On January 1, 20X1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 60,000. RoadTime’s December 31, 20X1, trial balance in SFr is as follows:
| Debit | Credit | |||
| Cash | SFr | 7,000 | ||
| Accounts Receivable (net) | 20,000 | |||
| Receivable from Popular Creek | 5,000 | |||
| Inventory | 25,000 | |||
| Plant & Equipment | 100,000 | |||
| Accumulated Depreciation | SFr | 10,000 | ||
| Accounts Payable | 12,000 | |||
| Bonds Payable | 50,000 | |||
| Common Stock | 60,000 | |||
| Sales | 150,000 | |||
| Cost of Goods Sold | 70,000 | |||
| Depreciation Expense | 10,000 | |||
| Operating Expense | 30,000 | |||
| Dividends Paid | 15,000 | |||
| Total | SFr | 282,000 | SFr | 282,000 |
Additional Information
1.
The receivable from Popular Creek is denominated in Swiss francs. Popular Creek’s books show a $4,000 payable to RoadTime.
2.
Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.
3.
Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year’s depreciation is taken in the year of acquisition. The equipment was acquired on March 1.
4. The dividends were declared and paid on November 1.
5. Exchange rates were as follows:
| SFr | $ | ||
| January 1 | 1 | = | 0.73 |
| March 1 | 1 | = | 0.74 |
| November 1 | 1 | = | 0.77 |
| December 31 | 1 | = | 0.80 |
| 20X1 average | 1 | = | 0.75 |
6. The U.S. dollar is the functional currency.
Required:
Prepare a schedule remeasuring the December 31, 20X1, trial balance from Swiss francs to dollars. (If no adjustment is needed, select 'No entry necessary'.)
In: Accounting
In: Accounting
BONUS OBLIGATION
1.) Arthur Corporation pays bonuses to its sales manager and two sales agents. The company had profit for 2020 of P 3,000,000 before bonuses and income taxes. Assume-
a.) The sales manager gets 8% and each sales agent gets 6% of profit before tax and bonuses.
b.) Each bonus is 12% of profit after income tax and bonuses.
c.) Sales manager gets 12% and each sales agent gets 10% of profit after bonuses but before income tax.
REQUIRED:
Determine the amount of bonus of the sales manager and for each sales agent under the given independent assumptions. Assume a tax rate of 30%.
2.) Cleveland Inc. pays its general manager an annual bonus of 6% of profit after deduction for both bonus and corporate income tax. For the year 2020, the company realized profit of P 9,000,000 before said deductions. The income tax rate is 30%.
REQUIRED:
What is the corporate income tax liability at December 31,2020?
In: Accounting
I have the solution.. I just do not know how they came up with some of the answers. e.g. sales return and allowande. Exercise 5-11
Calculating income statement components L01,5
Referring to Exhibit 5.15 calculate the missing amounts (round to two decimal places).
Company A Company B
2020 2019 2020 2019
Sales $263,000.00 $187,000.00 ? 114200.00 $48,500.00
Sales Discount $2,630.00 ? 1350.00 $1,200.00 $570.00
Sales Return and Allowance ? 51570 $16,700.00 $6,200.00 ? 2430.00
Net Sales ? 208800.00 $168,950.00 ? 106800.00 $45,500.00
Cost of Goods Sold $157,100.00 ? 106450 $57,700.00 ? 23400.00
Gross Profit from Sales $51,700.00 ? 62500.00 $49,100.00 $22,100.00
Selling Expense $18,620.00 $19,700.00 $25,700.00 ? 9700.00
Administrative Expenses $26,300.00 ? 27700.00 $30,400.00 $9,700.00
Total Operating Expenses ? 44920.00 $47,400.00 ? 56100.00 ? 0
Profit (Loss) ? 6780.00 $15,100.00 ? (7000) $2,700.00
Gross Profit Ration ? 24.76 ? 36.99 ? 45.67 ? 48.57
Solve for ?
In: Accounting
Shroff Company has a defined benefit pension plan. The following data relate to the operation of the plan for 2019.
A. Prepare a pension worksheet and the journal entry to record the pension expense for 2019.
Plan assets (fair value), 1/1 $29,000
Projected benefit obligation, 1/1 35,000
Prior service cost, 1/1 2,600
unrecognized net gain/loss (debit), 1/1 4,800
Service cost 2,500
Actual gain on plan assets 1,500
Amortization of prior service cost 300
Annual contributions 3,400
Benefits paid 2,700
Settlement rate 5%
Expected rate of return 6%
Average service life of employees 10 yrs
B. Suppose plan assets of Shroff Company make about $5,000 more than expected in both 2020 and 2021. How would this affect Shroff’s net income in 2020 and 2021 and why? From this example, what do you think is the main role of the AOCI in the current US pension accounting?
