The before-tax income for Nash Co. for 2020 was $101,000 and
$81,800 for 2021. However, the accountant noted that the following
errors had been made:
| 1. | Sales for 2020 included amounts of $35,500 which had been received in cash during 2020, but for which the related products were delivered in 2021. Title did not pass to the purchaser until 2021. | |
| 2. | The inventory on December 31, 2020, was understated by $8,400. | |
| 3. | The bookkeeper in recording interest expense for both 2020 and 2021 on bonds payable made the following entry on an annual basis. |
|
Interest Expense |
13,800 |
|
|
Cash |
13,800 |
| The bonds have a face value of $230,000 and pay a stated interest rate of 6%. They were issued at a discount of $13,000 on January 1, 2020, to yield an effective-interest rate of 7%. (Assume that the effective-yield method should be used.) |
| 4. | Ordinary repairs to equipment had been erroneously charged to the Equipment account during 2020 and 2021. Repairs in the amount of $7,800 in 2020 and $9,500 in 2021 were so charged. The company applies a rate of 10% to the balance in the Equipment account at the end of the year in its determination of depreciation charges. |
Prepare a schedule showing the determination of corrected income
before taxes for 2020 and 2021. (Enter negative amounts
using either a negative sign preceding the number e.g. -15,000 or
parentheses e.g. (15,000). Round answers to 0 decimal places, e.g.
125.)
|
2020 |
2021 |
|||
|---|---|---|---|---|
|
Income Before Tax |
$Enter a dollar amount |
$Enter a dollar amount |
||
|
Corrections: |
||||
|
Select an item Adjustment to Bond Interest ExpenseAdjustment to Bond Interest PayableDepreciation Not Recorded on Capitalized RepairsDepreciation Recorded on Improperly Capitalized RepairsOverstatement of 2020 Ending InventoryRepairs Erroneously Charged to the Equipment AccountRepairs Not Charged to Equipment AccountSales Erroneously Excluded in 2020 IncomeSales Erroneously Included in 2020 IncomeUnderstatement of 2020 Ending Inventory |
Enter a dollar amount |
Enter a dollar amount |
||
|
Select an item Adjustment to Bond Interest ExpenseAdjustment to Bond Interest PayableDepreciation Not Recorded on Capitalized RepairsDepreciation Recorded on Improperly Capitalized RepairsOverstatement of 2020 Ending InventoryRepairs Erroneously Charged to the Equipment AccountRepairs Not Charged to Equipment AccountSales Erroneously Excluded in 2020 IncomeSales Erroneously Included in 2020 IncomeUnderstatement of 2020 Ending Inventory |
Enter a dollar amount |
Enter a dollar amount |
||
|
Select an item Adjustment to Bond Interest ExpenseAdjustment to Bond Interest PayableDepreciation Not Recorded on Capitalized RepairsDepreciation Recorded on Improperly Capitalized RepairsOverstatement of 2020 Ending InventoryRepairs Erroneously Charged to the Equipment AccountRepairs Not Charged to Equipment AccountSales Erroneously Excluded in 2020 IncomeSales Erroneously Included in 2020 IncomeUnderstatement of 2020 Ending Inventory |
Enter a dollar amount |
Enter a dollar amount |
||
|
Select an item Adjustment to Bond Interest ExpenseAdjustment to Bond Interest PayableDepreciation Not Recorded on Capitalized RepairsDepreciation Recorded on Improperly Capitalized RepairsOverstatement of 2020 Ending InventoryRepairs Erroneously Charged to the Equipment AccountRepairs Not Charged to Equipment AccountSales Erroneously Excluded in 2020 IncomeSales Erroneously Included in 2020 IncomeUnderstatement of 2020 Ending Inventory |
Enter a dollar amount |
Enter a dollar amount |
||
|
Select an item Adjustment to Bond Interest ExpenseAdjustment to Bond Interest PayableDepreciation Not Recorded on Capitalized RepairsDepreciation Recorded on Improperly Capitalized RepairsOverstatement of 2020 Ending InventoryRepairs Erroneously Charged to the Equipment AccountRepairs Not Charged to Equipment AccountSales Erroneously Excluded in 2020 IncomeSales Erroneously Included in 2020 IncomeUnderstatement of 2020 Ending Inventory |
