The Edwards Lake Community Hospital balance sheet as of December
31, 2019, follows.
| EDWARDS LAKE COMMUNITY HOSPITAL | |||||||||
| Balance Sheet | |||||||||
| As of December 31, 2019 | |||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and Cash Equivalents | $ | 445,500 | |||||||
| Accounts and notes receivable (net of uncollectible accounts of $17,200) | 27,900 | ||||||||
| Inventory | 93,400 | ||||||||
| Total current assets | 566,800 | ||||||||
| Assets limited as to use: | |||||||||
| Cash | $ | 18,540 | |||||||
| Investments | 236,220 | ||||||||
| Total assets limited as to use | 254,760 | ||||||||
| Property, plant, and equipment: | |||||||||
| Land | 217,100 | ||||||||
| Buildings (net of accumulated depreciation of $1,624,400) | 2,900,000 | ||||||||
| Equipment (net of accumulated depreciation of $1,025,900) | 1,861,600 | ||||||||
| Total property, plant, and equipment | 4,978,700 | ||||||||
| Total assets | $ | 5,800,260 | |||||||
| Liabilities and Net Assets | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 20,600 | |||||||
| Accrued payroll | 47,800 | ||||||||
| Current portion of mortgage payable | 570,000 | ||||||||
| Total current liabilities | 638,400 | ||||||||
| Long-term debt—mortgage payable | 2,640,000 | ||||||||
| Total liabilities | 3,278,400 | ||||||||
| Net assets: | |||||||||
| Without donor restrictions | |||||||||
| Undesignated | 2,089,760 | ||||||||
| Designated for plant | 253,360 | ||||||||
| With donor restrictions | 178,740 | 2,521,860 | |||||||
| Total liabilities and net assets | $ | 5,800,260 | |||||||
The following are the transactions of Edwards Lake Community
Hospital during the fiscal year ended December 31, 2020.
(1) Information related to accrual of revenues and gains is as
follows:
| Patient services revenue, gross | $ | 3,502,300 |
| Charity care | 218,260 | |
| Contractual adjustments to patient service revenues | 1,534,000 | |
| Other operating revenues | 1,001,550 | |
(2) Cash received includes
| Interest on investments in Assets Limited as to Use | 8,750 | |
| Collections of receivables | 2,967,600 | |
(3) Expenses of $898,000 were recorded in accounts payable and
$1,462,790 in accrued payroll. Because some of the nursing expenses
met a net asset restriction, $101,000 was released from
restrictions.
| Administration expenses | 453,480 | |
| General services expenses | 527,860 | |
| Nursing services expenses | 1,033,200 | |
| Other professional services expenses | 346,250 | |
(4) Cash paid includes:
| Interest expense (allocated half to nursing services and half to general services) | $ | 294,000 |
| Payment on mortgage principal | 570,000 | |
| Accounts payable for purchases | 839,600 | |
| Accrued payroll | 1,286,500 | |
(5) Interest of $1,880 accrued on investments in Assets Limited as
to Use.
(6) Depreciation charges for the year amounted to $124,000 for the
buildings and $135,500 for equipment. Depreciation was allocated 45
percent to nursing services, 15 percent to other professional
services and 20 percent to each administrative and general
services.
(7) Other information:
(a) Provision for uncollectible
receivables was determined to be adequate.
(b) Supplies inventory balances:
| 12/31/2019 | 12/31/2020 | |||||||||
| Administration | $ | 12,200 | $ | 10,100 | ||||||
| General services | 12,900 | 16,000 | ||||||||
| Nursing services | 24,000 | 19,600 | ||||||||
| Other professional services | 44,300 | 54,000 | ||||||||
| Totals | $ | 93,400 | $ | 99,700 | ||||||
(c) Portion of mortgage payable due within one year, $570,000.
(8) A $691 unrealized loss on investments occurred.
(9) Nominal accounts were closed. Necessary adjustments were made
to increase the Net Assets—Without Donor Restrictions, Designated
for Plant.
Required
a-1. Prepare journal entry for the preceding transactions during the fiscal year ended December 31, 2020, assuming that Edwards Lake Community Hospital is a not-for-profit hospital.
a-2. Prepare closing entries for the fiscal year ended December 31, 2020, assuming that Edwards Lake Community Hospital is a not-for-profit hospital.
b. Prepare a balance sheet as of December 31, 2020.
c-1. Prepare a statement of operations for the year ended December 31, 2020.
c-2. Prepare a statement of changes in net assets for the year ended December 31, 2020.
d. Prepare a statement of cash flows for the year ended December 31, 2020.
