Flounder Company began operations on January 1, 2016, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2016 and, because there was no beginning inventory, its ending inventory for 2016 of $37,300 would have been the same under either the conventional retail system or the LIFO retail system. On December 31, 2017, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2017, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level. Inventory, Jan. 1, 2017 cost:$37,300 retail:$60,100 Markdowns (net) retail:12,900 Markups (net) retail:22,100 Purchases (net) cost:128,800 retail:178,800 Sales (net) retail:169,300 Determine the cost of the 2017 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method. (Round ratios for computational purposes to 2 decimal place, e.g. 78.72% and final answers to 0 decimal places, e.g. 28,987.) (a) Ending inventory using conventional retail method $ (b) Ending inventory LIFO retail method $

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.

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.

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.)