Exercise 17-05 (Video)

The current sections of Scoggin Inc.’s balance sheets at December 31, 2019 and 2020, are presented here.

Scoggin’s net income for 2020 was $153,200. Depreciation expense was $25,000.

Prepare the net cash provided by operating activities section of the company’s statement of cash flows for the year ended December 31, 2020, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

The inventory of Sunland Company on December 31, 2020, consists of the following items.

^a Part No. 121 is obsolete and has a realizable value of $1.00 each as scrap.

(a) Determine the inventory as of December 31, 2020, by the LCNRV method, applying this method to each item.

(b) Determine the inventory by the LCNRV method, applying the method to the total of the inventory.

On 1/04/2019, AUS Ltd enters into a binding agreement with a Canadian company to construct an item of machinery that manufactures spoons. The cost of the machinery is $400,000 Canadian Dollars. The construction of the machinery is completed on 1/06/2020 and shipped FOB Canada on that date. The debt is unpaid at 30 June 2020, which is also AUS Ltd’s end of reporting period. The exchange rates at the relevant dates are: • 01/04/2019 A$1.00 = C$1.10 • 30/06/2019 A$1.00 = C$1.05 • 01/06/2020 A$1.00 = C$1.02 • 30/06/2020 A$1.00 = C$1.00 Required: Provide the required journal entries for the above transactions. (7 marks, word limit: n/a) Please provide unique answer than others.

In 2020 the United States will use some $10 trillion of manufactured goods as measured by the price level as it will be in 2020—producing $9 trillion and paying for the extra $1 trillion by exporting services. Let’s use that as our unit of the quantity of manufactures—$1 worth at 2020 prices is equal to one unit of manufactured goods. And let’s set our index of the price of manufactured goods in 2000 equal to 1.

Suppose the supply curve for manufactured goods has constant-returns-to-scale, with no producer having (much of) an opportunity cost advantage over any other.

Suppose the demand curve for manufactured goods is a straight line linear function such that an increase in the price from its 2000 value of 1 to a value of 2 would lead to a reduction in the quantity demanded by $1 trillion.

What will be the equilibrium price of manufactures in 2020?

1. 14 marks Contract price $ 3,140,000 Total estimated construction cost at contract inception $ 2,305,000 2020 2021 2022 Total costs incurred to date $ 691,500 $ 1,540,500 $ 2,350,000 Estimated costs to complete $ 1,613,500 $ 829,500 $ - Customer billings to date $ 625,000 $ 2,175,000 $ 3,140,000 Collections to date $ 600,000 $ 1,790,000 $ 2,899,000 Required: 1. Calculate the gross profit that should be recognized for 2020, 2021, and 2022, using the percentage of completion method. 2. Prepare the journal entries required for the 2021 year assuming that the percentage of completion method is used. 3. Determine the gross profit to be recognized for 2020, 2021, and 2022, using the completed contract method. On February 1, 2020, Kenora Contractors agreed to construct a building. The project was scheduled to be finished in 2022. Information relating to the costs and billings for this contract is as follows:

Here is the unemployment summary from February, 2020 (pre-COVID19)

Data from February 2020:

Unemployed: 5.7 million

Employed: 158.8 million

Not in the Labor Force: 95.1 million

Unemployment rate: 3.5%

Labor force participation rate: 63.4%

Here is the unemployment summary from April, 2020

Data from April, 2020

Unemployed: 23.08 million

Employed: 133.4 million

Not in the Labor Force: 103.4 million

Unemployment rate: 14.7%

Labor force participation rate: 60.2%

1. Describe what happened between February and April using the unemployment and labor force participation rates. You must JUSTIFY these changes using rationale from this chapter. You must consider how we calculate unemployment and the labor force participation rate (look at the numbers that go into the calculations and not just the percentages).

Sheridan Corp. has a deferred tax asset account with a balance of $74,440 at the end of 2019 due to a single cumulative temporary difference of $372,200. At the end of 2020, this same temporary difference has increased to a cumulative amount of $450,400. Taxable income for 2020 is $757,900. The tax rate is 20% for all years. At the end of 2019, Sheridan Corp. had a valuation account related to its deferred tax asset of $44,800.

(a) Record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming that it is more likely than not that the deferred tax asset will be realized in full.

(b) Record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming that it is more likely than not that none of the deferred tax asset will be realized.

Roberto Company makes wooden foot stools and has prepared a sales budget of 15,000 finished units for the first quarter of 2020. The company has an inventory of 450 foot stools on hand at December 31, 2019 and has a target finished goods inventory of 750 foot stools at the end of the first quarter, 2020. It takes five (5) board feet of wood to produce a foot stool. The company has 15,000 board feet of wood on hand at December 31, 2019 and a target ending inventory of 3,750 board feet at the end of the first quarter, 2020. The wood costs $8 per board foot. What is the cost of direct material used in the first quarter of 2020?

Group of answer choices $588,000 $600,000 $522,000 $612,000

On January 1, 2020, Oriole Company purchased 11% bonds, having a maturity value of $328,000 for $353,515.61. 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. Oriole 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.

2020
$351,400      
2023
$338,100
2021
$337,000      
2024
$328,000
2022
$336,000              

(a)       Prepare the journal entry at the date of the bond purchase.
(b)       Prepare the journal entries to record the interest revenue and recognition of fair value for 2020.
(c)       Prepare the journal entry to record the recognition of fair value for 2021.