On January 1, 2013, Heckert Company purchases a controlling interest in Aker Company. The following information is available: a. Heckert Company purchases 1,600 shares of Aker Company outstanding stock on January 1, 2012, for $48,000 and purchases an additional 1,400 shares on January 1, 2013, for $51,800. b. An analysis of the stockholders’ equity accounts at December 31, 2012, and 2011, follows: c. Aker Company’s marketable securities consist of 1,500 shares of Heckert Company stock purchased on June 15, 2013, in the open market for $18,000. The securities are purchased as a temporary investment and are sold on January 15, 2014, for $25,000. d. On December 10, 2013, Heckert Company declares a cash dividend of $0.50 per share, payable January 10, 2014, to stockholders of record on December 20, 2013. Aker Company pays a cash dividend of $1 per share on June 30, 2013, and distributes a 10% stock dividend on September 30, 2013. The stock is selling for $15 per share ex-dividend on September 30, 2013. Aker Company pays no dividends in 2012. e. Aker Company sells machinery, with a book value of $4,000 and a remaining life of five years, to Heckert Company for $4,800 on December 31, 2013. The gain on the sale is credited to the other income account. f. Aker Company includes all intercompany receivables and payables in its trade accounts receivable and trade accounts payable accounts. g. During 2013, the following intercompany sales are made: Heckert Compa

Arma Company sells equipment on September 30, 2014, for $20,000 cash. The equipment originally cost $72,000 and as of January 1, 2014, had accumulated depreciation of $42,000. Depreciation for the first 9 months of 2014 is $4,800. Prepare the journal entries to (a) Update depreciation to September 30, 2014, (b) Record the sale of the equipment.View Solution:
Arma Company sells equipment on September 30 2014 for 20 000

The financial statements of The Hershey Company are presented in Appendix B, following the financial statements for Tootsie Roll Industries in Appendix A.

Instructions

(a) Based on the information in these financial statements, compute these 2009 ratios for each company:

(1) Current cash debt coverage.

(2) Cash debt coverage.

(b) What conclusions about the management of cash can you draw from these data?

1. Use the following information to compute profit margin for each separate company a through e.

Net Income         Net Sales Net                     Income                 Net Sales

a.            $ 5,390                 $ 44,830                               d. $55,234           $1,458,999

b.            87,644                  398,954                                e. 70,158             435,925

c.             93,385                  257,082

Which of the five companies is the most profitable according to the profit margin ratio? Interpret that company’s profit margin ratio.

2. If your company pays a $4,800 premium on April 1, 2011, for two years’ insurance coverage, how much insurance expense is reported in 2012 using cash basis accounting?

A company estimates $10M in direct labor and overhead costs for the next year will be $7,500,000 for indirect labor and $650,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 250,000 machine hours are planned for this next year, what is the company’s plantwide overhead rate?A. $.0306 per machine hour. B. $32.60 per machine hour. C. $30.00 per machine hour. D. $2.600 per machine hour. E. $.0137 per machine hour.