The following transactions apply to Jova Company for Year 1, the first year of operation:

1. Issued $14,000 of common stock for cash.
2. Recognized $214,000 of service revenue earned on account.
3. Collected $166,400 from accounts receivable.
4. Paid $129,000 cash for operating expenses.
5. Adjusted the accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account.

The following transactions apply to Jova for Year 2:

1. Recognized $324,000 of service revenue on account.
2. Collected $339,000 from accounts receivable.
3. Determined that $2,350 of the accounts receivable were uncollectible and wrote them off.
4. Collected $1,200 of an account that had previously been written off.
5. Paid $209,000 cash for operating expenses.
6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 1.0 percent of sales on account.

Complete the following requirements for Year 1 and Year 2. Complete all requirements for Year 1 prior to beginning the requirements for Year 2.

c-1. Record the Year 1 transactions in general journal form and post them to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
  

Journal entry worksheet

• Record entry for issuance of common stock.

Note: Enter debits before credits.

The following events apply to Gulf Seafood for the Year 1 fiscal year:

1. The company started when it acquired $60,000 cash by issuing common stock.
2. Purchased a new cooktop that cost $40,000 cash.
3. Earned $72,000 in cash revenue.
4. Paid $25,000 cash for salaries expense.
5. Adjusted the records to reflect the use of the cooktop. Purchased on January 1, Year 1, the cooktop has an expected useful life of four years and an estimated salvage value of $4,000. Use straight-line depreciation. The adjusting entry was made as of December 31, Year 1.

Required
a. Record the events in general journal format and post to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

An investment pays $2,050 per year for the first 3 years, $4,100 per year for the next 3 years, and $6,150 per year the following 7 years (all payments are at the end of each year). If the discount rate is 8.75% compounding quarterly, what is the fair price of this investment?

An investment pays $2,050 per year for the first 3 years, $4,100 per year for the next 3 years, and $6,150 per year the following 7 years (all payments are at the end of each year). If the discount rate is 8.75% compounding quarterly, what is the fair price of this investment?

If the firm’s expected future free cash flows in year 1 is $1.2 million, in year 2 it is expected to equal $1.6 million, in year 3 it is expected to equal $2.0 million and then the expected future free cash flows are expected to increase at a constant rate of 3%/year into perpetuity. Assume the firm’s WACC is 8%/year. Provide an equation, including all of the inputs, to calculate the present value of the expected future free cash flows of this firm.

A proposed project will generate £150,000 in revenue a year for 20 years (starting next year), but will cause another product line to lose £60,000 in revenue a year during that time. The project will make use of 50% of an already leased warehouse with total annual rent of£50,000 (the contract does not prohibit sub-leasing). The discount rate for this project is 6%. Should the firm undertake this project if the required investment is £250,000? What is the Payback Period for this project?

Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations. Sunshine Company had the following income, expense, and loss items for the current year:

Furthermore, Sunshine’s liabilities (all recourse) increased from $0 on 1/1 to $300,000 on 12/31 of the current year.

1. Assume that Sunshine Company is an s-corporation. Alvin contributed $60,000 in exchange for 60% of the stock while his wife’s best friend, Ann, contributed $40,000 in exchange for the remaining 40% of the stock when the corporation was formed this year. Alvin received a $2,400 per month salary ($28,800 in total). Ann doesn’t work for the company so she received no salary. The company made a $55,000 partial distribution of profits at the end of the year. (9 points)
   1. Calculate Sunshine’s ordinary income and separately stated items to be reported on Form 1120S.
   2. What amount and type of income must Alvin report on his individual Form 1040 tax return?
   3. What amount of Alvin’s income will be subject to self-employment tax?
   4. What is Alvin’s basis in his Sunshine Company stock at the end of the year?

Note that you do not need to complete Form 1120-S but this form and related schedules will be a useful guide in completing this portion of the assignment.

Trend Analysis - The following data pertain to Company A:

Common-Size Income Statements - Company A reported the following income statements:

Using the data above, answer the following: (provide formulas used to answer questions)

(1) Show the decomposition of return on equity for Company A for Years 1 and 2?

(2) Compute the return on assets for Company A for Years 1 and 2?

(3) Comment on Company A's use of debt?

Trend Analysis - The following data pertain to Company B:

Common-Size Income Statements - Company B reported the following income statements:

Using the data provided above, answer the following questions: (provide formulas used to answer questions)

(4) Show the decomposition of return on equity for Company B for Years 1 and 2?

(5) Compute the return on assets for Company B for Years 1 and 2?

(6) Comment on Company B's use of debt?

Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations. Sunshine Company had the following income, expense, and loss items for the current year:

Furthermore, Sunshine’s liabilities (all recourse) increased from $0 on 1/1 to $300,000 on 12/31 of the current year.

1. Assume that Sunshine Company is a c corporation. Alvin contributed $60,000 to purchase 60% of the stock while his wife’s best friend, Ann, contributed $40,000 to purchase the remaining 40% of the stock when the corporation was formed this year. Alvin received a $2,400 per month salary ($28,800 in total). Ann doesn’t work for the company so she received no salary. The company distributed some profits at the end of the year by paying out a $55,000 dividend.
   1. Calculate Sunshine Corporation’s taxable income and income tax liability to be reported on Form 1120.
   2. What amount and type of income must Alvin report on his individual Form 1040 tax return?
   3. What amount of Alvin’s income will be subject to self-employment tax?
   4. What is Alvin’s basis in his Sunshine stock at the end of this year?

Note that you do not need to complete Form 1120, but this form and related schedules will be a useful guide in completing this portion of the assignment.

IMPORTANT - All information is provided, form 1120 is a tool that might help you solve the problem. The related schedules that are linked to form 1120 are useful as well, but not entirely necessary to solve the exercise. Form 1120 can be found on IRS official site.

NOTE- The solution below is not correct, do not use it to answer the question again.

On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule below pertains to the bonds:

b. When the bonds mature at the end of Year 4, what amount of principal will Olive pay investors?

c. How much cash was received on the day the bonds were issued (sold)?

d. Were the bonds issued at a premium or a discount? If so, what was the amount of the premium or discount?

e. How much cash will be disbursed for interest each period and in total over the life of the bonds?

f. What is the coupon rate? (Enter your answer as a percentage rounded to 1 decimal place (i.e. 0.123 should be entered as 12.3).)

g. What was the annual market rate of interest on the date the bonds were issued? (Enter your answer as a percentage rounded to the nearest whole percent (i.e. 0.123 should be entered as 12).)

h. What amount of interest expense will be reported on the income statement for Year 2 and Year 3?(Round your final answers to nearest whole dollar amount.)

i. What amount will be reported on the balance sheet at the end of Year 2 and Year 3?