Enter a dollar amount |
Enter a dollar amount |
||
|
Corrected Income Before Tax |
$Enter a total amount for year 2020 |
$Enter a total amount for year 2021 |
In: Accounting
Desrosiers Ltd. had the following long-term receivable account balances at December 31, 2019:
Notes receivable $1,800,000
Notes receivable—Employees 400,000
Transactions during 2020 and other information relating to Desrosiers' long-term receivables were as follows:
1. The $1.8-million note receivable is dated May 1, 2019, bears interest at 9%, and represents the balance of the consideration received from the sale of Desrosiers's electronics division to New York Company. Principal payments of $600,000 plus appropriate interest are due on May 1, 2020, 2021, and 2022. The first principal and interest payment was made on May 1, 2020. Collection of the note instalments is reasonably assured.
2. The $400,000 note receivable is dated December 31, 2019, bears interest at 8%, and is due on December 31, 2022. The note is due from Marcia Cumby, president of Desrosiers Ltd., and is secured by 10,000 Desrosiers common shares. Interest is payable annually on December 31, and the interest payment was made on December 31, 2020. The quoted market price of Desrosiers's common shares was $45 per share on December 31, 2020.
3. On April 1, 2020, Desrosiers sold a patent to Pinot Company in exchange for a $200,000 non–interest bearing note due on April 1, 2022. There was no established exchange price for the patent, and the note had no ready market. The prevailing rate of interest for a note of this type at April 1, 2020, was 12%. The present value of $1 for two periods at 12% is 0.79719 (use this factor). The patent had a carrying amount of $40,000 at January 1, 2020, and the amortization for the year ended December 31, 2020 would have been $8,000. The collection of the note receivable from Pinot is reasonably assured.
4. On July 1, 2020, Desrosiers sold a parcel of land to Four Winds Inc. for $200,000 under an instalment sale contract. Four Winds made a $60,000 cash down payment on July 1, 2020, and signed a four year, 11% note for the $140,000 balance. The equal annual payments of principal and interest on the note will be $45,125, payable on July 1, 2021, through July 1, 2024. The land could have been sold at an established cash price of $200,000. Desrosiers had paid $150,000 for the land when it purchased it. Collection of the instalments on the note is reasonably assured.
5. On August 1, 2020, Desrosiers agreed to allow its customer, Saini Inc., to substitute a six-month note for accounts receivable of $200,000 it owed. The note bears interest at 6% and principal and interest are due on the note's maturity date.
Instructions
a. For each note:
1. Describe the relevant cash flows in terms of amount and timing.
2. Determine the amount of interest income that should be reported in 2020.
3. Determine the portion of the note and any interest that should be reported in current assets at December 31, 2020.
4. Determine the portion of the note that should be reported as a long-term investment at December 31, 2020.
b. Prepare the long-term receivables section of Desrosiers's SFP at December 31, 2020.
c. Prepare a schedule showing the current portion of the long-term receivables and accrued interest receivable that would appear in Desrosiers's SFP at December 31, 2020.
d. Determine the total interest income from the long-term receivables that would appear on Desrosiers's income statement for the year ended December 31, 2020.
In: Accounting
In: Accounting
ABC Corporation is an American company that wishes to do business with Rimonter, a corporation located in Asia. Rimonter has the standard practice of requiring an undocumented payment of $50,000 to a charitable organization headed by Rimonter's CEO. This payment is required in exchange for securing a manufacturing contract with Rimonter Corporation.
In response to Rimonter's demand, what should ABC do?