In: Accounting
On December 31, 2020, Pina Company signed a $1,056,300 note to Grouper Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Pina’s financial situation worsened. On December 31, 2022, Grouper Bank determined that it was probable that the company would pay back only $633,780 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,056,300 loan.
1. Determine the amount of cash Pina received from the loan on December 31, 2020. (Round present value factors to 5 decimal places, e.g. 0.52513 and final answer to 0 decimal places, e.g. 5,275.)
2. Determine the loss on impairment that Grouper Bank should recognize on December 31, 2022. (Round present value factors to 5 decimal places, e.g. 0.52500 and final answer to 0 decimal places, e.g. 5,275.)
In: Accounting
Vita Water purchased a used machine for $117,800 on January 2,
2020. It was repaired the next day at a cost of $5,663 and
installed on a new platform that cost $1,537. The company predicted
that the machine would be used for six years and would then have a
$21,320 residual value. Depreciation was to be charged on a
straight-line basis to the nearest whole month. A full year’s
depreciation was recorded on December 31, 2020. On September 30,
2025, it was retired.
Required:
1. Prepare journal entries to record the purchase of the
machine, the cost of repairing it, and the installation. Assume
that cash was paid.
2. Prepare entries to record depreciation on the
machine on December 31 of its first year and on September 30 in the
year of its disposal. (Round intermediate calculations to
the nearest whole dollar.)
3. Prepare entries to record the retirement of the
machine under each of the following unrelated
assumptions:
a. It was sold for $24,000.
b. It was sold for $27,000.
c. It was destroyed in a fire and the insurance
company paid $27,000 in full settlement of the loss
claim.
In: Accounting
based on the ratios completed above)
|
Industry |
Lululime Ltd. Ratios |
|||
|
2020 |
2020 |
2019 |
2018 |
|
|
Profit margin |
5.81% |
5.5% |
5.62% |
6.25% |
|
Return on assets |
8.48% |
6.34% |
7.79% |
9.38% |
|
Return on equity |
10.10% |
14.24% |
15.72% |
17.05% |
|
Receivable turnover |
9.31 × |
6.54x |
7.8x |
10x |
|
Average collection period |
35.6 days |
55.8 days |
46.7 days |
36.5 days |
|
Inventory turnover |
5.84 × |
4x |
3.9x |
3.8x |
|
Capital asset turnover |
2.20 × |
1.84x |
2.5x |
2.72x |
|
Total asset turnover |
1.46 × |
1.14x |
2.5x |
1.5x |
|
Current ratio |
2.15 × |
1.45x |
1.78x |
2.25x |
|
Quick ratio |
1.10 × |
0.8x |
0.91x |
1 |
|
Debt to total Assets |
40.10% |
55.4% |
50.4% |
45% |
|
Times interest Earned |
5.26 × |
3.17x |
4.75x |
5.67x |
What the Ratios Tell Us About the Company in General or its Financial Management?
How the Ratios Affect the Decision Whether to Grant Short-term Credit or Long-term Credit, or to Buy Shares in the Company
In: Accounting
Richard and Rachel operate a coffee shop, Richell Coffee Roaster Pty Ltd, with a financial year ending 30 June. On 1 July 2017, they purchased a new espresso machine for $23,000 (ignore GST). They then paid a further $500 (ignore GST) for delivery of the machine and $900 (ignore GST) to have it installed. All amounts were paid in cash. The company estimates that the machine has a 4 years useful life, and a residual value of $4,400 (ignore GST). They intend to depreciate the machine using the straight-line method.
On 30 June 2020, the company sold the espresso machine for $10,000 cash (ignore GST).
REQUIRED:
Narrations are not required.
In: Accounting
Diaz Company incurred the following costs during the year 2020.
| 1. | Salaries expense related to design for a trademark with an indefinite estimated life | $12,000 |
| 2. | Materials used for research and development projects for the current year | 20,000 |
| 3. | Fees paid to external consultants related to research and development projects | 60,000 |
| 4. | Trouble-shooting in connection with breakdowns during production | 36,000 |
| 5. | Design of tooling involving new technology | 18,000 |
| 6. | Cost of equipment (purchased January 2019) that will have alternative uses over 6 years | 160,000 |
| 7. | Salaries expense related to updates to an existing product | 80,000 |
| 8. | Allocation of rent expense for a facility partially used for research and development activities | 30,000 |
| 9. | Routine testing of product during commercial production | 56,000 |
Determine the amount of research and development costs that would be disclosed in the financial statements of Diaz company for the year 2020.
Note: Round your answer to the nearest whole dollar.
In: Accounting