The following transactions relate to the General Fund of the City of Buffalo Falls for the year ended December 31, 2017:

1. Beginning balances were: Cash, $95,000; Taxes Receivable, $192,500; Accounts Payable, $53,750; and Fund Balance, $233,750.
2. The budget was passed. Estimated revenues amounted to $1,250,000 and appropriations totaled $1,247,000. All expenditures are classified as General Government.
3. Property taxes were levied in the amount of $925,000. All of the taxes are expected to be collected before February 2018.
4. Cash receipts totaled $895,000 for property taxes and $302,500 from other revenue.
5. Contracts were issued for contracted services in the amount of $98,750.
6. Contracted services were performed relating to $88,500 of the contracts with invoices amounting to $86,500.
7. Other expenditures amounted to $972,500.
8. Accounts payable were paid in the amount of $1,107,500.
9. The books were closed.

Required:
a. Prepare journal entries for the above transactions.
b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the General Fund.
c. Prepare a Balance Sheet for the General Fund assuming there are no restricted or assigned net resources and outstanding encumbrances are committed by contractual obligation.

Mastery Problem: Corporations: Organization, Stock Transactions, and Dividends

Pranks, Inc.

Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout Year 6, the current year. It is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You’ve been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be determined before the distribution of the stock dividend is made. The company has two classes of stock: common stock and cumulative preferred stock.

Number of common shares authorized900,000

Number of common shares issued750,000

Par value of common shares$20

Par value of cumulative preferred shares$30

Paid-in capital in excess of par-common stock$7,000,000

Paid-in capital in excess of par-preferred stock$0

Total retained earnings before the stock dividend is declared$33,500,000

No treasury share have been reissued.

Preferred DividendsCommon Dividends

YearTotal Cash
DividendsTotalPer ShareTotalPer Share

Year 130,000  30,0000.20      00.00      

Year 254,000  54,0000.36      00.00      

Year 396,000  51,0000.34      45,0000.09      

Year 4120,000  45,0000.3      75,0000.15      

Year 5135,000  45,0000.3      90,0000.18      

Year 6195,000  45,0000.3      150,0000.3      

Cash Dividends

The accounting manager for the company prepared the schedule of cash dividends paid from Year 1 to Year 6 on the Pranks, Inc. panel. However, one of the reasons for Pranks, Inc.’s missing information is that the manager is away on vacation and is unreachable by phone, because he is backpacking on a remote island that does not have cell phone reception. Management would like you to determine some information from the data you’ve collected regarding its outstanding stock.

Fill in the following answers.

How many shares of common stock are outstanding?

How many shares of preferred stock are outstanding?

What is the preferred dividend as a percent of par?
%

Feedback

Review the definitions of the items, and the amounts that are included in their computation.

Additional Questions

1. After completing the Cash Dividends panel, answer the following question.

Does Pranks, Inc. have any treasury stock? How can you tell?

Yes, because the number of shares issued is greater than the number of shares outstanding.

2. In which years has Pranks, Inc. paid cumulative preferred dividends in arrears?

a.Year 1

b.Year 2

c.Year 3

d.Year 4

e.Year 5

f.Year 6

b and c

Feedback

1. Review the definitions and relationships between authorized, issued, and outstanding shares of stock.

2. Review the definition of cumulative preferred dividends in arrears. When did Pranks, Inc. not pay the full amount of preferred dividends due? When did they make up these amounts?

Stock Dividend

The company declared a 2% common stock dividend on December 1, and would like you to compute the following pieces of missing information. The market value of the common shares is $26 on December 1, and is $32 on the actual distribution date of the stock, December 31.

Fill in the missing information in the following table, using the information given and your work on the other panels. All “before” items are before the stock dividend was declared. All “after” items are after the stock dividend was declared and closing entries were recorded at the end of the year.

Total paid-in capital before the stock dividend$

Total retained earnings before the stock dividend

Total stockholders’ equity before the stock dividend$

Total paid-in capital after the stock dividend$

Total retained earnings after the stock dividend

Total stockholders’ equity after the stock dividend$

1) A ball 1 with a mass of 2.0 kg and moving at 2.0 m/s strikes a glancing blow on a second ball 2 which is initially at rest. Assume no external forces act. After the collision, ball 1 is moving at right angles to its original direction at a speed of 3.0 m/s.
(a) Calculate the initial momentum of the system.
(b) Determine the magnitude of the momentum of Ball 2 after the collision?
(c) In what direction is Ball 2 moving after the collision?
(d) If Ball 2 has a mass of 5.0 kg, what is its speed after the collision?
(e) If the impact lasted 0.020 s, calculate the magnitude of the average force exerted on B during the collision.
(f) Based on the kinetic energy before and after the collision calculate classify the collision as (inelastic, completely inelastic, or fully elastic)

Leah Reyes is thinking about investing in residential income-producing property that she can purchase for $200,000. Leah can either pay cash for the full amount of the property or put up $100,000 of her own money and borrow the remaining $100,000 at 5 percent interest. The property is expected to generate $20,000 per year after all expenses but before interest and income taxes. Assume that Leah is in the 35 percent tax bracket. (Hint: Earnings before interest & taxes minus Interest expenses (if any) equals Earnings before taxes minus Income taxes (@35%) equals Profit after taxes.) Calculate her annual profit and return on investment assuming that she pays the full $200,000 from her own funds. Do not round intermediate calculations. Round the profit to the nearest whole dollar and ROI to two decimal places. Annual profit

$ Return on Investment % Calculate her annual profit and return on investment assuming that she borrows $100,000 at 5 percent. Do not round intermediate calculations. Round the profit to the nearest whole dollar and ROI to two decimal places. Annual profit $ Return on Investment % What was the effect of using leverage on Leah's rate of return?

