P18.8 Sarah Corp. reported the following differences between SFP carrying amounts and tax bases at December 31, 2019:

The differences between the carrying amounts and tax bases were expected to reverse as follows:

Tax rates enacted at December 31, 2019, were 31% for 2019, 30% for 2020, 29% for 2021, and 28% for 2022 and later years.

During 2020, Sarah Corp. made four quarterly tax instalment payments of $9,500 each and reported income before income tax on its income statement of $119,650. Included in this amount were dividends from taxable Canadian corporations of $5,800 (non-taxable income) and $25,000 of expenses related to the executive team's golf dues (non–tax-deductible expenses). There were no changes to the enacted tax rates during the year.

As expected, book depreciation in 2020 exceeded the capital cost allowance claimed for tax purposes by $17,500, and there were no additions or disposals of property, plant, and equipment during the year. A review of the 2020 activity in the Warranty Liability account in the ledger indicated the following:

All warranties are valid for one year only. The Pension Liability account reported the following activity:

Pension expenses are deductible for tax purposes, but only as they are paid to the trustee, not as they are accrued for financial reporting purposes.

Sarah Corp. reports under IFRS.

Instructions

a. Calculate the Deferred Tax Asset or Deferred Tax Liability account at December 31, 2019, and explain how it should be reported on the December 31, 2019 SFP.

b. Calculate the Deferred Tax Asset or Deferred Tax Liability account at December 31, 2020.

c. Prepare all income tax entries for Sarah Corp. for 2020.

d. Identify the balances of all income tax accounts at December 31, 2020, and show how they will be reported on the comparative statements of financial position at December 31, 2020 and 2019, and on the income statement for the year ended December 31, 2020.

e. How would your responses to parts (a) and (d) change if Sarah Corp. followed the ASPE future/deferred income taxes method?

please use accelerated investment incentive, not half rule

Marmidan Mold Shop Inc. designs and builds molds for the automotive and aircraft industries. The account balances in the company’s general ledger on January 1, 2020 (first day of the new annual fiscal year) were as follows (all account balances are in their normal position):

Cash                                                                    $     3,700

Accounts receivable                                                   5,900

Supplies inventory                                                    29,300

Land                                                                        168,500  

Buildings                                                                 116,500

Accumulated depreciation, buildings                       37,500   

Equipment                                                                 58,500

Accumulated depreciation, equipment                     18,000

Accounts payable                                                      25,200

Income tax payable                                                   16,600

Interest payable                                                           4,200

Wages payable (due in 2020)                                    15,700                                         

9% Notes payable ($10,000 due June 30, 2021,

     balance due June 30, 2022)                                  61,500

Common shares                                                       151,500

Retained earnings, Dec. 31, 2019                              52,200         

Transactions during 2020:

1.The company provided sales services to customers, on credit, for $ 210,300. In addition, the company produced cash sales to customers of $ 62,300.

2.Accounts receivable from customers of $ 15,600 remains to be collected at December 31, 2020.

3.Inventory of $ 62,900 was purchased on credit and debited to the supplies inventory account.

4.Minor parts were purchased with cash for $ 7,400 and debited to the supplies inventory account.

5.Wages payable at the beginning of 2020 were paid early in 2020. In addition, wages were earned by employees and paid during 2020 in the amount of $ 112,000.

6.Income tax payable at the beginning of 2020 was paid early in 2020.

7.Payments of $ 73,000 were made to creditors for supplies previously purchased on credit.

8.One year’s interest at 9% was paid on the notes payable at July 1, 2020.

9. During 2020, Don Tallint, the principal shareholder, purchased a new car for his wife

    Debbie. The new car cost $ 45,000 and was paid for with cash from personal sources.

10.Property taxes were paid on the land and buildings in the amount of $ 17,000 with cash.

11.Dividends were declared and paid in caah in the amount of $ 7,200.

Information available for year end adjusting entries:

12.•Supplies inventory was counted on December 31, 2020 and it was determined the supplies inventory still on hand at yearend was $ 31,900.

13. •Annual depreciation on the buildings is $ 6,000.

14•Annual deprecation on the equipment is $ 5,500

15•Additional wages of $4,000 were earned but are unpaid and unrecorded at December 31, 2020.

16•Interest for six months at 9% per year on the notes payable is unpaid and unrecorded at December 31, 2020.

17•Income taxes of $ 16,500 were unpaid and unrecorded at December 31, 2020.

