Cash is a monetary and financial asset. It is the most liquid finance asset; it is also the standard medium of exchange for most business transactions. Cash is usually classified as a current account, however there are circumstances in which cash is classified as a non-current asset. Required: With the aid of a suitable example, explain when can be classified as a non-current asset.

B. Study the following items related to transactions during the year to September 30, 2020 for Thompson’s Tours’ Inc. All transactions are reported on the financial statements in $XCD.

I. A bank overdraft of $200,000 in a chequing account at St Kitts National Bank.

II. A saving account with a balance of $400,000 at Open Campus Bank and chequing account with an overdraft of $100,000 at the same bank repayable on demand.

III. The Operation Manager was given a salary advance of $2,000 on August 24, 2020 and this amount was deducted from his October salary.

IV. CAD$3,045 on hand from tips up to March 31, 2020, its pre-COVID operations when the exchange rate was CAD$1 = $2.01 XCD. On September 30, 2020, the exchange rate was CAD$1 = $1.95 XCD

V. Special Edition Independence postage stamps on hand valued at $200.

VI. Cash holdings of US$100,000, the exchange rate on September 30, 2020 is $2.70.

VII. Petty cash on hand valued at $1,500.

VIII. A cheque in the amount of $5,000 and dated October 23, 2020 was received from a customer on September 27, 2020.

IX. Short term 60 days treasury bill valued at $35,000.

X. Thompson’s Tours’ Inc. invested $1,000,000 in a money market fund with Mona Campus Bank on July 10, 2020 which will mature on October 9, 2020.

Required:

a. List all items from above that would NOT be classified as cash or cash equivalents in the current asset section of Thompson’s Tours’ Inc. Statement of Financial Position as at September 30, 2020? State how each of these items would then be classified in the financials.

b) . Using the information in B above, calculate the cash and cash equivalent value that would appear in Thompson’s Tours’ Inc. Statement of Financial Position on September 30,2020

Presented below are two independent situations related to future taxable and deductible amounts resulting from temporary differences existing at December 31, 2020. 1. Sunland Co. has developed the following schedule of future taxable and deductible amounts. 2021 2022 2023 2024 2025 Taxable amounts $200 $200 $200 $200 $200 Deductible amount — — — (1,400 ) 2. Coronado Co. has the following schedule of future taxable and deductible amounts. 2021 2022 2023 2024 Taxable amounts $200 $200 $200 $200 Deductible amount — — (2,500 ) — Both Sunland Co. and Coronado Co. have taxable income of $3,800 in 2020 and expect to have taxable income in all future years. The tax rates enacted as of the beginning of 2020 are 30% for 2020–2023 and 35% for years thereafter. All of the underlying temporary differences relate to noncurrent assets and liabilities.

1. Compute the net amount of deferred income taxes to be reported at the end of 2020, and indicate how it should be classified on the balance sheet for situation one.

2. Compute the net amount of deferred income taxes to be reported at the end of 2020, and indicate how it should be classified on the balance sheet for situation two.

You set up your own business in merchandising sector in Scranton, PA - opening a luxury watch shop on 1/1/2020.

The following is related information about the business:

-   Specific sub-sector: Merchandising sector.

-   Location: Scranton, PA

-   Business model: merchandiser - buying and selling luxury watches.

-   Investment by owner: $1,000,000

- You hired a shop manager. In order to handle different aspects of business, you had one employee responsible for the purchasing, receiving, and storing of watches purchased. A second employee is responsible for the maintenance of account receivable records and collection from customers. A third employee has responsibility for personal records, timekeeping, preparation of payrolls, and distribution of payroll checks. As a part of his job, the shop manager would do some internal control functions. In addition, you hired one security officer, and 4 full-time sales assistants.

Requirements:

1. Based on information given above, identify at least 3 internal control weaknesses that the company has – be specific and explain why those are weaknesses. (review chapter 6) (10 points).

2. Set up an effective Internal Control System for your business using 5 different internal control elements. Be very specific with each element. At least 2 pages long- double spaced. (review pages 164- 168 – chapter 6 textbook). (50 points).

Note: answer to questions 1 and 2 using APA writing style.

3. Draw a document flowchart to depict that the luxury watches are shipped back to the supplier if they are found to be damaged upon arrival at the receiving warehouse of your company (review pages 368-371 – Chapter 12 textbook) (10 points)

4. You are given the following economic events of the business in 2020 (30 points):

1/1/2020: Opened the business, invested $1,000,000 cash in the business.

