Posted: October 30th, 2022

Shown below is an income statement for 2016 that was prepared by a poorly trained

Shown below is an income statement for 2016 that was prepared by a poorly trainedbookkeeper of Hutton Corporation (not Hutton’s son).Hutton CorporationIncome StatementDecember 31, 2016Sales revenueInvestment revenueCost of merchandise soldSelling expensesAdministrative expenseInterest expenseIncome before special itemsSpecial itemsLoss on disposal of a component of the businessNet federal income tax liabilityNet income$945,00019,500(408,500)(145,000)(285,000)(13,000)113,000(30,000)(24,900)$58,100Instructions: Prepare a multiple-step income statement, in good form, for 2016 for HuttonCorporation that is presented in accordance with generally accepted accounting principles(including format and terminology). Hutton Corporation has 25,000 shares of common stockoutstanding and has a 30% federal income tax rate on all tax related items. Round EPS valuesto the nearest cent.2: 15 points —Balance sheet presentation.The following balance sheet was prepared by the bookkeeper for Moyano Company as ofDecember 31, 2016.Moyano CompanyBalance Sheetas of December 31, 2016CashAccounts receivable (net)InventoriesInvestmentsEquipment (net)Patents$80,00052,20057,00076,30096,00032,000$393,500Accounts payableLong-term liabilitiesStockholders' equity$75,000100,000218,500$393,500The following additional information is provided:a. Cash includes the cash surrender value of a life insurance policy $9,400, and a bankoverdraft of $2,500 has been deducted.b. The net accounts receivable balance includes:(1) accounts receivable—debit balances $60,000;(2) accounts receivable—credit balances $4,000;(3) allowance for doubtful accounts $3,800.c. Inventories do not include goods costing $3,000 shipped out on consignment. Receivablesof $3,000 were recorded on these goods.d. Investments include investments in common stock, trading $19,000 and available-for-sale$48,300, and franchises $9,000.e. Equipment costing $5,000 with accumulated depreciation $4,000 is no longer used and isheld for sale. Accumulated depreciation on the other equipment is $40,000.Instructions: Prepare a balance sheet in good form (omit stockholders' equity details.)3: 6 points —FIFO and LIFO inventory methods.During June, the following changes in inventory item 27 took place:June 1 Balance1,400 units @ $2414 Purchased800 units @ $3624 Purchased700 units @ $308 Sold400 units @ $5510 Sold1,000 units @ $6029 Sold500 units @ $55Instructions: What is the cost of the ending inventory for item 27 under the followingmethods? (Show calculations.) Perpetual inventories are maintained.a. FIFO. $______________Calculation:b.LIFO. $_______________Calculation:4: 6 points —FIFO and LIFO periodic inventory methods.The Pine Shop shows the following data related to an item of inventory:Inventory, January 1100 units @ $5.00Purchase, January 9300 units @ $5.40Purchase, January 1970 units @ $6.00Inventory, January 31120 unitsInstructionsa. What value should be assigned to the ending inventory using FIFO? $__________Calculation:b. What value should be assigned to cost of goods sold using LIFO? $____________Calculation:5: 8 Points —Gross profit method.Reese Co. prepares monthly income statements. Inventory is counted only at year end; thus,month-end inventories must be estimated. All sales are made on account. The rate of mark-upon cost is 20%. The following information relates to the month of May.Accounts receivable, May 1Accounts receivable, May 31Collections of accounts during MayInventory, May 1Purchases during May$21,00027,00090,00045,00058,000Instructions: Calculate the estimated cost of the inventory on May 31.