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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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- Problem 1: On January 1, 2020, Pond Co. acquired 40% of the outstanding voting common shares of Ramp Co. for $700,000. On that date, Ramp reported assets and liabilities with book values of $2.2 million and $700,000, respectively. A building owned by Ramp had an appraised value of $300,000, although it had a book value of only $120,000. This building had a 10-year remaining life and no salvage value. It was being depreciated on the straight-line basis. Ramp generated a loss of $120,000 in 2021, and paid a cash dividend of $70,000 to its stockholders. During 2020, Ramp sold inventory to Pond for $96,000 at a 37.5% gross profit. Of this balance, $24,000 was still unsold at the end of 2020. In 2021, Ramp again sold inventory to Pond for $180,000 at a 40% gross profit. Of this balance, $60,000 was still unsold at the end of 2021. Required: Prepare all of Pond's journal entries for 2021 in relation to Ramp Co. Assume the equity method is appropriate for use. Show all your calculations…PROBLEM EAST Corporation purchased 50,000 out of the 200,000 ordinary shares of FAR Corporation on January 1, 2020 at P165 per share given EAST the right to exercise significant influence over FAR Corporation. Any excess of fair value over carrying value was attributed to land. FAR Corp reported P680,000 profit in 2020 and P1,000,000 in 2021. Dividends were paid and EAST received P210,000 in 2020 and P240,000 in 2021. Market values at year end: 2020 P160 and 2021 P175. On Jan 2, 2022, EAST Corporation sold 20,000 of its shares at P175 and exercised the option to account for its remaining investment as an available for sale securities classified at FVOCI. FAR Corporation reported profit of P3,720,000 and gave EAST dividends of P800,000 to all its shareholders. Required: Entries in 2020, 2021, 2022. Give the a) investment balance as at December 31, 2021, and b) Effect on net income in 2021. Give the a) investment balance as at December 31, 2022, and b) effect on net income in 2022.Required information Ocean Enterprises Inc. (Ocean) acquired 15% of the 100,000 outstanding common shares of Whale Ltd. (Whale) on January 1, 2022, for a cash consideration of $180,000 and a further 10% of the company's common shares a year later for $130,000. On July 1, 2023, Ocean sold half of its holding in Whale for proceeds of $175,000 Whale earned income of $150,000 in 2022 and $180,000 in 2023 (evenly over both years) and paid a regular semi- annual dividend of $40,000 on June 30th and December 31st of each year. Ocean does not have significant influence over Whale. The company's shares were trading for $13 at the end of 2022 and $11.75 at the end of 2023. Assume Whale has classified the investment as fair value through profit and loss (FVTPL). Prepare dated journal entries for Ocean for 2022 to account for its investment in Whale and any related income therefrom.
- PROBLEM III. On January 1, 2020, P Corporation purchase 80% of S Company's ordinary share for P810,000. P37,500 of the excess is attributable to goodwill and the balance to depreciable asset with economic life of ten years. NCI is measured at fair value on the date of acquisition. On this date, shareholders' equity of the two companies were as follows: P Corporation S Company Ordinary share P1,312,500 P300,000 Retained earnings 1,950,000 525,000 On December 31, 2020, S Company reported net income of P131,250 and paid dividends of P45,000 to Party. Party reported earnings from its own operations of 356,250 and paid dividends of P172,500. Goodwill has been impaired and should be reported at P7,500 on December 31, 2020. latlecomeoltolbutable-te-perent. NCINIS 3. NCINAS 4. Consolidated retained earnings 5. Consolidated Shareholders' EquityRequirements 1. How much is the consolidated net income for 2022? 2. How much is the consolidated net income for 2023? 3. Using the proportionate method, how much is the non-controlling interest as December 31, 2023? Philippians Company purchased 60% of Seth Company on January 2, 2022 for P3,930,000 when Seth's book, value was P6,300,000. On that day, the market value of the net assets of Seth equaled their book values. with the following exceptions: Buildings Equipment Book value P1,850,000 300,000 Market value Remaining life P1,600,000 20 years 500,000 10 years Seth Company reported the following for 2022 and 2023: Net income (loss) Dividends P.750,000 150,000 2022 2023 P100,000 50,000X) Alpha Company acquired 30 percent of the outstanding voting stock of Beta Company on January 1, 2020, for $254,000 in cash and had the ability to significantly influence the investee's operations and decision making, The book value of Beta's net assets on that date was $600,000, although one of the company's buildings, with a $40,000 carrying amount, was actually worth $120,000. This building had an 8-year remaining life. Beta owned a royalty agreement with a 5-year remaining life that was undervalued by $100,000. Alpha attributed to goodwill any unidentified excess cost. Beta reported net income of $100,000 in 2020 and $120,000 in 2021. Dividends of $20,000 and $30,000 are declared and paid in 2020 and 2021, respectively. Alpha sold inventory with an original cost of $24,000 to Beta during 2020 at a price of $40,000. Beta still held $10,000 (transfer price) of this amount in inventory as of December 31, 2020. These goods are to be sold to outside parties during 2021. During 2021,…
