Exercise 13.3. The worksheet of Bridget’s Office Supplies contains the following revenue, cost, and expense accounts. Prepare a classified income statement for this firm for the year ended December 31, 2016. The merchandise inventory amounted to $59,775 on January 1, 2016, and $52,725 on December 31, 2016. The expense accounts numbered 611 – 617 represent selling expenses, and those numbered 631 – 646 represent general and administrative expenses.

Accounts:

            401                  Sales                                                               $248,900         Cr.

            451                  Sales Returns and Allowances                 4,350               Dr.

            491                  Miscellaneous Income                                    400                  Cr.

            501                  Purchases                                                       103,600           Dr.

            502                  Freight In                                                       1,975               Dr.

            503                  Purchases Returns and Allowances                 3,600               Cr.

            504                  Purchases Discounts                                     1,800               Cr.

            611                  Salaries Expense – Sales                                    45,300             Dr.

            614                  Store Supplies Expense                                    2,310               Dr.

            617                  Depreciation Expense – Store Equip. 1,510               Dr.

            631                  Rent Expense                                                 13,500             Dr.

            634                  Utilities Expense                                            3,000               Dr.

            637                  Salaries Expense – Office                                    21,100             Dr.

            640                  Payroll Taxes Expense                                    6,000               Dr.

            643                  Depreciation Expense – Office Equip. 570                  Dr.

            646                  Uncollectible Accounts Expense                      720                  Dr.

            691                  Interest Expense                                            740                  Dr.

1.As of December 31, 2016, the Balance Sheet of Peterson Products, Inc. contains the following items (in random order): Accounts Payable $ 10,000 Land 80,000 Building 240,000 Notes Payable 125,000 Accounts Receivable 30,000 Cash 6,000 Retained Earnings 100,000 Common Stock 180,000 Equipment ? Determine the amount for Equipment.

A. $69,000 B. $145,000 C. $45,000 D. $59,000

2.

Simon Corporation had a transaction that caused a $60,000 increase in both assets and liabilities. This transaction could have been:

Pinot Noir Company obtains 100% of Sangria Company's stock on January 1, 2016. As of that date, Sangria has the following trial balance:

                                                                                                          Debit           Credit

Accounts payable                                                                                                $50,000

Accounts receivable                                                                         $40,000

Additional paid-in-capital                                                                                     $50,000

Buildings(4-year remaining life)                                                      $120,000

Cash and short-term investment                                                      $60,000

Common stock                                                                                                  $250,000

Equipment (5 year remaining life)                                                   $200,000

Inventory                                                                                           $90,000

Land                                                                                                  $80,000

Long term liabilities (mature 12/31/19)                                                                $150,000

Retained earnings, 1/1/16                                                                                   $100,000

Supplies                                                                                            $10,000

      Totals                                                                                         $600,000      $600,000

During 2016, Sangria reported net income of $80,000 while declaring and paying dividends of $10,000. During 2017, Sangria reported net income of $110,000 while declaring and paying dividends of $30,000

Assume that Pinot Noir company acquires Sangria's common stock for $490,000 in cash. As of January 1,2016, Sangria's land had a fair value of $90,000, its building were valued at $200,000, and its equipment was appraised at $180,000. Pinot Noir uses the equity method for this investment.

Required:

Prepare consolidation worksheet entries for December 31, 2016 and Dec 31,2017.

The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Leone Company.
   

Prepare the company’s 2017 schedule of cost of goods manufactured.
  

A lease agreement that qualifies as a finance lease calls for annual lease payments of $26,269 over a six-year lease term (also the asset’s useful life), with the first payment at January 1, 2016, the beginning of the lease. The interest rate is 5%. The lessor’s fiscal year is the calendar year. The lessor manufactured this asset at a cost of $125,000. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:

a. Determine the price at which the lessor is “selling” the asset (present value of the lease payments).

b. Create a partial amortization schedule through the second payment on January 1, 2017

Date Cash Interest Received Effective Interest Decrease in Balance Outstanding Balance

01/01/2016

01/01/2016

01/01/2017

. c. What would be the amounts related to the lease that the lessor would report in its income statement for the year ended December 31, 2017 (ignore taxes)?

