Question 2

KOL Limited purchased a machine on 1 January 2018 at $500,000. It has an expected useful life of 5 years and an estimated salvage value of $50,000. It is also expected that the machine can run for 30,000 hours. For the year ended 31 December 2018, KOL has used the machine for 4,000 hours.

KOL has another equipment with the following data on 31 December 2018.

Cost $260,000

Carrying amount $200,000

Fair value less costs to sell $180,000

Value-in-use $175,000

KOL has a shop in which it carries out retail business. In the year ended 31 December 2018, it had a sale of $79,644 and net income of $5,584. The carrying amount of the shop on 31 December 2018 was $125,717.

Required:

a. For the machine, calculate the depreciation expense for the year ended 31 December 2018 using straight-line method.

b. For the machine, calculate the depreciation expense for the year ended 31 December 2018 using activity-based method.

c. For the machine, calculate the depreciation expense for the year ended 31 December 2018 using double declining-balance method.

d. For the machine, calculate the depreciation expense for the year ended 31 December 2018 using sum-of-the-years’-digits method.

e. Discuss when a company should perform an impairment review for a long-lived tangible asset, and when it is impaired.

f. Determine the impairment loss for the equipment on 31 December 2018

g. Compute the asset turnover for the shop.

h. Compute the profit margin on sales for the shop.

i. Compute the return on assets for the shop.

On January 1, 2018, the following information was drawn from the accounting records of Carter Company: cash of $800; land of $3,500; notes payable of $600; and common stock of $1,000.

Required

a. Determine the amount of retained earnings as of January 1, 2018.

b. After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a $1,000 cash dividend to the stockholders. Can the company pay this dividend?

c. As of January 1, 2018, what percentage of the assets were acquired from creditors?

d. As of January 1, 2018, what percentage of the assets were acquired from investors?

e. As of January 1, 2018, what percentage of the assets were acquired from retained earnings?

f. Create an accounting equation using percentages instead of dollar amounts on the right side of the equation.

g. During 2018, Carter Company earned cash revenue of $1,800, paid cash expenses of $1,200, and paid a cash dividend of $500. (Hint: It is helpful to record these events under an accounting equation before preparing the statements.)

g-1. Prepare an income statement dated December 31, 2018.

g-2. Prepare a statement of changes in stockholders’ equity dated December 31, 2018.

g-3. Prepare a balance sheet dated December 31, 2018.

g-4. Prepare a statement of cash flows dated December 31, 2018.

j. What is the balance in the Revenue account on January 1, 2019?

Complete and submit the assignment in an EXCEL file.

Full credit is earned only if the formulas for the calculations is evident in the spreadsheet

She Shed. Corp was organized in 2017. These business events occurred during the year, affecting intangible assets.

1.    Purchased a license for $20,000 on July 1, 2017. The license gives She Shed exclusive rights to sell its sheds in the tri-state region and will expire on July 1, 2025.

2.    Purchased a patent on January 2, 2018, for $40,000. It is estimated to have a 5-year life.

3.    Costs incurred to develop an exclusive Internet connection process as of June 1, 2018, were $45,000. The process has an indefinite life.

4.    On April 1, 2018, She Shed. purchased a small circuit board manufacturer for $350,000. Goodwill recorded in the transaction was $90,000.

5.    On July 1, 2018, legal fees for successful defense of the patent purchased on January 2, 2018, were $11,400.

6.    Research and development costs incurred as of September 1, 2018, were $75,000.

(a) Prepare the journal entries to record all the entries related to the patent during 2018.

(b) At December 31, 2018, an impairment test is performed on the license purchased in 2017. It is estimated that the net cash flows to be received from the license will be $13,000, and its fair value is $7,000.

Compute the amount of impairment, if any, to be recorded on December 31, 2018.

(c) What is the amount to be reported for intangible assets on the balance sheet at December 31, 2017 and December 31, 2018?

