On January 1, 2020, Marigold Company purchased 12% bonds having a maturity value of $270,000, for $290,470.00. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Marigold Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

1.Prepare the journal entry at the date of the bond purchase.

2.Prepare a bond amortization schedule.

3.Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.

4.Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.

On January 1, 2017, Metlock Company purchased 8% bonds having a maturity value of $240,000, for $260,219.71. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Metlock Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

1.)Prepare the journal entry at the date of the bond purchase.

2.)Prepare a bond amortization schedule.

3.)Prepare the journal entry to record the interest revenue and the amortization at December 31, 2017.

4.)Prepare the journal entry to record the interest revenue and the amortization at December 21, 2018.

1. If your company has Total Fixed Cost = $800,000, Total Sales Revenue = $2,225,000, Total Variable Cost = $1,335,000, and Number of Units = 25,000, what is the number of units you need to sell to break even?
2. If your company has Total Fixed Cost = $141,000, Selling Price per Unit = $29.00, and Variable Cost per Unit = $7.71, what is the sales revenue you need to generate to break even?
3. If your company has Net Operating Income = $855,000, Total Fixed Cost = $185,000, and Total Sales Revenue = $1,300,000, what is the sales revenue you need to generate to reach your target profit $2,171,700?
4. If your company has Unit Contribution Margin = $29.38, Number of Units = 36,000, and Net Operating Income = $94,500, what is the number of units you need to sell to break even?
5. If your company has Total Variable Cost = $740,000, Total Contribution Margin = $1,110,000, and Total Fixed Cost = $112,000, what is the sales revenue you need to generate to break even?
6. If your company has Total Fixed Cost = $490,000, Unit Contribution Margin = $69.43, and Contribution Margin Ratio = 0.8, what is the number of units you need to sell to reach your target profit of $1,751,500?
7. If your company has Total Fixed Cost = $500,000, Total Sales Revenue = $2,225,000, Total Variable Cost = $667,500, and Unit Contribution Margin = $62.30, what is the sales revenue you need to generate to reach your target profit $2,728,350?

A CPA has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period. If the CPA does not make the proper adjusting entry for this transaction at the end of the accounting period, which of the following is correct?

A. Net income will be correct because no cash has been received.

B. Net income will understated.

C. Net income will be overstated.

D. Accounts Receivable will be overstated.

Entity I collected $800 on account from its credit customers. The entry to record this transaction will include:

A. a debit to Accounts Receivable credit to Service Revenue

B. a debit to Cash and a credit to Service Revenue

C. a debit to Accounts Receivable and a credit Cash.

D. a debit to Cash and a credit to Accounts Receivable

Entity L purchased equipment for $12,000 on January 1, 2022. The company expects to use the equipment for 5 years and uses straight-line depreciation. The equipment has no salvage value. The entry to record depreciation expense on December 31, 2022 will include:

All of the following would be classified as internal users of financial statements except:

All of the following accounts must be closed at the end of the accounting period except:

Entity G received cash of $1,400 for services rendered. The entry to record this transaction will include

Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

Adjusting entries to recognize unearned revenue that has now been earned (hint: think of the journal entry):

JETBLUE AIRWAYS CORPORATION: GETTING OVER THE “BLUES”?

In 2017 JetBlue faced challenges that included rising fuel prices, troubling technical disruptions, and declining quality of the flying experience. Since the beginning of 2016, JetBlue had enjoyed low fuel prices that helped increase their earnings about 18 percent during the second quarter of 2016, but the company experienced technical issues that caused booking problems and resulted in delays, as well as bad publicity. In order to cope with the likelihood of a rise in future fuel prices, JetBlue undertook massive cost reductions by investing in cabin restyling, for instance, adding more seats to JetBlue’s A320 airplanes. However, the shrinking legroom that accompanied the cabin restyling was despised by passengers, which posed a problem for an airline that had once offered customers a captivating (as opposed to a captive) flying experience. To meet the challenges, new CEO Robin Hayes orchestrated various initiatives that the company planned to take through 2017. Those initiatives included wider fare options, enhanced Mint services, cabin restyling, new lines of JetBlue credit cards, and partnerships with other airlines.

