Based on Problem 10-6

Indigo Landscaping began construction of a new plant on December 1, 2020. On this date, the company purchased a parcel of land for $147,600 in cash. In addition, it paid $3,120 in surveying costs and $4,080 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $3,120, with $960 being received from the sale of materials.

Architectural plans were also formalized on December 1, 2020, when the architect was paid $34,800. The necessary building permits costing $3,120 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor in 2021 as follows.

Compute the balance in each of the following accounts at December 31, 2020, and December 31, 2021.

To finance construction of this plant, Indigo borrowed $602,400 from the bank on December 1, 2020. Indigo had no other borrowings. The $602,400 was a 10-year loan bearing interest at 9%.

The building was completed on July 1, 2021.

Using Excel calculate the following (show your work and use formulas where appropriate):

1. Balance in the Land account for December 31, 2020 and December 31, 2021
2. The weighted average of accumulated expenditures for 2020
3. The amount of interest capitalized in 2020
4. The weighted average of accumulated expenditures for 2021
5. The amount of interest capitalized in 2021
6. Balance in the Building account for December 31, 2020 and December 31, 2021
7. Balance in the Interest Expense account for December 31, 2020 and December 31, 2021

Problem 4

As of December 31, 2020 Big USA Company owns a foreign subsidiary (Taco) based in Mexico. Big is in the process of preparing consolidated financial statements and must translate the trial balance of Taco to U.S. Dollars. Selected financial information of Taco in pesos is presented below.

                                                                                       Pesos

Inventory 12/31/20                                                  300,000

Purchases in 2020                                                    2,600,000

Inventory 12/31/19                                                    420,000

Equipment purchased as follows

            1/1/18                                                                        250,000                                   

            Purchases during 2018                                            150,000

            Purchases during 2019                                            350,000

            Purchases during 2020                                           620,000

All equipment is depreciated over 8 years on a straight-line basis with a full year taken in year of acquisition.

The inventory turnover rate is 90 days.

Relevant Exchange Rates                           Pesos per dollar

1/1/18                                                                                    8.0

Average Rates 2018                                                  8.5

Average Rate            2019                                                    9.3

Average Rate 2020                                                   9.8

Rate 4^thquarter 2019                                                            8.9

Rate 4^thquarter 2020                                                           9.6

Current rate 12/31/18                                                         8.9

Current Rate 12/31/19                                                        9.2

Current Rate 12/31/20                                                        9.9

REQUIRED (In US Dollars)

1. Assuming the U.S. Dollar is functional currency determine following

            Cost Goods Sold for 2020

            Balance in Equipment 12/31/20

            Balance in Accumulated Depreciation 12/31/20

            Depreciation Expense – 2020

2. Assuming the Peso is functional currency determine following

            Cost Goods Sold for 2020

            Balance in Equipment 12/31/20

            Balance in Accumulated Depreciation 12/31/20

            Depreciation Expense – 2020

The number of hours per week that the television is turned on is determined for each family in a sample. The mean of the data is 3535 hours and the median is 31.231.2 hours. Twenty-four of the families in the sample turned on the television for 2020 hours or less for the week. The 6^th percentile of the data is 2020 hours.

Step 2 of 5:

Approximately how many families are in the sample? Round your answer to the nearest integer.

The number of hours per week that the television is turned on is determined for each family in a sample. The mean of the data is 3535 hours and the median is 31.231.2 hours. Twenty-four of the families in the sample turned on the television for 2020 hours or less for the week. The 6^th percentile of the data is 2020 hours.

Step 3 of 5:

Based on the given information, determine if the following statement is true or false.

Approximately 200200 families turned on their televisions for less than 3535 hours.

The number of hours per week that the television is turned on is determined for each family in a sample. The mean of the data is 3535 hours and the median is 31.231.2 hours. Twenty-four of the families in the sample turned on the television for 2020 hours or less for the week. The 6^th percentile of the data is 2020 hours.

