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Use this information to answer the following questions:
The trial balance of Rollins Inc. included the following accounts as of December 31, 2018:
Debits Credits
Sales revenue 5,900,000
Interest revenue 40,000
Loss on sale of investments 10,000
Unrealized holding losses on investments 150,000
Foreign currency translation adjustment 260,000
Cost of goods sold 4,400,000
Selling expenses 400,000
Restructuring costs 180,000
Interest expense 20,000
General and administrative expenses 300,000
Rollins had 100,000 shares of stock outstanding throughout the year. Income tax expense has not
yet been accrued. The effective tax rate is 40%.
175) Required: Prepare a 2018 multiple-step income statement for Rollins Inc. with earnings per
share disclosure.
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176) Required: Prepare a 2018 separate statement of comprehensive income for Rollins Inc.
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177) Required: Prepare a 2018 single, continuous statement of comprehensive income for
Rollins Inc. Use a multiple-step income statement format.
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178) Calstone, Inc., prepares a single, continuous statement of comprehensive income. The
following situations occurred during the company’s 2018 fiscal year:
1. Land that had been held as an investment was sold and a gain was recognized.
2. There was a negative foreign currency translation adjustment at December 31, 2018.
3. Interest revenue was recognized.
4. A division was sold that qualifies as a separate component according to GAAP regarding
discontinued operations.
5. There were unrealized holding losses on investments during the year.
6. Restructuring costs were incurred due to downsizing and reorganization of a
manufacturing facility.
Required:
For each situation, identify the appropriate reporting treatment from the list below (consider each
event to be material).
a. As a component of operating income.
b. As a nonoperating income item (other income or expense).
c. As a discontinued operation.
d. As an item of other comprehensive income.
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179) The following information is for Redwood Inc. for the year ended December 31, 2018.
Redwood had a balance for cash and cash equivalents of $5,200 on January 1, 2018.
Cash received from:
Customers $ 1,900
Interest on investments 200
Sale of land 100
Sale of common stock 600
Issuance of debt securities 2,000
Cash paid for:
Interest on debt $ 300
Income tax 80
Debt principal reduction 1,500
Purchase of equipment 4,100
Purchase of inventory 1,000
Dividends on common stock 200
Operating expenses 500
Required: Prepare a statement of cash flows for the year using the direct method for operating
activities.
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180) The chief accountant for Julius Co. provides you with the company’s most recent income
statement and comparative balance sheets below. The accountant has asked for your help in
preparing part of the company’s 2018 statement of cash flows.
2018 Income Statement ($ in thousands)
Sales revenue $5,000
Depreciation expense 280
3,720
Selling & administrative expenses 4,000
Income before taxes 1,000
Income tax expense 300
Net income $700
Balance Sheet (all $ in thousands) 12/31/2018 12/31/2017
Cash $800 $750
Accounts receivable 450 365
Property, plant & equipment 1,900 1,450
Less: Accumulated depreciation ( 800) (520)
$2,350 $2,045
Accrued liabilities for selling & administration expenses 300 325
Income taxes payable 180 130
Common stock 700 700
Retained earnings 1,170 890
$2,350 $2,045
Required:
In the space provided below, determine the cash flow from operating activities for Julius Co.,
using the direct method.
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181) The accounting records of Rockness Company provided the data below ($ in 000s).
Net income $25,200
Depreciation and amortization expense 3,300
Decrease in accounts receivable 2,000
Increase in inventory 4,500
Increase in prepaid insurance 300
Increase in salaries payable 900
Decrease in interest payable 400
Required:
Prepare a reconciliation of net income to net cash flows from operating activities.
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182) The statement of cash flows for the year ended December 31, 2018, for Whiteside
Incorporated is presented below.
Whiteside Incorporated
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash flows from operating activities:
Collections from customers $420,000
Interest on note receivable 12,000
Dividends received 4,500
Purchase of inventory (156,000)
Payment of operating expenses (83,000)
Payment of interest on debt (16,000)
Net cash flows from operating activities $181,500
Cash flows from investing activities:
Sale of investments 42,000
Purchase of equipment (180,000)
Net cash flows from investing activities (138,000)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 200,000
Purchase of treasury stock (140,000)
Dividends paid (50,000)
Net cash flows from financing activities 10,000
Net increase in cash 53,500
Cash and cash equivalents, January 1 68,900
Cash and cash equivalents, December 31 $122,400
Required:
Prepare the statement of cash flows assuming that Whiteside prepares its financial statements
according to International Financial Reporting Standards (IFRS). Where IFRS allows flexibility,
use the classification used most often in IFRS financial statements.
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Use this information to answer the following questions:
Missoula Inc. reported the following selected financial statement data:
Dec 31, 2017 Dec 31, 2018
Cash $ 30,000 $ 32,000
Accounts receivable (net) 48,000 52,000
Inventory 68,000 72,000
Plant assets (net) 210,000 218,000
Total assets 405,000 395,000
Liabilities 145,000 145,000
Shareholders’ equity 260,000 250,000
Net sales 340,000 400,000
Cost of goods sold 220,000 280,000
Net income 20,000 25,000
183) Required: Compute the receivables turnover ratio for 2018.
Answer: $400,000 / [($48,000 + 52,000)/2] = 8.0
184) Required: Compute the inventory turnover ratio for 2018.
Answer: $280,000 / [($68,000 + 72,000)/2] = 4.0
185) Required: Compute the asset turnover ratio for 2018.
Answer: $400,000 / [$405,000 + 395,000)/2] = 1.0