Consider the following scenario: A newly incorporated company ("iX Nuts") engages in the selling of macadamia nuts. Fo the 2022 year of assessment, the following is applicable: • The company was initially funded by a bank loan of $500k bearing interest at 5% payabl annually in arrears • Share capital was $1,000 paid for in cash by shareholders • The company purchased $1m worth of macadamia nuts as stock during the year. 10% of th was owing to creditors at year end The company had sold 80% of its stock by year end • The company incurred packaging costs of $100,000 in converting purchased macadami nuts into the final product that is ready for sale. This amount is considered to be part of th cost of goods sold. The mark-up the company applied to its cost (including packaging) was 120%

Consider the following scenario: A newly incorporated company ("iX Nuts") engages in the selling of macadamia nuts. Fo the 2022 year of assessment, the following is applicable: • The company was initially funded by a bank loan of $500k bearing interest at 5% payabl annually in arrears • Share capital was $1,000 paid for in cash by shareholders • The company purchased $1m worth of macadamia nuts as stock during the year. 10% of th was owing to creditors at year end The company had sold 80% of its stock by year end • The company incurred packaging costs of $100,000 in converting purchased macadami nuts into the final product that is ready for sale. This amount is considered to be part of th cost of goods sold. The mark-up the company applied to its cost (including packaging) was 120%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Z Corporation has the following transactions relating to its investment during 2020: Jan 5 Acquired 16,000 shares of Y company for P1,500,000 paying an additional P10,000 for brokerage and P5,000 for commission. Feb 14 Received dividends from Y company declared January 10,2020 to the stockholders of records January 31,2020, P16,000. Required:prepare all the necessary entries assuming the investment is 1. Financial asset at Fair Value through profit and loss 2. Financial asset at Fair Value through other comprehensive income
Assume the following independent cases:A. At the beginning of the year, a check was issued for P400,000 as payment for a piece of land, and the buyer assumed the liability for the unpaid taxes at the end of the year, P10,000 and those assessed for the current year at P9,000.B. A company issued 14,000 ordinary shares (P10 par) with a market value of P60 per share (based upon a recent sale of 100 shares) for the land. The land was recently appraised at P800,000 by independent and competent appraisers.C. A company rejected an offer to purchase the land for P8,000,000 cash two years ago. Instead, the company issued 100,000 ordinary shares for the land (market value of the ordinary share, P78 each based on several recent large transactions and normal weekly stock trading volume).D. A company purchased land by signing a note with the seller, requiring P100,000 down payment, payment of P120,000 one year from purchase, and P80,000 three years from purchase. The note is non-interest bearing,…
Assume the following independent cases: (a) At the beginning of the year, a check was issued for P400,000 as payment for a piece of land and the buyer assumed the liability for unpaid taxes in arrears for the previous year, P10,000 and those assessed for the current year, P9,000.(b) A company issued 14,000 ordinary shares (P50 par) with a market value of P60 per share (based upon a recent sale of 100 shares) for the land. The land was recently appraised at P800,000 by independent and professional appraisers.(c) A company rejected an offer to purchase the land for P8,000,000 cash two years ago. Instead, the company issued 100,000 ordinary shares for the land (market value of the ordinary share, P78 each based on several recent large transactions and normal weekly stock trading volume).How much is the cost of land acquired in (a), (b), and (c), respectively? a. 419,000; 800,000; 7,800,000 b. 410,000; 800,000; 7,800,000 c. 410,000; 840,000; 7,800,000 d. 419,000; 840,000;…
On January 1, 2025, Vaughn Corporation purchased 20% of the common shares of Bramble Company for $196,000. During the year, Bramble earned net income of $77,000 and paid dividends of $19,250. Prepare the entries for Vaughn to record the purchase and any additional entries related to this investment in Bramble Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.)
Problem: The following transactions occurred at BBS Company in 2022. 1. The company purchased a new building for $258,000. A down payment of $43,000 was made. The balance is due in four equal annual installments (plus interest) beginning July 1, 2023. 2. The company bought 1,000 shares of its own common stock for $13,000. 3. The company purchased as an investment $42,000 par value of Ridge Company's 8 percent bonds, maturing in five years. The purchase price was $42,000. Required: Compute the company's net cash flow from investing activities. (Amounts to be deducted should be indicated with a minus sign.) Journal Entries: Purchase of investment in bonds Purchase of new building Purchase of treasury stock Format: Cash flows from investing activities %24
Blanco Company purchased 200 of the 1,000 outstanding shares of Darby Company's common stock for $600,000 on January 2, 2021. During 2021, Darby Company declared dividends of $100,000 and reported earnings for the year of $400,000. If Blanco Company used the fair value method of accounting for its investment in Darby Company, its Equity Investments (Darby) account on December 31, 2021 should be: a. $580,000 b. $660,000 c. $600,000 d. $680,000 If Blanco Company uses the equity method of accounting for its investment in Darby Company, its Equity Investments (Darby) account at December 31, 2021 should be: a. $580,000 b. $600,000 c. $660,000 d. $680,000
On January 1, 2020, Carter Company makes the two following acquisitions. 1. Purchases land having a fair value of $200,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $337,012. 2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $250,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. Instructions (Round answers to the nearest cent.) a. Record the two journal entries that should be recorded by Carter Company for the two purchases on January 1, 2020. b. Record the interest at the end of the first year on both notes using the effective-interest method.
