I need help with this assignment, I am unsure of how to prepare the adjusting entries for this problem.

Purpose of this assignment:

1. Review the adjustment/correction process including sophisticated topics from accounting 350/351/352.
2. Prepare all of the financial statements in proper form.

These are foundational to this course and your career as accountants.

Setting:

You have been hired by Dillard to prepare adjusting entries and financial statements for 2018.Previously Rinky Dink Accounting had been performing such tasks.

The following information was gathered through examination of the books of Dillard Company and through discussions with its employees.You are to prepare the income statement, statement of stockholders' equity, statement of cash flows, balance sheet; all in proper formYou have the option of preparing a statement of comprehensive income or to incorporate that into the statement of stockholders' equity.Refer to your intermediate accounting textbook for form questions.Ignore tax effects.

As support to your financial statements, provide in good order your adjusting/correcting entries with detailed computations.

The trial balance at 12/31/18 before you work your magic and the balance sheet at 12/31/17 are included in a separate excel file.

1. A. The investments account at 12/31/18 contains stocks that were all purchased during 2018.In discussions with the CFO, you determine that they were made to invest excess cash.The company expects that they will need the cash within the next year.Here is information that you gather regarding that portfolio:

Company Initial Investment Cost Market Value at 12/31/18

DAG $400 $408

GLS 50 55

HRG 80 78

B. You also discuss with the CFO the Investment in Timberside Corporation.You discover that this Investment was first made 2 years ago on 1/1/17 and that the investment cost was $900.The investment in 35% of the voting stock of Timberside was made in order to be able to have representation on its board since Timberside is a key supplier of the inventory that Dillard sells.Dillard wants to have a say in the quality control and other decisions that Timberside makes.You dig around and realize that the $900 investment cost was exactly equal to 35% of the book value of equity of Timberside on 1/1/17.You also determine that Dillard has been recording dividend revenue when it receives payment.During 2017, Dillard received $30 in dividends and in 2018$40.Timberside has reported income during 2017 and 2018 of $400 and $380 respectively.

1. You also discover that the Pink Panther Product Line was sold on 6/30/18.This did not result in any decline in plant and equipment, however, the Pink Panther trademark was a part of the sale.You also are able to determine that sales related to Pink Panther for 2018 were $350, CGS was $300, Salaries Expense was $25.

1. You discover that the company entered into an agreement with AG to lease equipment from AG for 10 years.The agreement, structured as an annuity due, dated 1/1/16 required 10 payments, the first due on 1/1/16 and then annually on 12/31 of each year (including 12/31/16).The payments are $100 each.The normal life of the equipment is 12 years.There was guaranteed residual value of $125 related to the lease.A reasonable interest for such a lease is 10%

1. The bond payable was sold on 1/1/16 for $1,067.22.The bond maturity value is $1,000 and the coupon rate is 8% payable semi-annually on July 1 and December 31.The original maturity term was 10 years.

1. Dillard recorded its contribution into its pension plan as Prepaid Pensionthis year and has made no other entries related to the pension this year.In examining last year's financials you note the following in the footnotes.

Projected Pension Benefit Obligation($2,200)

Plan Assets2,000

Unfunded Pension(200)

Unamortized Prior service cost200

Prepaid pension0

In discussions with the actuary you determine the following:

2018, service cost is $185,

The discount rate used to compute the PBO is 8%

At 12/31/17, 8 years remained related to the prior service cost.

The company assumes an expected return on its pension assets of 9%.

Funding is always on 12/31 of each year.

The plan asset value at the end of 2018 after the funding was$2,570

Assume that the pension expense was properly recorded in 2017.

Assume that no benefits were paid to retirees in 201.

1. The company uses the percentage of accounts receivable method and historically does not collect 10% of its ending accounts receivable

1. Additional information: Dillard purchased equipment for $400 cash this year.This transaction was properly recorded.

1. You discover that the ending inventory for 2016, 2017 and 2018 were all wrong.This is first detected by you this year.Inventory on 12/31/16 was understated by $500, on 12/31/17 understated by $125 and on 12/31/18 overstated by $50.These appear to be independent errors.

1. On 1/1/16, Dillard granted 100,000 stock options to its executives with an exercise price of $10.The options were exercisable beginning on 1/1/18.As of 12/31/18, 40% of the stock options have been exercised.The fair value per option on 1/1/16 was $3.Dillard did not record any stock compensation expense for 2016, 2017 or 2018.

1. Dillard wants you to as best as possible use the theoretically best approaches to accounting for its transactions as well as GAAP.