E13.13 (LO 3), AP The condensed financial statements of Ness Company for the years 2021 and 2022 are presented below.

Compute ratios.

Compute the following ratios for 2022 and 2021.

• a. Current ratio.
• b. Inventory turnover. (Inventory on December 31, 2020, was $340.)
• c. Profit margin.
• d. Return on assets. (Assets on December 31, 2020, were $1,900.)
• e. Return on common stockholders' equity. (Equity on December 31, 2020, was $900.)
• f. Debt to assets ratio.
• g. Times interest earned.

Problem 7-11 A Preparing a bank reconciliation and recording adjustments

CHECK FIGURE: 1. Adjusted book balance = $28,250

The following is information for Dundee Reality:

1. Balance per the bank statement dated October 31, 2020, is $26,830.
2. The balance of the Cash account on the company books as of October 31, 2020, is $5,575.
3. $14,680 of customer deposits were outstanding as of September 30; this amount has been deposited to Dundee’s account in October.
4. Cheques written in October that had not cleared the bank as of October 31 were:

#8700, $985

#8709, $12,600

#8801, $620

#8815, $145

5. The bank charged Dundee’s account for a $2,350 cheque of the E-Zone Networks; the cheque was found among the cancelled cheques returned with the bank statement.
6. Bank service charges for October amount to $65.
7. A customer’s cheque (Teresa Krant) for $7,050 had been deposited in the bank correctly but was recorded in the accounting records as $7,500.
8. Among the cancelled cheques in one for $260 given in payment of an account payable to Decker Company; the bookkeeper had recorded the cheque incorrectly at $620 in the company records.
9. The bank statement showed an electronic fund transfer of 22,880 for a customer payment. A bank service fee of $50 was charged.
10. A bank deposit of October 31 for $13,420 does not appear on the bank statement.

Required

1. Prepare a bank reconciliation statement as of October 31, 2020.
2. Prepare the necessary entries to make the Cash account agree with the bank reconciliation adjusted Cash balance as of October 31.

Analysis Component:

Identify the effects on the income statement and balance sheet if the entries in Part 2 were not recorded.

Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 82,000 pounds. The subsidiary immediately borrowed 195,000 pounds on a five-year note with 9 percent interest payable annually beginning on January 1, 2018. The subsidiary then purchased for 277,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2017, the subsidiary rented the building for three years to a group of local attorneys for 8,550 pounds per month. By year-end, rent payments totaling 85,500 pounds had been received, and 17,100 pounds was in accounts receivable. On October 1, 3,500 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,725 pounds back to Sullivan's Island Company on December 31, 2017.

The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2017 $ 2.00 = 1 Pound October 1, 2017 2.05 = 1 December 31, 2017 2.08 = 1 Average for 2017 2.04 = 1 Prepare an income statement, statement of retained earnings, and balance sheet for this subsidiary in pounds and then translate these amounts into U.S. dollars. Prepare a Statement of Retained earnings. (Amounts to be deducted should be indicated by a minus sign.) SULLIVAN'S ISLAND COMPANY Statement of Retained Earnings For the Year Ended December 31, 2017 Pounds U.S. Dollars Retained earnings, 1/1 Retained earnings, 12/31 0 $0 Prepare a Balance Sheet. (Amounts to be deducted should be indicated by a minus sign.) SULLIVAN'S ISLAND COMPANY Balance Sheet December 31, 2017 Pounds U.S. Dollars Assets: Total assets 0 $0 Liabilities and Equities: Total liabilities and equities 0 $0

the beginning of 2020, Browne Corporation had the following stockholders’ equity balances in its general ledger:

Common Stock, $10 Par Value $500,000

Paid-In Capital in Excess of Par 1,500,000

In Capital, Treasury Stock 100,000

Paid-In Capital, Stock Options 80,000

Retained Earnings 100,000

Treasury Stock (15,000 shares) (270000)

Total Stockholders’ Equity 2,010,000

The paid-in capital from stock options relates to options granted on 1/1/16 to the CEO as incentive compensation. As of 1/1/20, the remaining expected benefit period is three years; expense has been and will be recorded evenly over the benefit period.

