John Tuckland, the CEO of the Storedalsgatan (STI), believes that the company can significantly increase its operating profit by implementing supply chain management. STI manufactures a variety of consumer electronic products, from hair dryers to humidifiers to massagers, for the world market.

John believes that STI has already integrated its internal processes and is ready to proceed with external integration. However, he is uncertain as to which direction to take. Should the company work on integrating the suppliers or the distributors first? Currently, STI uses approximately 1250 different components and/or raw materials in manufacturing its product line. Those components and raw materials are purchased from approximately 275 different suppliers around the world. In terms of distribution, STI currently sends its finished products to a central warehouse that supplies 10 regional distribution centers (RDC); 6 are domestic and 4 are located outside of the United States. Each RDC supplies an average of 12 local distributors that each supply an average of 25 retailers.

John is looking for some advice.

1. Briefly describe STI's supply chain.

2. What are the advantages that STI can gain by implementing supply chain management?

3. What would you recommend STI attempt next? Should it work on integrating the suppliers or the distributors first? Or should it work on both simultaneously?

4. What are your recommendations with regard to the external distributors?

1. On January 1, 2020, Misnomer Company purchased the land with valuable natural ore deposits for P10,000,000. The residual value of the land was P2,000,000. At the time of purchase, a geological survey estimated a recoverable output of P4,000,000 tons. Early in 2020, roads were constructed on the land to aid in the extraction and transportation of the mined ore at a cost of P1,600,000. In 2020, 500,000 tons were mined and sold. A new survey at the end of 2021 estimated 4,200,000 tons of ore available for mining. In 2021, 800,000 tons were mined and sold. Prepare journal entries for 2020 and 2021 based on the transactions.

Lucky Corp. purchased the net assets of Cranky Company on 31 December 2020 for $920,000. Lucky Corp. reports under IFRS and considers Cranky Company to be a cash-generating unit. The following is the balance sheet for Cranky Company on that date:

Additional data:

a.     The inventory has a fair market value of $89,000.

b.     The plant & equipment have a fair market value of $380,000.

c.     Not included in the balance sheet is an internally developed patent with an estimated fair value of $60,000.

d.     All other assets and liabilities have fair values that are equal to their carrying amounts.

Required:

a)     Calculate the amount of goodwill that Lucky Corp. will record upon the purchase of the net assets of Cranky Company.

b)    Prepare the journal entry at 31 December 2020 to record the purchase of the net assets by Lucky Corp.

c)     Explain how goodwill differs from other intangible assets. (2 marks)

. Alpha Ltd has appointed you as a manager in the budgeting department. The company has provided the following information to prepare a cash flow budget for the six months from the 1 January 2021 to 30 June 2021.

1. Alpha Ltd produces only one type of product and the projected selling price of the product is £2 for January and February and after that will be fixed at £3 for the foreseeable future.      
2. For the first three months of the year, 2,000 units will be sold per month. For the following three months, 2,500 units will be sold per month. Sales income is to be received in the month of sale.
3. Insurance costs are £200 every two months. The company will pay for insurance on 1 December 2020.
4. The company is paying 20% of sales of each month as bonus to the employees in the following month. The total sales during December 2020 will be £5,000.
5. Alpha Ltd will pay overhead costs of £2,000 each month.
6. The opening cash balance at 1 January 2021 will be £1,000.
7. The monthly cost of direct material and direct labour is estimated to be £500 and the company will pay them during each month.

viii Fixed costs of production are £100 per month, payable in the month

In 2000, the Gandoff Company purchased all of the outstanding stock of Bilbo Company at book value. Gandoff accounts for its investment in Bilbo under the initial value method and Bilbo pays no dividends

In 2016, Gandoff sold inventory to Bilbo Co for $600,000 on credit. This merchandise had cost Gandoff $300,000. At the end of 2016 Bilbo had not sold any of this merchandise nor had they paid Gandoff for the merchandise

In 2017 Bilbo paid off Gandoff and had sold 70% of the merchandise acquired from Gandoff.

In 2018 Bilbo sold the rest of the merchandise it had acquired from Gandoff

REQUIRED:

A) MAKE THE JOURNAL ENTRY GANDOFF MAKES WHEN IT SELLS THE MERCHANDISE TO BILBO (GANDOFF USES THE PERPETUAL METHOD FOR INVENTORY)

B) MAKE THE JOURNAL ENTRY BILBO MAKES WHEN IT BUYS THE MERCHANDISE FROM GANDOFF (BILBO ALSO USES PERPETUAL INVENTORY METHOD)

C) MAKE ANY NECESSARY WORKSHEET ENTRIES FOR 2016 CONNECTED WITH THIS MERCHANDISE

D)MAKE ANY NECESSARY WORKSHEET ENTRIES IN 2017 CONNECTED WITH THIS MERCHANDISE

E) MAKE ANY NECESSARY WORKSHEET ENTRIES IN 2018 CONNECTED WITH THIS MERCHANDISE

F) IN 2016, GANDOFF REPORTED UNCONSOLIDATED INCOME OF $4,000,000 AND BILBO REPORTED INCOME OF $300,000 WHAT WAS CONSOLIDATED INCOME IN 2016

G) IN 2017, GANDOFF REPORTED UNCONSOLIDATED INCOME OF $4,300,000 AND BILBO REPORTED INCOME OF $333,000 WHAT WAS CONSOLDIATED INCOME IN 2017

H) IN 2018 GANDOFF REPORTED UNCONSOLIDTED INCOME OF $5,000,000 AND BILBO REPORTED INCOME OF $500,000 WHAT WAS CONSOLIDATED INCOME IN 2018?

