1. The Cromwell Company sold equipment for $35,000. The equipment, which originally cost $100,000 and had an estimated useful life of 10 years and no salvage value, was depreciated for five years using the straight-line method. What is the gain or loss on the sale? the correct answer is $15,000
2. Weston Company purchased a tooling machine on January 3, 2007 for $1,000,000.The machine was being depreciated on the straight-line method over an estimated useful life of 10 years, with no salvage value. At the beginning of 2014, the company paid $250,000 to overhaul the machine. As a result of this improvement, the company estimated that the useful life of the machine would be extended an additional 5 years (15 years total). What should be the depreciation expense recorded for the machine in 2014? the correct answer is $68,750

The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Required:

1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

2. Should the production and sale of racing bikes be discontinued?

3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.

7. What will be used to identify clients in default of trading terms?

8. What are the standards that you will need to adhere to when contacting clients in default of trading terms promptly and courteously to make satisfactory arrangements for the payment of their outstanding monies?

9. Discuss an organisational policy/procedures that could be implemented for monies owing that constitute breach of organisational credit policy

10. What types of information could be obtained from a review of the previous activities and of communication with clients?

(1)

On January 1, Alan King decided to deposit $58,800 in a savings account that will provide funds four years later to send his son to college. The savings account will earn 8% annually. Any interest earned will be added to the fund at year-end (rather than withdrawn). (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Required:

1. How much will be available in four years?

2. Assume that Alan King follows GAAP. Prepare the journal entry that Alan should make on January 1.

3. What is the total interest for the four years?

4. Assume that Alan King follows GAAP. Prepare the journal entry that Alan should make on December 31 of the first year and December 31 of the second year.

(2)

At the end of each year, you plan to deposit $2,000 in a savings account. The account will earn 9% annual interest, which will be added to the fund balance at year-end. The first deposit will be made at the end of Year 1. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Required:

1. Assume you follow GAAP. Prepare the required journal entry at the end of Year 1.

2. What will be the balance in the savings account at the end of the 10th year (i.e., after 10 deposits)?

3. What is the interest earned on the 10 deposits?

4. How much interest revenue did the fund earn in the second year? In the third year?

5. Assume you follow GAAP. Prepare the all required journal entries at the end of the second and third years.

Question 1

1. <Budget & Schedule>

   	Budget	Start Week	End Week
   Task1	93,019	1	10
   Task2	140,853	1	10
   Task3	183,921	1	10
   Task4	205,017	1	10

   <Cost Loaded Schedule>

   	Week1	Week2	Week3	Week4	Week5
   Task1	10% of Budget	10% of Budget	10% of Budget	10% of Budget	10% of Budget
   Task2	10% of Budget	10% of Budget	10% of Budget	15% of Budget	15% of Budget
   Task3	10% of Budget	10% of Budget	10% of Budget	15% of Budget	15% of Budget
   Task4	15% of Budget	15% of Budget	5% of Budget	5% of Budget	5% of Budget

   <Percentage of Completion>

   	Week1	Week2	Week3	Week4	Week5
   Task1	8% of Budget	10% of Budget	10% of Budget	15% of Budget	15% of Budget
   Task2	10% of Budget	10% of Budget	10% of Budget	15% of Budget	15% of Budget
   Task3	10% of Budget	10% of Budget	10% of Budget	20% of Budget	20% of Budget
   Task4	20% of Budget	20% of Budget	10% of Budget	10% of Budget	10% of Budget

   <Actual Cost of Work Performed>

   	Week1	Week2	Week3	Week4	Week5
   Task1	8% of Budget	12% of Budget	14% of Budget	18% of Budget	30% of Budget
   Task2	9% of Budget	10% of Budget	9% of Budget	15% of Budget	14% of Budget
   Task3	10% of Budget	10% of Budget	10% of Budget	20% of Budget	15% of Budget
   Task4	20% of Budget	25% of Budget	15% of Budget	20% of Budget	20% of Budget

   What is BCWP of the project at the end of week 2 (BCWP accumulated from the beginning of the project)?

Problem 21-5 Statement of cash flows; direct method [LO21-3, 21-8]

Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.

Additional information from the accounting records:

1. Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2018.
2. During 2018, equipment with a cost of $600,000 (90% depreciated) was sold.
3. The statement of shareholders' equity reveals reductions of $225,000 and $370,000 for stock dividends and cash dividends, respectively.

Required:
Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)

How to obtain the accumulated depreciate - Training equipment = $34,100?

How to balance the adjusted trail balance?

On 1 October, Hercules Ho sold a treadmill that costs $5,000, with accumulated depreciation of $2,000 as at 31 Dec 2017 for cash of $3,000. Hercules Ho deposited the cash into his personal bank account. Hercules Ho forgot to inform his accountant of this transaction. According to him, the cash taken by him was to be treated as a loan to him.
Both the cost of the treadmill and the accumulated depreciation were included in the amount shown for training equipment at cost and the accumulated depreciation for training equipment in the unadjusted trial balance above. The residual value of the treadmill was originally estimated to be $500.