In: Accounting
Shari Patel of the controller's office of Sheridan Corporation was given the assignment of determining the basic and diluted earnings per share values for the year ended December 31, 2020. Patel has gathered the following information.
1.The company is authorized to issue 8 million common shares. As at December 31, 2019, 2 million shares had been issued and were outstanding.2.The per share market prices of the common shares on selected dates were as follows:
Price per Share July 1,
2019 $18.00 Jan. 1,
2020 22.00 Apr. 1,
2020 24.00 July 1,
2020 13.00 Aug. 1,
2020 8.50 Nov. 1,
2020 8.00 Dec. 31,
2020 9.00
3.A total of 800,000 shares of an authorized 1.2 million convertible preferred shares had been issued on July 1, 2019. The shares were issued at $25, and have a cumulative dividend of $2 per share. The shares are convertible into common shares at the rate of one convertible preferred share for one common share. The rate of conversion is to be automatically adjusted for stock splits and stock dividends. Dividends are paid quarterly on September 30, December 31, March 31, and June 30.4.Sheridan Corporation is subject to a 30% income tax rate.5.The after-tax net income for the year ended December 31, 2020, was $11,600,000.
The following specific activities took place during 2020:
1.January 1: A 5% common stock dividend was issued. The dividend had been declared on December 1, 2019, to all shareholders of record on December 29, 2019.2.April 1: A total of 400,000 shares of the $2 convertible preferred shares were converted into common shares. The company issued new common shares and retired the preferred shares. This was the only conversion of the preferred shares during 2020.3.July 1: A 2-for-1 split of the common shares became effective on this date. The board of directors had authorized the split on June 1.4.August 1: A total of 600,000 common shares were issued to acquire a factory building.5.November 1: A total of 21,000 common shares were purchased on the open market at $8 per share and cancelled.6.Cash dividends to common shareholders were declared and paid as follows:
April 15:$0.30per shareOctober 15:$0.20per share
7. Cash dividends to preferred shareholders were declared and paid as scheduled.
Determine the number of shares to use in calculating basic earnings per share for the year ended December 31, 2020.
Number of shares
Enter your answer in accordance to the question statement
shares
Determine the number of shares to use in calculating diluted earnings per share for the year ended December 31, 2020.
Number of sharesEnter your answer in accordance to the question statement
shares
Calculate the adjusted net income amount to use as the numerator in the basic earnings per share calculation for the year ended December 31, 2020.
Adjusted net income$
Enter your answer in accordance to the question statement
In: Accounting
The profit before tax, as reported in the statement of profit or loss and other comprehensive income of Andreas Ltd for the year ended 30 June 2020, amounted to $85 000, including the following revenue and expense items:
|
Rent revenue |
$4 500 |
|
Bad debts expense |
6 000 |
|
Depreciation of plant |
5 000 |
|
Annual leave expense Long service leave expense |
2 500 3 500 |
|
Entertainment costs (non-deductible) |
2 800 |
|
Depreciation of buildings (non-deductible) |
800 |
|
Fines and penalties (non-deductible) |
1 500 |
The statement of financial position of the company at 30 June 2020 showed the following net assets.
|
2020 |
2019 |
|
|
Assets |
||
|
Cash |
12 000 |
9 500 |
|
Inventories |
17 000 |
15 500 |
|
Receivables |
50 000 |
48 000 |
|
Allowance for doubtful debts |
(6 500) |
(4 000) |
|
Office supplies |
2 500 |
2 200 |
|
Plant |
50 000 |
50 000 |
|
Accumulated depreciation |
(26 000) |
(21 000) |
|
Buildings |
30 000 |
30 000 |
|
Accumulated depreciation |
(14 800) |
(14 000) |
|
Goodwill (net) |
7 000 |
7 000 |
|
Deferred tax asset |
? |
4 050 |
|
Liabilities |
||
|
Accounts payable |
29 000 |
26 000 |
|
Provision for long service leave |
7 000 |
4 500 |
|
Provision for annual leave |
5 000 |
3 000 |
|
Rent received in advance |
3 500 |
2 000 |
|
Deferred tax liability |
? |
3 150 |
Additional information
(a) Accumulated depreciation of plant for tax purposes was $30 000 at 30 June 2019, and depreciation for tax purposes for the year ended 30 June 2020 amounted to $ 6 500.
