ACCTG414 Study Guide - Financial Statement, Dividend, Retained Earnings

98 views3 pages

violetchinchilla775

8 Apr 2014

School

University of Alberta

Department

Accounting

Course

ACCTG414

Professor

Jocelyn King

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Carlsberg corporation management formally decided to discontinue operation of its. Carlsberg is a successful corporation with earnings of million or more before taxes for each of the past 5 years. Division, a major part of carlsberg"s operations, is being discontinued because it has not contributed to this profitable performance. The main assets of the division are the land, plant and equipment used to manufacture. The land, plant and equipment had a net book value of million on. Carlsberg"s management has entered into negotiations for a cash sale of the division for. The expected sale date and final disposal of the division is july 1, 2012. Carlsberg corporation has a fiscal year ending may 31. The results of operations for the corona division for the 2012 -2012 fiscal year and the estimated results for june. The before tax losses after november 30, 2012 are calculated without depreciation on the plant and equipment. June 1 30, 2013 (estimated) (3,900,000) (750,000)

Related Questions

PLEASE EXPLAIN

While preparing the income statement for WESTON, Inc., the accountant had some doubts about the appropriate accounting treatment of the five items listed below during the fiscal year ending December 31, 2016. Assume a tax rate of 35 percent.

a. Office equipment purchased April 1, 2016 for $60,000 was incorrectly charged to Supplies Expense at the time of purchase. The office equipment has an estimated three-year service life with no expected salvage value. WESTON uses the straight-line method to depreciate office equipment for financial reporting purposes.

b. The corporation disposed of its sporting goods division during 2016. This disposal meets the criteria for discontinued operations. The division correctly calculated income from operating this division of $110,000 before taxes and a loss of $80,000 before taxes on the disposal of the division. All of these events occurred in 2016 and have not been recorded.

c. The company recorded advances of $12,000 to employees made in December 31, 2016 as Salaries and Wages Expense.

d. Dividends of $10,000 during 2016 were recorded as an operating expense.

e. In 2016, WESTON changed its method of accounting for inventory from the first-in-first-out method to the average cost method. Inventory in 2016 was correctly recorded using the average cost method. The effect of this change on prior years is to increase 2014 cost of goods sold by $60,000 (before taxes) and decrease 2015 cost of good sold by $20,000 (before taxes). Assume WESTON, Inc. began operations on January 1, 2014.

Instructions

1. For each item, record corrections to income from continuing operations before taxes, if any.

2. State where the items that do not affect income from continuing operations should be shown.

ivorycicada476

Waterways prepared the balance sheet and income statement forthe irrigation installation division for last year. Now the companyneeds to prepare a cash flow statement for the same division. Thecomparative balance sheets for Waterways Corporationâs IrrigationInstallation Division for last year and the prior year and theincome statement for last year are presented below. (Note: Work inProcess is a current asset and should be treated as any othercurrent asset.)

Additional information:

1. Waterways sold a piece of company equipment for $30,000. Theequipment had been used for six years. It had cost $100,000 whenpurchases and had a 10-years life and a $10,000 salvage value.Straight-line depreciation was used.

2. Waterways purchased new equipment costing $200,000.

3. The division paid $100,000 in dividends.

Waterways Corporation - Installation Division
Income Statement
For the Year Ending December 31, Last Year


Sales		$5,536,077
Less: Cost of goods sold		3,132,777
Gross Profit		2,403,300
Operating expenses:
Advertising	$52,000
Insurance	382,000
Salaries and wages	594,650
Depreciation	72,500
Other operating expenses	30,500
Total operating expenses		1,131,650
Income from operations		1,271,650
Other income
Loss on sale of equip	(16,000)
Other expenses
Interest expense	(12,200)
Net other income and expenses		(28,200)
Income before income tax		1,243,450
Income tax expenses		373,035
Net income		$870,415

