Question 1 - On January 1st 2015 The Cher Company made the following investment purchases
a) purchased 100 of the 100,000 shares of Madonna Company for $40,000. Any excess of purchase price over book value is attributable to goodwill
b) purchased 400 of the 1000 shares of Kardashian Company for $40,000. The book value of Kardashian is $90,000.
Any excess is attributable to a car with 10 year life and no salvage value
7/1/2015 Madonna Company pays a $2 per share dividend
8/15/2015 Kardashian Company pays a $1 per share dividend
12/31/2015 Madonna reports income of $500,000 and its stock price is $404 per share
12/31/2015 Kardashian Company reports income of $14,000 its stock price is $103 per share
7/1/2016 Madonna Company pays a $3 per share dividend
8/1/2016 Kardashian Company pays a $1 per share dividend
12/31/2016 Madonna reports a loss of $10,000 its stock price is $399 per share
12/31/2016 Kardashian Company reports a loss of $4,000; its stock price is $105 per share
1/4/2017 Cher sells its investment in Madonna at $401 per share
1/5/2017 Cher sells its investment in Kardashian at $106 per share
REQUIRED: Make all the necessary journal entries for cher for 2015, 2016 and 2017.
Question 2 - The Alpha and Beta Companies had the following balance sheets on 1/1/2017:
|
Alpha
|
Beta
|
|
Cash
|
250,000
|
50,000
|
|
accts receivable
|
400,000
|
100,000
|
|
inventory
|
300,000
|
100,000
|
|
land
|
400,000
|
100,000
|
|
equipment
|
500,000
|
200,000
|
|
a/d equipment
|
50,000
|
10,000
|
|
|
|
|
total assets
|
1,800,000
|
540,000
|
|
|
|
|
accts payable
|
400,000
|
140,000
|
|
|
|
|
common stock (5 par)
|
200,000
|
100,000
|
|
additional paid in capital
|
800,000
|
100,000
|
|
retained earnings
|
400000
|
200000
|
On January 2nd Alpha acquired all of the stock of Beta by issuing 10,000 shares of its common stock.
On January 2nd, Alpha's stock is selling for $ 80 per share.
The book value of Beta's assets and liabilities equaled fair market value except for:
- equipment fmv - 40000
- land fmv - 212,000
REQUIRED:
A) Make the journal entry alpha makes when it issues its stock to acquire beta
B) Make the journal entry beta makes when it is acquired by alpha
C) Prepare the consolidated balance sheet as of 1/2/2017
D) Make the worksheet entries needed to prepare the consolidated balance sheet
Question 3 - The Alpha and Beta Companies had the following balance sheets on 1/1/2017:
|
Alpha
|
Beta
|
|
Cash
|
250,000
|
50,000
|
|
accts receivable
|
400,000
|
60,000
|
|
inventory
|
300,000
|
100,000
|
|
land
|
400,000
|
300,000
|
|
equipment
|
500,000
|
40,000
|
|
a/d equipment
|
50,000
|
10,000
|
|
|
|
|
total assets
|
1,800,000
|
540,000
|
|
|
|
|
accts payable
|
400,000
|
140,000
|
|
|
|
|
common stock (5 par)
|
200,000
|
100,000
|
|
additional paid in capital
|
800,000
|
100,000
|
|
retained earnings
|
400000
|
200000
|
On January 2nd Alpha acquired 80% of the stock of Beta by issuing 10,000 shares of its common stock.
On January 2nd, Alpha's stock is selling for $ 90 per share.
The book value of Beta's assets and liabilities equaled fair market value except for:
- equipment fmv - 40000
- land fmv - 212,000
- accts rec - 50
- accts pay - 120
REQUIRED:
A) Make the journal entry alpha makes when it issues its stock to acquire beta.
B) Make the journal entry beta makes when it is acquired by alpha.
C) Prepare the consolidated balance sheet as of 1/2/2017.
D) Make the worksheet entries needed to prepare the consolidated balance sheet.
At the end of 2017 Alpha and Beta Had the following financial statements:
|
Income Statement
|
|
Alpha
|
Beta
|
|
sales
|
890,000
|
300,000
|
|
cogs
|
400,000
|
120,000
|
|
gross profit
|
490,000
|
180,000
|
|
depreciation*
|
50,000
|
4,000
|
|
|
|
|
investment income
|
?
|
0
|
|
income
|
?
|
176,000
|
|
Balance Sheet
|
|
Alpha
|
Beta
|
|
Cash
|
550,000
|
140,000
|
|
accts receivable
|
600,000
|
160,000
|
|
inventory
|
300,000
|
100,000
|
|
land
|
400,000
|
300,000
|
|
equipment
|
500,000
|
40,000
|
|
a/d equipment
|
100,000
|
14,000
|
|
investment in Beta
|
A
|
|
|
|
|
|
total assets
|
B
|
726,000
|
|
|
|
|
accts payable
|
400,000
|
160,000
|
|
|
|
|
common stock (5 par)
|
250,000
|
100,000
|
|
additional paid in capital
|
C
|
100,000
|
|
retained earnings
|
D
|
366000
|
|
|
|
|
total liabilities plus equity
|
|
726,000
|
REQUIRED: (HINT: DON'T FORGET ABOUT DIVIDENDS BY ALPHA AND BETA!!)
A) Make alpha's journal entries connected with its investment in beta. Note: let me know which method of accounting for the investment you are doing.
