For the year ending December 31, 2021, Olivo Corporation had income from continuing operations before taxes of $1,200,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should be considered material.
1. In November 2021, Olivo sold its PizzaPasta restaurant chain that qualified as a component of an entity. The company had adopted a plan to sell the chain in May 2021. The income from operations of the chain from January 1, 2021, through November was $160,000 and the loss on sale of the chain’s assets was $300,000.
2. In 2021, Olivo sold one of its six factories for $1,200,000. At the time of the sale, the factory had a book value of $1,100,000. The factory was not considered a component of the entity.
3. In 2019, Olivo’s accountant omitted the annual adjustment for patent amortization expense of $120,000. The error was not discovered until December 2021.
Required:
Prepare Olivo’s income statement, beginning with income from continuing operations before taxes, for the year ended December 31, 2021. Assume an income tax rate of 25%. Ignore EPS disclosures.
In: Accounting
Problem 24-01A a-c (Part Level Submission) (Video)
Cook Farm Supply Company manufactures and sells a pesticide
called Snare. The following data are available for preparing
budgets for Snare for the first 2 quarters of 2020.
| 1. | Sales: quarter 1, 29,200 bags; quarter 2, 43,200 bags. Selling price is $61 per bag. | |
| 2. | Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. | |
| 3. | Desired inventory levels: |
|
Type of Inventory |
January 1 |
April 1 |
July 1 |
|||
| Snare (bags) | 8,400 | 12,200 | 18,200 | |||
| Gumm (pounds) | 9,200 | 10,200 | 13,500 | |||
| Tarr (pounds) | 14,300 | 20,400 | 25,400 |
| 4. | Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour. | |
| 5. | Selling and administrative expenses are expected to be 15% of sales plus $180,000 per quarter. | |
| 6. | Interest expense is $100,000. | |
| 7. | Income taxes are expected to be 30% of income before income taxes. |
Your assistant has prepared two budgets: (1) the manufacturing
overhead budget shows expected costs to be 125% of direct labor
cost, and (2) the direct materials budget for Tarr shows the cost
of Tarr purchases to be $301,000 in quarter 1 and $425,500 in
quarter 2.
Prepare the direct materials budget. (Round Cost per pound answers to 2 decimal places, e.g. 52.70.)
| COOK FARM SUPPLY COMPANY Direct Materials Budget—Gumm June 30, 2020For the Six Months Ending June 30, 2020For the Quarter Ending June 30, 2020 |
||||||
|
Quarter |
Six |
|||||
|
1 |
2 |
|||||
|
Add/Less : |
||||||
|
Add/Less : |
||||||
| $ | $ | |||||
| $ | $ | $ | ||||
Prepare the direct labor budget. (Enter Direct labor
time per unit in proportion to hours, e.g. for 45 minutes the
proportion will be 0.75.)
| COOK FARM SUPPLY COMPANY Direct Labor Budget For the Six Months Ending June 30, 2020For the Quarter Ending June 30, 2020June 30, 2020 |
||||||
|
Quarter |
Six |
|||||
|
1 |
2 |
|||||
| $ | $ | |||||
| $ | $ | $ | ||||
Prepare the selling and administrative expense budget.
| COOK FARM SUPPLY COMPANY Selling and Administrative Expense Budget |
||||||
|
Quarter |
Six |
|||||
|
1 |
2 |
|||||
| $ | $ | $ | ||||
| $ | $ | $ | ||||
| $ | $ | $ | ||||
In: Accounting
PART I-- Peak, Inc. acquired a machine that involved the following expenditures and related factors:
|
Gross invoice price …………………………………………….. |
$27,200 |
|
Sales tax ………………………………………………………… |
1,760 |
|
Cash discount taken …………………………………………… |
544 |
|
Freight ………………………………………………………….... |
960 |
|
Assembly of machine ………………………………………….. |
800 |
|
Installation of machine ………………………………………… |
1,200 |
|
Training of employees before use …………………… |
640 |
|
Required: What will be the recorded cost of the machine? |
|
PART II-- On January 1, 2019, Ivey Company purchased a bottle-capping machine for $160,000. During its useful life, the company expects that the machine will cap 1,500,000 bottles. The machine’s expected salvage value is $10,000. During 2019, the machine capped 250,000 bottles and during 2020, the machine capped 300,000 bottles.
Required: Assuming units-of-production depreciation, 2020 depreciation expense is what amount?
PART III-- The cost of an asset is $1,020,000, and its residual value is $160,000. Estimated useful life of the asset is five years.
Required:
1. Compute
first –year depreciation using the straight-line method.
2. Compute
first-year and second –year depreciation using
double-declining-balance method.
PART IV-- An asset was purchased for $37,000 on January 1, 2019. The asset's estimated useful life was five years, and its residual value was $9,000. The straight-line method of depreciation was used.
The asset was sold on December 31, 2019.
Required: Compute the gain or loss on the sale of the
asset and prepare the required journal entry
under
both of the following assumptions:
1. The
selling price was $19,000.
2. The
selling price was $37,000.
PART V-- Saul Company purchased a tractor at a cost of $120,000 on January 1, 2019. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years.
Required: If Saul uses the straight-line method, what is the book value at January 1, 2023?
PART VI-- Steve Company purchased a tractor at a cost of $180,000. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years, or 10,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,100 hours in 2020. On January 1, 2021, the company decided to sell the tractor for $70,000. Steve uses the units-of-production method to account for the depreciation on the tractor.
Required:
1. Compute the book value of the tractor on January 1, 2021.
2. Compute the gain or loss on sale.
3. Prepare the journal entry to record the sale.
In: Accounting
|
LEBRON’S SPORTS SHOP COMPARATIVE BALANCE SHEETS AS AT DECEMBER 31 2020 2019
|
|
LEBRON’S SPORTS SHOP INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31 2020
|
ADDITIONAL INFORMATION
The owner contributed $16,000 cash during the year. All drawings were for cash.
Required
Complete the cash flow statement on page 4 of this document. Please show your calculations on page 5 of the document. You can take a photo of your calculations if you do them by hand and then insert the photo into this document, but I want to see your calculations as well as your answers to both questions
For the Year ended 31stDecember 2020
|
Cash from Operating Activities |
$ |
$ |
|
Receipts from Customers |
||
|
Payments to Suppliers and Employees |
||
|
Cash from Operations |
||
|
Interest Received |
||
|
Interest Paid |
||
|
Tax Paid |
||
|
Cash from Operating Activities |
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