Y received stock as a gift from her father in 2019. Her father purchased the stock several years ago of $30,000. The stock was worth $20,000 at the time the gift was received. Y sold the stock for $18,000 in 2020.
How much gain or loss, if any, should Y report on her 2020 tax return?
Assume the same facts as above, except that Y sold the stock for $25,000. How much gain or loss, if any, should Y report on her 2020 tax return?
In: Accounting
Think up a company you would like to start. Then, choose an organizational type. Assume the company will start on January 1st, 2020. Create 10 transactions for the year 2020. Please make sure you use entries which affect equity, revenue, expenses, assets and liabilities. You can draw the "T" accounts or you can describe the affect of the transactions on the financial statement. Then, show the income statement, the balance sheet and the statement of equity for the year ending 12/31/2020.
Any company or organization is fine!
In: Accounting
Amazon leased equipment from United Machines on July 1, 2020, in a finance lease. The present value of the lease payments discounted at 10% was $82,000. Ten annual lease payments of $12,000 are due each year beginning July 1, 2020. United Machines had constructed the equipment recently for $66,000. What net effect did the lease have on the income statement of United Machines for the year ending December 31, 2020? Ignore taxes. a. $23,000 b. $0 c. $16,000 d. $19,500 e. $3,500
In: Accounting
Bond H, described in the table below, is sold for settlement on 20 April 2020.
|
Annual Coupon |
6% |
|
Coupon Payment Frequency |
Semiannual |
|
Interest Payment Dates |
30 December and 30 June |
|
Maturity Date |
30 December 2025 |
|
Day-Count Convention |
30/360 |
|
Annual Yield-to-Maturity |
7% |
What is the full price (per 100 of par value) that Bond H will settle at on 20 April 2020? Round your answer to three decimal places.
Bond H, described in the table below, is sold for settlement on 20 April 2020.
|
Annual Coupon |
6% |
|
Coupon Payment Frequency |
Semiannual |
|
Interest Payment Dates |
30 December and 30 June |
|
Maturity Date |
30 December 2025 |
|
Day-Count Convention |
30/360 |
|
Annual Yield-to-Maturity |
7% |
What is the amount of accrued interest for Bond H on the settlement date of 20 April 2020? Round your answer to three decimal places.
Bond H, described in the table below, is sold for settlement on 20 April 2020.
|
Annual Coupon |
6% |
|
Coupon Payment Frequency |
Semiannual |
|
Interest Payment Dates |
30 December and 30 June |
|
Maturity Date |
30 December 2025 |
|
Day-Count Convention |
30/360 |
|
Annual Yield-to-Maturity |
7% |
What is the flat price for Bond H on the settlement date of 20 April 2020? Round your answer to three decimal places.
In: Finance
The adjusted trial balance of Monona Inc. as of December 31, 2020, follows.
| Adjusted Trial Balance | |||
|---|---|---|---|
| December 31, 2020 | |||
| Acct. No. | Account | Debit | Credit |
| 100 | Cash | $18,000 | $ |
| 104 | Accounts receivable | 35,000 | |
| 105 | Allowance for doubtful accounts | 1,775 | |
| 106 | Inventory | 40,000 | |
| 108 | Prepaid insurance | 2,400 | |
| 150 | Land | 5,725 | |
| 155 | Building | 100,000 | |
| 156 | Equipment | 30,000 | |
| 162 | Accumulated depreciation | 6,250 | |
| 202 | Accounts payable | 37,500 | |
| 204 | Salaries payable | 2,250 | |
| 208 | Deferred service revenue | 1,000 | |
| 210 | Interest payable | 250 | |
| 240 | Note payable | 75,000 | |
| 302 | Common stock | 92,500 | |
| 304 | Retained earnings | 6,000 | |
| 310 | Dividends | 2,500 | |
| 400 | Sales revenue | 250,000 | |
| 402 | Service revenue | 12,500 | |
| 510 | Costs of goods sold | 120,000 | |
| 512 | Salaries expense | 115,000 | |
| 520 | Repair expense | 1,000 | |
| 526 | Insurance expense | 1,800 | |
| 528 | Depreciation expense | 6,600 | |
| 540 | Interest expense | 6,000 | |
| 542 | Bad debt expense |
1,000 |
|
| Totals |
$485,025 |
$485,025 |
|
a. Prepare the income statement for the year ended
December 31, 2020.
b. Prepare the statement of stockholders’ equity for the
year ended December 31, 2020. Assume that the common stock was
issued prior to 2020.
c. Prepare the balance sheet on December 31, 2020
In: Accounting
The accountant of Patrick Ltd needs to prepare consolidated financial statements for Patrick Ltd at the end of financial year. Following information was available on 30 June 2020:
1) Patrick Ltd acquired 100 per cent interest in Sand Ltd for $790,000 on 1 July 2015. All assets and liabilities were fairly valued on the acquisition date. At the date of acquisition, the equity of Sand Ltd included:
Share capital $320,000
Reserve $160,000
Retained earnings $170,000
The balance of the investment account was $790,000 as shown in the Statement of Financial Position of Patrick Ltd on 30 June 2020.
