Carla Vista Company manufactures one product. On December 31, 2019, Carla Vista adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was $960,000. Inventory data are as follows:

Compute the inventory at December 31, 2020, 2021, and 2022, using the dollar-value LIFO method for each year.

On July 1, 2018, Kirby, Inc. issued $3,000,000, 6%, 5-year bonds at a price of 98. Interest is payable semiannually on January 1 and July 1. The bonds are callable at 102. Kirby uses straight-line amortization. On January 1, 2020, Kirby paid interest and recorded amortization on all of the bonds, and purchased the entire issue at the call price. Prepare journal entries to record: The issue of the bonds on July 1, 2018. The payment of interest and amortization of any discount or premium on January 1, 2019, July 1, 2019, and January 1, 2020 (ignore accrual entries). The repurchase of the bonds on January 1, 2020.

1. On April 1, 2020, Sydney Company issued 300 $1,000 bonds at 98. Each bond was issued with two detachable stock warrants. Shortly after issuance, the bonds were selling at 96, and the warrants were selling for $50 each.

Instructions:

Prepare the entry to record the issuance of the bonds and warrant

2.

The Cinci Company issues $100,000, 10% bonds at 103 on April 1, 2020. The bonds are dated January 1, 2020 and mature six years from that date. Straight-line amortization is used. Interest is paid annually each December 31. Compute the bond carrying value as of December 31, 2023.

Answer

$_______________

On April 1, 2019 Garr Co. issued $4,800,000 of 5%, 5-year convertible bonds at a price of 102. The bonds pay interest on April 1 and October 1. Bond premium is amortized each interest payment period on a straight-line basis.

On April 1, 2020, all of these bonds were converted into 20,000 shares of $5 par common stock.

a) Prepare the entry to record the original issuance of the convertible bonds.

b) Prepare the entries to record the interest payment and premium amortization at October 1, 2019 and April 1, 2020.

c) Prepare the entry to record the conversion on April 1, 2020.

Culver Company issues 8,900 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2020. The stock has a fair value of $445,000 on this date. The service period related to this restricted stock is 5 years. Vesting occurs if Tokar stays with the company until December 31, 2024. The par value of the stock is $10. At December 31, 2020, the fair value of the stock is $363,000.

(a) Prepare the journal entries to record the restricted stock on January 1, 2020 (the date of grant), and December 31, 2021.

(b) On July 25, 2024, Tokar leaves the company. Prepare the journal entry to account for this forfeiture.

1. Mercy Sports Shop started operations on 1^st January, 2020. The firm sells sports shoes in shopping malls. The company expects a 20 per cent increase in sales per month for November and December 2020. Mercy has budgeted sales as indicated in the following table:

Required:-

1. Using excel complete the sales budget by filling in the missing amounts.   
2. Determine the amount of sales revenue that will appear on the pro-forma income statement for the company’s fourth quarter 2020.

On January 1, 2016, a company pays $5,222,591 for a 5-year corporate bond with a face value of $5 million. The bond pays interest at 5 percent on December 31 of each

year, and the principal is due on December 31, 2020. The investment yields a 4 percent compound annual

return to maturity. The company classies the bond as a held-to-maturity investment.

Required

Prepare the journal entries to record the investment on January 1, 2016, receipt of the interest payments

on December 31 of each year 2016 through 2020, and receipt of the bond principal on December 31,

2020, using the effective interest method.

Eastman Corporation manufactures one product. On December 31, 2018, Eastman adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was $850,000. Inventory data are as follows:

                Year                       Inventory @ Year-End Prices                       Price Index (base year 2018

                2019                       $1,180,000                                                                           1.05

                2020                       $1,940,000                                                                           1.15

                2021                       $1,800,000                                                                           1.25

1. Compute the inventory at December 31, 2019, 2020 and 2021, using the dollar-value LIFO method for each year, including the LIFO Reserve.

Please show computations.

2. Prepare the journal entries for the LIFO reserve for 2019 and 2020.

During 2020, Blue Spruce Corporation started a construction job with a contract price of $6.16 million. Blue Spruce ran into severe technical difficulties during construction but managed to complete the job in 2022. The contract is non-cancellable. Under the terms of the contract, Blue Spruce sends billings as revenues are earned. Billings are non-refundable. The following information is available:

Calculate the amount of gross profit that should be recognized each year under the percentage-of-completion method.

2020

2021

2022

The following account balances are taken from Sherwood Ltd.’s adjusted trial balance at June 30, 2020:

Prepare a single-step statement of income for the year ended June 30, 2020.

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.

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Prepare a multi-step statement of income for the year ended June 30, 2020.