Other data:
Accrued but unrecorded and uncollected consulting fees earned at December 31 amount to: $27500.
The company determined that $16500 of previously unearned consulting fees had been earned at December 31.
Office supplies on hand at December 31 total $330
The company purchased all of its equipment when it first began business. At that time, the estimated useful life of the equipment was six years.
The company prepaid its nine-month rent agreement on June 1, 2020.
The company prepaid its six-month insurance policy on December 1, 2020
Accrued but unpaid salaries total $13200 at December 31,2020.
On September 1, 2020, the company borrowed $66000 by signing an eight-month, 4 percent note payable. The entire amount, plus interest, is due March 31, 2021.
Account Debit Credit
Cash 304,150
Accounts Receivable 99,000
Office supplies 880
Prepaid rent. 3,960
Unexpired insurance 1,650
Office equipment 79,200
Accumulated depreciation: office equipment 26,400
Accounts payable 4,400
Notes payable (due 3/1/12) 66,000
Interest payable 660
Income taxes payable 9,900
Dividends payable 3,500
Unearned consulting fees 24,200
Capital stock 220,000
Retained earnings 44,000
Dividends 3,500
Consulting fees earned 550,000
Rent expense 16,170
Insurance expense 2,420
Office supplies expense 4,950
Depreciation expense: office equipment 12,100
Salaries expense 363,000
Utilities expense 5,280
Interest expense 3,300
Income taxes expense 49,500
Totals 949,060 949,8060
Instructions:
In: Accounting
Financial Accounting Research Assignment
Acorn Limited is a listed company based in Vermont. On January 1, 2018, the company granted 1,000 share units to its CFO. Each share unit has a contractual service period of three years and a vesting condition based on the details below. At the end of 2020, each share unit is convertible into 100 common shares of Acorn Limited if both of the following criteria are met:
2018-2020 Accumulated company net income is greater than $5 million.
2018-2020 Stock price increase is greater than 25%.
On the grant date, the company’s common shares had a fair value of $6 per share and the company was expected to meet both of the criteria above.
During 2018 and 2019, the company was expected to meet both of the criteria above. However, during 2020 the company’s stock price decreased and the company did not meet the stock price increase criteria at the end of the year.
The company’s accountant has asked for your help to check the compensation costs recorded for these share units during 2018-2019 and record the appropriate journal entry at the end of 2020.
Ignore the effects of taxes.
The answer should have these parts:
1.The first part of your report is the Question. In this section, you must identify the accounting problem. Be brief and precise. Try to write your question in one sentence. This section should not exceed two sentences.
2. The second part of your report is the Solution. In this section, you must clearly communicate your proposed solution to the accounting problem you identified in section one. Explain and lay out all of the steps involved in your solution. This will usually involve calculations and journal entries. Be sure to adequately answer the question from part one, including calculations and working. Your solution should be clear and understandable such that the reader does not have to read the authoritative literature for himself/herself. Please use in-text citations!
3. The third part of your report is the Authoritative Citation(s). In this section, you must list the titles of the citation(s) from the professional accounting literature upon which you based your solution.
In: Accounting
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