A performs bookkeeping and tax- reporting services to startup companies. On January 1, 2018, A entered into a 3-year service contract with B. B promises to pay $9,000 at the beginning of each year, which at contract inception is the stand-alone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $8,000. In addition, B agrees to pay an additional $22,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract.

1. Prepare the journal entries for the A in 2018 related to this service contract. (1) on January 1, 2018 and (2) on December 31, 2018

2. Prepare the journal entries for B in 2020 related to the modified service contract, assuming the addition of the service is not a separate contract. (1) on January 1, 2020 and (2) on December 31, 2020.

3. Assuming A and B agree on a revised set of services (fewer bookkeeping services but more tax services) in the extended contract period and the modification results in a separate performance obligation, (1) prepare the journal entry on December 31, 2020. (2) What are required to treat the modification as a separate contract.

In June 1, 2020, Jill Bow and Aisha Adams formed a partnership to open a gluten-free commercial bakery, contributing $297,000 cash and $394,000 of equipment, respectively. The partnership also assumed responsibility for a $57,000 note payable associated with the equipment. The partners agreed to share profits as follows: Bow is to receive an annual salary allowance of $167,000, both are to receive an annual interest allowance of 10% of their original capital investments, and any remaining profit or loss is to be shared 40/60 (to Bow and Adams, respectively). On November 20, 2020, Adams withdrew cash of $117,000. At year-end, May 31, 2021, the Income Summary account had a credit balance of $550,000. On June 1, 2021, Peter Williams invested $137,000 and was admitted to the partnership for a 20% interest in equity. Required: 1. Prepare journal entries for the following dates.

Required: 1. Prepare journal entries for the following dates.

a. June 1, 2020 Record the formation of partnership

b. November 20, 2020 Record the withdrawal by partner

c. May 31, 2021 Record the closing of profit to capital.

d. June 1, 2021 Record the admission of Williams for a 20% interest.

2. Calculate the balance in each partner’s capital account immediately after the June 1, 2021, entry.

Beatrice Corp. desired to raise cash to fund its expansion by issuing long-term bonds. The corporation hired an investment banker to manage the issue (best efforts underwriting) and also hired the services of a lawyer, an audit firm, etc. On June 1, 2020, Twilight sold $ 500,000 in long-term bonds. The bonds will mature in 10 years and have a stated interest rate of 8%. Other bonds that Twilight has issued with identical terms are traded based on a market rate of 10%. The bonds pay interest semi-annually on May 31 and November 30. The bonds are to be accounted for using the effective-interest method. On June 1, 2022 Twilight decided to retire 20% of the bonds. At that time the bonds were selling at 98.

Instructions (Round all values to the nearest dollar)

a)    Provide the journal entry for the issuance of the bonds on June 1, 2020.

b)    What was the interest expense related to these bonds that would be reported on Twilight’s calendar 2020 income statement?

c)    Provide all entries from after the issue of the bond until December 31, 2020.

d)    Calculate the gain or loss on the partial retirement of the bonds on June 1, 2022.

e)    Provide the journal entries to record the partial retirement on June 1, 2022.

1.) On June 1, 2020, Hanes Company purchased 10 computers with an invoice price of $50,000. Other costs incurred were sales tax $2,100, Freight $300, installation of $2,300, testing of $300, prepaid insurance to cover the computers; $3,600. The computers are estimated to have a 5-year life and $5,000 salvage value.

Instructions:

1. Find the cost of new computers. ___________________________

2. What is depreciation for 2020 and 2021 if the company uses the double-declining balance method.

2020 ______________________________                                                           

2021 ______________________________                                                                

2.) A company purchased factory equipment for $700,000 on August 1, 2020. It is estimated that the equipment will have a $70,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be. (Round to whole dollars if necessary)

3.) A factory machine was purchased for $375,000 on November 1, 2021. It was estimated that it would have a $75,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2021. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2021 would be.

Problem 16-1 Single temporary difference originates each year for four years [LO16-1]

Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2017–2020 are as follows:

There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%.

(Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 2017–2020.)

Required:
1. Prepare the appropriate journal entry to record Alsup's 2018 income taxes, Alsup’s 2019 income taxes and Alsup’s 2020 income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands.)