Question 1

Comparative statement data for Whispering Company and Metlock Company, two competitors, appear below. All statement of financial position data are as of December 31, 2017, and December 31, 2016.

Prepare a vertical analysis of the 2017 income statement data for Whispering Company and Metlock Company in columnar form. (Round percentages to 1 decimal place, e.g. 12.1%. Enter all percentages as positive numbers.)

Brooks Sporting Inc. is prepared to report the following 2016 income statement (shown in thousands of dollars).

Prior to reporting this income statement, the company wants to determine its annual dividend. The company has 530000 shares of stock outstanding, and its common stock trades at $47 per share. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

please help!thank you!:)

1. The company had a 30% dividend payout ratio in 2015. If Brooks wants to maintain this payout ratio in 2016, what will be its per-share dividend in 2016? Round your answer to the nearest cent.

   $  

2. If the company maintains this 30% payout ratio, what will be the current dividend yield on the company's stock? Round your answer to two decimal places.

   %

3. The company reported net income of $1.6 million in 2015. Assume that the number of shares outstanding has remained constant. What was the company's per-share dividend in 2015? Round your answer to the nearest cent.

   $  

4. As an alternative to maintaining the same dividend payout ratio, Brooks is considering maintaining the same per-share dividend in 2016 that it paid in 2015. If it chooses this policy, what will be the company's dividend payout ratio in 2016? Round your answer to two decimal places.

   %

5. Assume that the company is interested in dramatically expanding its operations and that this expansion will require significant amounts of capital. The company would like to avoid transactions costs involved in issuing new equity. Given this scenario, would it make more sense for the company to maintain a constant dividend payout ratio or to maintain the same per-share dividend?

   1. Since the company would like to avoid transactions costs involved in issuing new equity, it would be best for the firm to maintain the same per-share dividend.
   2. Since the company would like to avoid transactions costs involved in issuing new equity, it would be best for the firm to maintain a constant dividend payout ratio.

March 1. 2016: borrowed $400,000 from Coconut creek bank. The eight-year 5% note requires payments due annually on March 1. Each payment consists of $50,000 Principal plus one year’s interest. December 1. 2016: Mortgaged the warehouse for $150,000 cash with Saban Bank. The mortgage requires monthly payments of $6,000. The interest rate on the note is 6% and accrues monthly. The first payment is due on January 1, 2017. December 31, 2016: Recorded interest accrued on the Saban Bank note. December 31, 2016: recorded interest accrued on the Coconut Creek Bank note. Jan. 1, 2017: Paid Saban Bank monthly mortgage payment. Feb 1, 2017: Paid Saban Bank monthly mortgage payment. March 1, 2017: Paid Saban Bank monthly mortgage payment. March 1, 2017: Paid first installment on note due to Coconut Creek Bank. Prepare the liabilities section of the balance sheet for Green Pharmacies on March 1, 2017 after all the journal entries are recorded. First, prepare an amortization schedule for the Saban Bank mortgage to March 1, 2018. Prepare the schedule for the first three payments, then the remaining months one at a time. (Round your answers to the nearest whole dollar.) Review the related journal entries you prepared in Requirement 1 Beginning Principal Interest Total Ending Balance Payment Expense Payment Balance 12/01/2016 1/01/2017 2/01/2017 3/01/2017 4/01/2017 5/01/2017 6/01/2017 07/01/2017 08/01/2017 9/01/2017 10/01/2017 11/01/2017 12/01/2017 1/01/2018 2/01/2018 3/01/2018 Now prepare the liabilities section of the balance sheet for Green Pharmacies on March 1, 2017. (If a box is not used in the table leave the box empty; do not enter a zero.) Review the amortization schedule you prepared above. Green Pharmacies Balance Sheet (Partial) March 1, 2017 Liabilities.