JetBlue had been established with the goal of being a leading low-fare passenger airline that offered customers a differentiated product and high-quality customer service on point-to-point routes. JetBlue had a geographically diversified flight schedule that included both short-haul and long-haul routes. The mission of the company, according to Neeleman, was “to bring humanity back to air travel.” To stimulate demand, the airline focused on underserved markets and large metropolitan areas that had high average fares.JetBlue was committed to keeping its costs low. To achieve this objective, the company originally operated a single-type aircraft fleet comprising Airbus A320 planes as opposed to the more popular but costly Boeing 737. The A320s had 162 seats, compared to 132 seats in the Boeing 737. According to JetBlue, the A320 was less expensive to maintain and more fuel-efficient. Since all of JetBlue’s planes were new, the maintenance costs were also lower. In addition, the single type of aircraft kept training costs low and increased personnel utilization. JetBlue was the first to introduce the “paperless cockpit,” in which pilots, equipped with laptops, had ready access to flight manuals that were constantly updated at headquarters. As a result, pilots could quickly calculate the weight, balance, and takeoff performance of the aircraft instead of having to download and print the manuals to make the calculations.

The paperless cockpit ensured faster takeoffs by reducing paperwork and thus helped the airline achieve quicker turnarounds and higher aircraft utilization. No meals were served on the planes, and pilots even had to be ready, if need be, to do cleanup work on the plane to minimize the time the aircraft was on the ground. Turnaround time was also reduced by the airline’s choice of less congested airports. Innovation was everywhere. For example, there were no paper tickets to lose and no mileage statements to mail to frequent fliers. With friendly, customer service–oriented employees; new aircraft; roomy leather seats with 36 channels of free Live TV, 100 channels of free XM satellite radio, and movie channel offerings from FOX Inflight; and more legroom (one row of seats was removed to create additional space), JetBlue promised its customers a distinctive flying experience, the “JetBlue experience.” With virtually no incidents of passengers being denied boarding; high completion factors (99.6 percent as compared to 98.3 percent at other major airlines); the lowest incidence of delayed, mishandled, or lost bags; and the third-lowest number of customer complaints, the company was indeed setting standards for low-cost operations in the industry. JetBlue was voted the best domestic airline in the Conde Nast Traveler’s Readers’ Choice Awards for five consecutive years. Readers of Travel + Leisure magazine also rated it the World’s Best Domestic Airline in 2006. In addition, it earned the Passenger Service Award from Air Transport World.

Hitting Bumpy Air

Nevertheless, high fuel prices, the competitive pricing environment, and other cost increases made it increasingly difficult to keep JetBlue growing and profitable. The airline suffered it’s first-ever losses after its IPO in 2005. It posted net losses of $20 million and $1 million for 2005 and 2006, respectively. The ice storm on Valentine’s Day 2007 that cost Neeleman his job was a nightmare in JetBlue’s hitherto high-flying history for more than one reason. Not only did the event destroy JetBlue’s reputation for customer friendliness, but it also exposed critical weaknesses in the systems that had kept the airline’s operations going. The airline’s reputation hit rock bottom. To limit the damage, JetBlue announced huge compensations to customers—refunds and future flights—which were to cost the airline about $30 million. Neeleman quickly followed up with a new Customer Bill of Rights. The Customer Bill of Rights outlined self-imposed penalties for JetBlue and major rewards for its passengers if the airline experienced operational problems and could not adjust to weather-related cancelations within a “reasonable” amount of time. All these announcements and even a public apology could not restore things to normalcy. Neeleman was pushed out as CEO on May 10, 2007. Dave Barger, the president, assumed the position of chief executive officer.

Restoring JetBlue’s Luster?

Under the second CEO, Dave Barger, JetBlue added several new services and embarked on capacity expansion to give the airline a new boost. In July 2007, it became the first U.S. carrier to let passengers send free email and text messages from wireless handheld devices, a technology developed through its Live TV LLC subsidiary. Later, in September 2007, it expanded to smaller cities that did not have sufficient demand for the larger planes flown by Southwest, Virgin America, and Sky bus Airlines. It also introduced Embraer jets to its fleet. In 2007, JetBlue had its first full-year profit in three years as an increase in traffic and operational improvements helped compensate for skyrocketing fuel costs. However, as a result of global financial turmoil and skyrocketing fuel prices, JetBlue’s profits tanked again in 2008, and the company reported a net loss of $85 million. Nevertheless, the company returned to profitability in 2009. In April 2010, JetBlue successfully completed the International Air Transport Association’s (IATA’s) Operational Safety Audit (IOSA) and achieved IOSA registration, meeting the same highest industry benchmarks as other world-class airlines.