B) Determine the values of a, b, c and d
C) Prepare a consolidated balance sheet as of 12/31/17
D) Prepare a consoloidated income statement for 2017
E) Make the necessary worksheet entries.
Question 4 - In 2008 Vadar Company acquired all of the outstanding stock in Yoda Company, and Vadar accounts for its investment in Yoda using the Cost method. Yoda has not paid any dividends since 2006.
In 2016 Vadar sold some inventory to Yoda for $250,000 on account. This merchandise had cost Vadar $100,000. 60% of this inventory was still unsold by Yoda at year end. In addition, Yoda had not paid Vadar by year end. Vadar and Yoda reported the following in 2016:
|
Vadar
|
Yoda
|
|
sales
|
$2,000,000
|
$500,000
|
|
cogs
|
$800,000
|
$370,000
|
|
Income
|
$700,000
|
$30,000
|
|
ending inventory
|
$150,000
|
$300,000
|
In 2017 Yoda sold the rest of the merchandise purchased from Vadar and paid off the account payable. In 2017 Vadar and Yoda reported the following;
|
|
Vadar
|
Yoda
|
|
sales
|
$2,200,000
|
$540,000
|
|
cogs
|
$1,000,000
|
$400,000
|
|
income
|
$700,000
|
$40,000
|
|
ending inventory
|
$165,000
|
$225,000
|
REQUIRED: FOR 2016
A) Make the journal entry vadar makes when it sells its inventory to yoda (vadar uses perpetual inventory)
B) Make the journal entry yoda makes when it buys its inventory from vadar (yoda uses perpetual inventory)
C) Determine consolidated sales.
D) Determine consolidated cost of goods sold.
E) Determine consolidated ending inventory.
F) Determine consolidated income.
G) Make the necessary worksheet entries.
FOR 2017
A) Determine consolidated sales.
B) Determine consolidated cost of goods sold.
C) Determine consolidated ending inventory.
D) Determine consolidated income.
E) Make the necessary worksheet entries.
Question 5 - In 2008 Froto Company purchased all of the outstanding stock of Mordor Company and accounts for its investment using the cost method Mordor has not paid any dividends since 2000.
On 1/1/2015 Froto purchased a tractor for $120,000. This tractor is expected to last 8 years and have a $8000 salvage value Froto uses straight line depreciation.
On 1/1/2017 Froto sold the tractor to Mordor for $100,000 receiving a 1 year 10% note for the equipment.
Mordor believes the tractor will last 6 years and have an $8000 salvage value. Mordor also uses straight line depreciation
In 2017; Froto reported unconsolidated income of $125,000 and Mordor reported income of $12,000
In 2018 Froto reported unconsolidated income of $145,000 and Mordor reported income of $14,000
On 1/1/2020 Mordor sold the tractor to Farm's R US for $77,000.
In 2020 Froto reported unconsolidated income of $155,000 and Mordor reported income of $22,000
REQUIRED:
A) Make the journal entry froto makes in 2015 when it buys the tractor for cash.
B) What is froto's annual depreciation on this tractor?
C) Make the journal entry froto makes when it sells the tractor to mordor in 2017
D) Make the journal entry mordor makes when it buys the tractor in 2017
E) What is mordor's annual depreciation on this tractor?
F) What is consolidated income in 2017?
G) Make the necessary worksheet entries for 2017.
H) What is conolidated income in 2018?
I) Make the necessary worksheet entries for 2018.
J) What is consolidated income in 2020?
K) Make the necessary worksheet entries for 2020.
Question 6 - In 2001 Batman Company acquired all of the Robin Company. Batman accounts for its investment in Robin using the cost method. Robin Company does not pay any dividends.
On 1/1/2014 Batman Company issued (sold) 1000, 10% 10 year $1000 bonds for $1,100,000. These bonds pay interest annually on December 31st. Since the difference was not material, Batman has elected the straight line amortization method for these bonds.
On 1/1/2017 Robin acquired all of the bonds for $1,063,000. Robin also elects to use straight line amortization for its bond investment.
In 2017 Batman reported unconsolidated income of $2,000,000 and Robin reported income of $125,000
In 2018 Batman reported unconsolidated income of $2,100,000 and Robin reported income of $145,000
REQUIRED:
A) Make batman's journal entry for the issuance of the bonds in 2014.
B) What is batman's annual interest expense?
C) Make the entry robin makes when it buys the bonds in 2017.
D) What is robin's annual interest income?
E) What is consolidated 2017 income?
F) Make the necessary worksheet entries for 2017.
G) What is consolidated 2018 income?
H) Make the necessary worksheet entries for 2018.
Question 7 - In 2015 Lois Lane Company acquired 8000 of the 10000 shares of outstanding stock of the Superman Company. Lois Land Company accounts for this investment using the cost method and Superman pays no dividends.
Information for 2015 for Lois Lane and Superman are as follows:
|
Lois Lane
|
Superman
|
|
unconsolidated income
|
$900,000
|
$55,000
|
|
outstanding shares of stock
|
40,000
|
10000
|
Superman has outstanding $100,000 of convertible bonds issued at par. These bonds pay 10% interest and the interest expense has been included in the reported income of Superman.
Each of these 100 bonds could be converted into 20 shares of Superman common stock;
REQUIRED: (IGNORE TAXES)
A) If superman's convertible bonds are anti-dilutive what is the eps of the consolidated lois lane company?
B) If superman's convertible bonds are dilutive, what is the eps of the consolidated lois lane company?
Attachment:- Accounting Assignment.rar