Recording Revenue Under Different Repurchase Agreements

On January 1, 2020, Miller Inc. sells equipment to Smith Inc. for $132,000. As stipulated in the revenue contract, Miller Inc. will buy back the equipment on December 31, 2020, for $141,240. The relevant interest rate is 7%

a. Prepare the seller’s journal entry on January 1, 2020.

b. Prepare the seller’s journal entry on December 31, 2020.

c. Assume instead that Miller has the option to buy back the equipment and the fair value of the equipment is expected to
decline through 2020. How would the answers to parts a and b change (if at all)?

d. Assume instead that Smith has the option to require Miller to buy back the equipment after one year for $141,240 (an amount greater than
the expected market value of the equipment at that time). How would the answers to parts a and b change (if at all)?

New York (CNN Business)President Donald Trump has long cast OPEC as an evil force ripping Americans off by not pumping enough oil. Now he's pleading with Saudi Arabia and Russia to stop pumping so much oil. In the past, Trump has called OPEC a "monopoly" (it's not) that must be broken up. "They are robbing our country blind," he tweeted in November 2012. Since winning the presidency, Trump has repeatedly hammered OPEC for engineering higher oil prices to hurt American drivers. Donald Trump cannot win reelection without Texas. It's as simple as that." GREG VALLIERE, CHIEF US POLICY STRATEGIST AT AGF INVESTMENTS "OPEC, please relax and take it easy. World cannot take a price hike -- fragile!" the president tweeted in February 2019. Flash forward to 2020: Instead of slamming OPEC for artificially restraining production, Trump is urging the cartel to do just that. And rather than calling for OPEC to be broken up, Trump is elevating the group's status by encouraging it to stop the oil crash one that threatens to set off a surge of bankruptcies and job losses in Texas and throughout America's oil industry. Trump is even attempting to broker an agreement between Saudi Arabia and Russia to end their devastating price war by massively cutting production. The president's tweets on the subject Thursday helped US oil prices to spike 25% -- their biggest one-day gain in history. "It's amazing to have Trump get in the middle of this," Helima Croft, head of global commodity strategy at RBC Capital Markets, told CNN Business. "Think about the 180: For years, Trump hated collusion among the producers and wanted to get rid of OPEC." Texas is a huge prize in 2020 That reversal reflects shifting political realities. The coronavirus pandemic is causing millions of job losses ahead of the November presidential election. A prolonged downturn in the US oil industry would only amplify the economic pain, especially in Republican-leaning states. "What has changed is the political equation: Donald Trump cannot win reelection without Texas. It's as simple as that," said Greg Valliere, chief US policy strategist at AGF Investments. Oil prices spike by a record 25% as Trump talks up huge production cuts and Saudi Arabia calls for OPEC meeting Not only is Texas the second-biggest electoral prize (after California), it's also by far the nation's largest oil producer. In fact, Texas pumps more oil than every OPEC nation not named Saudi Arabia. But Texas is getting crushed by cheap oil. Russia, seeking to blunt the rise of US shale oil producers, refused last month to cut oil production. Saudi Arabia responded by surging output and slashing prices. Reflecting the urgency of the moment, Trump is meeting with the CEOs of ExxonMobil (XOM), Chevron and other leading US oil companies Friday to discuss the crisis facing the industry. Navigating this situation is a delicate balance. The White House doesn't want oil bankruptcies and job losses on its hands. But Trump doesn't want to be seen helping oil CEOs and Saudi Arabia at the expense of average Americans who want cheap gas prices. 'I would always raise hell with OPEC' The president has acknowledged his evolving views. "You always get a little torn," Trump said on March 20. "Until we became the leading producer, I was always for the person driving the car and filling up the tank of gas...If (prices were too high, I would always raise hell with OPEC." Now the oil crash is setting off real turmoil in the energy industry. Whiting Petroleum (WLL), a former rising star in the shale industry, this week became the first of what will surely be a wave of US oil companies to file for bankruptcy during this crisis. Nearly 100 US oil and gas producers could file for Chapter 11 over the next year, Buddy Clark, co-chair of the energy practice at Houston law firm Haynes and Boone, told CNN Business. And that may be the optimistic view. Rystad Energy warned this week that 140 US oil producers could file for bankruptcy this year if oil stays at $20 a barrel, followed by another 400 in 2021. Even the largest oil companies are cutting back. Debt-ridden Occidental Petroleum (OXY) slashed its dividend by 86% and announced pay cuts across the entire company. Chevron (CVX) is cutting production and spending in hopes of avoiding its first dividend cut since the Great Depression. "We have a great oil industry, and the oil industry is being ravaged," Trump said Wednesday during a press briefing. "We don't want to lose our great oil companies." Will Texas cap output? Now there is a debate playing out over whether and even how the United States should intervene in the oil war. Some independent oil producers are pushing Texas to -- for the first time in more than 40 years -- limit the state's output. A wave of oil bankruptcies is on the way Ryan Sitton, a commissioner on the Railroad Commission of Texas, the state's energy regulator, even held a call Thursday with Russia's energy minister to discuss options. "While we normally compete," Sitton said in a tweet, "we agreed that #COVID19 requires unprecedented levels of int'l cooperation." He added that he will speak to Saudi Arabia's energy minister soon. Shale pioneer Harold Hamm and others are pushing for Trump, the self-proclaimed "Tariff Man," to sanction OPEC by enacting tariffs that would punish Russia and Saudi Arabia for their ruinous oil war. But the American Petroleum Institute, the nation's largest oil lobby, is urging Trump to avoid intervening in free markets. Trump has so far taken modest steps, including instructing the Energy Department to take advantage of cheap prices by filling up the nation's emergency stockpile of crude. Debate over free markets OPEC has signaled it isn't willing to keep cutting production -- unless other countries join in and do so, too. The cartel will meet via video conference Monday with Russia and other countries outside the alliance, two sources at the OPEC secretariat told CNN Business. Although the final list of invitees has not yet been set, the United States, Canada and Mexico could reportedly be invited. But it's not clear how the United States would enact its own production cuts. US output is controlled by thousands of different companies across the nation who all have their own competing interests. The irony calling on OPEC to come to the rescue is that Trump and others for years have complained that OPEC distorts free markets. And Now that Saudi Arabia and Russia have stopped artificially restraining their production, they're being urged to step back in to calm markets. "This is the free market. We are living in the world of NOPEC right now," RBC's Croft said. "OPEC's cuts gave US producers a vital lifeline. Now that the lifeline has been withdrawn, you have figures in Washington wanting sanctions against OPEC." The above article was published on April 3, 2020 on CNN Business News. Read the article carefully and answer the questions below. (Do it by yourself). Q1. What are the major points in this article. Q2. How do you see the role of OPEC from the above article.

