Leitner Manufacturing, Inc. produces control valves used in the production of oil field equipment. The control valves are sold to various gas and oil engineering companies throughout the US.

Projected sales in units for the coming four months are as follows:
January 20 000
February 25 000
March 30 000
April 30 000

The following data pertain to production policies and manufacturing specifications followed by Leitner:

a. Finished goods inventory on 1 January is 13 000 units. The desired ending inventory for each month is 70% of the next month’s sales.
b. The data on materials used are as follows:
Direct material
Per-unit usage
Unit cost

Part 714
5
R4

Part 50
3
R3

Inventory policy dictates that sufficient materials be on hand at the beginning of the month to produce 50% of that month’s estimated sales. This is exactly the amount of material on hand on 1 January.
c. The direct labour used per unit of output is 2 hours. The average direct labour rate per hour is R15.
d. Each month, overhead estimates are based on direct labour hours.

Fixed cost component
Variable cost component

Supplies
-
R1.00

Power
-
R0.20

Maintenance
R28 000
R1.10

Supervision
R14 000
-

Depreciation
R100 000
-

Taxes
R7 000
-

Other
R56 000
R1.60

e. Monthly selling and administrative expenses are also estimated based on units sold.

Fixed costs
Variable costs

Salaries
R30 000
-

Commissions
-
R0.75

Depreciation
R5 000
-

Shipping
-
R2.60

Other
R10 000
R0.40

f. The unit selling price of the control valve is R90
g. In February, the company plans to purchase land for future expansion. The land costs R90 000
h. All sales and purchases are for cash. Cash balance on 1 January equals R162 900. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid one month later, as is the interest due. The interest rate is 12% per annum.

Required:

Prepare the following for the first quarter:

1.1 Sales budget
1.2 Production budget
1.3 Direct materials purchases budget
1.4 Direct labour budget
1.5 Overhead budget
1.6 Selling and administrative budget
1.7 Ending finished goods inventory budget
1.8 Cost of goods sold budget
1.9 Budgeted income statement (ignore taxes)
1.10 Cash budget

Maintaining a clean working environment is important to Life is Great​, an industrial parts manufacturer. Cleaning the plant is the responsibility of the maintenance department. The 80,000 square foot plant is thoroughly cleaned from four to eight times a month depending on the level and stage of production. For the most recent​ month, March, the plant was cleaned four times. The production schedule for the next quarter​ (April through​ June) indicates that the plant will need to be cleaned​ five, six, and eight times respectively. Two of the resources needed to clean the plant are labor and cleaning supplies. The cost driver for both resources is number of times the plant is cleaned. Plant cleaning laborers are​ full-time employees who are paid the same wages regardless of the number of times the plant is cleaned. Cleaning supplies is a variable cost. The March cost of labor was $ 27,000 and cleaning supplies used cost $ 9,600.

Requirement 1. Prepare a table that shows how labor​ cost, cleaning supplies​ cost, total​ cost, and total cost per cleaning changes in response to the number of times the plant is cleaned. What is the predicted total cost of plant cleaning for the next​ quarter?

Begin by preparing a table that shows how labor​ cost, cleaning supplies​ cost, total​ cost, and total cost per cleaning changes in response to the number of times the plant is cleaned. ​(Do not round until the final answer for the cost per cleaning. Then round to the nearest whole​ dollar.)

Number of Times Plant is Cleaned	Square Feet Cleaned	Cleaning Supplies Cost	Total Cost	Cost Per Cleaning
4
5
6
7
8

Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2021, Rhone-Metro leased equipment to Western Soya Co. for a noncancelable stated lease term of four years ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $320,000 to manufacture and has an expected useful life of six years. Its normal sales price is $404,357. The expected residual value of $18,000 at December 31, 2025, is not guaranteed. Western Soya Co. is reasonably certain to exercise a purchase option on December 30, 2024, at an option price of $8,000. Equal payments under the lease are $147,000 (including $4,000 annual maintenance costs) and are due on December 31 of each year. The first payment was made on December 31, 2021. Western Soya’s incremental borrowing rate is 10%. Western Soya knows the interest rate implicit in the lease payments is 8%. Both companies use straight-line amortization.


