solve question (case study)

Information about the Vargo Company for the year ended 12/31/23 is given below. Some of the sections ask a question and require an answer (the questions are in bold type). If information is presented, and no question is asked, the information may be needed for the last question (prepare a multi-step income statement for the year ended December 31,2023). Show your computations and clearly label your answers. This is not a group project. Complete the exam on your own. Exams are due by 3:30 p.m. on Monday, 12/11/23. Prepare a written/printed solution (don't email it) and put it in the inbox outside my office suite if I'm not there when you drop it off. Include the exam questions (what you're holding in your hands) with your solution. a. Vargo sells two products. The first (the "tibed") is sold only for cash and represents a single performance obligation (sale of the product). "Tibed" sales for the year are 203,000 units. "Tibed" sells for a price of $24.95 per unit, and Vargo incurs shipping costs of $3.90 per unit sold. Vargo had sales discounts of $83,000 on "tibed" sales. The second is a software package (the "tiderc") and is new for 2023. It has two performance obligations (sale of the software and a software update after 2 years). 60,200 units of "tiderc" were sold. "Tiderc" sells for $30 per unit (also cash sales). The standalone sales price of the software has been determined to be $28 and the standalone sales price of the update is \$7. Vargo incurs a costs of $4.15 per software package. Report sales of the two products separately on the income statement (one line for tibed and one line for tiderc) h. Early in 2023, Vargo engaged Wheeler Inc. to design and construct a new manufacturing facility. Construction began on January 1, 2023 and was completed on December 31, 2023. (no depreciation is needed) Vargo made the following payments to Wheeler, Inc. during 2023: In order to help finance the construction, Vargo issued the following during 2023: 1. $210,000 of 10 -year, 9% bonds payable, issued at par on January 1,2023 , with interest payable annually on Dec. 31 . In addition to the 9% bonds payable, the only debt outstanding during 2023 was a $140,000,10% note payable dated January 1,2012 and due January 1,2026 , and a $220,0007% note payable dated January 1, 2017 and due January 1,2027. Interest on each is payable on January 1. Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2. Avoidable interest incurred during 2023. 3. Total amount of interest cost to be capitalized during 2023 and interest expense for 2023. Prepare the journal entry to record interest capitalized/expensed. i. Vargo had an average of 135,000 shares of common stock outstanding. Vargo has no preferred stock. j. Vargo obtained a patent on 4/1/18 for $96,000 with a legal life remaining of 14 years that was estimated to have a useful life of 12 years. The future cash flows from the patent are estimated to be $44,000 as of 12/31/22 and the fair value is estimated to be $41,000. Make any entries necessary for the patent during 2023. k. Vargo had an unrealized $33,000 gain on marketable securities and a $14,000 loss on translation adjustments from converting the financial statements of a foreign subsidiary to US dollars. 1. Prepare the 2023 income statement in good form for Vargo in a multi-step format and calculate comprehensive income. Use the two-statement format shown in Demo 3-5 on page 318 for comprehensive income (more detail is needed for the income statement than is shown in that example). Revenue and cost of goods sold from each product should be shown on separate lines. Vargo has a tax rate of 21%. Clearly list each expense separately on the income statement (c.g. don't add up 5 things and call them "administrative expenses")