Farmer Inc. began business on January 1, 2019. Its pretax financial income for the first 2 years was as follows:

                              2019                                  $340,000

                              2020                                    760,000

The following items caused the only differences between pretax financial income and taxable income.

1.    In 2019, the company collected $420,000 of rent; of this amount, $140,000 was earned in 2019; the other $280,000 will be earned equally over the 2020–2021 periods. The full $420,000 was included in taxable income in 2019.

2.    The company pays $20,000 a year for life insurance on officers.

3.    In 2020, the company terminated a top executive and agreed to $90,000 of severance pay. The amount will be paid $30,000 per year for 2020–2022. The 2020 payment was made. The $90,000 was expensed in 2020 for financial reporting purposes. For tax purposes, the severance pay is deductible as it is paid.

4. The company purchased a large asset in 2019 for $60,000. The depreciation will be computed using a five-year life. For tax purposes, the company will be able to deduct half of the cost in 2019 and in 2020.

The enacted tax rates existing on December 31, 2019, are:

               2019                     30%                                      2021                     40%

               2020                     35%                                      2022                     40%

Instructions:

(a)      Determine taxable income for 2019 and 2020.

(b)      Determine the deferred income taxes at the end of 2019, and prepare the journal entry to record income taxes for 2019.

(c)      Prepare a schedule of future taxable and (deductible) amounts at the end of 2020.

(d)      Prepare a schedule of the deferred tax (asset) and liability at the end of 2020.