Hint: A lease term ends for accounting purposes when an option becomes exercisable if it’s expected to be exercised (i.e., a BPO). (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

1. Show how Rhone-Metro calculated the $147,000 annual lease payments.
2. How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lessor)?
3. Prepare the appropriate entries for both Western Soya Co. and Rhone-Metro on December 31, 2021.
4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor.
5. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2022 (the second rent payment and amortization).
6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 30, 2024, assuming the purchase option is exercised on that date.

Show how Rhone-Metro calculated the $147,000 annual lease payments. (Round your intermediate and final answers to nearest whole dollar.)

	BPO Price Table or calculator function: n = i = Present Value Amount to be recovered Amount to be recovered through periodic lease payments Lease Payments Table or calculator function: n = i = Lease Payments Lease payments at the beginning of each of three years: Lease payments including executory costs

How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lessor)? (Round your intermediate and final answers to nearest whole dollar.)

	Western Soya Co. Rhone-Metro Industries

Prepare the appropriate entries for Western Soya Co. on December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.)

Journal entry worksheet

• Record lease in the books of lessee.

Note: Enter debits before credits.

	Date General Journal Debit Credit December 31, 2021

a) Suppose that A = A^T can be row reduced without row swaps. If E is an elementary matrix such that EA has zero as a second entry in the first column, what can you say about EAE^T?

b) Use step a) to prove that any symmetric matrix that can be row reduced without swaps can be written as A = LDL^T

P.s: L is the lower triangular matrix whose diagonal contains only 1. D is a diagonal matrix whose diagonal contains the pivots of A. Originally, the triangular factorization of A is A = LDU (U is the upper triangular whose diagonal contains only 1), but since A is a symmetric matrix, it can be rewritten as A = LDL^T (U = L^T)

PLEASE HELP ME WITH THIS QUESTION. I HAVE BEEN SPENDING HOURS SOLVING IT AND I GOT STUCK. THANK YOU VERY MUCH FOR YOUR HELP!

Cast Iron Grills, Inc., manufactures premium gas barbecue grills. The company reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. Cast Iron’s December 31, 2021, fiscal year-end inventory consisted of the following (listed in chronological order of acquisition): Units Unit Cost 8,800 $ 600 5,900 700 9,800 800 The replacement cost of the grills throughout 2022 was $900. Cast Iron sold 46,000 grills during 2022. The company's selling price is set at 200% of the current replacement cost. What needs to be calculated: 1. & 2. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2022 under two different assumptions. First, that Cast Iron purchased 47,000 units and, second, that Cast Iron purchased 24,500 units during the year. 4. Please help me compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2022 assuming that Cast Iron purchased 47,000 units (as per the first assumption) and 24,500 units (as per the second assumption) during the year and uses the FIFO inventory cost method rather than the LIFO method. Thanks!

1. This questions are based on the article below that examines the macroeconomic consequences of the outbreak of COVID-19 virus in early 2020.

(a) According to the article, in what ways has the COVID-19 outbreak affected the aggregate production capacity in China and other countries? What are some of the examples used to demonstrate this change? (please provide at least three examples of specific firms) Answer:

(b) According to the article, in what ways has the COVID-19 outbreak affected aggregate demand in China and other countries? What is the overall impact on global demand for goods and services? Answer:

(c) According to the article, in what ways is the macroeconomic shock caused by the COVID-19 outbreak similar to the oil and food shocks of the 1970s? In what ways are the macroeconomic circumstances of the COVID-19 shock different from those of the oil and food shocks in the 1970s? Answer:

(d) What macroeconomic policy responses does the article recommend if the COVID-19 shock becomes widespread and reduces aggregate demand, but does not disrupt the global integration or trigger high inflation? Would conventional monetary policies work in this environment? Why or why not? Could unconventional monetary policies or fiscal policy help? Answer:

(e) What complications and tradeoffs would policymakers face if global integration is disrupted in a prolonged way? Answer:

