Brown Company paid cash to purchase the assets of Coffee Company on January 1, 2019. Information is as follows:
Total cash paid $2,990,000
Assets acquired:
Land $600,000
Building $600,000
Machinery $500,000
Patents $600,000
The building is depreciated using the double-declining balance method. Other information is:
Salvage value $60,000
Estimated useful life in years 30
The machinery is depreciated using the units-of-production method. Other information is:
Salvage value, percentage of cost 10%
Estimated total production output in units 400,000
Actual production in units was as follows: 2019: 40,000
2020: 80,000
2021: 120,000
The patents are amortized on a straight-line basis. They have no salvage value.
Estimated useful life of patents in years 20
On December 31, 2020, the value of the patents was estimated to be $900,000
Where applicable, the company uses the ½ year rule to calculate depreciation and amortization expense in the years of acquisition and disposal. Its fiscal year-end is December 31.
The machinery was traded on December 2, 2021 for new machinery. Other information is:
Fair value of old machinery $240,000
Trade-in allowance $336,000
List price for new machinery $504,000
Estimated useful life of new machinery in years 20
Estimated salvage value of new machinery $15,120
The new machinery if depreciated using the stright-line method and ½ year rule.
On August 14, 2023, an addition was made. This amount was material. Other relevant information is as follows:
Amount of addition, paid in cash $100,000
Number of years of useful life from 2023 (original machinery and addition): 20
Salvage value, percentage of addition 10%
Required: Prepare journal entries to record:
1 The purchase of the assets of Coffee.
2 Depreciation and amortization expense on the purchased assets for 2019.
3 The decline (if any) in value of the patents at December 31, 2020.
4 The trade-in of the old machinery and purchase of the new machinery.
5 Depreciation on the new machinery for 2021.
6 Cost of the addition to the machinery on August 14, 2023.
7 Depreciation on the new machinery for 2023.
In: Accounting
Part C
Question 1
Mr. Kenny is an accountant at AF Textile, and he plays squash with Mr. Zuni, the CEO of AF Textile. The CEO wanted to decrease net income with the objective to pay lesser tax. Mr. Kenny was eager to get into Mr. Zuni’s elite social circle; he boasted to Mr. Zuni that he knew some accounting tricks that could decrease company income by simply disclosing company’s capital expenditure as their revenue expenditure. At the end of the year, Mr. Kenny changed the debits from “capital expenditures” to “revenue expenditure” on several transactions. Later, Mr. Zuni achieved his objective of paying lesser tax, and the manipulations were never discovered.
Required:
Differentiate between Capital Expenditure and Revenue Expenditure. (4 marks)
How did the change in journal entries affect the net income and net assets of the company at year-end? (3 marks)
In: Accounting
Naa Tetterley Company Ltd engaged your firm to prepare
a Cash Budget for them. They informed you that:
a. They have two bills payable of $55,000 and $60,000 with due
dates of 31st July and 30th September, 2020 respectively.
These bills will be paid on their due dates
b. The Company wishes to arrange with its bankers for any necessary
re-financing in advance, which will ensure a minimum end of month
cash balance of $25,000
You are also given the following information: i. The projected
sales and purchases:
SALES
($) PURCHASES
($)
June
65,000
July. 57,000
July 90,000 August. 45,000
August 65,000 September. 51,000
September 68,000 October. 42,000
October 75,000
ii. The cash balance on 1st July, 2020 will be $18,000
iii. All sales are on terms of a 2% discount allowed on any payment made by the tenth of the month following the sale. Past experience indicates that 70% of the sales are collected within the first 10 days; 20% during the remainder of the first month; and 8% in the second month following the sale. 2% of the sales are considered irrecoverable.
iv. All payments for purchases qualify for 2% discount. Two-thirds of the invoices will be paid in the month of the purchase, and one-third in the month following the purchase.
v. Operating expenses are expected at $6,000 for July 2020. This will increase by 10% per month for the subsequent months.
vi. The company will receive $1,500 monthly from property rentals. This amount will be paid half-a-month in arrears.
vii. An amount of $2,500 will be realised in July from the sale of obsolete equipment.
viii. The company will buy a new plant for $42,000 on 1st June, 2020. The payment for this amount will be spread over 6 monthly equal instalments, starting from August, 2020.
ix. The company anticipates receiving interest on investment of $10,000 every month.
Required:
a. Prepare the Cash Budget for the three months ending 30th
September, 2020
b. Outline any four benefits and four limitations
respectively of a Cash
Budget.
In: Finance
You have been asked to do a training session on improving interviewing skills. List five things you have experienced and know about good communication in interview situations, from an interviewer or from an interviewee perspective. From that list, formulate an outline for a training session.