Evaluate the various forms of bribery and factors that foster them, the ethical problems with bribery, and the diverse means and strategies for combating bribery.
In: Operations Management
Suppose that the owner and CEO of a firm that operates in a PERFECTLY COMPETITIVE market environment comes to see you for help. She has a few questions to ask you as the company Economist. This question is:
(i) “At lunch the other day, I overheard an economist at the next table describe our perfectly competitive firm as being a ‘Price Taker’ in the market. Can you carefully and completely explain what it means to be a Price Taker AND why my firm is described that way, please?”
In: Economics
Critical Thinking Assignment
Starbucks in 2009, the company launched an instant coffee brand: VIA Ready Brew.
Develop a one-page summary presentation. Include a solid introduction and conclusion to Howard Schultz, CEO.
What is the S-T-P?
What are Starbucks’ core competencies?
How would you recommend to launch the product? (Think downstream marketing)
What are the calculated risks? (Think upstream...)
Key question: why did Starbucks develop this product?
In: Operations Management
Marin Industries has the following patents on its December 31,
2016, balance sheet.
|
Patent Item |
Initial Cost |
Date Acquired |
Useful Life at Date Acquired |
|||
| Patent A | $43,452 | 3/1/13 | 17 years | |||
| Patent B | $16,560 | 7/1/14 | 10 years | |||
| Patent C | $20,640 | 9/1/15 | 4 years |
The following events occurred during the year ended December 31,
2017.
| 1. | Research and development costs of $243,000 were incurred during the year. | |
| 2. | Patent D was purchased on July 1 for $34,770. This patent has a useful life of 91/2 years. | |
| 3. | As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B’s value may have occurred at December 31, 2017. The controller for Marin estimates the expected future cash flows from Patent B will be as follows. |
|
Year |
Expected Future Cash Flows |
|
| 2018 | $2,000 | |
| 2019 | 2,000 | |
| 2020 | 2,000 |
The proper discount rate to be used for these flows is 8%. (Assume
that the cash flows occur at the end of the year.)
1) Compute the total carrying amount of Marin’ patents on its December 31, 2016, balance sheet.
2) Compute the total carrying amount of Marin' patents on its December 31, 2017, balance sheet.
In: Accounting
Q#1: As an auditor for the CPA firm of Hinkson and Calvert, you encounter the following situations in auditing different clients.
| 1. Ayayai Corporation is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 3,500 shares of its $19 par value common stock. The owners’ asking price for the land was $133,500, and the fair value of the land was $119,000. | ||||||||||||||
|
2. Whispering Winds Corporation is a publicly held corporation whose common stock is traded on the securities markets. On June 1, it acquired land by issuing 19,000 shares of its $11 par value stock. At the time of the exchange, the land was advertised for sale at $273,000. The stock was selling at $12 per share Q#2: On January 1, 2020, the stockholders’ equity section of
Bramble Corporation shows common stock ($6 par value) $1,800,000;
paid-in capital in excess of par $1,050,000; and retained earnings
$1,230,000. During the year, the following treasury stock
transactions occurred.
Part B: Restate the entry for September 1, assuming the treasury shares were sold at $12 per share. |
In: Accounting
Penn Station East Coast Subs began in Cincinnati, Ohio with founder Jeff Osterfeld. Feeling frustrated with the lack of growth and profits, Jeff decided to franchise his handful of restaurants in the late 1980’s. This strategy proved successful. Based on the internal environment of Penn Station, what factors contributed to the success of the business? What characteristics, culture, and management style did Jeff portray that lead to his overall success?
In: Accounting
The value of goodwill is the excess of
The purchase price over the fair value of tangible and identifiable intangible net assets acquired.
The purchase price over the fair value of tangible net assets acquired.
The purchase price over the carrying value of tangible and identifiable intangible net assets acquired.
The purchase price over the carrying value of tangible net assets acquired.
In: Accounting