The cash account for Corey’s Construction Company at August 31, 2020, indicated a book balance of $19,885. The bank statement received by the company indicated a balance of $39,473.63 as at August 31, 2020. A comparison of the bank statement and the accompanying cancelled cheques and memos with the records revealed the following:

1. A deposit of $6,794.62 was received by the bank on August 31 after the bank statement was prepared.

2. Cheques #251 for $1,200 and #260 for $1,333.25 were not presented to the bank for encashment as at August 31, 2020.
3. The bank erroneously debited a cheque drawn Corey’s Construction as $16,000 instead of $1,600.

4. The company’s accountant recorded a $3,500.00 cheque for payment of accounts payables as $35,000

5. The bank credited a deposit of $200 as $2,000 to Corey’s Construction account.
6. A cheque for $13,500 from a customer Ali Woods was returned for insufficient funds. The bank charged $50 for Wood’s NSF cheque. The company’s policy states that the bank charges associated with NSF cheques are to be recovered from the customer.
7. A note was collected by the bank of $21,000 on August 31 which included interest of $1,500.

8. A debit memo from the bank showed service charge amounting to $2,500 as at August 31, 2020.

Required:

1. Prepare the necessary journal entries for Corey’s Construction Company at August 31, 2020.

2. Prepare Corey’s Construction Company adjusted cash book to be included in the balance sheet for August 31^st. 2020.

3. Prepare Corey’s Construction Company bank reconciliation statement for August 31, 2020

During 2020, Mr. Hopkins realized a $20,000 long-term capital loss on a sale of ABC Inc. stock. Mr. Hopkins also owns 2,100 shares of XYZ Inc. stock with a basis of $70 per share and a current market value of $90 per share. Mr. Hopkins purchased this stock six months ago. Mr. Hopkins plans to hold his XYZ stock until 2024, at which time he expects to sell the stock for $135 per share. Mr. Hopkins is considering selling just enough of his XYZ shares to fully utilize his capital loss in 2020, and immediately repurchasing the XYZ shares the following day at the same price ($90) so as to maintain his investment in XYZ. He will then sell his XYZ stock, including the original shares acquired for $70 and the repurchased shares acquired for $90, in 2024 as originally planned.

Alternatively, Mr. Hopkins is considering simply holding his XYZ stock until selling it in 2024. Mr. Hopkins’ ordinary income tax rate is 25% and his long-term capital gains tax rate is 15%. He uses a discount rate of 5% in his NPV calculations.

Using the above information, which alternative (i.e., the sale/repurchase strategy or simply holding the stock until 2024) maximizes Mr. Hopkins’ post-tax cash flows from his XYZ stock?

The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

1. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition.
2. Land A and Building A were acquired from a predecessor corporation. Thompson paid $772,500 for the land and building together. At the time of acquisition, the land had a fair value of $103,200 and the building had a fair value of $756,800.
3. Land B was acquired on October 2, 2019, in exchange for 2,600 newly issued shares of Thompson’s common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $21 per share. During October 2019, Thompson paid $10,000 to demolish an existing building on this land so it could construct a new building.
4. Construction of Building B on the newly acquired land began on October 1, 2020. By September 30, 2021, Thompson had paid $170,000 of the estimated total construction costs of $260,000. Estimated completion and occupancy are July 2022.
5. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value at $14,400 and the residual value at $1,600.
6. Equipment A’s total cost of $102,000 includes installation charges of $510 and normal repairs and maintenance of $10,600. Residual value is estimated at $5,000. Equipment A was sold on February 1, 2021.
7. On October 1, 2020, Equipment B was acquired with a down payment of $3,600 and the remaining payments to be made in 10 annual installments of $3,600 each beginning October 1, 2021. The prevailing interest rate was 7%.

Required:
Supply the correct amount for each answer box on the schedule. (Round your intermediate calculations and final answers to the nearest whole dollar.)

Business leaders live by the calendar, attaching forecasts, projects and goals to a specific date or period of time. No one knows how the crisis will play out or even when state-issued mandates to stay at home will lift. For CEOs, it is like stumbling around in the dark. When Bahram Akradi, founder of the Life Time health-club chain, closed more than 150 clubs in 30 states, he recorded a video message to employees. He said Life Time could weather a two-week shutdown without breaking much of a sweat. After that, he’d have to get creative. It is a classic case of decision-making under uncertainty!

• Q1 - Why does the coronavirus pose such a challenge for top managers and decision-makers in corporations?
• Q2 - What makes this particular crisis different from other types of crises?
• Q3 - Why are CEOs not so well-adapted to this kind of situation?
• Q4 - Why do their habits and training not prepare them for the kind of decision-making needed in the week of the current crisis?

Many proponents of environmental safety and public health are concerned about the creation, spread, and potential impact of genetically modified foods. The United States, Canada, and Argentina are some of the leading producers of genetically modified foods made from bioengineered organisms (GMOs). The U.S. government believes that GMOs are important for the world’s food supply because they can boost food production and nutrition and lead to both disease-resistant crops and better-tasting foods. Many respected scientific studies vouch for the safety of GMOs for human and animal consumption and on the Earth’s environment. GMOs are important to U.S. agriculture economically. According to the U.S. Department of Agriculture, approximately three-quarters of U.S. soybean and cotton production and over one-third of corn production are genetically modified. However, many consumer groups and countries argue that the dangers to humans, wildlife, and the environment are unknown. Genetically modified corn and soy were approved for sale in the EU prior to 1998, but the European countries ceased new approvals after that time. In addition, the EU and several other countries have adopted regulations requiring the tracing of biotech crops through the chain of distribution, and they imposed strict labeling requirements on all foods and animal feed containing more than 1 percent GMO. European consumers who fear GMO foods will not purchase products with these labels. The United States claims that the requirements are expensive and unnecessary and have cost U.S. farm exporters hundreds of millions of dollars in lost revenues. In 2003, the United States requested a WTO panel to decide whether the moratorium and labeling requirements violate the WTO Sanitary and Phytosanitary Agreement. Research the history of the WTO’s deliberations. What was the outcome? Can you find any decisions of the European Court of Justice on GMOs? What is the current state of EU legislation on GMOs? What is your opinion? Do you think that GMOs should be permitted, or do you think they present some possible harm to the environment or to public health?

