CHAPTER 21 (2.) Agee Technology, Inc., Issued 9% Bonds, Dated January 1, With A

CHAPTER 21 (2.) Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $1,680 million on July 1, 2018, at a price of $1,670 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2018, if it uses the indirect method?

CHAPTER 16 (10.) Alsup Consulting Sometimes Performs Services For Which It Receives Payment At

CHAPTER 16 (10.) Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2017–2020 are as follows: Service Revenue Collections Pretax Accounting Income 2017 $ 624,000 $ 599,000 $ 160,000 2018 720,000 730,000 225,000 2019 685,000 660,000 195,000 2020 670,000 690,000 175,000 There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%. (Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 2017–2020.) Required: 1. Prepare the appropriate journal entry to record Alsup’s 2018 income taxes, Alsup’s 2019 income taxes and Alsup’s 2020 income taxes.

CHAPTER 16 (9.) Wynn Sheet Metal Reported An Operating Loss Of $164,000 For Financial

CHAPTER 16 (9.) Wynn Sheet Metal reported an operating loss of $164,000 for financial reporting and tax purposes in 2018. The enacted tax rate is 40%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows: Taxable Income Tax Rates Income Taxes Paid 2014 $ 62,000 30 % $ 18,600 2015 72,000 30 21,600 2016 82,000 40 32,800 2017 62,000 45 27,900 Required: 1. Complete the following table given below and prepare the journal entry to recognize the income tax benefit of the operating loss. Wynn elects the carryback option. 2. Show the lower portion of the 2018 income statement that reports the income tax benefit of the operating loss.   

CHAPTER 16 (8.) Allmond Corporation, Organized On January 3, 2018, Had Pretax Accounting Income

CHAPTER 16 (8.) Allmond Corporation, organized on January 3, 2018, had pretax accounting income of $17 million and taxable income of $28 million for the year ended December 31, 2018. The 2018 tax rate is 30%. The only difference between accounting income and taxable income is estimated product warranty costs. Expected payments and scheduled tax rates (based on recent tax legislation) are as follows: 2019 $ 4 million 25 % 2020 2 million 25 % 2021 2 million 25 % 2022 3 million 20 % Required: 1. Determine the amounts necessary to record Allmond’s income taxes for 2018 and prepare the appropriate journal entry. 2. What is Allmond’s 2018 net income?

CHAPTER 16 (6.) In 2018, DFS Medical Supply Collected Rent Revenue For 2019 Tenant

CHAPTER 16 (6.) In 2018, DFS Medical Supply collected rent revenue for 2019 tenant occupancy. For income tax reporting, the rent is taxed when collected. For financial statement reporting, the rent is recorded as deferred revenue and then recognized as income in the period tenants occupy the rental property. The deferred portion of the rent collected in 2018 amounted to $360,000 at December 31, 2018. DFS had no temporary differences at the beginning of the year. Required: Assuming an income tax rate of 40% and 2018 income tax payable of $910,000, prepare the journal entry to record income taxes for 2018.

CHAPTER 16 (5.) Alvis Corporation Reports Pretax Accounting Income Of $500,000, But Due To

CHAPTER 16 (5.) Alvis Corporation reports pretax accounting income of $500,000, but due to a single temporary difference, taxable income is only $325,000. At the beginning of the year, no temporary differences existed. Required: 1. Assuming a tax rate of 35%, what will be Alvis’s net income? 2. What will Alvis report in the balance sheet pertaining to income taxes?

CHAPTER 16 (4.) Shannon Polymers Uses Straight-line Depreciation For Financial Reporting Purposes For Equipment

CHAPTER 16 (4.) Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $500,000 and with an expected useful life of 4 years and no residual value. For tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $600,000, which includes interest revenue of $10,000 from municipal bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 30%.     Prepare the journal entry to record income taxes.

CHAPTER 16 (3.) In 2018, Ryan Management Collected Rent Revenue For 2019 Tenant Occupancy.

CHAPTER 16 (3.) In 2018, Ryan Management collected rent revenue for 2019 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as income in the period tenants occupy rental property, but for income tax reporting it is taxed when collected. The deferred portion of the rent collected in 2018 was $65 million. Taxable income is $190 million. No temporary differences existed at the beginning of the year, and the tax rate is 40%. Suppose the deferred portion of the rent collected was $55 million at the end of 2019. Taxable income is $210 million.    Prepare the appropriate journal entry to record income taxes.

CHAPTER 16 (2.) A Company Reports Pretax Accounting Income Of $16 Million, But Because

CHAPTER 16 (2.) A company reports pretax accounting income of $16 million, but because of a single temporary difference, taxable income is $17 million. No temporary differences existed at the beginning of the year, and the tax rate is 30%.     Prepare the appropriate journal entry to record income taxes.

