Superior Hardwood Company distributes hardwood products to small furniture manufacturers. The adjusted trial balance data given below is from the firm’s worksheet for the year ended December 31, 2019. ACCOUNTS Debit Credit Cash $ 23,600 Petty Cash Fund 600 Notes Receivable, due 2020 11,300 Accounts Receivable 91,000 Allowance for Doubtful Accounts $ 5,500 Merchandise Inventory 229,000 Warehouse Supplies 2,810 Office Supplies 1,370 Prepaid Insurance 8,700 Land 41,000 Building 173,000 Accumulated Depreciation—Building 51,000 Warehouse Equipment 34,500 Accumulated Depreciation—Warehouse Equipment 15,900 Delivery Equipment 48,500 Accumulated Depreciation—Delivery Equipment 18,600 Office Equipment 22,500 Accumulated Depreciation—Office Equipment 10,500 Notes Payable, due 2020 19,700 Accounts Payable 38,500 Interest Payable 530 Mortgage Payable 58,500 Loans Payable, Long-term 14,500 Charles Ronie, Capital (Jan. 1) 430,560 Charles Ronie, Drawing 126,500 Income Summary 239,000 229,000 Sales 1,675,000 Sales Returns and Allowances 17,700 Interest Income 1,530 Purchases 762,000 Freight In 13,300 Purchases Returns and Allowances 7,940 Purchases Discounts 10,660 Warehouse Wages Expense 194,600 Warehouse Supplies Expense 6,600 Depreciation Expense—Warehouse Equipment 5,300 Salaries Expense—Sales 264,200 Travel and Entertainment Expense 21,000 Delivery Wages Expense 59,830 Depreciation Expense—Delivery Equipment 9,300 Salaries Expense—Office 70,100 Office Supplies Expense 3,500 Insurance Expense 5,700 Utilities Expense 8,790 Telephone Expense 6,020 Payroll Taxes Expense 56,500 Property Taxes Expense 5,100 Uncollectible Accounts Expense 5,300 Depreciation Expense—Building 8,500 Depreciation Expense—Office Equipment 3,500 Interest Expense 7,700 Totals $ 2,587,920 $ 2,587,920 Required: Prepare a classified income statement for the year ended December 31, 2019. The expense accounts represent warehouse expenses, selling expenses, and general and administrative expenses. Prepare a statement of owner’s equity for the year ended December 31, 2019. No additional investments were made during the period. Prepare a classified balance sheet as of December 31, 2019. The mortgage payable extends for more than a year. Analyze: What is the current ratio for this business? SUPERIOR HARDWOOD COMPANY Income Statement Operating revenue Net sales Cost of goods sold Merchandise inventory, January 1, 2019 Delivered cost of purchases Net delivered cost of purchases Total merchandise available for sale Gross profit on sales Operating expenses Warehouse expenses Total warehouse expenses Selling expenses Total selling expenses General and administrative expenses Total general and administrative exp. Total operating expenses Income from operations Other income Other expenses Net nonoperating expenses Net income for year Required 1 Required 2

1. Mr Derrick Asumadu Danso has been in employment at KNUST IDL ACF Limited since 1^st April 2014 as Financial Controller on a salary scale of GH¢ 12,000 × GH¢ 6,000.00 – GH¢ 60,000.

His service conditions include the following:

1. Provision of a well-furnished bungalow in respect of which he pays GH¢100 per month as rent by way of deduction at source.
2. Provision of a Land Cruiser Prado Vehicle with driver and fuel for both official and private purposes
3. Special retirement package by way of a provident fund of which he contributes 7% of his basic salary, while the company tops it up with 8.5%.
4. Social Security & National Insurance Trust contribution of 7%

His Returns submitted to Ghana Revenue Authority (GRA) on 16^th March, 2018 in respect of 2017 Year of Assessment show the following unconsolidated allowances and benefits:

5. Responsibility allowance of GH¢800 per month for which the company pays him cash.
6. Utilities allowance per annum, GH¢2,400
7. Risk allowance of 15% on basic salary and car maintenance allowance of GH¢1,200 for the year.
8. Leave allowance of GH¢1,800 per annum.
9. Watchman and a garden boy on salary of GH¢300 and GH¢350 per month respectively.
10. Medical allowance per year GH¢2,400.
11. Meals allowance of GH¢550 per month.
12. Two house helps on GH¢380 wages per month. The amount is paid to Mr. Danso in cash directly by the company.
13. Bonus of 40% of annual basic salary.
14. Monthly Overtime allowance of GH¢140
15. Unaccountable Entertainment allowance of GH¢800 a year.

Additional Information

16. On 1^st January, 2017 he was given a car loan of GH¢ 10,000 to purchase a car for his wife at a simple interest rate of 15.0% per annum. The institution gives similar facility to any other customer at the rate of 28% but the statutory rate (Bank of Ghana Rate) is 25.0%. The loan is to be paid within the period of 24 months.
17. He is married with five (5) children, three (3) of whom are in SHS, the rest are working.
18. He is also responsible for the upkeep of four (4) aged relatives of his.
19. He is currently pursuing a Master of Science degree in Accounting at KNUST where he incurred GH¢ 13,000 by way of educational expenses in 2017
20. He withdrew GH¢ 10,500 from his provident fund to buy a house in Kumasi in 2017
21. His December, 2017 salary was paid on 2^nd January 2018. However all allowances which are unconsolidated were paid in full during 2017 except those tied to the basic salary.