The first audit of the books of Carla Company was made for the year ended December 31, 2021. In examining the books, the auditor found that certain items had been overlooked or incorrectly handled in the last 3 years. These items are

1. At the beginning of 2019, the company purchased a machine for $561,000 (salvage value of $56,100) that had a useful life of 6 years. The bookkeeper used straight-line depreciation but failed to deduct the salvage value in computing the depreciation base for the 3 years.

2. At the end of 2020, the company failed to accrue sales salaries of $47,000.

3. A tax lawsuit that involved the year 2019 was settled late in 2021. It was determined that the company owed an additional $89,000 in taxes related to 2019. The company did not record a liability in 2019 or 2020 because the possibility of loss was considered remote, and charged the $89,000 to a loss account in 2021.

4. Carla Company purchased the copyright from another company early in 2019 for $54,000. Carla had not amortized the copyright because its value had not diminished. The copyright has a useful life at the purchase of 20 years.

5. In 2021, the company wrote off $87,000 of inventory considered to be obsolete; this loss was charged directly to Retained Earnings. Prepare the journal entries necessary in 2021 to correct the books, assuming that the books have not been closed. Disregard the effects of corrections on income tax.

A ["prospective", OR "retrospective"] cohort study is carried out to investigate the association between occupational arsenic inhalation and neurological exposure and neurological effects among workers in a copper smelter. For the sake of simplicity, let’s assume there are two possible exposure categories: high and low (for example, those working in the smelting process and those working in administration). The exposure was carefully assessed by review of company records which reflected very good exposure monitoring (both air sampling and urine testing). The outcome was based on self-reported information from an interview that asked: “Have you had tingling in your fingers in the last month that lasted more than 30 minutes?” Those that said “yes” were classified as “diseased”, and those that said “no” were the “non-diseased” group. In order to avoid ["information bias", OR "selection bias"]   bias, the company encouraged everyone to participate by telling their workers that they were a concerned employer and wanted to know if there were adverse neurological effects from the potential arsenic exposure in some of the work areas.

The following is the resulting 2 x 2 table:

On 1 April 2019 Orange Limited entered into an agreement to lease a machine that had an estimated life of four years. The lease period is also four years, at which point the asset will be returned to the leasing company. Annual rentals of $50,000 are payable in arrears from 31 March 2020. The machine is expected to have a nil residual value at the end of its life. The machine had a fair value of $142,750 at the inception of the lease. The lessor includes a finance cost of 15% per annum when calculating annual rentals.

Required: How should the lease be accounted for in the financial statements of Orange Limited for the year end 31 March 2020? Note: Clearly present the lease liability table.

On January 1, 2020, the Vasquez SA ledger shows Equipment €32,000 and Accumulated Depreciation—Equipment €9,000. The depreciation resulted from using the straight‐line method with a useful life of 10 years and a residual value of €2,000. On this date, the company concludes that the equipment has a remaining useful life of only 4 years with the same residual value. Compute the revised annual depreciation.

1) Compute the revised depreciation.

a. Same facts as (1), except assume that Vasquez will use the declining-balance method for the remaining four years, at 50%. What will be the annual depreciation expense for 2020 and 2021?

b. At the end of the useful life, what will be the book value of the equipment if the straight-line method is used?

Wilderness Inc. uses a perpetual inventory system and follows ASPE standards. During September, the following transactions occurred regarding their backpack inventory: Sept 4 Purchased backpacks for $1,050 from Back Packs Unlimited, terms 3/10, n/60, FOB Shipping Point. 5 The necessary party paid the shipping fees of $50 from the Sept. 4 transaction. 6 Returned $250 of the backpacks that were purchased Sept. 4 that were defective. 9 Sold backpacks for $1,000 to University Supply, terms 2/15, n/30, FOB Shipping Point. The cost of the backpacks were $600. 11 The necessary party paid the shipping fees of $75 for the Sept. 9 transaction. 13 Paid amount owed to Back Packs Unlimted for September transactions. 16 University Supply found some damages on 3 of the backpacks that were sold on Sept. 9 so we granted them an allowance of $100. 22 Received payment from University Supply for September transactions. Instructions: Prepare journal entries to record the above transactions. (no explanations necessary)