How are current investments reported?

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Transactions and events during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $11 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $8.
3. Issued additional shares of common stock on April 3 for $27.
4. Purchased software on July 4, $11 cash.
5. Purchased supplies on account on October 5 for future use, $19.
6. Paid accounts payable on November 6, $12.
7. Signed a $20 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $168 on December 8, including $44 on credit and $124 collected in cash.
9. Recognized salaries and wages expense on December 9, $89 paid in cash.
10. Collected accounts receivable on December 10, $28.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $4.
12. Supplies counted on December 31, 2018, $12.
13. Depreciation for the year on the equipment, $5.
14. Interest of $1 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $13.
16. Income tax for the year was $7. It will be paid in 2019.

Required:

2. Record journal entries for transactions (a) through (j). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)
3. 1, 3, 5 and 8. Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions (a)-(j), adjusting entries (k)-(p), and closing entry. (Enter your answers in thousands of dollars.)
4. Prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.)
5. Record the adjusting journal entries (k) through (p). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Transactions and events during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $11 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $8.
3. Issued additional shares of common stock on April 3 for $27.
4. Purchased software on July 4, $11 cash.
5. Purchased supplies on account on October 5 for future use, $19.
6. Paid accounts payable on November 6, $12.
7. Signed a $20 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $168 on December 8, including $44 on credit and $124 collected in cash.
9. Recognized salaries and wages expense on December 9, $89 paid in cash.
10. Collected accounts receivable on December 10, $28.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $4.
12. Supplies counted on December 31, 2018, $12.
13. Depreciation for the year on the equipment, $5.
14. Interest of $1 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $13.
16. Income tax for the year was $7. It will be paid in 2019. Adjusted trail balance is $346

17. 6-a. Prepare an income statement.

18. 6-b. Prepare the statement of retained earnings.

19. 6-c. Prepare the balance sheet.

20. Prepare the closing journal entry. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)

21. Post the closing entry from requirement 4 and prepare a post-closing trial balance. (Enter your answers in thousands of dollars.

QUESTION ONE

Mila, a travel consultant, was doing her shopping at the local supermarket, Buckleys. When walking in the milk and dairy section in Buckleys, Mila slipped on the floor and hit her knees on a trolley.

While on the floor, Mila looked at the bottom of her shoes and found some squashed cheese which had fallen from the refrigerated display shelves.

Ben, an employee of Buckleys, came to help Mila. Ben told Mila that he was on his tea break and didn’t have the time to clean up the cheese that had fallen onto the floor.

Mila admitted that she was not looking at the floor as she walked, and told Ben, “I was looking around for items to purchase”.

Due to her falling and hitting her knees on the supermarket trolley, Mila suffers from soft tissue injuries and is not able to sit or walk for a long time. Mila’s injuries have become worse due to her taking up binge eating as a means of dealing with her symptoms. Mila is claiming compensation for medical expenses, economic loss and domestic assistance.

REQUIRED:

Advise Mila as to whether she would be successful in negligence against Buckleys supermarket. Please explain fully, using relevant legal authority.

QUESTION TWO

On the 2^nd of March, Jack offers to sell his collection of Persian rugs to his friend Liam for $30,000 by telephone. This was considerably less than the $50,000 that Jack had advertised his collection for in the local newspaper. Liam asked for a little time to think it over and was told by Jack: “Sure, I will leave the offer open until Tuesday the 5^th of March”.

On Monday the 4^th of March, Liam sends Jack an email agreeing to buy the Persian rugs at the specified price subject to Jack’s assurance that the rugs were genuine, hand-made rugs.

Later that same Monday, Jack was approached by Zoe who offered to purchase Jack’s Persian rugs for $50,000 as advertised in the newspaper. Jack immediately accepted Zoe’s offer and then sent Liam a text message withdrawing his offer to sell the rugs to Liam.

Jack read Liam’s “agreement” email on Tuesday the 5^th of March and Liam read Jack’s withdrawal text message on Wednesday the 6^th of March.

REQUIRED:

Advise Jack whether he has an enforceable contract with either Liam or Zoe.

Tree Seedlings has the following current-year purchases and sales for its only product.

