For her daughter's university education, Carla Hackl has invested an inheritance in a fund paying 9.2% compounded quarterly. If ordinary annuity payments of $4750.00 per month are to be made out of the fund for 5 years and the annuity begins 9.75 years from now, how much was the inheritance?
In: Finance
In: Finance
Question 3.2 (Total: 22 marks; 2 marks each)
For each of the items listed below, indicate how it should be treated in the financial statements. Use the following letter code for your selections:
a. Ordinary item on the income statement
b. Discontinued operations
c. Unusual item on the income statement
d. Adjustment to prior year’s retained earnings
_____ 1. The bad debt rate was increased from 1% to 2% of sales, thus increasing bad debt expense.
_____ 2. Obsolete inventory was written off. This was a material amount, and the first loss of this type in the company's history.
_____ 3. An uninsured earthquake loss was incurred. This was the first loss of this type in the company's history.
_____ 4. Recognition of revenue earned last year, inadvertently omitted from last year's income statement.
_____ 5. The company sold one of its warehouses at a loss.
_____6. Settlement of a court case involving the federal government, related to income taxes of three years ago. The company is continually involved in various adjustments with the federal government related to its taxes.
_____ 7. A loss incurred from expropriation – the company owned resources in South America which were taken over by a dictator unsympathetic to Canadian business interests.
_____ 8. The company failed to record depreciation in the previous year.
_____ 9. Discontinuance of all production in Canada. The manufacturing operations were relocated to Honduras.
_____ 10. Loss on sale of investments. The company last sold some of its investments two years ago.
_____11. Loss on the disposal of a segment of the business.
Question 3.3 (Total: 45 marks; part 1: 24 marks; part 2: 15 marks; part 3: 6 marks)
Star Finder Inc. has provided the following information for the year ended December 31, 2021:
|
Sales revenue |
$1,300,000 |
Loss on inventory due to decline in net realizable value |
$80,000 |
|
Unrealized gain on FV-OCI equity investments |
42,000 |
Loss on disposal of equipment |
35,000 |
|
Interest income |
7,000 |
Depreciation expense related to buildings omitted by mistake in 2020 |
55,000 |
|
Cost of goods sold |
780,000 |
Retained earnings at December 31, 2020 |
980,000 |
|
Selling expense |
65,000 |
Loss from expropriation of land |
60,000 |
|
Administrative expense |
48,000 |
Dividends declared |
45,000 |
|
Dividend revenue |
20,000 |
The effective tax rate is 25% on all items. Star Finder Inc. prepares financial statements in accordance with IFRS. The FV-OCI equity investments trade on the stock exchange. Gains/losses on FV-OCI investments are not recycled through net income.
Required:
1. Prepare a multi-step statement of financial performance for 2021, showing expenses by function. Ignore calculation of EPS.
2. Prepare the retained earnings section of the statement of changes in equity for 2021.
3. Prepare the journal entry to record the depreciation expense omitted by mistake in 2020.
In: Accounting
ABC Corp. provides its employees with a defined benefit pension plan. The company's actuary has provided you with the following information as of December 31, 2020: PBO $ 1,200,000 Fair Value Plan Assets 1,650,000 Current Service Cost 480,000 Interest Cost 48,000 PSC amortization 120,000 Expected and actual return on assets 165,000 In the past, contributions made to the pension plan have been equal to the pension expense for the corresponding year. The company has not made any contribution in 2020. In the statement of financial position as of December 31, 2020, ABC must report
a. a net pension asset of $ 1,650,000
b. a net pension debt of $ 78,000
c. a net pension debt of $ 450,000
d. a net pension asset of $ 450,000
In: Accounting
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In: Accounting
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In: Accounting
Dobbs Company issues 9%, two-year bonds, on December 31, 2018,
with a par value of $104,000 and semiannual interest
payments.
| Semiannual Period-End | Unamortized Discount | Carrying Value | ||||||
| (0) | 12/31/2018 | $ | 6,080 | $ | 97,920 | |||
| (1) | 6/30/2019 | 4,560 | 99,440 | |||||
| (2) | 12/31/2019 | 3,040 | 100,960 | |||||
| (3) | 6/30/2020 | 1,520 | 102,480 | |||||
| (4) | 12/31/2020 | 0 | 104,000 | |||||
Use the above straight-line bond amortization table and prepare
journal entries for the following.
Required:
(a) The issuance of bonds on December 31,
2018.
(b) The first through fourth interest payments on
each June 30 and December 31.
(c) The maturity of the bonds on December 31,
2020.
In: Accounting
In: Accounting
Q. Baoshan Energy Ltd. in Shanghai, China, has a tank lorry that costed the company ¥300,000 when it was purchased on January 1, 2016. The vehicle has an estimated useful life of 10 years and no residual value. Baoshan uses straight-line method of depreciation on equipment. Baoshan decides to dispose the tank lorry and sells it to Pudong Oil & Gas Co. on August 31, 2020. (Currency in Chinese yuan, ¥)
Instructions:
A. What journal and T-account entries would Baoshan Energy make to record the sale of the tank lorry for ¥170,000 cash on August 31, 2020?
B. What journal and T-account entries would Baoshan Energy make to record the sale of the tank lorry for ¥100,000 cash on August 31, 2020?
In: Accounting
On January 1, 2020 the Walker Manufacturing Company purchased 10% bonds having a maturity value of $100,000 due in 5 years. The bonds pay interest every January 1st. Walker paid a premium for the bonds in the amount of $7,985.10. As a result of paying the $7,985.10 premium, the bond investment provides Walker with an 8% yield. Required:
Prepare journal entries for the following dates:
1. January 1, 2020 when the bonds were purchased.
2. December 31, 2020 to record interest revenue and amortization.
3. January 1, 2021 to record the interest payment being received.
5. December 31, 2021 to record interest revenue and amortization.
5. January 1, 2022 to record the interest payment being received.
In: Accounting