Headquartered in Toronto, Indigo Books & Music Inc. (TSX: IDG) is Canada’s largest book retailer and the third largest in North America. The following information was taken from the management discussion and analysis section of the company’s March 31, 2020, annual report (in thousands):

Additional information from the company’s annual report:

1. Inventories are valued at the lower of cost, determined using a moving average cost formula, and market, being net realizable value. Under this method, inventory is recorded at the level of the individual article (stock-keeping unit or SKU).

2. Costs include all direct and reasonable expenditures that are incurred in bringing inventories to their present location and condition. Vendor rebates are recorded as a reduction in the price of the products and corresponding inventory is recorded net of vendor rebates.

3. The average cost of an article is continually updated based on the cost of each purchase recorded in inventory. When the company permanently reduces the retail price of an item, there is a corresponding reduction in inventory recognized in the period if the markdown incurred brings the retail price below the cost of the item.

4. The amount of inventory write-downs as a result of net realizable value lower than cost was $10.3 million in 2020 ($7.3 million in fiscal 2019), and there were no reversals of inventory write-downs that were recognized in 2020 or in prior

periods. The amount of inventory at March 31, 2020 with net realizable value equal to cost was $1.7 million ($2.3 million at March 31, 2019).

(a) Calculate the company’s inventory turnover and days sales in inventory ratios for 2020 and 2019. Comment on whether Indigo’s management of its inventory improved or weakened in fiscal 2020.  

(b) Does Indigo follow the lower of cost or net realizable value rule? Did the application of this rule have any effect on 2020 results? Explain

(c) Indigo uses the average cost formula to account for its inventories. A major competitor, Amazon Inc., uses the FIFO cost formula to account for its inventories. What difficulties would this create in comparing Indigo’s financial results with those of Amazon? Explain.  

ABC Ltd acquired $5 million of ten-year, 6 percent, annual coupon corporate bond (which pay interest annually).
At the time of ABC Ltd acquiring the bond, the market required a rate of return 7 percent per annum on such
bonds. ABC Ltd has an intention to hold the bond for cash flows and not to trade them. Assume that the moneys
paid out to acquire debentures were allotted on the same day: 30 June 2018.
Appendix A provides the present value of $1 in n periods.
Appendix B provides the present value of an annuity of $1 per period for n periods.
Required:
(a) Calculate the acquired price of the bonds at 30 June 2018. Show workings.
(b) Prepare a schedule as follows Please copy the schedule format to the paper.

(c) Provide the relevant journal entries at 30 June 2018.
(d) Provide the journal entries for the receipt of interest and principal component at 30 June 2019. Show
workings.
(e) Provide the journal entries for the receipt of interest and principal component at 30 December 2028. Show
workings.

A company in the United States, imports and exports equipment. The company uses a perpetual inventory system. During May the company entered into the following transactions. All rate quotations are direct exchange rates.

May 2 Purchased power tools from a wholesaler in Japan, on account, at an invoice cost of 1,600,000 yen. On this date the exchange rate for the yen was $.0072.

4 Sold hand tools on credit that were manufactured in the U.S. to a retail outlet located in West Germany. The invoice price was $2,800. The exchange rate for marks was $.5829.

8 Sold electric drills on account to a retailer in New Zealand. The invoice price was 16,800 U.S. dollars and the exchange rate for the New Zealand dollar was $.576. 10 Purchased drill bits on account from a manufacturer located in Belgium. The billing was for 801,282 francs. The exchange rate for francs was $.0312.

15 Paid 1,000,000 yen on account to the wholesaler for purchases made on May 2. The exchange rate on this date was $.0067.

17 Settled the accounts payable with the Belgium manufacturer. The exchange rate was $.0368.

21 Received full payment from the New Zealand retailer. The exchange rate was $.568.

29 Completed payment on the May 2 purchase. The exchange rate was $.0078.
(Show calculations)
Prepare journal entries on the books of the US Company to record the transactions listed above.

1. MIGITSU COMPANY
Comparative Balance Sheets
December 31

Additional information:
1. Net income for 2020 was $97,000.

2. Cash dividends of $34,000 were declared and paid.

3. Bonds payable amounting to $57,000 were redeemed for cash $57,000.

4. Common stock was issued for $42,000 cash.

5. Equipment that cost $45,000 and had a book value of $27,000 was sold for $35,000 during 2020; land was sold at cost.

PART A. Prepare a statement of cash flows for 2020 using the indirect method.

PART B. Compute free cash flow

2.

