At December 31, 2020, the investments in the portfolio of the trading securities of Mac Company included the following:

Atlanta Corp. bonds, 5%, $100,000 face value, purchased on Oct. 1, 2020 at par

Dallas Inc. bonds, 4%, $50,000 face value, purchased on July 1, 2020 at par

Required:

1. Record the receipt of quarterly interest from the Atlanta Corp. bonds on December 31, 2020.
2. Record the receipt of semiannual interest from the Dallas Inc. bonds on December 31, 2020.
3. Record the entry to adjust the bonds to fair value on December 31, 2020. The fair value of the Atlanta Corp. bonds and the Dallas In bonds on December 31, 2020, were $110,000 and $45,000 respectively.
4. Record the entry to sell the Atlanta Corporation bonds on January 2, 2021, for $112,500.
5. Record the entry to sell the Dallas Inc. bonds on January 3, 2021 for $44,500.
6. Adjust the Fair Value Adjustment account on December 31, 2021 to reflect that no trading securities are owned (if necessary).

7. Assume INSTEAD that the above bonds are held as available-for-sale investments. if we assume the bonds are AFS Securities, not Trading Securities. if the accounting for the transaction should change, write the complete corrected journal entry.

In your audit of Chris Anderson Company, you find that a physical inventory on December 31, 2020, showed merchandise with a cost of $439,750 was on hand at that date. You also discover the following items were all excluded from the $439,750.

Based on the above information, calculate the amount that should appear on Anderson’s balance sheet at December 31, 2020, for inventory.

Presented here are summarized data from the balance sheets and income statements of Wiper Inc.:

Required:

1. Calculate return on investment, based on net income and average total assets, for 2020 and 2019.
2. Calculate return on equity for 2020 and 2019.
3. Calculate working capital and the current ratio for each of the past three years.
4. Calculate earnings per share for 2020 and 2019.

The purchasing and supply department needs to forecast the number of tubes of adhesive being ordered. The data for several months is supplied below. Be careful since the data is listed beginning with the most recent. The forecasting method to be used here is exponential smoothing accounting for seasonality with a smoothing constant of 0.35 and a previous forecast (with seasonality) of 635. Please round your forecast to the nearest whole number.

Review the following information pertaining to Denzel Company.

1. A patent was purchased on January 2, 2018, for $39,000 when the remaining legal life was 16 years. On January 2, 2020, Denzel determined that the remaining useful life of the patent was only eight years from the date of its acquisition.
2. On January 1, 2020, Denzel Company purchased a second patent for $48,000 cash. At January 1, 2020, 6 years of the patent's legal life of 20 years had already expired.
3. On June 30, 2020, Denzel Company paid a firm $4,800 for a new trademark. Denzel considers the life of the trademark to be indefinite.
4. On November 1, 2020, Denzel Company acquired all noncash assets and assumed all liabilities of Lee Company at a cash purchase price of $72,000. Denzel determined that the fair value of the identfiable net assets acquired in the transaction is $70,200.

Note: When answering the following questions, do not round until your final answer. Round your final answer to the nearest whole number.

Required

a. What is the carrying value of intangible assets on December 31, 2020? Assume no impairment losses were recognized in prior periods.

$Answer

b. What is amortization expense for 2020?

$Answer

On January 1, 2020, Lawrence Co. began construction of a building to be used as its office headquarters. The building is expected to be completed on December 31, 2020. Expenditures on this project during 2020 were as follows:
                January 1st          $ 160,000
March 1st               420,000
June 1st                  270,000
October 31st           165,000
On Jan. 1, 2020, the company obtained a $600,000 specific construction loan with a 7% interest rate. The loan was outstanding during the entire construction period. The company’s other interest-bearing debts included two long-term notes of $480,000 and $900,000 with interest rates of 10% and 11%, respectively. Both notes were outstanding during the entire construction period.

Instruction:
(a) Determine the amount of interest capitalized for 2020. Please show your work (i.e. the weighted average accumulated expenditure, the actual interest, the weighted average interest rate, and the avoidable interest) to support your final answer. Please round the WA interest rate to four decimal places when necessary.      

