Consider an economy with the following market prices and production quantities over time:

13. Nominal GDP in 2017 was _____.

A. $1,210

B. $1,347

C. $1,425

D. None of the above/not enough information

14. Nominal GDP in 2018 was _____.

A. $1,180

B. $1,347

C. $1,425

D. None of the above/not enough information

15. Using 2018 as the base year, real GDP in 2017 was _____.

A. $1,264

B. $1,347

C. $1,425

D. None of the above/not enough information

16. Using 2018 as the base year, real GDP in 2018 was _____.

A. $1,290

B. $1,347

C. $1,425

D. None of the above/not enough information

17. The real GDP growth between 2017 and 2018 was _____.

A. 5.93%

B. 6.16%

C. 6.57%

D. None of the above/not enough information

18. Using 2018 as the base year, the GDP deflator in 2017 was _____.

A. 95.73

B. 100

C. 104.46

D. None of the above/not enough information

19. Using 2018 as the base year, the GDP deflator in 2018 was _____.

A. 95.73

B. 100

C. 104.46

D. None of the above/not enough information

Colah Company purchased $1.7 million of Jackson, Inc., 5% bonds at par on July 1, 2018, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2018, the Jackson bonds had a fair value of $1.97 million. Colah sold the Jackson bonds on July 1, 2019 for $1,530,000.

The purchase of the Jackson bonds on July 1.

Interest revenue for the last half of 2018.

Any year-end 2018 adjusting entries.

Interest revenue for the first half of 2019.

Any entries necessary upon sale of the Jackson bonds on July 1, 2019, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.

Required:
1. Prepare Colah’s journal entries for above transaction.
2. Fill out the following table to show the effect of the Jackson bonds on Colah’s net income, other comprehensive income, and comprehensive income for 2018, 2019, and cumulatively over 2018 and 2019.

TABLE:

D’Jais Corporation, a U.S. company, owns 100% of Bar A Corporation, a New Zealand company. Bar A's equipment was acquired on the following dates (amounts are stated in New Zealand dollars):

Jan. 1, 2017 purchased equipment for 40,000 NZ dollars

Jul. 1, 2017 purchased equipment for 80,000 NZ dollars

Jan. 1, 2018 purchased equipment for 50,000 NZ dollars

Jul. 1, 2018 sold equipment purchased on Jan. 1, 2017 for 35,000 NZ dollars

Exchange rates for the NZ dollar on various dates are:

Jan. 1, 2017           $.500                           Jan. 1, 2018           $.530

Jul. 1, 2017           $.520                           Jul. 1, 2018           $.505

Dec. 31, 2017       $.530                           Dec. 31, 2018        $.490

2017 avg. rate       $.515                           2018 avg. rate       $.510

Bar A's equipment has an estimated 5-year life with no salvage value and is depreciated using the straight-line method, calculating depreciation expense on a monthly basis. Bar A's functional currency is the U.S. dollar, but the company uses the NZ dollar for recordkeeping.

Required:

1. Determine the value of Bar A's equipment account on December 31, 2018 in U.S. dollars.

2. Determine Bar A's depreciation expense for 2018 in U.S. dollars.

3. Determine the gain or loss from the sale of equipment on July 1, 2018 in U.S. dollars.

QUESTION 5       

You are in charge of the audit of “cash and bank” at Beachbreak (Pty) Ltd for the financial year – end February 2018. During the interim audit conducted during late December 2017, you had audited the bank reconciliation at 30 November and found it to be correct. During March, as part of your normal year – end procedures, you are preparing to audit the bank reconciliation prepared by Otis Redding and presented below.

Page 17 of 17



Bank reconciliation at 29 February 2018 – Beachbreak (Pty) Ltd

Balance as per cashbook               $127 261.30 Add: outstanding cheques 49378 3 October 2017    4 447.35 52133 10 December 2017 15 210.65 52876 18 February 2018    9 316.00 53192 22 February 2018       943.89 53193 22 February 2018 47 209.11    77 126.00          204 387.30 Add: direct deposit: Note 1       18 649.30          223 036 60 Less: bank charges and fees for February 2018         (163.00) Balance as per Bank statement 28 February 2018   222 873.60

Note 1: This represents a deposit credited in error by the bank, to Beachbreak (Pty ) Ltd’s account on the 17 February 2018.

