was $360,000. Gross profit from collections of installment receivables was $270,000.?Life insurance on officers was $3,800.?Machinery was acquired in January for $300,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Orkin may deduct 14% for 2008.?Interest received on tax exempt Iowa State bonds was $9,000.?The estimated warranty liability related to 2008 sales was $19,600. Repair costs under warranties during 2008 were $13,600. The remainder will be incurred in 2009.?Pretax financial income is $600,000. The tax rate is 30%.Instructions(a)Prepare a schedule starting with pretax financial income and compute taxable income.(b)Prepare the journal entry to record income taxes for 2008. 2. Gregory, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2008:January 1, 2008December 31, 2008Projected benefit obligation$2,500,000$2,850,000Market-related asset value1,250,0001,600,000Accumulated benefit obligation1,930,0002,620,000Unrecognized net (gains) and losses-0-300,000The service cost component for 2008 is $150,000 and the amortization of prior service cost is $240,000. The company's actual funding of the plan in 2008 amounted to $510,000. The expected return on plan assets and the settlement rate were both 8%.Instructions(a)Determine the pension expense to be reported in 2008.(b)Prepare the journal entry to record pension expense and the employers' contribution to the pension plan in 2008.3. Presented below is information related to Major Department Stores, Inc. pension plan for 2008.Accumulated benefit obligation (at year-end)$600,000Service cost520,000Funding contribution for 2008500,000Settlement rate used in actuarial computation10%Expected return on plan assets9%Amortization of prior service cost100,000Amortization of unrecognized net gains48,000Projected benefit obligation (at beginning of period)480,000Market-related asset value (at beginning of period)360,000Instructions(a)Compute the amount of pension expense to be reported for 2008. (Show computations.)(b)Prepare the journal entry to record pension expense and the employer's contribution for 2008.1. The board of directors of Ogle Construction Company is meeting to choose between the completed-contract method and the percentage-of-completion method of accounting for long-term contracts in the company's financial statements. You have been engaged to assist Ogle's controller in the preparation of a presentation to be given at the board meeting. The controller provides you with the following information:1.Ogle commenced doing business on January 1, 2011.2.Construction activities for the year ended December 31, 2011, were as follows:Total ContractBillings ThroughCash CollectionsProject Price 12/31/11Through 12/31/11A$ 515,000$ 340,000$ 310,000B690,000210,000210,000C475,000475,000390,000D200,000100,00065,000E 480,000 400,000 400,000$2,360,000$1,525,000$1,375,000Contract CostsEstimatedIncurred ThroughAdditional Costs toProject 12/31/11Complete ContractsA$ 424,000$101,000B195,000455,000C350,000-0-D123,00097,000E 320,000 80,000$1,412,000$733,0003.Each contract is with a different customer.4.Any work remaining to be done on the contracts is expected to be completed in 2012.Instructions(a)Prepare a schedule by project, computing the amount of income (or loss) before selling, general, and administrative expenses for the year ended December 31, 2011, which would be reported under:(1)The completed-contract method.(2)The percentage-of-completion method (based on estimated costs).(b)Prepare the general journal entry(ies) to record revenue and gross profit on project B (second project) for 2011, assuming that the percentage-of-completion method is used.(c)Indicate the balances that would appear in the balance sheet at December 31, 2011 for the following accounts for Project D (fourth project), assuming that the percentage-of-completion method is used.Accounts ReceivableBillings on Construction in ProcessConstruction in Process(d)How would the balances in the accounts discussed in part (c) change (if at all) for Project D (fourth project), if the completed-contract method is used? 2. Korman Company has the following securities in its portfolio of trading equity securities on December 31, 2010: CostFair Value5,000 shares of Thomas Corp., Common$155,000$139,00010,000 shares of Gant, Common 182,000 190,000$337,000$329,000All of the securities had been purchased in 2010. In 2011, Korman completed the following securities transactions:March 1Sold 5,000 shares of Thomas Corp., Common @ $31 less fees of $1,500.April 1Bought 600 shares of Werth Stores, Common @ $45 plus fees of $550. The Korman Company portfolio of trading equity securities appeared as follows on December 31, 2011: CostFair Value10,000 shares of Gant, Common$182,000$195,500600 shares of Werth Stores, Common 27,550 25,500$209,550$221,000InstructionsPrepare the general journal entries for Korman Company for:(a)the 2010 adjusting entry.(b)the sale of the Thomas Corp. stock.(c)the purchase of the Werth Stores' stock.(d)the 2011 adjusting entry. 3. Assume that the following data relative to Kane Company for 2010 is available:Net Income$2,100,000Transactions in Common Shares ChangeCumulativeJan. 1, 2010, Beginning number700,000Mar. 1, 2010, Purchase of treasury shares(60,000)640,000June 1, 2010, Stock split 2-1640,0001,280,000Nov. 1, 2010, Issuance of shares120,0001,400,0008% Cumulative Convertible Preferred StockSold at par, convertible into 200,000 shares of common(adjusted for split).$1,000,000Stock OptionsExercisable at the option price of $25 per share. Average market price in 2010, $30 (market price and option price adjusted for split).60,000 sharesInstructions(a)Compute the basic earnings per share for 2010. (Round to the nearest penny.)
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