Huffy Co., a lessee, records a finance lease of machinery on January 1, 2020. The five annual lease payments of $525,000 are made at the beginning of each year. The present value of the lease payments at 10% is $2,189,180. Huffy uses straight-line depreciation with no salvage value.    

1. Prepare an amortization table for the life of the lease. Round all amounts to the nearest dollar.

b. Prepare all of Huffy’s journal entries for 2020 and 2021 (10 points)

The following information is related to Tobey Corporation for 2020:
 Net Income: $2,500,000
 Common Stock Activities
1/1/20: 700,000 common shares outstanding
3/1/20: Purchased 60,000 treasury shares
7/1/20: 3-for-1 stock split
11/1/20: 120,000 new shares issued for cash
 8% Cumulative Preferred Stock
10,000 shares at $100 par
Required
a. Compute weighted average common shares outstanding (WACSO) for 2020.
b. Compute basic earnings per share for 2020. (Round to no fewer than four decimal places.)

Question 6: The following company provides a single product and have provided their summary forecast data shown below relating to its product for 2020.     

a. Calculate the contribution margin per unit.                                         

b. Calculate the contribution margin ratio.

c. Calculate the break-even in units and sales dollars for 2020.

d.Calculate the profit earned in 2020.

1. A University has recorded the following freshmen enrollment of students in each Academic Year shown below.

Year                Enrollment

2015                     662

2016                     596

2017                     570

2018                     541

2019                     496

      a.   What is the forecast for 2020 using a three period moving average?

b. What is the forecast for 2020 using a weighted moving average, in which the weights are .6, .3, .1?

c. What is the forecast for 2020 using a linear trend?

Extra credit (10 points) – This part is not required. Use the mean absolute deviation (MAD) to determine which method is most accurate.

I’m a Lumberjack and I’m OK Co. (Lumberjack) has the following temporary tax differences:

1. Lumberjack collected rents of $100,000 total for 4 years at the beginning of 2019. For tax purposes, rent revenue is recognized when collected. For financial reporting purposes, the lease is classified as an operating lease and rent revenue is recognized on a straight-line basis over the lease term.

2. Lumberjack has equipment that cost $1,120,000 with an estimated useful life of 7 years. At the end of 2019, the accounting carrying value for the equipment was $480,000 and the tax basis was $349,888. During 2020, the MACRS rate for tax purposes is 8.93%; straight-line depreciation is used for financial reporting purposes.

3. Lumberjack has a defined benefit pension plan for its employees. The accrual basis is used for financial reporting purposes, whereas for tax purposes, deductions are allowed as the plan is funded. As of the end of 2019, pension expense for financial reporting has been $500,000 greater than tax deductions allowed for funding contributions. For 2020, the pension expense recorded for financial reporting purposes was $70,000 and the amount deducted for tax purposes was $30,000.

REQUIRED: Complete the following schedules for each temporary difference to compute current year and future taxable (deductible) amounts for 2020.

The following shows the unadjusted Trial Balance of Services as at 31 August 2020 is as follows:

The following adjustments have not been considered for the year ended 31 August 2020:

· Provision for doubtful debts is to be estimated at 4% of total Debtors.

· Accrued Salaries Expenses, RM5,000.

· Insurance paid in advance for the month has expired. RM36,000 insurance was paid in advance for twelve (12) months period starting 1st January 2020.

· Furniture was purchased on 1 January 2019. Depreciation on the Machinery is required to be recorded using the straight-line method. Assume a useful life of five years with a zero-salvage value.

· RM12,000 unearned revenue has been earned during the period.

· Interest Expense for the month of July and August has not been recorded yet.

Required:

1) Prepare the adjusting entries for the above adjustments. (Show workings)

2) Prepare Services Statement of Comprehensive Income (Income Statement) for the year ended 31 August 2020.                 

3) Prepare Services Statement of Financial Position as at 31 August 2020.

Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 12,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 12,000 dinars on March 1, 2021. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows:

Icebreaker must close its books and prepare financial statements at December 31.

1. a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency receivable, prepare journal entries for the sale and foreign currency forward contract in U.S. dollars.