Dave Barger was known for “being overly concerned” with customer service and comfort. During Barger’s tenure, JetBlue earned tributes for its customer service. However, its low-fare business model was being threatened as its costs kept going up. In April 2014, its pilots, long nonunion, voted to join the Air Line Pilots Association. In the wintertime the airline was again racked by weather-driven flight cancelations. JetBlue’s stock under Barger’s leadership lagged behind big legacy carriers Delta Air Lines and fellow discounter Southwest Airlines. The shares were up just 9 percent since Barger became CEO. In the same period, Southwest’s shares gained more than 140 percent and the overall Bloomberg U.S. Airline index gained 49 percent. Barger had said he was not interested in doing any acquisitions, and he did not see JetBlue as a target for a buy-out offer, even though the Luftanza deal had caused some speculation about this. Yet the airline had expanded into Alaska and on the West Coast of the United States, and there were multiple code share agreements in place as of 2015. Starting in 2014 JetBlue “will begin vying for big-spending business travelers” by offering “lie-flat seats and private suites on transcontinental flights on the highly competitive routes between Los Angeles and New York and San Francisco and New York… the new seats added to Airbus A321 planes will have adjustable firmness, a massage function, a 15-inch wide-screen television and a “wake-me-for-service” indicator if the flier decides to sleep. The private suites will include a closeable door for privacy. The airline plans to dedicate 11 planes to serve the two transcontinental routes, with expansions along the same routes and the addition of lie-flat seats on other routes, depending on demand.” In 2015, JetBlue was set to fly these “Mint business-class seats” between New York and the Caribbean. And as another example of how JetBlue was trying to add special “perks” to its service, here’s a story from August 2013: “. . . as the airline industry continues to put the squeeze on luggage fees, US-based carrier JetBlue has launched a baggage delivery service that will allow flyers to bypass the carrousel and proceed directly home or to their resort holiday. JetBlue unveiled details this week of its new Bags VIP concierge service, which will hand deliver checked bags to customers’ final destination within a 40-mile radius of the airport. Promotional pricing starts at $25 for delivery of one bag and $40 for up to 10 bags.”

What internal resources and assets does JetBlue have, that may give it a competitive advantage?Critically discuss whether Jet Blue position is supported by its value chain and other internal resources. (35 marks-800 words)

You must acknowledge all sources of information using full Harvard Style Referencing (In-text referencing plus list of references at the end) Minimum of 3 references are required

Cuneo Company’s income statements for the last 3 years are as follows: Cuneo Company Income Statements For the Years 1, 2, and 3 1 Year 1 Year 2 Year 3 2 Sales $1,000,000.00 $1,200,000.00 $1,700,000.00 3 Less: Cost of goods sold (700,000.00) (700,000.00) (1,000,000.00) 4 Gross margin $300,000.00 $500,000.00 $700,000.00 5 Less operating expenses: 6 Selling expenses (150,000.00) (220,000.00) (250,000.00) 7 Administrative expenses (50,000.00) (60,000.00) (120,000.00) 8 Operating income $100,000.00 $220,000.00 $330,000.00 9 Less: 10 Interest expense (25,000.00) (25,000.00) (25,000.00) 11 Income before taxes $75,000.00 $195,000.00 $305,000.00 Required: 1. Prepare a common-size income statement for Year 1 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.) 2. Prepare a common-size income statement for Year 2 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.) 3. Prepare a common-size income statement for Year 3 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.) Refer to the list below for the exact wording of an account title within your income statement. Labels Add Add operating expenses Less Less operating expenses Amount Descriptions Administrative expenses Contribution margin Cost of goods sold Gross margin Income after taxes Income before taxes Interest expense Operating income Sales Selling expenses Total 1. Prepare a common-size income statement for Year 1 by expressing each line item as a percentage of sales revenue. (Note: Enter all amounts as positive numbers. Round answers to the nearest tenth of a percent. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.) Cuneo Company Income Statement For Year 1 1 Year 1 Percent of Sales in Year 1 2 3 4 5 (Label) 6 7 8 9 (Label) 10 11 2. Prepare a common-size income statement for Year 2 by expressing each line item as a percentage of sales revenue. (Note: Enter all amounts as positive numbers. Round answers to the nearest tenth of a percent. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.) Cuneo Company Income Statement For Year 2 1 Year 2 Percent of Sales in Year 2 2 3 4 5 (Label) 6 7 8 9 (Label) 10 11 3. Prepare a common-size income statement for Year 3 by expressing each line item as a percentage of sales revenue. (Note: Enter all amounts as positive numbers. Round answers to the nearest tenth of a percent. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.) Cuneo Company Income Statement For Year 3 1 Year 3 Percent of Sales in Year 3 2 3 4 5 (Label) 6 7 8 9 (Label) 10 11

