Business
On November 4, 2018, Blue Company acquired an asset (27.5-year residential real property) for $200,000 for use in its business. In 2018 and 2019, respectively, Blue took $642 and $5,128 of cost recovery. These amounts were incorrect; Blue applied the wrong percentages (i.e., those for 39-year rather than 27.5-year property). Blue should have taken $910 and $7,272 of cost recovery in 2018 and 2019, respectively. On January 1, 2020, the asset was sold for $180,000. If required, round all computations to the nearest dollar.a. The adjusted basis of the asset at the end of 2017 is $.b. The cost recovery deduction for 2018 is $.c. The__________ on the sale of the asset in 2018 is $
A reconciliation of Zack's Company's pretax accounting income with its taxable income for 2018, its first year of operations, is as follows: Pretax accounting income $3,000,000 Excess tax depreciation (150,000) Taxable income $2,850,000 The excess tax depreciation will result in equal net taxable amounts in each of the next three years. Enacted tax rates are 40% in 2018, 35% in 2019 and 2020, and 30% in 2021. The total deferred tax liability to be reported on Charles's balance sheet at December 31, 2018, is
On December 31, 2020, the Frisbee Company had 262,000 shares of common stock issued and outstanding. On March 31, 2021, the company sold 62,000 additional shares for cash. Frisbees net income for the year ended December 31, 2021, was $820,000. During 2021, Frisbee declared and paid $92,000 in cash dividends on its nonconvertible preferred stock. What is the 2021 basic earnings per share
Prepare summary journal entries to record the following transactions and events a through g for a company in its first month of operations.a. Raw materials purchased on account, $92,000. b. Direct materials used in production, $40,000. Indirect materials used in production, $25,000.c. Paid cash for factory payroll, $65,000. Of this total, $45,000 is for direct labor and $20,000 is for indirect labor. d. Paid cash for other actual overhead costs, $7,750. e. Applied overhead at the rate of 120% of direct labor cost. f. Transferred cost of jobs completed to finished goods, $69,000. g. Jobs that had a cost of $69,000 were sold. h. Sold jobs on account for $98,000.
Storm Tools has formed a new business unit to produce battery-powered drills. The business unit was formed by the transfer of selected assets and obligations from the parent company. The unit's initial balance sheet on January 1 contained cash ($500,000), plant and equipment ($2,500,000), notes payable to the parent ($1,000,000), and residual equity ($2,000,000).The business unit is expected to repay the note at $50,000 per month, plus all accrued interest at 1/2% per month. Payments are made on the last day of each month.The unit is scheduled to produce 25,000 drills during January, with an increase of 2,500 units per month for the next three months. Each drill requires $40 of raw materials. Raw materials are purchased on account, and paid in the month following the month of purchase. The plant manager has established a goal to end each month with raw materials on hand, sufficient to meet 25% of the following month's planned production.The unit expects to sell 20,000 drills in January; 25,000 in February, 25,000 in March, and 30,000 per month thereafter. The selling price is $100 per drill. Half of the drills will be sold for cash through a website. The others will be sold to retailers on account, who pay 40% in the month of purchase, and 60% in the following month. Uncollectible accounts are not material. Each drill requires 20 minutes of direct labor to assemble. Labor rates are $24 per hour. Variable factory overhead is applied at $9 per direct labor hour. The fixed factory overhead is $25,000 per month; 60% of this amount is related to depreciation of plant and equipment. With the exception of depreciation, all overhead is funded as incurred.Selling, general, and administrative costs are funded in cash as incurred, and consist of fixed components (salaries, $100,000; office, $40,000; and advertising, $75,000) and variable components (15% of sales). Prepare a monthly comprehensive budget plan for Storm's new business unit for January through March. The plan should include the (a) sales and cash collections budget, (b) production budget, (c) direct materials purchases and payments budget, (d) direct labor budget, (e) factory overhead budget, (f) ending finished goods budget (assume total factory overhead is applied to production at the rate of $11.73 per direct labor hour), (g) SG&A budget, and (h) cash budget.STORM TOOLSSales BudgetFor the Three Months January to MarchJanuaryFebruaryMarchExpected Cash Collections From SalesSTORM TOOLSProduction BudgetFor the Three Months January to MarchJanuaryFebruaryMarchSTORM TOOLSDirect Materials BudgetFor the Three Months January to MarchJanuaryFebruaryMarchExpected Cash Payments for Materials PurchasesSTORM TOOLSDirect Labor BudgetFor the Three Months January to MarchJanuaryFebruaryMarchSTORM TOOLSFactory Overhead BudgetFor the Three Months January to MarchJanuaryFebruaryMarchSTORM TOOLSEnding Finished Goods Inventory31-MarUnitsPer Unit CostPer Unit TotalSTORM TOOLSSelling, General, and Administrative BudgetFor the Three Months January to MarchJanuaryFebruaryMarchSTORM TOOLSCash BudgetFor the Three Months January to MarchJanuaryFebruaryMarchBeginning cash balancePlus: Customer receiptsAvailable cashLess disbursements: Direct materials Direct labor Factory overhead SG&ATotal disbursementsCash surplus/(deficit)Financing: Planned repayment Interest on note (1/2% of unpaid balance)Ending cash balance