The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2021. The company buys debt securities, not intending to profit from short-term differences in price and not necessarily to hold debt securities to maturity, but to have them available for sale in years when circumstances warrant. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2020.
Mar. 31 Acquired 6% Distribution Transformers Corporation bonds costing $460,000 at face value.
Sep. 1 Acquired $990,000 of American Instruments’ 8% bonds at face value.
Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds.
Oct. 2 Sold the Distribution Transformers bonds for $491,000.
Nov. 1 Purchased $1,440,000 of M&D Corporation 4% bonds at face value.
Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are:
American Instruments bonds $ 934,000
M&D Corporation bonds $ 1,526,000
(Hint: Interest must be accrued.)
Required:
1. Prepare the appropriate journal entry for each transaction or
event during 2021, as well as any adjusting entries necessary at
year end. For any sales, prepare entries to update the fair-value
adjustment, record any reclassification adjustment, and record the
sale.
2. Indicate any amounts that Ornamental Insulation would report in
its 2021 income statement, 2021 statement of comprehensive income,
and 12/31/2021 balance sheet as a result of these investments.
Include totals for net income, comprehensive income, and retained
earnings as a result of these investments.
In: Accounting
The following selected transactions relate to investment
activities of Ornamental Insulation Corporation during 2021. The
company buys debt securities, not intending to profit from
short-term differences in price and not necessarily to hold debt
securities to maturity, but to have them available for sale in
years when circumstances warrant. Ornamental’s fiscal year ends on
December 31. No investments were held by Ornamental on December 31,
2020.
| Mar. | 31 | Acquired 8% Distribution Transformers Corporation bonds costing $570,000 at face value. | ||
| Sep. | 1 | Acquired $1,155,000 of American Instruments’ 10% bonds at face value. | ||
| Sep. | 30 | Received semiannual interest payment on the Distribution Transformers bonds. | ||
| Oct. | 2 | Sold the Distribution Transformers bonds for $612,000. | ||
| Nov. | 1 | Purchased $1,570,000 of M&D Corporation 6% bonds at face value. | ||
| Dec. | 31 |
Recorded any necessary adjusting entry(s) relating to the
investments. The market prices of the investments are: M&D Corporation bonds$1,649,000 |
Required:
1. Prepare the appropriate journal entry for each
transaction or event during 2021, as well as any adjusting entries
necessary at year end. For any sales, prepare entries to
update the fair-value adjustment, record any reclassification
adjustment, and record the sale.
2. Indicate any amounts that Ornamental Insulation
would report in its 2021 income statement, 2021 statement of
comprehensive income, and 12/31/2021 balance sheet as a result of
these investments. Include totals for net income, comprehensive
income, and retained earnings as a result of these investments.
In: Accounting
The following selected transactions relate to investment
activities of Ornamental Insulation Corporation during 2021. The
company buys debt securities, not intending to profit from
short-term differences in price and not necessarily to hold debt
securities to maturity, but to have them available for sale in
years when circumstances warrant. Ornamental’s fiscal year ends on
December 31. No investments were held by Ornamental on December 31,
2020.
| Mar. | 31 | Acquired 6% Distribution Transformers Corporation bonds costing $500,000 at face value. | ||
| Sep. | 1 | Acquired $1,050,000 of American Instruments’ 8% bonds at face value. | ||
| Sep. | 30 | Received semiannual interest payment on the Distribution Transformers bonds. | ||
| Oct. | 2 | Sold the Distribution Transformers bonds for $535,000. | ||
| Nov. | 1 | Purchased $1,500,000 of M&D Corporation 4% bonds at face value. | ||
| Dec. | 31 | Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are: |
| American Instruments bonds | $ | 990,000 | |
| M&D Corporation bonds | $ | 1,570,000 | |
(Hint: Interest must be accrued.)
Required:
1. Prepare the appropriate journal entry for each
transaction or event during 2021, as well as any adjusting entries
necessary at year end. For any sales, prepare entries to update the
fair-value adjustment, record any reclassification adjustment, and
record the sale.
2. Indicate any amounts that Ornamental Insulation
would report in its 2021 income statement, 2021 statement of
comprehensive income, and 12/31/2021 balance sheet as a result of
these investments. Include totals for net income, comprehensive
income, and retained earnings as a result of these investments.
