ADVANCED ACCOUNTING
13th Edition
ISBN: 9781264046263
Author: Hoyle
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 5, Problem 30P
Following are financial statements for Moore Company and Kirby Company for 2018:
Moore | Kirby | ||||
Sales | $ (800,000) | $ (600,000) | |||
Cost of goods sold | 500,000 | 400,000 | |||
Operating and interest expenses | 100,000 | 160,000 | |||
Net income | $ (200,000) | $ (40,000) | |||
$ (990,000) | $ (550,000) | ||||
Net income | (200,000) | (40,000) | |||
Dividends declared | 1 30,000 | –0– | |||
Retained earnings, 12/31/18 | $(1,060,000) | $ (590,000) | |||
Cash and receivables | $ 217,000 | $ 180,000 | |||
Inventory | 224,000 | 160,000 | |||
Investment in Kirby | 657,000 | –0– | |||
Equipment (net) | 600,000 | 420,000 | |||
Buildings | 1,000,000 | 650,000 | |||
(100,000) | (200,000) | ||||
Other assets | 200,000 | 100,000 | |||
Total assets | $ 2,798,000 | $ 1,310,000 | |||
Liabilities | $(1,138,000) | $ (570,000) | |||
Common stock | (600,000) | (150,000) | |||
Retained earnings, 12/31/18 | (1,060,000) | (590,000) | |||
Total liabilities and equity | $(2,798,000) | $(1,310,000) |
- Moore purchased 90 percent of Kirby on January 1, 2017, for $657,000 in cash. On that date, the 10 percent noncontrolling interest was assessed to have a $73,000 fair value. Also at the acquisition date, Kirby held equipment (four-year remaining life) undervalued in its financial records by $20,000 and interest-bearing liabilities (five-year remaining life) overvalued by $40,000. The rest of the excess fair over book value was assigned to previously unrecognized brand names and amortized over a 10-year life.
- During 2017 Kirby reported a net income of $80,000 and declared no dividends.
- Each year Kirby sells Moore inventory at a 20 percent gross profit rate. Intra-entity sales were $145,000 in 2017 and $160,000 in 2018. On January 1, 2018, 30 percent of the 2017 transfers were still on hand, and on December 31, 2018, 40 percent of the 2018 transfers remained.
- Moore sold Kirby a building on January 2, 2017. It had cost Moore $100,000 but had $90,000 in accumulated depreciation at the time of this transfer. The price was $25,000 in cash. At that time, the building had a five-year remaining life.
Determine all consolidated balances either computationally or by using a worksheet.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
s
The 2021 income statement of Adrian Express reports sales of $22,110,000, cost of goods sold of $12,950,000, and net income of
$2,260,000. Balance sheet information is provided in the following table.
Assets
Current assets:
Cash
Accounts receivable
Inventory
Long-term assets
Total assets
Liabilities and Stockholders' Equity
Current liabilities
Long-term liabilities
Common stock
Retained earnings
Total liabilities and stockholders' equity
Gross profit ratio
Return on assets
ADRIAN EXPRESS
Balance Sheets
December 31, 2021 and 2020
Profit margin
Asset turnover
Return on equity
Profitability Ratios
Industry averages for the following profitability ratios are as follows:
Gross profit ratio
Mes
%
$
45%
25%
15%
15.5 times.
35%
2021
2020
980,000
1,950,000
2,490,000
5,180,000 4,480,000
$10,600,000
$8,640,000
$1,000,000
1,310,000
1,850,000
Required:
1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.)
$ 2,228,000 $1,928,000…
The 2021 income statement of Adrian Express reports sales of $18,957,000, cost of goods sold of $11,971,500, and net income of
$1,690,000. Balance sheet information is provided in the following table.
Assets
Current assets:
Cash
Accounts receivable
Inventory
Long-term assets.
Total assets
Liabilities and Stockholders' Equity
Current liabilities
Long-term liabilities
Common stock
Retained earnings
Total liabilities and stockholders' equity
ADRIAN EXPRESS
Balance Sheets
December 31, 2021 and 2020
Average collection period
Average days in inventory
Current ratio
Debt to equity ratio
Industry averages for the following four risk ratios are as follows:
Risk Ratios
Average collection period
Average days in inventory
Current ratio
Debt to equity ratio
25 days
60 days.