Required:

Prepare any necessary adjusting journal entries for items 11 to 17 above and record the adjusting journal entries in the T accounts while adding any new T accounts that you need as you complete this task.( Record your journal entries on the electronic worksheet )

Estimating and Recording Bad Debt Estimates and Write-offs; Reporting of Accounts Receivable

At December 31, 2020, its annual year-end, the accounts of Sun Systems Inc. show the following.

1. Sales revenue for 2020, $468,000, of which one-sixth was on account.
2. Allowance for doubtful accounts, balance December 31, 2019, $2,340 credit.
3. Accounts receivable, balance December 31, 2020 (prior to any write-offs of uncollectible accounts during 2020), $46,930.
4. Uncollectible accounts to be written off, December 31, 2020, $2,730.
5. Aging schedule at December 31, 2020, showing the following breakdown of total accounts receivable, excluding amounts to be written off.

Required

a. Prepare the 2020 entry to write off the uncollectible accounts.

b. Prepare the 2020 adjusting entry to record bad debt expense for each of the following separate assumptions concerning expected bad debt loss rates. Note: Treat each of the following scenarios separately, they are independent of one another.

1. Bad debt expense is based on credit sales, 1.5%. (Hint: See p. 8-19: Alternative to Estimating Net Realizable Value)

2. The Allowance for Doubtful accounts is based on total receivables at year-end, 2.5%.

3. The Allowance for Doubtful accounts is based on aging schedule: not past due, 0.5%; past due 1–60 days, 1%; and past due over 60 days, 8%.

4. Bad debt expense is based on direct write-off method (assume entry in part a has not been recorded).

c. Prepare the 2020 balance sheet disclosure relating to accounts receivable for each assumption 1 through 4 of part b.

a.

b. Note: Treat each scenario separately, they are independent of one another.

1.

2.

3.

4.

c.  

Note: Do not use negative signs with your answers.

. Prepare the necessary journal entry on September 30, 2020 to account for:

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

Ink Spill, a printing company, provides printing services to its customers. Customers normally pay for printing services in advance. In October 2020, Ink Spill received $20,000 from customers for services to be provided in November 2020. A senior accountant at Ink Spill wants to record the full amount as a liability in the company’s Balance Sheet at the end of October 2020.

Required:

Should the $20,000 be recorded as a liability in the company’s Balance Sheet at the end of October 2020? Explain, using the definition and recognition criteria of a liability in your explanation.

11-

Clampett, Inc., has been an S corporation since its inception. On July 15, 2020, Clampett, Inc., distributed $53,000 to J.D. His basis in his Clampett, Inc., stock on January 1, 2020, was $46,000. For 2020, J.D. was allocated $6,000 of ordinary income from Clampett, Inc., and no separately stated items. What is J.D.'s basis in his Clampett, Inc., stock after all transactions in 2020?

Multiple Choice

• $52,000.

• None of the choices are correct.

• ($6,000).

• $46,000.

• $40,000.

The dollar-value LIFO method was adopted by Blossom Corp. on January 1, 2020. Its inventory on that date was $399,900. On December 31, 2020, the inventory at prices existing on that date amounted to $380,800. The price level at January 1, 2020, was 100, and the price level at December 31, 2020, was 112.

On December 31, 2021, the inventory at prices existing on that date was $421,245, and the price level was 115. Compute the inventory on that date under the dollar-value LIFO method.

True/False for the following:

1) It is standard practice for a term sheet to require more than half the board seats to go to the seed investors.

2) The term sheet between an investors and founder is a legally binding agreement.

3) If a 1X liquidation preference is included in the term sheet the Venture Capitalist will never be able to realize a gain on its investment but will be protected from a loss.

4) An option pool is used by founders to make payments to employees. The options grant the employees the right but not the obligation to buy shares of the companies shares at a set price before they expire. Using options conserves cash and ties the employee to the long-term success of the venture.

5) A term sheet will address what happens to the shares of founders should founders decide to leave the company.

Please respond too this statement with 2 paragraphs on why you agree with this statement and providing additional information (Explanation):

How are conventional banks different than the Grameen Bank?--Conventional banks differ from Grameen Bank in many numbers of ways. It begins with the goal of the institution. Conventional Banks’ goal is to maximize profits. They want to create a company and products that are intended to create profit to the company. Grameen Bank is not intended to create profit for the person who created. Mohammad Yunus, the founder of Grameen Bank, wanted to create a social business that is intended to be self-sustaining, but not created to make him rich. They also differ from conventional banks by having the barrowers benefit from the company’s profits. The profits from Grameen Bank go back to the barrowers.