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In: Accounting
1. On January 1, 2020, Hawkeye Air leased a new airplane for a term of 8 years. The expected life of the airplane is 20 years. There are no rights to purchase the asset at the end of the term, no bargain purchase option, and no residual value guarantee. The lease stipulates that Hawkeye Air makes annual payments of $550,000 beginning at the end of the first year (December 31, 2020). Hawkeye Air has an incremental borrowing rate of 6% and the fair market value of the airplane on January 1, 2020, is $6,250,000 (for simplicity, assume the lessor’s implicit rate is greater than 6%).
a. What journal entries related to the lease arrangement should be recorded during 2020 (assume Hawkeye Air’s fiscal year-end is December 31).
b. Identify any effects the lease arrangement and the associated reporting would have on the balance sheet, income statement, and statement of cash flows for 2020.
c. What is the annual lease payment that results in a present value of minimum lease payments equal to 90% of the fair market value of the airplane ($6,250,000)?
In: Accounting
AZA Company purchased a machine on July 1, 2019. The machine cost $400,000 and has an estimated residual value of $40,000. The expected useful life is 8 years. The machine is to be used for 100,000 machine hours. AZA’s year end is December 31. Required:
a. Calculate the depreciation expense for 2019 and 2020 using the straight-line method. Also list the Accumulated Depreciation Balances at December 31, 2019 and December 31, 2020.
b. Calculate the depreciation expense for 2019 and 2020 using the units-of-production method. The machine was used for 8,000 machine hours in 2019 and 23,000 machine hours in 2020.
c. Calculate the depreciation expense for 2019 and 2020 using the double-declining-balance method.
d. Determine the book value of the machine at December 31, 2019 under the (a) straight-line method and (b) units-of-production, and (c) double-declining-balance method.
e. Write the journal entry for recording depreciation expense for year ended December 31, 2019 using the double declining balance depreciation method.
In: Accounting
Question 5
Alto Imports ending inventory was assigned a cost of $14,600 as a result of a physical stock-take on 30 June 2020.
A review of the company’s records revealed the following information:
Required:
In: Accounting
Pearl Corporation is a publicly traded company that follows
IFRS. On December 31, 2019, Pearl’ financial records indicated the
following information related to the company’s defined benefit
pension plan:
| Defined Benefit Obligation | $3,714,000 | |
| Pension Plan Assets | 3,714,000 |
On July 1, 2020, Pearl acquired the operations of Trap Ltd. As one
of the conditions of the purchase, Pearl agreed that Trap’s
employees would be included in Pearl’s defined benefit pension
plan, and would be granted credit for the past service of Trap’s
employees. The actuary estimated the value of the prior service
amount granted on July 1, 2020 to be $193,000.
Pearl’ actuary provided the following information on December 31,
2020:
| Current year service cost | $921,000 | |
| Employer contributions for the year | 899,000 | |
| Benefits paid to retirees | 318,000 | |
| Actuarial increase in pension obligations | 48,000 | |
| Discount rate | 6% | |
| Actual return on assets | 4% |
Prepare a pension worksheet for Pearl Corporation for the year
ending December 31, 2020.
Prepare the journal entry to record the pension expense for
2020.
