On October 15, 2016, Koala, Inc. issued a 10 year bond (with a typical $1000 face value) that had an annual coupon value of $60. [We are assuming that the 2020 coupon has just been redeemed.]

• Initially, the bond was sold for the premium price of $1,025.

• On October 15, 2020, this bond was selling for only $975.

• The market rate of interest for a riskless corporate bond, of this maturity, was 4.5% on October 15, 2016, which reflects market expectations about future rates of inflation.

• The market rate of interest for a riskless corporate bond, of this maturity, was 4.0% on October 15, 2020, which reflects market expectations about future rates of inflation.

Question: It is now October 15, 2020 and suddenly the Federal Reserve announces a massive program to reduce inflation. Instantly, the market rate of interest for a riskless corporate bond that would apply to this bond, falls from 4.0% to 2.5%. If there is no change in the risk premium expected for this Koala, Inc. bond, what will be this bond’s yield to maturity?  [To 3 decimal places.]

Janice acquired an apartment building on June 4, 2020, for $1,600,000. The value of the land is $300,000. Assume Janice sold the apartment building on November 29, 2026.

If required, round your answers to the nearest dollar.

Click here to access the depreciation table to use for this problem.

a. How is the property classified for MACRS?

b. What is the life of the asset for MACRS?

c. Determine Janice's cost recovery deduction for 2020 and 2026.
2020: $
2026: $

On April 30, 2019, Leo purchased and placed in service a new car that cost $78,600. The business use percentage for the car is always 100%. He does not take the additional first-year depreciation or any § 179.

If required, round your answers to the nearest dollar.

Click here to access the depreciation table of the textbook. Click here to access the limits for certain automobiles.

a. What MACRS convention applies to the new car?

b. Is the automobile considered "listed property"?

c. Leo's cost recovery deduction in 2019 is $ and for 2020 is $.

Teal Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $597,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $908,000. The following data pertain to the construction period.

(a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.

Gross profit recognized in 2022

(b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period

Gross profit recognized in 2021

Gross profit recognized in 2022

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?

On January 1, 2020, Empress Bank granted a loan to a borrower. The interest on the loan is 10% payable annually starting on December 31, 2019. The loan matures in three years on December 31, 2022.

After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 8%.

Determine the carrying amount of the loan on January 1, 2020. Use comma to separate figures.

For the following journal entries, do not compound entries. Use comma to separate figures.

Prepare journal entries for January 1, 2020.

Prepare journal entry for receipt of interest on December 31, 2020.

Prepare journal entry for amortization of direct origination cost in 2021. (One entry for interest and one entry for amortization. Do not compound entries.)

Prepare journal entry for receipt of payment of loan in 2022.

Wildhorse Corporation had 118,000 common shares outstanding on December 31, 2019. During 2020, the company issued 14,000 shares on March 1, retired 6,500 shares on July 1, issued a 20% stock dividend on October 1, and issued 21,300 shares on December 1. For 2020, the company reported net income of $472,000 after a loss from discontinued operations of $67,600 (net of tax). The company issued a 2-for-1 stock split on February 1, 2021, and the company’s financial statements for the year ended December 31, 2020, were issued on February 28, 2021.

QUESTION:

Calculate earnings per share for 2020 as it should be reported to shareholders. (Round answer to 2 decimal places)

1.) Winnie the Pooh Inc. issues 5,000 shares of $2 par common stock for $75 a share and 10,000 shares of $6 par preferred stock for $88 dollars per share. Journalize the issuance of these stocks:

2.) Winnie the Pooh Inc. the most generous of the companies declares a $200,000 cash dividend on April 1st, 2020. The company has 10,000 shares of $5 par common stock with a market value of $25 per share and 20,000 shares of $10 par 8% preferred stock with a $60 market value per share. The preferred stock is cumulative, and dividends were not paid in 2019. The date of record is April 20th, and the payment date is April 29th. Make the necessary journal entry showing exactly which shareholders will receive how much of each dividend, also be sure to perform the correct entry on the correct date: April 1st, 2020 journal entry: April 20th, 2020 journal entry: April 29th, 2020 journal entry:

Cansela Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2018 with inventory of 6,100 units of its only product. The beginning inventory balance of $87,200 consisted of the following layers: 2,600 units at $12 per unit = $ 31,200 3,500 units at $16 per unit = 56,000 Beginning inventory $ 87,200 During the three years 2018–2020, the cost of inventory remained constant at $18 per unit. Unit purchases and sales during these years were as follows: Purchases Sales 2018 19,000 20,000 2019 25,000 27,500 2020 21,000 22,000 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 30%.