i need very detailed answers to this financial accounting


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i need very detailed answers to this financial accounting exercise. thanks EAP Assignment H3.docx EAP Corporation Assignment #3 Financial Management & Reporting EMBA 1040 Fall 2015 Mike Peters State e of Stockholde ‘ Equity m nt rs EAP Corporation Ending 2012/Beginning 2013 Net Income Unrealized Gains – AFS Securities Sale of AFS Securities Sale of Stock Treasury Stock (Purchases) Sales Dividends Declared Ending 2013 Net Income Unrealized Gains – AFS Securities Sale of AFS Securities Sale of Stock Treasury Stock (Purchases) Sales Dividends Declared Ending 2014 Net Income Unrealized Gains – AFS Securities Sale of AFS Securities Sale of Stock Treasury Stock (Purchases) Sales Dividends Declared Ending 2015 Com o mn Stock 2,000,000 – 2,000,000 – 2,000,000 – 2,000,000 Re taine d Earning s 400,000 1,173,772 Tre asury Stock – Com he pre nsive Incom e 100,000 120,000 (60,000) 160,000 Total 2,500,000 1,173,772 120,000 (60,000) (34,000) (100,000) 3,599,772 (90,000) (10,000) 60,000 1,776,284 (90,000) (10,000) (110,000) (120,000) 5,046,056 50,000 (10,000) 100,000 2,180,864 50,000 (10,000) (1,900,000) (150,000) 5,216,920 – (100,000) 1,473,772 (34,000) (34,000) 1,776,284 – (120,000) 3,130,056 2,180,864 (150,000) 5,160,920 (110,000) (144,000) – (1,900,000) (2,044,000) FOOTNOTES, CLIPPINGS, AND OTHER INFORMATION 1. Trading Securities. Trading securities (TS) on the balance sheet are markedto-market, i.e., reported at fair market value. Of the total dividend revenue, $30,000 was for TS in 2015; $25,000 in 2014; and $21,000 in 2013. For simplicity, assume that most purchases and sales of TS occur at in the middle of the year. During 2013, the firm sold trading securities at year-end 2013; this sale constituted the vast majority of the $163,000 “gain from sale of TS” amount reported on the 2013 income statement. 2. Accounts Receivable. Accounts receivable are shown net of the allowance for doubtful accounts. An internal memo showed that beginning in 2014, the credit manager predicted that the firm was going to experience a higher than normal default rate and this prediction was an important factor in the 2014 bad debt estimate. The credit manager has a reputation for consistency delivering what is needed on behalf of top management. 3. Inventory. In 2014, the firm began to report its inventory using the last-in, first-out (LIFO) cost flow assumption. If the firm had used the first-in, first-out (FIFO) cost flow assumption, then its inventory amount would have been $742,000 at year-end 2015 and $610,000 at year-end 2014. During late-2010, the firm began to develop a new product with the expectation of bringing it to market in 2012. Initial reports showed a high likelihood that this product was to be well-received. Unfortunately, the product’s sales fell well short of expectations in 2012 and continuing in 2013. By 2013, the consumer interest for this product reached a point of no return; that is, it just wasn’t well accepted and its reputation was such that it was highly unlikely that this product would ever meet expectations. As a result, in late-2013, the firm wrote-off $200,000 of this inventory. The book value of this inventory after the write-off was $52,000. On the write-off announcement date, the firm’s stock price decreased by 11 percent. 4. Available for Sale Securities. Available for Sale securities (AFS) on the balance sheet are marked to market. For simplicity, assume that most purchases and sales of AS occur in the middle of the year. 5. Equity Method Securities, Investment in Cunningham. On 1/2/13, the firm purchased 50 percent of the common stock of Cunningham Corporation for $250,000 cash. At the time of purchase, the book value of Cunningham equaled its market value. In addition, at the time of purchase, Cunningham had $1,400,000 of liabilities. On 12/31/13, 12/31/14, and 12/31/15, Cunningham reported $2,500,000, $4,110,000, and $7,330,000 of total assets. Even though the firm only owns

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