Comprehensive Problem: Consolidation Working Paper and Financial Statements Pierre

Corporation acquired 75 percent of Selene Corporation’s common stock for $20,100,000 on January 2,

2017. The estimated fair value of the noncontrolling interest was $5,900,000. Selene’s book value at date

of acquisition was $10,000,000, and its identifiable net assets were fairly stated except for previously

unreported completed technology, valued at $4,000,000, with a remaining life of 5 years, straight‑line. It

is now December 31, 2020, and you are preparing consolidated financial statements for Pierre and Selene.

Following is information on intercompany transactions

1. On January 2, 2018, Pierre sold equipment to Selene for $6 million and recorded a gain of $2 million.

The equipment had a remaining life of 10 years at that time.

2. Selene supplies Pierre with component parts for its products, at a markup of 20 percent on cost.

During 2020, Selene made sales totaling $20 million to Pierre. Pierre had parts purchased for $1.8

million and $2.4 million in its 2020 beginning and ending inventory balances, respectively.

3. Pierre sells materials to Selene for use in its manufacturing processes, at a markup of 20 percent on sell‑

ing price. During 2020, Pierre made sales totaling $15 million to Selene. Selene had materials purchased

for $3 million and $2.8 million in its 2020 beginning and ending inventory balances, respectively

Goodwill arising from this acquisition was impaired by $3 million during the years 2017–2019, and no

further goodwill impairment occurred in 2020. Pierre uses the complete equity method to report the in‑

vestment in Selene on its own books. The separate December 31, 2020, trial balances of Pierre and Selene

appear below, before Pierre’s end‑of‑year adjustment to record its equity in Selene’s net income and other

comprehensive income for 2020.

in thousands) Pierre Selene

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000 $ 2,500

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,600 10,000

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 30,000

Investment in AFS debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 6,000

Plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452,000 144,000

Investment in Selene . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,225 —

Current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,000) (2,800)

Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (489,825) (163,700)

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,000) (2,000)

Retained earnings, January 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88,500) (19,600)

Accumulated other comprehensive income, January 1. . . . . . . . . . . . . . . . . . (1,500) (400)

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 3,000

Sales revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (150,000) (50,000)

Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 35,000

Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,500 7,900

Unrealized losses on AFS investments (other comprehensive income). . . . . . 500

100

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $ 0

Required

a. Calculate the total goodwill arising from this acquisition and its percentage allocation to the control‑

ling and noncontrolling interests.

b. Prepare a schedule calculating Pierre’s equity in the net income of Selene for 2020, and the noncon‑

trolling interest in Selene’s net income for 2020.

c. Update Pierre’s trial balance for its 2020 equity method entries and prepare a working paper consoli‑

dating the 2020 trial balances of Pierre and Selene.

d. Present the consolidated financial statements of Pierre and Selene, in proper format

The pKb values for the dibasic base B are pKb1 = 2.10 and pKb2 = 7.65. Calculate the pH at each of the following points in the titration of 50.0 mL of a 0.85 M B(aq) with 0.85 M HCl(aq).

a) before addition of any HCl

b)after addition of 25.0mL of HCl

c)after addition of 50.0mL of HCl

d) after addition of 75.0mL of HCl

e) after addition of 100.0 mL of HCl

Calculate the pH for each of the following cases in the titration of 50.0 mL of 0.230 M HClO(aq) with 0.230 M KOH(aq). The ionization constant for HClO can be found here.

(a) before addition of any KOH

(b) after addition of 25.0 mL of KOH

(c) after addition of 30.0 mL of KOH

(d) after addition of 50.0 mL of KOH

(e) after addition of 60.0 mL of KOH

Calculate the pH for each of the following cases in the titration of 50.0 mL of 0.180 M HClO(aq) with 0.180 M KOH(aq). The ionization constant for HClO can be found here.

(a) before addition of any KOH

(b) after addition of 25.0 mL of KOH

(c) after addition of 35.0 mL of KOH

(d) after addition of 50.0 mL of KOH

(e) after addition of 60.0 mL of KOH

Calculate the pH for each of the following cases in the titration of 50.0 mL of 0.100 M HClO(aq) with 0.100 M KOH(aq). The ionization constant for HClO can be found here.

(a) before addition of any KOH

(b) after addition of 25.0 mL of KOH

(c) after addition of 30.0 mL of KOH

(d) after addition of 50.0 mL of KOH

(e) after addition of 60.0 mL of KOH