1/1/2020: bought a building for the business purpose for $100,000 cash. The building has a useful economic life of 10 years.

1/1/2020: purchased 100 luxury watches for $200,000 with $100,000 cash payment, the remaining amount payable on 2/1/2021. (each watch costs $2,000)

3/1/2020: purchased 50 luxury watches for $250,000 with cash. Each watch costs $5,000.

4/1/2020: purchased 40 luxury watches for $240,000 with cash. Each costs $6,000.

6/1/2020: Sold 130 watched for $1,300,000. Of which $300,000 cash was received at the time of sale. The remaining amount to be received on 5/2/2021.

7/1/2020: paid $1,200 in advance for 12 months’ property insurance (7/1/20 to 7/1/21).

8/1/2020: borrowed $500,000 from a local Chase bank. Interest rate is 12%/year. Interest is paid every 6 months- the first payment date is 2/1/2021. Principal would be paid on 8/1/2021.

9/1/2020: to expand business, you rent a showroom in the next building. Paid $24,000 cash in advance for 12 month’s rent.

12/31/2020: Paid 2020 utilities expense, advertising expense, and miscellaneous expense for $5000, $15,000, and $4,000, respectively.

Salary is paid on the last day of each month. Each month’s salary expense is $20,000.

Notes:

• On 12/31/2020: Physical inventory showed that there were 60 luxury watches on hand at the end of the period. The company used periodic inventory system, and used FIFO costing method.
• Your business used straight-line depreciation method for all fixed assets.
• Ignore tax.

Requirement: Prepare an excel file that includes

1. Tab 1 titled “accounting entries”: prepare all journal entries, adjusting entries, closing entries needed for the period ending on 12/31/2020 based on above economic events (12 points.)

2. Tab 2 titled “income statement”: prepare a multiple-step income statement for year ended 12/31/2020. (5 points)

3. Tab 3 titled “Statement of retained earning”: Prepare Statement of retained earnings for year ended 12/31/2020 (5 points)

4. Tab 4 titled “Balance sheet”: prepare a balance sheet as of 12/31/2020 (8 points)

Claim of Right Doctrine Examples:

1. Clara rented her garage apartment to Jared and collected $450, the first-month’s rent, in advance. She also collected $500 as a security deposit that she will return to Jared if he doesn’t damage the apartment. How much of the $950 is included in Clara’s gross income?

2. Shannon signs a $100,000 contract to develop a plan for integrating the computer operations of State University in December. Under the contract, she receives a $30,000 cash advance against future payments on the contract upon signing the contract. The contract stipulates that if Shannon does not produce an acceptable plan, she must repay any portion of the advance not earned to date. Does Shannon have any income from the receipt of the advance? When?

3. a. Tom, a contractor, was paid $20,000 in May for adding a screened porch onto the house of a customer. In November,         certain spots in the porch began leaking. The customer threatened to sue and requested $5,000 of         the $20,000 cost be          returned to him due to the leaking. None was returned to the customer in 2020. How much gross income must Tom            report in the current year, 2020?

      b. The dispute between Tom and his customer was settled in court in 2021, the following year. The court required Tom to          pay $3,000 to the customer for the water leakage problem. When should Tom report the $3,000 deduction? In 2020 or in       the year of settlement, 2021?

Fixed Annuity Example:

      Renee purchased a 10-year annuity for $4,000. It pays her $100 per month, and she received $1,200 from the annuity during the year. How much of the $1,200 is included in gross income?

      Expected return/value of the annuity =

      Exclusion % =             Cost_____    

                              Exp. Return/Value

      Excluded Income =

      Gross income =

Life Annuity Examples:

1.    George, age 68, purchased a life annuity for $30,000. He begins receiving $300 per month in January. What amount is included in his gross income?

      Expected return =

      Exclusion % =       Cost    

                              Exp. Return

      Excluded Income =

      Gross income =

2.    Don has been employed by Longbow Corporation for 25 years. During that time, he bought an annuity at a cost of $50 per month ($15,000 total cost). The annuity will pay him $200 per month after he reaches age 69. Don turned 69 in April 2020 and received 8 payments on the contract.

a. How much gross income does Don report in the current year?

