|
Based on past experience, Leickner Company expects to purchase raw materials from a foreign supplier at a cost of 1,800,000 marks on March 15, 2016. To hedge this forecasted transaction, the company acquires a three-month call option to purchase 1,800,000 marks on December 15, 2015. Leickner selects a strike price of $0.66 per mark, paying a premium of $0.003 per unit, when the spot rate is $0.66. The spot rate increases to $0.665 at December 31, 2015, causing the fair value of the option to increase to $14,000. By March 15, 2016, when the raw materials are purchased, the spot rate has climbed to $0.68, resulting in a fair value for the option of $36,000. |
| a. |
Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials, assuming that December 31 is Leickner’s year-end and that the raw materials are included in the cost of goods sold in 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
| b. |
What is the overall impact on net income over the two accounting periods? (In case of negative impact on net income, answer should be entered with a minus sign.) |
| c. |
What is the net cash outflow to acquire the raw materials? |
In: Accounting
Condensed financial data of Monty Company for 2017 and 2016 are presented below. MONTY COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 2017 2016 Cash $1,820 $1,150 Receivables 1,780 1,310 Inventory 1,600 1,930 Plant assets 1,930 1,710 Accumulated depreciation (1,200 ) (1,160 ) Long-term investments (held-to-maturity) 1,320 1,400 $7,250 $6,340 Accounts payable $1,190 $880 Accrued liabilities 190 270 Bonds payable 1,430 1,520 Common stock 1,900 1,730 Retained earnings 2,540 1,940 $7,250 $6,340 MONTY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $6,860 Cost of goods sold 4,620 Gross margin 2,240 Selling and administrative expenses 920 Income from operations 1,320 Other revenues and gains Gain on sale of investments 80 Income before tax 1,400 Income tax expense 540 Net income 860 Cash dividends 260 Income retained in business $600 Additional information: During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2017. Prepare a statement of cash flows using the direct method.
In: Accounting
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.
In: Accounting
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.
In: Accounting
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:
| A. | Paying cash for office equipment costing $60,000 |
| B. | Repaying a $60,000 bank loan |
| C. | Purchasing office equipment for $88,000, paying for it with $28,000 cash and a note payable for $60,000 |
|
D.Stockholders investing $60,000 cash in the business 3. Yale Company began operations on January 1, 2016, with an investment of $250,000 by each of its two stockholders (total amount invested $500,000). Net income for its first year of business was $472,000. During the year, the company paid dividends of $100,000 to each of the two stockholders. How much is the company's ending Stockholders' Equity on December 31, 2016?
|
In: Accounting
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.
In: Accounting
The following calendar year-end information is taken from the
December 31, 2017, adjusted trial balance and other records of
Leone Company.
| Advertising expense | $33,700 | Direct labor | $680,700 | |
|---|---|---|---|---|
| Depreciation expense—Office equipment | 11,300 | Income taxes expense | 262,500 | |
| Depreciation expense—Selling equipment | 10,700 | Indirect labor | 57,100 | |
| Depreciation expense—Factory equipment | 37,500 | Miscellaneous production costs | 11,100 | |
| Factory supervision | 146,200 | Office salaries expense | 70,000 | |
| Factory supplies used | 9,500 | Raw materials purchases | 992,000 | |
| Factory utilities | 42,000 | Rent expense—Office space | 28,000 | |
| Inventories | Rent expense—Selling space | 27,500 | ||
| Raw materials, December 31, 2016 | 168,300 | Rent expense—Factory building | 78,000 | |
| Raw materials, December 31, 2017 | 192,000 | Maintenance expense—Factory equipment | 36,700 | |
| Work in process, December 31, 2016 | 15,800 | Sales | 4,486,400 | |
| Work in process, December 31, 2017 | 25,000 | Sales salaries expense | 393,700 | |
| Finished goods, December 31, 2016 | 167,100 | |||
| Finished goods, December 31, 2017 | 144,800 | |||
Prepare the company’s 2017 schedule of cost of goods
manufactured.
In: Accounting
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)?
|
||||||||||
In: Accounting
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.
|
Whispering Company |
Metlock Company |
|||||||
|
2017 |
2016 |
2017 |
2016 |
|||||
| Net sales | £1,504,113 | £339,668 | ||||||
| Cost of goods sold | 1,023,277 | 236,886 | ||||||
| Operating expenses | 277,402 | 76,916 | ||||||
| Interest expense | 7,970 | 2,320 | ||||||
| Income tax expense | 61,839 | 7,410 | ||||||
| Plant assets (net) | 596,402 | £572,775 | 143,285 | £ 128,013 | ||||
| Current assets | 408,279 | 385,366 | 85,117 | 81,019 | ||||
| Share capital—ordinary, £5 par | 582,000 | 582,000 | 140,000 | 140,000 | ||||
| Retained earnings | 253,932 | 216,973 | 52,054 | 44,504 | ||||
| Non-current liabilities | 102,775 | 84,601 | 15,746 | 11,897 | ||||
| Current liabilities | 65,974 | 74,567 | 20,602 | 12,631 | ||||
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.)
|
In: Finance
Brooks Sporting Inc. is prepared to report the following 2016 income statement (shown in thousands of dollars).
| Sales | $13000 |
| Operating costs including depreciation | 9620 |
| EBIT | $3380 |
| Interest | 330 |
| EBT | $3050 |
| Taxes (40%) | 1220 |
| Net income | $1830 |
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!:)
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.
$
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.
%
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.
$
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.
%
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?
In: Finance