January 1, 2020, Teal Company makes the two following acquisitions. 1. Purchases land having a fair value of $270,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $475,832. 2.Purchases equipment by issuing a 7%, 8-year promissory note having a maturity value of $360,000 (interest payable annually). The company has to pay 12% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Teal Company for the two purchases on January 1, 2020. (b) Record the interest at the end of the first year on both notes using the effective-interest method.
A Company acquired the assets and assumed the liabilities of B Inc. on June 30, 2022. The consideration transferred by the acquirer were as follows: • Cash amounting to P2,000,000. • Issued 10,000 ordinary shares at P10 par with a market price of P15. • Issued 5 year interest bearing bonds payable with a face value of P3,000,000 with a nominal rate of 10% and effective interest of 12%. (use two decimal places for the present value factor) Acquisition related costs incurred were as follows: • Legal fees amounting to P120,000, 70% of which is not yet paid. • Share issue costs paid amounted to P15,000. • Bond Issue costs paid amounting to P120,000. The Balance Sheet of the two entities before acquisition were as follows: A Company B Inc.Total Assets 16,500,000 5,235,000Total Liabilities 2,500,000 500,000Ordinary Shares 5,000,000 1,250,000Share premium 1,500,000 750,000Retained Earnings 6/30/22 7,500,000 2,735,000It was determined that the book value of the assets and liabilities of the…
A Company acquired the assets and assumed the liabilities of B Inc. on June 30, 2022. The consideration transferred by the acquirer were as follows: • Cash amounting to P2,000,000. • Issued 10,000 ordinary shares at P10 par with a market price of P15. • Issued 5 year interest bearing bonds payable with a face value of P3,000,000 with a nominal rate of 10% and effective interest of 12%. (use two decimal places for the present value factor) Acquisition related costs incurred were as follows: • Legal fees amounting to P120,000, 70% of which is not yet paid. • Share issue costs paid amounted to P15,000. • Bond Issue costs paid amounting to P120,000. The Balance Sheet of the two entities before acquisition were as follows: A Company B Inc.Total Assets 16,500,000 5,235,000Total Liabilities 2,500,000 500,000Ordinary Shares 5,000,000 1,250,000Share premium 1,500,000 750,000Retained Earnings 6/30/22 7,500,000 2,735,000It was determined that the book value of the assets and liabilities of the…
Pasta House Inc. was organized in January 2019. During the year, the transactions belowoccurred:a. On January 14, Pasta House sold Martin Halter, the firm’s founder and sole owner, 10,000shares of its common stock for $8 per share.b. On the same day, Bank One loaned Pasta House $45,000 on a 10-year note payable.c. On February 22, Pasta House purchased a building and the land on which it stands fromFrank Jakubek for $34,000 cash and a 5-year, $56,000 note payable. The land and buildinghad appraised values of $30,000 and $60,000, respectively.d. On March 1, Pasta House signed an $15,000 contract with Cosby Renovations to remodelthe inside of the building. Pasta House paid $4,000 down and agreed to pay the remainderwhen Cosby completed its work.e. On May 3, Cosby completed its work and submitted a bill to Pasta House for the remaining$11,000.f. On May 20, Pasta House paid $11,000 to Cosby Renovations.g. On June 4, Pasta House purchased restaurant supplies from Glidden Supply for $650…
On January 1, 2020 Rosen Company purchased 35,000 which is 15% of the total common stock owned by Polo Corporation for 770,000. During 2020 Polo Corporation reported a net profit of 400,000 and declared a dividend of 100,000. Requested: (a) If Rosen Company records its investment using the cost method (there is no significant effect), prepare the journal entry that Rosen Company should record in relation to the investment made. (b) Suppose that Rosen Company has significant influence in Polo Corporation so that Rosen Company must record its investment using the equity method, prepare the journal entry that Rosen company must present in relation to the value of its investment, and present the calculation of the investment balance as of December 31, 2020