Farmers Technology is a software company based in New Baden. On January 1, 2017, the company granted 20,000 shares of restricted stock to its CEO. The restricted stock had a par value of $1 and a fair value of $15 per share at issuance. The service period is 4 years. The restricted stock also has a performance condition, where the restricted stock will only vest if the company’s profits grow by 50% or more over the 4-year service period.
The likelihood that the company will meet the performance condition was determined at each of these dates as follows:
December 31, 2017 = not probable
December 31, 2018 = probable
Your task is to provide the necessary journal entries in 2017 and 2018.                  

1. On June 1, King Company paid $7,200 for one year of advertising, in advance. King Company recorded the transaction by debiting Prepaid Advertising and crediting Cash.

Required: Journalize the adjusting entry on December 31.

Note: Assume that the advertising is used evenly throughout the year

2. By the end of December, Brown Company has completed work, earning $2,500. Brown company has neither billed the clients nor recorded any of the revenue.

Required:
Journalize the adjusting entry on December 31.

3. On January 2, 2020, Collins Company purchased land that cost $500,000, a building on the land that cost $910,000, and equipment that cost $73,000. The building has an estimated useful life of 28 years. The equipment has an estimated useful life of 10 years.

Required:

Prepare the property, plant, and equipment section of the balance sheet as of December 31, 2020.

Note: Use straight-line depreciation with no salvage value.

We acquire 30% of the company for a thousand dollars.The fair value of the investee is 3000, and the book value is 2500. The difference is from property plant equipment with a fair 500 higher than its book value. During the year, the investee reports income of 120 and pays dividends of 40. PP&E is being depreciated over 10 years and 10% of initial goodwill is impaired. We acquired 30% of the company for 1000 dollars, fair value is 3000, book value is 2500. You tested annually for impairment. We acquire 30% of the company for a thousand dollars. The fair value of the investee is 3000, and the book value is 2500. The difference is from property plant equipment with a fair 500 higher than its book value. During the year, the investee reports income of 120 and pays dividends of 40. PP&E is being depreciated over 10 years and 10% of initial goodwill is impaired. We acquired 30% of the company for 1000 dollars, fair value is 3000, book value is 2500. You tested annually for impairment.

In the journal entry there is:

Debit: Cash 12

                        Credit: Investment                              12

Could you please tell me what does this do?

On January 1, 2020, McGee Co. had the following balances:

         Projected benefit obligation                                                $7,800,000

         Fair value of plan assets                                                        7,800,000

Other data related to the pension plan for 2020:

         Service cost                                                                               315,000

         Contributions to the plan                                                         459,000

         Benefits paid                                                                             450,000

         Actual return on plan assets                                                     444,000

         Settlement rate                                                                                 9%

         Expected rate of return                                                                    6%

         No prior service cost, no prior OCI gains/losses

Required:

(a)    Prepare the journal entry to record pension expense, the contributions for 2020 and adjustments to Pension Asset/Liability and OCI (g/l).

(b) Answer the following questions:

(1) What is the plan assets balance on 12/31/2020?

(2) What is the Pension Benefit Obligation balance at December 31, 2020?

(3) What is the ending balance in the pension asset/liability at December 31, 2020?

(4)    What is Pension Expense for 2020?

A pension worksheet is provided to help you calculate and answer the questions, although you are not required to use it but feel free to fill it out here if you would like to. If you do, please make sure to answer the questions in the response area, do not expect to be graded only on what you might have included in the worksheet.

(a)    Prepare the journal entry to record pension expense, the contributions for 2020 and adjustments to Pension Asset/Liability and OCI (g/l).

(enter Journal entry here)

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(b) Answer the following questions. Type your response after each question:

(1) What is the plan assets balance on 12/31/2020? -->

(2) What is the Pension Benefit Obligation balance at December 31, 2020? -->

(3) What is the ending balance in the pension asset/liability at December 31, 2020? -->

(4)    What is Pension Expense for 2020? -->

Here is the problem:

The Neon Lumber Company uses the periodic inventory method, and it has a policy of adjusting and closing its books only at year end. The following adjusted trial balance for the company was prepared after posting the normal adjusting entries on December 31, 2020:

The ending inventory balance at Dec. 31, 2020 was $280,000.

Required:

A. Following the example on page 242 of the textbook, prepare the income statement for the year ended December 31, 2020. Do your best to distinguish between selling expenses and administrative expenses. Both interest revenue and interest expense, of course, are non-operating items.

B. Using the example on page 249 of the textbook, prepare the statement of retained earnings for the year ended December. 31, 2020.

C. Using the example on page 250 and other locations in the textbook, prepare the balance sheet as of December. 31, 2020.

D. Prepare the closing entries as of December 31,2020

On 1 November 2018, ACP imported a new multi-colour printing machine (No-10) for $68,300 cash. In addition, ACP paid $6,500 of import duties and $1,200 of transport costs for the machine on 3 November 2018. The useful life of the machine and the residual value were estimated to be 8 years and $7,000 respectively. ACP decides to depreciate the machine using a straight-line basis. The company’s financial year-end is 30 June.

On 30 June 2019, Auckland City Printers revalued the machine to $73,000 following a review by an independent valuer.

On 1 July 2019, due to the changes in technology caused the company to revise the estimated useful life of the printing machine from 8 years to 6 years. On the same day, it was also determined that the residual value of the machine is nil.

On 30 June 2020, the printing machine has been revalued at a fair value of $55,200.

On 30 September 2020, the accountant believes that the value of the printing machine has declined substantially. The value in use is nil, but it is estimated that the company may be able to sell the printing machine for $35,000 to a purchaser and the costs associated with making the sale would be $2,000.

