Sunny Ltd., a hand sanitizer manufacturer, has prepared its financial statements for the year ended at December 31, 2019. On February 28, 2020, the board of directors authorized to issue the financial statements to shareholders. The following events have occurred:

1. On December 1, 2019, the board of directors decided to issue $50,000,000, 9% convertible bonds for the purpose of expanding business in other countries. The conversion rate is fixed at 50 shares for bond with face value of $1,000. The convertible bonds are offered to the public on January 15, 2020. The market interest rate for a similar bond without conversion option is at 12%.

2. On October 23, 2019, Sunny signed a contract to sell 10,000 hand sanitizer to a local store at a price of $200 each. However, due to the increase in the cost of materials, the estimated cost of making one hand sanitizer has been increased to $250. Sunny has to deliver the hand sanitizer to its customer on January 30, 2020.

3. Under the terms of the sales contract, Sunny undertakes to recall its new formulated sanitizer, for its manufacturing defects within six months from the date of sale. The accountants estimated that 5% of the sanitizer will be returned for refund. In January 2020, Sunny discovered a serious problem in the manufacturing process of the new formulated sanitizer. Because of this, Sunny expected that 20% of the sanitizer sold in 2019 will be returned for refund.

4. On December 15, 2019, a group of customers reported that the hand sanitizer that they bought in 2019 caused them have serious skin infection problems. They filed a lawsuit against Sunny on December 20, 2019. The company’s attorney said that it was probable that Sunny would be liable for the case. However, the amount of damage could not be estimated.

5. On February 12, 2020, the above lawsuit case was settled for the amount of $2,500,000.

6. Sunny has retail stores in China doing poorly. On February 15, 2020, Sunny estimated that those stores might report a loss of $1,500,000 in 2020.

7. In May 2019, Sunny had legal disputes with Coco Limited. Unable to reach out-of-court settlement with Coco, Sunny sued Coco for compensation for damages in August 2018. In November 2019, Sunny heard good news about the lawsuit in which the company sued Coco. Sunny’s lawyer is confident that the company will win the case and will receive about $120,000 in compensation for damages from Coco in early 2020. Sunny recognized the gain and receivable from litigation of $120,000 in year 2019.

8. On March 1, 2020, a customer owing $600,000 to Sunny filed for bankruptcy. The financial statements include an allowance for doubtful debts pertaining to this customer only of $30,000.

Required: For each of the above event, state the correct accounting treatments in accordance with Hong Kong Accounting Standards for the year ended at December 31, 2019. If it is an event after the reporting period, identify whether it is an adjusting or non-adjusting event. Give reasons for your answer.

Natalie has prepared the balance sheet and income statement of Cookie & Coffee Creations Inc. and would like you to prepare the cash flow statement. The comparative balance sheet of Cookie & Coffee Creations Inc. at October 31, 2020 for the years 2020 and 2019 and the income statement for the year ended October 31, 2020, are presented below.

Additional information:

1.   Equipment (cost $4,500 and book value $3,000) was disposed of at the beginning of the year for $500 cash and replaced with new equipment purchased for $4,000 cash.

2.   Additional equipment was bought for $14,000 on November 1, 2019. A $12,000 note payable was signed. The terms provide for equal semi-annual installment payments of $2,000 on May 1 and November 1 of each year, plus interest of 5% on the outstanding principal balance.

3.   Other equipment was bought for $13,000 cash.

4.   Dividends were declared on the preferred and common stock on October 15, 2020, to be paid on November 15, 2018.

5.   Accounts payable relate only to merchandise creditors.

6.   Prepaid expenses relate only to other operating expenses.

Instructions:

(a) Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2020, using the indirect method.

*(b)            Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2020, using the direct method.

COOKIE & COFFEE CREATIONS INC.

Balance Sheet

October 31,

COOKIE & COFFEE CREATIONS INC.

Balance Sheet

October 31,

COOKIE & COFFEE CREATIONS INC.

