The cash account for Corey’s Construction Company at August 31, 2018, indicated a book balance of $19,885. The bank statement received by the company indicated a balance of $39,473.63 as at August 31, 2018. A comparison of the bank statement and the accompanying cancelled cheques and memos with the records revealed the following:
A deposit of $6,794.62 was received by the bank on August 31 after the bank statement was prepared.
Cheques #251 for $1,200 and #260 for $1,333.25 were not presented to the bank for encashment as at August 31, 2018.
The bank erroneously debited a cheque drawn Corey’s Construction as $16,000 instead of $1,600.
The company’s accountant recorded a $3,500.00 cheque for payment of accounts payables as $35,000
The bank credited a deposit of $200 as $2,000 to Corey’s Construction account.
A cheque for $13,500 from a customer Ali Woods was returned for insufficient funds. The bank charged $50 for Wood’s NSF cheque. The company’s policy states that the bank charges associated with NSF cheques are to be recovered from the customer.
A note was collected by the bank of $21,000 on August 31 which included interest of $1,500. A debit memo from the bank showed service charge amounting to $2,500 as at August 31, 2018
Required: 1.Prepare the necessary journal entries for Corey’s Construction Company at August 31, 2018.
2.Prepare Corey’s Construction Company adjusted cash book for August 31st. 2018.
3.Prepare Corey’s Construction Company bank reconciliation statement for August 31, 2018.
In: Accounting
JJ produces and sells cotton jerseys. The company uses variable costing for internal purposes and absorption costing for external reporting. At year-end, financial information must be converted from variable costing to absorption costing to satisfy external requirements.
At the end of 2018, management anticipated that 2019
sales would be 20% above 2018 levels. Thus, production for 2019 was
increased by 20% to meet the expected demand. However, economic
conditions in 2019 kept sales at the 2018 unit level of 40 000. The
following data pertain to 2018 and 2019:
2018
2019
Selling price per unit
R20
R20
Sales (units)
40 000
40 000
Beginning inventory (units)
4 000
4 000
Production (units)
40 000
48 000
Ending inventory (units
4 000
?
Production costs per unit (budgeted and actual) for
2018 and 2019 were:
Material R2.25
Labour R3.75
Overhead R1.50
Total R7.50
Annual fixed costs for 2018 and 2019 (budgeted and
actual) were:
Production R117 000
Selling and administrative R125 000
Total R242 000
The predetermined OH rate under absorption costing is based on annual capacity of 60 000. Any volume variance is assigned to Cost of Goods Sold.
Required:
3.1 Prepare an Income Statement using variable costing.
3.2 Prepare an Income Statement using absorption costing.
3.3 Reconcile the profits.
In: Accounting
Timpanogos Inc. is an accrual-method calendar-year corporation. For 2018, it reported financial statement income after taxes of $1,152,000. Timpanogos provided the following information relating to its 2018 activities:
| Life insurance proceeds as a result of CEO’s death | $ | 200,000 |
| Revenue from sales (for both book and tax purposes) | 2,000,000 | |
| Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. | 21,000 | |
| Charitable contributions | 180,000 | |
| Cost of goods sold for book and tax purposes | 300,000 | |
| Interest income on tax-exempt bonds issued in 2017 | 40,000 | |
| Interest paid on loan obtained to purchase tax-exempt bonds | 45,000 | |
| Rental income payments received and earned in 2018 | 15,000 | |
| Rental income payments received in 2017 but earned in 2018 | 10,000 | |
| Rental income payments received in 2018 but not earned by year-end | 30,000 | |
| MACRS depreciation | 55,000 | |
| Book Depreciation | 25,000 | |
| Net capital loss | 42,000 | |
| Federal income tax expense for books in 2018 | 500,000 | |
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Required:
In: Accounting
At the beginning of 2018, Baker Co. reported the following amounts related to investments:
ASSETS
Interest receivable-Black Co. bonds 20,000
Investment in Blue Co. common stock $320,000
Fair value adjustment (10,000)=$310,000
Investment in Red Co. common stock $700,000
Fair value adjustment $20,000= $720,000
Investment in Black Co., 8% bonds-AFS security $600,000
Fair value adjustment 30,000 = $630,000
Requirement 1: In the space below each item a-d (or on a t-account sheet), record Rockets 2018 transactions/events on the underlined date. Show any computations.
a. On January 31, 2018, received semi-annual interest payment of $24,000 on 8% Black Co. bonds purchased at the $600,000 face value on August 1, 2017. Baker recorded an adjusting entry for interest at the end of 2017.
b. On July 31, 2018, received semi-annual interest payment of $24,000 from Black Co.
c. On November 1, 2018, sold Red Co. common stock for $690,000.
.
d. On December 31, 2018, recorded any necessary adjusting entries related to investments. The following information is available:
Dec. 31, 2018 fair value
Bkue Co. common stock $270,000
Blue Co. bonds 674,000
What is net income?
What is comprehensive NI?
In: Accounting
Part 1:
On January 1 2018, Louis Company issued bonds with a Par Value of $400,000. The coupon interest rate on the bond is 10%, and it has a maturity of 3 years.
Interest is paid semiannually on June 30th and December 31 of each year.
