Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year,...

Question

Question

Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costin

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Answer: $1,926

Explanation

Gross profit rate = (133,000 - 93,100) / 133,000

= 30%

Inventory remaining at year-end = $21,400

Unrealized gain = $21,400 x 30% = $6,420

Ownership = 30%

gross profit must Panner defer in reporting this investment using the equity method = $6,420 x 30% = $1,926

Add a comment

Answer 2

Similar Homework Help Questions

Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year,...

Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $110,400 and then sells it to Watkins for $138,000. At the end of the year, Watkins still holds only $25,300 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method? Multiple Choice $1,518. 0 $8,418. 0 $6,318. 0 $11,118.
Panner, Inc., owns 25 percent of Watkins and applies the equity method. During the current year,...

Panner, Inc., owns 25 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $133,600 and then sells it to Watkins for $167,000. At the end of the year, Watkins still holds only $27,000 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method?
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year,...

Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year, Watkins still holds only $20,000 of merchandise. What amount of unrealized gross profit must Panner defer in reporting this investment using the equity method? a. $2,400 b. $4,800. c. $8,000. d. $10,800

Saved Help Save & Exit Jubilee, Inc., owns 20 percent of JPW Company and applies the...

Saved Help Save & Exit Jubilee, Inc., owns 20 percent of JPW Company and applies the equity method. During the current year, Jubilee buys inventory costing $116,350 and then sells it to JPW for $179 000. At the end of the year, JPW still holds only $24,700 of merchandise. What amount of gross profit must Jubilee defer in reporting this investment sing the equity method? Multiple Choice $10.429 $8,629. $1,729 $6.229 < Prev 2 of 8 Next >
Ch 1/2 QUIZ Seved Help Save & Exit Submit 2 Jubilee, Inc., owns 20 percent of...

Ch 1/2 QUIZ Seved Help Save & Exit Submit 2 Jubilee, Inc., owns 20 percent of JPW Company and applies the equity method. During the current year, Jubilee buys inventory costing $138,750 and then sells it to JPW for $185,000. At the end of the year, JPW still holds only $29,100 of merchandise. What amount of gross profit must Jubilee defer in reporting this investment using the equity method? Multiple Choice $11655 $6.255 $9.555 O $1,455 < Prey 2 of...
8 to 11? could you also write a solution The Equity Method of Accounting for Investments...

8 to 11? could you also write a solution The Equity Method of Accounting for Investments 29 8. Franklin purchases 40 percent of Johnson Company on January 1 for $500,000. Although did not use it, this acquisition gave Franklin the ability to apply sinificant influence to Johnson operating and financing policies. Johnson reports assets on that date of $1.400,000 with lat of $500,000. One building with a seven-year remaining life is undervalued on Johnson's books $140,000. Also, Johnson's book value...

Grand Teton Inc. own 25% of Grand Canyon Inc. and applies the equity method. During the...

Grand Teton Inc. own 25% of Grand Canyon Inc. and applies the equity method. During the current Year, Grand Teton sold merchandise with a cost of $120,000 to Grand Canyon for $180,000. At the end of the year Grand Canyon still hold half of that merchandise. What amount of gross profit should Grand Teton defer to next year? a. 7,500 b. 15,000 c. 30,000 d. 60,000 e. all answers incorrect
On June 1, Cline Co. paid $1,071,500 cash for all of the issued and outstanding common...

On June 1, Cline Co. paid $1,071,500 cash for all of the issued and outstanding common stock of Renn Corp. The carrying amounts for Renn's assets and liabilities on June 1 follow: Cash Accounts receivable Capitalized software costs Goodwill Liabilities $ 168,000 298,500 376,000 193,000 (196,000) $ 839,500 Net assets On June 1, Renn's accounts receivable had a fair value of $209,000. Additionally, Renn's in-process research and development was estimated to have a fair value of $249,000. All other items...
Perez, Inc., applies the equity method for its 25 percent investment in Senior, Inc. During 2018,...

Perez, Inc., applies the equity method for its 25 percent investment in Senior, Inc. During 2018, Perez sold goods with a 40 percent gross profit to Senior, which sold all of these goods in 2018. How should Perez report the effect of the intra-entity sale on its 2018 income statement? Multiple Choice O Investment income should be reduced by 25 percent of the gross profit on the amount of intra-entity sales. No adjustment is necessary. Sales and cost of goods...

Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability...

Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $336,000. Amortization associated with this acquisition is $17,100 per year. In 2018, Lindman earns an income of $126,000 and declares cash dividends of $31,500. Previously, in 2017, Lindman had sold inventory costing $31,800 to Matthew for $53,000. Matthew consumed all but 25...

Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year,...

Homework Answers