The journal of accountancy is written created but which organization?

                a. FASB

                b. IASB

                c. AICPA                                  

                d. SEC

LEASE VERSUS BUY Morris-Meyer Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the required amount. Alternatively, a Nevada investment banking firm that represents a group of investors believes that it can arrange for a lease financing plan. Assume that the following facts apply: The equipment falls in the MACRS 3-year class. The applicable MACRS rates are 33%, 45%, 15%, and 7%.

2. Estimated maintenance expenses are $75,000 per year.

3. Morris-Meyer’s federal-plus-state tax rate is 40%.

4. If the money is borrowed, the bank loan will be at a rate of 15%, amortized in 4 equal installments to be paid at the end of each year.

5. The tentative lease terms call for end-of-year payments of $400,000 per year for 4 years.

6. Under the proposed lease terms, the lessee must pay for insurance, property taxes, and maintenance.

7. The equipment has an estimated salvage value of $400,000, which is the expected market value after 4 years, at which time Morris-Meyer plans to replace the equipment regardless of whether the firm leases or purchases it. The best estimate for the salvage value is $400,000, but it may be much higher or lower under certain circumstances.

To assist management in making the proper lease-versus-buy decision, you are asked to answer the following questions.

a. Assuming that the lease can be arranged, should Morris-Meyer lease or borrow and buy the equipment? Explain.

b. Consider the $400,000 estimated salvage value. Is it appropriate to discount it at the same rate as the other cash flows? What about the other cash flows—are they all equally risky? Explain.

On June 30, 2018, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2033 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2018. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds on June 30, 2018. 2. Calculate the interest expense Singleton reports in 2018 for these bonds using the effective interest method.

Required 1

Determine the price of the bonds on June 30, 2018. (Enter your answers in whole dollars. Round percentage answers to one decimal place. Round your final answers to nearest whole dollar amount.)

Required 2

Calculate the interest expense Singleton reports in 2018 for these bonds using the effective interest method. (Enter your answers in whole dollars. Round your final answers to nearest whole dollar amount.)

Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available:

• Capitalization period: January 1, 2019, to June 30, 2020
• Expenditures on project:

  2019:
  	January 1	$ 516,000
  	May 1	549,000
  	October 1	492,000
  2020:
  	March 1	1,512,000
  	June 30	600,000

• Amounts borrowed and outstanding:
     $1.4 million borrowed at 12%, specifically for the project
     $5 million borrowed on July 1, 2018, at 14%
     $18 million borrowed on January 1, 2017, at 8%

Required:

Note: Round all final numeric answers to two decimal places.

1. Compute the amount of interest costs capitalized each year.

   Capitalized interest, 2019	$ fill in the blank 1
   Capitalized interest, 2020	$ fill in the blank 2

2. If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2020.

   $ fill in the blank 3

3. Since GAAP requires accrual accounting, if a company capitalizes interest during the construction period it will report _________ income than if it had not capitalized interest. In future periods, the same company will report ________ income than if it had not capitalized interest.

In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows: 2018 2019 2020 Cost incurred during the year $ 2,044,000 $ 2,628,000 $ 2,890,800 Estimated costs to complete as of year-end 5,256,000 2,628,000 0 Billings during the year 2,170,000 2,502,000 5,328,000 Cash collections during the year 1,885,000 2,600,000 5,515,000 Westgate recognizes revenue over time according to percentage of completion. Required:

A company borrowed $40,000 on June 30, 2016 from a bank. The bank is charging an interest rate of 10% annually. Interest is compounded quarterly. If the loan is due on September 30, 2017, how many times will the company record a journal entry for Interest Expense over the whole loan period?

