Kindly provide detailed solution for these

Problem 1

Shown below is an income statement for 2017 that was prepared by a poorly trained bookkeeper

of Howell Corporation.

Howell Corporation

INCOME STATEMENT

December 31, 2017

Sales revenue $ 815,000

Investment revenue 19,500

Cost of goods sold (408,500)

Selling expenses (145,000)

Administrative expenses (195,000)

Interest expense (13,000)

Income before special items 73,000

Special items

Loss on disposal of a component of the business (40,000)

Net federal income tax liability (19,900)

Net income $ 23,100

Instructions

Prepare multiple-step income statement for 2017 for Howell Corporation that is presented in

accordance with generally accepted accounting principles (including format and terminology).

Howell Corporation has 50,000 shares of common stock outstanding and has a 30% federal

income tax rate on all tax related items. Round all earnings per share figures to the nearest cent.

Problem 2

Presented below is an income statement for Kinder Company for the year ended December 31,

2017.

Kinder Company

Income Statement

For the Year Ended December 31, 2017

Net sales $840,000

Costs and expenses:

Cost of goods sold 560,000

Selling, general, and administrative expenses 70,000

Other, net 40,000

Total costs and expenses 670,000

Income before income taxes 170,000

Income taxes 51,000

Net income $119,000

Additional information:

1. "Selling, general, and administrative expenses" included a usual but infrequent charge of

$7,000 due to a loss on the sale of investments.

2. "Other, net" consisted of interest expense, $10,000, and a discontinued operations loss of

$30,000 before taxes. If the discontinued operations loss had not occurred, income taxes for

2017 would have been $60,000 instead of $51,000.

4. Kinder had 40,000 shares of common stock outstanding during 2017.

Problem 3

Porter Corporation's capital structure consists of 50,000 shares of common stock. At December

31, 2017 an analysis of the accounts and discussions with company officials revealed the

following information:

Sales revenue $1,250,000

Discontinued operations loss (net of tax) 63,000

Selling expenses 128,000

Cash 60,000

Accounts receivable 90,000

Common stock 200,000

Cost of goods sold 700,000

Accumulated depreciation-machinery 180,000

Dividend revenue 8,000

Unearned service revenue 4,400

Interest payable 1,000

Land 370,000

Patents 100,000

Retained earnings, January 1, 2017 270,000

Interest expense 17,000

Administrative expenses 170,000

Dividends declared 24,000

Allowance for doubtful accounts 5,000

Notes payable (maturity 7/1/20) 200,000

Machinery 450,000

Materials 40,000

Accounts payable 60,000

The amount of income taxes applicable to income was $72,900, excluding the tax effect of the

discontinued operations loss which amounted to $27,000.

Instructions

(a) Prepare multiple-step income statement.

(b) Prepare retained earnings statement.

1. On April 30, 20x1, A, B and C formed a partnership. A contributed cash of 50,000. B contributed property with 36,000 carrying amount, 40,000 original cost and 80,000 fair value. The partnership accepted responsibility for the 35,000 mortgage attached to the property. C contributed equipment with 30,000 carrying amount, 75,000 original cost and 55,000 fair value. The partnership agreement specifies that profits and losses are to be shared equally but is silent regarding capital contributions. Which partner has the smallest April 30, 20x1 capital account balance?

2. A and B formed a partnership. The following are their contributions: A B Cash 200,000 - Accounts receivable 150,000 - Inventory 100,000 - Land 500,000 Building 620,000 Total 450,000 1,120,000 Note payable 220,000 A, capital 230,000 B, capital 1,120,000 Total 450,000 1,120,000 Additional information: The accounts receivable has a recoverable amount of 120,000. The inventory has an estimated selling price of 110,000 and estimated costs to sell of 20,000. The land has a fair value of 500,000 an unpaid mortgage of 120,000. The partners agreed that B shall settle the mortgage using his personal funds. The building is over-depreciated by 30,000. The building also has an unpaid mortgage amounting to 550,000. The partners agreed that the partnership shall assume repayment of the mortgage. The note payable has a fair value of 210,000. A and B shall share in profits and losses 40% and 60%, respectively. How much are the adjusted capital balances of A and B, respectively?

3. A and B agreed to form a partnership. A shall contribute 60,000 cash while B shall contribute 120,000 cash. However due to the expertise that A will be bringing to the partnership, the partners agreed that they should initially have an equal interest in the partnership capital. Under the bonus method, how much is the adjusted capital balance of B immediately after the formation of the partnership?

4. A, B and C formed a partnership. Their contributions are as follows: A B C Cash 50,000 40,000 140,000 Equipment 150,000 Totals 50,000 190,000 140,000 Additional information: Although C has contributed the most cash to the partnership, he did not have the full amount of 140,000 available and was forced to borrow 40,000. The partners agreed that half of the amount borrowed shall be assumed by the partnership. The equipment contributed by B has an unpaid mortgage of 20,000, the repayment of which is not assumed by the partnership. The partners agreed to equalize their interests. Cash settlements among the partners are to be made outside the partnership. Which partner(s) shall receive cash payment from the other partner(s)?

5. A and B agreed to form a partnership. The partnership agreement stipulates the following: Initial capital of 300,000. A 25:75 interest in the equity of the partnership. A contributed 100,000 cash, while B contributed 200,000 cash. Which partner should provide additional investment (or withdraw part of his investment) in order to bring the partners' capital credits equal to their respective interests in the equity of the partnership?

1.1. Presented below is certain information pertaining to Madison Company.

Assets, January 1 $250,000

Assets, December 31 230,000

Liabilities, January 1 150,000

Common stock, December 31 90,000