(b) The tax rate is 30%.
Required(show all workings):
Prepare a current tax worksheet and the journal entry to recognise the company’s current tax liability as at 30 June 2020.
In: Accounting
The condensed financial statements of Oriole Company for the years 2019 and 2020 are presented as follows. (Amounts in thousands.)
|
ORIOLE COMPANY |
||||
|
2020 |
2019 |
|||
| Current assets | ||||
| Cash and cash equivalents |
$330 |
$360 |
||
| Accounts receivable (net) |
660 |
590 |
||
| Inventory |
600 |
530 |
||
| Prepaid expenses |
120 |
160 |
||
| Total current assets |
1,710 |
1,640 |
||
| Investments |
200 |
200 |
||
| Property, plant, and equipment |
420 |
380 |
||
| Intangibles and other assets |
530 |
510 |
||
| Total assets |
$2,860 |
$2,730 |
||
| Current liabilities |
$1,090 |
$980 |
||
| Long-term liabilities |
550 |
520 |
||
| Stockholders’ equity—common |
1,220 |
1,230 |
||
| Total liabilities and stockholders’ equity |
$2,860 |
$2,730 |
||
|
ORIOLE COMPANY |
||||
|
2020 |
2019 |
|||
| Sales revenue |
$3,940 |
$3,600 |
||
| Costs and expenses | ||||
| Cost of goods sold |
1,145 |
1,080 |
||
| Selling & administrative expenses |
2,400 |
2,330 |
||
| Interest expense |
25 |
20 |
||
| Total costs and expenses |
3,570 |
3,430 |
||
| Income before income taxes |
370 |
170 |
||
| Income tax expense |
111 |
51 |
||
| Net income |
$ 259 |
$ 119 |
||
Compute the following ratios for 2020 and 2019.
(Round current ratio and inventory turnover to 2
decimal places, e.g. 1.83 and all other answers to 1 decimal place,
e.g. 1.8 or 12.6%.)
| (a) | Current ratio. | |
| (b) | Inventory turnover. (Inventory on 12/31/18, was $360.) | |
| (c) | Profit margin. | |
| (d) | Return on assets. (Assets on 12/31/18, were $2,290.) | |
| (e) | Return on common stockholders’ equity. (Stockholders’ equity on 12/31/18, was $980.) | |
| (f) | Debt to assets ratio. | |
| (g) | Times interest earned. |
|
2020 |
2019 |
|||||
| (a) Current ratio | :1 | :1 | ||||
| (b) Inventory turnover | times | times | ||||
| (c) Profit margin | % | % | ||||
| (d) Return on assets | % | % | ||||
| (e) Return on common stockholders’ equity | % | % | ||||
| (f) Debt to assets ratio | % | % | ||||
| (g) Times interest earned | times | times | ||||
In: Accounting
Headland Inc., a greeting card company, had the following statements prepared as of December 31, 2020.
|
HEADLAND INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$6,100 |
$6,900 |
||||
|
Accounts receivable |
62,500 |
51,000 |
||||
|
Short-term debt investments (available-for-sale) |
34,800 |
18,100 |
||||
|
Inventory |
39,600 |
60,200 |
||||
|
Prepaid rent |
4,900 |
4,000 |
||||
|
Equipment |
154,500 |
130,100 |
||||
|
Accumulated depreciation—equipment |
(34,800 |
) |
(25,300 |
) |
||
|
Copyrights |
46,300 |
50,400 |
||||
|
Total assets |
$313,900 |
$295,400 |
||||
|
Accounts payable |
$46,000 |
$40,200 |
||||
|
Income taxes payable |
4,000 |
6,000 |
||||
|
Salaries and wages payable |
8,100 |
4,000 |
||||
|
Short-term loans payable |
8,000 |
10,000 |
||||
|
Long-term loans payable |
59,700 |
69,000 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
58,100 |
36,200 |
||||
|
Total liabilities & stockholders’ equity |
$313,900 |
$295,400 |
||||
|
HEADLAND INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$339,075 |
|||
|
Cost of goods sold |
175,000 |
|||
|
Gross profit |
164,075 |
|||
|
Operating expenses |
119,900 |
|||
|
Operating income |
44,175 |
|||
|
Interest expense |
$11,300 |
|||
|
Gain on sale of equipment |
2,000 |
9,300 |
||
|
Income before tax |
34,875 |
|||
|
Income tax expense |
6,975 |
|||
|
Net income |
$27,900 |
|||
Additional information:
| 1. | Dividends in the amount of $6,000 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $19,900 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the direct method.