CHAPTER 16 (1.) A Company Reports Pretax Accounting Income Of $16 Million, But Because

CHAPTER 16 (1.) A company reports pretax accounting income of $16 million, but because of a single temporary difference, taxable income is only $12 million. No temporary differences existed at the beginning of the year, and the tax rate is 40%. Prepare the appropriate journal entry to record income taxes.

CHAPTER 21 (13.) Comparative Balance Sheets For 2018 And 2017 And A Statement Of

CHAPTER 21 (13.) Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided. METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s) 2018 2017 Assets Cash $ 390 $ 190 Accounts receivable 450 240 Inventory 600 375 Land 600 560 Building 900 900 Less: Accumulated depreciation (300 ) (285 ) Equipment 2,750 2,450 Less: Accumulated depreciation (430 ) (400 ) Patent 1,500 1,650 $ 6,460 $ 5,680 Liabilities Accounts payable $ 700 $ 550 Accrued expenses payable 200 175 Lease liability—land 130 0 Shareholders’ Equity Common stock 3,110 3,000 Paid-in capital—excess of par 550 485 Retained earnings 1,770 1,470 $ 6,460 $ 5,680 METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2018 ($ in 000s) Revenues Sales revenue $ 2,765 Gain on sale of land 55 $ 2,820 Expenses Cost of goods sold $ 900 Depreciation expense—building 15 Depreciation expense—equipment 300 Loss on sale of equipment 10 Amortization of patent 150 Operating expenses $ 550 1,925 Net income $ 895 Additional information from the accounting records: Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2018. During 2018, equipment with a cost of $300,000 (90% depreciated) was sold. The statement of shareholders’ equity reveals reductions of $175,000 and $420,000 for stock dividends and cash dividends, respectively. Required: Prepare the statement of cash flows for Metagrobolize Industries using the indirect method.

CHAPTER 21 (12.) Portions Of The Financial Statements For Parnell Company Are Provided Below.

CHAPTER 21 (12.) Portions of the financial statements for Parnell Company are provided below. PARNELL COMPANY Income Statement For the Year Ended December 31, 2018 ($ in 000s) Revenues and gains: Sales $ 780 Gain on sale of buildings 11 $ 791 Expenses and loss: Cost of goods sold $ 290 Salaries 118 Insurance 38 Depreciation 121 Interest expense 48 Loss on sale of machinery 12 627 Income before tax 164 Income tax expense 82 Net income $ 82 PARNELL COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s) Year 2018 2017 Change Cash $ 132 $ 102 $ 30 Accounts receivable 322 218 104 Inventory 323 423 (100 ) Prepaid insurance 68 86 (18 ) Accounts payable 208 119 89 Salaries payable 106 95 11 Deferred income tax liability 64 54 10 Bond discount 186 202 (16 ) Required: 1. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method. 2. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the indirect method.

CHAPTER 21 (11.) Comparative Balance Sheets For 2018 And 2017 And A Statement Of

CHAPTER 21 (11.) Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided. METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s) 2018 2017 Assets Cash $ 540 $ 285 Accounts receivable 670 350 Inventory 820 430 Land 600 570 Building 900 900 Less: Accumulated depreciation (250 ) (220) Equipment 3,300 3,110 Less: Accumulated depreciation (481 ) (440 ) Patent 1,600 1,800 $ 7,699 $ 6,785 Liabilities Accounts payable $ 920 $ 720 Accrued expenses payable 310 250 Lease liability—land 130 0 Shareholders’ Equity Common stock 3,640 3,500 Paid-in capital—excess of par 550 460 Retained earnings 2,149 1,855 $ 7,699 $ 6,785 METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2018 ($ in 000s) Revenues Sales revenue $ 3,152 Gain on sale of land 70 $ 3,222 Expenses Cost of goods sold $ 1,120 Depreciation expense—building 30 Depreciation expense—equipment 608 Loss on sale of equipment 25 Amortization of patent 200 Operating expenses 350 2,333 Net income $ 889 Additional information from the accounting records: Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2018. During 2018, equipment with a cost of $630,000 (90% depreciated) was sold. The statement of shareholders’ equity reveals reductions of $230,000 and $365,000 for stock dividends and cash dividends, respectively. Required: Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2018. Present cash flows from operating activities by the direct method.

