Cansela Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2018 with inventory of 5,600 units of its only product. The beginning inventory balance of $75,600 consisted of the following layers:
  

  
During the three years 2018–2020, the cost of inventory remained constant at $17 per unit. Unit purchases and sales during these years were as follows:
  

  
Required:
1. Calculate cost of goods sold for 2018, 2019, and 2020.
2. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for each of the three years.
3. Determine the effects of LIFO liquidation on cost of goods sold and net income for 2018, 2019, and 2020. Cansela’s effective income tax rate is 35%.

Exercise 21-10 (Part Level Submission)

The following facts pertain to a non-cancelable lease agreement between Sandhill Leasing Company and Teal Mountain Company, a lessee.

The collectibility of the lease payments by Sandhill is probable.

c.  Prepare a lease amortization schedule for Rode for the 5-year lease term.

d.  Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2020 and 2021. Rode's annual accounting period ends on December 31. Reversing entries are used by Rode.

Computing and Assessing Plant Asset Impairment

Zeibart Company purchases equipment for $225,000 on July 1, 2016, with an estimated useful life of 10 years and expected salvage value of $25,000. Straight-line depreciation is used. On July 1, 2020, economic factors cause the fair value of the equipment to decline to $90,000. On this date, Zeibart examines the equipment for impairment and estimates $125,000 in future cash inflows related to use of this equipment.

a. Is the equipment impaired at July 1, 2020? Explain.

b. If the equipment is impaired on July 1, 2020, compute the impairment loss and prepare a journal entry to record the loss.

c. What amount of depreciation expense would Zeibart record for the 12 months from July 1, 2020 through June 30, 2021? Prepare a journal entry to record this depreciation expense.

(Hint: Assume no change in salvage value.)

d. Using the financial statement effects template, show how the entries in parts b and c affect Zeibart Company's balance sheet and income statement.

On 1 July, 2018 Bundoora Ltd acquires 25 percent of the issued capital of Preston Ltd for a cash consideration of $150,000. At the date of acquisition, the share capital and retained earnings of Preston Ltd are as follows: Share capital $120,000 and Retained earnings $480,000 (Total Shareholders’ equity $600,000). Additional information:  For the year ending 30 June 2019 Preston Ltd records an after-tax profit of $50,000 from which it pays a dividend of $30,000.  For the year ending 30 June, 2020 Preston Ltd records an after-tax loss of $30,000. On 30 June 2020, Preston Ltd declares dividends of $10,000.  Bundoora Ltd has a number of subsidiaries. Required: (i) Prepare the journal entries using both the cost and equity methods of accounting in context of parent entity for the investment in Preston Ltd for each of the years ended 30 June 2019 to 2020. (ii) Calculate the carrying amount of the investment in Preston Ltd at 30 June 2020.

On 1 July, 2018 Bundoora Ltd acquires 25 per cent of the issued capital of Preston Ltd for a cash consideration of $150,000. At the date of acquisition, the share capital and retained earnings of Preston Ltd are as follows: Share capital $120,000 and Retained earnings $480,000 (Total Shareholders’ equity $600,000). Additional information:  For the year ending 30 June, 2019 Preston Ltd records an after tax profit of $50,000 from which it pays a dividend of $30,000.  For the year ending 30 June, 2020 Preston Ltd records an after tax loss of $30,000. On 30 June 2020, Preston Ltd declares dividends of $10,000.  Bundoora Ltd has a number of subsidiaries.

Required:

(i) Prepare the journal entries using both the cost and equity methods of accounting in context of parent entity for the investment in Preston Ltd for each of the years ended 30 June 2019 to 2020.

(ii) Calculate the carrying amount of the investment in Preston Ltd at 30 June 2020.

On 1 July, 2018 Bundoora Ltd acquires 25 per cent of the issued capital of Preston Ltd for a cash consideration of $150,000.

At the date of acquisition, the share capital and retained earnings of Preston Ltd are as follows: Share capital $120,000 and Retained earnings $480,000 (Total Shareholders' equity $600,000).

Additional information:

§ For the year ending 30 June, 2019 Preston Ltd records an after tax profit of $50,000 from which it pays a dividend of $30,000.

§ For the year ending 30 June, 2020 Preston Ltd records an after tax loss of $30,000. On 30 June 2020, Preston Ltd declares dividends of $10,000.

§ Bundoora Ltd has a number of subsidiaries.

Required:

(i)                Prepare the journal entries using both the cost and equity methods of accounting in context of parent entity for the investment in Preston Ltd for each of the years ended 30 June 2019 to 2020.                                                                           

(ii)             Calculate the carrying amount of the investment in Preston Ltd at 30 June 2020.

Accounting

On June 1, 2020, Shebandowan Investors Inc. issued a $4,800,000, 12%, three-year bond. Interest is to be paid semiannually beginning December 1, 2020. Assume that the market rate of interest is 13%. Use TABLE 14A.1 and TABLE 14A.2. (Use appropriate factor(s) from the tables provided.) Required: Part 1 Record the following entries: (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

a. Issuance of the bonds on June 1, 2020

b. Payment of interest on December 1, 2020

c. Adjusting entry to accrue bond interest and discount amortization on January 31, 2021

d. Payment of interest on June 1, 2021 Assume Shebandowan Investors Inc. has a January 31 year-end.

Part 2

Show how the bonds will appear on the balance sheet under non-current liabilities at January 31, 2022. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

On January 1, 2020, Flounder Company purchased 11% bonds, having a maturity value of $320,000 for $344,893.28. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Flounder Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows.

(Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

In Jan. 2020 Mary Jones was earning $40,000 in net income and spending $39,000 on a yearly basis. Mary Jones loses her job on April 1, 2020, and regains the same job ---at the same pay ---exactly six months later on October 1, 2020. During the six month layoff period, in the first three months, April, May and June, she earns $600 a week in EXTRA unemployment benefits -- IN ADDITION TO the $347 a week he earns, which is the average UI benefit for the workers in our state. Thus, for these 13 weeks, she earns $947 per week. In the next three months, July, August and September, she earns $347 per week in UI benefits. She and her family cut back on their spending by ten percent during the six months duration of unemployment, but then they go back to spending $39,000 on a yearly basis after he goes back to work. What is her net income level and spending level for 2020? What is his A.P.C. for the year?