The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.

B)

What is the firm's ROE?

C)

What is the firm's quick ratio?

D)

What is the firm's TIE?

Acccounting questions I have on capital assets:

1.

The Electric Company buys machinery for $500,000 and gives a promissory note to pay dated 2 years from the purchase date. Interest at 10% and principal are to be repaid at maturity. The life of the asset is also estimated to be two years with no salvage and straight line depreciation is used. The charge to earnings in year 2 resulting from this will be:

$250,000

$300,000

$350,000

None of the above

$200,000

2.

A company sells a piece of equipment half way through the accounting year. The straight-line rate of amortization on the equipment is $40,000 a year. Before recording the asset sale, the company should debit:

amortization expense for $20,000 and credit accumulated amortization for $20,000

none of the above

cash for $20,000 and credit amortization expense for $20,000.

amortization expense for $40,000 and credit long-lived assets for $40,000.

accumulated amortization for $40,000 and credit cash for $40,000

3.

Shark Ltd. buys a building on April 1, 2010 for $600,000. The building will last for 40 years, but Shark expects to use the building for 25 years. At the end of 40 years the building will have no disposal value, but is expected to have a $100,000 disposal value at the end of 25 years. Shark uses the straight-line method of depreciation.


The depreciation expense at for the year-ended December 31, 2010 is:

$7,500

$10,800

$9,375

$11,200

None of the above

4.

Val Ltd. began the year with capital assets of $743,000 and accumulated amortization of $121,000. During the year, capital assets were purchased for $78,000 and capital assets were sold for proceeds of $27,000. Amortization expense for the year was $31,000. At the end of the year, Val had capital assets of $757,000 and accumulated amortization of $103,000. What was the gain/loss on the disposal of capital assets?

$49,000 loss

$12,000 loss

$64,000 gain

Unable to determine from data provided

$12,000 gain

Colbert sells 3-D printers along with a number of retail items. The package price and stand-alone selling prices of each item are as follows. The printer and stand are often sold as a bundle with the bundling discount noted below. Item Stand-Alone Selling Price Price When Bundled Bundling Discount 3-D printer (cost $4,000) $5,000 $4,500 $500 Custom stand (cost $200) 450 450 –0– Special 3-D plastic (cost $135) 175 175 –0– Total for bundle $5,625 $5,125 $500 Due to the timing of the delivery—the plastic is delivered six months after the printer is delivered to the customer—Colbert chooses to account for two performance obligations: (1) the printer and stand, and (2) the plastic. Prepare the journal entries for Colbert on March 1, 2020, when Colbert receives $51,250 for the sale of 10 printer bundles, and September 1, 2020, when the plastic are delivered to customers.

On May 3, 2020, Pharoah Company consigned 90 freezers, costing $490 each, to Remmers Company. The cost of shipping the freezers amounted to $850 and was paid by Pharoah Company. On December 30, 2020, a report was received from the consignee, indicating that 45 freezers had been sold for $730 each. Remittance was made by the consignee for the amount due after deducting a commission of 6%, advertising of $200, and total installation costs of $310 on the freezers sold.

(Round answers to 0 decimal places, e.g. 5,275.)

(a) Compute the inventory value of the units unsold in the hands of the consignee.

(b) Compute the profit for the consignor for the units sold.

(c) Compute the amount of cash that will be remitted by the consignee.

Question 3 Harie Company has the following transactions related to non-current liabilities. On January 1, 2019, Harie Company issued 10% bonds with a par value of $1,000,000 due in 10 years. They were issued to yield 8% (i.e. the effective interest rate is 8%) and were callable at 102 at any date after January 1, 2020. Interest are payable semiannually on July 1 and January 1, starting from July 1, 2019.

Required:

(a) Compute the selling price of the bonds on January 1, 2019.

(b) Prepare a bond amortization schedule up to and including January 1, 2020.

(c) Prepare the journal entries to record the issuance of the bonds on January 1, 2019 and interest payment on July 1, 2019.

(Ignore any potential impact of the bonds’ callable nature on the selling price. Refer to the Appendices for Present Value tables and round your answer to the nearest dollar.)

Royals Incorporated leases a piece of equipment to Polar Corporation on January 1, 2020. The lease agreement called for annual rental payments of $8,648 at the beginning of each year of the 3-year lease. The equipment has a fair value of $35,000, a book value of $20,000, and an economic useful life of 5 years after which the residual value will be zero. Both parties expect a residual value of $12,500 at the end of the lease term, though this amount is not guaranteed. Royals set the lease payments with the intent of earning a 6% return, and Polar is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

Instructions:

(Round all numbers to the nearest dollar.)

(a) Describe the nature of the lease to both Royals and Polar.

(b) Prepare the lease amortization schedule(s) for Polar for all 3 years of the lease.

(c) Prepare the journal entries for Polar for 2020 and 2021.

Collins Corporation purchased office equipment at the beginning of 2019 and capitalized a cost of $2,072,000. This cost figure included the following expenditures: Purchase price $ 1,910,000 Freight charges 36,000 Installation charges 26,000 Annual maintenance charge 100,000 Total $ 2,072,000 The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2019 and 2020. In 2021, after the 2020 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company’s controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment. Required: 1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2021. 2. Ignoring income taxes, prepare any 2021 journal entry(s) related to the change in depreciation methods.

At January 1, 2018, Brainard Industries, Inc., owed Second BancCorp $18 million under a 10% note due December 31, 2020. Interest was paid last on December 31, 2016. Brainard was experiencing severe financial difficulties and asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorp agreed to: a. Forgive the interest accrued for the year just ended. b. Reduce the remaining two years’ interest payments to $1 million each and delay the first payment until December 31, 2019. c. Reduce the unpaid principal amount to $17 million. Required: Prepare the journal entries by Brainard Industries, Inc., necessitated by the restructuring of the debt at (1) January 1, 2018; (2) December 31, 2019; and (3) December 31, 2020. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Accounting for Dilutive securities and Earning per share.

On November 1, 2017, Larkspur Company adopted a stock-option plan that granted options to key executives to purchase 30,000 shares of the company’s $10 par value common stock. The options were granted on January 2, 2018, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $30, and the fair value option-pricing model determines the total compensation expense to be $450,000.

All of the options were exercised during the year 2020: 20,000 on January 3 when the market price was $69, and 10,000 on May 1 when the market price was $78 a share.

Prepare journal entries relating to the stock option plan for the years 2018, 2019, and 2020. Assume that the employee performs services equally in 2018 and 2019.

Suppose a central bank decides it is appropriate to increase its policy interest rate in order to increase rates more generally throughout the economy.

1. In the contex of the money market , if the money demand function is stable ,explain how the change in policy would be reflected in the money supply.

2. Suppose the economy is a closed one. What effect will there be on investment, on aggregate expenditure? Include diagrams in your answer.

3. What additional effect will there be on aggregate expenditure if the economy were an open one?

4. How will aggregate demand be affected, whether we treat the economy as closed or open? Illustrate in a

   diagram.