On June 30, 2020, Buffalo Company issued $4,860,000 face value of 14%, 20-year bonds at $5,591,240, a yield of 12%. Buffalo uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.

(a) Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) The issuance of the bonds on June 30, 2020. (2) The payment of interest and the amortization of the premium on December 31, 2020. (3) The payment of interest and the amortization of the premium on June 30, 2021. (4) The payment of interest and the amortization of the premium on December 31, 2021. No. Date Account Titles and Explanation Debit Credit (1) June 30, 2020 (2) December 31, 2020 (3) June 30, 2021 (4) December 31, 2021

During 2020, Sandhill Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sandhill for a lump sum of $119,700 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below.

During 2020, Sandhill sells 400 lounge chairs, 200 armchairs, and 240 straight chairs.

What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.)

During 2020, Skysong Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Skysong for a lump sum of $77,805 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below.

During 2020, Skysong sells 260 lounge chairs, 130 armchairs, and 156 straight chairs.

What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.)

Purple Company has $200,000 in net income for 2020 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,400 standard deduction for 2020. Purple Company is Kirsten's only source of income.

Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations.

Click here to access the 2020 individual tax rate schedule to use for this problem. Assume the corporate tax rate is 21%.

When required, carryout intermediate tax computations to the nearest cent and then round your final tax liability to the nearest dollar.

a. Purple Company is a proprietorship and Kirsten withdraws $50,000 from the business during the year; Kirsten claims a $37,520 deduction for qualified business income.

Kirsten's taxable income is $_150,080__, and her after-tax income is $______________

b. Purple Company is a C corporation and the corporation pays out all of its after-tax income as a dividend to Kirsten.

Note: Individual taxpayers received preferential treatment regarding the taxation of qualified dividends (0%,15%,20%). For single taxpayers, the 0 percent rate applies to the first $40,000 of taxable income.

Purple Corporation's after-tax income is $ 158,000 and Kirsten's after tax income is $_________________?

c. Purple Company is a C corporation and the corporation pays Kirsten a salary of $158,000.

Purple Corporation's after-tax income is $________________ and Kirsten's after-tax income is $________________?

Suppose you are given the following financial information on January 1, 2020:

Spot $/£ exchange rate (e):                                         $1.20/£

One-year interest rate on dollars (i_US):                       2.0%

One-year interest rate on pounds (i_UK):                      6.0%

Market’s expected spot rate in one year (e^ex):            $1.12/£

1. If a U.K. investor looking for the highest return agrees with the market’s expectation of the future spot rate, should she make an uncovered investment in dollars or simply invest in pounds?
2. If a U.S. firm will be receiving £1,000,000 in one year, and wants to eliminate any foreign exchange risk, what can the firm do in the money markets?
3. A U.S. firm will be receiving £1,000,000 in one year, and discovers that forward contracts are available. Its bank quotes the firm a forward rate of f = $1.15/£? What would the firm do to eliminate any foreign exchange risk using a forward contract?

D. Suppose there is still trading in the spot foreign exchange market today, but the market’s expected spot rate in one year is set at $1.12/£. What is the equilibrium spot rate in the market today at which uncovered interest rate parity holds?

Topic: Property, plant and equipment.

Answer both parts independently of each other.

PART A (21 marks)

On 1 July 2018, ABC Ltd purchased and recorded equipment at its cost of acquisition of $320 000. The equipment is expected to have a useful life for seven years and an estimated residual value of $10 000. ABC Ltd depreciates the asset using the straight-line method. ABC Ltd uses the revaluation model to equipment and records accumulated depreciation using the net method. The reporting period end of ABC Ltd is 30 June. ABC Ltd revalued the equipment on 30 June 2020, when the fair value of the equipment was $250 000. On 1 July 2020, the useful life of the equipment is reassessed: it is expected to have a remaining useful life of 6 years. The estimated residual value remains unchanged. ABC Ltd revalued the equipment on 30 June 2021, when the fair value of the equipment was $180 000. On 30 June 2022 the equipment was sold for $200 000.

REQUIRED:

(1) Prepare journal entries to account for the revaluation of the equipment of 30 June 2020. Show all working steps.

(2) Prepare journal entries to account for the revaluation of the equipment of 30 June 2021. Show all working steps.

(3) Prepare journal entries to account for the sale of the equipment of 30 June 2022. Show all working steps.

PART B (19 marks)

ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a useful life of five years and was depreciated on a straight-line basis with no disposal value. ABC Ltd adopts the cost model for accounting for assets in this class. ABC Ltd makes the following estimates of the value of the machine: Date Net selling price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000 30 June 2020 $460 000 420 000 490 000 Indicators of impairment were identified on 30 June 2019, while indicators of a reversal of impairment were found on 30 June 2020.

REQUIRED: Prepare journal entries relating to this asset from 30 June 2019 to 30 June 2020. Show the steps of impairment (or reversal of impairment) tests. Show all working (step by step).

Question 1 Topic: Property, plant and equipment.

Answer both parts independently of each other.

