Answer:
Nippon Technology
Value of Cash between January 1 and March 31, 2018:
= $1,737,000
Explanation:
a) Calculations:
Beginning Cash Balance $37,000
Net Income 2,400,000
Increase in other assets ($300,000)
Decrease in Liabilities ($200,000)
Dividends paid ($200,000)
Ending Cash balance $1,737,000
b) Nippon Technology's cash balance at the end of March 31, 2018 is the net effect of cash transactions that took place between January 1, 2018 and March 31, 2018. It shows what Nippon Technology received in the form of cash receipts from customers and what it spent in operational, investing, and financing activities during the period of 3 months.
Answer:
a. Calculate the balance in retained earnings at the time of the change (beginning of 2017) as it would have been reported had FIFO been previously used.
b. Prepare the journal entry to record the change in accounting principle at the beginning of 2017.
- Dr Inventory 80,000
- Cr Income taxes payable 16,800
- Cr Retained earnings 63,200
Explanation:
inventory under FIFO would have been $80,000 higher, that means that COGS were overstated by $80,000 and net earnings were understated by $80,000.
retained earnings 2016 = $1,750,000
tax rate 21%
Dr Inventory 80,000
Income taxes payable 16,800
Retained earnings 63,200
Retained earnings = $1,750,000 + $63,200 = $1,813,200
When companies change from LIFO to FIFO, they must adjust their income statement and balance sheet in a prospective way because it will affect the future value of their accounts. But when a company changes from FIFO to LIFO, no adjustment is required.
Answer: a. additional paid-in capital to the extent that previous net "gains" from sales of the same class of stock are included therein; otherwise, from retained earnings.
Explanation:
When a stock is sold for higher than its par value, the additional value is recorded in the additional paid-in capital account as a gain to equity.
If a treasury stock is sold for less than its cost, the difference between the selling price and the cost will be deducted from the additional paid in capital account but the only amount that is deductible is the gain that the company has made so far from selling stock above their par value.
If the loss from the treasury stock is more than this gain, the remainder will be deducted from the retained earnings account.