Tuck Corporation Consolidated Statement of Income and Retained Earnings for 2013 (Problem 11) REVENUES AND GAINS Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,000,000 Gain on Sale of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 Rental Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,000 Dividend Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 Equity in Earnings of Unconsolidated Affiliates . . . . . . . . . . . . . . . . . . . 102,000 Total Revenues and Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,353,000 EXPENSES, LOSSES, AND DEDUCTIONS Cost of Goods Sold (Including Depreciation and Amortization) . . . . . . . . . $2,580,000 Selling and Administration Expenses (Including Depreciation and Amortization and Bad Debt Expense) . . . . . . . . . . . . . . . . . . . . . 1,102,205 Warranty Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,800 Interest Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,995 Loss on Sale of Marketable Equity Securities . . . . . . . . . . . . . . . . . . . . . 8,000 Income Tax Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 Total Expenses, Losses, and Deductions . . . . . . . . . . . . . . . . . . . . . . 4,053,000 Consolidated Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300,000 Less Dividends Declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (119,500) Increase in Retained Earnings for 2013 . . . . . . . . . . . . . . . . . . . . . . . . $ 180,500 Retained Earnings, December 31, 2012. . . . . . . . . . . . . . . . . . . . . . . . . 277,000 Retained Earnings, December 31, 2013. . . . . . . . . . . . . . . . . . . . . . . . . $ 457,500

studying these financial statements and notes, respond to each of the following questions and calculation requirements. Required a. Prepare an analysis that explains the change in the Marketable Equity Securities account during 2013. b. Calculate the proceeds from sales of marketable equity securities classified as current assets during 2013. c. Calculate the amount of the bad debt expense for 2013. d. Calculate the amount of cost of goods sold assuming Tuck Corporation used a FIFO cost-flow assumption. e. Give the journal entry (entries) to account for the change in the Investment in Thayer Corporation account during 2013. f. Calculate the amount of income or loss from the Investment in Thayer Corporation during 2013. g. Give the journal entry (entries) to account for the change in the Investment in Davis Corporation account during 2013. h. Refer to Note 5. Give the journal entry to record the sale of equipment during 2013. i. Refer to Note 9. Demonstrate that the $106,036 is the correct amount of the leasehold asset at the beginning of the lease term. j. Calculate the amount of cash received during 2013 for rental fees. k. Calculate the actual cost incurred to service customers warranties during 2013. l. Refer to Note 7. Calculate the amount of interest expense on the $1 million, 6% bonds for 2013

Tuck Corporation Consolidated Comparative Balance Sheets (Problem 11) December 31, 2013 December 31, 2012 ASSETS Current Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 278,000 $ 240,000 Marketable Securities (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,000 125,000 Accounts ReceivableNet (Note 2). . . . . . . . . . . . . . . . . . . . . . . . . 1,509,600 1,431,200 Inventories (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,525,315 1,257,261 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,000 28,000 Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,485,915 $3,081,461 Investments (Note 4) Investment in Thayer Corporation (15% owned). . . . . . . . . . . . . . . . . $ 87,000 $ 92,000 Investment in Hitchcock Corporation (30% owned) . . . . . . . . . . . . . . 135,000 120,000 Investment in Davis Corporation (40% owned) . . . . . . . . . . . . . . . . . 298,000 215,000 Total Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 520,000 $ 427,000 Property, Plant, and Equipment (Note 5) Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 82,000 $ 82,000 Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843,000 843,000 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,848,418 497,818 Leasehold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,036 106,036 Total Plant Assets at Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,879,454 $1,528,854 Less Accumulated Depreciation and Amortization. . . . . . . . . . . . . . . . (420,854) (383,854) Total Plant AssetsNet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,458,600 $1,145,000 Intangibles GoodwillNet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,000 $ 36,000 Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,500,515 $4,689,461 LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities Note Payable (Note 6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,000 $ 100,000 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723,700 666,100 Rental Fees Received in Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,000 46,000 Estimated Warranty Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,600 75,200 Interest Payable on Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 1,500 Dividends Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 25,000 Income Taxes PayableCurrent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000 140,000 Mortgage PayableCurrent Portion . . . . . . . . . . . . . . . . . . . . . . . . . 37,383 37,383 Capitalized Lease ObligationCurrent Portion . . . . . . . . . . . . . . . . . . 10,000 10,000 Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,299,683 $1,101,183 Noncurrent Liabilities Bonds Payable (Note 7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,931,143 $1,104,650 Mortgage Payable (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243,560 262,564 Capitalized Lease Obligation (Note 9) . . . . . . . . . . . . . . . . . . . . . . . 46,229 52,064 Deferred Tax Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,000 130,000 Total Noncurrent Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,365,932 $1,549,278 Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,665,615 $2,650,461 Shareholders Equity Convertible Preferred Stock, $100 par Value (Note 10) . . . . . . . . . . . . $ 200,000 $ 700,000 Common Stock, $10 par Value (Note 11) . . . . . . . . . . . . . . . . . . . . . 1,650,000 1,000,000 Additional Paid-In CapitalCommon . . . . . . . . . . . . . . . . . . . . . . . . 583,600 130,000 Accumulated Other Comprehensive Income: Unrealized Loss on Marketable Securities . . . . . . . . . . . . . . . . . . . (21,000) (25,000) Unrealized Loss on Investments in Securities. . . . . . . . . . . . . . . . . (21,000) (16,000) Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457,500 277,000 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,849,100 $2,066,000 Less Cost of Treasury Stock (Note 12) . . . . . . . . . . . . . . . . . . . . . . . (14,200) (27,000) Total Shareholders Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,834,900 $2,039,000 Total Liabilities and Shareholders Equity . . . . . . . . . . . . . . . . . . . $6,500,515 $4,689,461

Give the journal entry (entries) for the change in the Mortgage Payable accounts during 2013. Be sure to consider the current portion. n. Verify that the carrying value of the combined current and noncurrent portions of the Capitalized Lease Obligation on December 31, 2012, should be $62,064. o. Prepare an analysis that explains the change in the carrying value of the combined current and noncurrent portions of the Capitalized Lease Obligation during 2013. p. Give the journal entry to record income tax expense for 2013. q. Compute the amount of cash payments for income taxes during 2013. r. The income tax rate is 30%. Assume that during 2013, Tuck Corporation recognized $12,000 of deferred tax expense related to differences in depreciation methods. Calculate the difference between the amount of depreciation recognized for financial reporting purposes and the amount recognized for tax purposes. s. Give the journal entry made on July 1, 2013, upon conversion of the preferred stock. t. Give the journal entry (entries) to account for the change in the Treasury Stock account