CHAPTER 21 (10.) Listed Below Are Transactions That Might Be Reported As Investing And/or

CHAPTER 21 (10.) Listed below are transactions that might be reported as investing and/or financing activities on a statement of cash flows. Possible reporting classifications of those transactions are provided also. Required: Indicate the reporting classification of each transaction by entering the appropriate classification code. (The first item is provided as an example.) Classifications I Investing activity (cash inflow) – I Investing activity (cash outflow) F Financing activity (cash inflow) – F Financing activity (cash outflow) N Noncash investing and financing activity X Not reported as an investing and/or a financing activity

CHAPTER 21 (9.) Comparative Balance Sheets For 2018 And 2017, A Statement Of Income

CHAPTER 21 (9.) Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below. RED, INC. Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) 2018 2017 Assets Cash $ 43 $ 138 Accounts receivable 196 151 Prepaid insurance 9 4 Inventory 302 194 Buildings and equipment 438 369 Less: Accumulated depreciation (138 ) (259 ) $ 850 $ 597 Liabilities Accounts payable $ 106 $ 138 Accrued expenses payable 8 15 Notes payable 69 0 Bonds payable 154 0 Shareholders’ Equity Common stock 419 419 Retained earnings 94 25 $ 850 $ 597 RED, INC. Statement of Income For Year Ended December 31, 2018 ($ in millions) Revenues Sales revenue $ 2,190 Expenses Cost of goods sold $ 1,471 Depreciation expense 41 Operating expenses 540 2,052 Net income $ 138 Additional information from the accounting records: During 2018, $249 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value. In order to maintain the usual policy of paying cash dividends of $69 million, it was necessary for Red to borrow $69 million from its bank. Required: Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities.

CHAPTER 21 (8.) Portions Of The Financial Statements For Myriad Products Are Provided Below.

CHAPTER 21 (8.) Portions of the financial statements for Myriad Products are provided below. MYRIAD PRODUCTS COMPANY Income Statement For the Year Ended December 31, 2018 ($ in millions) Sales $ 1,000 Cost of goods sold 350 Gross margin 650 Salaries expense $ 175 Depreciation expense 108 Patent amortization expense 5 Interest expense 48 Loss on sale of land 4 340 Income before taxes 310 Income tax expense 155 Net Income $ 155 MYRIAD PRODUCTS COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) Year 2018 2017 Change Cash $ 153 $ 140 $ 13 Accounts receivable 271 292 (21 ) Inventory 470 490 (20 ) Accounts payable 228 214 14 Salaries payable 112 126 (14 ) Interest payable 72 60 12 Income taxes payable 63 50 13 Required: Prepare the cash flows from operating activities section of the statement of cash flows for Myriad Products Company using the direct method.

CHAPTER 21 (7.) The Accounting Records Of EZ Company Provided The Data Below. Net

CHAPTER 21 (7.) The accounting records of EZ Company provided the data below. Net income $ 55,700 Depreciation expense 9,700 Increase in inventory 2,850 Decrease in salaries payable 1,910 Decrease in accounts receivable 3,800 Amortization of patent 710 Amortization of premium on bonds 3,370 Increase in accounts payable 6,700 Cash dividends 15,000 Prepare a reconciliation of net income to net cash flows from operating activities.

CHAPTER 21 (6.) In Preparation For Developing Its Statement Of Cash Flows For The

CHAPTER 21 (6.) In preparation for developing its statement of cash flows for the year ended December 31, 2018, Rapid Pac, Inc., collected the following information: ($ in millions) Fair value of shares issued in a stock dividend $ 84.0 Payment for the early extinguishment of long-term bonds (book value: $85.0 million) 90.0 Proceeds from the sale of treasury stock (cost: $21.0million) 26.0 Gain on sale of land 3.0 Proceeds from sale of land 9.0 Purchase of Microsoft common stock 150.0 Declaration of cash dividends 55.0 Distribution of cash dividends declared in 2017 51.0 Required: 1. In Rapid Pac’s statement of cash flows, what were net cash inflows (or outflows) from investing activities for 2018? 2. In Rapid Pac’s statement of cash flows, what were net cash inflows (or outflows) from financing activities for 2018?

CHAPTER 21 (5.) For Each Of The Three Independent Situations Determine The Amount Of

CHAPTER 21 (5.) For each of the three independent situations determine the amount of cash received from the customers and prepare journal entries that summarize the selling and collection activities for the reporting period. All dollars are in millions and prepare journal entries Prepare journal entries- record the sales to customers in situation 1,2,3

CHAPTER 21 (4.) Listed Below Are Several Transactions That Typically Produce Either An Increase

CHAPTER 21 (4.) Listed below are several transactions that typically produce either an increase or a decrease in cash. Indicate by letter whether the cash effect of each transaction is reported on a statement of cash flows as an operating (O), investing (I), or financing (F) activity.

CHAPTER 21 (3.) On July 15, 2018, M.W. Morgan Distribution Sold Land For $32.0

CHAPTER 21 (3.) On July 15, 2018, M.W. Morgan Distribution sold land for $32.0 million that it had purchased in 2013 for $27.0 million. What would be the amount(s) related to the sale that Morgan would report in its statement of cash flows for the year ended December 31, 2018, using the direct method? The indirect method?

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