- PROBLEM I. P Corporation acquired an 80% interest in S Company on January 1, 2020 for P425,000. On this date, the share capital and retained earnings of two companies were as follows: P Corporation S Company Share Capital P530,000 P175,000 35,000 380,000 The assets and liabilities of S Company were stated at their fair values when Pacquired its 80% interest and the fair value method was used to initially measure the NCI. Net income and dividends for 2020 for the affiliated companies were: Р Согрoration Retained Earnings S Company Net Income P105,000 P31,500 Dividends Declared End of the year valuation indicates P2,400 impairment in goodwill (partial). 1. Consolidated retained earnings at December 31, 2020. 2. Goodwill in the consolidated balance sheet at December 31, 2020. 63,000 17,500Compute for the NCI on June 30, 2023 On June 30, 2021, ABC Co. acquired 75,000 of DEF Co.'s 100,000 outstanding shares with par value per share of P1 for P4 per share. At this time, DEF's shares have a quoted price of P3.50 per share and DEF's retained earnings is P80,000. Additional information: • DEF's total assets include land classified as investment property at a cost of P180,000. The land's fair values are P200,000 on acquisition date and P320,000 on June 30, 2023. DEF uses the cost model for its investment properties. However, the group uses the fair value model. • On acquisition date, DEF's building classified as property, plant, and equipment had a fair value of P30,000 in excess of its carrying amount. The building's remaining useful life is 5 years. The group uses the straight-line method of depreciation. • The current accounts on June 30, 2023 include intercompany receivables and payables of P10,000. • An impairment test on June 30, 2023 concluded that goodwill is impaired…57) A Co. acquired 60% of the outstanding ordinary shares of B Co. on January 2, 2021. A acquired it at book value which is the same as its fair value at the date of acquisition. Income statements of A and B for 2022 were as follows: A Net sales Cost of sales 525,000 P350,000 B P875,000 210,000 Gross profit 350.000 105,000 Operating expenses 140.000 52.500 87,500 Operating income Dividend income 245,000 56.000 Net income P301.000 P87.500 There was an upstream of sales of P112,000 in 2021 and P168,000 in 2022. The buying affiliate reported inventory on December 31, 2021 amounting to P70,000 of which 20% comes from the selling affiliate and inventory on December 31, 2022 amounting to PS4,000 of which 30% comes from the selling affiliate. A uses 30% markup on cost and B uses 25% markup on cost for their selling prices. A and B declared and paid dividends in 2022 amounting to P84,000 and P70,000 respectively. On January 1, 2022, B…
- M.T. Glass, Inc. purchased the following investments onJanuary 1, 2028:1. 21,000 shares (representing 42%) of AA Company stockfor $546,0002. 18,000 shares (representing 9%) of ZZ Company stockfor $306,000AA Company and ZZ Company reported the following informationfor the years 2028 and 2029:2028: AA Company ZZ CompanyNet income $140,000 $225,000Total dividends paid $ 78,000 $ 53,000Market value at Dec 31 $33 per share $22 per share2029: AA Company ZZ CompanyNet income $210,000 $280,000Total dividends paid $ 90,000 $125,000Market value at Dec 31 $35 per share $23 per shareCalculate the total investments shown in M.T. Glass, Inc.'sDecember 31, 2028 balance sheet (i.e., the balance in theInvestment in AA Company plus the balance in the Investmentin ZZ Company).M.T. Glass, Inc. purchased the following investments onJanuary 1, 2028:1. 21,000 shares (representing 42%) of AA Company stockfor $546,0002. 18,000 shares (representing 9%) of ZZ Company stockfor $306,000AA Company and ZZ Company reported the following informationfor the years 2028 and 2029:2028: AA Company ZZ CompanyNet income $140,000 $225,000Total dividends paid $ 78,000 $ 53,000Market value at Dec 31 $33 per share $22 per share2029: AA Company ZZ CompanyNet income $210,000 $280,000Total dividends paid $ 90,000 $125,000Market value at Dec 31 $35 per share $23 per shareCalculate the amount of dividend revenue shown in M.T. Glass,Inc.'s 2029 income statement for these two investments.On January 1st 2020, the Tesla Company purchased 400 of the 1000 shares of the Spaceship Enterprise Company (SEC)for $4,000,000. At this time Spaceship Enterprise's assets has a book value equal to market value for all assets exceptthe NCC1701 which has a 5 year life, a book value of $200,000 and a market value of $350000. On July 1st 2020, SEC declared and paid a $2 per share dividendOn December 31st 2020 SEC's stock was selling for $11,000 per share. SEC reported income of $222,000On July 1st 2021 SEC declared and paid a $2 per share dividendOn December 31st 2021, SEC's stock was selling for $9999 per share. SEC reported a loss of $111,000On July 1st 2022 SEC had a 2 for one stock splitOn December 31st 2022, SEC's stock was selling for $5555 per share. SEC reported a profit of $333,000On February 4th 2023 Tesla sold all of its stock in Spaceship Enterprise Company for $5700 per share. REQUIRED; AMAKE ALL OF THE JOURNAL ENTRIES FOR TESLA BEGINNING WITH THE PURCHASE OF THE…