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4 Sep 2018

Use the following information for questions 6 and 7:

On Janury 1, 2015, Parent company sold to Subsidiary company for$60,000, a parcel of land that had cost the Parent $57,000. OnMarch 2, 2019, Subsidiary company sold the land to an outsidecompany for $62,000.

6. Working paper entries for the year ended December 31, 2017would include

a. a debit of $3,000 to Land

b. a credit of $7,000 to Land

c. a debit of $3,000 to Investment inSubsidiary

d. a debit of $3,000 to RetainedEarnings

7. Working paper entries for the year ended December 31, 2019would include

a. A credit of $3,000 to Gain on Sale of Land

b. A credit of $5,000 to Retained Earnings

c. A debit of $3,000 to Intercompany Gain on Sale of Land

d. A credit of $5,000 to Gain on Sale of Land

11. Qualitative evidence that an entity is NOT a variableinterest entity includes which one of the following?

a. The entityâs equity level is greater than that of similarentities that do not require their debt to be guaranteed by anotherparty.

b. The entity has a debt to equity ratio that is higher thanthat of its competitors.

c. The entityâs business is not focused on just a fewcustomers.

d. The entity has issued preferred and common stock, and theshareholders are guaranteed a certain return on theirinvestment.

12. Included in the working paper entry for intercompany salesof equipment was a decrease to Investment in Subsidiary. Thisdecrease indicates

a. A downstream sale made at a gain

b. An upstream sale made at a loss

c. A downstream sale mad at a loss

d. An upstream sale made at a gain

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7 Sep 2018

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Related questions

Use the following information for questions 1, 2, 3, 4 and5:

Sally Company (a 70%-owned subsidiary) owned a machine with anoriginal cost of $210,000. It had been depreciated in the last 2years on the straight-line method with 7 years of life and nosalvage value. On January 1, 2015, Sally sold this machine to PattyCorporation (the parent) for a price of $170,000 in cash. Pattyuses the machine in its operation.

How are Pattyâs 2015 equity in net income of Sally and 2015noncontrolling interest in net income affected by the intercompanysale of machine?

Equity in netincome Noncontrolling interest in net income

$16,000decrease $0

$4,000increase $0

$11,200decrease $4,800 decrease

$2,800increase $1,200 increase

The working paper entries for the year ended December 31, 2015would include

A credit of $20,000 to Intercompany Gain on Sale of Machine

A credit of $4,000 to Depreciation Expense

A credit of $20,000 to Retained Earnings

A debit of $54,000 to Machine

The working paper entries for the year ended December 31, 2016would include

A debit of $12,000 to Accumulated Depreciation

A debit of $16,000 to Retained Earnings

A credit for $12,000 toInvestment in Sally

A debit of $16,000 to Investment in Sally

As of December 31, 2016, the unconfirmed intercompany gainwas

$8,000

$12,000

$16,000

$20,000

The working paper entries for the year ended December 31, 2016would

Increase accumulated depreciated by $52,000

Decrease machine by $40,000

Decrease depreciation expense by $8,000

Decrease Intercompany Gain on Sale of Machine by $20,000

Use the following information for questions 6 and 7:

On Janury 1, 2015, Parent company sold to Subsidiary company for$60,000, a parcel of land that had cost the Parent $57,000. OnMarch 2, 2019, Subsidiary company sold the land to an outsidecompany for $62,000.

Working paper entries for the year ended December 31, 2017 wouldinclude
a. a debit of $3,000 to Land

b. a credit of $7,000 to Land

c. a debit of $3,000 to Investment in Subsidiary

d. a debit of $3,000 to Retained Earnings

Working paper entries for the year ended December 31, 2019 wouldinclude

A credit of $3,000 to Gain on Sale of Land

A credit of $5,000 to Retained Earnings

A debit of $3,000 to Intercompany Gain on Sale of Land

A credit of $5,000 to Gain on Sale of Land

Pete Corporation acquired 70% of Sand Company on January 1,2015. During 2015, Pete sold merchandise costing $5,120 to Sand fora price of $8,000. Sand sold $3,700 of the merchandise purchasedfrom Pete to outside customers for $7,000 during 2015. Theunconfirmed intercompany profit as of December 31, 2015 is

$1,548

$1,188

$1,332

$1,926

Parson Company acquired 80% of Scott Corporationâs common stockon January 2, 2014. No revaluation was reported for thisacquisition. Scott reported an income of $7,000 in 2015. Scottpurchased from Parson for $25,000 a parcel of land that had costParson $23,000 on March 2, 2015. Parson uses the complete equitymethod. Scott still holds the land. Based on the above information,Parsonâs equity in income of Scott for 2015 was

$4,000

$3,200

$5,600

$3,600

Parent company sold merchandise to its subsidiary. Thesubsidiary sold the merchandise to outside customers. Which of thefollowing is NOT an effect of the working paper entries for theintercompany sales of merchandise by the parent company to itssubsidiary?

They eliminate the subsidiaryâs cost of intercompanypurchases.