PART A On 1 July 2018, ABC Ltd purchased and recorded equipment at its cost of acquisition of $320 000. The equipment is expected to have a useful life for seven years and an estimated residual value of $10 000. ABC Ltd depreciates the asset using the straight-line method. ABC Ltd uses the revaluation model to equipment and records accumulated depreciation using the net method. The reporting period end of ABC Ltd is 30 June. ABC Ltd revalued the equipment on 30 June 2020, when the fair value of the equipment was $250 000. On 1 July 2020, the useful life of the equipment is reassessed: it is expected to have a remaining useful life of 6 years. The estimated residual value remains unchanged. ABC Ltd revalued the equipment on 30 June 2021, when the fair value of the equipment was $180 000. On 30 June 2022 the equipment was sold for $200 000.

REQUIRED: (1) Prepare journal entries to account for the revaluation of the equipment of 30 June 2020. Show all working steps.

(2) Prepare journal entries to account for the revaluation of the equipment of 30 June 2021. Show all working steps.

(3) Prepare journal entries to account for the sale of the equipment of 30 June 2022. Show all working steps.

PART B

ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a useful life of five years and was depreciated on a straight-line basis with no disposal value. ABC Ltd adopts the cost model for accounting for assets in this class. ABC Ltd makes the following estimates of the value of the machine: Date Net selling price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000 30 June 2020 $460 000 420 000 490 000 Indicators of impairment were identified on 30 June 2019, while indicators of a reversal of impairment were found on 30 June 2020.

REQUIRED: Prepare journal entries relating to this asset from 30 June 2019 to 30 June 2020. Show the steps of impairment (or reversal of impairment) tests. Show all working (step by step)

Question 1 Topic: Property, plant and equipment.

Answer both parts independently of each other.

PART A On 1 July 2018, ABC Ltd purchased and recorded equipment at its cost of acquisition of $320 000. The equipment is expected to have a useful life for seven years and an estimated residual value of $10 000. ABC Ltd depreciates the asset using the straight-line method. ABC Ltd uses the revaluation model to equipment and records accumulated depreciation using the net method. The reporting period end of ABC Ltd is 30 June. ABC Ltd revalued the equipment on 30 June 2020, when the fair value of the equipment was $250 000. On 1 July 2020, the useful life of the equipment is reassessed: it is expected to have a remaining useful life of 6 years. The estimated residual value remains unchanged. ABC Ltd revalued the equipment on 30 June 2021, when the fair value of the equipment was $180 000. On 30 June 2022 the equipment was sold for $200 000.

REQUIRED: (1) Prepare journal entries to account for the revaluation of the equipment of 30 June 2020. Show all working steps.

(2) Prepare journal entries to account for the revaluation of the equipment of 30 June 2021. Show all working steps.

(3) Prepare journal entries to account for the sale of the equipment of 30 June 2022. Show all working steps.

PART B

ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a useful life of five years and was depreciated on a straight-line basis with no disposal value. ABC Ltd adopts the cost model for accounting for assets in this class. ABC Ltd makes the following estimates of the value of the machine: Date Net selling price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000 30 June 2020 $460 000 420 000 490 000 Indicators of impairment were identified on 30 June 2019, while indicators of a reversal of impairment were found on 30 June 2020.

REQUIRED: Prepare journal entries relating to this asset from 30 June 2019 to 30 June 2020. Show the steps of impairment (or reversal of impairment) tests. Show all working (step by step)

Question 1 Topic: Property, plant and equipment.

Answer both parts independently of each other.

PART A On 1 July 2018, ABC Ltd purchased and recorded equipment at its cost of acquisition of $320 000. The equipment is expected to have a useful life for seven years and an estimated residual value of $10 000. ABC Ltd depreciates the asset using the straight-line method. ABC Ltd uses the revaluation model to equipment and records accumulated depreciation using the net method. The reporting period end of ABC Ltd is 30 June. ABC Ltd revalued the equipment on 30 June 2020, when the fair value of the equipment was $250 000. On 1 July 2020, the useful life of the equipment is reassessed: it is expected to have a remaining useful life of 6 years. The estimated residual value remains unchanged. ABC Ltd revalued the equipment on 30 June 2021, when the fair value of the equipment was $180 000. On 30 June 2022 the equipment was sold for $200 000.

REQUIRED: (1) Prepare journal entries to account for the revaluation of the equipment of 30 June 2020. Show all working steps.

(2) Prepare journal entries to account for the revaluation of the equipment of 30 June 2021. Show all working steps.

(3) Prepare journal entries to account for the sale of the equipment of 30 June 2022. Show all working steps.

PART B

ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a useful life of five years and was depreciated on a straight-line basis with no disposal value. ABC Ltd adopts the cost model for accounting for assets in this class. ABC Ltd makes the following estimates of the value of the machine: Date Net selling price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000 30 June 2020 $460 000 420 000 490 000 Indicators of impairment were identified on 30 June 2019, while indicators of a reversal of impairment were found on 30 June 2020.

REQUIRED: Prepare journal entries relating to this asset from 30 June 2019 to 30 June 2020. Show the steps of impairment (or reversal of impairment) tests. Show all working (step by step)