Chapter 1, Problem 15E

Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):      2021   2020 Sales revenue $ 5,350,000 $ 4,450,000 Cost of goods sold   3,050,000   2,190,000 Administrative expense   990,000   865,000 Selling expense   550,000   492,000 Interest revenue   169,000   159,000 Interest expense   238,000   238,000 Loss on sale of assets of discontinued component   124,000   —    On July 1, 2021, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP. The assets of the component were sold on September 30, 2021, for $124,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:     1/1/2021–9/30/2021   2020   Sales revenue   $ 590,000       $ 690,000   Cost of goods sold     (385,000 )       (434,000 ) Administrative expense     (69,000 )       (59,000…

Integrative: Pro forma statements Morten Metal Limited has assembled past (2020) financial statements (income statement and balance sheet follows) and financial projections for use in preparing financial plans for the coming year (2021). Information related to financial projections for the year 2021 follows. (1) Projected sales are $420,000.(2) Cost of goods sold in 2020 includes $72,000 in fixed costs.(3) Operating expense in 2020 includes $17,500 in fixed costs.(4) Interest expense will be $18,000 in 2021.(5) The firm will pay cash dividend amounting to 25% of net profit after taxes.(6) Cash and inventories are expected to double.(7) Marketable securities, long-term debt, and common stock will remain unchanged.(8) Accounts receivable, accounts payable, and other current liabilities will change in direct response to the change in sales.(9) During the year, the firm will purchase a delivery vehicle costing $25,000. The depreciation expense on the new vehicle for 2021 will be…

Berhad has the following financial statement as at 31 December 2019:   Jiki Berhad   Statement of Financial Position as at 31 December 2019   Assets (RM)   Plant (Net) 4,000,000   Research and Development 16,000,000   Cash 5,400,000   Trade Receivable (Net) 5,400,000   Interest Receivable 800,000   Inventory 2,000,000   Total Assets 33,600,000   Liabilities and Shareholders’ Equity   Trade Payable 5,920,000   Loan Payable 9,300,000   Provision for warranties 300,000   Deferred tax liability 4,200,000   Share Capital 10,380,000   Retained Earnings 3,500,000   Total Liabilities and Shareholders’ Equity 33,600,000   Additional Information:   a) Tax laws allow only specific bad debts. The carrying amount in the trade receivable account is after the provision of 10% provision of doubtful debts.   b) Interest receivable is recorded on accrued basis however is taxable only upon receipt.   c) The carrying amount of the plant is after providing accumulated depreciation of RM 6 million. As at 31…