They eliminate the overstatement of the subsidiaryâs sales

They reduce inventories to the cost incurred by the consolidatedentity.

They eliminate the parentâs intercompany sales.

Qualitative evidence that an entity is NOT a variable interestentity includes which one of the following?

The entityâs equity level is greater than that of similarentities that do not require their debt to be guaranteed by anotherparty.

The entity has a debt to equity ratio that is higher than thatof its competitors.

The entityâs business is not focused on just a fewcustomers.

The entity has issued preferred and common stock, and theshareholders are guaranteed a certain return on theirinvestment.

Included in the working paper entry for intercompany sales ofequipment was a decrease to Investment in Subsidiary. This decreaseindicates

A downstream sale made at a gain

An upstream sale made at a loss

A downstream sale mad at a loss

An upstream sale made at a gain

Problem 1
Part A
Davis Company is formed with $5,000 in equity and is expected togenerate the following cash flows (all occurring at the end of oneyear):

CashFlows Probability
$63,000 0.3
39,000 0.5
28,000 0.2

Determine if the equity is high enough to absorb the expectedlosses assuming the appropriate discount rate of 6%

Part B
Paul Corporation paid $205,000 to buy 25% of Slide Companyâs commonstock on Jan 1, 2015 and paid $459,000 to buy 60% of Slideâs stockon December 31, 2015. There is no control premium. On December 31,2015, Slideâs stockholdersâ equity was Common Stock at $50,000 andRetained Earnings at $657,000. Differences between book value andfair value of the net identifiable assets of Slide Company onDecember 31, 2015, were limited to the following:

Book Value FairValue
Copyrights $ 32,000 $ 30,200
Long-termdebt 26,000 23,700

How much, if any, gain or loss did Paul Corporation recognize onDecember 31, 2015? Prepare working paper entry R (in journal entryformat) for Paul Corporation and subsidiary on December 31,2015.

Problem 2
Sue Company (an 80%-owned subsidiary) sells merchandise to itsparent Pony Corporation at a 15% markup on cost. During the yearended December 31,2015 Pony sold $75,330 of the intercompanymerchandise acquired from Sue to outside customers. Pony paid$71,820 to acquire merchandise from Sue in 2015. Included in PonyâsDecember 31, 2015, inventories were goods acquired from Sue at abilled price of $19,980

Prepare the working paper entry (in journal entry format) forthe intercompany sale of merchandise for Pony Corporation andsubsidiary for the year ended December 31, 2015. Based on the aboveinformation, what are the amounts of consolidated cost of goodssold and consolidated ending inventory reported on the 2015consolidated financial statements? How (increase or decrease andthe amount) is Ponyâs 2015 equity in income of Sue affected by theintercompany sale of merchandise?

Problem 3
On January 1, 2015, Pack Corporation (the parent) issued $300,000of 8%, 3-year bonds for $285,080 to yield 10%. The bonds payinterest annually on December 31. On January 1, 2016, SnyderCompany (a 65%-owned subsidiary) acquired in the open market Packâsbond for $294,723 to yield 9%.

Prepare the working paper entry (in journal entry format) forthe intercompany acquisition of bonds for Pack Corporation andsubsidiary for the year ended December 31, 2016. How (increase ordecrease and the amount) will the consolidated working paper entryaffected consolidated income for 2016?

Should be easy, answer questions and give ashort explanation

I give 1 star if you just guess

A company purchased a tract of land for itsnatural resources at a cost of $1,570,000. It expects to mine2,800,000 tons of ore from this land. The salvage value of the landis expected to be $270,000. The depletion expense per ton of oreis:

$.10

A company's balance sheet shows: cash$21,000, accounts receivable $17,000, office equipment $53,000, andaccounts payable $14,000. What is the amount of equity?

	$14,000.
	$105,000.
	$24,000.
	$77,000.
	$60,000.

A company had net sales of $32,000 and ending accounts receivableof $2,800 for the current period. Its days' sales uncollectedequals (rounded):

32 days

MOP Co. leased a portion of its store to another company for eightmonths beginning on October 1, 2009 at a monthly rate of $1,000.This other company paid the entire $8,000 cash on October 1, whichMOP Co. recorded as unearned revenue. The journal entry made by MOPCo. at year- end on December 31, 2009 would include:

	A credit to Rent Earned for $3,000.
	A debit to Rent Earned for $3,000.
	A debit to Unearned Rent for $5,000.
	A credit to Unearned Rent for $3,000.
	A debit to Cash for $8,000.

Assume Sambazon.com sold an acai processing machine for $172,000cash. If accumulated depreciation on the sale date was $59,500 anda gain of $6,850 was recognized on the sale. What was the originalcost of the asset?

