Accounting for Gift Cards

Assume Ikeo Inc. sold $160,000 of gift cards during the last two weeks of December 2020. No gift cards were redeemed in 2020, while $144,000 of the gift cards were redeemed for store purchases during 2021. On December 31, 2021, Ikeo Inc. calculates the remaining balance of unredeemed gift cards of $16,000 ($160,000 less $144,000). Based on previous experiences, Ikeo estimates gift card breakage to be 5% of total gift card sales. Ikeo uses the proportional method to recognize income on gift card breakage.

Required

a. Record the sale of gift cards in 2020.

b. Record the redemption of gift cards in 2021.

c. Record revenue in 2021 due to gift card breakage using the proportional method.

Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2021:

Required:

Prepare journal entries for each of the above transactions and additional year-end adjusting entries indicated. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations and round your final answers to nearest whole dollar.)

4. Record the cash received on the discounted note.

6. The Blankenship Company paid its account in full.

7. Sold stock with a book value of $5,500 and accepted a $7,000 noninterest-bearing note with a discount rate of 9% due on February 28, 2022.

8. To record the accrual of interest earned on note receivable.

9. To record the accrual of bad debt expense.

We are learning in this topic about adjusting entries. If our business affairs are to be conducted in a godly manner, we could consider Luke 16:12: "And if you have not been trustworthy with someone else's property, who will give you property of your own?" Think about this verse and explain how this might be applied to the topic of adjusting entries.

1) Determine the price of a $1 million bond issue under each of the following independent assumptions:

2) Prepare journal entries to record the issuance for each of the following the above independent assumptions

3) Only for Assumption 1 and 2, prepare an amortization schedule that determines interest at the effective rate.

On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $250,000 in cash. The equipment had originally cost $225,000 but had a book value of only $137,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method.

Ackerman reported $350,000 in net income in 2018 (not including any investment income) while Brannigan reported $114,500. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $4,500 per year.

a.) What is consolidated net income for 2018?

b.) What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan?

c.) What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream?

d.) What is the consolidated net income for 2019 if Ackerman reports $370,000 (does not include investment income) and Brannigan $125,000 in income? Assume that Brannigan is a wholly owned subsidiary and the equipment transfer was downstream.

On June 3, Swifty Company sold to Chester Company merchandise having a sale price of $2,100 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $96, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company.

(a) Prepare journal entries on the Swifty Company books to record all the events noted above under each of the following bases.

(1) Sales and receivables are entered at gross selling price.

(2) Sales and receivables are entered at net of cash discounts.

b.

1.

Looking to compare, thanks.

A) Allocate the two support departments' costs to the two operating departments using the following methods?

Direct Method
Step-down method (Allocate AS first)
Step -down method (Allocate IS first)

B) Compare and Explain differences in the support department costs allocated to each operating department?

C) What approaches might be used to decide the sequence in which to allocate support departments when using the step-down method?

Metlock Corporation was organized on January 1, 2017. It is authorized to issue 10,400 shares of 8%, $100 par value preferred stock, and 534,200 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year.

Prepare the journal entries to record the above transactions. (Credit account titles are automatically indented when 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.)

Computer Depot was incorporated on January 1st. The business maintains a retail personal computer replacement parts store, and also provides a full range of services, including computer diagnostic services, virus removal, hardware replacement, software installation and upgrades, and optimization services. The following transactions occurred during the first twelve months of operations: January 1st Common stock is issued in exchange for cash in the amount of ………….………….……………………… 350,000 February 8th The company purchases and pays for 300 units of computer replacement parts at a price of $25 per unit ………….. 7,500 March 1st The company pays cash for a one-year insurance policy in the amount of ……………….………………………..….. 10,752 March 31st Rent on a retail space for 12 months is paid in the amount of …..……….……………………………………… 10,512 April 1st Diagnostic tools and testing equipment with a useful life of 2 years is purchased for cash in the amount of …… 23,460 April 10th PC tuning supplies purchased on account in the amount of …………..…………………………………………… 4,250 May 15th The company purchases and pays for another 300 units of computer replacement parts at a price of $38 per unit ….. 11,400 May 30th PC repair services are performed on account in the amount of …………………………………………………………..………… 10,538 June 1st The company pays for advertisements to be run for the next 12 months in the amount of ………………………. 1,540 June 30th The company issues a 5-year bond with a face value of $100,000 and a stated annual rate of 8%. Interest is due on June 30th each year. The market rate is 6% on the date of issuance ……………………………. 100,000 July 25th Software installation & upgrade services are performed on account in the amount of …...……………………………..………… 10,759 July 31st 120 units of computer replacement parts are sold for $75 per unit with terms 2/10, n/30. The sale is recorded using the gross method in the amount of (see note c for cost flow assumptions) ……………………………………………………………………………………. 9,000 August 2nd Hardware replacement services are provided on account in the amount of ………………………………………………………………. 9,820 August 6th The company receives full payment from the customer for the July 31st sale ……………………………………… 7,350 September 15th Virus removal services are performed on account in the amount of ……………………..…………………………….………….. 6,295 September 29th Customer payments are received for services previously provided in the amount of ……………………………….. 1,520 October 13th 136 units of computer replacement parts are sold for $75 per unit with terms 2/10, n/30. The sale is recorded using the gross method in the amount of ………………………………………………………………………………………. 10,200 October 29th The company receives payment for half of the October 13th sale ……………………………………………………… 5,100 November 1st Equipment originally purchased on April 1st for $3,000 is sold for $1,500 cash November 15th A bookkeeper is hired to help the company with daily accounting taxes and annual tax preparation December 15th The bookkeeper is paid $4,500 for the previous month's services 4,500 Additional information: a. PC tuning supplies on hand at the end of the month are as follows: ……………………………………. 2,550 b. The year-end balance reported at the end of the year for the Allowance for Doubtful Accounts is estimated as 2.5% of outstanding receivables at the end of the year c. The Company uses a perpetual inventory system and accounts for costs using the Last-In-First-Out cost flow assumption. On December 31st, a count of ending inventory reveals that there are 344 units of computer replacement parts on hand. d. All revenue is recorded in the "Sales Revenue" account and reported net of cash discounts on the income statement. e. The effective interest method is used to amortize bond premiums and discounts f. Adjustments are made at the end of the year for prepaid insurance, rent, advertising, depreciation, and interest expense. g. The bookkeeper is paid a salary of $4,500 on the 15th of every month. h. The company declared dividends of $700 for the year i. Assume selling expenses include advertising and supplies expense. All other expenses, other than depreciation and interest expense, are considered general & administrative. REQUIRED: 1. Prepare journal entries for each transaction listed above (with descriptions). 2. Post journal entries to the general ledger accounts. 3. Prepare an unadjusted trial balance. 4. Prepare all necessary adjusting journal entries (with descriptions) and post to the general ledger. 5. Prepare an adjusted trial balance on December 31st. 6. Prepare closing entries, post to the general ledger, and carryforward balances to January 1st of the next year. 7. Prepare the following financial statements on December 31st (ignore income taxes): a. Income Statement (multi-step, see Example 5.2 in textbook) b. Statement of Stockholders' Equity c. Balance Sheet (classified) d. Statement of Cash Flows (indirect method) 8. Rename the excel file Lastname_PortfolioProject_Option1.xls and submit your completed project online.