In: Operations Management
Shamrock Corporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May 31, 2020, and May 31, 2021. The income from operations for the fiscal year ended May 31, 2020, was $1,818,000 and income from continuing operations for the fiscal year ended May 31, 2021, was $2,424,000. In both years, the company incurred a 10% interest expense on $2,424,000 of debt, an obligation that requires interest-only payments for 5 years. The company experienced a loss from discontinued operations of $575,000 on February 2021. The company uses a 20% effective tax rate for income taxes. The capital structure of Shamrock Corporation on June 1, 2019, consisted of 1,037,000 shares of common stock outstanding and 19,100 shares of $50 par value, 6%, cumulative preferred stock. There were no preferred dividends in arrears, and the company had not issued any convertible securities, options, or warrants. On October 1, 2019, Shamrock sold an additional 511,000 shares of the common stock at $20 per share. Shamrock distributed a 20% stock dividend on the common shares outstanding on January 1, 2020. On December 1, 2020, Shamrock was able to sell an additional 785,000 shares of the common stock at $22 per share. These were the only common stock transactions that occurred during the two fiscal years.
Determine the weighted-average number of shares that Shamrock
Corporation would use in calculating earnings per share for the
fiscal year ended:
| Weighted-average number of shares | ||||
| (1) | May 31, 2020 | |||
| (2) | May 31, 2021 |
Prepare, in good form, a comparative income statement, beginning with income from operations, for Shamrock Corporation for the fiscal years ended May 31, 2020, and May 31, 2021. This statement will be included in Shamrock’s annual report and should display the appropriate earnings per share presentations. (Round earnings per share to 2 decimal places, e.g. $1.55.)
In: Accounting
The personnel office at a large electronics firm regularly
schedules job interviews and maintains records of the interviews.
From the past records, they have found that the length of a first
interview is normally distributed, with mean μ = 36
minutes and standard deviation σ = 9 minutes. (Round your
answers to four decimal places.)
1.What is the probability that a first interview will last 40 minutes or longer?
2. Twelve first interviews are usually scheduled per day. What is the probability that the average length of time for the twelve interviews will be 40 minutes or longer?
In: Statistics and Probability
| 9. | At the end of a job interview, you may be invited
to ask questions. What should you ask about?
(10%) |
||
| A. | The exact salary for the post | ||
| B. | When you can expect to hear from them | ||
| C. | Whether overtime work is required for the post | ||
| D. | The work style of your prospective superior | ||
| 10. | During the interview, which of the following should
be avoided?
(10%) |
||
| A. | Having a direct eye contact with the interviewer(s) | ||
| B. | Saying ‘please’ and ‘thank you’ | ||
| C. | Using ‘yes’ or ‘no’ when answering questions | ||
| D. | Thanking them for their time | ||
In: Operations Management
Problem 3. You currently make $100,000 a year and expect your salary increase by 10% a year for 20 years. You are considering an MBA which will cost you $120,000 for the entire education. If you take the MBA, you will have to pay the full tuition today (all upfront) and you will make zero earnings at the end of years 1 and 2. However, after graduation you’ll have an opportunity to join a premier investment bank, which promises $130,000 a year, which will grow by 15% for 18 years after graduation. Is the MBA a good deal? Assume a constant discount rate of 15%. What if rates fall to 10%? What if rates rise to 17%, how does your answer change? Show your detailed spreadsheet calculations (Alt#2). Note: salary is paid at the end of each year.
In: Finance
When the price of a soda from the campus vending machine was $0.50 per can, 100 cans were sold each day. After the price increased to $0.60 per can, sales dropped to 80 cans per day. Over this range, the absolute price elasticity of demand for soft drinks was approximately equal to
| A. |
1.00 |
|
| B. |
2.00 |
|
| C. |
1.47 |
|
| D. |
1.22 |
1 points
QUESTION 9
Luna is a manufacturer of fashion jewelry. The CEO of Luna makes sure that the company frequently introduces new styles of jewelry to suit changes in tastes and stay a step ahead of her competitors. Which of the following success drivers of performance is the CEO using?
| A. |
cost competitiveness |
|
| B. |
innovation |
|
| C. |
service |
|
| D. |
quality |
In: Economics
Read:
A Guide to the Good Life: Irvine, William B.. A Guide to the Good Life: The Ancient Art of Stoic Joy (pp. 159-172). Oxford University Press. Kindle Edition.
by William B. Irvine
Chapters 13 & 14
Answer:
In what way is anger beneficial?
What is Seneca's general advice about how to prevent ourselves from becoming angry?
List three pieces of more specific advice given about how to avoid anger.
According to the Stoics, what is a major reason that people are unhappy?
Why is the pursuit of fame in tension with being free?
Describe one piece of advice given by the Stoics for overcoming our obsession with what others think of us.
In: Psychology