2020 2019

Cash   $14,900   $10,400

Accounts receivable.   21,500.   23,400

Land.      19,700   25,900

Buildings 70,100   70,100

Accumulated depreciation—buildings. (14,800) (10,700)

   Total $111,400 $119,100

Accounts payable $12,100   $28,300

Common stock   75,400   73,600

Retained earnings 23,900   17,200

Total $111,400   $119,100

Additional information:

1. Net income was $22,400. Dividends declared and paid were $15,700

2. No noncash investing and financing activities occurred during 2020.

3. The land was sold for cash of $4,900.

PART A.) Prepare a statement of cash flows for 2020 using the indirect method.

PART B.) Compute free cash flow

Assume all of the same facts as in Part I, except that Soccer Inc. uses the percent of receivables or "aging of receivables" method to determine bad debt expense. I will repeat the facts for your convenience: Soccer Inc. had credit sales of $775,000 during 2020. At the end of 2020, the unadjusted ending balance in Soccer’s Allowance for Bad Debt account was $7,600, and the unadjusted balance in its gross accounts receivable account was $239,000. The company has a policy of writing-off any Account Receivable which is outstanding more than 75 days. As of 12/31/20, Soccer has Accounts Receivable balances totaling $2,000 outstanding over 75 days which need to be written off.

Soccer has created the following aging schedule:

You may round your answers to the nearest dollar.

(A) What journal entry would Soccer record to "Write-Off" Accounts Receivable?

(B) What journal entry would Soccer record to recognize 2020 Bad Debt Expense?

(C) What is the adjusted 12/31/2020 balance of Soccer's Gross Accounts Receivable? **(Show calculation)**

(D) What is the adjusted 12/31/2020 balance of Soccer's Allowance for Bad Debt? **(Show calculation)**

(E) What is the adjusted 12/31/2020 balance of Soccer's Net Accounts Receivable? **(Show calculation)**

The U.S.

a.income taxes U.S.corporate income earned abroad as though the income was earned in the U.S., ignoring foreign income tax paid.

b.tries to limit double taxation on U.S. corporate income earned abroad.

c.allows a deduction, not a credit, to U.S. corporations for tax paid to foreign countries.

d.taxes U.S. corporate income earned abroad at rates lower than the host country.

The federal budget is defined as

A.

an annual statement of what policy actions the U.S. government has pursued.

B.

an annual statement of expenditures and tax revenues of the U.S. government.

C.

an annual statement of U.S. government violations of international laws.

D.

a monthly statement of expenditure laws passed by the U.S. government.

E.

a monthly statement of whether the U.S. government is in deficit or surplus.

What will happen to the value of the dollar if U.S. interests rates increase relative to interst rates in the rest of the world?

Question 33 options:

What are the journal entries for the following?

1. Company purchased inventory on credit (with accounts payable), cost of $330,000.
2. Company made credit sales (with accounts receivable), amount of $200,000.
3. Company collected accounts receivable, amount of $100,000.
4. Company hired a new assistant store manager. He will start in June 2020.
5. Company made cash sales, amount of $100,000.
6. Company paid off accounts payable in the amount of $300,000.
7. Company counted inventory at year-end, and found that the inventory sold cost $200,000.
8. Company paid $21,000 in salaries in cash.
9. Company paid $5,000 for interest on the note payable (Noncurrent).
10. Company recognized $7,000 in depreciation on the Property, Plant and Equipment.
11. Company pays income taxes at a rate of 21%. It uses an income tax payable account now, and will pay cash in the future.

6. Suppose the amount of national saving at each interest rate remains the same. If U.S. firms decide to invest
less domestically at each interest rate, then the real interest rate in the U.S. ___________ and U.S. net
capital outflow __________.
A. increases; increases
B. increases; decreases
C. increases; remains the same
D. decreases; decreases
E. decreases; increases
7. Suppose the amount of national saving at each interest rate remains the same. If U.S. firms decide to invest
more domestically at each interest rate, then the real interest rate in the U.S. _____________, U.S. net capital
outflow __________, and the real exchange rate of the U.S. dollar ___________.
A. increases; increases; depreciates
B. increases; decreases; appreciates
C. decreases; decreases; depreciates
D. decreases; increases; appreciates
E. decreases; increases; depreciates
8. An increase in the U.S. government budget deficit shifts the supply of U.S. loanable funds to the _________.
If the demand for loanable funds does not shift, then the supply shift will cause U.S. interest rates to
___________ and U.S. domestic investment to __________.
A. left; rise; decrease.
B. left; fall; decrease.
C. left; fall; increase.
D. right; rise; increase.
E. right; fall; increase.