Magpie Ltd enters into a non-cancellable two-year lease agreement with Tiger Ltd for an item of machinery on 1 January 2020. Magpie Ltd pays $15,000 on signing the agreement with Tiger Ltd on 1 January 2020. There are eight quarter payments of $10,000, the first being made on 31 March 2020. Included within the $10,000 lease payments is an amount of $1,000 representing payment to the lessor for insurance and maintenance of the machinery. The machinery is to be depreciated on a straight-line basis. The machinery is expected to have an economic life of five years, after which time it will have a zero-salvage value. There is a purchase option Magpie Ltd will be able to exercise at the end of the second year for $30,000. If this purchase option is exercised, the machinery will be transferred to Magpie Ltd. The rate of interest implicit in the lease is 12%. Refer to the appendix for the tables of Present Value Factor for a single future amount and Present Value of an ordinary annuity of $1
Calculate the lease liability and lease asset.
In: Finance
Marydale Products permits its customers to defer payment by giving personal notes instead of cash. All the notes bear interest and require the customer to pay the entire note in a single payment 6 months after issuance. Consider the following transactions, which describe Marydale’s experience with two such notes:
| a. | On October 31, 2019, Marydale accepts a 6-month, 9% note from Customer A in lieu of a $3,600 cash payment for services provided that day. |
| b. | On February 28, 2020, Marydale accepts a 6-month, $2,400, 7% note from Customer B in lieu of a $2,400 cash payment for services provided on that day. |
| c. | On April 30, 2020, Customer A pays the entire note plus interest in cash. |
| d. | On August 31, 2020, Customer B pays the entire note plus interest in cash. |
| Required: | |
| Prepare the necessary journal and adjusting entries required to record Transactions a through d in Marydale’s records. |
In: Accounting
B1 - Snow Company started operations on February 1, 2020 by depositing $3,000,000 cash in the bank as capital. The following transactions took place during the first month of operations:
February 3: Purchased supplies for $22,500 in cash.
February 9: Purchased equipment for $255,000, paid $105,000 in cash and the remaining amount will be paid after 10 days.
February 12: Received a bill from Dubai News for advertising amounted to $1,650.
February 14: Paid $24,000 salaries in cash.
February 16: Paid $6,000 utilities expense in cash.
February 17: Provided services to customers for $195,000 in cash.
February 19: Paid $150,000 for equipment purchased on February 9.
February 28: The owner withdrew $7,500 cash for personal use.
Required:
In: Accounting
B1 - Snow Company started operations on February 1, 2020 by depositing $3,000,000 cash in the bank as capital. The following transactions took place during the first month of operations:
February 3: Purchased supplies for $22,500 in cash.
February 9: Purchased equipment for $255,000, paid $105,000 in cash and the remaining amount will be paid after 10 days.
February 12: Received a bill from Dubai News for advertising amounted to $1,650.
February 14: Paid $24,000 salaries in cash.
February 16: Paid $6,000 utilities expense in cash.
February 17: Provided services to customers for $195,000 in cash.
February 19: Paid $150,000 for equipment purchased on February 9.
February 28: The owner withdrew $7,500 cash for personal use.
Required:
In: Accounting
An empty tin can with height of 30cm and a diameter of 15cm is open at one end and closed at the other end. If the vertical can, with open end down, be slowly immersed in water, how far the water will rise inside the can when the closed end is 10 cm below the water surface?
In: Physics
Please don not copy solutions in the text book .
At December 31, 2020, Bouvier Corp. has assets of $10 million, liabilities of $6 million, common shares of $2 million (representing 2 million common shares of $1.00 par), and retained earnings of $2 million. Net sales for the year 2020 were $18 million, and net income was $800,000. As one of the auditors of this company, you are making a review of subsequent events on February 13, 2021, and you find the following.
1)
On February 3, 2021, one of Bouvier's customers declared bankruptcy. At December 31, 2020, this company owed Bouvier $300,000, of which $40,000 was paid in January 2021.
2
On January 18, 2021, one of the client's three major plants burned. Bouvier has fire insurance coverage.
3
On January 23, 2021, a strike was called at one of Bouvier's largest plants and it halted 30% of production. As of today (February 13), the strike has not been settled.
4)
A major electronics enterprise has introduced a line of products that would compete directly with Bouvier's primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor has been able to achieve quality similar to that of Bouvier's products, but at a price 30% lower. Bouvier officials say they will meet the lower prices, which are barely high enough to cover variable and fixed manufacturing and selling costs.
5)
Merchandise traded in the open market is recorded in the company's records at $1.40 per unit on December 31, 2020. This price held for two weeks after the release of an official market report that predicted vastly excessive supplies; however, no purchases were made at $1.40. The price throughout the preceding year had been about $2.00, which was the level experienced over several years. On January 18, 2021, the price returned to $2.00 after public disclosure of an error in the official calculations of the prior December—the correction erased the expectations of excessive supplies. Inventory at December 31, 2020, was on a lower of cost and net realizable value basis.
