McAdoo & Co. is an engineering firm with offices in several cities in the Carolinas. McAdoo’s fiscal year-end is December 31, and it prepares financial statements just once a year, at year-end. For bookkeeping purposes, McAdoo has adopted a policy to record payments and collections in advance into asset and liability accounts, respectively. The company’s unadjusted trial balance at December 31, 2020 is shown below. All accounts have normal-side balances.

Additional information available at year-end is as follows:

1.         In the first week of January 2021, McAdoo received bills for December 2020 utilities totaling $28,985. The company paid all of these bills in late January 2021.

2.         On June 1, 2020, McAdoo purchased a 24-month insurance policy for $306,720 and paid the full cost of the policy in advance. The policy provides coverage through May 31, 2022. Note – Contrary to the company’s normal practice, McAdoo’s bookkeeper recorded the prepayment into the Insurance Expense account. Give the adjusting entry needed when a company uses the expense approach to record a payment in advance.

3.         McAdoo operates 5 days a week, Mondays through Fridays. Employees are paid each Monday, for hours worked through the previous Friday. On Monday, December 28, 2020, the last payday in 2020, McAdoo paid its employees for hours worked during the week of December 21-25. (Note that Christmas Day is a paid holiday for all employees.) The employees then worked their regular schedule through the end of the year. McAdoo’s payroll averages $14,215 per day.

4.         McAdoo sometimes leases unused space in its buildings to other businesses. On November 1, 2020, a new tenant signed a 1-year lease and paid the first 8 months’ rent of $63,880 in advance. The lease began on that date and runs through October 31, 2021.

5.         McAdoo started the year 2020 with a Supplies account balance of $51,320. During the year, McAdoo made several purchases of supplies totaling $78,465. A physical count at year-end 2020 revealed the company had a total of $59,715 of supplies on hand.

6.         The Notes Payable balance relates to a bank loan taken in 2019 that is payable in full on September 30, 2023. The loan agreement specifies that McAdoo pay interest annually on September 30 at the rate of 5.20% per year. McAdoo’s bookkeeper made the proper entry for the first interest payment, on September 30, 2020. (Hint – Think about the entry McAdoo made on the first interest payment date.)

7.         McAdoo performed $291,670 of legal services for several clients in December 2020 that it has not yet billed, recorded or collected.

8.         McAdoo estimates that 8.55% of the 2020 year-end accounts receivable balance will not be collected.

9.         McAdoo purchased its buildings in 2011 and its equipment in 2015. McAdoo depreciates its fixed assets according to the straight-line method. For the buildings, it uses estimates of 36 years for the useful life and $240,000 for the salvage value. For the equipment, it uses estimates of 12 years for the useful life and $37,000 for the salvage value.

10.       The company’s income tax rate for the year is 25%. (Hint – The income tax rate is applied to the company’s income after all revenues and expenses have been considered except for the income tax charge.)

– Instructions –

Complete the following tasks relating to McAdoo & Co.’s accounting process at year-end 2020:

(b)        Prepare the adjusting journal entries needed at December 31, 2020.

Carla Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid.

Determine the amounts of the components of pension expense that should be recognized by the company in 2020.

Prepare the journal entry or entries to record pension expense and the employer’s contribution to the pension trustee in 2020.

Indicate the pension-related amounts that would be reported on the income statement and the balance sheet for Carla Company for the year 2020.
(Should be a Partial Income Statement, Comprehensive Income Statement and a Partial Balance Sheet)

Blue Manufacturing purchased a machine on January 1, 2020 for use in its factory. Blue paid $458,000 for the machine and estimated that it had a useful life of 10 years, at the end of which time the machine was expected to have a residual value of $40,000. During its life, the machine was expected to produce 380,000 units. During 2020, the machine produced 41,800 units, and produced 58,600 in 2021. The machine was subject to a 20% CCA rate, and Blue’s year-end was December 31.

