Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Textbook Question
Chapter 3, Problem 32P
Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several of Mergaronite’s accounts have been omitted. Credit balances are indicated by parentheses. Dividends were declared and paid in the same period
| Mergaronite | Hill | |
| Revenues...................................... | $(600,000) | $(250,000) |
| Cost of goods sold.............................. | 280,000 | 100,000 |
| 120,000 | 50,000 | |
| Investment income.............................. | Not given | NA |
| Retained earnings. 1/1/18........................ | (900,000) | (600,000) |
| Dividends declared.............................. | 130,000 | 40,000 |
| Current assets.................................. | 200,000 | 690,000 |
| Land........................................... | 300,000 | 90,000 |
| Buildings (net).................................. | 500,000 | 140,000 |
| Equipment (net)................................. | 200,000 | 250,000 |
| Liabilities....................................... | (400,000) | (310,000) |
| Common stock................................. | (300,000) | (40,000) |
| Additional paid-in capital......................... | (50,000) | (160,000) |
Assume that Mergaronite took over Hill on January 1, 2014, by issuing 7,000 shares of common stock having a par value of $10 per share but a fair value of $100 each. On January 1, 2014, Hill’s land was undervalued by $20,000, its buildings were overvalued by $30,000, and equipment was undervalued by $60,000. The buildings had a 10-year remaining life; the equipment had a 5-year remaining life. A customer list with an appraised value of $100,000 was developed internally by Hill and was to be written off over a 20-year period.
a. Determine and explain the December 31, 2018, consolidated totals for the following accounts:
| Revenues | Amortization Expense | Customer List |
| Cost of Goods Sold | Buildings | Common Stock |
| Depreciation Expense | Equipment | Additional Paid-In Capital |
b. In requirement (a), why can the consolidated totals be determined without knowing which method the parent used to account for the subsidiary?
c. If the parent uses the equity method, what consolidation entries would be used on a 2018 worksheet?
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The following account balances were found for Jetson Corp. at the beginning of its fiscal year, January 1, 2020:
Accounts Receivable (debit balance)................................................. $1,240,250
Allowance for Doubtful Accounts (credit balance)....................................... 19,220
The following transactions are for the year 2020:
Sales for the year were $8,100,000, of which 60% was on credit, and sales returns, all on credit, were $146,000. Cash collections, excluding recoveries, were $5,416,000. Jetson wrote off $62,500 in receivables, of which half was later recovered and collected. The company’s credit and collection manager has estimated that 6% of outstanding accounts receivable are uncollectible.
Required: Calculate the bad debt expense for the year and record the appropriate journal entry.
Examine the following selected financial information for
Best Value
Corporation and
Modern
Stores, Inc., as of the end of their fiscal years ending in
2018:
Data table
(In millions)
Best Value Corporation
Modern Stores, Inc.
1.
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . .
$15,256
$203,110
2.
Total common stockholders' equity. . . . .
$3,075
$71,460
3.
Operating income. . . . . . . . . . . . . . . . . . . .
$1,350
$26,820
4.
Interest expense. . . . . . . . . . . . . . . . . . . . . .
$88
$2,020
5.
Leverage ratio. . . . . . . . . . . . . . . . . . . . . . . .
6.
Total debt. . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.
Debt ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.
Times interest earned. . . . . . . . . . . . . . . . .
Requirements…
Use the following information for Questions 9–10.Porter Co. reported the following on its December 31, 2013, balance sheet:
Liabilities and Stockholders’ Equity:Accounts payable . . . . . . . . . . . . . . . . . . . . $ 3,000Notes payable. . . . . . . . . . . . . . . . . . . . . . . 22,000Bonds payable . . . . . . . . . . . . . . . . . . . . . . 45,000Common stock . . . . . . . . . . . . . . . . . . . . . . 110,000Preferred stock . . . . . . . . . . . . . . . . . . . . . . 20,000Additional paid-in capital . . . . . . . . . . . . . . . 70,000Retained earnings . . . . . . . . . . . . . . . . . . . . 32,000Treasury stock. . . . . . . . . . . . . . . . . . . . . . . 12,000
9. The debt/equity ratio for Porter Co. in 2013 (rounded) isa. 20.5%b. 24.1%c. 28.7%d. 31.8%10. The debt ratio for Porter Co. in 2013 (rounded) isa. 20.5%b. 24.1%c. 28.7%d. 31.8%
Chapter 3 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - When a parent company applies the initial value...Ch. 3 - Several years ago, Jenkins Company acquired a...Ch. 3 - Benns adopts the equity method for its 100 percent...Ch. 3 - Prob. 8QCh. 3 - Prob. 9QCh. 3 - Prob. 10Q
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Paar Corporation bought 100 percent of Kimmel,...Ch. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - If no legal, regulatory, contractual, competitive,...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - What is Phoenixs consolidated retained earnings...Ch. 3 - On its December 31, 2018, consolidated balance...Ch. 3 - Prob. 13PCh. 3 - Herbert, Inc., acquired all of Rambis Companys...Ch. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Following are selected account balances from...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - On January 1, 2017, Pinnacle Corporation exchanged...Ch. 3 - Following are selected accounts for Mergaronite...Ch. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39APCh. 3 - Prob. 40APCh. 3 - Prob. 1DYSCh. 3 - FASB ASC AND IASB RESEARCH CASE A vice president...Ch. 3 - Prob. 4DYSCh. 3 - Prob. 5DYS
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