On April 1, 2020, Blossom Ltd. paid $150 for a call to buy 530 shares of NorthernTel at a strike price of $25 per share any time during the next six months. The market price of NorthernTel’s shares was $25 per share on April 1, 2020. On June 30, 2020, the market price for NorthernTel’s stock was $35 per share, and the fair value of the option was $8,200.

Prepare the journal entry to record the purchase of the call option on April 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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Prepare the journal entry to recognize the change in the call option’s fair value as at June 30, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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Prepare the journal entry that would be required if Blossom Ltd. exercised the call option and took delivery of the shares as soon as the market opened on July 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Barings Bank collapsed about two decades ago as a result of derivative trading. Identify any other high profile corporate bankruptcy attributable to derivative trading and. Describe the events that created the problem outlining the differences and similarities between Barings Bank and your chosen institution. What are the lessons that financial institutions, investors and regulators can learn from the occurrence of such events.

compare the IMA code of conduct to the AICPA code of professional conduct and assess the effectiveness of the two codes

Bank Reconciliation and Entries

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $14,890. During May, the total cash deposited was $75,440 and checks written totaled $70,050. The bank statement indicated a balance of $25,570 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

1. Checks outstanding totaled $11,390.
2. A deposit of $9,280, representing receipts of May 31, had been made too late to appear on the bank statement.
3. The bank had collected for Brentwood Bike Co. $4,900 on a note left for collection. The face of the note was $4,530.
4. A check for $580 returned with the statement had been incorrectly charged by the bank as $850.
5. A check for $410 returned with the statement had been recorded by Brentwood Bike Co. as $140. The check was for the payment of an obligation to Adkins Co. on account.
6. Bank service charges for May amounted to $50.
7. A check for $1,130 from Jennings Co. was returned by the bank because of insufficient funds.

Instructions:

1. Prepare a bank reconciliation as of May 31.

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank.

3. If a balance sheet is prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
$

Collin Zucs, CFO of Travel United, Inc., invested some of the firm's excess cash in the common shares of what he thought were three undervalued securities. At year-end, he reviewed how the portfolio of securities had done.

Required

1. Calculate the value that would be assigned to the portfolio of securities on Travel United's balance sheet at year-end.

$Answer

2. Calculate the income statement effect of the portfolio of securities at year-end.

$Answer Answer

3. Calculate the income statement effect of the portfolio of securities at year-end assuming all securities are classified as available-for-sale.

$Answer

4. Are the company's reported earnings impacted by whether the portfolio of securities are classified as trading versus available-for-sale?

Answer

Will the company's income taxes be impacted?

The Skysong, Inc. opened for business on May 1, 2020. Its trial balance before adjustment on May 31 is as follows.

In addition to those accounts listed on the trial balance, the chart of accounts for Skysong, Inc. also contains the following accounts and account numbers: No. 142 Accumulated Depreciation—Buildings, No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 619 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data:

Do the following:

A. Journalize the adjusting entries on May 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

B. Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post sthe adjusting entries. (Post entries in the order of journal entries posted in the previous part of the question. Round answers to 0 decimal places, e.g. 5,275.)

C.  Prepare an adjusted trial balance on May 31. (Round answers to 0 decimal places, e.g. 5,275.)

D.  Prepare an income statement for the month of May 31. (Round answers to 0 decimal places, e.g. 5,275.)

E. Prepare an retained earnings statement for the month of May 31. (Round answers to 0 decimal places, e.g. 5,275.)

F. Prepare a balance sheet at May 31. (List Assets in order of liquidity. List Property, plant and equipment in order of land, buildings and equipment. Round answers to 0 decimal places, e.g. 5,275.)

Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below:

The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to closing the store. The company has asked you to make a recommendation as to whether the store should be closed or kept open. The following additional information is available for your use:

1. The breakdown of the selling and administrative expenses that are shown above is as follows:

*Allocated on the basis of sales dollars.

*Allocated on the basis of sales dollars.

2. The lease on the building housing the North Store can be broken with no penalty.

3. The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed.

4. The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $11,400 per quarter. The general manager of the North Store would continue to earn her normal salary of $12,400 per quarter. All other managers and employees in the North store would be discharged.

5. The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This person’s salary is $4,900 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete.