2. a-2. What is the impact on 2020 net income?

3. a-3. What is the impact on 2021 net income?

4. a-4. What is the impact on net income over the two accounting periods?

5. b-1. Assuming that Icebreaker designates the forward contract as a fair value hedge of a foreign currency receivable, prepare journal entries for the sale and foreign currency forward contract in U.S. dollars.

6. b-2. What is the impact on 2020 net income?

7. b-3. What is the impact on 2021 net income?

8. b-4. What is the impact on net income over the two accounting periods?

Journalize the adjusting entry needed on December 31, 2020 the company’s year end, for each of the following independent cases. Adjusting entries are only made on December 31 in this company.

1. Details of the Prepaid Rent Expense account are shown:

The company pays office rent semi-annually on March 31 and September 30. At December 31, part of the last payment is still available to cover January to march of the next year. No rent expense has been recorded for the year yet.

2. The company pays its employees each Friday. The amount of the weekly payroll is $12,500 for a five day work week. December 31 is on a Wednesday, the employees will be paid on Friday, January 2.

3. The company purchased equipment on March 1, 2020 for $120,000. The equipment has a useful life of 5 years and a residual value of $0. No depreciation has been recorded yet this year.

4. On May 1 the company received $36,000 for services to be provided from May 1, 2020 to April 30, 2021. The company provided its services from May 1-December 31, 2020.

5. The company provided services valued at $15,000 for a customer in December but has not yet sent out a bill or received any cash.

6. The beginning balance of Supplies on January 1, 2020 was $6,400. During 2019 the company purchased supplies costing $18,200. On December 31, 2020, there were $8,000 worth of supplies remaining.

Determining Merchandise to be Included or Excluded from Ending Inventory

The unadjusted inventory balance of Sara Ann Corp. is $500,000 on December 31, 2020, based on a physical inventory count. The following items must be considered before the inventory valuation is finalized.

a. On December 31, the physical inventory excluded $500 of merchandise inventory shipped to Sara Ann Corp. from a vendor f.o.b. destination that arrived on January 1, 2021.

b. On December 31, the physical inventory included $18,000 of merchandise inventory held on consignment by a customer. Sara Ann Corp. is the consignor.

c. On December 31, the physical inventory included $800 of merchandise held on consignment. The consignor is Sara Ann’s largest vendor.

d. $18,000 of in-transit merchandise was shipped f.o.b. shipping point to a customer and was excluded from the physical inventory count. The merchandise was shipped on December 28, 2020, and is expected to arrive at the customer on December 31, 2020.

e. Goods are in-transit from a vendor to Sara Ann on December 31, 2020. The invoice cost was $12,000 and the goods were shipped f.o.b. shipping point on December 28, 2020. The merchandise was excluded from the physical inventory count because they had not been delivered.

f. Merchandise with a cost of $300 is held in the receiving department for return. The merchandise was excluded from the physical inventory count.

Required

Considering items a through f, determine the adjusted inventory balance for Sara Ann Corp.

Adjusted inventory balance on December 31, 2020: $Answer

Assume that in an annual audit of Sandhill Inc. at December 31, 2020, you find the following transactions near the closing date. Assuming that each of the amounts is material, state whether the merchandise should be included in the client’s inventory. Transactions 1. A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2020. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2021. select an option 2. Merchandise costing $5,740 was received on January 3, 2021, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2020, f.o.b. destination. select an option 3. A packing case containing a product costing $6,970 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked “Hold for shipping instructions.” Your investigation revealed that the customer’s order was dated December 18, 2020, but that the case was shipped and the customer billed on January 10, 2021. The product was a stock item of your client. select an option 4. Merchandise received on January 6, 2021, costing $1,394 was entered in the purchase journal on January 7, 2021. The invoice showed shipment was made f.o.b. supplier’s warehouse on December 31, 2020. Because it was not on hand at December 31, it was not included in inventory. select an option 5. Merchandise costing $1,476 was received on December 28, 2020, and the invoice was not recorded. You located it in the hands of the purchasing agent; it was marked “on consignment.” select an option