YOU ARE REQUIRED TO describe the audit procedures you would conduct on the bank reconciliation of Beachbreak (Pty) Ltd at 28 February 2018.

You are considering investing in Australian shares and decide to investigate the shares of two Australian companies: Woodside Petroleum Ltd (WPL.AX) and Commonwealth Bank of Australia (CBA.AX).

Below are the opening prices, closing prices and dividends paid for WPL Ltd and CBA for the financial year 2018-2019.

Construct the minimum variance portfolio (MVP) comprising of only WPL and CBA and calculate the risk (standard deviation) and return of this minimum variance portfolio. (Hint: To calculate return of MVP you need annual holding period returns of the shares.)

. installment sales for 2018 is $600,000 and cost of goods sold $300,000 while the installment sales in 2019 is $1,000,000 and cost of goods sold $800,000, cash collection from 2018 sales was $400,000 in 2018 and $200,000 in 2019, cash collection from 2019 sales was $500,000 in 2019 and $500,000 in 2020, using cost recovery method compute gross profit realized in 2018?

a.
$100,000.

b.
$200,000.

c.
$300,000.

d.
$150,000.

On January 1, 2018, Twister Enterprises, a manufacturer of a variety of transportable spin rides, issues $470,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. If the market interest rate is 9%, the bonds will issue at $431,721. Record the bond issue on January 1, 2018, and the first two semiannual interest payments on June 30, 2018, and December 31, 2018.

Jim is a Mechanical Engineer. He earns $116000/year after allowable deductions.

a. What will he owe the IRS in 2018?  

Jim is offered a new position that will double his taxable income for 2018.

b. If he accepts the new position how much more will he owe the IRS in 2018?

Jim's boss Ron will have $601000/year taxable income in 2018.

c. What will he owe the IRS?

We have purchased 20 items of inventory at $2,500 each on 26 July 2019 from Suppliers on account. Ignore GST

Suppliers is your only creditor. Assume a perpetual inventory system, as per the Practice Set.

All numerical answers should consist of digits from 0 to 9 (no symbols, spaces or commas).

Dates should be entered as dd/mm/yy (eg 01/06/19).

Each box must have an answer - If it would normally be blank enter 0.

Select whether the following are impacted by this transaction.

Inventory AnswerYesNo

Subsidiary Ledgers AnswerYesNo

Which special journal will this transaction be recorded in? AnswerSalesPurchasesCash ReceiptsCash PaymentsGeneral

What is the most likely date that this transaction will be posted to:

The General Ledger: Answer

The Subsidiary Ledger: Answer

Enter the transaction into the journal provided, update inventory and post to the subsidiary and general ledger.

Purchases Journal (P1)

Inventory Record

Accounts Payable Subsidiary Ledger

General Ledger

Assume you pay the full amount owing to Suppliers on 02/08/19.

Complete the journal recording this payment:

Answer Journal (CP1)

Joyce is a single, cash-method taxpayer. On April 11, 2017, Joyce paid $120 in state income taxes with her 2016 state income tax return. During 2017, Joyce had $1,600 in state income taxes withheld. On April 13, 2018, Joyce paid $200 with her 2017 state tax return. During 2018, she had $2,100 in state income taxes withheld from her paycheck. Upon filing her 2018 tax return on April 15, 2019, she received a refund of $450 for excess state income taxes withheld. Joyce had total AGI in 2018 and 2019 of $51,000 and $53,500, respectively. In 2018, Joyce also paid $10,500 in qualified residence interest.

a. What is the amount of state income taxes Joyce may include as an itemized deduction for 2017?

b. What is Joyce’s allowed itemized deduction for state income taxes for 2018?

c. What is Joyce’s taxable income for 2018?