6. The company pays employment taxes equal to 15% of their employees' salaries.

7. One-third of the insurance in the North Store is on the store’s fixtures.

8. The “General office salaries” and “General office—other” relate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person’s compensation is $6,200 per quarter.

Required:

1. How much employee salaries will the company avoid if it closes the North Store?

2. How much employment taxes will the company avoid if it closes the North Store?

3. What is the financial advantage (disadvantage) of closing the North Store?

4. Assuming that the North Store's floor space can’t be subleased, would you recommend closing the North Store?

5. Assume that the North Store's floor space can’t be subleased. However, let's introduce three more assumptions. First, assume that if the North Store were closed, one-fourth of its sales would transfer to the East Store, due to strong customer loyalty to Superior Markets. Second, assume that the East Store has enough capacity to handle the increased sales that would arise from closing the North Store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentage of sales as present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Store?

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made.

The pizzeria’s cost formulas appear below:

In November, the pizzeria budgeted for 1,530 pizzas at an average selling price of $14 per pizza and for 210 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

Required:

1. Compute the revenue and spending variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

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Birch Company normally produces and sells 46,000 units of RG-6 each month. The selling price is $25 per unit, variable costs are $17 per unit, fixed manufacturing overhead costs total $200,000 per month, and fixed selling costs total $40,000 per month.

Employment-contract strikes in the companies that purchase the bulk of the RG-6 units have caused Birch Company’s sales to temporarily drop to only 9,000 units per month. Birch Company estimates that the strikes will last for two months, after which time sales of RG-6 should return to normal. Due to the current low level of sales, Birch Company is thinking about closing down its own plant during the strike, which would reduce its fixed manufacturing overhead costs by $49,000 per month and its fixed selling costs by 8%. Start-up costs at the end of the shutdown period would total $14,000. Because Birch Company uses Lean Production methods, no inventories are on hand.

Required:

1. What is the financial advantage (disadvantage) if Birch closes its own plant for two months?

2. Should Birch close the plant for two months?

3. At what level of unit sales for the two-month period would Birch Company be indifferent between closing the plant or keeping it open?

Journal Entries, T-Accounts, Cost of Goods Manufactured and Sold

During May, the following transactions were completed and reported by Jerico Company:

1. Materials purchased on account, $60,200.
2. Materials issued to production to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,700.
3. Payroll for the month: direct labor, $75,000; indirect labor, $35,000; administrative, $28,000; sales, $19,000.
4. Depreciation on factory plant and equipment, $10,400.
5. Property taxes on the factory accrued during the month, $1,450.
6. Insurance on the factory expired with a credit to the prepaid insurance account, $6,200.
7. Factory utilities, $5,500.
8. Advertising paid with cash, $7,900.
9. Depreciation on office equipment, $800; on sales vehicles, $1,650.
10. Legal fees incurred but not yet paid for preparation of lease agreements, $750.
11. Overhead is charged to production at a rate of $18 per direct labor hour. Records show 4,000 direct labor hours were worked during the month.
12. Cost of jobs completed during the month, $160,000.

The company also reported the following beginning balances in its inventory accounts:

Required:

1. 3. Prepare a statement of cost of goods manufactured.

   Jerico Company
   Statement of Cost of Goods Manufactured
   For the Month Ended May 31, 20XX
   		$
   Overhead:
   	$
   	$
   Manufacturing costs added		$
   Cost of goods manufactured		$

   4. If the overhead variance is all allocated to cost of goods sold, by how much will cost of goods sold decrease or increase?
       by $

Journal Entries, T-Accounts, Cost of Goods Manufactured and Sold

During May, the following transactions were completed and reported by Jerico Company:

1. Materials purchased on account, $60,200.
2. Materials issued to production to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,700.
3. Payroll for the month: direct labor, $75,000; indirect labor, $35,000; administrative, $28,000; sales, $19,000.
4. Depreciation on factory plant and equipment, $10,400.
5. Property taxes on the factory accrued during the month, $1,450.
6. Insurance on the factory expired with a credit to the prepaid insurance account, $6,200.
7. Factory utilities, $5,500.
8. Advertising paid with cash, $7,900.
9. Depreciation on office equipment, $800; on sales vehicles, $1,650.
10. Legal fees incurred but not yet paid for preparation of lease agreements, $750.
11. Overhead is charged to production at a rate of $18 per direct labor hour. Records show 4,000 direct labor hours were worked during the month.
12. Cost of jobs completed during the month, $160,000.

