The Board of Directors decides that old inventory costing €18,000 is to be written off as the inventory is no longer sellable (it has gone out of fashion). Identical inventory in the past was sold to customers for €31,000. What is the impact on the net assets of the company in monetary terms?
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The Board of Directors decides that old inventory costing €18,000 is to be written off as the inventory is no longer sellable (it has gone out of fashion). Identical inventory in the past was sold to customers for €31,000. What is the impact on the net assets of the company in monetary terms?
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- E5-8. Discontinued Operations. Elegant Homes Corporation provided the following statement of net income on December 31, 2022, before the disposal of a business segment. The income statement includes the results of operations of Elegant's mobile home division. The company made a commitment to dispose of the mobile home division on December 1, 2022. Elegant Homes Corporation Income Statement For the Year Ended December 31, 2022 Sales $500 Cost of Goods Sold (120) Gross Profit $380 Selling Expenses (80) General and Administrative Expenses (65) Other Revenues and Expenses (40) Loss on Asset Impairment (38) Income before Tax $157 Income Tax Expense (at 40%) (63) Net Income $ 94 The mobile home division accounts for 20% of sales, cost of goods sold, selling, and general and administra- tive expenses. Assume no gain or loss on remeasurement of the division. Prepare the multiple-step income statement for 2022 only, assuming that Elegant sells the segment on December 31 at a $130 pretax loss.…Shown below is an income statement for 2020 that was prepared by a poorly trained bookkeeper of BASCO Corporation. BASCO Corporation INCOME STATEMENT December 31, 2020 Sales revenue $945,000 Interest revenue 19,500 Cost of merchandise sold (408,500) Selling expenses (145,000) Administrative expense (215,000) Interest expense (13,000) Income before special items 183,000 Special items Loss on disposal of a component of the business (30,000) Major casualty loss (extraordinary item) (70,000) Net income $ 83,000 Instructions: Prepare a multiple-step income statement for 2020 for BASCO Corporation, the tax rate 30%.Martinez Corp. experienced a fire on December 31, 2020, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances. December 31, 2020 December 31, 2019 Cash $ 38,100 $ 11,100 Accounts receivable (net) 74,000 128,400 Inventory 204,600 183,400 Accounts payable 50,200 90,600 Notes payable 36,500 64,900 Common stock, $100 par 406,600 406,600 Retained earnings 120,000 106,300 Additional information: 1. The inventory turnover is 3.7 times. 2. The return on common stockholders’ equity is 19%. The company had no additional paid-in capital. 3. The receivables turnover is 11.8 times. 4. The return on assets is 19%. 5. Total assets at December 31, 2019, were $607,100. Compute the following for Martinez Corp.. (Round all answers to 0 decimal places, e.g. 2,150.) (a) Cost of goods sold for 2020. $ (b) Net credit…
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- The owner of Time Traders requested you to calculate the net profit for the year ended30 June 2020. Mr Minute, the owner, has not been very diligent in keeping records. He has presentedyou with the following information: His assets and liabilities at the beginning of the financial year were as follows:Equipment at carrying value R75 000Vehicles at carrying value R 125 000Trading inventory R180 000Cash in bank R32 000Debtors R31 500Creditors R8 500Loan: Second Bank (14%) R50 000 The bank statements show a credit balance of R48 790 as at 30 June 2020. All the cash received has been deposited. A stock‐take performed on 30 June 2020, showed inventory on hand with a cost price ofR230 000. The debtors balance at year‐end is R38 000 and the creditors balance is R16 225. Equipment was purchased during the year at a cost price of R5 000. Depreciation on vehicles for the year amounted to R20 000 and for the equipment R15 000. The owner took R23 000 in cash for personal use during the…Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt. b. A warehouse fire destroyed $4.7 million worth of uninsured inventory. c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building. d. A large customer owing $3.1 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment. e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 51%. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices. Global used $19.2 million of its available cash to repay $19.2 million…Use the trial balance presented for Lynch, Inc., in problem (51). Assume that the company will be liquidated and the following transactions will occur: • Accounts receivable of $18,000 are collected with remainder written off. • All of the company’s inventory is sold for $40,000. • Additional accounts payable of $10,000 incurred for various expenses such as utilities and maintenance are discovered. • The land and building are sold for $71,000. • The note payable due to the Colorado Savings and Loan is paid. • The equipment is sold at auction for only $11,000 with the proceeds applied to the note owed to the First National Bank. • The investments are sold for $21,000. • Administrative expenses total $20,000 as of July 23, 2017, but no payment has yet been made. a. Prepare a statement of realization and liquidation for the period from March 14, 2017, through July 23, 2017. b. How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $1,000?
- Bananas, Inc. is a calendar-year corporation. Its financial statements for the years ended December 31, 2019 and 2020 contained the following errors: Ending Inventory Depreciation expense 2019 $25,000 overstatement 10,000 understatement 2020 $40,000 understatement 20,000 overstatement Assume that no correcting entries were made in 2019 or 2020 and that no errors existed in 2018. Ignoring income taxes, by how much will retained earnings at December 31, 2020 be overstated or understated? Enter an overstatement as a positive number and an understatement as a negative number.In the current year, Randa Merchandising Incorporated sold its interest in a chain of wholesale outlets, taking the company completely out of the wholesaling business. The company still operates its retail outlets. A listing of the major sections of an income statement follows. Item 1. 2. 3. 4. 5. 6. 7. 8. 1. Net sales 2. Gain on state's condemnation of company property 3. Cost of goods sold 4. Income tax expense 5. Depreciation expense 6. Gain on sale of wholesale business segment, net of tax 7. Loss from operating wholesale business segment, net of tax 8. Loss of assets from meteor strike Exercise 13-17A (Algo) Income statement categories LO A2 Debit Section $ 1,888,000 277,000 296,000 566,000 817,000 Credit $ 3,700,000 293,000 Indicate where each of the following income-related items for this company appears on its current year income statement by selecting the appropriate section in the drop down beside each item. 989,000 Item Net sales Gain on state's condemnation of company…1. ABC Inc. operates two separate lines of business - a fashion design business and an investment firm. During the year ended December 31, 2021, the company lost $3 million from the fashion design business and earned a profit of $1 million from the investment firm. The $2 million non-capital loss could not be carried back, and as a result it was carried forward. On January 1, 2022, ABC Inc. is acquired by another company - i.e. Acquisition of control. During the 2022 year, the fashion design business lost $1.5 million while the investment firm earned $4 million. Determine the minimum taxable income for 2022.....................[a]