Spartan Corporation manufactures quidgets at its plant in Sparta, Michigan. Spartan sells its quidgets to customers in the United States, Canada, England, and Australia.

Spartan markets its products in Canada and England through branches in Toronto and London, respectively. Title transfers in the United States on all sales to U.S. customers and abroad (FOB: destination) on all sales to Canadian and English customers. Spartan reported total gross income on U.S. sales of $11,400,000 and total gross income on Canadian and U.K. sales of $3,800,000, split equally between the two countries. Spartan paid Canadian income taxes of $456,000 on its branch profits in Canada and U.K. income taxes of $532,000 on its branch profits in the U.K. Spartan financed its Canadian operations through a $9 million capital contribution, which Spartan financed through a loan from Bank of America. During the current year, Spartan paid $540,000 in interest on the loan.

Spartan sells its quidgets to Australian customers through its wholly owned Australian subsidiary. Title passes in the United States (FOB: shipping) on all sales to the subsidiary. Spartan reported gross income of $2,040,000 on sales to its subsidiary during the year. The subsidiary paid Spartan a dividend of $703,500 on December 31 (the withholding tax is 0 percent under the U.S.- Australia treaty). Spartan was deemed to have paid Australian income taxes of $346,500 on the income repatriated as a dividend.

a. Compute Spartan’s foreign source gross income and foreign tax (direct and withholding) for the current year.

b. Assume 20 percent of the interest paid to Bank of America is allocated to the numerator of Spartan’s FTC limitation calculation. Compute Spartan Corporation’s FTC limitation using your calculation from question a and any excess FTC or excess FTC limitation (all of the foreign source income is put in the general category FTC basket). (Do not round intermediate calculations.)

The separate condensed balance sheets of Patrick Corporation and its wholly-owned subsidiary, Sean Corporation, are as follows: BALANCE SHEETS December 31, 2020 Patrick Sean Cash $ 76,000 $ 74,000 Accounts receivable (net) 144,000 22,000 Inventories 84,000 74,000 Plant and equipment (net) 622,000 266,000 Investment in Sean 456,000 - Total assets $ 1,382,000 $ 436,000 Accounts payable 160,000 88,000 Long-term debt 100,000 34,000 Common stock ($10 par) 326,000 50,000 Additional paid-in capital 14,000 Retained earnings 796,000 250,000 Total liabilities and shareholders' equity $ 1,382,000 $ 436,000 Additional Information: On December 31, 2020, Patrick acquired 100 percent of Sean’s voting stock in exchange for $456,000. At the acquisition date, the fair values of Sean’s assets and liabilities equaled their carrying amounts, respectively, except that the fair value of certain items in Sean’s inventory were $22,000 more than their carrying amounts. In the December 31, 2020, consolidated balance sheet of Patrick and its subsidiary, what amount of total assets should be reported?

Ayres Services acquired an asset for $96 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020, and 2021 are as follows: ($ in millions) 2018 2019 2020 2021 are as

Required:

Required: Determine (a) the temporary book–tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Show all amounts as positive amounts. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Anja is an advisor. She uses her own car to travel to various locations to meet clients. She acquired a car on 1 March 2020 for $57,000. The acquisition cost was funded entirely by a loan at an interest rate of 10%. She has determined that the depreciation deduction on the car would be $5,700 for the year. In addition, Anja incurred the following expenses during the year:

• Registration and insurance = $5,000;
• Repairs and maintenance = $300; and
• Oil and fuel costs = $4,100.

For the period 1 March 2020 to 30 June 2020, Anja estimates that the car travelled a total of 12,000 kilometres; 8,000 of which were for business purposes. You may assume that Anja has maintained all necessary records and a logbook. Assume that depreciation has been adjusted for partial year use and the impact of the car limit.

i. Calculate Anja's deduction for car expenses under "cents per kilometre" method 1.5 marks
ii. Calculate Anja's deduction for car expenses under log book method 1.5 marks
iii. Which method is preferable for Anja and why? 2 marks

Ben bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow hi to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program.

Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $53,000 per year, and his salary is expected to increase at 3 percent year until retirement. He is currently 28 years old and expects to work for 38 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a saving account with enough money to cover the entire cost of his MBA program.

The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $58,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $87,000 per year, with a $10,000 signing bonus. The salary at this job will increase a 4 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent.

The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated one-year program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,200. Ben thinks that he will receive an offer of $78,000 per year upon graduation, with an $8,000 signing bonus. The salary at this job will increase at 3.5 percent per year. His average tax rate at this level of income will be 29 percent.

Both schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben has also found that both schools offer graduate housing. HIs room and board expenses will decrease by $4,000 per year at either school he attends. The appropriate discount rate is 5.5 percent.

5. What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?

6. Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 5.4 percent. How would this affect his decision?