4-5 The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company. NELSON COMPANY Unadjusted Trial Balance January 31, 2017 Debit Credit Cash $ 31,200 Merchandise inventory 14,500 Store supplies 5,200 Prepaid insurance 2,800 Store equipment 42,600 Accumulated depreciation—Store equipment $ 16,000 Accounts payable 13,000 Common stock 3,800 Retained earnings 19,000 Dividends 2,100 Sales 141,750 Sales discounts 1,900 Sales returns and allowances 2,050 Cost of goods sold 38,000 Depreciation expense—Store equipment 0 Salaries expense 27,800 Insurance expense 0 Rent expense 16,000 Store supplies expense 0 Advertising expense 9,400 Totals $ 193,550 $ 193,550 Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system. Additional Information: Store supplies still available at fiscal year-end amount to $2,700. Expired insurance, an administrative expense, for the fiscal year is $1,500. Depreciation expense on store equipment, a selling expense, is $1,600 for the fiscal year. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end. rev: 10_24_2018_QC_CS-145044 Required: 1. Using the above information prepare adjusting journal entries: 2. Prepare a multiple-step income statement for fiscal year 2017. 3. Prepare a single-step income statement for fiscal year 2017.

• 1

  Store supplies still available at fiscal year-end amount to $2,700.

• 2

  Expired insurance, an administrative expense, for the fiscal year is $1,500.

• 3

  Depreciation expense on store equipment, a selling expense, is $1,600 for the fiscal year.

• 4

  To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end.

• Prepare a multiple-step income statement for fiscal year 2017.

  	NELSON COMPANY Income Statement For Year Ended January 31, 2017 Expense Selling expenses Total selling expenses General and administrative expenses Total general and administrative expenses Total expenses

• Prepare a single-step income statement for fiscal year 2017.

  	NELSON COMPANY Income Statement For Year Ended January 31, 2017 Expenses Total expenses

BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows:   

Required:

a. Allocate the cost of the service departments to the operating departments using the direct method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)

b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)

c. Allocate the cost of the service departments to the operating departments using the reciprocal method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)

Financial Statements and Closing Entries

The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 2018, the end of the fiscal year, the accountant for The Gorman Group prepared an end-of-period spreadsheet, part of which follows:

Required:

1. Prepare an income statement.

Prepare a Retained Earnings Statement.

Prepare a balance sheet.

2. Journalize the entries that were required to close the accounts at October 31. For a compound transaction, if a box does not require an entry, leave it blank.

3. If Retained Earnings had instead decreased $30,300 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss? Enter all amounts as positive numbers.
$  

Honey Ltd, a New Zealand company, has sold US$150,000 of products to the US, to receive cash exactly one month later. At the time of sale, the spot rate of exchange is US$0.55, that is, NZ$1 buys US$0.55. Honey Ltd wishes to hedge the currency risk associated with this transaction, so on the day of the sale, the company buys a put option – that is, it buys the right to sell US$150,000 at an exercise price of US$0.57 one month later. The option costs $3,000 in cash. The relevant information is shown in the table below:

Required:

(i) In accordance with NZ IFRS 9, show the journal entry to record the sale and any additional journal entries that are required through to (and including) settlement.

(ii) What is the most that Honey Ltd can lose overall in this hedging activity (regardless of what the exchange rate is at settlement date)? Show all workings.

Dividends Per Share Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 15,000 shares of cumulative preferred 1% stock, $120 par, and 50,000 shares of $15 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $12,000; second year, $34,000; third year, $46,200; fourth year, $76,500. Compute the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0". 1st Year 2nd Year 3rd Year 4th Year Preferred stock (dividend per share) $ $ $ $ Common stock (dividend per share) $ $ $ $

Suppose that the 2017 actual and 2018 projected financial statements for Cramner Corp. are initially as shown in the following tables. In these tables, sales are projected to rise 35 percent in the coming year, and the components of the income statement and balance sheet that are expected to increase at the same 35 percent rate as sales are indicated with an italics font. Assuming that Cramner Corp. wants to cover the AFN with 45 percent equity, 25 percent long-term debt, and the remainder from notes payable, what amount of additional funds will they need to raise if debt carries an 8 percent interest rate?

On December 31, 2019, the Income Statement section of the worksheet is shown below. The balance of Ally Logan’s drawing account is $32,000.

Prepare the closing entries that should be made in the general journal.

Journal entry worksheet
Record entry to transfer sales, interest, purchases return and allowances and purchase discounts to income summary.
Note: Enter debits before credits.
  
Date   General Journal   Debit   Credit
Dec 31, 2019