2 to 1
50%
2021
$ 690,000
1,580,000
1,980,000
4,890,000
$9, 140,000
365.0 days
days
to 1
%
2020
$
850,000
1,090,000
1,490,000
4,330,000
$7,760,000
Required:
1. Calculate the four risk ratios listed above for Adrian Express in…
ollowing are financial statements for Moore Company and Kirby Company for 2021:
Moore
Kirby
Sales
$ (800,000)
$ (600,000)
Cost of goods sold
500,000
400,000
Operating and interest expenses
100,000
160,000
Net income
$ (200,000)
$ (40,000)
Retained earnings, 1/1/21
$ (990,000)
$ (550,000)
Net income
(200,000)
(40,000)
Dividends declared
130,000
–0–
Retained earnings, 12/31/21
$(1,060,000)
$ (590,000)
Cash and receivables
$ 217,000
$ 180,000
Inventory
224,000
160,000
Investment in Kirby
657,000
–0–
Equipment (net)
600,000
420,000
Buildings
1,000,000
650,000
Accumulated depreciation—buildings
(100,000)
(200,000)
Other assets
200,000
100,000
Total assets
$ 2,798,000
$ 1,310,000
Liabilities
$(1,138,000)
$ (570,000)
Common stock
(600,000)
(150,000)
Retained earnings, 12/31/21
(1,060,000)
(590,000)
Total…
Chapter 5 Solutions
ADVANCED ACCOUNTING
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Use the same information as in problem (5) except...Ch. 5 - Angela, Inc., holds a 90 percent interest in Corby...Ch. 5 - Prob. 8PCh. 5 - Thomson Corporation owns 70 percent of the...Ch. 5 - Prob. 10PCh. 5 - What is the total of consolidated cost of goods...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - What is the consolidated total for inventory at...Ch. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Akron, Inc., owns all outstanding stock of Toledo...Ch. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Following are financial statements for Moore...Ch. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 1DYSCh. 5 - Hamilton Hawks Players Association and Mr....
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Comprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1, 000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50, 000 to retire bonds with a face value (and book value) of 50, 000. e. On July 2, 2019, Farrell purchased equipment for 63, 000 cash. f. On December 31, 2019, land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows. (Appendix 21.1) Spreadsheet and Statement Refer to the information for Farrell Corporation in P21-13. Required: 1. Using the direct method for operating cash flows, prepare a spreadsheet to support a 2019 statement of cash flows. (Hint: Combine the income statement and December 31, 2019, balance sheet items for the adjusted trial balance. Use a retained earnings balance of 291,000 in this adjusted trial balance.) 2. Prepare the statement of cash flows. (A separate schedule reconciling net income to cash provided by operating activities is not necessary.)arrow_forwardComprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1,000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50,000 to retire bonds with a face value (and book value) of 50,000. e. On July 2, 2019, Farrell purchased equipment for 63,000 cash. f. On December 31, 2019. land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows.arrow_forwardErnst Companys balance sheet shows total liabilities of 32,500,000, total stockholders equity of 8,125,000, and total assets of 40,625,000. Required: Note: Round answers to two decimal places. 1. Calculate the debt ratio. 2. Calculate the debt-to-equity ratio.arrow_forward
- Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: Note: Round answers to two decimal places. 1. Calculate the times-interest-earned ratio. 2. Calculate the debt ratio. 3. Calculate the debt-to-equity ratio.arrow_forwardMeasures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was 82.60 on December 31, 20Y2. Instructions Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts): 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days sales in receivables 6. Inventory turnover 7. Number of days sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders equity 10. Times interest earned 11. Asset turnover 12. Return on total assets 13. Return on stockholders equity 14. Return on common stockholders equity 15. Earnings per share on common stock 16. Price-earnings ratio 17. Dividends per share of common stock 18. Dividend yieldarrow_forwardJuroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Refer to the information for Juroe Company on the previous page. Also, assume that Juroes total assets at the beginning of last year equaled 17,350,000 and that the tax rate applicable to Juroe is 40%. Required: Note: Round answers to two decimal places. 1. Calculate the average total assets. 2. Calculate the return on assets.arrow_forward
- Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was 82.60 on December 31, 20Y2. Instructions Determine the following measures for 20Y2, rounding to one decimal place, including percentages, except for per-share amounts: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days sales in receivables 6. Inventory turnover 7. Number of days sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders equity 10. Times interest earned 11. Asset turnover 12. Return on total assets 13. Return on stockholders equity 14. Return on common stockholders equity 15. Earnings per share on common stock 16. Price-earnings ratio 17. Dividends per share of common stock 18. Dividend yieldarrow_forwardFinancial Information for Powell Panther Corporation is shown below: Powell Panther Corporation: Income Statements for Year Ending December 31 (millions of dollars) 2020 $2,500.0 2,125.0 $375.0 75.0 $300.0 55.0 $ 245.0 98.0 $147.0 $152.1 $117.6 Common dividends Powell Panther Corporation: Balance Sheets as of December 31 (millions of dollars) 2020 Sales Operating costs excluding depreciation and amortization EBITDA Depreciation and amortization Earnings before interest and taxes (EBIT) Interest Earnings before taxes (EBT) Taxes (25%) Net Income Assets Cash and equivalents Accounts receivable Inventories Total current assets Net plant and equipment Total assets 2021: $ b. What was the 2021 free cash flow? 2021 $2,875.0 2,444.0 $ 431.0 86.0 $345.0 63.3 $281.7 112.7 $ 169.0 $ -Select- 2021 46.0 450.0 540.0 $1,036.0 863.0 $1,899.0 Liabilities and Equity Accounts payable Accruals Notes payable Total current liabilities $601.5 Long-term bonds 575.0 Total liabilities $1,176.5 661.5 Common…arrow_forwardThe 2021 income statement of Adrian Express reports sales of $15,642,000, cost of goods sold of $9,351,500, and net income of $1,590,000. Balance sheet information is provided in the following table. Assets Current assets: Cash Accounts receivable Inventory Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term liabilities. ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 Common stock Retained earnings Total liabilities and stockholders' equity Average collection period Average days in inventory Current ratio Debt to equity ratio Industry averages for the following four risk ratios are as follows: Risk Ratios Average collection period Average days in inventory Current ratio Debt to equity ratio 25 days 60 days 2 to 1 50% days days 2021 Required: 1. Calculate the four risk ratios listed above for Adrian Express in 2021. (Use 365 days in a year. Round your answers to 1 decimal place.) to 1 % 2020 $ 590,000 1,380,000 $750,000 990,000…arrow_forward
- The 2021 income statement of Adrian Express reports sales of $19,710,000, cost of goods sold of $12,350,000, and net income of $1,780,000. Balance sheet information is provided in the following table. Assets Current assets: Cash ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 Accounts receivable Inventory Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and stockholders' equity Gross profit ratio Return on assets Profit margin Asset turnover Return on equity 45% 25% 15% 2021 Industry averages for the following profitability ratios are as follows: 3.5 times 35% 2020 $ 740,000 $ 880,000 1,650,000 1,130,000 2,070,000 1,550,000 4,940,000 4,360,000 $9,400,000 $7,920,000 $1,964,000 $1,784,000 2,436,000 2,524,000 1,950,000 1,930,000 3,050,000 1,682,000 $9,400,000 $7,920,000arrow_forwardThe 2024 income statement of Adrian Express reports sales of $20,710,000, cost of goods sold of $12,600,000, and net income of $1,980,000. Balance sheet information is provided in the following table. Assets Current assets: Cash Accounts receivable Inventory Long-term assets Total assets ADRIAN EXPRESS Balance Sheets December 31, 2024 and 2023 Liabilities and Stockholders' Equity Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and stockholders' equity Industry averages for the following four risk ratios are as follows: Gross profit ratio Return on assets Profit margin Asset turnover Return on equity 45% 25% 15% 8.5 35% times 2024 2023 $840,000 $930,000 1,775,000 1,205,000 2,245,000 1,675,000 5,040,000 4,410,000 $9,900,000 $8,220,000 $2,074,000 $1,844,000 2,526,000 2,584,000 2,075,000 2,005,000 3,225,000 1,787,000 $9,900,000 $8,220,000 Complete this question by entering your answers in the tabs below. Required: 1. Calculate the five…arrow_forwardPresented here are the comparative balance sheets of Hames Inc. at December 31, 2020 and 2019. Sales for the year ended December 31, 2020, totaled $580,000. Assets Cash Accounts receivable Merchandise inventory Total current assets Land Plant and equipment Less: Accumulated depreciation Total assets Liabilities Short-term debt Accounts payable Other accrued liabilities Total current liabilities Long-term debt Total liabilities Stockholders' Equity Common stock, no par, 100,000 shares authorized 40,000 and 25,000 shares issued, respectively Retained earnings: Total stockholders' equity Total liabilities and stockholders' equity Beginning balance Net income for the year Dividends for the year Ending balance a. ROI b. ROE e. C. d. Current ratio f. 9. Working capital Acid test ratio ROI ROE HAMES INC. Balance Sheets December 31, 2020 and 2019 Working capital Current ratio ROI ROE Working capital Current ratio 2020 $ 22,000 78,000 103,000 $203,000 50,000 125,000 (65,000) $ 313,000 $ 18,000…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
The KEY to Understanding Financial Statements; Author: Accounting Stuff;https://www.youtube.com/watch?v=_F6a0ddbjtI;License: Standard Youtube License