Required:
The company uses a periodic inventory system.

a. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
b. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.
c. Compute the gross margin for each method.

In December 2016, Learer Company’s manager estimated next year’s total direct labor cost assuming 30 persons working an average of 2,500 hours each at an average wage rate of $30 per hour. The manager also estimated the following manufacturing overhead costs for 2017.

At the end of 2017, records show the company incurred $1,566,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $608,000; Job 202, $567,000; Job 203, $302,000; Job 204, $720,000; and Job 205, $318,000. In addition, Job 206 is in process at the end of 2017 and had been charged $21,000 for direct labor. No jobs were in process at the end of 2016. The company’s predetermined overhead rate is based on direct labor cost.

Required
1-a. Determine the predetermined overhead rate for 2017.
1-b. Determine the total overhead cost applied to each of the six jobs during 2017.
1-c. Determine the over- or underapplied overhead at year-end 2017.
2. Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of 2017.

Question 1 a) Differentiate between the 'definition of assets' and the criteria for recognition of assets' provided in the conceptual framework. b) If an asset is expensed in one financial year because future economic benefits were not deemed to be 'probable', can the same asset be reinstated in future periods if the benefits are subsequently assessed as probable? In this respect, does the ability to reinstate assets apply to all assets? Briefly explain. c) AASB 101 stipulates a number of disclosures that many reporting entities are required to make. What specific disclosures are required by AASB 101 in relation to assets? d) Is depreciation an allocation process or a valuation process? Provide reasons for your answer e) In an article that appeared in The Australian Financial Review on 26 August 2011 ('Apple could easily flounder without its founder' by Mark Ritson), it was reported: The news that Steve Jobs has resigned from Apple and will be replaced as CEO by Tim Cook made global headlines yesterday What has followed since has been a frenzied discussion of what the loss of Jobs will mean for new product development timelines, share price issues and corporate culture. Apple's share price fell 5 percent on the news of the resignation as questions were raised about Apple's prospects without its creative guru at the helm. But the real question for Apple as it enters its post-Jobs period is how well the brand will survive without the founder. Required The fact that the share prices fell following the departure of Steve Jobs is consistent with the view that Jobs was an 'asset' to the company. How do you think this 'asset' would have been disclosed in the financial statements of Apple? f) What is a contingent asset? When should a contingent asset be disclosed within the notes to the financial statements? If something is initially disclosed as a contingent asset, when can it subsequently be recognized as an asset within the financial statements? Briefly explain.

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2017 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $30,000 $432,000 During 2018, credit sales were $1,750,000, cash collections from customers $1,830,000, and $35,000 in accounts receivable were written off. In addition, $3,000 was collected from a customer whose account was written off in 2017.

An aging of accounts receivable at December 31, 2018, reveals the following: Percentage of Year-End Percent Age Group Receivables in Group Uncollectible

0–60 days 65 % 4 %

61–90 days 20% 15%

91–120 days 10% 25%

Over 120 days 5% 40%

Required:

1. Prepare summary journal entries to account for the 2018 write-offs and the collection of the receivable previously written off.

2. Prepare the year-end adjusting entry for bad debts according to each of the following situations: Bad debt expense is estimated to be 3% of credit sales for the year. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

3. For situations (a)–(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2018 balance sheet?

Research, define, describe, and explain the above-mentioned (Minimum 250 words answer for each questions)

Describe and explain the regulatory environment.

On Jan 1, 2018, Rising Star purchased a crane for $ 1,200,000 and paid $200,000 as a downpyament while the balance will be paid over the next five years in installments of $100,000 every six months , starting July 1, 2018. The market rate on Jan 1, 2018 was 9%.

Requirements:
a.   For the how much the company should recognize the crane on Jan 1, 2018? Show your calculation along with your accounting entry to recognize the purchase of the crane.
b.   On Jan 1, 2020, the company will pay installment payment of $100,000. How much of this payment represents a payment of the principal and how much of it represents a payment of the interest? Show your calculation (fill in the following table Jan 1 2018 – Jan 2020).

c.   What is the total interest expense for the year ended on Dec 31, 2018?
d.   What will be the carrying value of the notes on Dec 31, 2019?