(Show amounts in the investing and financing sections
that decrease cash flow with either a - sign e.g. -15,000 or in
parenthesis e.g. (15,000).)
|
HEADLAND INC. |
|---|
In: Accounting
On July 31, 2020, Oriole Company paid $2,750,000 to acquire all
of the common stock of Conchita Incorporated, which became a
division (a reporting unit) of Oriole. Conchita reported the
following balance sheet at the time of the acquisition.
| Current assets |
$730,000 |
Current liabilities |
$560,000 |
|||
|---|---|---|---|---|---|---|
| Noncurrent assets |
2,450,000 |
Long-term liabilities |
460,000 |
|||
| Total assets |
$3,180,000 |
Stockholders’ equity |
2,160,000 |
|||
| Total liabilities and stockholders’ equity |
$3,180,000 |
It was determined at the date of the purchase that the fair value
of the identifiable net assets of Conchita was $2,510,000. Over the
next 6 months of operations, the newly purchased division
experienced operating losses. In addition, it now appears that it
will generate substantial losses for the foreseeable future. At
December 31, 2020, Conchita reports the following balance sheet
information.
| Current assets |
$470,000 |
||
| Noncurrent assets (including goodwill recognized in purchase) |
2,050,000 |
||
| Current liabilities |
(620,000 |
) |
|
| Long-term liabilities |
(420,000 |
) |
|
| Net assets |
$1,480,000 |
Finally, it is determined that the fair value of the Conchita
Division is $1,850,000.
a. Compute the amount of goodwill recognized, if any, on July
31, 2020. (If answer is zero, do not leave answer field
blank. Enter 0 for the amount.)
|
The amount of goodwill b. Determine the impairment loss, if any, to be recorded on
December 31, 2020. (If answer is zero, do not leave
answer field blank. Enter 0 for the
amount.)
|
In: Accounting
Question 3 Part A XYZ Windows Ltd is involved in a research and development project to create a filtering window that removes the need for curtains. For the current year ended 30 June 2020 expenditure on the project is as follows: Research $235,000 Development $500,000 The window is expected to return profits of $70,000 per year for the 10 years commencing 1 July 2020. Assuming the company uses a straight-line method amortisation. This company uses a discount rate of 8 per cent. Required: i) How much research and development cost should be expensed in the year to 30 June 2020? ii) How much development expenditure should be amortised in the year to 30 June 2021?
Part B An assistant of yours has encountered the
following matter during the preparation of the draft financial
statements of XYZ Ltd for the year ending 30 June 2020. He /She has
given an explanation of his/her treatment of the item. “XYZ Ltd
management spent $200,000 sending its staff on training courses
during the year. This has already led to an improvement in the
company’s efficiency and resulted in cost savings. The organiser of
the course has stated that the benefits from the training should
last for a minimum of four years. The assistant has therefore
treated the cost of the training as an intangible asset and charged
six months’ amortisation based on the average date during the year
on which the training courses were completed.” Required: Comment on
the assistant’s treatment of them in the financial statement for
the year ended 30 June 2020 and advise him how they should be
treated under AASB 138 Intangible Assets.
Part C If an organisation is constructing a building, and that building will take a number of years to complete, can the organisation recognise revenue throughout the contract, or does the construction-based organisation have to wait until project completion before it recognises the revenue associated with the construction contract? Discuss this statement in accordance to AASB 15.
In: Accounting
Sage Inc., a greeting card company, had the following statements
prepared as of December 31, 2020.
