5. On December 1, 2018, Folks Wagon Company adopted a stock-option plan that granted options

to key executives to purchase 50,000 shares of the company’s $10 par value common stock. The

options were granted on January 1, 2019, and were exercisable 3 years after the date of grant if the

grantee was still an employee of the company. The options expired 5 years from the date of grant.

The option price was set at $35, and the fair value option-pricing model determines the total

compensation expense to be $450,000.

All of the options were exercised during the year 2022: 20,000 on February 23 when the market

price was $46, and 30,000 on August 8 when the market price was $85 a share.

a. Prepare the journal entries relating to the stock option plan for the years 2019, 2020, and 2021.

Assume that the employee performs services equally in 2019, 2020, and 2021.

b. Prepare the journal entries that record the two events of exercising the options in 2022.

On December 1, 2018, Folks Wagon Company adopted a stock-option plan that granted options to key executives to purchase 50,000 shares of the company’s $10 par value common stock. The options were granted on January 1, 2019, and were exercisable 3 years after the date of grant if the grantee was still an employee of the company. The options expired 5 years from the date of grant. The option price was set at $35, and the fair value option-pricing model determines the total compensation expense to be $450,000.

All of the options were exercised during the year 2022: 20,000 on February 23 when the market price was $46, and 30,000 on August 8 when the market price was $85 a share.

a. Prepare the journal entries relating to the stock option plan for the years 2019, 2020, and 2021. Assume that the employee performs services equally in 2019, 2020, and 2021.

b. Prepare the journal entries that record the two events of exercising the options in 2022.

Diaz Company incurred the following costs during the year 2020.

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.

Jane Jones organized Kinney Enterprise, Inc., in January 2018. The corporation immediately issued at $15 per share on half of its 260,000 authorized shares of $1 par value common stock. On January 2, 2019, the corporation sold at par value the entire 10,000 authorized shares of 10 percent, $100 par value cumulative preferred stock. On January 2, 2020, the company again needed capital and issued 5,000 shares of an authorized 8,000 shares of no-par cumulative preferred stock for a total of $320,000. The no-par shares have a stated dividend of $6 per share.

The company declared no dividends in 2018 and 2019. At the end of 2019, its retained earnings were 530,000. During 2020 and 2021 combined, the company earned a total net income of $1,400,000. Dividends of 90 cents per share in 2020 and $2 per share in 2021 were paid on common stock.

Required:

1.   Prepare the stockholders’ equity section of the balance sheet at December 31, 2021. Include a supporting schedule showing your computation of retained earnings at the balance sheet date. Ensure that your partial balance sheet is labeled correctly and uses the correct format for the stockholders’ equity section of the balance sheet.

2. Assume that on January 2, 2019, the corporation could have borrowed $1,000,000 at 10 percent interest on a long-term basis instead of issuing the 10,000 shares of the $100 par value cumulative preferred stock. Identify two reasons a corporation may choose to issue cumulative preferred stock rather than finance operations with long-term debt.

The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. Commencement date May 1, 2020 Annual lease payment due at the beginning of each year, beginning with May 1, 2020 $20,471.94 Bargain purchase option price at end of lease term $4,000 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $65,000 Fair value of asset at May 1, 2020 $91,000 Lessor’s implicit rate 8 % Lessee’s incremental borrowing rate 8 % The collectibility of the lease payments by Mooney is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Correct answer iconYour answer is correct. Discuss the nature of this lease to Rode. The nature of this lease to Rode is a lease. eTextbook and Media List of Accounts Attempts: 1 of 5 used (b) Correct answer iconYour answer is correct. Discuss the nature of this lease to Mooney. The nature of this lease to Mooney is a lease. eTextbook and Media List of Accounts Attempts: 3 of 5 used (c) Prepare a lease amortization schedule for Rode for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) RODE COMPANY (Lessee) Lease Amortization Schedule Date Annual Lease Payment Plus BPO Interest on Liability Reduction of Lease Liability Lease Liability 5/1/20 $ $ $ $ 5/1/20 5/1/21 5/1/22 5/1/23 5/1/24 4/30/25 $ $ $ eTextbook and Media List of Accounts Attempts: 0 of 5 used?

On January 1, 2020, Swifty Company purchased 12% bonds having a maturity value of $230,000, for $247,437.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Swifty Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. 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.)

Jan 01, 2020

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Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.)

Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.)

1. Suppose that Americans decide to increase their saving. As a result, the real interest rate will (Rise/Fall) , and U.S. net capital outflow will (Increase/Decrease) .

2. If the elasticity of U.S. net capital outflow with respect to the real interest rate is very low, this increase in private saving will have a (Large/Small) effect on U.S. domestic investment.

3. If the elasticity of U.S. exports with respect to the real exchange rate is very high, this increase in private saving will have a (Large/Small) effect on the U.S. real exchange rate.

Which of the following is an example of economic exposure but not an example of transaction exposure?

A decrease in the peso's value decreases a U.S. firm's dollar value of peso receivables

An increase in the pound's value increases a U.S. firm's cost of British pound payables.

An increase in the dollar's value impacts a U.S. firm's domestic sales because foreign competitors are able to increase their sales to U.S. customers.

A decrease in the Swiss franc's value decreases the dollar value of interest payments on a Swiss deposit sent to a U.S. firm by a Swiss bank.

Dark, Inc., a U.S. corporation, operates Dunkel, an unincorporated branch manufacturing operation in Germany. Dark reports $100,000 of taxable income from Dunkel on its U.S. tax return along with $400,000 of taxable income from its U.S. operations. Dark paid $30,000 in German income taxes related to the $100,000 of Dunkel income. Assuming a U.S. tax rate of 21%, what is Dark's U.S. tax liability after any allowable foreign tax credits?

a.$75,000

b.$21,000

c.$84,000

d.$105,000

a) Make a chart of the U.S. current account deficit, both in absolute $ value and as a share of GDP from 1990 to present. Find the most recent estimate of the U.S. current account deficit for the next two quarters (Note: depending on the availability of actual data. If actual data is available up to the third quarter of 2016, you should look for the estimate for 2016Q4 and 2017Q1).

b) For the same sample period (1990-present), chart the evolution of the net foreign assets of the U.S. (NIIP) and decompose the total NIPP in the part that is the net stock of foreign direct investment from the part that is the rest (portfolio, banks, other forms of debt).

c) Discuss the evolution of the U.S current account deficit and net foreign assets: how much of the evolution of the deficit (as a share of GDP) is due to changes in private savings, public savings (fiscal deficits) and investment rate (all as a share of GDP) and how much has the role of different factors changed over time?

d) Based on this analysis, are the U.S. current account and external debt sustainable? Does the U.S. differ or not from emerging markets or not and why?

e) How likely are the risks of a crash of the U.S. dollar triggered by foreign investors reduced willingness to lend to the U.S. and accumulate U.S. assets?

f) Will the U.S. dollar strengthen or weaken in the next 2 years and relative to which currencies and why?