Prepare Wertz’s 2014 journal entry to record the change in accounting principle.

Wertz Construction Company decided at the beginning of 2014 to change from the completed-contract method to the percentage-of-completion method for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2014, pretax income under the two methods was as follows: percentage-of-completion $120,000, and completed-contract $80,000. The tax rate is 35%.

Prepare Wertz’s 2014 journal entry to record the change in accounting principle. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Account Titles and Explanation
Debit
Credit

Brief Exercise 22-6

In 2014, Bailey Corporation discovered that equipment purchased on January 1, 2012, for $50,000 was expensed at that time. The equipment should have been depreciated over 5 years, with no salvage value. The effective tax rate is 30%.

Prepare Bailey’s 2014 journal entry to correct the error. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Account Titles and Explanation
Debit
Credit

Brief Exercise 22-7

At January 1, 2014, Beidler Company reported retained earnings of $2,000,000. In 2014, Beidler discovered that 2013 depreciation expense was understated by $400,000. In 2014, net income was $900,000 and dividends declared were $250,000. The tax rate is 40%.

Prepare a 2014 retained earnings statement for Beidler Company.

BEIDLER COMPANY

Retained Earnings Statement

For the Year Ended December 31, 2014

$

:

:

:

$

Brief Exercise 22-11

Simmons Corporation owns stock of Armstrong, Inc. Prior to 2014, the investment was accounted for using the equity method. In early 2014, Simmons sold part of its investment in Armstrong, and began using the fair value method. In 2014, Armstrong earned net income of $80,000 and paid dividends of $95,000.

Prepare Simmons’s entries related to Armstrong’s net income and dividends, assuming Simmons now owns 10% of Armstrong’s stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Account Titles and Explanation
Debit
Credit

Brief Exercise 16-13

DiCenta Corporation reported net income of $270,000 in 2014 and had 50,000 shares of common stock outstanding throughout the year. Also outstanding all year were 5,000 shares of cumulative preferred stock, each convertible into 2 shares of common. The preferred stock pays an annual dividend of $5 per share. DiCenta’s tax rate is 40%.

Compute DiCenta’s 2014 diluted earnings per share. (Round answer to 2 decimal places, e.g. $3.55.)

Diluted earnings per share
$

Brief Exercise 20-1

AMR Corporation (parent company of American Airlines) reported the following for 2011 (in millions).

Service cost $366
Interest on P.B.O. 737
Return on plan assets 593
Amortization of prior service cost 13
Amortization of net loss 154

Compute AMR Corporation’s 2011 pension expense.

Pension expense
$

millions

Brief Exercise 20-2

For Warren Corporation, year-end plan assets were $2,000,000. At the beginning of the year, plan assets were $1,780,000. During the year, contributions to the pension fund were $120,000, and benefits paid were $200,000.

Compute Warren’s actual return on plan assets.

Actual return on plan assets
$

Brief Exercise 20-4

For 2012, Campbell Soup Company had pension expense of $73 million and contributed $71 million to the pension fund.

Prepare Campbell Soup Company’s journal entry to record pension expense and funding. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Enter amounts in millions. Ex: 10,000,000 is to be imputed as 10, eliminating the 000,000.)

Account Titles and Explanation
Debit
Credit

Brief Exercise 17-10

Hillsborough Co. has an available-for-sale investment in the bonds of Schuyler Corp. with a carrying (and fair) value of $70,000. Hillsborough determined that due to poor economic prospects for Schuyler, the bonds have decreased in value to $60,000. It is determined that this loss in value is other-than-temporary.

Prepare the journal entry, if any, to record the reduction in value. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

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