This problem consists of two parts. Part I A portion of the Stockholders’ Equity section of Hatten Corporation’s balance sheet as of December 31, 2016, appears below. Dividends have not been paid for the years 2014 and 2015. There has been no change in the number of shares of stock issued and outstanding during these years. Assume that the board of directors of Hatten Corporation declares a dividend of $28,650 after completing operations for the year 2016. Stockholders’ Equity Preferred Stock (10% cumulative, $50 par value, 2,000 shares authorized) At Par Value (1,600 shares issued) $ 80,000 Common Stock (no-par value, with stated value of $25, 20,000 shares authorized) At Stated Value (15,000 shares issued) 375,000 ________________________________________ 1. Compute the amount of the dividend distributed to preferred stockholders in 2014, 2015 & 2016. 2. Compute the amount of the dividend to be paid on each share of preferred stock. (Round your "per share" value to 2 decimal places.) 3. Compute the total amount of the dividend available to be distributed to common stockholders. 4. Compute the amount of the dividend to be paid on each share of common stock. (Round your "per share" value to 2 decimal places.) 5. Compute the amount of dividends in arrears (if any) that preferred stockholders may expect from future declarations of dividends. Part II Use the information given in Part I to solve this part of the problem. Assume that the board of directors of Hatten Corporation has declared a dividend of $117,000 instead of $28,650 after operations for 2016 are completed. 1. Compute the amount of the dividend distributed to preferred stockholders in 2014, 2015 & 2016. 2. Compute the amount of the dividend to be paid on each share of preferred stock. (Round your "per share" value to 2 decimal places.) 3. Compute the total amount of the dividend available to be distributed to common stockholders. 4. Compute the amount of the dividend to be paid on each share of common stock. (Round your "per share" value to 2 decimal places.) 5. Compute the amount of dividends in arrears (if any) that preferred stockholders may expect from future declarations of dividends. Analyze: Assume only Part 1 has transpired. If, in 2015, the board of directors declared a dividend of $51,000, what amount would be paid to preferred stockholders?

Reformulating Allowance for Doubtful Accounts and Bad Debt Expense

Merck & Company reported the following from its 2016 financial statements.

$ millions 2013 2014 2015 2016

Accounts receivable, net $7,185 $6,627 $6,485 $7,017

Allowance for doubtful accounts 153 160 172 201

a. Compute accounts receivable gross for each year.

$ millions 2013 2014 2015 2016

Accounts receivable, gross $Answer 7,338 $Answer 6,787 $Answer 6,657 $Answer 7,218

b. Determine the percentage of allowance to gross account receivables for each year.

Round answers to two decimal places (ex: 0.02345 = 2.35%).

2013 2014 2015 2016

% allowance Answer 2.09 % Answer 2.36 % Answer 2.58 % Answer 2.78 %

c. Assume that we want to reformulate the balance sheet and income statement to reflect a constant percentage of allowance to gross accounts receivables for each year.

Compute the four-year average and then reformulate the balance sheet and income statements for each of the four years. Follow the process shown in Analyst Adjustments 5.2 and assume a tax rate of 35%. Four- year average of percentage of allowance to gross accounts receivables.

Round answer to two decimal places (ex: 0.02345 = 2.35%) Answer 2.45 %

Reformulate the balance sheet and income statements. Use rounded answer above for computations, then round answers to one decimal place. Use negative signs with answers to indicate the adjustment decreases an account.

2013 2014 2015 2016

Adjusted allowance for doubtful accts. $Answer 179.8 $Answer 166.3 $Answer 163.1 $Answer 176.8

Balance Sheets

Adjustments Allowance for doubtful accounts Answer 26.8 Answer Answer Answer

Accounts receivable, net Answer (26.8) Answer 0 Answer 0 Answer 0 Deferred tax liabilities Answer

Retained Earnings Answer (17.4) Answer 0 Answer 0 Answer 0

Income Statements Adjustments

Bad debts expense Answer 26.8 Answer 0 Answer 0 Answer 0

Income tax expense at 35% Answer (9.4) Answer 0 Answer 0 Answer 0

Net Income Answer 17.4 Answer 0 Answer 0 Answer 0