January 2: Purchased 10,000 shares of its common stock for $16 per share. Browne uses the cost method of accounting for treasury stock transactions.

February 1: Declared and distributed a 30% stock dividend on common stock outstanding when the market price of the stock was $24 per share.

April 1: Issued 20,000 shares of $50 par, noncumulative, convertible 6% preferred stock for $60 per share, where one share of preferred stock is convertible into two shares of common stock.

July 1: 2,000 shares of treasury stock that had been purchased in a prior year for $22 per share were re-issued for $20 per share.

August 1: Holders of 8,000 shares of the preferred stock converted their shares into common stock when the market value of the common stock was $22 per share. Taylor uses the book value method of accounting for conversions.

October 1: Declared and paid a cash dividend of $2 per share on the outstanding common stock.

November 1: investors used ten percent of the outstanding stock option to purchase 1,000 common share. Brown received $25,000 from investors

December 1: Declared and distributed a property dividend of land to preferred shareholders. The land had a fair value of $75,000 and a carrying value of $60,000.

December 31: Recorded 2020 compensation expense related to the stock options.

The 2020 Final Net Income, including the effects of any net income items listed above (and the 2020 tax effects on net income items), was $1,000,000. There were 500,000 shares authorized for both preferred and common stock. Required All journal entries for the item above 12/30/20 stockholders equity section

Required All journal entries for the item above

12/30/20 stockholders equity section

Subaru’s Sales Boom Thanks to the Weaker Yen

For the Japanese carmaker Subaru, a sharp fall in the value of the yen against the U.S. dollar has turned a problem—the lack of U.S. production—into an unexpected sales boom. Subaru, which is a niche player in the global auto industry, has long bucked the trend among its Japanese rivals of establishing significant manufacturing facilities in the North American market. Instead, the company has chosen to concentrate most of its manufacturing in Japan in order to achieve economies of scale at its home plants, exporting its production to the United States. Subaru still makes 80 percent of its vehicles at home, compared with 21 percent for Honda.

Back in 2012, this strategy was viewed as something of a liability. In those days, 1 U.S. dollar bought only 80 Japanese yen. The strong yen meant that Subaru cars were being priced out of the U.S. market. Japanese companies like Honda and Toyota, which had substantial production in the United States, gained business at Subaru’s expense. But from 2012 onward, with Japan mired in recession and consumer prices falling, the country’s central bank repeatedly cut interest rates in an attempt to stimulate the economy. As interest rates fell in Japan, investors moved money out of the country, selling yen and buying the U.S. dollar. They used those dollars to invest in U.S. stocks and bonds, where they anticipated a greater return. As a consequence, the price of yen in terms of dollars fell. By December 2015, 1 dollar bought 120 yen, representing a 50 percent fall in the value of the yen against the U.S. dollar since 2012.   

For Subaru, the depreciation in the value of the yen has given it a pricing advantage and driven a sales boom. Demand for Subaru cars in the United States has been so strong that the automaker has been struggling to keep up. The profits of Subaru’s parent company, Fuji Heavy Industries, have surged. In February 2015, Fuji announced that it would earn record operating profits of around ¥410 billion ($3.5 billion U.S.) for the financial year ending March 2015. Subaru’s profit margin has increased to 14.4 percent, compared with 5.6 percent for Honda, a company that is heavily dependent on U.S. production. The good times continued in 2015, with Subaru posting record profits in the quarter ending December 31, 2015.

Despite its current pricing advantage, Subaru is moving to increase its U.S. production. It plans to expand its sole plant in the United States, in Indiana, by March 2017, with a goal of making 310,000 a year, up from 200,000 currently. When asked why it is doing this, Subaru’s management notes that the yen will not stay weak against the dollar forever, and it is wise to expand local production as a hedge against future increases in the value of the yen. Indeed, when the Bank of Japan decided to set a key interest rate below zero in early February 2016, the yen started to appreciate against the U.S. dollar, presumably on expectations that negative interest rates would finally help stimulate Japan’s sluggish economy. By late March 2016, the yen had appreciated against the dollar and was trading at $1 = ¥112.