______________6: 10 points —Calculate depreciation.A machine cost $500,000 on April 1, 2016. Its estimated salvage value is $50,000 and itsexpected life is eight years.Instructions: Calculate the depreciation expense (to the nearest dollar) by each of thefollowing methods, showing the figures used.a. Straight-line for 2016: $_________Calculation:b. Double-declining balance for 2017: $_________Calculation:c. Sum-of-the-years'-digits for 2017: $_________Calculation:Short problems (Ques 7 - 11) (2 points each).7.8.Jim Brown, M.D., keeps his accounting records on the cash basis. During 2016, Dr.Brown collected $360,000 from his patients. At December 31, 2015, Dr. Brown hadaccounts receivable of $50,000. At December 31, 2016, Dr. Brown had accountsreceivable of $70,000 and unearned revenue of $10,000. On the accrual basis, howmuch was Dr. Brown’s patient service revenue for 2016? _____________.Story Corp.'s trial balance reflected the following account balances at December 31, 2016:Accounts receivable (net)$24,000Trading securities6,000Accumulated depreciation on equipment and furniture15,000Cash11,000Inventory30,000Equipment25,000Patent4,000Prepaid expenses2,000Land held for future business site18,000In Story’s December 31, 2016 balance sheet, the current assets total is _______________.9. Demich Corp. incurred $420,000 of research and development costs to develop a productfor which a patent was granted on January 2, 2016. Legal fees and other costs associated withregistration of the patent totaled $80,000. On March 31, 2016, Lopez paid $120,000 for legalfees in a successful defense of the patent. The total amount capitalized for the patent throughMarch 31, 2016 should be ___________________.10. DeMarco Corp. is contemplating the purchase of a machine that will produce net after-taxcash savings of $23,000 per year for five years. At the end of five years, the machine can be soldto realize after-tax cash flow of $5,300. Interest is 11%. Assume the cash flows occur at the endof each year.Required:Calculate the total present value of the cash savings. ____________________.11. A note about debt included in the financial statements of the Henry Company for the yearended December 31, 2015 disclosed the following:Debt. The following table summarizes the long-term debt of the Company at December 31,2015. All of the notes were issued at their face (maturity) value.7.55% notes due 2016$ 206,400,0008.05% notes due 2023$ 350,200,0008.30% notes due 2030$ 231,000,0007.93% notes due 2038$ 206,000,0006.85% notes due 2017$ 25,600,000Assuming that the notes pay interest annually and mature on December 31 of the respectiveyears.Required:Compute the total cash interest payments in 2016 for these notes. ______________Essay Questions (Ques 12 - 17) (5 points each)12. What is the purpose of Emerging Issues Task Force?13. The FASB's conceptual framework classifies gains and losses based on whether they arerelated to an entity's major ongoing or central operations. Discuss the GAAP theory behind theclassification, and provide at least one well-described example.14. Discuss the GAAP theory behind prior period adjustments, and provide a well-articulatedexample.15. Discuss the GAAP theory behind the Statement of Cash Flows; as part of your response,include a comparison of the differences in computing the operations section using the directand indirect methods.16, A depreciable asset has an estimated 15% salvage value. At the end of its estimated usefullife, the accumulated depreciation would equal the original cost of the asset under which of thefollowing depreciation methods? Is this statement true or false, and why?17. A plant asset with a five-year estimated useful life and no residual value is sold at the endof the second year of its useful life. How would using the sum-of-the-years'-digits method ofdepreciation instead of the double-declining balance method of depreciation affect a gain orloss on the sale of the plant asset?Extra Credit, but do not guess – incorrect answers lose pointsEC: 5 Points —Impairment of copyrights.Presented below is information related to copyrights owned by Zheng Corporation atDecember 31, 2016.Cost$2,700,000Carrying amount2,400,000Expected future net cash flows2,100,000Fair value1,200,000Assume Zheng will continue to use this asset in the future. As of December 31, 2016, thecopyrights have a remaining useful life of 5 years.Instructions:a. Prepare the journal entry (if any) to record the impairment of the asset at December 31,2016.b. Prepare the journal entry to record amortization expense for 2017.c. The fair value of the copyright at December 31, 2017 is $1,500,000. Prepare the journalentry (if any) necessary to record this increase in fair value.

Tags: Ace My Homework: Essay Help, Assignment Help: USA's #1 Online Assignment Writing Service, Do My Assignment for Me Online - Write Academic Papers, Reliable Online Homework Help For You