       Expected return = 16.8* x ($200 x 12) = $40,320         *Don is age 69 when the annuity payments begin.

       Exclusion % =    Cost    =              $15,000 = 37.2%

                                Exp. Ret./Value      $40,320

       Monthly Excluded Income = 37.2% x $200 = $74

     Monthly Gross Income = $200 - $74 = $126       

      Annual Gross Income = $126 x 8 monthly receipts = $1,008 (May thru December)

b.    What amount would be included in Don’s gross income in 2038?

      [$15,000 ÷ $74 (exclusion amount)] = 202.7 payments   So, cost is recovered with 203rd payment:

      2020:

      2021 – 2036:

       2037:

        Don recovers his investment of $15,000 (with his 203^rd monthly receipt) in March 2037. Therefore, in 2038, he will include

c.    Assume Don dies on August 4, 2031, after receiving his August payment. What amount would be included and deducted on his final tax return?

            2020:

            2021 – 2030:

            2031:

       Don only received 136 of the 202 payments expected from the contract. Therefore, he has not recovered all of his $15,000 investment through his excluded portions.

      Income on 2031 return:

      Deduction on 2031 return:

Overview of Business Entity Taxation:

MF has decided to start saving for his retirement. He will start at the end of this year saving $2000 a year for 10 years and $5,000 a year for the next 15 years after that. When he has finished with this period, he will still have 10 years left until he retires. The interest rate before retirement is 9.5% interest per year. After he retires the expected interest rate is 8%. If he wants to withdraw from his account for 25 years, how much will he be able to withdraw each year so nothing is left at the end of the 25 years?

The following reaction was performed in a 1.60 L non-leaking container at a constant temperature of 134.0 ℃.

4NO(g)+6H2O(g)→4NH3(g)+5O2(g)

Upon completion of the reaction 0.970 g O2 was formed.

A) What was the pressure of O2 after the reaction was completed?

B) What was the minimum starting pressure of NO?

C) What was the minimum starting pressure of H2O?

D) If stoichiometric amounts of NO and H2O were used and the reaction went to completion, what was the total pressure of the system before the reaction took place?

E) If stoichiometric amounts of NO and H2O were used, what was the total pressure of the system after the reaction went to completion?

1. A company is evaluating the addition of equipment to its present operations. They need to purchase equipment for $160,000. The 5-year MACRS GDS recovery method (see table 7.3) is appropriate for the investment and the total tax rate is 40%. Gross revenue is expected to be $30,000/YEAR while maintenance cost is expected to be $5,000/YEAR. It is expected that operations will shut down by the end of the 4^th year with a salvage value of $20,000.

Part A:

Draw a before tax cash flow diagram

Part B:

Use a table to show the development of the after-tax cash flow

Part C:

If the after-tax MARR is 12%, is the investment profitable?

A researcher studies the effect of cognitive psychotherapy on positive self-regard. The number of positive statements made about oneself is recorded for each participant during the first meeting. After 8 weekly therapy sessions, the measures are repeated for each person. The therapist predicts that cognitive psychotherapy will increase the number of positive statements. For the following data: Before Treatment: 7, 6, 9, 5 After Treatment: 10,12,7,17

Null hypothesis: Cognitive psychotherapy will not increase positive self-regard.

What is the appropriate conclusion from this study?

reject alternative hypothesis

retain alternative hypothesis

reject null hypothesis

fail to reject null hypothesis

A titration is performed by adding 0.791 M KOH to 40 mL of 0.127 M HC₃H₅O₂.

a) Calculate the pH before addition of any KOH.

b) Calculate the pH after the addition of 1.28, 3.21 and 5.42 mL of the base.(Show your work in detail for one of the volumes.)

c) Calculate the volume of base needed to reach the equivalence point.

d) Calculate the pH at the equivalence point.

e) Calculate the pH after adding 5.00 mL of KOH past the equivalence point.

f) Plot pH (y axis) versus volume of KOH added (x axis) for each calculation above. Sketch the titration curve.

Assume the following selected balances appear in their normal debit or credit column in the adjusted trial balance for the Leonard Company:

Required:
a. Use T-Accounts to demonstrate the necessary closing entries for the company at 12/31/13. (T-accounts should show the balance before closing and the balance after closing.)
b.   Determine the Retained Earnings account balance after the year-end closing.