In: Accounting
Hundar Ltd is a Japanese car manufacturer. On 1 March 2020, Vicpark Ltd, an Australian African company, purchased 50 cars from Hundar Ltd. The terms of the contract are FOB shipping, with the invoice denominated in Japanese Yen. The order was completed on 25 May 2020, shipped from Nagoya Port (the largest port in Japan) on 1 June and received by Vicpark Ltd on 25 June 2020. The total cost of the cars was 70 million Yen. Vicpark Ltd’s reporting date is 30 June. Vicpark Ltd settled the payment on 31 July 2020. Selected exchange rates were:
| AU$ | Japanese yen | |
| 1-mar-20 | $1.00 | 73.44 |
| 25-may-20 | $1.00 | 74.15 |
| 1-jun-20 | $1.00 | 72.66 |
| 25-jun-20 | $1.00 | 73.76 |
| 30-jun-20 | $1.00 | 73.69 |
| 31-jul-20 | $1.00 | 70.47 |
Required:
Prepare all journal entries required by Vicpark Ltd (the Australian company) to record the above transactions. Narrations are not required but you must show all workings and round figures to the nearest dollar. (5 Marks, 4 marks for correct journal entries, 1 mark for your workings)
In: Accounting
Wilkins Food Products Inc. acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2019. In payment for the machine Wilkins issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 15%. Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to discover until 2021. As a result of the error, Wilkins understated interest expense by $50,000 in 2019 and $45,000 in 2020. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2021 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Wilkins account for the error (a) retrospectively or (b) prospectively?
In: Accounting
Enter the transactions listed below in the General Journal.
January 1, 2019 or 2020 – Use January 1 as the starting date for
transactions. This will give us a one-month accounting period for
reports, etc.
Date
1 Night invested cash in business, $90,000.
Debit: Checking increases.
Credit: Owner’s Equity increases.
1 Paid insurance premium for six-month camping season, $9,000. (Record the insurance payment as a pre-paid asset.)
Debit: Prepaid asset of insurance
Credit: Checking as cash was reduced
2 Paid rent for lodge and campgrounds for the month of April, $40,000. Vendor: Wilderness Properties
Debit: The expense of paying the rent.
Credit: Checking – the reduction of cash
2 Received registration information from Augsburg University for $15,000 for an ice fishing camp during the third week in January.
Debit: Accounts Receivable: No money received yet
Credit: Registration Fees – record revenue earned
3 Received registration information from Bemidji State University for $20,000 for an ice fishing camp during the fourth week in January. Prepare an invoice for this sale. They are sending four coaches on the trip. Make note on the invoice of the dates of the camp in the Message on Invoice section. Record in the General Journal and then prepare an invoice.
Debit: Accounts Receivable: No money received yet
Credit: Revenue is increased with a credit Registration Fees
3 Purchased 10 fishing boats on account for $60,000. The boats have estimated useful lives of five years, at which time they will be donated to a local day camp. Vendor: Mt. Dora Watercraft A loan agreement with terms was signed.
Debit: The asset Fishing Boats is increased
Credit: The Notes Payable is increased
4 Purchased food supplies from Acme Super Market on account, $7,000. You are increasing the asset Food supplies and increasing the Liability – Accounts Payable for Acme Super Market.
Debit: Food Supplies
Credit: Accounts Payable
5 Purchased office supplies from Gordon Office Supplies on account, $500. Same process as previous transaction.
Debit: Office Supplies
Credit: Accounts Payable
6 Received registration information from University of Minnesota for an ice fishing camp during the first week in February. Make note on the invoice of the dates of the camp in the Message on Invoice section. They are sending eight coaches on the trip. Record in the General Journal and then prepare an invoice.
Debit: Accounts Receivable: No money received yet
Credit: Registration Fees Revenue is increased with a credit
5 Purchased food supplies from Acme Super Market on account, $8,200.
Debit: Food Supplies
Credit: Accounts Payable
7 Received a check from Augsburg University for $15,000 for payment
of the fishing trip the third week in January. You will record the
payment of the accounts receivable and the deposit to checking from
cashing the checks.
Debit: Checking – Cash was received
Credit: Accounts Receivable – Cash was received, and balance
reduced
8 Received a check from Bemidji State University for $20,000 for an ice fishing camp during the fourth week in January.
Debit: Checking – Cash was received
Credit: Accounts Receivable – Cash was received, and balance
reduced
9 Purchased food supplies from Acme Super Market on account, $9,000.
15 Paid wages to fishing guides, $10,000. This is the expense of paying employees’ wages. Wages Expense is increased and Checking (Cash) is decreased. Wages are paid on the 15th and last day of each month. The fishing guides are salaried employees.
Debit: The expense of paying Wages
Credit: Cash as the account was reduced to pay wages for the
period.
21 Paid postage, $150.
24 Purchased food supplies from Acme Super Market on account,
$8,500.
30 Purchased food supplies from Acme Super Market on account,
$6,000.
30 Paid Acme Super Market on account, $32,700. You are making a payment to pay down the balance of this accounts payable liability that you owe.
Debit Accounts Payable: You are reducing this debt.
Credit: Checking as you are reducing the balance of the
account.
30 Paid utilities bill, $2,000. Record the expense of paying for the utilities.
30 Paid phone bill, $1,200. Record the expense of paying the phone bill.
30 Bob Night withdrew cash for personal use, $6,000. You will increase the drawing account and decrease cash.
30 Paid wages to fishing guides, $10,000.
Office supplies remaining on hand, $100.
Food supplies remaining on hand, $8,000.
Insurance expired during the month of January, $1500
Depreciationon the fishing boats for the month of January,
$1000
How do you record closing journal entries for all accounts for the end of the month?