Income Statement

Year Ended October 31, 2020

A partial trial balance of Novak Corporation is as follows on December 31, 2021. Dr. Cr. Supplies $2,600 Salaries and wages payable $1,300 Interest Receivable 5,000 Prepaid Insurance 89,600 Unearned Rent 0 Interest Payable 14,900 Additional adjusting data:

1. A physical count of supplies on hand on December 31, 2021, totaled $1,000.

2. Through oversight, the Salaries and Wages Payable account was not changed during 2021. Accrued salaries and wages on December 31, 2021, amounted to $4,700.

3. The Interest Receivable account was also left unchanged during 2021. Accrued interest on investments amounts to $4,200 on December 31, 2021.

4. The unexpired portions of the insurance policies totaled $70,800 as of December 31, 2021.

5. $25,800 was received on January 1, 2021, for the rent of a building for both 2021 and 2022. The entire amount was credited to rent revenue.

6. Depreciation on equipment for the year was erroneously recorded as $4,500 rather than the correct figure of $45,000.

7. A further review of depreciation calculations of prior years revealed that equipment depreciation of $6,400 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment. Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2021? (Ignore income tax

Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2021? (Ignore income tax considerations.)

Pass the necessary adjusting entries for the following taking into account income tax effects (40% tax rate) and assuming that the books have been closed. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Pass the necessary adjusting entries for the following taking into account income tax effects (40% tax rate) and assuming that the books have been closed. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Exercise 7-7A Effect of recognizing uncollectible accounts on the financial statements: percent of receivables allowance method LO 7-2

[The following information applies to the questions displayed below.]

Leach Inc. experienced the following events for the first two years of its operations:

Year 1:

1. Issued $29,000 of common stock for cash.
2. Provided $98,900 of services on account.
3. Provided $55,000 of services and received cash.
4. Collected $88,000 cash from accounts receivable.
5. Paid $57,000 of salaries expense for the year.
6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible.
7. Closed the revenue account.
8. Closed the expense account.

Year 2:

1. Wrote off an uncollectible account for $840.
2. Provided $107,000 of services on account.
3. Provided $51,000 of services and collected cash.
4. Collected $100,000 cash from accounts receivable.
5. Paid $84,000 of salaries expense for the year.
6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible.

Exercise 7-7A Effect of recognizing uncollectible accounts on the financial statements: percent of receivables allowance method LO 7-2

[The following information applies to the questions displayed below.]

Leach Inc. experienced the following events for the first two years of its operations:

Year 1:

1. Issued $29,000 of common stock for cash.
2. Provided $98,900 of services on account.
3. Provided $55,000 of services and received cash.
4. Collected $88,000 cash from accounts receivable.
5. Paid $57,000 of salaries expense for the year.
6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible.
7. Closed the revenue account.
8. Closed the expense account.

Year 2:

1. Wrote off an uncollectible account for $840.
2. Provided $107,000 of services on account.
3. Provided $51,000 of services and collected cash.
4. Collected $100,000 cash from accounts receivable.
5. Paid $84,000 of salaries expense for the year.
6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts

1. Calculate Beta for Apple and Microsoft, using a characteristic line. Display the data points on a graph and display the characteristic line.

   	Year	Microsoft	Apple	Market
   Jan 2010 - Dec 2010	1	-0.34%	3.85%	14.93%
   Jan 2011 - Dec 2011	2	-0.37%	2.09%	2.06%
   Jan 2012 - Dec 2012	3	0.40%	2.87%	15.84%
   Jan 2013 - Dec 2013	4	2.81%	0.38%	32.21%
   Jan 2014 - Dec 2014	5	1.91%	3.05%	13.53%
   Jan 2015 - Dec 2015	6	1.75%	-0.45%	1.34%
   Jan 2016 - Dec 2016	7	1.37%	1.24%	11.80%
   Jan 2017 - Dec 2017	8	2.72%	3.41%	21.69%
   Jan 2018 - Dec 2018	9	1.41%	-0.33%	-4.45%
   Jan 2019 - Dec 2019	10	4.06%	5.89%	31.29%
   Average Return		1.57%	2.20%	14.02%
   Std Deviation		1.42%	2.02%	12.21%
   Correlation with the market		0.61	0.57	1.00
   Beta		0.07	0.09	1.00