    Answer: The amount of interest capitalized for 2020 is                                                            .
(b) Regardless your answer in (a), determine the amount of avoidable interest for 2020 assuming that the weighted average accumulated expenditure is $534,000 (other things being equal).

The Eserine Wood Corporation manufactures desks. Most of the company’s desks are standard models that are sold at catalogue prices. At December 31, 2020, the following finished desks appear in the company’s inventory:

The 2020 catalogue was in effect through November 2020, and the 2021 catalogue is effective as of December 1, 2020. All catalogue prices are net of the usual discounts. Generally, the company tries to obtain a 20% gross margin on the selling price and it has usually been successful in achieving this.

a) Explain the rationale for using the lower of cost and net realizable rule for inventories.

b) Explain the impact if inventory was valued at lower of cost and net realizable value on a total basis.

David Wong, the product manager of KiKi Company, was reviewing the production schedule for the last quarter of 2020. He noted that the company planned to sell 4,000 units during the year and keep a minimum closing inventory level at 100 units on 31 December 2020. As at 30 September 2020, the following data was reported.

Units

Inventory, 1 January 2020 0

Production 3,000

Sales 2,700

Inventory, 30 September 2020 300

At the beginning of the year, the company rented a warehouse that could store its inventory up to 1,250 units. The company had a maximum production capacity of 2,300 units per quarter.

Required:

(a) Assume that KiKi Company adopted marginal costing,
(i) what is the minimum units that the company should produce during the last quarter of 2020?

(ii) will the number of units produced affect the company’s profit or loss for the year? Explain.

(b) Assume that the company adopted absorption costing and David was given an annual bonus based on the company’s reported profit. If David wanted to maximize his bonus in 2020, how many units would he produce? Explain.

(c) Advise the management of the company on the costing method that should be chosen to determine David’s bonus?

The accounting department needs to forecast the profit for a subsidiary. The data for several months is supplied below. Be careful since the data is listed beginning with the most recent. The forecasting method to be used here is exponential smoothing with trend accounting for seasonality given a smoothing constant (alpha) of 0.69, a trend smoothing constant (delta) of 0.3, a previous trend amount, seasonally adjusted, of 65, and a previous seasonal forecast of 582. Please round your forecast to the nearest whole number.

As of December 31, 2020 Big USA Company owns a foreign subsidiary (Taco) based in Mexico. Big is in the process of preparing consolidated financial statements and must translate the trial balance of Taco to U.S. Dollars. Selected financial information of Taco in pesos is presented below.

                                                                                       Pesos

Inventory 12/31/20                                                       300,000

Purchases in 2020                                                         2,600,000

Inventory 12/31/19                                                       420,000

Equipment purchased as follows

            1/1/18                                                             250,000                        

            Purchases during 2018                                      150,000

            Purchases during 2019                                     350,000

            Purchases during 2020                                     620,000

All equipment is depreciated over 8 years on a straight-line basis with a full year taken in year of acquisition.

The inventory turnover rate is 90 days.

Relevant Exchange Rates                                Pesos per dollar

1/1/18                                                                          8.0

Average Rates 2018                                                       8.5

Average Rate   2019                                                      9.3

Average Rate 2020                                                        9.8

Rate 4^th quarter 2019                                                     8.9

Rate 4^th quarter 2020                                                     9.6

Current rate 12/31/18                                                   8.9

Current Rate 12/31/19                                                  9.2

Current Rate 12/31/20                                                 9.9

REQUIRED (In US Dollars)

1. Assuming the U.S. Dollar is functional currency determine following

            Cost Goods Sold for 2020

            Balance in Equipment 12/31/20

            Balance in Accumulated Depreciation 12/31/20

            Depreciation Expense – 2020

2. Assuming the Peso is functional currency determine following

            Cost Goods Sold for 2020

            Balance in Equipment 12/31/20

            Balance in Accumulated Depreciation 12/31/20

            Depreciation Expense – 2020