1 Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method The inventory as reported at the end of 2017 using LIFO would have been $19 million higher using FIFO Retained earnings reported at the end of 2016 and 2017 was $239 million and $259 million, respectively (reflecting the LIFO method) Those amounts reflecting the FIFO method would have been $249 million and $271 million, respectively 2017 net income reported at the end of 2017 was $27 million (LIFO method) but would have been $29 million using FIFO After changing to FIFO, 2018 net income was $35 million Dividends of $7 million were paid each year The tax rate is 40 Required 1 Prepare the journal entry at the beginning of 2018 to record the change in accounting principle 2 In the 2018 2017 comparative income statements, what will be the amounts of net income reported for 2017 and 2018 3 Prepare the 2018 2017 retained earnings column of the comparative statements of shareholders' equity 2 Following are selected balance sheet accounts of Del Conte Corp at December 31, 2018 and 2017, and the increases or decreases in each account from 2017 to 2018 Also presented is selected income statement information for the year ended December 31, 2018, and additional information Selected Balance Sheet Accounts20182017Increase (Decrease) Assets Accounts receivable$56,000$35,000$21,000Property, plant, and equipment299,000258,00041,000Accumulated depreciation(200,000)(178,000)22,000 Liabilities and Stockholders' Equity Bonds payable82,00068,00014,000Dividends payable13,5009,4004,100Common stock, $1 par44,00030,00014,000Additional paid in capital14,5007,4007,100Retained earnings126,000102,00024,000 Selected Income Statement Information for the Year Ended December 31, 2018 Sales revenue$177,000Depreciation55,000Gain on sale of equipment18,500Net income50,000 Additional information Accounts receivable relate to sales of merchandise During 2018, equipment costing $62,000 was sold for cash During 2018, bonds payable with a face value of $42,000 were issued in exchange for property, plant, and equipment There was no amortization of bond discount or premium Required Items 1 through 5 represent activities that will be reported in Del Conte's statement of cash flows for the year ended December 31, 2018 The following two responses are required for each item Determine the amount that should be reported in Del Conte's 2018 statement of cash flows Select the category (i e , O Operating activity, I Investing activity and F Financing activity)in which the amount should be reported in the statement of cash flows 3 In preparation for developing its statement of cash flows for the year ended December 31, 2018, Rapid Pac, Inc , collected the following information ($ in millions)Fair value of shares issued in a stock dividend$120 0Payment for the early extinguishment of long term bonds (book value $94 0 million)99 0Proceeds from the sale of treasury stock (cost $30 0million)35 0Gain on sale of land3 9Proceeds from sale of land11 7Purchase of Microsoft common stock168 0Declaration of cash dividends64 0Distribution of cash dividends declared in 201761 0 Required 1 In Rapid Pac's statement of cash flows, what were net cash inflows (or outflows) from investing activities for 2018 2 In Rapid Pac's statement of cash flows, what were net cash inflows (or outflows) from financing activities for 2018 4 Wilson Foods Corporation leased a commercial food processor on September 30, 2018 The five year finance lease agreement calls for Wilson to make quarterly lease payments of $156,619, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2018 Wilson's incremental borrowing rate is 12 Wilson records depreciation on a straight line basis at the end of each fiscal year Wilson recorded the lease as follows September 30, 2018Right of use asset (calculated below)2,400,000Lease payable (calculated below)2,400,000Lease payable156,619Cash (first payment)156,619 Calculation of the present value of lease payments $156,619 15 32380 $2,400,000 (rounded) Present value of an annuity due of $1 n 20, i 3 Required What would be the pretax amounts related to the lease that Wilson would report in its statement of cash flows for the year ended December 31, 2018 (Cash outflows should be indicated by a minus sign Do not round your intermediate calculations Enter your answers in whole dollars )

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1.. Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The

1.. Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The inventory as reported at the end of 2017 using LIFO would have been $19 million higher using FIFO.

Retained earnings reported at the end of 2016 and 2017 was $239 million and $259 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $249 million and $271 million, respectively. 2017 net income reported at the end of 2017 was $27 million (LIFO method) but would have been $29 million using FIFO. After changing to FIFO, 2018 net income was $35 million. Dividends of $7 million were paid each year. The tax rate is 40%.

Required:

1.Prepare the journal entry at the beginning of 2018 to record the change in accounting principle.

2.In the 2018-2017 comparative income statements, what will be the amounts of net income reported for 2017 and 2018?

3.Prepare the 2018-2017 retained earnings column of the comparative statements of shareholders' equity.

2.. Following are selected balance sheet accounts of Del Conte Corp. at December 31, 2018 and 2017, and the increases or decreases in each account from 2017 to 2018. Also presented is selected income statement information for the year ended December 31, 2018, and additional information.

Selected Balance Sheet Accounts20182017Increase

(Decrease)AssetsAccounts receivable$56,000$35,000$21,000Property, plant, and equipment299,000258,00041,000Accumulated depreciation(200,000)(178,000)22,000Liabilities and Stockholders' EquityBonds payable82,00068,00014,000Dividends payable13,5009,4004,100Common stock, $1 par44,00030,00014,000Additional paid-in capital14,5007,4007,100Retained earnings126,000102,00024,000Selected Income Statement Information for the Year Ended December 31, 2018Sales revenue$177,000Depreciation55,000Gain on sale of equipment18,500Net income50,000

Additional information:

Accounts receivable relate to sales of merchandise.
During 2018, equipment costing $62,000 was sold for cash.
During 2018, bonds payable with a face value of $42,000 were issued in exchange for property, plant, and equipment. There was no amortization of bond discount or premium.

Required:

Items 1 through 5 represent activities that will be reported in Del Conte's statement of cash flows for the year ended December 31, 2018. The following two responses are required for each item:

Determine the amount that should be reported in Del Conte's 2018 statement of cash flows.
Select the category (i.e., O - Operating activity, I - Investing activity and F - Financing activity)in which the amount should be reported in the statement of cash flows.

3.. In preparation for developing its statement of cash flows for the year ended December 31, 2018, Rapid Pac, Inc., collected the following information:

($ in millions)Fair value of shares issued in a stock dividend$120.0Payment for the early extinguishment of

long-term bonds (book value: $94.0 million)99.0Proceeds from the sale of treasury stock (cost: $30.0million)35.0Gain on sale of land3.9Proceeds from sale of land11.7Purchase of Microsoft common stock168.0Declaration of cash dividends64.0Distribution of cash dividends declared in 201761.0

Required:

1.In Rapid Pac's statement of cash flows, what were net cash inflows (or outflows) from investing activities for 2018?

2.In Rapid Pac's statement of cash flows, what were net cash inflows (or outflows) from financing activities for 2018?

4.. Wilson Foods Corporation leased a commercial food processor on September 30, 2018. The five-year finance lease agreement calls for Wilson to make quarterly lease payments of $156,619, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2018. Wilson's incremental borrowing rate is 12%. Wilson records depreciation on a straight-line basis at the end of each fiscal year. Wilson recorded the lease as follows:

September 30, 2018Right-of-use asset (calculated below)2,400,000Lease payable (calculated below)2,400,000Lease payable156,619Cash (first payment)156,619

Calculation of the present value of lease payments

$156,619 15.32380* = $2,400,000 (rounded)

*Present value of an annuity due of $1:n= 20,i= 3%

Required:

What would be the pretax amounts related to the lease that Wilson would report in its statement of cash flows for the year ended December 31, 2018?(Cash outflows should be indicated by a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars.)