Question 1: As Subaru expands into different countries, we will face increased foreign currency risk. Discuss different modes of currency risk and how each should be managed.

Question 2: When evaluating which foreign markets to serve, Subaru must consider certain variables that influence the location-specific costs and benefits of serving those markets. Identify several of the most important variables to consider and the implications of each on potential profitability.

Question 3: As Subaru implements it international operations, we will need to consider to what degree we delegate decision making to our foreign subsidiaries. Explain several advantages and disadvantages of centralized versus decentralized decision making.

Question 4: What are some of the most important considerations we should evaluate to best configure our production and supply chain operations. Provide specific details for each consideration.

Question 5: Discuss political, economic and legal criteria to assess the attractiveness of doing business in different country-specific locations.   

On January 1, 20x1, Entity acquires 30% of Co. B, for P600,000. Co. B reports profit of P200,000 and also declares
dividends of P50,000 in 20x1. How much is the carrying amount of the investment in associate, Dec 31, 20x1?
a)   P600,000   c)   P645,000
b)   P660,000   d)   P630,000

58   A Company acquired a 30% interest in B Company, for P400,000 on January 1, 2020. During the year, B Company
earned profits of P80,000 and paid no dividends. IN the year 2021, B Company incurred losses of P32,000 and
paid dividends of P10,000. In A Company's consolidated financial statements, at the end of 2021, what would
be the carrying amount of its interest in B Company, according to IAS 28, Investments in Associates ?
       a)   P438,000   c)   P414,400
       b)   P411,400   d)   P400,000

Conceptual Framework/ Accounting Overview/ Standards/Financial Statements…
59   Which of the following is one of the fundamental qualitative characteristics?
       a)   Faithful representation   c)   Reliability
       b)   Comparability   d)   Relevant

60   A concept that states that all the components of a complete set financial statement are interrelated.
       a)   Concept of Entity   c)   Accounting Process Concept
       b)   Concept of Articulation   d) Concept of Fair Presentation

PAS 29 - Financial Reporting in Hyperinflationary economies
61   Under constant peso accounting…
       a)   all items in the statement of profit or loss and other comprehensive income are restated.
       b)   some items in the statement of profit or loss and other comprehensive income are restated.
       c)   items in the statement of profit or loss and other comprehensive income are not restated.
       d)   items in the statement of profit or loss are restated but not in other comprehensive income

The gain or loss on net monetary position is computed as,
a)   the difference between the "net monetary items, end - historical" and "net monetary items, end - restated'.
   This amount is recognized in profit or loss.
b)   the difference between the "net monetary items, end - historical" and "net monetary items, end - restated'.
   This amount is recognized in equity.
c)   the difference between the "net monetary items, beg. - historical" and "net monetary items, end - restated'.
   This amount is recognized in profit or loss.
d)   the difference between the "net monetary items, beg. - historical" and "net monetary items, end - restated'.
   This amount is recognized in equity.

DLW Corporation acquired and placed in service the following assets during the year:

Assuming DLW does not elect S179 expensing or bonus depreciation, answer the following question:

1. What is DLW's year 3 cost recovery for each asset if DLW sells all of these assets on 2/22 of year 3?

This year ABC Company reported net property, plant, and equipment (PP&E) of $17,607 after having reported net PP&E of $11,825 last year. During the year the company sold PP&E with a net book value of $1,428 for $1,112. ABC also charged $7,851 in depreciation expenses against its earnings. How much did ABC spend to acquire PP&E during the year? Assume that all new PP&E was acquired for cash. Note that your answer will represent a cash outflow for purchasing new PP&E, but you should present your result as a positive value.