	$66,350
	$224,650
	$165,150
	$112,500
	$217,800

Plopper Cola bought $5,500 worth ofmerchandise from VisCom and signed a 75-day, 9% promissory note forthe $5,500. VisCom's journal entry to record the sales portion ofthe transaction is:

Notes Receivable	5,500
Interest Receivable	495
Sales		5,995

Notes Receivable	5,500
Sales		5,500

Accounts Receivable	103
Sales		103

Notes Receivable	103
Sales		103

Accounts Receivable	5,500
Sales		5,500

At the end of the day, the cash register's record shows $935 butthe count of cash in the register is $1,050. The proper entry torecord this excess includes a:

	Debit to Cash for $115
	Debit to Cash Over and Short for $115
	Credit to Cash for $115
	Debit to Petty Cash for $115
	Credit to Cash Over and Short for $115

coppermole152

The comparative balance sheet of Whitman Co. at December 31,2016 and 2015, is as follows:

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$918,260.00	$965,110.00
4	Accounts receivable (net)	â828,050.00	761,830.00
5	Inventories	1,268,550.00	1,163,510.00
6	Prepaid expenses	28,760.00	35,720.00
7	Land	315,810.00	479,900.00
8	Buildings	1,463,300.00	900,740.00
9	Accumulated depreciation-buildings	(408,350.00)	(381,910.00)
10	Equipment	512,470.00	454,060.00
11	Accumulated depreciation-equipment	(142,270.00)	(159,730.00)
12	Total assets	$4,784,580.00	$4,219,230.00
13	Liabilities and Stockholdersâ Equity
14	Accounts payable (merchandise creditors)	$922,360.00	$957,810.00
15	Bonds payable	270,000.00	0.00
16	Common stock, $25 par	316,000.00	116,000.00
17	Paid-in capital: Excess of issue price over parâcommon stock	775,000.00	559,000.00
18	Retained earnings	2,501,220.00	2,586,420.00
19	Total liabilities and stockholdersâ equity	$4,784,580.00	$4,219,230.00

The noncurrent asset, noncurrent liability, and stockholdersâequity accounts for 2016 are as follows:

ACCOUNT Land

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance			479,900
Apr.	20	Realized $152,430 cash from sale		164,090	315,810

ACCOUNT Buildings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance			900,740
Apr.	20	Acquired for cash	562,560		1,463,300

ACCOUNT Accumulated DepreciationââBuildings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				381,910
Dec.	31	Depreciation for year		26,440		408,350

ACCOUNT Equipment

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance			454,060
	26	Discarded, no salvage		47,260	406,800
Aug.	11	Purchased for cash	105,670		512,470

ACCOUNT Accumulated Depreciation ââEquipment

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				159,730
	26	Equipment discarded	47,260			112,470
Dec.	31	Depreciation for year		29,800		142,270

ACCOUNT Bonds Payable

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
May	1	Issued 20-year bonds		270,000		270,000

ACCOUNT Common Stock $25 par

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				116,000
Dec.	7	Issued 8,000 shares of common stock for $52 per share		200,000		316,000

ACCOUNT Paid-In Capital in Excess of ParââCommonStock

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				559,000
Dec.	7	Issued 8,000 shares of common stock for $52 per share		216,000		775,000

ACCOUNT Retained Earnings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				2,586,420
Dec.	31	Net loss	53,460			2,532,960
	31	Cash dividends	31,740			2,501,220

Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities. Refer to theLabels and Amount Descriptions list provided for the exact wordingof the answer choices for text entries. Be sure to complete theheading of the statement. In the operating activities section, usethe minus sign to indicate cash outflows, decreases in cash and anet cash outflow, if required. In the investing and financingactivities section, use a minus sign only to indicate a NET cashoutflow for the section.

Labels and Amount Descriptions

Labels andAmount Descriptions
Cash paid for acquisition ofbuilding
Cash paid for dividends
Cash paid for merchandise
Cash paid for purchase ofequipment
Cash received from customers
Cash received from issuance ofbonds payable
Cash received from issuance ofcommon stock
Cash received from land sold
December 31, 2016
Decrease in accounts payable
Decrease in accountsreceivable
Decrease in cash
Decrease in inventories
Decrease in prepaid expenses
Decrease in salaries payable
Depreciation
For the Year Ended December 31,2016
Gain on sale of investments
Gain on sale of land
Increase in accounts payable
Increase in accountsreceivable
Increase in cash
Increase in inventories
Increase in prepaid expenses
Increase in salaries payable
Issuance of common stock foracquisition of building
Issuance of common stock forpurchase of equipment
Issuance of common stock to retirebonds
Loss on sale of investments
Loss on sale of land
Net cash flow from financingactivities
Net cash flow from investingactivities
Net cash flow from operatingactivities
Net cash flow used for financingactivities
Net cash flow used for investingactivities
Net cash flow used for operatingactivities
Net income
Net loss

Statement of Cash Flows

Whitman Co.

Statement of Cash Flows

1	Cash flows from operating activities:
2
3	Adjustments to reconcile net loss to net cash flow fromoperating activities:
4
5
6	Changes in current operating assets and liabilities:
7
8
9
10
11
12
13	Cash flows from investing activities:
14
15
16
17
18
19	Cash flows from financing activities:
20
21
22
23
24
25	Cash at the beginning of the year
26	Cash at the end of the year

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