Matt Winne​, Inc. issued $700,000 of 9​%, five​-year bonds payable on January​ 1, 2018.

The market interest rate at the date of issuance was 6​%, and the bonds pay interest semiannually.

a) The company received a grant worth RM6,000 on 15 December 2018. It was an incentive by the government for retraining a group of its employees. The three-month training started in December 2018 has a cost of RM10,000 a month.

None of the transactions related to the above has been recorded.

b) Included in the long-termloans is a loan worth RM4,000,000 at 5% annual interest, granted by a local bank on 1 August 2018, for five-year period. Instalment for the month of December 2018 has not been paid yet and the related interest for the instalment was RM15,200.

None of the transactions related to the above has been recorded.

Required:

Show the necessary adjusting journal entries for the additional information above.

On Jan 2, 2018, Sandstone Enterprises purchased equipment for $129,200. The equipment has a useful life of four years or of 13,000 working hours and after the useful life it will have a residual value of $13,500. The machine was used for 1,900 hours in 2018, 2,800 hours in 2019; 3,700 hours in 2020.

Required:

1. Calculate the depreciation expense for 2018 and 2019 under each of the following methods:

1. Straight-line,
2. Double diminishing-balance, and
3. Units-of -production

2. Record the journal entry for depreciation expense for the year ended December 31, 2018 under the straight-line method. (2 marks)
3. Which method results in the lowest profit for the first two years? Why?

Tangshang Industries production budget from the 2^nd quarter of 2018, projected the following amounts of units to be produced:

April 1,000 units

May    1,200 units

June    1,250 units

Each unit requires 2 parts of component A and 3 parts of component B. Component A cost is $1.25 per unit and component B cost is $.80 per unit.

A. Calculate the Direct Material budgeted cost for May 2018

B. Calculate the Direct Material budgeted cost for the quarter April - June 2018

C. The raw materials inventory policy is 0 ending inventory, 0 beginning inventory. How much inventory of component A is required in April 2018?

Chapter 11 Operational Assets: Utilization and Impairment

Jackson Company purchased a new piece of equipment on July 1, 2018 at a cost of $36,000. The equipment has an estimated useful life of 10 years and an estimated residual value of $6,000. During its ten-year useful life, the equipment is expected to produce 500,000 units. The equipment actually produced the following number of units: 2018, 25,000; 2019, 84,000; and 2020, 90,000.

(a) Calculate depreciation expense for 2018, 2019, and 2020 assuming Jackson uses sum-of-the-years’-digits depreciation.

(b) Calculate depreciation expense for 2018, 2019, and 2020 assuming Jackson uses double-declining balance depreciation.

Information from the financial statements of Henderson-Niles Industries included the following at December 31, 2018:

Henderson-Niles’s net income for the year ended December 31, 2018, is $900 million. The income tax rate is 40%. Henderson-Niles paid dividends of $2 per share on its preferred stock during 2018.

Required:
Compute basic and diluted earnings per share for the year ended December 31, 2018.

1. The following is an excerpt from the Freight Train, Inc.’s 2019 annual report:

Required

1. Calculate the debt-to-equity ratio for Freight Train, Inc. for 2019 and 2018 based on year end values of debt and equity.

b.   The present values of the operating leases totaled $6,192 and $6,448 in 2019 and 2018, respectively. Assume that the leases were capitalized (were included in the total amount of debt reported). Recalculate the debt-to-equity ratio for Freight Train, Inc. for 2019 and 2018 without including the operating leases. Does capitalizing the leases improve or worsen the company’s risk perception?

Simpson Company purchased a new machine for $80,000 on January 1, 2017. The machine has an expected salvage value of $5,000, and is expected to used 187,500 hours over its estimated useful life of 15 years. Actual hours used were 11,000 in 2017 and 13,000 in 2018. Determine the following:

________________ Depreciation expense for 2017 under the straight-line method

________________ Depreciation expense for 2018 under the straight-line method

________________ Book value at the end of 2018 under the straight-line method

________________ Depreciation expense for 2017 under the units-of-activity method

________________ Depreciation expense for 2017 under the declining balance method

________________ Depreciation expense for 2018 under the declining balance method

1. Zella Co. uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Zella allocates manufacturing overhead costs using direct manufacturing labor costs. Zella provides the following information:

1. Compute the actual and budgeted manufacturing overhead rates for 2018. (1pt)
2. At the end of 2018, compute the under- or overallocated manufacturing overhead under normal costing. Prepare a journal entry to dispose of this amount. (1pt)

Assume that TDW Corporation (calendar-year-end) has 2018 taxable income of $674,000 for purposes of computing the §179 expense. The company acquired the following assets during 2018: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

b. What is the maximum total depreciation, including §179 expense, that TDW may deduct in 2018 on the assets it placed in service in 2018 assuming no bonus depreciation? (Round your intermediate calculations to the nearest whole dollar amount.)