Ayayai Hardware takes pride as the “shop around the corner” that can compete with the big-box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Ayayai has developed the following two revenue arrangements to enhance its relationships with customers and increase its bottom line.

1. Ayayai sells a specialty portable winch that is popular with many of the local customers for use at their lake homes (putting docks in and out, launching boats, etc.). The Ayayai winch is a standard manufacture winch that Ayayai modifies so the winch can be used for a variety of tasks. Ayayai sold 70 of these winches during 2017 at a total price of $18,900, with a warranty guarantee that the product was free of any defects. The cost of winches sold is $16,200. The assurance warranties extend for a 3-year period with an estimated cost of $2,100. In addition, Ayayai sold extended warranties related to 20 Ayayai winches for 2 years beyond the 3-year period for $410 each.

2. To bolster its already strong customer base, Ayayai implemented a customer loyalty program that rewards a customer with 1 loyalty point for every $10 of purchases on a select group of Ayayai products. Each point is redeemable for a $1 discount on any purchases of Ayayai merchandise in the following 2 years. During 2017, customers purchased select group products for $92,000 (all products are sold to provide a 45% gross profit) and earned 9,200 points redeemable for future purchases. The standalone selling price of the purchased products is $92,000. Based on prior experience with incentives programs like this, Ayayai expects 8,800 points to be redeemed related to these sales (Ayayai appropriately uses this experience to estimate the value of future consideration related to bonus points).

Prepare the journal entries for Ayayai related to the sales of Ayayai winches with warranties.

Prepare the journal entries for the bonus point sales for Ayayai in 2017

How much additional sales revenue is recognized by Ayayai in 2018, assuming 3,300 bonus points are redeemed?

Q1- Provide an example of each title here and then record the journal entries .

Following is the first given answer.

1-Purchasing Equipment for cash

Given answer:

ABC company purchased equipment for SAR20,000 cash .

Equipment 20,000

Cash                   20,000

2-Issuing common stocks receiving cash.

3-Providing service receiving cash.

4-Purchasing supplies on credit.

5-Borrowing money from a bank.

6-Paying employees their salaries.

___

Q2- What is the accrual basis of accounting? When should revenue and expense be recognized in the accrual basis? Provide an example. (1 Mark).

__

Q3- On your own words, explain the purpose and the importance of the income statement, and prepare the income statement for ABC company based on the following information taken from the trial balance in 2019

Part C

Question 1

Mr. Kenny is an accountant at AF Textile, and he plays squash with Mr. Zuni, the CEO of AF Textile. The CEO wanted to decrease net income with the objective to pay lesser tax. Mr. Kenny was eager to get into Mr. Zuni’s elite social circle; he boasted to Mr. Zuni that he knew some accounting tricks that could decrease company income by simply disclosing company’s capital expenditure as their revenue expenditure. At the end of the year, Mr. Kenny changed the debits from “capital expenditures” to “revenue expenditure” on several transactions. Later, Mr. Zuni achieved his objective of paying lesser tax, and the manipulations were never discovered.

Required:

Differentiate between Capital Expenditure and Revenue Expenditure. (4 marks)

How did the change in journal entries affect the net income and net assets of the company at year-end?                                 (3 marks)