On 1 October 2020, Auckland City Printers sold the printing machine for $32,000 cash.

Required:

(a)   Prepare relevant journal entries to record the depreciation expense for the year ended 30 June 2019 and revaluation entries on 30 June 2019.

(b)   Prepare relevant journal entries to record the depreciation the year ended 30 June 2020 and revaluation entries on 30 June 2020.

(c) Explain the accounting treatment for the transaction on 30 September 2020 in respect of the printing machine with reference to the relevant accounting standards. Prepare the journal entry required.  

(d) Prepare the journal entry required on 1 October 2020 to reflect the disposal of the printing machine. Show all workings.  

On 1 November 2018, Auckland City Printers (ACP) imported a new multi-colour printing machine (No-10) for $68,300 cash. In addition, ACP paid $6,500 of import duties and $1,200 of transport costs for the machine on 3 November 2018. The useful life of the machine and the residual value were estimated to be 8 years and $7,000 respectively. ACP decides to depreciate the machine using straight-line basis. The company’s financial year-end is 30 June.

On 30 June 2019, Auckland City Printers revalued the machine to $73,000 following a review by an independent valuer. On 1 July 2019, due to the changes in technology caused the company to revise the estimated useful life of the printing machine from 8 years to 6 years. On the same day, it was also determined that the residual value of the machine is nil.

On 30 June 2020, the printing machine has been revalued at a fair value of $55,200.

On 30 September 2020, the accountant believes that the value of the printing machine has declined substantially. The value in use is nil, but it is estimated that the company may be able to sell the printing machine for $35,000 to a purchaser and the costs associated with making the sale would be $2,000.

On 1 October 2020, Auckland City Printers sold the printing machine for $32,000 cash.

Required:

(a)Prepare relevant journal entries to record the depreciation expense for the year ended 30 June 2019 and revaluation entries on 30 June 2019.

(b)Prepare relevant journal entries to record the depreciation the year ended 30 June 2020 and revaluation entries on 30 June 2020.

(c) Explain the accounting treatment for the transaction on 30 September 2020 in respect of the printing machine with reference to the relevant accounting standards. Prepare the journal entry required.

(d) Prepare the journal entry required on 1 October 2020 to reflect the disposal of the printing machine. Show all workings.

On 1 November 2018, Auckland City Printers (ACP) imported a new multi-colour printing machine (No-10) for $68,300 cash. In addition, ACP paid $6,500 of import duties and $1,200 of transport costs for the machine on 3 November 2018. The useful life of the machine and the residual value were estimated to be 8 years and $7,000 respectively. ACP decides to depreciate the machine using straight-line basis. The company’s financial year-end is 30 June.

On 30 June 2019, Auckland City Printers revalued the machine to $73,000 following a review by an independent valuer.

On 1 July 2019, due to the changes in technology caused the company to revise the estimated useful life of the printing machine from 8 years to 6 years. On the same day, it was also determined that the residual value of the machine is nil. On 30 June 2020, the printing machine has been revalued at a fair value of $55,200.

On 30 September 2020, the accountant believes that the value of the printing machine has declined substantially. The value in use is nil, but it is estimated that the company may be able to sell the printing machine for $35,000 to a purchaser and the costs associated with making the sale would be $2,000.

On 1 October 2020, Auckland City Printers sold the printing machine for $32,000 cash.

Required: (a)Prepare relevant journal entries to record the depreciation expense for the year ended 30 June 2019 and revaluation entries on 30 June 2019.

(b)Prepare relevant journal entries to record the depreciation the year ended 30 June 2020 and revaluation entries on 30 June 2020.

(c) Explain the accounting treatment for the transaction on 30 September 2020 in respect of the printing machine with reference to the relevant accounting standards. Prepare the journal entry required.

(d) Prepare the journal entry required on 1 October 2020 to reflect the disposal of the printing machine. Show all workings.

Swifty Company purchased a delivery truck for $26,000 on January 1, 2020. The truck has an expected salvage value of $1,000, and is expected to be driven 100,000 miles over its estimated useful life of 10 years. Actual miles driven were 12,800 in 2020 and 12,000 in 2021.

Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.)

eTextbook and Media

List of Accounts

Compute depreciation expense for 2020 and 2021 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method. (Round depreciation cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate to 0 decimal places, e.g. 15%. Round final answers to 0 decimal places, e.g. 2,125.)

eTextbook and Media

List of Accounts

Assume that Swifty uses the straight-line method. Prepare the journal entry to record 2020 depreciation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 2,125.)

eTextbook and Media

List of Accounts

Assume that Swifty uses the straight-line method. Show how the truck would be reported in the December 31, 2020, balance sheet. (Round answers to 0 decimal places, e.g. 2,125.)

Here is the problem:

The Neon Lumber Company uses the periodic inventory method, and it has a policy of adjusting and closing its books only at year end. The following adjusted trial balance for the company was prepared after posting the normal adjusting entries on December 31, 2020:

The ending inventory balance at Dec. 31, 2020 was $280,000.

Required:

A. Following the example on page 242 of the textbook, prepare the income statement for the year ended December 31, 2020. Do your best to distinguish between selling expenses and administrative expenses. Both interest revenue and interest expense, of course, are non-operating items.

B. Using the example on page 249 of the textbook, prepare the statement of retained earnings for the year ended December. 31, 2020.

C. Using the example on page 250 and other locations in the textbook, prepare the balance sheet as of December. 31, 2020.

D. Prepare the closing entries as of December 31,2020