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Van Hatten Consolidated has three operating divisions: DeMent Publishing Division, Ankiel Securities Division, and Depp Advisory Division. Each division maintains its own accounting system. DeMent Publishing Division The DeMent Publishing Division sells large volumes of novels to a few book distributors, which in turn sell to several national chains of bookstores. DeMent allows distributors to return up to 30% of sales, and distributors give the same terms to bookstores. While returns from individual titles fluctuate greatly, the returns from distributors have averaged 20% in each of the past 5 years. A total of $6,620,000 of paperback novel sales were made to distributors during fiscal 2014. On November 30, 2014 (the end of the fiscal year), $1,570,000 of fiscal 2014 sales were still subject to return privileges over the next 6 months. The remaining $5,050,000 of fiscal 2014 sales had actual returns of 21%. Sales from fiscal 2013 totaling $1,870,000 were collected in fiscal 2014 less 18% returns. This division records revenue according to the revenue recognition method when the right of return exists. Ankiel Securities Division The Ankiel Securities Division works through manufacturers? agents in various cities. Orders for alarm systems and down payments are forwarded from agents, and the division ships the goods f.o.b. factory directly to customers (usually police departments and security guard companies). Customers are billed directly for the balance due plus actual shipping costs. The company received orders for $6,180,000 of goods during the fiscal year ended November 30, 2014. Down payments of $618,000 were received, and $5,440,000 of goods were billed and shipped. Actual freight costs of $103,000 were also billed. Commissions of 10% on product price are paid to manufacturing agents after goods are shipped to customers. Such goods are warranted for 90 days after shipment, and warranty returns have been about 1% of sales. Revenue is recognized at the point of sale by this division. Depp Advisory Division The Depp Advisory Division provides asset management services. This division grew out of Van Hatten?s own treasury and asset management operations that several of its customers asked to have access to. On January 1, 2014, Depp entered into a contract with Scutaro Co. to perform asset management services for 1 year. Depp receives a quarterly management fee of 0.25% of Scutaro?s assets under management at the end of each quarter. In addition, Depp receives a performance-based incentive fee of 20% of the fund?s annual return in excess of the return of the S&P 500 index at the end of the quarter (multiplied by the assets under management at quarter-end). At the end of the first quarter of 2014, Depp was managing $2,400,000 of Scutaro assets. The annualized return on the portfolio was 6.2% (the S&P 500 index had an annualized return of 5.7%). (b) Compute the revenue to be recognized in fiscal year 2014 for each of the three operating divisions of Van Hatten in accordance with generally accepted accounting principles.

Operating Division
DeMent Publishing Division - Revenue to be recognized in fiscal year 2014	$
Ankiel Securities Division - Revenue to be recognized in fiscal year 2014	$
Depp Advisory Division - Revenue for 1st Quarter of fiscal year 2014	$

1. On January 2, 2014, Jones Company purchases a call option for $490 on Merchant common stock. The call option gives Jones the option to buy 1,020 shares of Merchant at a strike price of $68 per share. The market price of a Merchant share is $68 on January 2, 2014 (the intrinsic value is therefore $0). On March 31, 2014, the market price for Merchant stock is $71 per share, and the time value of the option is $155. (a) Prepare the journal entry to record the purchase of the call option on January 2, 2014. (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.) Date Account Titles and Explanation Debit Credit Jan. 2, 2014 (b) Prepare the journal entries to recognize the change in the fair value of the call option as of March 31, 2014. (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.) Date Account Titles and Explanation Debit Credit Mar. 31, 2014 (To record the time value change.) Mar. 31, 2014 (To record the change in intrinsic value.) (c) What was the effect on net income of entering into the derivative transaction for the period January 2 to March 31, 2014? Unrealized Holding $ 2. During 2014, Nilsen Company started a construction job with a contract price of $1,648,000. The job was completed in 2016. The following information is available. Costs incurred to date Estimated costs to complete Billings to date Collections to date 2014 $412,000 2015 $849,750 2016 $1,102,100 618,000 283,250 -0- 309,000 278,100 927,000 834,300 1,648,000 1,467,750 Compute the amount of gross profit to be recognized each year, assuming the percentage-ofcompletion method is used. 2014 2015 $ 2016 $ $ Gross profit recognized SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare all necessary journal entries for 2015, assuming all costs are on account. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation (To record costs of construction) Debit Credit (To record progress billings) (To record collections) (To recognize revenue and gross profit) 2. Van Hatten Consolidated has three operating divisions: DeMent Publishing Division, Ankiel Securities Division, and Depp Advisory Division. Each division maintains its own accounting system. DeMent Publishing Division The DeMent Publishing Division sells large volumes of novels to a few book distributors, which in turn sell to several national chains of bookstores. DeMent allows distributors to return up to 30% of sales, and distributors give the same terms to bookstores. While returns from individual titles fluctuate greatly, the returns from distributors have averaged 20% in each of the past 5 years. A total of $6,620,000 of paperback novel sales were made to distributors during fiscal 2014. On November 30, 2014 (the end of the fiscal year), $1,570,000 of fiscal 2014 sales were still subject to return privileges over the next 6 months. The remaining $5,050,000 of fiscal 2014 sales had actual returns of 21%. Sales from fiscal 2013 totaling $1,870,000 were collected in fiscal 2014 less 18% returns. This division records revenue according to the revenue recognition method when the right of return exists. Ankiel Securities Division The Ankiel Securities Division works through manufacturers' agents in various cities. Orders for alarm systems and down payments are forwarded from agents, and the division ships the goods f.o.b. factory directly to customers (usually police departments and security guard companies). Customers are billed directly for the balance due plus actual shipping costs. The company received orders for $6,180,000 of goods during the fiscal year ended November 30, 2014. Down payments of $618,000 were received, and $5,440,000 of goods were billed and shipped. Actual freight costs of $103,000 were also billed. Commissions of 10% on product price are paid to manufacturing agents after goods are shipped to customers. Such goods are warranted for 90 days after shipment, and warranty returns have been about 1% of sales. Revenue is recognized at the point of sale by this division. Depp Advisory Division The Depp Advisory Division provides asset management services. This division grew out of Van Hatten's own treasury and asset management operations that several of its customers asked to have access to. On January 1, 2014, Depp entered into a contract with Scutaro Co. to perform asset management services for 1 year. Depp receives a quarterly management fee of 0.25% of Scutaro's assets under management at the end of each quarter. In addition, Depp receives a performance-based incentive fee of 20% of the fund's annual return in excess of the return of the S&P 500 index at the end of the quarter (multiplied by the assets under management at quarter-end). At the end of the first quarter of 2014, Depp was managing $2,400,000 of Scutaro assets. The annualized return on the portfolio was 6.2% (the S&P 500 index had an annualized return of 5.7%). (b) Compute the revenue to be recognized in fiscal year 2014 for each of the three operating divisions of Van Hatten in accordance with generally accepted accounting principles. Operating Division $ DeMent Publishing Division - Revenue to be recognized in fiscal year 2014 $ Ankiel Securities Division - Revenue to be recognized in fiscal year 2014 $ Depp Advisory Division - Revenue for 1st Quarter of fiscal year 2014