On March 1, 2022, Stratford Lighting issued 14% bonds, dated March 1, with a principal amount of $300,000. The bonds sold for $294,000 and mature on February 28, 2042 (20 years). Interest is paid semiannually on August 31 and February 28. The market yield for bonds of similar risk and maturity was 14.3%.

Required:
1. to 4. Prepare the journal entry to record the issuance of the bonds by Stratford Lighting on March 1, 2022, interest on August 31, 2022, interest on December 31, 2022 and interest on February 28, 2023. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
  

LO 2) Aston Corporation performs year-end planning in November of each year before its calendar year ends in December. The preliminary estimated net income is $3 million. The CFO, Rita Warren, meets with the company president, J. B. Aston, to review the projected numbers. She presents the following projected information.

Estimated fair value at December 31, 2017:

Other information at December 31, 2017:

The corporation has never used robotic equipment before, and Warren assumed an accelerated method because of the rapidly changing technology in robotic equipment. The company normally uses straight-line depreciation for production equipment.

Aston explains to Warren that it is important for the corporation to show a $7,000,000 income before taxes because Aston receives a $1,000,000 bonus if the income before taxes and bonus reaches $7,000,000. Aston also does not want the company to pay more than $3,000,000 in income taxes to the government.

Instructions

(a)  

What can Warren do within GAAP to accommodate the president's wishes to achieve $7,000,000 in income before taxes and bonus? Present the revised income statement based on your decision.

(b)  

Are the actions ethical? Who are the stakeholders in this decision, and what effect do Warren's actions have on their interests?

LO 2) Aston Corporation performs year-end planning in November of each year before its calendar year ends in December. The preliminary estimated net income is $3 million. The CFO, Rita Warren, meets with the company president, J. B. Aston, to review the projected numbers. She presents the following projected information.

Estimated fair value at December 31, 2017:

Other information at December 31, 2017:

The corporation has never used robotic equipment before, and Warren assumed an accelerated method because of the rapidly changing technology in robotic equipment. The company normally uses straight-line depreciation for production equipment.

Aston explains to Warren that it is important for the corporation to show a $7,000,000 income before taxes because Aston receives a $1,000,000 bonus if the income before taxes and bonus reaches $7,000,000. Aston also does not want the company to pay more than $3,000,000 in income taxes to the government.

Instructions

(a)  

What can Warren do within GAAP to accommodate the president's wishes to achieve $7,000,000 in income before taxes and bonus? Present the revised income statement based on your decision.

(b)  

Are the actions ethical? Who are the stakeholders in this decision, and what effect do Warren's actions have on their interests?

Question 1 Topic: Property, plant and equipment.

Answer both parts independently of each other.

PART A On 1 July 2018, ABC Ltd purchased and recorded equipment at its cost of acquisition of $320 000. The equipment is expected to have a useful life for seven years and an estimated residual value of $10 000. ABC Ltd depreciates the asset using the straight-line method. ABC Ltd uses the revaluation model to equipment and records accumulated depreciation using the net method. The reporting period end of ABC Ltd is 30 June. ABC Ltd revalued the equipment on 30 June 2020, when the fair value of the equipment was $250 000. On 1 July 2020, the useful life of the equipment is reassessed: it is expected to have a remaining useful life of 6 years. The estimated residual value remains unchanged. ABC Ltd revalued the equipment on 30 June 2021, when the fair value of the equipment was $180 000. On 30 June 2022 the equipment was sold for $200 000.

REQUIRED: (1) Prepare journal entries to account for the revaluation of the equipment of 30 June 2020. Show all working steps.

(2) Prepare journal entries to account for the revaluation of the equipment of 30 June 2021. Show all working steps.

(3) Prepare journal entries to account for the sale of the equipment of 30 June 2022. Show all working steps.

PART B

ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a useful life of five years and was depreciated on a straight-line basis with no disposal value. ABC Ltd adopts the cost model for accounting for assets in this class. ABC Ltd makes the following estimates of the value of the machine: Date Net selling price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000 30 June 2020 $460 000 420 000 490 000 Indicators of impairment were identified on 30 June 2019, while indicators of a reversal of impairment were found on 30 June 2020.

REQUIRED: Prepare journal entries relating to this asset from 30 June 2019 to 30 June 2020. Show the steps of impairment (or reversal of impairment) tests. Show all working (step by step)

Last month, two employees were terminated for submitting fraudulent timesheets which were approved and paid through the accounting system. The leadership team expressed concern that this practice could be widespread. As a financial accounting manager at Waterbag Inc., you were assigned to a project to identify solutions to prevent recurrences.

Using the terms accounts payable fraud cases or payroll fraud cases, find a recent example or examples of cases involving accounts payable or payroll. Based on your research, what recommendations would you share with the leadership team to improve both departments? Explain your answer.

Make sure you select a different case from your classmates.

Explain and provide an example for the following job order cost system entries: actual manufacturing overhead used in production, estimated manufacturing overhead applied in production and cost of goods manufactured transferred from the production floor to the warehouse. For each journal entry, identify if the cost being recorded is a product cost or a period cost.

Explain and provide an example for the following job order cost system entries: sale of goods to the customer, administrative costs incurred and selling costs incurred. For each journal entry, identify if the cost being recorded is a product cost or a period cost.