Read the following article and answer the following questions.

VOLATILE COFFEE PRICES: COVID-19 AND MARKET FUNDAMENTALS

Since the covid-19 outbreak was declared a global pandemic by the World Health Organization in midMarch, the virus has spread to virtually all coffee exporting and importing countries. The ICO Composite Indicator Price, which is a weighted average of all major coffee origins and types, has shown a fluctuating but upward trend since February 2020. Due to social distancing and other measures imposed by governments to contain the virus, some coffee workers were quarantined and only one worker at a time can access a container to load bags of coffee. These have resulted in disruptions and delays, and subsequently in increased transaction and trade costs of coffee. Moreover, at the onset of COVID-19, there was higher supermarket sales of coffee resulting from panic buying and stockpiling as the public worried that coffee shops might be closed during the pandemic. Modified from the article in http://www.ico.org/news/coffee-break-series-2e.pdf

a. Some factors could affect the demand for and supply of coffee. Identify the two factors mentioned in the above article. Clearly state whether they affect demand or supply.

b. Suppose, under the above impacts in (a), there was a fall in the equilibrium quantity of coffee in the market. Draw a well-labeled demand-and-supply diagram to illustrate these impacts on the market for coffee. Briefly explain your answer.

1. This question is related to making an object method call by reference instead of by value. Use the (CallValueTest.java). Convert the calculation method (calc(..) ) in the Test class. You need to modify the Test class attributes and constructor to support this new cal (…) method. Your program should display:

Before call obj.a 15 obj.b is 20

Before call obj.a 30 obj.b is 10

CallValueTest.java

package com.Assignment3.Q1;

class Test {
  
   void calc(int a, int b) {
       a *= 2;
       b /= 2;
       System.out.println(" in calc a = " + a + " b = " + b);
   }
  
}
public class CallByValueTest {
   public static void main (String args[]) {
       Test ob = new Test();
       int a =15, b = 20;
       System.out.println ("Before calc :a = " + a + " b " + b);
      
       ob.calc (a, b );
      
       System.out.println(" After calc: a = " + a + " b " + b);
      
   }
}

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2021 ($ in thousands): sales revenue, $15,300; cost of goods sold, $6,200; selling expenses, $1,300; general and administrative expenses, $800; interest revenue, $40; interest expense, $180. Income taxes have not yet been recorded. The company’s income tax rate is 25% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2021 ($ in thousands). All transactions are material in amount.

1. Investments were sold during the year at a loss of $220. Schembri also had an unrealized gain of $320 for the year on investments in debt securities that qualify as components of comprehensive income.
2. One of the company’s factories was closed during the year. Restructuring costs incurred were $1,200.
3. During the year, Schembri completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP. The division had incurred a loss from operations of $560 in 2021 prior to the sale, and its assets were sold at a gain of $1,400.
4. In 2021, the company’s accountant discovered that depreciation expense in 2020 for the office building was understated by $200.
5. Negative foreign currency translation adjustment for the year totaled $240.

Required:
1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2021, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 400,000 shares were issued on July 1, 2021.
2. Prepare a separate statement of comprehensive income for 2021

Prepare the journal entry recording pension expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

On January 1, 2020, The Justice League issued $100,000, 9%, four-year bonds.  Interest is paid semiannually on June 30 and December 31.  The bonds were issued at $96,768 to yield an annual return of 10%.

Required:

1. Show how Justice League calculated the $96,768 bond price (round each to the whole dollar).

2. Prepare an amortization schedule for the dates indicated using the effective interest rate method.

3. Prepare the journal entries to record the issuance of the bond on January 1 and interest expense on June 30, 2020.         

3) What amount would the bonds be reported on the balance sheet at the end 2020?

Violet Ltd owns all the share capital of Indigo Ltd. The following transactions are independent:

1. Indigo Ltd gives $55 000 as an interest-free loan to Violet Ltd on 1 July 2019. Violet Ltd made a $20 000 repayment by 30 June 2020.
2. Indigo Ltd rented a spare warehouse to Violet Ltd starting from 1 July 2019 for 1 year. The total charge for the rental was $3 500, and Violet Ltd paid half of this amount to Indigo Ltd on 1 January 2020 and the rest on 1 July 2020.
3. During March 2020, Indigo Ltd declared a $5000 dividend. The dividend was paid in August 2020.

Required

In relation to the above intragroup transactions:

1.     Prepare adjusting journal entries for the consolidation worksheet at 30 June 2020.

2.     Explain in detail why you made each adjusting journal entry.