Required

1. Calculate his chargeable income for the 2017 Year of Assessment
2. Compute his tax liability for 2017 Year of Assessment

The balance sheet for The Itex Corporation on December 31, 2014, includes the following cash and receivables balances.

Cash – First Security Bank…………………………………………………………………………………………………………….                              $45,000

Currency on hand…………………………………………………………………………………………………………………………                                16,000

Petty cash fund…………………………………………………………………………………………………………………………….                                  1,000

Cash in bond sinking fund…………………………………………………………………………………………………………….                                15,000

Notes receivable (including notes discounted with recourse, $15,500)………………………………………........                                36,500

Accounts receivable……………………………………………………………………………………………………………………..      $85,600

Less: Allowance for bad debts………………………………………………………………………………………………………           4,150           81,450

Interest receivable……………………………………………………………………………………………………………………….                                      525

Current liabilities reported in the December 31, 2014, balance sheet included:

Obligation on discounted notes receivable………………………………………………………………………………..….                               $15,500

Transactions during 2015 included the following:

(a)    Sales on account were $767,000.

(b)    Cash collected on accounts totaled $576,500, including accounts of $93,000 with cash discounts of 2%.

(c)     Notes received in settlement of accounts totaled $82,500.

(d)    Notes receivable discounted as of December 31, 2014, were paid at maturity with the exception of one $3,000 note on which the company had to pay the bank $3,090, which included interest and protest fees. It is expected that recovery will be made on this note early in 2016.

(e)    Customer notes of $58,500 were discounted with recourse during the year, proceeds from their transfer being $58,500. (All discounting transactions were recorded as loans). Of this total, $48,000 matured during the year without notice of protest.

(f)      Customer accounts of $8,720 were written off during the year as worthless.

(g)    Recoveries of bad debts written off in prior years were $2,020.

(h)    Notes receivable collected during the year totaled $27,000 and interest collected was $2,450.

(i)      On December 31, accrued interest on notes receivable was $630.

(j)      Uncollectible accounts are estimated to be 5% of the December 31, 2015, Accounts Receivable balance.

(k)    Cash of $35,000 was borrowed from First Security Bank with accounts receivable of $40,000 being pledged on the loan. Collections of $19,500 had been made on these receivables [included in the total given in transaction (b)], and this amount was applied on December 31, 2015, to payment of accrued interest on the loan of $600, and the balance to partial payment of the loan.

(l)      The petty cash fund was reimbursed (meaning that cash was removed from the bank account and placed in the petty cash fund) based on the following analysis of expenditure vouchers:

     Travel expense………………………………………..   $112

     Entertainment expense…………………………..       78

     Postage expense……………………………………..       93

     Office supplies expense…………………………..     173

     Cash short and over (a revenue account)....          6

(m)  Cash of $3,000 was added to a bond retirement fund.

(n)    Currency on hand at December 31, 2015, was $12,000.

(o)    Total cash payments for all expenses during the year were $680,000. Charge to General Expenses.

Instructions:

1.       Prepare journal entries summarizing the preceding transactions and information.

2.       Prepare a summary of current cash and receivables for balance sheet presentation.

Complete all true or false questions

Firms maximize profits where MR=MC. MR= dTR/dQ , MC= dTC/dQ Using the following Total Revenue and Cost functions to answer the following questions.

TR= 50Q TC=10Q^2 - 50Q +100

_____   (1)        Marginal Revenue is $50 and is constant over all Q.

_____   (2)        Profits are maximized at a Q more than 20.

_____   (3)        The total cost function is in the form of a quadratic function.

_____   (4)        Marginal Cost is: MC= 20Q-100

_____   (5)        Profits (TR-TC) at the maximum is greater than $280.

The State Highway Department is considering a bypass loop that is expected to save motorists $820,000 per year in gasoline and other automobile-related expenses. However, local businesses will experience revenue losses estimated to be $135,000 each year. The cost of the loop will be $9,000,000. (a) Calculate the conventional B/C ratio using an interest rate of 6% per year and a 20-year project period. (b) Calculate the conventional B/C ratio without considering the disbenefits. Is the project economically justified with and without consider­ing the revenue losses? (c) Develop the single-cell spreadsheet functions that will answer the two questions above.

Jasper makes a $29,000, 90-day, 9.0% cash loan to Clayborn Co. Jasper's entry to record the collection of the note and interest at maturity should be: (Use 360 days a year.)

• Debit Cash $29,652.50; credit Interest Revenue $652.50; credit Notes Receivable $29,000.

• Debit Notes Payable $29,000; Debit Interest Expense $2,610; credit Cash $31,610.

• Debit Cash $31,610; credit Interest Revenue $2,610, credit Notes Receivable $29,000.

• Debit Cash $29,652.50; credit Notes Receivable for $29,652.50.

• Debit Cash for $29,000; credit Notes Receivable $29,000.

The ledger of Hammond Company, on March 31, 2020, includes these selected accounts before adjusting entries are prepared.

  Debit   Credit

Prepaid Insurance   RM 3,600

Supplies   2,800

Equipment   25,000

Accumulated Depreciation—Equipment   RM5,000

Unearned Service Revenue   9,200

An analysis of the accounts shows the following.

1.Insurance expires at the rate of RM100 per month.

2.Supplies on hand total RM800.

3.The equipment depreciates RM200 a month.

4.During March, services were performed for one-half of the unearned service revenue.

Prepare the adjusting entries for the month of March.