The company also reported the following beginning balances in its inventory accounts:

Required:

1. Prepare journal entries to record the transactions occurring in May. For a compound transaction, if an amount box does not require an entry, leave it blank.

2. Prepare T-accounts for Materials Inventory, Overhead Control, Work-in-Process Inventory, and Finished Goods Inventory. Post the entries to the T-account in the same order in which they were journalized.

Dividends on Preferred and Common Stock

Yukon Bike Corp. manufactures mountain bikes and distributes them through retail outlets in Canada, Montana, Idaho, Oregon, and Washington. Yukon Bike Corp. declared the following annual dividends over a six-year period ending December 31 of each year: Year 1, $30,000; Year 2, $37,500; Year 3, $60,000; Year 4, $165,000; Year 5, $210,000; and Year 6, $263,000. During the entire period, the outstanding stock of the company was composed of 25,000 shares of 3% preferred stock, $100 par, and 100,000 shares of common stock, $25 par.

Instructions:

1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. If required, round your answers to the nearest cent. If the amount is zero, please enter "0".

2. Calculate the average annual dividend per share for each class of stock for the six-year period. If required, round your answers to the nearest cent.

3. Assuming a market price per share of $118 for the preferred stock and $31 for the common stock, calculate the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share for preferred stock and for common stock.

Round your answers to two decimal places.

QUESTION 6
George recently paid $ 50.00 to renew his driver's license. This payment is considered a tax.
   True
   False

QUESTION 7
Because the United States District Court knows a broader set of cases, decisions of the United States District Court may be considered to have a more authoritative weight than the United States Federal Claims Court.
   True
   False

QUESTION 8
Corporations are required to file a tax return only if their taxable income is greater than:

a-$ 0

b-$ 1,000.

c-$ 600.

d-$ 750.

e-None of those.
  
QUESTION 9
The future value can be calculated as Future Value = Present Value / (1 + r) n.
   True
   False

QUESTION 10
The conversion strategy takes advantage of the fact that tax rates vary according to different activities.
   True
   False

ABC Company is authorized to issue 100,000 shares of its $10 par value common stock and as of February 1 had 25,000 shares issued and outstanding. On March 1, ABC bought 1,000 of its shares for the treasury at $25 each. Required—Prepare the journal entries that ABC should have made to record the transactions described in each of the following independent scenarios: Scenario #1 (1) On March 11, ABC issued 100 of the treasury shares at $30 each. (2) On March 21, ABC issued 100 of the treasury shares at $22 each. Scenario #2 (1) On March 11, ABC issued 100 of the treasury shares at $26 each. (2) On March 21, ABC issued 100 of the treasury shares at $22 each.

Tony’s favorite memories of his childhood were the times he spent with his dad at camp. Tony was daydreaming of those days a bit as he and Suzie jogged along a nature trail and came across a wonderful piece of property for sale. He turned to Suzie and said, “I’ve always wanted to start a camp where families could get away and spend some quality time together. If we just had the money, I know this would be the perfect place.” On November 1, 2022, Great Adventures purchased the land by issuing a $600,000, 6%, 10-year installment note to the seller. Payments of $6,661 are required at the end of each month over the life of the 10-year loan. Each monthly payment of $6,661 includes both interest expense and principal payments (i.e., reduction of the loan amount).

Late that night Tony exclaimed, “We now have land for our new camp; this has to be the best news ever!” Suzie said, “There’s something else I need to tell you. I’m expecting!” They decided right then, if it was a boy, they would name him Venture.

• Record the issuance of the long-term note payable for the purchase of land on November 1, 2022.
• Record the first monthly payment on the long-term note payable, made on November 30, 2022.
• Record the second monthly payment on the long-term note payable, made on December 31, 2022.
• The 12 monthly payments in 2023 (following year) will reduce the note's balance by an additional $45,616. Record the reclassification of this amount from long-term notes payable to current notes payable.
• Prepare the closing entry for revenue accounts.
• Prepare the closing entry for expense and loss accounts.

Prepare general journal, income statement (unadjusted), and balance sheet.