In: Accounting
| On January 1 2020 Potter Company purchased 100 of the 1000 shares of Voldomort Company for $800. Potter has no significant influence over Voldomort | ||||
| On July 1, 2020 Voldomort declared and paid a $1 per share dividend | ||||
| On December 31st Voldomort's stock was selling for $9 per share; Voldomort reported income of $4000 | ||||
| On January 1 2021 Potter Company purchased 300 shares of Voldomort Company for $2700. Potter now has two seats on the Voldomort Board of Directors | ||||
| On March 1, Voldomort had a two for one stock split. | ||||
| On July 1, Voldomort declared and paid a $1 per share dividend | ||||
| On December 31st Voldomort reported income of $5000 and its stock was selling for $7 per share | ||||
| On July 1, 2022 Voldomort announced that it will not pay a dividend in 2022. | ||||
| On December 31st Voldomort reported a loss of $2000 and its stock was selling for $5 per share | ||||
| On January 3rd 2023 Potter sold all of its shares in Voldomort at $5.50 per share | ||||
| REQUIRED: | ||||
| A) MAKE THE REQUIRED JOURNAL ENTRIES FOR POTTER CONNECTED WITH ITS OWNERSHIP OF VOLDOMORT STOCK IN | ||||
| 2020 | ||||
| 2021 | ||||
| 2022 | ||||
| 2023 | ||||
| B) FILL IN THE FOLLOWING TABLE | ||||
| 2020 | 2021 | 2022 | ||
| Investment in Voldomort | ||||
| income from investment in Voldomort |
In: Accounting
On June 1, 2020, BlueSky Company provided services to GreenGrass Company and received a 1-year, 8%, $150,000 note, due May 31, 2021. Interest is payable at maturity. BlueSky records adjusting entries annually at December 31.
a. Compute the total interest on the note. How much interest revenue will be recognized in 2020? In 2021?
b. Record the June 1, 2020, journal entry for BlueSky.
c. Record the December 31, 2020, adjusting journal entry for BlueSky.
d. BlueSky’s 2020 preliminary net income of $100,000 was computed without including any amounts related to the receipt of the note or the 12-31-20 adjusting entry. Determine the correct amount of 2020 net income. Ignore taxes.
e. On BlueSky’s December 31, 2019, balance sheet, retained earnings was reported at $300,000. In 2020, the company paid $40,000 in dividends. What is the December 31, 2020, retained earnings balance?
f. What amount(s) will BlueSky report on the December 31, 2020, balance sheet related to the note? How will these amounts be classified?
e. Record the May 31, 2021, journal entry for BlueSky for the receipt of principal and interest.
In: Accounting
Reflex Pte Ltd (“Reflex”) has undertaken market research at a
cost of $200,000 in order to evaluate two potential investment
projects that have similar capital requirements. Due to limited
resources, the company is currently only able to choose one project
to execute.
FIN303 Copyright © 2020 Singapore University of Social Sciences
(SUSS) Page 6 of 9
Timed Online Assignment – January Semester 2020
The cash flow projections are set out below:
Year
0
1
2
3
Project A
(2,000,000)
750,000
1,250,000
1,750,000
Project B
(1,850,000)
(250,000)
1,500,000
2,750,000
Jack is Reflex’s corporate finance manager. He has evaluated that
for Project A, the cost of capital should be 10%. As Project B is
assessed to be of higher risk than Project A, the cost of capital
of 12% was deemed to be more appropriate for Project B.
As Jack is preparing his proposal for recommendation, he receives a
call from his boss. His boss questions Jack as to why he is using
different discount rates to evaluate the project. Jack’s boss also
wants him to include IRR as one of the evaluation criteria. Jack
does not think that the IRR method is appropriate but he needs to
justify to his boss.
(a) Appraise each project from the perspective of net present value
and explain which project you would recommend Reflex to launch
first.
(b) Discuss whether Jack can rely on his company’s cost of capital
to evaluate all its investment projects.
(c) Explain why Jack does not think it is appropriate to use IRR to
evaluate the two projects.
(d) Jack’s boss still insists on using the IRR method. Propose an
alternative method to Jack to adjust his IRR calculations in order
to address some of his concerns about using IRR to evaluate the two
projects.
In: Finance
As CEO of WeCare, I am happy with what we have done so far advancing patient safety. The Diagnostic Errors concern for us is being managed. Now it is time to look at a second concern and move closer to becoming a High-Reliability Organization. The next executive briefing concern that I want to have addressed – Internal Care Coordination. Communication seems to be a big piece of this, so I want us to understand what this means. What do we need to have in place for effective care coordination to prevent patient harm? Before decisions can be made on how to move forward, I need to know what this is, why it is essential, and how it can improve patient safety here at WeCare General. You are being asked to write a recommendation for me outlining the answers to my questions and the steps you will take to implement as part of our safety plan. Support your plan with resources.
In: Operations Management