OSE provides a one year warranty on all its electronic products. The warranty is an assurance against manufacturing defects. In December 2016, OSE sold $500,000 worth of electronic products. The cost of the goods sold was $250,000 and OSE estimates the cost of repairs under the warranty to be $5,000.
During the financial year ended December 2017, OSE incurred cost of $3,000 to repair the products under warranty that were sold in December 2016. It also incurred costs of $1,000 on repairs that did not fall under the warranty agreement and charged its customers $1,200 for these repairs.
OSE complies with FRS 18 Revenue and FRS 37 Provision, Contingent Liabilities and Contingent Assets.

Prepare journal entries to record the sale of the electronic products and the warranty for the financial years ended 31 December 2016 and 31 December 2017.

Grouper Inc. acquired 10% of the outstanding common shares of Gregson Inc. on December 31, 2016. The purchase price was $904,000 for 45,200 shares, and is equal to 10% of Gregson’s carrying amount. Gregson declared and paid a $0.80 per share cash dividend on June 15 and again on December 15, 2017. Gregson reported net income of $516,000 for 2017. The fair value of Gregson’s shares was $24 per share at December 31, 2017. Grouper is a public company and applies IFRS.

Required: a) Prepare the journal entries for Grouper for 2016 and 2017, assuming that Grouper cannot exercise significant influence over Gregson. The investment is accounted for using the FV-OCI model.

b) Prepare the journal entries for Grouper for 2016 and 2017, assuming that Grouper can exercise significant influence over Gregson.

2. Abbey, Inc. acquired 15% of Tulsa Corporation on January 1, 2016, for $210,000 when the book value of Tulsa’s net assets was $950,000. During 2016, Tulsa reported net income of $330,000 and paid dividends of $70,000. On January 1, 2017, purchased an additional 25% of Tulsa for $350,000. Any excess of cost over book value was attributable to goodwill (No amortization). On that same date, Abbey changed to the equity method. During 2017, Tulsa reported net income of $420,000 and paid dividends of $110,000. Required: a. What income did Abbey record from Tulsa in 2016? b. What income did Abbey record from Tulsa in 2017? c. What journal entry was made to convert to the equity method? d. What was the balance in Equity Investment at December 31, 2017?

The following table shows the luxury tax threshold for MLB and Boston Red Sox payroll over 2012 - 2017. Year Luxury Tax Threshold Boston Red Sox Payroll 2012 178,000,000 179,859,051 2013 178,000,000 174,994,264 2014 189,000,000 174,313,058 2015 189,000,000 219,647,612 2016 189,000,000 215,875,101 2017 195,000,000 192,745,428 The luxury tax for an MLB team was 17.5%, 30%, 40%, and 50% depending on whether the team exceeded the threshold for the first, second, third or fourth time. Any team that drops below the threshold will reset their luxury tax rate, dropping them down to the first time rate (17.5%) . You can see that the Red Sox exceeded the threshold for the first time in 2015, and for the second time in 2016. How much was their luxury tax bill in 2015 an 2016?

The following selected account balances are provided for Delray Mfg.

Prepare an income statement for Delray Mfg. (a manufacturer

4. Sales Inc. was a regular C corporation with only 100 shares issued for many years. In 2015 they filed the necessary forms to become an S corporation as of January 1, 2016. At the time they had $500,000 of retained earnings. They had no cash because they had been using all the profit to pay down the mortgages. All shareholders meet the at-risk and active tests for all transactions. Tom bought his 50 shares for 50,000 when Sales was formed in 1996. Vic bought his 25 shares in 2011 for $200,000. Wes bought his 25 shares in 2014 for $350,000. In 2016 Sales made a profit of $900,000. They used the profit to purchase real estate. There were no distributions to shareholders. What will Tom, Vic and Wes report on their income tax returns for 2016?

Steve’s Laundry

Trial Balance

December 31, 2016

Cash                                                                                                    6,100

Laundry Supplies                                                                                 9,560

Prepaid Insurance                                                                                    8,490

Laundry Equipment                                                                                105,100

Accumulated Depreciation Laundry Equipment                                      40,200

Accounts Payable                                                                                   6,100

Mortgage Payable (Due 2030)                                                               10,000

Capital Stock                                                                                           6,000

Retained Earnings 1-1-2016                                                                  31,800

Dividends                                                                                                2,000

Laundry Revenue                                                                                 170,900

Wages Expense                                                                                        61,400

Rent Expense                                                                                          36,000

Utilities Expense                                                                                     10,000

Insurance Expense                                                                                     13,650

Miscellaneous Expense                                                                              12,700         

Prepare and income statement, retained earnings statement and balance statement for Steve’s Laundry for the year ending December 31, 2016. Please complete the problem using an excel worksheet provided. Please remember to use proper format including financial heading for the statements.

PT TOBA produces two types of products both TAKO and TAKI through joint production process. Both products must be further processed and then it can be sold. In April 2016 the production cost incurred consisted of a prime cost of $ 10,000, a direct labor cost of $ 4,000 and a conversion cost of $ 14,000. The production process in April produced 500 units of TAKO and 2,000 TAKI units. The cost for further processing TAKO is $ 5 per unit and TAKI $ 10 per unit. The selling price of TAKO and TAKI per unit is $ 25 and $ 20.
Requested: During April 2016 has sold 400 units of TAKO and 1700 units of TAKI, using the NRV method, calculate the gross profit earned in April 2016.

Note : PT TOBA is an example of a firm