Waterways Corporation - Installation Division
Balance Sheet
December 31

Assets	Last Year	Prior Year
Current assets
Cash	$792,306	$746,681
Accounts receivable	680,750	542,685
Work in process	680,450	0
Inventory	16,750	7,500
Prepaid expenses	71,500	42,590
Total current assets	2,241,756	1,339,456
Property, plant, and equipment
Furnishings	40,416	40,416
Equipment	900,200	800,200
Buildings	450,000	450,000
Land	300,000	300,000
Accumulated depreciation	(503,704)	(485,204)
Total property, plant, and equipment	1,186,912	1,105,412
Total Assets	$3,428,668	$2,444,868

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$156,300	$128,360
Income taxes payable	100,344	79,989
Wages payable	600	1,984
Interest payable	1,200	0
Other current liabilities	14,520	15,246
Revolving bank loan payable	16,000	0
Total current liabilities	288,964	225,579
Long-term liabilities
Notes payable	150,000	0
Total liabilities	438,964	225,579
Stockholders' equity
Common stock	1,250,000	1,250,000
Retained earnings	1,739,704	969,289
Total stockholders' equity	2,989,704	2,219,289
Total liabilities and stockholders' equity	$3,428,668	$2,444,868

Instructions:

For last year:

a. Prepare a statement of cash flowusing the indirect method.

b. Determine free cash flow.

coppermoose627

1. Waterways sold a piece of company equipment for $24,000. The equipment had been used for ten years. It had cost $80,000 when purchases and had a 10-years life and a $6,000 salvage value. Straight-line depreciation was used.

2. Waterways purchased new equipment costing $209,200.

3. The division paid $50,000 in dividends.

Waterways Corporation - Installation Division
Income Statement
For the year ending December 31


Sales		$5,536,077
Less: Cost of goods sold		3,132,777
Gross Profit		2,403,300
Operating expenses:
Advertising	$50,000
Insurance	400,000
Salaries and wages	584,640
Depreciation	71,319
Other operating expenses	21,200
Total operating expenses		1,127,159
Income from operations		1,276,141
Other income
Gain on sale of equip	18,000
Other expenses
Interest expense	(12,187)
Net other income and expenses		5,813
Income before income tax		1,281,954
Income tax expenses		384,586
Net income		$897,368

Waterways Corporation - Installation Division
Balance Sheet
December 31

Assets	This Year	Last Year
Current assets
Cash	$786,797	$746,681
Accounts receivable	680,750	542,685
Work in process	702,159	0
Inventory	16,766	7,500
Prepaid expenses	76,550	42,590
Total current assets	2,263,022	1,339,456
Property, plant, and equipment
Furnishings	40,416	40,416
Equipment	929,400	800,200
Buildings	450,000	450,000
Land	300,000	300,000
Accumulated depreciation	(482,523)	(485,204)
Total property, plant, and equipment	1,237,293	1,105,412
Total Assets	$3,500,315	$2,444,868

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$157,095	$128,360
Income taxes payable	101,344	79,989
Wages payable	4,517	1,984
Interest payable	1,187	0
Other current liabilities	14,515	15,246
Revolving bank loan payable	15,000	0
Total current liabilities	293,658	225,579
Long-term liabilities
Notes payable	140,000	0
Total liabilities	433,658	225,579
Stockholders' equity
Common stock	1,250,000	1,250,000
Retained earnings	1,816,657	969,289
Total stockholders' equity	3,066,657	2,219,289
Total liabilities and stockholders' equity	$3,500,315	$2,444,868

Instructions:

a. Prepare a statement of cash flow using the indirect method for this year.

b. Determine free cash flow.

beigeshark622

ACCTG414 Study Guide - Financial Statement, Dividend, Retained Earnings

Document Summary

Get access

Related Documents

MGCR 211 Lecture Notes - Current Liability, Quick Ratio, S&P 500 Index

ACCT-256 Lecture 3: Q - Chapter 4

BUS 320 Lecture Notes - Lecture 20: Net Income, Income Statement, Book Value

Related Questions