Reference no: EM132656080
Questions -
Question 1 - Brilliant Company uses the periodic inventory system. The company's beginning inventory and later purchases of inventory during June 2020 were as below:
Jun 01: Beginning inventory, 45 units @ $25 per unit.
Jun 17: Inventory purchased, 80 units @ $28 per unit.
Jun 25: Inventory purchased, 65 units @ $32 per unit.
Brilliant company sold 100 units during the month of June 2020.
Required: a. Calculate the cost of goods sold and ending inventory for June 2020 using both the Weighted Average cost and First in, first out (FIFO) method.
b. Also record the journal entries for the June 17 purchase of inventory and when 55 units from this lot were sold for $45 each. Assume both purchase of inventory and its sale are on account.
Question 2 - Sunshine Corporation purchased a new machine on Jan 4, 2018 for $185,000 cash. The machine has a useful life of five years or of 26,000 hours. After the useful life the machine will have a residual value of $3,000. The machine was used for 3,600 hours in 2018 and 4,500 hours in 2019.
Required: a. Calculate the depreciation expense for 2018 and 2019 under each of the following methods:
i. Straight-line
ii. Double diminishing-balance
iii. Units-of -production
b. Calculate the carrying amount at the end of 2019 for the machine when the company is using the Straight-line depreciation method.
c. Record the journal entry for the cash purchase of the machine on Jan 4, 2018 and for its depreciation expense for the year ended December 31, 2019 under the units-of-production method.
Question 3 - a. Milton Electronics Inc. purchased inventory costing $48,000 by signing an 8-month, 6% note payable on Sept 1 2019. The note will be repaid with interest at maturity. Prepare journal entries to record the purchase of the inventory, accrual of interest on Dec 31, 2019 and the final repayment of the note at maturity.
b. Milton Electronics Inc. started its business in 2019 and sold electronics worth $185,000 in 2019. The company provided a 2- year limited warranty for all sales. As per company estimate warranty costs would be 1% of sales in the first year and 3% of sales in the second year. By end of 2019 Milton Electronics Inc had already spent $1,510 on warranty repairs. Prepare all journal entries related to the warranty for 2019. Also Calculate the amount of Estimated Warranty Payable to be reported on the Balance Sheet on Dec 31, 2019.
Question 4 - Multigrain Health Foods Inc. is authorized to issue 5,000,000 common shares. In its initial public offering during 2010, it issued 500,000 common shares for $7.00 per share. Over the next year Multigrain' share price increased, and the company issued 400,000 additional shares at an average price of $8.50.
During the next seven years, from 2010 to 2016, It earned a net income of $920,000 and declared and paid cash dividends of $140,000. A 10% stock dividend was distributed to the shareholders in 2016 on the shares outstanding. The market price was $8.00 per share when the stock dividend was distributed. At December 31, 2016, the company has total assets of $14,500,000 and total liabilities of $6,820,000.
Required: Show the computation of the total shareholder's equity at December 31, 2016. Present a detailed computation of each element of shareholder's equity. (you are required to provide the breakdown of C/S and S/E).
Question 5 - The comparative Balance Sheets and the Income statement for the Marine Corporation are as follow:
Marine Corporation Balance Sheet
Assets 2018 2019
Cash $45,000 $50,000
Marketable Securities 175,000 160,000
Accounts Receivable 240,000 220,000
Inventories 230,000 275,000
Investments 70,000 55,000
Total current assets $760,000 $760,000
Plant and Equipment 1,300,000 1,550,000
Less Accumulated Amortization 450,000 600,000
Net plant and Equipment $850,000 $950,000
Total Assets 1,610,000 1,710,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $110,000 $85,000
Notes payable 65,000 10,000
Accrued Expenses 30,000 5,000
Income Taxes Payable 5,000 10,000
Bonds Payable (2016) 800,000 900,000
Common Stock (100,000 shares) 200,000 200,000
Retained Earnings 400,000 500,000
Total Liabilities' and Shareholders' Equity $1,610,000 $1,710,000
Marine Corporation Income Statement For the Year Ended December 31, 2019
Sales $5,500,000
Less: Cost of Goods Sold 4,200,000
Gross Profit 1,300,000
Less: Selling, General & Administrative Expenses 260,000
Operating profit 1,040,000
Less: Amortization Expense 150,000
Earnings Before Interest and Taxes 890,000
Less: Interest Expense 90,000
Earnings Before Taxes 800,000
Less: Taxes (50%) 400,000
Net Income $400,000
Required: Prepare a Statement of Cash Flows in good form for the year ended December 31, 2019 using the Indirect Method?