A residence was constructed in 1986 for $72,000 on a lot that cost $14,000. Before the property was converted to rental use in the current year, a finished porch costing $8,000 was added and a $3,000 casualty loss was claimed. If the fair market value on the date of conversion to rental use was $84,000 ($74,000 for the house and $10,000 allocated for the land), what is the depreciable basis?

• A.$84,000
• B.$74,000
• C.$72,000
• D.$77,000

During the current year, Liquid Corporation, a calendar-year taxpayer, purchased and placed in service the following assets on the following dates:

The three assets are all 5-year property under MACRS. The Sec. 179 and bonus depreciation deductions were not elected. What is Liquid’s depreciation deduction?

• A.$1,720
• B.$3,440
• C.$6,880
• D.$3,640

Evaluate the role of Australian Securities Exchange (ASX) in assisting corporate governance in Australia?

Week 1 Assignment

Question 1

Ruddy Lewis operates a bike repair shop operating under the name R.L. Bike Repairs. The balances of his accounts on April 1 of the current year were as follows:

The following transactions were incurred for the month of April:

9. Inventory of supplies at end of the month (April 30) was $550

Theres an acctg problem( Ruddy Lewis..... ) my question is under the supplies column, you listed 650 under entry #9, entry for #9 should be 550.if we use 550 then problem doesnt balance.

pleas help

Inventory information for Part 311 of Oriole Corp. discloses the following information for the month of June.

Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.

Question Part Score

--/12

Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?

Question Part Score

--/3

Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?

Problem Two

Below you will find the adjusted trial balance for Black Eyed Peas. Complete the
Multiple-Step Income Statementand the Closing Entriesfor this business. Don’t forget
the double-underlines, $ signs, single-underlines, and all formatting conventionss.

You are getting ready to buy a 25-year-old apartment complex – If you want a 7% return on your investment what would you pay for the complex? Using the financials below what is the Gross Potential Income, Adjusted Gross Income, Total Expenses, NOI, Cash Flow, Loan to Value, and Debt Coverage Ratio. Answer all the same questions except you must have a 10% return? Show your work.

You are getting ready to buy a 25-year-old apartment complex – If you want a 7% return on your investment what would you pay for the complex? Using the financials below what is the Gross Potential Income, Adjusted Gross Income, Total Expenses, NOI, Cash Flow, Loan to Value, and Debt Coverage Ratio. Answer all the same questions except you must have a 10% return? Show your work.

You are getting ready to buy a 25-year-old apartment complex – If you want a 7% return on your investment what would you pay for the complex? Using the financials below what is the Gross Potential Income, Adjusted Gross Income, Total Expenses, NOI, Cash Flow, Loan to Value, and Debt Coverage Ratio. Answer all the same questions except you must have a 10% return? Show your work.

Basic Information:

100 units Built - 1994

Average Rent - $950/ unit/ mt. Taxes - $95,000/ yr.

Insurance - $25,000/ yr Debt Service – $35,000

Amortization – $3,000/ yr. Management – 5% of AGI

Vacancy – 7% Landscape –$30,000/ yr.

Maintenance – $120,000/ yr. Depreciation - $60,000

Pest Control - $4,000/ yr. Other Income - $5,000/yr.

Payroll - $125,000 Utilities - $18,000/ yr.

General & Admin - $40,000

Loan: $4,000,000 @ 6% – interest only for 5 years ($240,000 annual payment