Question: Exhibit 17.13 presents a consolidated statement
Exhibit 17.13 presents a consolidated statement of income and retained earnings for 2013, and Exhibit 17.14 presents a consolidated balance sheet for Tuck Corporation as of December 31, 2012 and 2013. A statement of accounting policies and a set of notes to the financial statements follow these financial statements. After studying these financial statements and notes, respond to each of the following questions and calculation requirements.
Required:
a. Prepare an analysis that explains the change in the Marketable Equity Securities account during 2013.
b. Calculate the proceeds from sales of marketable equity securities classified as current assets during 2013.
c. Calculate the amount of the bad debt expense for 2013.
d. Calculate the amount of cost of goods sold assuming Tuck Corporation used a FIFO cost-flow assumption.
e. Give the journal entry (entries) to account for the change in the Investment in Thayer Corporation account during 2013.
f. Calculate the amount of income or loss from the Investment in Thayer Corporation during 2013.
g. Give the journal entry (entries) to account for the change in the Investment in Davis Corporation account during 2013.
h. Refer to Note 5. Give the journal entry to record the sale of equipment during 2013.
i. Refer to Note 9. Demonstrate that the $106,036 is the correct amount of the leasehold asset at the beginning of the lease term.
j. Calculate the amount of cash received during 2013 for rental fees.
k. Calculate the actual cost incurred to service customers’ warranties during 2013.
l. Refer to Note 7. Calculate the amount of interest expense on the $1 million, 6% bonds for 2013.
m. Give the journal entry (entries) for the change in the Mortgage Payable accounts during 2013. Be sure to consider the current portion.
n. Verify that the carrying value of the combined current and noncurrent portions of the Capitalized Lease Obligation on December 31, 2012, should be $62,064.
o. Prepare an analysis that explains the change in the carrying value of the combined current and noncurrent portions of the Capitalized Lease Obligation during 2013.
p. Give the journal entry to record income tax expense for 2013.
q. Compute the amount of cash payments for income taxes during 2013.
r. The income tax rate is 30%. Assume that during 2013, Tuck Corporation recognized $12,000 of deferred tax expense related to differences in depreciation methods. Calculate the difference between the amount of depreciation recognized for financial reporting purposes and the amount recognized for tax purposes.
s. Give the journal entry made on July 1, 2013, upon conversion of the preferred stock.
t. Give the journal entry (entries) to account for the change in the Treasury Stock account during 2013.
Statement of Accounting Policies
â– Basis of consolidation. Tuck Corporation consolidates its financial statements with those of Harvard Corporation, a 100%-owned subsidiary acquired on January 2, 2011.
â– Marketable securities. The firm classifies marketable securities as available for sale and measures them at fair value.
■Accounts receivable. The firm accounts for customers’ uncollectible accounts using the allowance method……………………………………………………………………
Exhibit 17.13:
Exhibit 17.14:
Transcribed Image Text:
Tuck Corporation Consolidated Statement of Income and Retained Earnings for 2013 (Problem 11) EXHIBIT 17.13 REVENUES AND GAINS Sales...... $4,000,000 Gain on Sale of Equipment. 3,000 Rental Revenue.. 240,000 Dividend Revenue .. Equity in Earnings of Unconsolidated Affiliates Total Revenues and Gains..... 8,000 102,000 $4,353,000 EXPENSES, LOSSES, AND DEDUCTIONS Cost of Goods Sold (Including Depreciation and Amortization)... $2,580,000 ...... Selling and Administration Expenses (Including Depreciation and Amortization and Bad Debt Expense) ... 1,102,205 Warranty Expense 46,800 Interest Expense... Loss on Sale of Marketable Equity Securities Income Tax Expense Total Expenses, Losses, and Deductions 165,995 8,000 150,000 4,053,000 $ 300,000 (119,500) $ 180,500 277,000 $ 457,500 Consolidated Net Income Less Dividends Declared... Increase in Retained Earnings for 2013 Retained Earnings, December 31, 2012.. Retained Earnings, December 31, 2013. . © Cengage Leaming 2014 Tuck Corporation Consolidated Comparative Balance Sheets (Problem 11) EXHIBIT 17.14 December December 31, 2013 31, 2012 ASSETS Current Assets Cash... $ 278,000 S 240,000 Marketable Securities (Note 1) Accounts Receivable-Net (Note 2). Inventories (Note 3). 141,000 1,509,600 125,000 1,431,200 1.257.261 Propayments Total Cument Assets. 1,525,315 32,000 3,485,915 28,000 $3,081,461 Investments (Note 4) Investiment in Thayer Corporation (19% owned). Investment in Hitchcock Corporation (30% owned) Investment in Bavis Corporation (40% owned) Total Investments. Proparty. Plant, and Equipmont (Nota 5) Land. Building Equipment. Leasehold Total Plant Assets at Cost. Less Accumulated Depreciation and Amortization. Total Plant Assets Net. Intangibles $ 7,000 $ 2,000 120,000 135,000 298,000 520,000 215,000 $ 427,000 S R2,000 S 2,000 843,000 1,848,418 843,000 497818 106,036 $2,879,A54 (420,854) 2458600 106,036 $1,528,854 $1.145,000 $ 36,000 $6,500,515 Goodwill Met. $ 36,000 Total Assets. $4,689,461 LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities Note Payable (Note 6).. Accounts Payable.. Rental Fees Received in Advance. Estimated Waranty Liability.- Interest Payable on Notes Dividends Fayable. Income Taes Payatle Cunent. $ 200,000 $ 100,000 723,700 666,100 58,000 46,000 75,200 1,500 78,600 2,000 30,000 160,000 25,000 140,000 37,383 Mortgage Payatle Curent Portion Capitaliznd Lease obligationCurent Portiom.. Total Curent Liabilities Moncurrent Liabilitios 37,383 10,000 $1,299,683 10,000 $1,101,183 Bonds Payable (Note 7). Mortgage Payable (Note 8) Capitaliznd Lease Obligation (Note 9) Defered Tax Liability... Total Moncurrent Liabilities. $1,931,143 $1,104,650 243,560 46,229 145,000 2365932 $3,665,615 262,564 52,064 130,000 $1,549,278 Total Liabilities. Shareholders Equity Convertible Proferned Stock, $100 par Value (Note 10). Common Stock, $10 par Value (Note 11) Additional Paid-in Capital Common. Accumulated other Comprehensive Incone Unrealized Loss on Marketable Securities Unmalized Loss on Investments in Securities. . Retained Eamings.. Total.. Less Cost of Treasury Stock (Note 12). Total shareholders Equity. Total tiabilities and Shamholders Equity $2,650,461 $ 200,000 1,650,000 $ 700,000 1,000,000 130,000 583,600 (21,000) (21,000) (25,000) (16,000) 271,000 457,500 $2,849,100 (14,200) 2834,900 $6,500.515 $2,066,000 (27.000) $2,039,000 $4,689,461
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