Liberty University ACCT 301 Connect Homework Chapter 4 answers perfection
Question 2
On December 31, 2021, the end of the fiscal year, Revolutionary Industries completed the sale of its
robotics business for $12.8 million. The robotics business segment qualifies as a component of the
entity according to GAAP. The book value of the assets of the segment was $8.9 million. The income
from operations of the segment during 2021 was $5.9 million. Pretax income from continuing
operations for the year totaled $13.9 million. The income tax rate is 25%.
Prepare the lower portion of the 2021 income statement beginning with income from continuing
operations before income taxes. Ignore EPS disclosures. (Amounts to be deducted and
negative amounts should be indicated with a minus sign. Enter your answers in whole dollars
and not in millions. For example, $4,000,000 rather than $4.)
Question 4
The following is a partial trial balance for General Lighting Corporation as of December 31, 2021:
There were 300,000 shares of common stock outstanding throughout 2021. Income tax expense has
not yet been recorded. The income tax rate is 25%.
Prepare a single-step income statement for 2021, including EPS disclosures.
Prepare a multiple-step income statement for 2021, including EPS disclosures.
Question 6
Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other
breeds and sells horses. Both divisions are considered separate components as defined by generally
accepted accounting principles. The horse division has been unprofitable, and, on November 15,
2021, Kandon adopted a formal plan to sell the division. The sale was completed on April 30, 2022.
At December 31, 2021, the component was considered held for sale.
Prepare a partial income statement for 2021 beginning with income from continuing operations.
Ignore EPS disclosures.
Prepare a partial income statement for 2021 beginning with income from continuing operations.
Assume that the estimated net fair value of the horse division’s assets was $660,000, instead of
$330,000. Ignore EPS disclosures.
Inventory that had cost $48,000 had become obsolete because a competitor introduced a better
product. The inventory was written down to its scrap value of $8,000.
Income taxes have not yet been recorded.
Prepare a multiple-step income statement for the Reed Company for 2021, showing 2020
information in comparative format, including income taxes computed at 25% and EPS disclosures
assuming 500,000 shares of outstanding common stock. (Amounts to be deducted should be
indicated with a minus sign. Round EPS answers to 2 decimal places.)
Question 8
For the year ending December 31, 2021, Olivo Corporation had income from continuing operations
before taxes of $1,250,000 before considering the following transactions and events. All of the items
described below are before taxes and the amounts should be considered material.
In November 2021, Olivo sold its PizzaPasta restaurant chain that qualified as a component of an
entity. The company had adopted a plan to sell the chain in May 2021. The income from operations
of the chain from January 1, 2021, through November was $165,000 and the loss on sale of the
chain’s assets was $310,000.
Question 9
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income
statement for the year ended December 31, 2021, appears below:
The following balance sheet information also is available:
In addition, the following transactions took place during the year:
Common stock was issued for $106,000 in cash.
Long-term investments were sold for $53,000 in cash. The original cost of the investments also was
$53,000.
1. Prepare a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct
method for reporting operating activities.
2. Prepare the cash flows from operating activities section of Diversified’s 2021 statement of cash
flows using the indirect method.
Question 1
The following is a partial year-end adjusted trial balance.
Income tax expense has not yet been recorded. The income tax rate is 25%.
a. Determine the operating income (loss).
b. Determine the income (loss) before income taxes.
c. Determine the net income (loss).
Question 3
On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the
sale of its semiconductor business for $16 million. The semiconductor business segment qualifies as
a component of the entity according to GAAP. The book value of the assets of the segment was $15
million. The loss from operations of the segment during 2021 was $3.9 million. Pretax income from
continuing operations for the year totaled $5.8 million. The income tax rate is 25%.
Prepare the lower portion of the 2021 income statement beginning with income from continuing
operations before income taxes. Ignore EPS disclosures. (Amounts to be deducted and negative
amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in
millions.)
Question 5
Chance Company had two operating divisions, one manufacturing farm equipment and the other
office supplies. Both divisions are considered separate components as defined by generally accepted
accounting principles. The farm equipment component had been unprofitable, and on September 1,
2021, the company adopted a plan to sell the assets of the division. The actual sale was completed
on December 15, 2021, at a price of $770,000. The book value of the division’s assets was
$1,350,000, resulting in a before-tax loss of $580,000 on the sale.
The division incurred a before-tax operating loss from operations of $270,000 from the beginning of
the year through December 15. The income tax rate is 25%. Chance’s after-tax income from its
continuing operations is $720,000.
Prepare an income statement for 2021 beginning with income from continuing operations. Include
appropriate EPS disclosures assuming that 100,000 shares of common stock were outstanding
throughout the year. (Amounts to be deducted should be indicated with a minus sign. Round EPS
answers to 2 decimal places.)
Question 7
Selected information about income statement accounts for the Reed Company is presented below
(the company's fiscal year ends on December 31):
On July 1, 2021, the company adopted a plan to discontinue a division that qualifies as a component
of an entity as defined by GAAP. The assets of the component were sold on September 30, 2021, for
$80,000 less than their book value. Results of operations for the component (included in the above
account balances) were as follows:
In addition to the account balances above, several events occurred during 2021 that have not yet
been reflected in the above accounts:
A fire caused $58,000 in uninsured damages to the main office building. The fire was considered to
be an unusual event.
In 2021, Olivo sold one of its six factories for $1,300,000. At the time of the sale, the factory had a
book value of $1,150,000. The factory was not considered a component of the entity.
In 2019, Olivo’s accountant omitted the annual adjustment for patent amortization expense of
$125,000. The error was not discovered until December 2021.
Prepare Olivo’s income statement, beginning with income from continuing operations before taxes,
for the year ended December 31, 2021. Assume an income tax rate of 25%. Ignore EPS disclosures.
(Amounts to be deducted should be indicated with a minus sign.)
$83,000 in cash dividends was paid to shareholders.
The company has no outstanding debt, other than those payables listed above.
Operating expenses include $33,000 in depreciation expense.
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