ARTICLE: Covid-19 presents economic policymakers with a new sort of threat

THE ONLY thing we have to fear is fear itself, or so reckoned Franklin Roosevelt. In many an economic downturn that is true—an anxiety-induced reluctance to spend is the main threat to prosperity. For now, the world is treating the outbreak of covid-19, a disease caused by a coronavirus that is now responsible for more than 2,000 deaths, as no exception. Central banks across Asia are easing monetary policy while governments prepare spending programmes to limit the economic damage. Covid-19, however, is not a conventional economic threat. Efforts to contain the virus are limiting activity by shutting factories and disrupting supply-chains. Such shocks to supply are harder to manage than anxiety-induced frugality among firms and investors. When people stop spending, growth slows and inflation falls. But when supply is constrained, prices can accelerate even as the economy wobbles. Economists first grappled with supply shocks in the 1970s, when reductions in food and oil supplies ended three decades of unprecedented growth and ushered in “stagflation”. Supply shocks divided the profession. Predictably, there was a row over whether governments should prioritise fighting rising unemployment or high inflation. In a victory that would shape central banking for decades, the inflation hawks eventually won. Like the oil and food shocks of the 1970s, the covid-19 epidemic poses an unexpected threat to a mainstay of global production. For as long as the mobility of Chinese workers is limited, shops, offices and factories in the world’s largest exporter will sit idle. As a result, firms dependent on supplies from China are running down inventories and curtailing operations. On February 17th Apple warned investors that supply-chain problems were limiting iPhone production and would reduce its revenues (see article). Hyundai, a carmaker, has cut production in South Korea because of parts shortages. On February 18th Jaguar Land Rover, a British carmaker, said that it could start to run out of parts in two weeks’ time, and that it had flown in emergency supplies from China in suitcases. But whether the understanding of supply shocks forged in the 1970s still applies is unclear. In practice, the distinction between shocks to demand and those to supply is fuzzy. In a paper published in 2013 that revisited the era of stagflation, Alan Blinder of Princeton University and Jeremy Rudd of the Federal Reserve argue that supply alone cannot explain the soaring unemployment of the 1970s. In fact, they say, price increases had demand effects that mattered more. They raised uncertainty, reduced households’ disposable income and eroded the value of their savings. Subsequent experience supports this more nuanced view of the effect of supply shocks. Soaring oil prices in 2007 gutted household consumption in America and helped push its economy into recession. The earthquake, tsunami and resulting nuclear disaster that struck Japan in 2011 dealt a blow to Japanese industry which, like China’s, occupies important supply-chain niches. The catastrophe led to a sharp decline in output and exports (and a long-term shift in economic activity away from the most affected regions), but despite the disruptions Japan remained in deflation. Higher tariffs should, in theory, disrupt supply and boost prices. But to date the main economic effect of the trade war being fought by America and China has been dented confidence, derailed business investment and tumbling interest rates. The covid-19 outbreak is hitting China’s demand for commodities and its tourists’ travel plans. Both effects drag down global demand in a conventional way, as they did after the outbreak of SARS in 2003. Circumstances today are also very different from the 1970s. Crucially, global inflation remains oddly subdued. That means policymakers can provide stimulus without exacerbating an ongoing inflation problem. Support seems warranted in China, where lost sales could give way to lay-offs, further cuts to spending, and a deep slump. Economies with close links to China are also moving, rightly, to shore up spending. Japan’s decision to raise consumption tax last year, a move that contributed to an annualised decline in GDP of 6.3% in the fourth quarter of 2019, looks spectacularly ill-timed in hindsight. Should covid-19 sweep across the world, the global economy as a whole will surely need a dose of stimulus, much as China does today. The main complication then would be a lack of central-bank ammunition, as interest rates are already low. But even if the virus stays contained, governments of less affected countries could have their hands full. Policymakers facing temporary supply shocks must reassure the public that growth and inflation will eventually return to normal—as modern central banks now try to do when oil prices spike. Continued disruption, though, requires adjustment. New suppliers must be tracked down, new contracts written and new customers found. Frustrated firms could decide the time is right to wash their hands of China. The effects of such changes are hard to predict.

Ill at ease

If China’s economy slumps further in response, it could exert a deflationary pull on economies in the West. But if decades of economic integration, which many economists credit with holding down global inflation for the past two decades, goes into reverse, then dormant price pressures could awaken. Macroeconomic policymakers could once again be confronted with the painful decision of whether or not to fight rising inflation during an economic downturn. For policymakers beset by unknowns, both overreaction and underreaction present serious risks. The time to build more resilience into production chains and financial systems has sadly passed. Perhaps the most important lesson of the 1970s is one the world ought to have appreciated before the arrival of the epidemic—shocks happen, and can transform well-worn economic terrain into something less familiar with frightening speed. ■

If people are made unemployed because of a fall in aggregate demand this is known as:

Select one:

a. Structural unemployment

b. Frictional unemployment

c. Cyclical unemployment

d. Natural Rate of unemployment

e. Seasonal unemployment

Which of the following describes a part of the transmission mechanism?

