Owen Company forgot to accrue $3,000 of salaries its employees had earned at the end of 2019. It paid and expensed the salaries in 2020. It also, in 2019, recorded $4,000 of sales as an account receivable; however, the sale really did not take place until 2020, and it should have recognized the revenue in 2020. It collected the money from the sale early in 2020.

Provide the impact of the errors on the following:

Assets as of 12/31/19: $_____________ Overstated Understated

Assets as of 12/31/20: $_____________ Overstated Understated

Liabilities as of 12/31/19: $_____________ Overstated Understated

Net income for 2020: $_____________ Overstated Understated

AMP Corporation (calendar-year-end) has 2020 taxable income of $1,900,000 for purposes of computing the §179 expense. During 2020, AMP acquired the following assets:

1.What is the maximum amount of §179 expense AMP may deduct for 2020?

2.What is the maximum total depreciation, including §179 expense, that AMP may deduct in 2020 on the assets it placed in service in 2020, assuming no bonus depreciation?

Suppose you use a call spread strategy on 4/15/2020, by buying a Facebook call option with the strike price of $180 at $7 and selling a Facebook call option with the strike price of $195 at $2. Both call options mature on 5/15/2020.

1. What is your total payoff and profit if Facebook share is traded at $170 on 5/15/2020?
2. What is your total payoff and profit if Facebook share is traded at $185 on 5/15/2020?
3. What is your total payoff and profit if Facebook share is traded at $200 on 5/15/2020?

Suppose you use a call spread strategy on 4/15/2020, by buying a Facebook call option with the strike price of $180 at $7 and selling a Facebook call option with the strike price of $195 at $2. Both call options mature on 5/15/2020.

(a) What is your total payoff and profit if Facebook share is traded at $170 on 5/15/2020?

(b) What is your total payoff and profit if Facebook share is traded at $185 on 5/15/2020?

(c) What is your total payoff and profit if Facebook share is traded at $200 on 5/15/2020?

Buzz Bee Yard Company’ Apiary began operations on January 1, 2020, with the purchase of 100 bee hives for $500 total. Buzz follows IFRS and its standard on agricultural products. It has completed the first year of operations and has the following information for its bee hives at December 31, 2020:

1. Bee Hives – purchase of hives as per above                                                                 $   500
2. Honey harvested during 2020 (at net realizable value)                                         1,900                  
3. Honey sold during 2020 (at net realizable value)                                                    1,600
4. Hive maintenance costs directly traceable to hive activity in year                      $60        
5. Company general administration costs                                                                           $40
6. Fair value on Dec. 31, 2020 of hives                                                                              $1,300    

Required:

1. Prepare all the journal entries for Buzz’s bee hives activities for 2020, as per the information in (a) to (f).

Bedco makes high quality beds. Each bed sells for $1,000. They sold 750 beds in 2020 and 900 beds in 2019. Their costs for both years are presented below:

2019:

Cost of Goods Sold: $360,000

Operating Expenses: $220,000

Factory Rent: $60,000

2020:

Cost of Goods Sold: 300,000

Operating Expenses: 190,000

Factory Rent: 60,000

A. PROVIDE BEDCO’S CONTRIBUTION MARGIN INCOME STATEMENT FOR 2020 AND 2019.

B. PROVIDE THE BEDCO’S 2020 VARIABLE COST RATIO AND VARIABLE COST/UNIT.

C. PROVIDE THE BEDCO’S 2020 CONTRIBUTION MARGIN RATIO AND CONTRIBUTION MARGIN/UNIT.

D. PART D: USING BREAK-EVEN ANALYSIS, DETERMINE THE BEDCO’S 2020 BREAK-EVEN POINTS IN TERMS OF SALES DOLLARS AND NUMBER OF UNITS SOLD.

On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of the machinery is NZ$750,000. The machinery is completed on 1 June 2021 and shipped FOB Auckland on that date. The debt is unpaid at 30 June 2020, which is also Holmes Ltd’s reporting date. The exchange rates at the relevant dates are:

1 March 2020 A$1.00 = NZ$1.20

30 June 2020 A$1.00 = NZ$1.30

1 June 2021 A$1.00 = NZ$1.25

Required:

a) Determine the amount in AUD, as at: • 1 March 2020; and • 30 June 2020.

b) Prepare the journal entries for the above dates, up to 1 June 2021,showing the amount of exchange gain or loss

Stellar Inc. has a defined benefit plan for its employees. On December 31, 2019 the company’s records showed the following information related to the plan: Pension plan assets $835,000 Defined benefit obligation 933,000 All employees are expected to receive benefits under the plan. The company’s actuary provided the following information as at December 31, 2020: Current year service cost $178,000 Past service benefits, granted July 1, 2020 29,000 Discount rate 5% Actual return on assets 6% Contributions for the year 266,000 Benefits paid to retirees 124,000 Calculate pension expense for Stellar Inc. for 2020, assuming ASPE is used.

Pension expense, 2020 $__________________

Calculate pension expense for Stellar Inc. for 2020, assuming IFRS is used.

Pension expense, 2020 $__________________

Sheffield Inc. reported the following partial statement of income data for the years ended December 31, 2021, and 2020:

The company reported inventory in the statement of financial position at $46,000, $49,500, and $48,000 at the end of 2019, 2020, and 2021, respectively. The ending inventory amounts for 2019 and 2021 are correct. However, the ending inventory at December 31, 2020, is understated by $7,620.

Prepare correct statements of income for 2020 and 2021 through to gross profit.