Calculate the annual depreciation amount for 2020 and 2021 under the straight-line method.

eTextbook and Media

Calculate the annual depreciation amount for 2020 and 2021 under the activity method. (Round per unit value to 2 decimal places e.g. 5.75 and final answers to 0 decimal places, e.g. 5,275.)

Calculate the annual depreciation amount for 2020 and 2021 under the double-declining balance method.

eTextbook and Media

Calculate the annual depreciation amount for 2020 and 2021 under the capital cost allowance method.

I can't get my calculations to work out for the last 2?

1)

Periodically, Merrill Lynch customers are asked to evaluate Merrill Lynch financial consultants and services on a 7-point scale (7 is the maximum). You are a manager with two consultants you are trying to compare. Consultant A has 10 years of experience, whereas consultant B has 1 year of experience. You want to test if the consultant with less experience has a rating that is different than the more experienced consultant. So, you collect independent samples of service ratings for these two financial consultants. Consultant A has 11 surveys with a mean of 6.66 and standard deviation of 0.63. Consultant B has 18 surveys with a mean of 6.43 and standard deviation of 0.58. You wish to test the claim at a significance level of α=0.05α=0.05.

1. What is the test statistic for this sample?
   
   test statistic =  Round to 4 decimal places.
   
2. What is the p-value for this sample?
   
   p-value =  Round to 4 decimal places.
   
3. The p-value is...
   • less than (or equal to) αα
   • greater than αα
   
   
4. This test statistic leads to a decision to...
   • reject the null
   • accept the null
   • fail to reject the null
   
   
5. As such, the final conclusion is that...
   • There is sufficient evidence to warrant rejection of the claim that the consultant with less experience (B) has a rating that is different than the more experienced consultant (A).
   • There is not sufficient evidence to warrant rejection of the claim that the consultant with less experience (B) has a rating that is different than the more experienced consultant (A).
   • The sample data support the claim that the consultant with less experience (B) has a rating that is different than the more experienced consultant (A).
   • There is not sufficient sample evidence to support the claim that the consultant with less experience (B) has a rating that is different than the more experienced consultant (A).

2)

A market research firm used a sample of individuals to rate the purchase potential of a particular product before and after the individuals saw a new, expensive television commercial about the product. The purchase potential ratings were based on a 0 to 10 scale, with higher values indicating more potential to purchase the product. You want to know if the commercial increased the mean purchase potential rating. You will test the claim at a significance level of  αα = 0.005. To do so, you find a sample of 36 people, you find the mean "after-before" rating to be ¯d=0.4d¯=0.4 with a standard deviation of the differences of sd=sd= 0.8.  

1. What is the test statistic for this sample?
   
   test statistic =  Round to 4 decimal places.
   
2. What is the p-value for this sample? Round to 4 decimal places.
   
   p-value =
   
3. The p-value is...
   • less than (or equal to) αα
   • greater than αα
   
   
4. This test statistic leads to a decision to...
   • reject the null
   • accept the null
   • fail to reject the null
   
   
5. As such, the final conclusion is that...
   • There is sufficient evidence to warrant rejection of the claim that the mean 'after'-'before' rating is greater than 0.
   • There is not sufficient evidence to warrant rejection of the claim that the mean 'after'-'before' rating is greater than 0.
   • The sample data support the claim that the mean 'after'-'before' rating is greater than 0.
   • There is not sufficient sample evidence to support the claim that the mean 'after'-'before' rating is greater than 0.

The Acme Company just bought a new machine that makes markers. In a random sample of 250 markers from the new machine, they find that 235 markers work. They want to test if the true proportion of working markers from the new machine is greater than 90%. Assuming that they use the approximate methodology, find the p-value of the test.

The Acme Company just bought a new machine that makes markers. In a random sample of 250 markers from the new machine, they find that 240 markers work. They want to test if the true proportion of working markers from the new machine is greater than 90%. Which is the correct alternative hypothesis?

