Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 5, Problem 30P
Following are financial statements for Moore Company and Kirby Company for 2018:
| Moore | Kirby | ||||
| Sales | $ (800,000) | $ (600,000) | |||
| Cost of goods sold | 500,000 | 400,000 | |||
| Operating and interest expenses | 100,000 | 160,000 | |||
| Net income | $ (200,000) | $ (40,000) | |||
| Retained earnings, 1/1/18 | $ (990,000) | $ (550,000) | |||
| Net income | (200,000) | (40,000) | |||
| Dividends declared | 1 30,000 | –0– | |||
| Retained earnings, 12/31/18 | $(1,060,000) | $ (590,000) | |||
| Cash and receivables | $ 217,000 | $ 180,000 | |||
| Inventory | 224,000 | 160,000 | |||
| Investment in Kirby | 657,000 | –0– | |||
| Equipment (net) | 600,000 | 420,000 | |||
| Buildings | 1,000,000 | 650,000 | |||
| (100,000) | (200,000) | ||||
| Other assets | 200,000 | 100,000 | |||
| Total assets | $ 2,798,000 | $ 1,310,000 | |||
| Liabilities | $(1,138,000) | $ (570,000) | |||
| Common stock | (600,000) | (150,000) | |||
| Retained earnings, 12/31/18 | (1,060,000) | (590,000) | |||
| Total liabilities and equity | $(2,798,000) | $(1,310,000) | |||
- Moore purchased 90 percent of Kirby on January 1, 2017, for $657,000 in cash. On that date, the 10 percent noncontrolling interest was assessed to have a $73,000 fair value. Also at the acquisition date, Kirby held equipment (four-year remaining life) undervalued in its financial records by $20,000 and interest-bearing liabilities (five-year remaining life) overvalued by $40,000. The rest of the excess fair over book value was assigned to previously unrecognized brand names and amortized over a 10-year life.
- During 2017 Kirby reported a net income of $80,000 and declared no dividends.
- Each year Kirby sells Moore inventory at a 20 percent gross profit rate. Intra-entity sales were $145,000 in 2017 and $160,000 in 2018. On January 1, 2018, 30 percent of the 2017 transfers were still on hand, and on December 31, 2018, 40 percent of the 2018 transfers remained.
- Moore sold Kirby a building on January 2, 2017. It had cost Moore $100,000 but had $90,000 in accumulated depreciation at the time of this transfer. The price was $25,000 in cash. At that time, the building had a five-year remaining life.
Determine all consolidated balances either computationally or by using a worksheet.
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The 2021 income statement of Adrian Express reports sales of $22,110,000, cost of goods sold of $12,950,000, and net income of
$2,260,000. Balance sheet information is provided in the following table.
Assets
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ADRIAN EXPRESS
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Industry averages for the following profitability ratios are as follows:
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Mes
%
$
45%
25%
15%
15.5 times.
35%
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2020
980,000
1,950,000
2,490,000
5,180,000 4,480,000
$10,600,000
$8,640,000
$1,000,000
1,310,000
1,850,000
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$ 2,228,000 $1,928,000…
The 2021 income statement of Adrian Express reports sales of $18,957,000, cost of goods sold of $11,971,500, and net income of
$1,690,000. Balance sheet information is provided in the following table.
Assets
Current assets:
Cash
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Liabilities and Stockholders' Equity
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December 31, 2021 and 2020
Average collection period
Average days in inventory
Current ratio
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Industry averages for the following four risk ratios are as follows:
Risk Ratios
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25 days
60 days.
2 to 1
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$ 690,000
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Financial Information for Powell Panther Corporation is shown below:
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75.0
$300.0
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Powell Panther Corporation: Balance Sheets as of December 31 (millions of dollars)
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Sales
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$345.0
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2021
46.0
450.0
540.0
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863.0
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Accounts payable
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Chapter 5 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
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