No depreciation has been charged for the year ended 31 Dec 2018. During the year, no additional non-current assets was purchased. The company depreciates non-current assets held at 31 Dec 2018 as follows:
 Training equipment at cost - straight line over five years. The residual value of the training equipment at cost was estimated to be $15,000.

Exercise 21-27 Statement of cash flows; direct method [LO21-3, 21-5, 21-6, 21-8]

Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below.

Additional information from the accounting records:

1. During 2018, $241 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.
2. In order to maintain the usual policy of paying cash dividends of $61 million, it was necessary for Red to borrow $61 million from its bank.

Required:
Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

Required:Journalize the transactions and the adjusting entries. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations. Round your final answers to the nearest cent.

Exercise 21-17 Indirect method; reconciliation of net income to net cash flows from operating activities [LO21-4]

The accounting records of EZ Company provided the data below.

Prepare a reconciliation of net income to net cash flows from operating activities. (Amounts to be deducted should be indicated with a minus sign.)

Exercise 21-23 Cash flows from operating activities (direct method) [LO21-3]

Portions of the financial statements for Myriad Products are provided below.

Required:
Prepare the cash flows from operating activities section of the statement of cash flows for Myriad Products Company using the direct method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Computation of deferred taxes under IFRS is slightly different from GAAP. For example, in the United Kingdom (which follows IFRS), companies use the crystallization approach. An equivalent concept in the United States is “realization.”

The concept underlying this “crystallization” approach is that companies recognize deferred income taxes only if the taxes are expected to crystallize. Therefore, if a liability is deferred indefinitely, then the present value of that liability is zero. No deferred tax liability is recognized if the accumulated deferred tax amount is expected to increase each year, thereby delaying indefinitely the ultimate liquidation of this obligation.

1. Compare and contrast the theory behind the “crystallization” approach with the inter-period allocation approach used in the U.S.
2. How might this same concept be applied to the recognition of liability for accounts payable? That is, if accounts payable are expected to increase each year, should the crystallization concept apply to this liability? Why or why not?
3. How reasonable does this approach seem? Explain.

Alpha-Tech, a rapidly growing distributor of electronic components, is formulating its plans for 20x5. Carol Jones, the firm’s marketing director, has completed the following sales forecast.

Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. The following information will be used in preparing the cash flow projection.

• Alpha-Tech’s excellent record in accounts receivable collection is expected to continue. Seventy percent of billings are collected the month after the sale, and the remaining 30 percent two months after.
• The purchase of electronic components is Alpha-Tech’s largest expenditure, and each month’s cost of goods sold is estimated to be 30 percent of sales. Seventy percent of the parts are received by Alpha-Tech one month prior to sale, and 30 percent are received during the month of sale.
• Historically, 70 percent of accounts payable has been paid one month after receipt of the purchased components, and the remaining 30 percent has been paid two months after receipt.
• Hourly wages and fringe benefits, estimated to be 30 percent of the current month’s sales, are paid in the month incurred.
• General and administrative expenses are projected to be $15,670,000 for the year. The breakdown of these expenses is presented in the following schedule. All cash expenditures are paid uniformly throughout the year, except the property taxes, which are paid in four equal installments at the end of each quarter.

  20x5 Forecasted General and Administrative Costs
  (in thousands)
  Salaries and fringe benefits	$	3,000
  Promotion		3,500
  Property taxes		1,330
  Insurance		2,830
  Utilities		1,500
  Depreciation		3,510
  Total	$	15,670

• Income-tax payments are made at the beginning of each calendar quarter based on the income of the prior quarter. Alpha-Tech is subject to an income-tax rate of 40 percent. Alpha-Tech’s operating income for the first quarter of 20x5 is projected to be $3,000,000. The company pays 100 percent of the estimated tax payment.
• Alpha-Tech maintains a minimum cash balance of $510,000. If the cash balance is less than $510,000 at the end of each month, the company borrows amounts necessary to maintain this balance. All amounts borrowed are repaid out of the subsequent positive cash flow. The projected April 1, 20x5, opening balance is $510,000.
• Alpha-Tech has no short-term debt as of April 1, 20x5.
• Alpha-Tech uses a calendar year for both financial reporting and tax purposes.

Required:

1. Prepare a cash budget for Alpha-Tech by month for the second quarter of 20x5. For simplicity, ignore any interest expense associated with borrowing. (Negative amounts should be indicated by a minus sign.)

On June 2, 2018, Lokar Corporation purchases a patent for $68,000 from the inventor of a new extrusion process. The patent has 12 years remaining on its legal life. Also, Lokar purchases substantially all the assets of the Barrios Corporation for $750,000 on September 8, 2018. The values of the assets listed in the purchase agreement are as follows:

Refer to the MACRS Depreciation Table to answer the following question.

Note: In your calculations, round amortization percentages to two decimal places, and dollar amounts to the nearest whole dollar. Assume the equipment has a MACRS recovery period of 7 years and that the full election expense is taken in the year of acquisition.

The maximum 2018 cost-recovery deductions for the tangible and intangible assets purchased is $

What the main purpose of the consolidation entries for intercompany sale of inventory and long term asset transactions. I hope you can clearly clarify this for me.