The following transactions occurred during December 31, 2021, for the Falwell Company.

1. A three-year fire insurance policy was purchased on July 1, 2021, for $15,480. The company debited insurance expense for the entire amount.
2. Depreciation on equipment totaled $14,500 for the year.
3. Employee salaries of $21,500 for the month of December will be paid in early January 2022.
4. On November 1, 2021, the company borrowed $290,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2022.
5. On December 1, 2021, the company received $8,700 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to deferred rent revenue.
6. On December 1, 2021, the company received $8,700 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to rent revenue rather than deferred rent revenue for $8,700 on December 1, 2021.

Prepare the necessary adjusting entries for each of the above situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Exercise 6-24 (Algo) Long-term contract; revenue recognition over time; solve for unknowns [LO6-9]

In 2021, Long Construction Corporation began construction work under a three-year contract. The contract price is $3,200,000. Long recognizes revenue over time according to percentage of completion for financial reporting purposes. The financial statement presentation relating to this contract at December 31, 2021, is as follows:

Required:
1. What was the cost of construction actually incurred in 2021?
2. How much cash was collected in 2021 on this contract?
3. What was the estimated cost to complete as of the end of 2021?
4. What was the estimated percentage of completion used to calculate revenue in 2021? (Round your percentage answer to 2 decimal places.)

The following ledger accounts are used by the Shawanda Race Track:
Cash
Accounts Receivable
Prepaid Printing
Prepaid Rent
Unearned Admissions Revenue
Note Payable
Interest payable
Admissions Revenue
Concessions Revenue
Interest Expense
Printing Expense
Rent Expense

Instructions
For each of the transactions below, prepare the journal entry (if one is required) to
record the initial transaction and then prepare the adjusting entry, if any, required on
November 30, the end of the fiscal year.
a) On November 1, paid rent on the track facility for three months, $105,000.
b) On November 1, sold season tickets for admission to the racetrack. The racing season
is year-round with 25 racing days each month. Season ticket sales totalled $900,000.
c) On November 1, borrowed $150,000 from their bank by issuing a 6% note payable
due in three months. Interest is payable at maturity.
d) On November 5, schedules for 20 racing days in November, 25 racing days in
December and 15 racing days in January were printed for $3,000.
e) The accountant for the concessions company reported that gross receipts for
November were $140,000. Ten percent is due to Shawanda and will be remitted by
December 10.

1. The following ledger accounts are used by the Shawanda Race Track:

Cash --Accounts Receivable-- Prepaid Printing-- Prepaid Rent-- Unearned Admissions Revenue --Note Payable --Interest payable --Admissions Revenue --Concessions Revenue-- Interest Expense --Printing Expense --Rent Expense

Instructions: For each of the transactions below, prepare the journal entry (if one is required) to record the initial transaction and then prepare the adjusting entry, if any, required on November 30, the end of the fiscal year.

a) On November 1, paid rent on the track facility for three months, $105,000.

b) On November 1, sold season tickets for admission to the racetrack. The racing season is year-round with 25 racing days each month. Season ticket sales totalled $900,000.

c) On November 1, borrowed $150,000 from their bank by issuing a 6% note payable due in three months. Interest is payable at maturity.

d) On November 5, schedules for 20 racing days in November, 25 racing days in December and 15 racing days in January were printed for $3,000.

e) The accountant for the concessions company reported that gross receipts for November were $140,000. Ten percent is due to Shawanda and will be remitted by December 10.

2). Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,600 pounds of oysters in August. The company’s flexible budget for August appears below: Quilcene Oysteria Flexible Budget For the Month Ended August 31 Actual pounds (q) 7,600 Revenue ($4.10q) $ 31,160 Expenses: Packing supplies ($0.25q) 1,900 Oyster bed maintenance ($3,300) 3,300 Wages and salaries ($2,200 + $0.30q) 4,480 Shipping ($0.75q) 5,700 Utilities ($1,230) 1,230 Other ($410 + $0.01q) 486 Total expense 17,096 Net operating income $ 14,064 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,600 Revenue $ 26,900 Expenses: Packing supplies 2,070 Oyster bed maintenance 3,160 Wages and salaries 4,890 Shipping 5,430 Utilities 1,040 Other 1,106 Total expense 17,696 Net operating income $ 9,204 Required: Calculate the company’s revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

PA4-1 Preparing a Trial Balance, Closing Journal Entry, and Post-Closing Trial Balance [LO 4-3, LO 4-5]

Required:

The Olney Company purchased a machine 3 years ago at a cost of $150,000. It had an expected life of 10 years at the time of purchase and an expected salvage value of $5,000.    The existing machine costs $54,000 year to run and generates $1,000,000 a year in revenue with a gross profit margin of 20%.   The old machine can be sold today for $55,000 and the expectation is that it can be sold for $7,500 in 7 years.

A new machine with a 7 year life can be purchased for $225,000. Cash operating expenses will be $65,000 per year. The new machine will boost revenue to $1,075,000 in the first three years of operation and then revenue of the new machine will increase to $1,090,000 per annum for the balance of machine’s life. The machine has a gross profit margin of 23% due to fewer defects. At the end of its useful life, the machine will have no value. The firm's tax rate is 34 percent. Straight-line depreciation is used for all assets. The firm’s WACC is 12 percent. The firm has an ACP of 63 days and pays its bills after 25 days.

Calculate project’s NPV and IRR.

The firm reduces its ACP to 55 days and starts to pay its bills after 30 days. What will be the project’s NPV ?