Question 4 [27]
The following bank reconciliation statement was prepared by the bookkeeper of Veggie Stores for January 2020. The financial year of the business ends in January each year.
|
Bank overdraft as per bank statement |
R35 000 |
|
Outstanding deposit on 10 January 2020 |
R12 900 |
|
28 January 2020 |
R10 000 |
|
Outstanding deposit: Cheque received from B Brother dated 24 February 2020 |
R1 800 |
|
Outstanding cheques: |
|
|
R7 000 |
|
R9 800 |
|
R4 800 |
|
Bank charges |
R570 |
|
Balance as per bank account in the General Ledger |
? |
Required:
Complete question 4.3 and 4.4 specifically in format below
4.3
|
Amount |
Error |
Corrective action |
(9)
4.4
|
Debit |
Credit |
|
(7)
In: Accounting
Glaus Leasing Company agrees to lease equipment to Jensen Corporation on January 1, 2020. The following information relates to the lease agreement.
| 1. | The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. | |
| 2. | The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2020, is $700,000. | |
| 3. | At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $50,000. Jensen estimates that the expected residual value at the end of the lease term will be 50,000. Jensen amortizes all of its leased equipment on a straight-line basis. | |
| 4. | The lease agreement requires equal annual rental payments, beginning on January 1, 2020. | |
| 5. | The collectibility of the lease payments is probable. | |
| 6. | Glaus desires a 5% rate of return on its investments. Jensen’s incremental borrowing rate is 6%, and the lessor’s implicit rate is unknown. |
b. Calculation for annual rental payment
| c) | Calculation of present value of minimum lease payment | |||
d. Prepare the journal entries Jensen would make in 2020 and 2021 related to the lease arrangement
e. Prepare the journal entries Glaus would make in 2020 and 2021
In: Accounting
Crane Incorporated leases a piece of machinery to Blue Company
on January 1, 2020, under the following terms.
| 1. | The lease is to be for 4 years with rental payments of $13,046 to be made at the beginning of each year. | |
| 2. | The machinery’ has a fair value of $68,934, a book value of $51,440, and an economic life of 10 years. | |
| 3. | At the end of the lease term, both parties expect the machinery to have a residual value of $25,720. To protect against a large loss, Crane requests Blue to guarantee $18,040 of the residual value, which Irving agrees to do. | |
| 4. | The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. | |
| 5. | The implicit rate is 5%, which is known by Blue. | |
| 6. |
Collectibility of the payments is probable. |
|
Evaluate the criteria for classification of the lease, and describe the nature of the lease. |
Prepare the journal entries for Blue for the year 2020.
|
Suppose Blue did not guarantee any amount of the expected residual value. Prepare the journal entries for Blue for the year 2020.
Suppose Blue did not guarantee any amount of the expected residual value. Prepare the journal entries for Crane for the year 2020.
In: Accounting
|
|
In: Accounting
Brady Construction Company contracted to build an apartment complex for a price of $5,700,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.
| Estimated Costs to Complete | ||||||||||||
|
Costs Incurred During Year |
(As of the End of the Year) |
|||||||||||
|
Situation |
2018 |
2019 |
2020 |
2018 |
2019 |
2020 |
||||||
| 1 | 1,570 | 2,340 | 1,110 | 3,450 | 1,110 | — | ||||||
| 2 | 1,570 | 1,110 | 2,680 | 3,450 | 2,680 | — | ||||||
| 3 | 1,570 | 2,340 | 2,160 | 3,450 | 2,060 | — | ||||||
| 4 | 570 | 3,070 | 1,140 | 3,990 | 910 | — | ||||||
| 5 | 570 | 3,070 | 1,790 | 3,990 | 2,060 | — | ||||||
| 6 | 570 | 3,070 | 2,500 | 5,300 | 2,330 | — | ||||||
Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.)
| Revenue Recognized Over Time | Revenue Recognized over time | Revenue recognized over time | Revenue recognized upon completion | Upon Completion | Upon Completion | |
|---|---|---|---|---|---|---|
| Situation | 2018 | 2019 | 2020 | 2018 | 2019 | 2020 |
| 1 | ||||||
| 2 | ||||||
| 3 | ||||||
| 4 | ||||||
| 5 | ||||||
| 6 |
In: Accounting
#5
REVISED PROBLEM 13-42
ACC 650 - Management Accounting
Megatronics Corporation, a massive retailer of electronic
products, is organized in four separate divisions.
The four divisional managers are evaluated at year-end, and bonuses
are awarded based on ROI.
Last year, the company as a whole produced a 13 percent return on
its investment.
During the past week, management of the company’s Northeast
Division was approached about the
possibility of buying a competitor that had decided to redirect its
retail activities. (If the competitor is
acquired, it will be acquired at its book value.) The data that
follow relate to recent performance of the
Northeast Division and the competitor:
| NE DIVISION | COMPETITOR | |
| SALES | $8,600,000 | $4,250,000 |
| VARIABLE COSTS | 75% of sales | 60% of sales |
| FIXED COSTS | $1,800,000 | $1,600,000 |
| INVESTED CAPITAL | $3,100,000 | $225,000 |
Management has determined that in order to upgrade the
competitor to Megatronics’ standards, an
additional $275,000 of invested capital would be needed.
REQUIRED:
5. Assume that Megatronics uses residual income to
evaluate performance and desires a 12 percent
minimum return on invested capital. Compute the current residual
income of the Northeast
Division and the division’s residual income if the competitor is
acquired. Will divisional management
be likely to change its attitude toward the acquisition?
Why?
In: Accounting
Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camerrand. The denomination of all transactions with these companies is alaries (AL), the Camerrand currency. During 2017, Benjamin acquires 22,000 widgets at a price of 8 alaries per widget. It will pay for them when it sells them. Currency exchange rates for 1 AL are as follows:
| September 1, 2017 | $ | 0.48 | |
| December 1, 2017 | 0.42 | ||
| December 31, 2017 | 0.50 | ||
| March 1, 2018 | 0.43 | ||
(Input all amounts as positive values.)
Effect of Exchange Rate Fluctuations
a.2017
2018
b.2017
c.2017
2018
In: Accounting
On 3/31/2020, Company ABC released its quarterly report, showing
the sales in the first quarter had tumbled 30% as pandemic hit.
However, the stock price for company ABC rose by 3% (instead of
fell by 3%) after the report is released. Does this mean a failure
of the Market Efficient Theory? please write equations and solve
step by step
In: Finance
Early the following year (2020), the Company is told that one of its customers declared bankruptcy & cannot pay the $8,000 it owes. The $8,000 was part of the Company’s Accounts Receivable balance at December 31, 2019 (see preceding fact pattern immediately above). Prepare the adjusting journal entry to write off the $8,000 receivable (Remember, the Company uses the Allowance Method).
In: Accounting
A company issued financial statements for the year ended March 31, 2020. Three months later, management discovered that net income was overstated (too high) by $10,000.
1. There was no fraud involved.
2. The accountants at the company were all competent.
What could have caused the error?
Please answer in two paragraphs with clear explanation and good reasoning.
In: Accounting