Foreign Currency Commitment:

U.S. Corporation entered into a contract on November 1, 2017 to sell two machines to International Company for 750,000 foreign currency units (FCU). The machines were to be delivered and the amount collected on March 1, 2018. In order to hedge its commitment, U.S. entered, on November 1, 2017 , into a forward contract to sell 750,000 FCU on March 1, 2018. The forward contract met all conditions for hedging a foreign currency commitment. Selected exchange rates for FCU at various dates were as follows:

Required: Prepare all journal entries relative to the above on the following dates:

1. November 1, 2017.

2. Year-end adjustments on December 31, 2017.

3. March 1, 2018. (Include all adjustments related to the forward contract)

IFRS - Accounting Questions

Write journal entries for the following series of foreign currency transactions:

a. On September 18, 2003, when the yen was valued at 225 to the dollar, a U.S. firm purchased transistors from a Japanese firm, and agreed to pay 6,750,000 yen on November 15, 2003.

b. On October 26, 2003, the same firm purchased leather goods from a Mexican company, agreeing to pay 4 million pesos on December 15, 2003. On October 26, 2003, one peso was worth $.004.

c. On November 24, 2003, the U.S. firm sold ?375,000 worth of cotton to a British firm when the pound was worth $1.45. Payment was to be received on January 15, 2004.

d. The following exchange rates prevailed on the dates below: __________________________________________________________________

November 15, 2003……………………………………………….$1.00 = 200 yen

December 15, 2003……………………………………………… $1.00 = 275 pesos

December 31, 2003……………………………………….………..$1.48 = 1 pound

January 15, 2004………………………………………..........……$1.42 = 1 pound

Question 16

C.T. Balls Cargo incorporated is responsible for the majority of imports brought into New Jersey. In fact, C.T. Balls carries 82 percent of New Jersey's imports. Taking this into consideration, New Jersey lawmakers enacted a law that only allows C.T. Balls Cargo incorporated to bring imports to New Jersey. The New Jersey legislature is aware that the law conflicts with the U.S. Constitution, but believes the law to be valid because there is a rational reason for the law. The New Jersey legislature stated that they passed the law because it is more cost effective and less burdensome for the state to only have to regulate one cargo ship company.

Which of the following statements regarding the above hypothetical scenario is true?

The law is valid because their is a rational basis for the law.

The U.S. Constitution has no effect on any state laws, including New Jersery's import law.

The law would be valid if it involved exports, but is void because it pertains to imports.

The law is void and has no legal effect

Greek Tavern Co was established on July 1, 2020 by a cash investment of $100,000. The following is the Trial Balance prepared on September 30, 2020.

During the three month period, the following activities occurred: 1. The physical checkup revealed that $4,000 worth of supplies is still on hand on September 30. 2. The annual depreciation of office equipment is $15,000. The equipment were purchased on August 1, 2020. 3. The unearned revenue was created on September 1, 2020 by an advance payment from a major customer for services extending over the period August 1 till December 31, 2020. 4. The loan was borrowed on July 1, 2020 for 5 years from BOND Bank. The bank charges 9% interest. 5. The firm pays its 5 employees a weekly salary of $6250. The policy is that it pays every Monday of the week for the previous 5 days' work, Monday through Friday. September 30, 2020 is a Tuesday. Last time the firm paid salary was on Monday September 29, 2020 for the week from 22 till 25. 6. Rogelio paid $50,000 cash on July 1, 2020 for 2 years' office rent.

Rogelio Legal Advisory firm follows the fiscal year extending from July 1 till September 30 and adjust Quarterly.

A. Journalize all the necessary adjusting entries on September 30, 2020 showing all the calculations.

B. Compute the Net Income.

Pharoah Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $93,000. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2020. Pharoah expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December 31, beginning December 31, 2020.

Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved

Prepare the journal entry at commencement of the lease for Pharoah.

Prepare the journal entry at commencement of the lease for Sharrer

Prepare the journal entry at commencement of the lease for Sharrer, assuming (1) Sharrer does not know Pharoah’s implicit rate (Sharrer’s incremental borrowing rate is 9%), and (2) Sharrer incurs initial directs costs of $10,500.

a.

a. For May 2020, the cost of Direct Materials transferred into the Filling Dept. of a liquid soap company is $20,200. Direct Labor cost incurred for the same department is unknown, and Factory Overhead cost applied to production is 80% of Direct Labor cost. The total cost of finished goods transferred out of the Filling Dept. is $85,600. The cost of beginning work in process (WIP) inventory in the Filling Dept. on May 1 was $12,000 and the ending balance in WIP Inventory-Filling on May 31 is $6,000. Calculate the cost of Direct Labor incurred by the Filling Dept. during May 2020.

b. The following data is taken from the production budget for the year: Beginning finished goods units 11,000; Units to be produced in the first quarter 82,000; First quarter sales units 58,000; Sales units budgeted for the second quarter 68,000. Second quarter finished goods inventory is budgeted at 12,000 units. Calculate units to produce in the second quarter.

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Update the balance sheet above to reflect the transactions below, which occur on January 6, 2020

1. Buy $15,000 worth of manufacturing supplies on credit
2. Issue $85,000 in stock
3. Borrow $63,000 from a bank
4. Pay $5,000 owed to a supplier
5. Receive payment of $12,000 owed by a customer
6. Purchase equipment for $44,000 in cash
7. Pay $7,000 owed to a supplier

What is the final amount in Accounts Receivable?

Vernon Company has an opportunity to purchase a forklift to use in its heavy equipment rental business. The forklift would be leased on an annual basis during its first two years of operation. Thereafter, it would be leased to the general public on demand. Vernon would sell it at the end of the fifth year of its useful life. The expected cash inflows and outflows follow:

Required

1. a.&b. Determine the payback period using the accumulated and average cash flows approaches. (Round your answers to 1 decimal place.)

a. Payback period (accumulated cash flows) = ? years

b. Payback period (average cash flows) = ? years

Monty Corp. purchased a new machine on October 1, 2019, at a cost of $124,000. The company estimated that the machine will have a salvage value of $15,000. The machine is expected to be used for 10,000 working hours during its 4-year life.

Compute the depreciation expense under straight-line method for 2019. (Round answer to 0 decimal places, e.g. 2,125.)

Compute the depreciation expense under units-of-activity for 2019, assuming machine usage was 1,860 hours. (Round depreciable cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate to 0 decimal places, e.g. 15%. Round final answer to 2 decimal places, e.g. 2,125.25.)

Compute the depreciation expense under declining-balance using double the straight-line rate for 2019 and 2020. (Round answers to 0 decimal places, e.g. 2,125.)

We Chat Ltd has Cash at Bank balance as per the company’s record of $10,665 debit as at 29^th February 2020. The bank statement balance from Citigroup Bank showed a credit balance of $9,450. A comparison of the statement with the cash account revealed the following:

1.     Unpresented cheques at 29 February totalled $5,405, and outstanding deposits were $6,900.

2.     Included with the cheques paid was a cheque issued by Click and Go Ltd to M. Phelps for $450 that was incorrectly charged to We Chat Ltd by the bank.

3.     The bank statement included a debit entry of $90 for the printing of additional company cheques.

4.     Included on the bank statement was a credit entry of $820 indicating the collection of a note receivable for We Chat Ltd by the bank on 15 February

Required

a.     Prepare a bank reconciliation at 29^th February based on the provided information.

b.     Prepare the necessary adjusting entries as at 29^th February 2020