You are reviewing the draft year-end results of CDI for the year ended December 31, 2016...
You are reviewing the draft year-end results of CDI for the year ended December 31, 2016 and your analysis identifies the following items with respect to capital assets.
- You discover that a capital asset, acquired at the beginning of 2014, at a cost of $25,000, was expensed in that year. The company would normally depreciate this asset type over 5 years on a straight-line basis with no residual value.
- In early January, 2015, CDI acquired programmable robotic equipment for one of its production lines at a vendor price of $150,000 plus 5% GST. The company’s usual depreciation policy for this category of assets is straight line over 10 years with no residual value and the accountant has applied this basis in determining both the 2015 and draft 2016 net incomes. Management evaluated, early in 2017, during the subsequent events period, that this particular equipment had a high obsolescence experience caused by technology advances and has determined that a 30% declining balance depreciation method would be more appropriate for such equipment and this basis was adopted.
The company’s tax rate for all periods is 30% and the tax treatment for the asset was correctly handled.
Selected draft results for the current year, excluding any effects arising from the above, are as follows:
|
2016 Draft |
2015 |
|
|
Retained earnings, beginning |
$280,000 |
$180,000 |
|
Net income, after tax |
$180,000 |
$160,000 |
|
Dividends declared |
$80,000 |
$60,000 |
Required:
- Prepare, with supporting calculations, all related entries required in 2016 to finalize the year end.
- Prepare a comparative statement of Retained Earnings, in good form, for the years ended December 31, 2016 and comparative 2015. Show any supporting computations where indicated
Homework Answers
Change in method of Depreciation is a change in accounting estimate. It can be effected retrospectively or prospectively.
IAS 8 requires the prior period items to be rectified retrospectively.
The financial statements of previous period are to be adjusted to show the effect of prior period items.
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You are reviewing the draft year-end results of CDI for the year
ended December 31, 2016...
The draft statement of financial position of Linfield Limited for the year ended 31 December 2016 are as below:...
The draft statement of financial position of Linfield Limited for the year ended 31 December 2016 are as below: Statement of financial position as at 31 December 2016 (with comparative figures) 2016 2015 Non-current assets Property, plant and equipment 35,750 281,000 Investment properties 7,000 7,500 Intangibles assets 6,000 6,200 49,250 294,200 Current assets Inventories 3,980 4,545 Trade receivables 7,410 9,075 Short-term investments 500 Cash and bank 7,555 13,650 26,105 20,610 14,810 375,355 Total assets Equity and reserves Share capital 54,500...
The following information is available for Amos Company for the year ended December 31, 2017 a....
The following information is available for Amos Company for the year ended December 31, 2017 a. Balance of retained earnings, December 31, 2016, prior to discovery of error, $867,000 b. Cash dividends declared and paid during 2017, $25,00o. c. It neglected to record 2015 depreciation expense of $46,600, which is net of $5,500 in tax benefits. d. The company earned $212,000 in 2017 net income Prepare a 2017 statement of retained earnings for Amos Company. (Amounts to be deducted should...
Simon Company’s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 31,800...
Simon Company’s year-end balance sheets follow.
At December 31
2017
2016
2015
Assets
Cash
$
31,800
$
36,000
$
37,200
Accounts receivable, net
88,100
62,000
50,500
Merchandise inventory
111,000
83,800
54,500
Prepaid expenses
10,300
9,350
4,600
Plant assets, net
280,000
257,000
235,000
Total assets
$
521,200
$
448,150
$
381,800
Liabilities and Equity
Accounts payable
$
129,200
$
75,250
$
50,400
Long-term notes payable secured by
mortgages on plant assets
98,000
100,000
82,600
Common stock, $10 par value
161,500
161,500...
Following is a partially completed balance sheet for Episco, Inc., at December 31, 2016, together with...
Following is a partially completed balance sheet for Episco, Inc., at December 31, 2016, together with comparative data for the year ended December 31, 2015. From the statement of cash flows for the year ended December 31, 2016, you determine the following: Net income for the year ended December 31, 2016, was $182. Dividends paid during the year ended December 31, 2016, were $56. Cash increased $56 during the year ended December 31, 2016. The cost of new equipment acquired...
Jackson Corporation prepared the following book income statement for its year ended December 31, 2017: Computations for...
Jackson Corporation prepared the following book income statement for its year ended December 31, 2017: Computations for Problem C:3-64 Sales $950,000 Minus: Cost of goods sold (450,000) Gross profit $500,000 Plus: Dividends received on Invest Corporation stock $3,000 Gain on sale of Invest Corporation stock 30,000 Total dividends and gain 33,000 Minus: Depreciation ($7,500+$52,000) $59,500 Bad debt expense 22,000 Other operating expenses 105,500 Loss on sale of Equipment 1 70,000 Total expenses and loss (257,000) Net income per books before...
During an audit of the inventory records of Winthrop Ltd for the year ended June 30,...