The Acme Company just bought a new machine that makes markers. They want to test if the true proportion of working markers from the new machine is greater than 90% at the 5% significance level. They take a random sample of 250 markers from the new machine. They find a test statistic of 2.108 with a p-value of 0.0175. Which is the correct conclusion?

A golf instructor is trying out a new technique for teaching her students. She randomly selects twenty of her students. She records the score of each student before the new technique and after the new technique. Is there evidence at α = 0.05 that true mean scores before and after the technique are different? Justify fully! You can assume normal populations where needed. She does not know which test to run, so she runs two. The outputs are given. Which is the correct design and conclusion?

Matched Pairs Design                         Welch’s (Independent) T Test

Test Statistic = 2.268                           Test Statistic = 1.218

p-value = 0.035                                   p-value = 0.231

You own goods A and B. You are considering increasing price of good A by 10%. Here is the information you have

Pa = 20

Qa = 1000

For each $1 increase in Pa, Qa will decrease by 100.

Pb = 12

Qb = 750

For each $1 increase in Pa, Qb will increase by 100.

(The point of this exercise is to have you do everything the long way then use the delta r formula so you can see the difference)

a . What is Total revenue of A before the price change?

b. What is total revenue of A after the price change?

c . What is Total revenue of B before the price change?

d. What is total revenue of B after the price change?

e. What is the change of revenue for A after the price changes?

f. What is the change or revenue for B after the price changes?

g. What is change in total revenue for both goods after price changes?

h. What is the own price elasticity for good A?

i. What is the cross price elasticity of A and B?

j. Calculate the change of revenue using the formula ∆ r =[ Rx (1 + E_Qx,Px) + Ry(E_Qy,Px)]%∆P_x.

k. Explain why the two methods have different answers.

l. To calculate the change in total revenue from the price change, which method do you prefer? Doing parts a-g or doing part h-j? Briefly explain.

Only h-l

You own goods A and B. You are considering increasing price of good A by 10%. Here is the information you have Pa = 20 Qa = 1000 For each $1 increase in Pa, Qa will decrease by 100. Pb = 12 Qb = 750 For each $1 increase in Pa, Qb will increase by 100. (The point of this exercise is to have you do everything the long way then use the delta r formula so you can see the difference) a . What is Total revenue of A before the price change? b. What is total revenue of A after the price change? c . What is Total revenue of B before the price change? d. What is total revenue of B after the price change? e. What is the change of revenue for A after the price changes? f. What is the change or revenue for B after the price changes? g. What is change in total revenue for both goods after price changes? h. What is the own price elasticity for good A? i. What is the cross price elasticity of A and B? j. Calculate the change of revenue using the formula provided in class. k. Explain why the two methods have different answers. l. To calculate the change in total revenue from the price change, which method do you prefer? Doing parts a-g or doing part h-j? Briefly explain.

Problem 23-04

Sarasota Company had the following information available at the end of 2020.

Prepare a statement of cash flows for Sarasota Company using the direct method accompanied by a reconciliation schedule. Assume the short-term investments are debt securities, classified as available-for-sale.

Problem 23-04

Sarasota Company had the following information available at the end of 2020.

Prepare a statement of cash flows for Sarasota Company using the direct method accompanied by a reconciliation schedule. Assume the short-term investments are debt securities, classified as available-for-sale.

The following data relate to the Plant Assets account of Tamarisk Inc. at December 31, 2019:

Note: In the year an asset is purchased, Tamarisk does not record any depreciation expense on the asset. In the year an asset is retired or traded in, Tamarisk takes a full year’s depreciation on the asset.

The following transactions occurred during 2020:

Prepare any necessary adjusting journal entries required at December 31, 2020, as well as any entries to record depreciation for 2020.

(To record depreciation on Asset A) (To record disposal of Asset A) (To record depreciation on Asset B) (To record cost of Asset E) (To record depreciation on Asset E) (To record depreciation on Asset D)