(e) Compute the net deferred tax expense (benefit) for 2020.

(f)       Prepare the journal entry to record income taxes for 2020.

SQL

A manufacturing company’s data warehouse contains the following tables.

Region

Note: (p) = "primary key" and (f) = "foreign key". They are not part of the column names.

Product

Sales_Totals

Answer the following questions using the above tables/data:

6. Write a set of SQL statements which will add a row to the Region table for Europe, and then add a row to the Sales_Total table for the Europe region and the Sprocket product (product_id = 7684) for October 2020, with a sales total of $1,500. You can assign any value to the region_id column, as long as it is unique to the Region table. The statements should be executed as a single unit of work. Please note that since the statements are executed as a single unit of work, additional code is needed.

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.
5. If Wiper's stock had a price/earnings ratio of 12 at the end of 2020, what was the market price of the stock?
6. Calculate the cash dividend per share for 2020 and the dividend yield based on the market price calculated in part e.
7. Calculate the dividend payout ratio for 2020.
8. Assume that accounts receivable at December 31, 2020, totaled $311 million. Calculate the number of days' sales in receivables at that date.
9. Calculate Wiper's debt ratio and debt/equity ratio at December 31, 2020 and 2019.
10. Calculate the times interest earned ratio for 2020 and 2019.

The following accounts, among others, appeared on ZZ Company's balance
sheet at January 1, 2020 and December 31, 2020:

                  January 1, 2020       December 31, 2020

Accounts receivable    48,000                63,000
Utilities payable      20,000                26,000
Notes payable          71,000                80,000
Common stock           30,000                90,000
Retained earnings      22,000                78,000

The following information was taken from ZZ Company's 2020 income
statement:

Sales revenue                   $500,000
Cost of goods sold               280,000
Other expenses                   120,000
Net income                      $100,000

Calculate the amount of cash collected from customers during 2020.

The following accounts, among others, appeared on ZZ Company's balance
sheet at January 1, 2020 and December 31, 2020:

                  January 1, 2020       December 31, 2020

Accounts receivable    48,000                63,000
Utilities payable      20,000                26,000
Notes payable          71,000                80,000
Common stock           30,000                90,000
Retained earnings      22,000                78,000

The following information was taken from ZZ Company's 2020 income
statement:

Sales revenue                   $500,000
Cost of goods sold               280,000
Other expenses                   120,000
Net income                      $100,000

Calculate the amount of cash collected from customers during 2020.

Provided below is the incomplete income statement (for 2020) and balance sheet (Dec 31 2019 and Dec 31 2020) for SCOTTY Inc. SCOTTY Inc. Income Statement For the year ended Dec. 21, 2020 Net sales $8,953 Cost of goods sold $5,865 Depreciation $? EBIT $? Interest paid $675 Earnings before taxes $? Taxes $400 Net income $705 Dividends paid $? Addition to retained earnings $450 SCOTTY Inc. Balance Sheet as at December 31, 2019 and 2020 2019 2020 2019 2020 Cash $725 $1,135 Accounts payable $859 $1,031 Accounts rec. $2,330 $? Notes payable $? $4,020 Inventory $3,240 $5,202 Current liabilities $? $? Current assets $? $? Long-term debt $9,250 $9,750 Net fixed assets $? $9,211 Common stock $250 $? Retained earnings $? $2,797 Total assets $16,083 $17,848 Total liabilities & equity $? $? a) Fill in the missing values for entries in the income statement and balance sheet in the table provided below. MISSING ENTERIES VALUES Depreciation EBIT Earnings before taxes Dividends paid Current assets (2019) Net fixed assets (2019) Notes payable (2019) Current Liabilities (2019) Retained earnings (2019) Total liabilities & equity (2019) Accounts receivables (2020) Current assets (2020) Current Liabilities (2020) Common stock (2020) Total liabilities & equity (2020) b) What is the company’s net working capital at the end of 2019 and at the end of 2020?

Carla Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan.

Prepare a 2020 pension worksheet. (Enter all amounts as positive.)

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List of Accounts

Prepare the journal entries at December 31, 2020, to record pension expense and related pension transactions. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

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