During an audit of the inventory records of Winthrop Ltd for the year ended June 30, 2019, the auditor discovered that the ending inventory balance was overvalued by $180,000. On further investigation, it was discovered that the ending inventory for the previous year was correctly counted and valued, but that the inventory balance as at June 30, 2017, was undervalued by $500,000. Spurred on by the concern for errors undetected in previous periods, a thorough investigation was carried out as...
The following information for the year ended December 31, 2016, was reported by Nice Bite, Inc....
The following information for the year ended December 31, 2016, was reported by Nice Bite, Inc. Accounts Payable $ 49,000 Accounts Receivable 26,800 Cash (balance on January 1, 2016) 103,900 Cash (balance on December 31, 2016) 90,000 Common Stock 156,500 Dividends 0 Equipment 140,700 Income Tax Expense 10,500 Interest Expense 29,900 Inventory 17,600 Notes Payable 27,600 Prepaid Rent 7,400 Office Expense 14,700 Retained Earnings (beginning) 8,300 Salaries and Wages Expense 36,100 Service Revenue 145,800 Utilities Expense 25,500 Salaries and Wages...
Simon Company’s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 27,923...
Simon Company’s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 27,923 $ 33,985 $ 32,679 Accounts receivable, net 85,935 58,886 45,369 Merchandise inventory 105,949 76,257 47,839 Prepaid expenses 9,270 8,833 3,743 Plant assets, net 258,832 242,650 210,670 Total assets $ 487,909 $ 420,611 $ 340,300 Liabilities and Equity Accounts payable $ 119,060 $ 71,083 $ 46,267 Long-term notes payable secured by mortgages on plant assets 92,644 93,838 75,206 Common stock, $10 par value 162,500 162,500...
Simon Company’s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 26,262...
Simon Company’s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 26,262 $ 30,391 $ 31,343 Accounts receivable, net 77,637 55,332 42,627 Merchandise inventory 98,570 70,278 44,508 Prepaid expenses 8,373 7,897 3,413 Plant assets, net 234,272 219,821 194,709 Total assets $ 445,114 $ 383,719 $ 316,600 Liabilities and Equity Accounts payable $ 107,508 $ 64,849 $ 41,791 Long-term notes payable secured by mortgages on plant assets 82,845 87,373 69,969 Common stock, $10 par value 162,500 162,500...
Simon Company’s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 35,286...
Simon Company’s year-end balance sheets follow.
At December 31
2017
2016
2015
Assets
Cash
$
35,286
$
41,246
$
40,887
Accounts receivable, net
101,276
68,676
54,516
Merchandise inventory
124,839
95,381
58,060
Prepaid expenses
11,143
10,407
4,634
Plant assets, net
308,101
284,846
254,903
Total assets
$
580,645
$
500,556
$
413,000
Liabilities and
Equity
Accounts payable
$
143,135
$
86,286
$
55,606
Long-term notes payable secured
by
mortgages on plant assets
111,344
117,430
93,098
Common stock, $10 par value
162,500
162,500...
The draft statement of financial position of Linfield Limited for the year ended 31 December 2016 are as below: Statement of financial position as at 31 December 2016 (with comparative figures) 2016 2015 Non-current assets Property, plant and equipment 35,750 281,000 Investment properties 7,000 7,500 Intangibles assets 6,000 6,200 49,250 294,200 Current assets Inventories 3,980 4,545 Trade receivables 7,410 9,075 Short-term investments 500 Cash and bank 7,555 13,650 26,105 20,610 14,810 375,355 Total assets Equity and reserves Share capital 54,500...
The following information is available for Amos Company for the year ended December 31, 2017 a. Balance of retained earnings, December 31, 2016, prior to discovery of error, $867,000 b. Cash dividends declared and paid during 2017, $25,00o. c. It neglected to record 2015 depreciation expense of $46,600, which is net of $5,500 in tax benefits. d. The company earned $212,000 in 2017 net income Prepare a 2017 statement of retained earnings for Amos Company. (Amounts to be deducted should...
Simon Company’s year-end balance sheets follow.
At December 31
2017
2016
2015
Assets
Cash
$
31,800
$
36,000
$
37,200
Accounts receivable, net
88,100
62,000
50,500
Merchandise inventory
111,000
83,800
54,500
Prepaid expenses
10,300
9,350
4,600
Plant assets, net
280,000
257,000
235,000
Total assets
$
521,200
$
448,150
$
381,800
Liabilities and Equity
Accounts payable
$
129,200
$
75,250
$
50,400
Long-term notes payable secured by
mortgages on plant assets
98,000
100,000
82,600
Common stock, $10 par value
161,500
161,500...
Simon Company’s year-end balance sheets follow.
At December 31
2017
2016
2015
Assets
Cash
$
35,286
$
41,246
$
40,887
Accounts receivable, net
101,276
68,676
54,516
Merchandise inventory
124,839
95,381
58,060
Prepaid expenses
11,143
10,407
4,634
Plant assets, net
308,101
284,846
254,903
Total assets
$
580,645
$
500,556
$
413,000
Liabilities and
Equity
Accounts payable
$
143,135
$
86,286
$
55,606
Long-term notes payable secured
by
mortgages on plant assets
111,344
117,430
93,098
Common stock, $10 par value
162,500
162,500...
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