Provide the required journal entries for both Year 1 and Year 2 under both the US GAAP and IFRS for each respective date where you are provided information in the above scenario. In your explanation for each journal entry, make sure you document the basis for each journal entry amount. In other words, how did you obtain the figures? In addition, provide a detailed explanation for each respective journal entry with the appropriate Reference(s) to IAS12 and ASC 740-10, respectively.

Global Multinational Corporation (Global) is a U.S. company that owns and operates 100% of a consolidated subsidiary in a foreign jurisdiction where income taxes are payable at a higher rate on undistributed profits than on distributed earnings. For the year ending December 31, Year 1, Global’s foreign subsidiaries taxable income is $150,000. Global’s foreign subsidiary also has net taxable temporary differences amounting to $50,000 for the year, thus creating the need for a deferred tax liability on the balance sheet. The tax rate on distributed profits is 40%, and the tax rate on undistributed profits is 50%; the difference results in a credit if profits are distributed in the future. At the date of the balance sheet, no distributions have been proposed or declared. On March 31, Year 2, Global’s foreign consolidated subsidiary distributes dividends of $75,000.

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:

Required:

CHART OF ACCOUNTSWinklevoss Inc.General Ledger

1a. Journalize the entries to record the 20Y1 transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles.

How does grading work?

PAGE 10

JOURNAL

ACCOUNTING EQUATION

Score: 67/75

Points:

12.51 / 14

1b. Journalize the entries to record the 20Y2 transactions. Refer to the Chart of Accounts for exact wording of account titles. Round all amounts to the nearest dollar.

How does grading work?

PAGE 11

JOURNAL

ACCOUNTING EQUATION

Score: 61/75

Points:

11.39 / 14

1c. Journalize the entries to record the 20Y3 transactions. Refer to the Chart of Accounts for exact wording of account titles. Round all amounts to the nearest dollar.

How does grading work?

PAGE 12

JOURNAL

ACCOUNTING EQUATION

Score: 20/49

2. Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. Enter amounts as positive number.

Points:

0 / 2

3. Determine the carrying amount of the bonds as of December 31, 20Y2.

Points:

0 / 1

Feedback

YYZ has the following financial information:

Inventory is recorded at FIFO

Required:

1. Calculate the value of the Ending Inventory under Absorption Costing and Variable costing for the prior year and current year
2. Prepare an income statement under Absorption Costing for the current year
3. Reconcile the difference in Operating Income between Variable costing and Absorption Costing for the current year

Vita Dental Agencies current fiscal year ended on December 31, 2018. For the year then ended, the company has reported an unadjusted net income of $100,000. The owner has some doubt about this figure and has asked you to review his accounting records.

Required:   Make adjusting entries as at December 31, 2018 for the following information uncovered in your review (show your calculations for full marks):

a)       Vita occupied their new building for the first time on May 1, 2018. The building has an estimated 15-year useful life and annual amortization is 40,000. No amortization has been recorded for 2018.

b)       The Dental Supplies account showed an opening balance of $1,900 on January 1, 2018. During the year, the owner used Dental Supplies asset account to record the purchase of another $2,985 of supplies. The year-end physical count of office supplies inventory only showed $0 unused Dental Supplies on hand.

c)       The Prepaid Insurance account showed an opening balance on January 1^st, 2018 of $1,200 representing the 3 months remaining on a 1-year insurance policy bought on April 1, 2017. At the expiration of this policy on March 31, 2018, the owner paid $6,000 for another 1 year policy. At year end, the accounting manager incorrectly debited Insurance Expense instead of Prepaid Insurance to record the purchase of this renewal on March 31, 2018.

Analysts expect Walmart Inc. to have earnings per share of $5.60 for the coming year (year 1). Walmart intends to invest heavily in its online platform in the near term and therefore plans to retain and reinvest 80% of its earnings for the next three years (years 1, 2 and 3). For the next two years (years 4 and 5), retention and reinvestment is anticipated to decrease, with Walmart expected to retain 60% of its earnings. After that (year 6 onwards) the retention rate is expected to drop to 40% and remain that way. Walmart’s new investments in online shopping are expected to generate a return of 15% per year. Walmart’s equity cost of capital is estimated to be 9%.

a. Using the information provided above, estimate Walmart’s share price today.

Suppose the retention rate estimate for year 6 onwards given above is not credible and you therefore ignore it (estimates prior to year 5 are still valid). Instead, you expect Walmart’s 1- year forward price to earnings ratio in year 5 (i.e. PE ratio based on year 5 price and year 6 expected earnings) to be 24.5 (the midpoint between the S&P 500 historical average of 16 and Walmart’s current PE ratio of 33).

b. Use this information to come up with another estimate of Walmart’s share price.

The following transactions apply to Hooper Co. for Year 1, its first year of operations:

1. Issued $130,000 of common stock for cash.
2. Provided $104,000 of services on account.
3. Collected $90,000 cash from accounts receivable.
4. Loaned $13,000 to Mosby Co. on November 30, Year 1. The note had a one-year term to maturity and a 8 percent interest rate.
5. Paid $46,000 of salaries expense for the year.
6. Paid a $3,500 dividend to the stockholders.
7. Recorded the accrued interest on December 31, Year 1 (see item 4).
8. Estimated that 1 percent of service revenue will be uncollectible.

1. Show the effects of these transactions in a horizontal statements model like the one shown below. (Do not round your intermediate calculation and round your final answer to the nearest whole dollar. Enter any decreases to account balances and cash outflows with a minus sign. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash. If there is no effect on the Statement of Cash Flow, leave the cell blank. Not all cells will require entry.)
2. Prepare the income statement, balance sheet, and statement of cash flows for Year 1

Assume a dealer is offering a last-year passenger car model for $20,400 today or 4 year financing terms for $109 weekly payment (a total of 209 payments with the first payment made now). For the dealer, it does not make an economic difference if the customer chooses any of these two options (options are equivalent). Page 2 of 2 [a] What is the effective annual interest rate (ieff = ?) implied in this offer assuming that compounding is weekly? [b] If the buyer is interested more in monthly payment instead of weekly, how much this monthly payment is expected to be using the same interest rate in [a] and assuming, still, that compounding is weekly?

The yield to maturity (YTM) on 1-year zero-coupon bonds is 7% and the YTM on 2-year zeros is 8%. The yield to maturity on 2-year-maturity coupon bonds with coupon rates of 10% (paid annually) is 7.5%.

a. What arbitrage opportunity is available for an investment banking firm?

The arbitrage strategy is to buy zeros with face values of $  and $  , and respective maturities of one year and two years.

b. What is the profit on the activity? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

The Millard Division's operating data for the past two years are provided below:

Millard Division's margin in Year 2 was 120% of the margin in Year 1.

The net operating income for Year 1 was:

Garrison 16e Rechecks 2017-10-31

Multiple Choice

• $385,200

• $160,500

• $192,600

• $190,000

Last year a company had sales of $370,000, a turnover of 2.1, and a return on investment of 56.7%. The company's net operating income for the year was:

Multiple Choice

• $109,890

• $209,790

• $176,190

• $99,900