Step 4 of 5:

What is the value of the 50^th percentile?

The number of hours per week that the television is turned on is determined for each family in a sample. The mean of the data is 3535 hours and the median is 31.231.2 hours. Twenty-four of the families in the sample turned on the television for 2020 hours or less for the week. The 6^th percentile of the data is 2020 hours.

Step 5 of 5:

Based on the given information, determine if the following statement is true or false.

The first quartile is less than 2020 hours.

Maendeleo Ltd. is a manufacturing company operating through a number of branches in Kenya. The following information relates to Maendeleo Ltd.’s operations for the year ending 31 December 2020.

Additional information

1. Details of property, plants and equipment schedule reflected the following details for the assets that existed before the year ending 31^st December 2020:

2. A perimeter wall was constructed at cost of sh.960,000 during the year ending 31^st December 2020 used from 1^st March 2020
3. A go down and drainage system were constructed at cost sh.2,860,000 and sh.1,780,000 respectively put into use on 1^st April 2020.
4. The company constructed a borehole at cost of sh.1,500,000 during the year which was put in use on 1^st July 2020

Required

Capital allowance due to Maendeleo ltd for the year ending 31^st December 2020

2. Tonka Industries sold inventory to customers on account totaling $90,000 during 2019. The inventory cost Tonka Industries $42,000.

3. During 2019, Tonka Industries collected $53,600 from customers who previously charged on account.

4. On December 31, 2019, Tonka Industries recorded its uncollectible accounts estimate. Tonka Industries estimates that $1,350 will be uncollectible.

5. On February 19, 2020, Tonka Industries received notification that Jan Levinson, who owes Tonka Industries $900, has filed for bankruptcy. Tonka Industries writes off Ms. Levinson’s account.

7. After invoicing the customer for more than one year, Tonka Industries decides to write-off the $200 accounts receivable balance of David Wallace.

8. Tonka Industries Corporation’s 2020 sales on account totaled $213,600. Inventory sold during 2020 cost Tonka Industries $103,000.

9. During 2020, Tonka Industries collected $80,000 from customers on open accounts receivable.

10. At the end of 2020, Tonka Industries estimates uncollectible accounts of $6,890

Summary Questions:

1. How much uncollectible accounts expense will appear on Tonka Industries Corporation income statement for the year ended December 31, 2019?

2. Calculate the net realizable value of receivables that will appear in the December 31, 2019 balance sheet.

- Accounts Receivable from #2

- Accounts Receivable collected from #3

= Ending Accounts Receivable Balance on December 31, 2019

- Allowance for Doubtful Accounts in #4

= Net Realizable Value of Receivables as of December 31, 2019

3. How much uncollectible accounts expense will appear on Tonka Industries Corporation income statement for the year ended December 31, 2020?

4. Calculate the net realizable value of receivables that will appear in the December 31, 2020 balance sheet. Hint: Remember that Accounts Receivable and Allowance for Doubtful Accounts are both balance sheet accounts, and their balances carry forward from year-to-year.

Beginning Accounts Receivable balance (ending balance on 12/31/19 calculated in #2 above)

+ Sales on account from #8

- Accounts Receivable collected from #9

- Write-offs during 2020 (from #5 and #7)

= Ending Accounts Receivable Balance as of December 31, 2020 ;

Beginning Allowance for Doubtful Accounts balance (ending balance on 12/31/19)

- Write-offs during 2020 (from #5 and #7)

+ 2020 uncollectible accounts estimate in #10

= Ending Allowance for Doubtful Accounts Balance as of December 31, 2020 Accounts Receivable

- Allowance for Doubtful Accounts

= Net Realizable Value of Receivables as of December 31, 2020

Theory of inheritance of acquired characters was given by

(a) Wallace

(b) Lamarck

(c) Darwin

(d) De Vries.

Perform an incremental analysis of the two finalist projects using the data provided below.