In: Accounting
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On June 1, 2020, Roman Construction Company Inc. contracted to build an office building for Sicily Corp. for a total contract price of $2,600,000. On July 1, Roman estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Sicily 2020, 2021, and 2022: |
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At |
At |
At |
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12/31/2020 |
12/31/2021 |
12/31/2022 |
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Contract costs incurred during the year |
$ 600,000 |
$ 1,500,000 |
$ 2,750,000 |
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Estimated costs to complete the contract |
1,800,000 |
1,200,000 |
- |
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Billings to Sicily |
400,000 |
1,200,000 |
2,400,000 |
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Instructions: |
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(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a |
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result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) |
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(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of |
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this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) |
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In: Accounting
You are asked to carry out the accounting of the company
1. Prepare with the information the opening entry in the General Journal,
2. Analyze the transactions recorded in the general journal
3. Transfer all information to Major General
4. Prepare the trial balance
The company reports the following assets and obligations:
Accounts Payable amount to B / .16,600.00
Has documents to pay for B / .7,000.00
The inventory of merchandise is B / .125,500.00
In the box they have B / 88,800.00
Also a bank loan payable B / .29,000.00
They have office furniture for 15,000.00
The bank account sum is B / .65,000.00
27,000.00 is the amount of the office equipment
And accounts receivable total B / .68,000.00
THE FOLLOWING TRANSACTIONS WERE DONE:
On 6/24/2020 We bought a car for B / .12,500.00 on credit
On 6/24/2020 A payment was made to accounts payable for B / .1,000.00
On 06/22/2020 the sum of B / 500.00 was paid to a bank loan
On 06/22/2020 Bank B / 88,000.00 was deposited
On 6/23/2020 We received credit to accounts receivable for B / 23,000.00
In: Accounting
QUESTION 2 - Taryn would like to open a new business as an interior designer, to funds her ambition she sold some of the following assets:
1. Antique Painting that was given to Taryn by her father 5 years ago. Taryn’s father bought it on 20 August 1984 for $2,500. Taryn sold it on 1’st June 2020 for $25,000
2. Taryn sold her car (Toyota Corolla) for the amount of $12,000 on 20’th May 2020, she bought on 1’st January 2015 for the amount of $20,000
3. Taryn sold her Harry Potter’s collection for the amount of $1,500 on 4’th January 2020, she bought it second hand on 10’th October 2018 for $350.
4. Taryn sold her gold necklace for $2,000 on 20’th March 2020, she bought it for $1,200 on 8’th August 2018 5. Taryn sold a sculpture for $6,000 on 1 January 2020, she bought it on December 1994 for $1,500
Advise the Capital Gain Tax Consequences for the above transactions
In: Finance
Select information from Patel Sales and Services financial statements are listed below:
|
2020 |
2019 |
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Cash |
60,100 |
64,200 |
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Held-for-trading investment |
74,000 |
50,000 |
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Accounts receivable |
117,800 |
102,800 |
|
Merchandise Inventory |
126,000 |
115,500 |
|
Property, plant and equipment (net) |
649,000 |
520,300 |
|
Accounts payable |
160,000 |
145,400 |
|
Income taxes payable |
43,500 |
42,000 |
|
Bonds payable (20,000 due each year) |
220,000 |
200,000 |
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Net sales |
1,890,540 |
1,750,500 |
|
Cost of goods sold |
1,058,540 |
1,006,000 |
Part A
Calculate the following ratios in the table below for 2020. Show your calculations to receive full marks). Results should be rounded to 2 decimal places.
The 2019 results for those ratios are shown in the table below. In the Conclusion column, indicate whether Patel has improved or deteriorated in 2020 as compared to 2019.
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2020 |
2019 |
Conclusion |
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Current Ratio |
1.5:1 |
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Inventory Turnover |
12 times |
Part B Marks
Discuss Patel’s overall financial position in 2020 compared to 2019 using your results from above.
In: Accounting
1. Soundbird Ltd has 600,000 ordinary shares on issue at 1 July
2019, which is the beginning of its reporting period. On 1 January
2020, it issued a further 600,000 ordinary shares for cash. On 1
March 2020, Soundbird Ltd repurchased 10,000 shares at fair value
in a market transaction.
Required: What is the correct weighted average number of shares to
use in the earnings per share calculation for the year ended 30
June 2020?
Show all your workings.
2.Rosy Ltd determined its profit attributable to ordinary
shareholders for the reporting period ended 30 June 2020 as
$1,250,000. The number of ordinary shares on issue up to 1 October
2019 was 1,000,000. Rosy Ltd announced a one-for-two bonus issue
(one bonus share for every two shares held) of shares effective for
each ordinary share outstanding at this date.
Required: What is the basic earnings per share for the year ended
30 June 2020 (keep two decimal places)?
Show all your workings.
In: Finance