These items are taken from the financial statements of Ivanhoe Company for 2022.

1. Prepare an income statement for the year ended December 31, 2022. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)


2. Prepare a retained earnings statement for the year ended December 31, 2022. (List items that increase retained earnings first.)

3. Prepare a classified balance sheet as of December 31, 2022. (List Current Assets in order of liquidity.)

Explain and provide an example for the following job order cost system entries: initial purchase of raw materials, the requisition of materials from the warehouse to the production floor, and factory labor used in production. For each journal entry, identify if the cost being recorded is a product cost or a period cost.

Topic: Current accounting for leases requires that certain leases be capitalized. For capital leases, an asset and the associated liability are recorded. Whether or not the lease is capitalized, the cash fows are the same. The rental payments are set by contract and are paid over time at equally spaced intervals.  

Required:

If one of the objectives of fnancial reporting is to enable investors, creditors, and other users to project future cash fows, what difference does it make whether we report the lease as a liability or simply describe its terms in foot-notes? Discuss.

Kubin Company’s relevant range of production is 24,000 to 31,000 units. When it produces and sells 27,500 units, its average costs per unit are as follows:

Required:

1. If 24,000 units are produced and sold, what is the variable cost per unit produced and sold?

2. If 31,000 units are produced and sold, what is the variable cost per unit produced and sold?

3. If 24,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

4. If 31,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

5. If 24,000 units are produced, what is the average fixed manufacturing cost per unit produced?

6. If 31,000 units are produced, what is the average fixed manufacturing cost per unit produced?

7. If 24,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?

8. If 31,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?

(Round per unit values to 2 decimal places.)

A, B and C, three individuals, form a general partnership by contributing the following property in exchange for equal 1/3 interests in the partnership’s capital, profits, and losses: A contributes land, a capital asset that A acquired several years ago, worth $100 in which A has a tax basis of $40. B contributes machinery with a basis of $25 and a value of $60, plus $40 in cash. B purchased the machinery several years ago for $75 and has taken $50 of depreciation. C contributes inventory with a value of $100 in which C has a basis of $90. What gain and/or loss will be recognized by the partners and the partnership on formation? What will be the partnership’s “inside basis” and holding period for each of the contributed assets? What will be the partners’ “outside bases” and holding period for their partnership interests? Construct an opening balance sheet for ABC. Your balance sheet should be in the following form: Assets Liabilities & Capital Basis Book Liabilities Cash $ $ Other assets Capital Accounts Tax Book A $ $ B C home / study / business / accounting / accounting questions and answers / 1. a, b and c, three individuals, form a general partnership by contributing the following ... Question: 1. A, B and C, three individuals, form a general partnership by contributing the following proper... (1 bookmark) 1. A, B and C, three individuals, form a general partnership by contributing the following property in exchange for equal 1/3 interests in the partnership’s capital, profits, and losses: A contributes land, a capital asset that A acquired several years ago, worth $100 in which A has a tax basis of $40. B contributes machinery with a basis of $25 and a value of $60, plus $40 in cash. B purchased the machinery several years ago for $75 and has taken $50 of depreciation. C contributes inventory with a value of $100 in which C has a basis of $90. (a) What gain and/or loss will be recognized by the partners and the partnership on formation? (b) What will be the partnership’s “inside basis” and holding period for each of the contributed assets? (c) What will be the partners’ “outside bases” and holding period for their partner

On January 1, 2019, Pronghorn Corporation purchased a building to use as its factory, and some equipment to manufacture its product. The following information was determined at the time of purchase:

On January 1, 2022, Pronghorn decided to change the depreciation method for the building to the straight-line method, as a result of a change in the pattern of benefits received. There was no change to the total useful life or the residual value of the building.

Pronghorn also decided that the equipment would have a total useful life of only 13 years, with a residual value of only $55,000. The depreciation method for the equipment did not change. Prepare the journal entries to record depreciation for both assets for 2022

QUESTION: Paraphrase this article into your own words.

Article: Ghost Goods: How to Spot Phantom Inventory by JOSEPH T. WELLS

In this article “Ghost Goods: How to Spot Phantom Inventory” by JOSEPH T. WELLS examines
the inventory’s manipulations. The valuation of inventory involves two separate elements:
quantity and price. Determining the quantity of inventory on hand is often difficult. Goods are
constantly being bought and sold, transferred among locations and added during a manufacturing
process. Figuring the unit cost of inventory can be problematic, too; FIFO, LIFO, average cost
and other valuation methods can routinely make a material difference in what the final inventory
is worth. As a result, the complex inventory account is an attractive target for fraud.
The obvious way to increase inventory asset value is to create various records for items that do
not exist: unsupported journal entries, inflated inventory count sheets, bogus shipping and
receiving reports and fake purchase orders. Since it can be difficult for the auditor to spot such
phony documents, he or she normally uses other means to substantiate the existence and value of
inventory.
Observation of physical inventory. The most reliable way to validate inventory quantity is to
count it in its entirety.
Analytical procedures. Ghost goods throw a company’s books out of kilter. Compared with
previous periods, the cost of sales will be too low; inventory and profits will be too.

How can I, do I or should I, perform a financial analysis using financial ratios to evaluate the firm's liquidity, solvency, and profitability for two sequential years using Amazon as the company?