The company uses a MARR of 10% and depreciates its assets using 7-year MACRS. The company’s effective income tax rate is 25%.

Project 1: Milling machines Equipment cost: Two (2) machines that each cost $380,000 including trade-in allowance and sales tax. The total cost of the freight and handling is expected to be $25,000. The total cost to install the machines is $30,000. Total testing and startup costs to place the machines into service are estimated to be $32,000. Useful life: 8 years. It is estimated that the machines can be sold for a total of $105,000 at the end of the project.

Each machine requires one operator at a time at a rate of $32.00 per hour. The plant operates 4080 hours per year. Total maintenance labor costs are estimated to be 20% of operating hours at $22.00 per hour. Total annual direct materials are estimated at $290,000. Manufacturing overhead exclusive of depreciation is expected to be an additional $270,000 per year.

Revenues are expected to be $1,025,000 each year as a result of this project. The project would run for 8 years.

Project 2: Painting Line Equipment cost: $315,000 including trade-in allowance and sales tax. The total cost for freight and handling is expected to be $15,000. The total cost to install the line is $35,000. Testing and startup costs to place the line in service are estimated to be $24,000. Useful life: 8 years. It is estimated that the line can be sold for a total of $70,000 at the end of the project.

The line requires one operator at a time a rate of $30.00 per hour and one helper at a time at a rate of $19.75 per hour. The plant operates 4080 hours per year. Total annual direct materials are estimated at $150,000. Maintenance labor costs are estimated to be 20% of operating hours at $19.00 per hour. Manufacturing overhead exclusive of depreciation is expected to be $220,000 per year.

Revenues are expected to be $635,000 for the first year as a result of the project and are expected to increase by 2% each year throughout the project. The project would run for 8 years.

An inexperienced accountant for Can’t Add Company recorded the following transactions in the records of the company for the year ended December 31, 2019. The controller has questioned the appropriateness of the entries since she thinks that they have not been recorded in accordance with generally accepted accounting principles.

1. An order for $61,500 was received from a customer on December 29, 2019 for products on hand. This order was shipped f.o.b. shipping point on January 9, 2020. The accountant made the following entry in 2019:

Accounts Receivable ……………………….. 61,500

Sales Revenue ………………………………. 61,500

2. Because of a “fire sale”, equipment that was obviously worth $200,000, was acquired at a bargain price of $155,000. The following entry was made:

Equipment …………………………………. 200,000

Cash ………………………. 155,000

Gain on Equipment …………….. 45,000

3. On January 1, the company president, the owner of the company, took a personal vacation trip to the Gaspé. The trip cost $ 3,000. The accountant recorded the entry as follows:

Travel Expense ............................................................................. 3,000

Accounts Payable ................................................................... 3,000

4. The company purchased on account a wastebasket on December 31 at a cost of $ 20. The accountant made the following entry:

Office Equipment ........................................................................... 20

Accounts Payable ................................................................... 20

In each situation above, identify the concept that has been violated, if any and why you think it has been violated. If a journal entry is incorrect, provide the correct journal entry.

On July 1, 2015, Velor Inc. acquired the following bonds, which Velor Inc. intended to hold to maturity:

Both bonds pay interest annually on December 31. Premium and discount will be amortized on a straight-line basis. Assume Velor Inc. follows ASPE. Please make sure your final answer(s) are accurate to 2 decimal places.

1) Prepare the following journal entries to be made on their correct dates in 2015:

1. The acquisition of the investments. Accrued interest was paid on the acquisition dates, as appropriate.
2. The receipt of interest and the amortization of the premium or discount for Zcom Inc.
3. The receipt of interest and the amortization of the premium or discount for Global Filter Corp.

Enter the transaction letter as the description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (i.e., January 15 would be 15/Jan).

2) Show the accounts and the corresponding amounts that would be reported in the 2015 income statement related to these investments

3) Calculate the balance for each investment account on the financial statement date.

2015