|
SAGE INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$6,100 |
$6,900 |
||||
|
Accounts receivable |
62,500 |
51,000 |
||||
|
Short-term debt investments (available-for-sale) |
34,800 |
18,100 |
||||
|
Inventory |
39,600 |
60,200 |
||||
|
Prepaid rent |
4,900 |
4,000 |
||||
|
Equipment |
154,500 |
130,100 |
||||
|
Accumulated depreciation—equipment |
(34,800 |
) |
(25,300 |
) |
||
|
Copyrights |
46,300 |
50,400 |
||||
|
Total assets |
$313,900 |
$295,400 |
||||
|
Accounts payable |
$46,000 |
$40,200 |
||||
|
Income taxes payable |
4,000 |
6,000 |
||||
|
Salaries and wages payable |
8,100 |
4,000 |
||||
|
Short-term loans payable |
8,000 |
10,000 |
||||
|
Long-term loans payable |
59,700 |
69,000 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
58,100 |
36,200 |
||||
|
Total liabilities & stockholders’ equity |
$313,900 |
$295,400 |
||||
|
SAGE INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$339,075 |
|||
|
Cost of goods sold |
175,000 |
|||
|
Gross profit |
164,075 |
|||
|
Operating expenses |
119,900 |
|||
|
Operating income |
44,175 |
|||
|
Interest expense |
$11,300 |
|||
|
Gain on sale of equipment |
2,000 |
9,300 |
||
|
Income before tax |
34,875 |
|||
|
Income tax expense |
6,975 |
|||
|
Net income |
$27,900 |
|||
Additional information:
| 1. | Dividends in the amount of $6,000 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $19,900 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the direct method.
(Show amounts in the investing and financing sections
that decrease cash flow with either a - sign e.g. -15,000 or in
parenthesis e.g. (15,000).)
In: Accounting
Jamie Bard is the owner Café Corner, a popular restaurant located at a busy traffic intersection in the city of Clutchmore.
For the financial year ended 30 June 2020:
The following are balances extracted from the Statements of Financial Position of Café Corner at the end of its most recent two financial years:
|
30 June 2020 |
30 June 2019 |
|
|
$ |
$ |
|
|
Accounts payable |
12,000 |
27,000 |
|
Accounts receivable |
28,000 |
103,000 |
|
Accrued expenses |
5,000 |
11,000 |
|
Accumulated depreciation |
84,000 |
65,000 |
|
Cash |
34,000 |
23,000 |
|
Inventory |
72,000 |
46,000 |
|
Plant and equipment |
293,000 |
228,000 |
|
Prepaid expenses |
4,000 |
15,000 |
|
Share capital |
180,000 |
160,000 |
Jamie wants to understand the cash flow of Café Corner better and has asked for your assistance to help him prepare some information regarding the cash flows of the business.
|
Required: |
||
|
a) |
Calculate the cash receipts from customers, cash payments to suppliers and |
|
|
cash payments for other expenses. Show all workings. |
||
|
b) |
Using the direct method, prepare the Statement of Cash Flows for Café |
|
|
Corner for the financial year ended 30 June 2020. |
||
|
c) |
Prepare a reconciliation of Cash Flows from Operating Activities and Profit |
|
|
After Tax for Café Corner. |
||
In: Accounting
Jamie Bard is the owner Café Corner, a popular restaurant located at a busy traffic intersection in the city of Clutchmore.
For the financial year ended 30 June 2020:
Café Corner earned a profit after income tax of $16,000. This was
after taking into account sales of $821,000 and cost of sales of
$623,000.
Other operating expenses incurred to operate the business
totalled $179,000. This figure included:
(i) depreciation expenses, and
(ii) interest expenses of $11,000 which were fully paid.
There were some additional plant and equipment purchased for cash. However, there were no disposals of property, plant and equipment.
The company paid $7,000 to the Tax Office in full settlement of its income tax obligations.
The company received some interest income amounting to $4,000 when it placed some of its excess cash in an investment fund.
The shareholders of Café Corner received dividends of $18,000 from the company.
The following are balances extracted from the Statements of
Financial Position of Café Corner at the end of its most recent two
financial years:
30 June 2020 30 June 2019
$ $
Accounts payable 12,000 27,000
Accounts receivable 28,000 103,000
Accrued expenses 5,000 11,000
Accumulated depreciation 84,000 65,000
Cash 34,000 23,000
Inventory 72,000 46,000
Plant and equipment 293,000 228,000
Prepaid expenses 4,000 15,000
Share capital 180,000 160,000
Jamie wants to understand the cash flow of Café Corner better and has asked for your assistance to help him prepare some information regarding the cash flows of the business.
Required:
a) Calculate the cash receipts from customers, cash payments to suppliers and cash payments for other expenses. Show all workings. (7½ marks)
b) Using the direct method, prepare the Statement of Cash Flows for Café Corner for the financial year ended 30 June 2020. (6½ marks)
c) Prepare a reconciliation of Cash Flows from Operating Activities and Profit After Tax for Café Corner.
In: Accounting