Problem 2-2A Julia Dumars is a licensed CPA. During the first month of operations of her business, Julia Dumars, Inc., the following events and transactions occurred. May 1 Stockholders invested $22,700 cash in exchange for common stock. 2 Hired a secretary-receptionist at a salary of $1,200 per month. 3 Purchased $2,560 of supplies on account from Vincent Supply Company. 7 Paid office rent of $760 cash for the month. 11 Completed a tax assignment and billed client $2,400 for services performed. 12 Received $3,120 advance on a management consulting engagement. 17 Received cash of $1,310 for services performed for Orville Co. 31 Paid secretary-receptionist $1,200 salary for the month. 31 Paid 48% of balance due Vincent Supply Company. Julia uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 311 Common Stock, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.

1. Journalize the transactions. 2. Post to the ledger accounts. 3. Prepare a trial balance on May 31, 2015. JULIA DUMARS, INC. Trial Balance May 31, 2015

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.70 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $353,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch—a 59-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $47.40 (200 square feet @ $23.70 per hundred square feet). Calculate the customer margin earned on this job.

Question 1

The following are independent situations. Required For each of the two independent situations, identify two control weaknesses, and explain the implications of these weaknesses for the company’s accounting records. (4 marks for each situation). Prepare your answer in the following format:

Situation 1

A finance company derives a large part of its business from financing retail purchases of furniture and electronic items, with terms generally over 2 or 3 years. Each day, there is a large volume of mail to process, which contains cheques, money orders, and customer correspondence. An account associate opens the mail, sorts the contents into payments or correspondence, and then prepares a payment listing. The account associate takes the cheques to the bank for deposit, but the payment listing is given to a separate person to enter into the computer. The manager spot-checks the total deposited in the bank to the payment listing to ensure that all funds are deposited. All cheques for purchases over $15,000 must be approved by 2 supervisory personnel. Given the small size of the office, this includes only the manager, the assistant manager, and the accountant. This restricts the number of signees who may be on vacation at any one time and creates a problem when one or, especially, two of these people are away from the office on business trips. The staff eventually came up with a win-win solution, based on the petty cash concept. The office manager keeps a cash box locked in her desk, containing three blank cheques, each one signed by one (but only one) of the three designated signees. When a cheque is needed and there aren’t two people with signing authority there to sign it, the office manager or her assistant has the available signee approve the amount and payee, and then sign the cheque to complete the control procedure.

Situation 2

Occasionally, the plant manager for a paper products manufacturer makes a deal with a supplier, presumably to get a good discount, and instructs the accounting staff to prepare a cheque in a hurry without the normal purchase order documentation that is supposed to be attached to the cheque stub. This allows the plant to have a just-in-time system for purchasing when a bargain is available from a supplier. Unfortunately, this also means that the regular purchase order may not be prepared and sent to the shipper/receiver in time for the goods, so the accounting department has to manually prepare a receiver’s memo with the information that is normally on a regular purchase order (e.g., description of goods, supplier’s name, quantity purchased) to let the shipper/receiver know that goods will be arriving for which the regular documentation may not be ready in time.

Part 1

Prior to closing, Syracuse Company's accounting records showed the following balances:

Retained earnings$16,800 Service revenue 21,750 Interest revenue 1,800 Salaries expense 12,300 Operating expense 3,450 Interest expense 900 Dividends 2,700

After closing, Syracuse's retained earnings balance would be?

Part 2

Revenue on account amounted to $9,000. Cash collections of accounts receivable amounted to $8,100. Cash paid for expenses was $7,500. The amount of employee salaries accrued at the end of the year was $900. Cash flow from operating activities was

A)900

B)600

C)1500

D)8700

Part 3

The purpose of the accrual basis of accounting is to:

Match assets and liabilities in the proper period.

Report expenses when cash disbursements are made.

Report revenue when received.

Match revenues and expenses in the proper period.

Part 4

Earning revenue on account would be classified as a/an?

claims exchange transaction.

asset use transaction.

asset source transaction.

asset exchange transaction.

Part 5

Which of the following describes the effects of a claims exchange transaction on a company's financial statements?

A) option A

B)option B

C) option C

D)option D