2) The directors of Patrick Ltd believed that goodwill acquired was impaired by 15 per cent for the year ended 30 June 2020.
3) On 3 March 2020, Patrick Ltd sold inventory to Sand Ltd at a value of $164,000.
4) The above inventory had a cost of $117,000 for Patrick Ltd to produce. All inventories remained unsold in Sand Ltd on 30 June 2020. Patrick Ltd and Sand Ltd adopt the perpetual inventory system for inventory accounting. The income tax rate is 30%.
Required: (Narrations are required in this question)
a) Determine the amount of goodwill acquired.
b) Prepare relevant consolidation journal entries on 30 June 2020.
c) Explain accounting for goodwill acquired in a business combination.
In: Accounting
P18.8 (LO 2, 3) (Time Value, Gift Cards, Discounts) Presented below are two independent revenue arrangements for Colbert Company.
Instructions
Respond to the requirements related to each revenue
arrangement.
a. Colbert sells 3D printer systems. Recently, Colbert provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Colbert sells Lyle Cartright a 3D system, receiving a $5,000 zero-interest-bearing note on January 1, 2020. The cost of the 3D printer system is $4,000. Colbert imputes a 6% interest rate on this zero-interest note transaction. Prepare the journal entry to record the sale on January 1, 2020, and compute the total amount of revenue to be recognized in 2020.
b. Colbert sells 20 nonrefundable $100 gift cards for 3D printer paper on March 1, 2020. The paper has a standalone selling price of $100 (cost $80). The gift cards expiration date is June 30, 2020. Colbert estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows.
Redemption Total
March 31
50%
April 30
80%
June 30
85%
Prepare the 2020 journal entries related to the gift cards at March
1, March 31, April 30, and June 30.
In: Accounting
Question 11
In early February 2020, Indigo Corp. began construction of an addition to its head office building that is expected to take 18 months to complete. The following 2020 expenditures relate to the addition:
| Feb. 1 | Payment #1 to contractor | $105,000 | ||
| Mar. 1 | Payment to architect | 24,000 | ||
| July 1 | Payment #2 to contractor | 63,000 | ||
| Dec. 1 | Payment #3 to contractor | 186,000 | ||
| Dec. 31 | Asset carrying amount | $378,000 |
On February 1, Indigo issued a $105,000, three-year note payable at
a rate of 10% to finance most of the initial payment to the
contractor. No other asset-specific debt was entered into. Details
of other interest-bearing debt during the period are provided in
the table below:
| Other Debt Instruments Outstanding—2020 | Principal amount | ||
| 8%, 15-year bonds, issued May 1, 2005, matured May 1, 2020 | $303,000 | ||
| 7%, 10-year bonds, issued June 15, 2014 | $496,000 | ||
| 6%, 12-year bonds, issued May 1, 2020 | $303,000 | ||
What amount of interest should be capitalized for the fiscal year
ending December 31, 2020, according to IAS 23? (Do not
round intermediate calculations. Round capitalization rate to 2
decimal places, e.g. 52.75% and final answer to 0 decimal places,
e.g. 5,275.)
| Amount of interest | $ |
In: Accounting
Exercise 19-04 Wildhorse Company reports pretax financial income of $76,100 for 2020. The following items cause taxable income to be different than pretax financial income.
1. Depreciation on the tax return is greater than depreciation on the income statement by $16,700.
2. Rent collected on the tax return is greater than rent recognized on the income statement by $22,700.
3. Fines for pollution appear as an expense of $11,100 on the income statement. Wildhorse’s tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2020.
1. Compute taxable income and income taxes payable for 2020.
2. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (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.)
3. Prepare the income tax expense section of the income statement
for 2020, beginning with the line “Income before income taxes.”
(Enter negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g.
(45).)
4. Compute the effective income tax rate for 2020.
(Round answer to 1 decimal places, e.g.
25.5%.)
In: Accounting
3. (LESSOR ENTRIES FOR FINANCING LEASE WITH A GUARANTEED RESIDUAL)
The following facts pertain to a non-cancelable lease agreement between Ace Leasing Company and King Company, a lessee.
Commencement of Lease Date January 1, 2020
Annual lease payment due at the beginning of the year beginning with January 1, 2020 $137,171
Residual value of equipment at end of lease term, guaranteed by lessee $54,000
Book Value of Lease Equipment on LESSOR books $500,000
Lease term 6 years
Economic life of leased equipment 7 years
Fair Value of asset at January 1, 2020 $659,000
Lessor’s Implicit Rate 12% Lessee’s incremental borrowing rate 12%
The asset will revert to the lessor at the end of the lease term. You examined this lease from the Lessee prospective in problem #1. Based on the tests you found it was a financing lease. In this problem you will complete the LESSOR entries. You do not need to redo the tests – it is still a financing lease with a guaranteed residual
A. Prepare the entry on the Lessor’s book to record this Lease on 1/1/2020. You will need to compute the Lease Receivable debit, the CGS debit, the Equipment credit and the Sale Revenue credit to complete the entry.
B. Complete the entry to receive the first rental payment on 1/1/2020.
C. Prepare the interest revenue amortization schedule for the first two years and prepare the interest revenue entry for 12/31/2020.
In: Accounting