On January 1, 2020, Riverbed Company purchased 12% bonds, having a maturity value of $276,000 for $296,924.88. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Riverbed 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 $294,800 2023 $286,100 2021 $285,000 2024 $276,000 2022 $284,100 (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.

Case 2: Reporting shareholders’ equity

Vinabread Ltd had the following equity account on 1 July 2020:

Share Capital (100,000 shares) 1,800,000

Retained Earnings $ 960,000

General Reserve $ 100,000

Vinabread Ltd’s profit for the year ending 30 June 2020, which has not been included in the retained earnings was $180,000. During the year, the following transactions and events occurred:

July 15, 2020 Declared and paid interim dividend of $0.50 per share.

July 30, 2020 Effected 3 for 1 share split,

June 30, 2021 Declared a final cash dividend of $0.30 per share and transferred $20,000 from retained earnings to general reserve.

Required: Prepare the equity section of the statement of financial position of Vinabread Ltd as at 30 June 2021.

The total costs incurred in 2019 at various output levels in a factory have been measured as follows:

When output is 200 units or more, another factory unit must be rented and fixed costs therefore increase by 50%. Variable cost per unit is forecast to rise by 20% at the start of 2020.

Required:

Using the high-low method and least squares method-

a.       Calculate the Variable cost per unit.

b.      Calculate Total Fixed Cost.

c.       Develop the cost function that links Cost to Output (2020).

d.      Calculate the estimated total costs of producing 200 units in 2020.

e.       Calculate the estimated output if total cost is $15,400 in 2020.

Geraths Windows manufactures and sells custom storm windows for three-season porches. Geraths also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be performed by other vendors. Geraths enters into the following contract on July 1, 2020, with a local homeowner. The customer purchases windows for a price of $2,400 and chooses Geraths to do the installation. Geraths charges the same price for the windows irrespective of whether it does the installation or not. Geraths estimates the standalone selling price of the installation based on an estimated cost of $400 plus a margin of 20% on cost The customer pays Geraths the full amount upon delivery. The windows are delivered on September 1, 2020, Geraths completes installation on October 15, 2020. Prepare the journal entries for Geraths in 2020.

On January 1, 2020, Larkspur Company purchased 12% bonds, having a maturity value of $275,000 for $295,849.07. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Larkspur 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.

COSTS INCURRED DURING THE YEAR 2020:

SALES REVENUE DURING 2020 WAS $600K. THE TAX RATE=21%

CALCULATE:

1. COST OF RAW MATERIALS USED

2. COST OF GOODS MANUFACTURED/COMPLETED

3. COST OF GOODS SOLD

4. GROSS MARGIN

5. NET INCOME

1- Assume that the following data relative to Rice Company for 2020 is available

Net Income $3,984,000:

Transactions in Common Shares Change Cumulative

Jan. 1,2020 Beginning number 650,000

Apr. 1,2020 Purchase of treasury shares (50,000) 600,000

June 1,2020 100% stock dividend 600,000 1,200,000

Dec 1,2020 Issuance of shares 200,000 1,400,000

5% Cumulative Preferred Stock:

$1,000,000 sold at par on January  1,2020 convertible into 200,000 shares of common stock

Stock options:

Exercisable at the option of $30 per share. Average market price in 2020, $35 and there were 60,000 options outstanding since 2017.

(A) compute the basic earnings per share for 2020. (round to the nearest penny)

(B) compute the diluted earnings per share for 2020. (round to the nearest penny)

On January 1, 2020, Hawkeye Air leased a new airplane for 5 years. The expected life of the airplane is 20 years. The lease stipulates that Hawkeye Air makes annual payments of $1,085,923 payable at the beginning of each year. Hawkeye Air has an incremental borrowing rate of 4.3%. Hawkeye Air has an option to renew the lease with a 2% increase in the lease payment.

1) How will the lease be classified and how do you know?

1b) Calculate the present value of the lease payments.

2) What is the balance sheet impact of the lease at the beginning of the lease (1/1/2020)?

2a) What is the income statement impact of the lease for 2020?

2b) Identify any effects the lease arrangement and the associated reporting would have on the statement of cash flows for 2020.

Your firm has a contract to purchase 1000 laptops from a Taiwanese company. The payment is due on receipt of the shipment and must be delivered in Taiwan on June 31, 2020. In March 2020, when you are arranging the contract, the laptops are each priced at 20,000 NT$ (New Taiwan Dollar). The spot rate in March 2020 is $1 in exchange for 30 NT$.

a) [5 points] What is the U.S. dollar price of one unit of laptop in March 2020?

b) [5 points] What will be the total USD price of the laptops when payment is due in June if the exchange rate does not change between March and June?

c) [10 points] What will be the total USD price of the laptops when payment is due in June if the USD depreciates against NT$ by 10% between March and June?

1. Suppose the data for a hypothetical economy is given above. This economy produces only 3 things, pizzas, haircuts and tanks. The base year is 2019.

1. Calculate GDP deflator in 2020. Based on GDP deflator, what is the inflation rate from 2019 to 2020?
2. Suppose a representative consumer basket consists of 10 pizzas and 20 haircuts. Using this consumer basket, calculate CPI in 2020 (again, assuming 2019 is the base year). Based on CPI, what is inflation rate?
3. Why do you think there is such a dramatic difference in the inflation rates from parts a and b?