Corporation Income Statements (excerpt)

(dollars in millions) 2019 2018 Sales to customers $71,890 $70,074 Cost of products sold 21,685 21,536 Gross profit 50,205 48,538 Selling, marketing and administrative expenses 19,945 21,203 Research and development expense 9,095 9,046 In-process research and development 29 224 Interest income -368 -128 Interest expense, net of portion capitalized 726 552 Other (income)expense, net 484 -2,064 Restructuring 491 509 Earnings before provision for taxes on income 19,803 19,196 Provision for taxes on income 3,263 3,787 Net earnings $16,540 $15,409 Horizontal Analysis Compute the difference in each line item from 2018 to 2019. Using 2018 as a base year, determine the change and percentage change in each line item from 2018 to 2019. Did sales to customers increase or decrease from 2018 to 2019? Did net income increase for decrease from 2018 to 2019? What line item(s) is (are) driving the differences between sales to customers and net income from 2018 to 2019? Vertical Analysis Compute each line item as a percentage of sales for 2018 and 2019. Which line items makes up the largest proportion of sales in 2018 and 2019? (Keep in mind that some of the items like gross profit and earnings before provision for taxes on income are subtotals.) Comment of any changes in the income and expenses as a percent of sales from 2018 and 2019.

QUESTION 2

The bank reconciliation statement on 30 September 2018 included the following:
       Outstanding cheques
Cheques not yet presented for payment No. 148 (Dated 10 November 2017) No. 358 (Dated 10 October 2018)
No. 400 (Dated 15 October 2018)
Debits
R 17.00 R 360.00 R 956.50
Credits
R1 255.00
               The bank statement on 31 October 2018 showed a favourable balance of R25 427.50. The general ledger account on the 1 October 2018 showed a debit balance of R25 249.50.
The comparison of the bank statement of October with the bank reconciliation statement of September and the cash journals of October showed the following differences:
1. Entries credited on the bank statement which do not appear in the cash journal for October 2018:
• Deposit R1 255
• Direct deposit R480 by Mr. King.
2. Entries debited on the bank statement which do not appear in the cash journal for October 2018:
• Debit order, R325. It is in favour of Knight Rental for rent.
• Cheque no 358, R360.
• Unpaid cheque, R582.50. This cheque was received from Ms. Queen but the cheque
was returned on 27 October 2018 marked insufficient funds.
• Unpaid cheque, R234.50. This cheque was received from Mr. Jack, deposited on 27
October, and returned on 28 October due to irregular signature.

• Unpaid cheque, R247.50. This cheque was received from Ms. Ace and deposited. It was returned by the bank since it was dated 1 November 2018.
• Cheque no. 223 issued to Mr. Ace for inventory, R1 285, was accidentally entered in the CPJ as R1 375.
• Charges for services fees, R30.50, and cash handling fees, R18.
3. Entries in the cash journal that do not appear on the bank statement:
• Cheque no 229 for R1 150 to Castle Wholesalers dated 15 October 2018.
• Cheque no 243 for R112.50 to Z Zeven dated 1 October 2018.
• Deposited on 1 October 2018, R2 445.
4. Cheque no 48 has not been re-issued to date.
You are required to:
a) Prepare the bank account in the general ledger for the month of October 2018.
b) Prepare the bank reconciliation statement as at 30 October 2018.

Please answer a and b.

1. In this exercise we are interested in comparing the proportion of those who support immigrant policy reform among Hispanics and non-Hispanics. A poll found that out of 800 Hispanics 77% supported immigration reform and out of 900 non-Hispanics 64% supported immigration reform. Test the hypothesis that Hispanics are more likely to support immigration reform than non-Hispanics at alpha = 0.01.

What does probability (random) and non-probability (non-random) sampling mean? Give a short example of how each could be performed to collect data. What are the advantages and disadvantages between probability and non-probability sampling? "Random" is a word that is used too often throughout statistics. Find (or create) two examples of the word "random" being used to represent different meanings.

0. Consider the following non-homogeneous linear recurrence:

   an =−a_n-1 +6a_n-2+125(8+1)·(n+1)·2ⁿ

1. a₀ = 0
   a₁ = 0

   2. (b) Find the solution a_n^(h) to the associated homogeneous linear recurrence. n

   3. (c) Find a particular solution a_n^p to the non-homogeneous linear recurrence.

   4. (d) Find the general solution to the non-homogeneous linear recurrence.

The cost of producing 5-gallon water bottles is given by

   C(q) =0.005q² +2q + 1000. If 2000 5-galllon water bottles are produced, find the

1. Total cost
2. Average cost
3. Marginal cost
4. Marginal average cost.