Required:
Compute the value of the bond assuming the following market rates of interest:
[5 points]
|
Value of Bond @ 8% = _____________________________________ Value of Bond @10% = _____________________________________ |
Part 2:
From part 1, using the effective interest method, show how the bond premium would be amortized over the life of the bond. Fill in the following table to do this. Please round any amounts to the nearest $.
|
A |
B |
C |
D |
E |
|
|
Interest Date |
Cash Interest Payment |
Interest Expense |
Premium Amortization |
Premium A/C Balance |
Bond Carrying Amount |
|
1/1/2018 |
|||||
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6/30/2018 |
|||||
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12/31/2018 |
|||||
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6/30/2019 |
|||||
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12/31/2019 |
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6/30/2020 |
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12/31/2020 |
Part 3:
Show journal entries for the premium bond for the following:
The issue of the bond on January 1st, 2018
(ii) The first and second interest dates (June 30th, 2018 and December 31st, 2018)
[10 points]
|
1/1/18 |
Account Name |
Debit |
Credit |
|
6/30/18 |
Account Name |
Debit |
Credit |
|
12/31/18 |
Account Name |
Debit |
Credit |
In: Accounting
Part 1:
On January 1 2018, Louis Company issued bonds with a Par Value of $400,000. The coupon interest rate on the bond is 10%, and it has a maturity of 3 years.
Interest is paid semiannually on June 30th and December 31 of each year.
Required:
Compute the value of the bond assuming the following market rates of interest:
[5 points]
|
Value of Bond @ 8% = _____________________________________ Value of Bond @10% = _____________________________________ |
Part 2:
From part 1, using the effective interest method, show how the bond premium would be amortized over the life of the bond. Fill in the following table to do this. Please round any amounts to the nearest $.
|
A |
B |
C |
D |
E |
|
|
Interest Date |
Cash Interest Payment |
Interest Expense |
Premium Amortization |
Premium A/C Balance |
Bond Carrying Amount |
|
1/1/2018 |
|||||
|
6/30/2018 |
|||||
|
12/31/2018 |
|||||
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6/30/2019 |
|||||
|
12/31/2019 |
|||||
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6/30/2020 |
|||||
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12/31/2020 |
Part 3:
Show journal entries for the premium bond for the following:
The issue of the bond on January 1st, 2018
(ii) The first and second interest dates (June 30th, 2018 and December 31st, 2018)
[10 points]
|
1/1/18 |
Account Name |
Debit |
Credit |
|
6/30/18 |
Account Name |
Debit |
Credit |
|
12/31/18 |
Account Name |
Debit |
Credit |
In: Accounting
Case1
1)Express design Ltd provide $5000 of graphic design service to one of its clents with credit terms of net 30 days on 3 June 2018. Revenue are considered earned when the service are provided. This mean that on June 3 express design will recognize the revenues even if it will not receive money until 3rd of the july
Required
identify which account are affected and explain how they are affected
Prepare journal entry for the transaction on 3 June 2018
2) Express Design also sells design product. It has just sold and shipped $11000 worth of design product using the terms FOB., shipping point on 10 June 2018. The cost of good sold for this sale is 80% of the sales amount
Required
calculate the cost of good sold
Prepare journal entry for the transaction on 10 June 2018
3 Express Design also sells design product. It has just sold and shipped $11000 worth of design product using the terms FOB., shipping point on 10 June 2018. The cost of good sold for this sale is 80% of the sales amount. The term of the sale is 2/10 net 30
Required
explain the credit terms 2/10, net 30
what is net amount due on 15 June 2018
what the net amount due on 15 July 2018
In: Accounting
The cash account for Corey’s Construction Company at August 31, 2018, indicated a book balance of $19,885. The bank statement received by the company indicated a balance of $39,473.63 as at August 31, 2018. A comparison of the bank statement and the accompanying cancelled cheques and memos with the records revealed the following:
In: Accounting
Jung & Newbicalm Advertising (JNA) recently hired a new creative director, Howard Rachell, for its Madison Avenue office in New York. To persuade Howard to move from San Francisco, JNA agreed to advance him $120,000 on April 30, 2018, on a one-year, 9 percent note, with interest payments required on October 31, 2018, and April 30, 2019. JNA issues quarterly financial statements on March 31, June 30, September 30, and December 31.
Prepare journal entries to record the note’s issuance, interest earned, and interest payments received for each quarter and on each payment date. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your final answers to whole dollar amount)
- Record the receipt of a note on April 30, 2018 for a $120,000 loan to the new creative director.
- Record the interest accrued on the note as of June 30, 2018.
- Record the interest accrued on the note as of September 30, 2018.
- Record the receipt of interest for the period ending October 31, 2018.
- Record the interest accrued on the note as of December 31, 2018.
- Record the interest accrued on the note as of March 31, 2019.
- Record the receipt of interest for the period ending April 30, 2019.
- Record the receipt of the principal on the note’s maturity date.
In: Accounting
Brandlin Company of Anaheim, California, purchases materials from a foreign supplier on December 1, 2017, with payment of 31,000 korunas to be made on March 1, 2018. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2017, Brandlin enters into a forward contract to purchase 31,000 korunas on March 1, 2018. Relevant exchange rates for the koruna on various dates are as follows:
| Date | Spot Rate |
Forward Rate (to March 1, 2018) |
||||
| December 1, 2017 | $ | 4.90 | $ | 4.975 | ||
| December 31, 2017 | 5.00 | 5.100 | ||||
| March 1, 2018 | 5.15 | N/A | ||||
Brandlin’s incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at December 31.
a-2.Assuming that the purchased parts became a part of the cost
of goods sold in 2017, what is the impact on 2017 net income?
a-3.What is the impact on 2018 net income?
a-4.What is the impact on net income over the two accounting
periods?
(Do not round intermediate calculations. In case of negative impact
on income, answer should be entered with a minus sign.)
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In: Accounting