3, 11-4, 11-5)
The balance sheets for Plasma Screens Corporation, along with additional information, are provided below:
| PLASMA SCREENS CORPORATION Balance Sheets December 31, 2021 and 2020 |
||||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 144,850 | $ | 156,500 | ||||
| Accounts receivable | 76,400 | 90,000 | ||||||
| Inventory | 91,000 | 76,400 | ||||||
| Prepaid rent | 3,200 | 1,600 | ||||||
| Long-term assets: | ||||||||
| Land | 460,000 | 460,000 | ||||||
| Equipment | 756,000 | 650,000 | ||||||
| Accumulated depreciation | (418,000 | ) | (260,000 | ) | ||||
| Total assets | $ | 1,113,450 | $ | 1,174,500 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 95,000 | $ | 81,400 | ||||
| Interest payable | 6,750 | 13,500 | ||||||
| Income tax payable | 7,200 | 4,600 | ||||||
| Long-term liabilities: | ||||||||
| Notes payable | 112,500 | 225,000 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 680,000 | 680,000 | ||||||
| Retained earnings | 212,000 | 170,000 | ||||||
| Total liabilities and stockholders' equity | $ | 1,113,450 | $ | 1,174,500 | ||||
Additional Information for 2021:
Required:
Prepare the statement of cash flows using the indirect method.
(List cash outflows and any decrease in cash as negative
amounts.)
In: Accounting
Exercise 11-10A Prepare a statement of cash flows—indirect method (LO11-3, 11-4, 11-5)
The balance sheets for Plasma Screens Corporation, along with additional information, are provided below:
| PLASMA SCREENS CORPORATION Balance Sheets December 31, 2021 and 2020 |
||||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 115,000 | $ | 131,200 | ||||
| Accounts receivable | 79,600 | 94,000 | ||||||
| Inventory | 99,000 | 83,600 | ||||||
| Prepaid rent | 4,800 | 2,400 | ||||||
| Long-term assets: | ||||||||
| Land | 500,000 | 500,000 | ||||||
| Equipment | 806,000 | 690,000 | ||||||
| Accumulated depreciation | (432,000 | ) | (276,000 | ) | ||||
| Total assets | $ | 1,172,400 | $ | 1,225,200 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 103,000 | $ | 88,600 | ||||
| Interest payable | 6,600 | 13,200 | ||||||
| Income tax payable | 8,800 | 5,400 | ||||||
| Long-term liabilities: | ||||||||
| Notes payable | 110,000 | 220,000 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 720,000 | 720,000 | ||||||
| Retained earnings | 224,000 | 178,000 | ||||||
| Total liabilities and stockholders' equity | $ | 1,172,400 | $ | 1,225,200 | ||||
Additional Information for 2021:
Required:
Prepare the statement of cash flows using the indirect method.
(List cash outflows and any decrease in cash as negative
amounts.)
In: Accounting
Max Ltd is involved in furniture business and runs furniture stores successfully in Victoria. Due to the detrimental impact of Covid 19 sales began to drop sharply and company is facing a severe liquidity problems. Management consultant, who advices the company on business matters, proposed them to sell off all shops owned by them and leased out shop to ease off the liquidity issue and run the business profitability. The chairman of Max Ltd is keen on the plan but is puzzled by the consultant’s insistence that all lease agreements for the shops be ‘operating’ rather than ‘finance’ leases.
Meantime, Johnson Ltd agreed to lease 5 shops to Max ltd under the following conditions.
The lease agreements details are as follows:
|
Length of lease |
10 Years |
|
Commencement date |
1 July 2020 |
|
Annual lease payment, payable 1 July each year commencing 1 July 2020($100000*5) |
$500000 |
|
Estimated economic life of the building |
10 Years |
|
Annual interest rate implicit in the lease |
10% |
Chairman of the board directed company accountant to submit a detailed report on the above project.
Required:
In: Accounting
A Ltd, is a company incorporated and carrying on business in Hong Kong, is organizing a pop music concert to be staged in Hong Kong in January 2018. A Ltd has appointed another Hong Kong resident company, B Ltd, to procure the performance of an overseas artist at the concert, for which A Ltd will pay B Ltd $11 million. Ms. Happy, a famous international star singer from the US, has been approached by B Ltd to undertake this performance. The remuneration for her performance in Hong Kong has been agreed as $10 million, payable to Mr. Money, the US resident manager of Ms. Happy. In the performance agreement, there will be a clause providing that when paying the remuneration, B Ltd will be entitled to deduct a sum equivalent to 10% of the gross payment, or any other amount which is sufficient to cover the Hong Kong tax applicable. Ms. Happy is not convinced of the need for this clause and has raised the following challenges: (1) She deals with B Ltd on a principal-to-principal basis and thus, B Ltd is not an ‘agent’ acting on her behalf. Therefore, B Ltd has no authority to deduct any tax from the payment. (2) Should there be any tax liability incurred, an assessment should be made by the Hong Kong Inland Revenue Department and issued to her directly as a demand for tax, given that Hong Kong does not operate a self assessment system. (3) Hong Kong profits tax should be based on the net assessable profits which are calculated by reference to gross income and deductible expenses. The 10% or any other deemed notional percentage has no legal basis.
Required:
(a) Explain why Ms. Happy will be chargeable to Hong Kong tax.
(b) Explain how the Hong Kong tax payable by Ms. Happy will be determined and collected. Note: with the exception of Mr. Money, none of the parties referred to are agents for any other person.
(c) State, giving reasons, whether there will be any difference in the tax position if Ms. Happy incorporates a company in Hong Kong to receive the payment on her behalf.
In: Accounting
In: Accounting
The Canliss Milling Company purchased machinery on January 2,
2019, for $860,000. A five-year life was estimated and no residual
value was anticipated. Canliss decided to use the straight-line
depreciation method and recorded $172,000 in depreciation in 2019
and 2020. Early in 2021, the company changed its depreciation
method to the sum-of-the-years’-digits (SYD) method.
Required:
2. Prepare any 2021 journal entry related to the
change. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
journal entry
Record the adjusting entry for depreciation in 2021.
In: Accounting
After reading the article by Michael Porter on his Diamond of National Advantage (in addition to Dyer et al, (2020), Chapt 9, p.164, Figure 9.5), apply Porter’s Diamond Yahoo company and an international geographic market where the organization currently does business. Briefly apply the four factors of the diamond Yahoo and a specific market location (country or region). You may need to do research on the company and its operations in that international market. How important do you feel the “clustering” of related and supporting industries might be to Yahoo?
In: Operations Management