1. Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $6,000.

Using the sum-of-the-years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be:

Multiple Choice

• $19,200 and $30,800 respectively.

• $19,200 and $28,800 respectively.

• $17,600 and $26,400 respectively.

• $17,600 and $32,400 respectively.

  2. Cutter Enterprises purchased equipment for $66,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $7,500.
  
  Using the sum-of-the-years'-digits method, depreciation for 2018 and book value at December 31, 2018, would be: (Do not round depreciation rate per year)

  Multiple Choice

• $22,000 and $36,500 respectively.

• $19,500 and $46,500 respectively.

• $22,000 and $44,000 respectively.

• $19,500 and $39,000 respectively.

On February 1, 2018, Strauss-Lombardi issued 8% bonds, dated February 1, with a face amount of $630,000. The bonds sold for $572,036 and mature on January 31, 2038 (20 years). The market yield for bonds of similar risk and maturity was 9%. Interest is paid semiannually on July 31 and January 31. Strauss-Lombardi’s fiscal year ends December 31.

Required:
1. to 4. Prepare the journal entry to record their issuance by Strauss-Lombardi on February 1, 2018, interest on July 31, 2018 (at the effective rate), adjusting entry to accrue interest on December 31, 2018 and interest on January 31, 2019. (Do not round your intermediate calculations and round your final answers to nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Central Supply purchased a new printer for $70,000 in January of 2017. It has a fiscal yearend of December 31. The printer is expected to operate for nine years, after which it will be sold for salvage value (estimated to be $6,550).

a.      (i) How much is the depreciation expense for the year end December 2017 and for yearend December 2018 if the company uses the double-declining-balance method?

(ii) What does the disclosure look like for the Balance Sheet as it relates to the printer for the year end December 2017 and for yearend December 2018 (using the double-declining balance method)?

b.      (i) How much is the depreciation expense for the year end December 2018 if the company uses the straight-line method?

(ii) What is the amount to be disclosed on the Balance Sheet as the value for the printer for the year end December 2018 (using the straight-line method)?

Isabella traveled to a neighboring state to investigate the purchase of an interior design firm. Her expenses included travel, legal, accounting, and miscellaneous expenses. The total was $51,000. She incurred the expenses in January and February of 2018. In each of the following scenarios, what can Isabella deduct in 2018?

In your computations, round the per-month amount to the nearest dollar. If an amount is zero, enter "0".

a. Isabella was in the interior design business and did not acquire the interior design firm.
$

b. Isabella was in the interior design business. She acquired the interior design firm and began operating it on August 1, 2018.
$

c. Isabella did not acquire the interior design firm and was not in the interior design business.
$

d. Isabella acquired the interior design firm but was not in the interior design business when she acquired it. Operations began on May 1, 2018.
$

Given the flowing financial information about Amazon

1. (4 pts) Calculate Amazon’s operating cycle

2. (6 pts) Calculate Amazon’s cash cycle. How will you interpret their cash cycle?

On January 1, 2018, Cameron Inc. bought 10% of the outstanding common stock of Lake Construction Company for $170 million cash. At the date of acquisition of the stock, Lake's net assets had a fair value of $700 million. Their book value was $600 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference. Lake’s net income for the year ended December 31, 2018, was $170 million. During 2018, Lake declared and paid cash dividends of $20 million. The buildings have a remaining life of 5 years.

Required:
1. Complete the table below and prepare all appropriate journal entries related to the investment during 2018, assuming Cameron accounts for this investment by the equity method.
2. Determine the amounts to be reported by Cameron.Determine the amounts to be reported by Cameron. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).)

On December 15, 2018, a US company imported 400,000 barrels of oil from a country in the Europe. The US company agreed to pay 40,000,000 euros on February 15, 2019. To reduce the risk of loss due to exchange rates, the company entered into a forward contract to buy 40,000,000 euros on February 15 at the forward rate of $.0269. Direct exchange rates on various dates were:

                                         Spot Rate          Forward Rate 2/15 Delivery

December 15, 2018        $.0239 $.0269

December 31, 2018 .0224             .0254

February 15, 2019                                   .0291

The US company is a calendar-year company.
(show calculations)
Compute the following:

1. The dollars to be paid on February 15, 2019, to acquire the 40,000,000 euros from the exchange dealer.

2. The dollars that would have been paid to settle the account payable had the US company not hedged the purchased contract with the forward contract.

3. The discount or premium on the forward contract.

4. The transaction gain or loss on the exposed liability related to the oil purchase in 2018 and 2019. 5. The transaction gain or loss on the forward contract in 2018 and 2019.

Noelle Inc. issued a $1.3 million bond at 9% for 3 years to finance a project. The bonds were issued on January 1, 2018. The bond pays interest semi annually on July 1 and January 1. The market rate is 8%. The company used effective interest method. Year end is September 30. Required: a) Calculate the proceeds (price) that Noelle Inc. would receive for the bond on January 1, 2018. The PV tables can be used. Show calculations b) Prepare a bond amortization schedule using the effective interest method. c) Prepare the journal entries to record the initial sale of the bond on January 1, 2018, the interest payment on July 1, 2018, the accrual on September 30, 2018 and the interest payment on January 1, 2019. d) Assume that on May 1, 2020, Noelle Inc. decides to retire 30% of the bonds for a cash price of 102 plus accrued interest. 1. Prepare the journal entry to pay out the interest to the bondholders on May 1, 2020 due to the bond retirement 2. Prepare the journal entry for the bond retirement on May 1, 2020