6)
On February 1, 2021, the board of directors adopted a resolution to accept the offer of an investment banker to guarantee the marketing of $1.2 million of preferred shares. The company owns equity investments classified as current assets accounted for using the fair value through net income model. The investments have been adjusted to fair value as at December 31, 2020.
7
On January 21, 2021, the annual report of one of the investment companies has been issued for its year ended November 30, 2020. The investee company did not meet its earnings forecasts and the market price of the investment dropped from $49 per share at December 31, 2020, to $27 per share on January 21, 2021
Instructions
For each event, state how it will affect the 2020 financial statements, if at all. The company follows IFRS
In: Accounting
QUESTION FIVE [10]
The following information was extracted from the accounting records of Humid Limited for the year ended 31 May 2020:
Humid Ltd
Summary of the statement of profit and loss and other comprehensive income
for the year ended 31 May 2020 .
|
31 May 2020 R |
|||
|
Sales Cost of sales |
1 840 000 (980 000) |
||
|
Gross profit Other income |
860 000 185 000 |
||
|
Commission income Profit on sale of non-current asset |
123 000 62 000 |
||
|
Distribution administration and other expenses |
(625 000) |
||
|
Audit fees Depreciation Salaries and wages Other expenses |
58 000 80 000 402 000 85 000 |
||
|
Finance cost |
(40 000) |
||
|
Interest on borrowings |
40 000 |
||
|
Profit before taxation |
380 000 |
||
|
Income tax expense |
(80 000) |
||
|
Profit / total comprehensive income for the year |
300 000 |
||
Humid Ltd
Extract from the statement of financial position as at 31 May 2020.
|
31 May 2020 R |
31 May 2019 R |
|
|
Inventories – merchandise
Trade debtors Bank Trade creditors Prepaid expenses Accrued expenses |
90 000 5 000 330 000 147 000 170 000 4 200 16 800 |
122 000 5 800 298 000 53 000 178 000 1 800 17 600 |
Required:
Prepare the following section of the statement of cash flows of Humid Limited for the year ended 31 May 2020:
Note that the entire “cash flows from operating activities” section is not required.
Humid Limited uses the indirect method to prepare its statement of cash flows.
In: Accounting
Peanut Corporation is a private corporation using IFRS. At December 31, 2020, an analysis of the accounts and discussions with company officials included the following account balances and other information:
Accounts receivable
$102,000
Accrued interest payable
1,000
Dividend revenue
9,000
Sales revenue
600,000
Purchase discounts
9,000
Purchases
360,000
Accounts payable
30,000
Loss from fire (net of $7,000 tax)
21,000
Selling expenses
64,000
Common shares (20,000 issued; no change during 2020)
200,000
Accumulated depreciation
90,000
Long-term note payable (due Oct 1, 2024)
100,000
Inventory, Jan 1, 2020
76,000
Inventory, Dec 31, 2020
62,500
Supplies inventory
40,000
Unearned service revenue
3,000
Land, at cost (fair value is $450,000).
370,000
Cash
60,000
Franchise
100,000
Retained earnings, Jan 1, 2020
135,000
Interest expense
8,500
Cumulative effect of change from straight-line to accelerated depreciation (net of $6,000 tax) prior to 2020
(18,000)
General and administrative expenses
80,000
Dividends declared and paid
15,000
Allowance for doubtful accounts
5,000
Loss from discontinued operation (before tax)
20,000
Machinery and equipment
225,000
Unless indicated otherwise, you may assume a 25% income tax rate.
General and administrative expenses include depreciation.
Peanut has chosen to account for its land at fair value but the bookkeeper does not understand what to do so he has kept the land’s recorded value at cost.
There are no preferred shares issued.
Instructions
a. Prepare, in good form, a multiple-step comprehensive income statement.
b. Prepare, in good form, the retained earnings portion of the statement of changes in equity.
In: Accounting
Identify two mistakes in the following quote from the Starbucks case:
“Starbucks grew from 17 coffee shops in Seattle 15 years ago to over 19,000 outlets in 58 countries. Sales have climbed an average of 20 percent annually since the company went public, peaking at $10.4 billion in 2008 before falling to $9.8 billion in 2009. Profits bounded ahead an average of 30 percent per year through 2007 peaking at $673, then dropping to $582 billion and $494 billion in 2008 and 2009, respectively. The firm closed 475 stores in the U.S. in 2009 to reduce costs. But more recently, sales revenues rebounded to $11.2 billion in 2011, and profits reached a record $1.2 billion.”
In: Economics
Categorize the following solvent recovery operation in terms of the waste management hierarchy. Discuss the pollution prevention features of this process. Determine whether this process is pollution prevention or not. Use both the federal definition and also the expanded definition adopted in this text. Process Description: The automotive industry uses robots to paint automobile bodies before attaching them to the chassis, and installing other components such as the drive train, lights, trim, and upholstery. In order to accommodate different colors, the paint lines must be flushed with a solvent and then re-charged with the new color paint. In the past, this solvent and paint residue was disposed of as hazardous waste or incinerated. The current process of spray painting automobiles uses a closed-loop solvent recovery process as outlined in the diagram below.
In: Other