Select one:

a. the central bank undertakes open market sales and the resulting interest rate increase encourages people to save more

b. a change in real money balances causes a portfolio disequilibrium and asset holders' reactions influence interest rates

c. an income tax rate cut stimulates private spending but the resulting interest rate increase dampens the income expansion

d. the central bank undertakes open market purchases and the resulting interest rate increase encourages people to save more

e. an increase in government spending is partially offset by the crowding out of private investment

In the IS-LM model, the interest rate serves as a link between

Select one:

a. household saving and business investment

b. domestic markets and foreign markets

c. the goods market and the assets market

d. actions of the central bank and changes in consumer spending

e. government spending and consumer spending

If the CB undertakes open market sales, then

  

Select one:

a. the LM-curve will shift to the left

b. the IS-curve will shift to the right

c. the LM-curve will shift to the right

d. bond prices will increase

e. interest rates will decrease and income will increase

The rate of wage inflation is 10%, the unemployment gap is 25, the responsiveness of wages to unemployment is 0,4. If we consider the augmented Phillips curve, what is the expected inflation?

Select one:

a. 15%

b. 25%

c. 10%

d. 20%

e. 16%

In an IS-LM model, any point that is to the left and below the IS-curve indicates a situation where

Select one:

a. there is excess demand for goods and services in the expenditure sector

b. there is excess supply of goods and services in the expenditure sector

c. the expenditure sector is in equilibrium but the money sector is not

d. there is excess demand for money in the money sector

e. there is excess supply of money in the money sector

The determinants of duration and frequency of unemployment are the basic determinants of ………..

Select one:

a. the cyclical unemployment

b. the frictional unemployment

c. the seasonal unemployment

d. the structural unemployment

e. the natural rate of unemployment

If the central bank increases money supply, then real money balances will rise and

Select one:

a. asset prices will fall

b. the LM–curve will shift to the left

c. so will the interest rate

d. the interest rate will fall

e. the IS-curve will shift to the right

The size of the money multiplier

Select one:

a. declines with a decrease in high-powered money

b. declines as the currency-deposit ratio decreases

c. increases as the reserve-deposit ratio decreases

d. increases as the reserve requirement is increased

e. cannot be influenced by actions of the Fed

A real depreciation of the domestic currency will

Select one:

a. improve the trade balance and increase aggregate demand

b. lower the trade balance and increase aggregate demand

c. lower the trade balance and aggregate demand

d. improve the trade balance and lower aggregate demand

e. improve the trade balance but not affect aggregate demand

The LM-curve

Select one:

a. shows the relationship between the interest rate and the level of investment spending

b. shows combinations of the interest rate and the income level such that money supply and money demand are equal

c. is negatively sloped because increases in the income level can only be achieved if the interest rate is lowered

d. is upward sloping because a higher income level is always associated with a higher nominal money supply

e. is negatively sloped since increases in money supply always lower interest rates

A change in which of the following will NOT shift the IS-curve?

Select one:

a. autonomous net exports

b. autonomous saving

c. autonomous money demand

d. autonomous investment

e. autonomous consumption

Assume adult males have a 40% share of the work force and their unemployment rate is 8%, adult females have a share of 50% and their unemployment rate is 7%, and teenagers have a share of 10% and their unemployment rate is 5%. What is the overall unemployment rate?

Select one:

a. 5.2%

b. 2.0%

c. 6.0%

d. 7.2%

e. 4.9%

A country's balance-of-payments surplus is equal to

Select one:

a. the decrease in the country's official exchange reserves

b. net capital outflow minus the current account deficit

c. exports minus imports

d. imports minus exports

e. the current account surplus plus private net capital inflow

Assume that the currency-deposit ratio is 32%, the required reserve ratio is 7%, the excess reserve ratio is 1%, and total money supply is $1,320 billion. What is the amount of high-powered money?

Select one:

a. $165 billion

b. $330 billion

c. $132 billion

d. $400 billion

e. $800 billion

Assume that bank deposits are $4000 billion, the required reserve ratio is 10%, currency outstanding is $600 billion, and excess reserve is zero. What is the money multiplier?

Select one:

a. 1

b. 2

c. 10

d. 4.6

e. 5.6

Suppose an increase in oil prices is accompanied by a decline in the level of potential output. Which of the following is the most likely long-run effect?