   Beta Calculation
   Run a regression line of past returns on Stock I versus returns on the market. The regression line is the characteristic line.
   	Year	rM	ri
   	1
   	2
   	3
   	4
   	5
   	6
   	7
   	8
   	9
   	10

Using the procedure outlined in the appendix at the end of the chapter for geometric average growth rates​ (in the section titled​ "Calculating Average​ (Compound) Growth​ Rates," reproduce the​ "Implied (Average) Annual​ Growth" figures​ (for the following​ countries: France,​ Singapore, Botswana,​ India, and Kenya. GDP values are​ PPP-adjusted 2005 constant dollars.

Fill in the table below with the geometric average growth rates as a percentage.

​(Round

your responses to two decimal

places​.)

Using the procedure outlined in the appendix for finding arithmetic average growth​ rates, calculate the arithmetic average growth rate for the five countries.  

Fill in the table below with the arithmetic average growth rates as a percentage.

​(Round

your responses to two decimal

places​.)

Compare the geometric and arithmetic average growth rates.  

The arithmetic average

overstates, or neither understates nor overstates, or understates. choose one of the three.

the actual growth rate.

Farm Fresh Produce Co. sells produce wholesale to local groceries on account. The accounts receivable department had the following information on December 31, 2009:

Total Credit sales $400,000.00

Balance of allowance for doubtful accounts ($950.00)

Bad debt as a percentage of credit sales 0.50%

Days Past Due Amount J

J Company 34 5,000.00

H Company 74 950.00

L Company 18 32,000.00

T Company 22 4,350.00

F Company 61 2,000.00

B Company 145 1,750.00

Age Class Percentage Uncollectible

0-30 2%

30-60 5%

60-90 12%

90-120 20%

120+ 75%

Instructions:

1. Create an aging of receivable report and determine the allowance for doubtful accounts.

2. Determine the allowance for doubtful accounts based on the percentage of sales method.

3. Illustrate the effects on the accounts and financial statements using both methods.

4. Illustrate the effects on the accounts and financial statements assuming Farm Fresh Produce Co. wrote off the balance of T Company on April 3, 2010.

5. Illustrate the effects on the accounts and financial statements assuming that T Company paid off its account on May 22, 2010.

Norther Leasing Corp. has the following standards for one unit of product:

The predetermined OH rates were developed using a practical capacity of 6,000 units per year. Production is assumed to occur evenly throughout the year.

During May 2010, the company produced 525 units. Actual data for May 2010 are as follows:

Direct material purchased: 45,000 pounds X $5.92 per pound

Direct material used: 43,020 pounds (all from May’s purchases)

Total labor cost: $24,955 for 1,550 hour

Variable overhead incurred: $43,750 for 800 hours of machine time

Fixed overhead incurred: $22,800 for 800 hours of machine time

Required: Calculate the following:

a) Variable overhead Cost

b) Variable overhead expenditure variance

c) Variable efficiency variances

d) Fixed overhead cost

e) Fixed overhead expenditure

f) Fixed volume variances

Real Gross Domestic Product (Real GDP), inflation rate and unemployment are important indicators in measuring the economic performance of a country. In this assignment, you are required to choose a country and explain its economic performance.

1. First, you will have to find and compile the data of Real GDP, unemployment rate and inflation rate from 1980 to 2010 for the chosen country.
2. Based on the data from question (a), draw a table to show the data for the three variables. Draw also a line graph for Real GDP and the second line graph that shows the unemployment rate and inflation rate (both variables in the same second line graph).
3. Explain the country's macroeconomic experience of economic growth rate (based on Real GDP data), unemployment and inflation between 1980 and 2010. Your explanation can also include policies implemented by the government and/or central bank of the country to increase economic growth rate and to remedy unemployment and inflation, if any, or any other relevant information for the three variables.

Additional information:

• Each group must consist of 3-4 members.
• All data are available in http://databank.worldbank.org/. e.g
  • Real GDP = Gross Domestic Product (Constant price USD)
  • Inflation rate = % Changes in Consumer Price Index (CPI)
  • Unemployment rate = % of Unemployment (Total labour force)