Select one:

a. real GDP will remain the same but prices will increase

b. real GDP will decrease but prices will increase

c. the unemployment rate and prices will both decrease

d. real GDP will remain the same but nominal GDP will decrease

e. real GDP and prices will both decline

Assume we know that the income velocity of M2 has remained constant, while M2 has increased by 6% and prices have increased by 4%. We can conclude that

Select one:

a. nominal GDP has grown by 10%

b. real GDP has decreased by 1.5%

c. nominal GDP has decreased by 2%

d. real GDP has grown by 2%

e. real GDP has grown by 1.5%

Suppose an increase in oil prices is accompanied by a decline in the level of potential output. Which of the following is the most likely long-run effect?

Select one:

a. real GDP will remain the same but prices will increase

b. real GDP will decrease but prices will increase

c. the unemployment rate and prices will both decrease

d. real GDP will remain the same but nominal GDP will decrease

e. real GDP and prices will both decline

Assume we know that the income velocity of M2 has remained constant, while M2 has increased by 6% and prices have increased by 4%. We can conclude that

Select one:

a. nominal GDP has grown by 10%

b. real GDP has decreased by 1.5%

c. nominal GDP has decreased by 2%

d. real GDP has grown by 2%

e. real GDP has grown by 1.5%

The inflation-expectations-augmented Phillips curve implies that

Select one:

a. unemployment is at its natural rate when expected inflation is equal to actual inflation

b. the inflation rate is equal to the real output growth rate plus the monetary growth rate

c. the expected inflation rate is always equal to the monetary growth rate

d. stagflation occurs when expected inflation is below actual inflation

e. stagflation occurs when the short-run Phillips curve shifts left

Which of the following is the equation for the LM-curve?

Select one:

a. L = kY – hi

b. i = (k/h)Y + (1/h)(M/P)

c. i = (1/b)A_o - (b/a)Y

d. L= kY + hi

e. i = (1/h)[kY – (M/P)]

mg

write a response to the paragraphs below, the answer must be at least 125 words

The “First Principles” are the thought by Aristotle that in order for things to exist there must be causes for them to have gained existence and of these causes the highest and most important contributions to these causes are referred to as the first principles. The theory of causation explains that the ultimate causes or first causes exist rather than an infinite set or infinite types of causes. The four causes that explain why knowledge can be obtained are a part theories and types of causes introduced by Aristotle. Formal, Final, Material, and Efficient causes are his explanation to how all things began to exist and where the knowledge for them can be within a definite number. According to Aristotle there must be causes for certain things to have gained existence and of these causes the highest and most important contributions to these are referred to as the first principles.

Some of the first principles to explain the existence of the universe have been the four causes made by Aristotle that all things are made of ultimate causes and that they are of a definite number. Plato thought that Platonic forms existed in a separate and eternal reality and as universal forms were the cause of the existence of all things. Kant’s perception of the first principles was the idea that there was a perfectly independent noumenal being that created all things and was the cause for existence.

The reason for making sure there is agreement about the first principles before discussing a topic in philosophy is to make sure that everyone can accept the reasoning that is given during a discussion and to ensure that everyone that is involved in the discussion is carrying the purpose of their points from the same base beginning. It also makes sure that subject of the conversation has the same cause of existence to ensure that comparisons and contrasts that are looked at within the conversation are better compared equally and fairly.

Ian Mathews is a creator of board games. Ian will be selling his most recent game, Radical Rainbows, through his newly formed company, UPR, Inc. UPR was formed in June, 2018. Ian contributed $1,000 to UPR in exchange for 100% of UPR’s voting common stock. Ian has had unprecedented success with the first two games in his most recent game trilogy: unicorns, ponies and rainbows. Ian was looking to finance UPR’s initial production run of the third game, Radical Rainbows at a rate of 7.5% or less.   The best deal offered by several banks had an APR of 8%. That was more than Ian was willing to pay and he felt there were other sources of financing that were less expensive.

As he had done for the first two games in the series: Unstable Unicorns and Perplexed Ponies, Ian turned to Kickstarter to finance the cost of the first production run of Radical Rainbows. Normally, UPR will be selling Radical Rainbows for $50 per game. UPR offered to sell Radical Rainbows to its Kickstarter backers for $45 per game.   The Kickstarter campaign was completed in two days, and on June 1, 2018 UPR received $225,000 in exchange for a promise to deliver 5000 games to its Kickstarter backers on December 1, 2019.  

At a manufacturing cost of $30 per game, UPR will be able to produce 7500 units with the $225,000 raised in the Kickstarter campaign. The 7500 games would be ready for shipment on December 1, 2019.

On June 1, 2018, UPR’s bookkeeper made the following entry to record the receipt of cash:

ELEMENT	ACCOUNT DESCRIPTION	DEBIT	CREDIT
A	Cash*	$225,000
L	Deferred Revenue		$225,000

On December 1, 2019, UPR was able to deliver the 5000 board games to its Kickstarter backers. UPR also sold and delivered the additional 2500 games to other customers for the normal retail price of $50 per game. UPR’s bookkeeper made the following entries to record these transactions:

ELEMENT*	ACCOUNT DESCRIPTION	DEBIT	CREDIT
A	Cash*	$125,000
L	Deferred Revenue	$225,000
R	Sales Revenue		$350,000
X	Cost of Goods Sold*	$225,000
A	Inventory*		$225,000

UPR used the $126,000 in cash available to UPR in December, 2019 to manufacture another 4200 board games. Those games were in finished goods inventory at December 31, 2019 and were sold in January, 2020 for $50 per game

UPR’s Financial Statements at December 31, 2019 and 2018 as prepared by UPR’s bookkeeper showed the following:

Balance Sheet
			12/31/19	12/31/18
Cash*			$0	$126,000
Inventory - Work in Process*			$0	$100,000
Inventory - Finished Goods*			$126,000
Total Assets			$126,000	$226,000
Deferred Revenue			$0	$225,000
Total Liabilities			$0	$225,000
Common Stock*			$1,000	$1,000
Retained Earnings			$125,000	$0
Total Equity			$126,000	$1,000
Total Liabilities and Equity			$126,000	$226,000
Income Statement
Revenues			$350,000	$0
Cost of Goods Sold*			$225,000	$0
Gross Profit			$125,000	$0
Expenses			$0	$0
Net Income			$125,000	$0

*You can assume that the Cash, Inventory, Common Stock and Cost of Goods Sold amounts as shown in both the journal entries and financial statements are correct.

Your analysis of this problem will involve using ASC 606 - Revenue from Contracts with Customers. UPR adopted ASC 606 when Ian formed the company in 2018. UPR has applied ASC 606 incorrectly.

You can assume that a contract is in place and that only one performance obligation exists: the delivery of the board game to the customer. Thus, determining the Transaction Price is the issue that needs to be addressed. The principles for the determining transaction prices can be found in ASC Subtopic 606-10-32-2 through 606-10-32-27. You may also want to refer to the illustrations (examples) contained in ASC 606. A list of the illustrations can be found at ASC Subtopic 606-10-55-93.

QUESTIONS TO BE ANSWERED

You must answer the following questions:

What are the additional entries or correct entries required on the following dates? If the entries made by the bookkeeper are correct, indicate “Bookkeeper made correct entry”. Otherwise use the Journal Entry template to record your answer and then paste into your answer.:

June 1, 2018

December 31, 2018 Adjusting Journal Entry

December 1, 2019

Use the attached Excel Template, show the corrected comparative Balance Sheet and Income Statement at December 31, 2019 and December 31, 2018.   Paste the template into your answer

Using references to ASC 606 explain how your arrived at your answers in 1. And 2. Above.

From the point of view of a potential investor or lender to UPR, do the corrected financial statements or the original financial statements prepared by UPR’s bookkeeper better reflect the economics of UPR during its initial two years in business? Why?                   

Corrected Balance Sheet
12/31/2019 12/31/2018
Cash* $0 $126,000
Inventory - Work in Process* $0 $100,000
Inventory - Finished Goods* $126,000
Total Assets $126,000 $226,000

Deferred Revenue $0
Total Liabilities $0
Common Stock* $1,000 $1,000
Retained Earnings- Accumulated Deficit $125,000
Total Equity $126,000
Total Liablities and Equity $126,000

Corrected Income Statement
Revenues
Cost of Goods Sold $225,000 $0
Gross Profit
Expenses - Interest
Net Income

You can assume that the Cash, Inventory, Common Stock and Cost of Goods Sold amounts as shown in the financial statements are correct. Also, the Balance Sheet at 12/31/2019 as prepated by UPR's bookkeeperis correct.