On November 1, 2020, Carla Company adopted a stock-option plan that granted options to key executives to purchase 33,900 shares of the company’s $9 par value common stock. The options were granted on January 2, 2021, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $30, and the fair value option-pricing model determines the total compensation expense to be $508,500.

All of the options were exercised during the year 2023: 22,600 on January 3 when the market price was $65, and 11,300 on May 1 when the market price was $74 a share.

Prepare journal entries relating to the stock option plan for the years 2021, 2022, and 2023. Assume that the employee performs services equally in 2022 and 2023.

Metlock Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 5 years and requires equal rental payments of $75,477 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $320,000, an estimated useful life of 5 years, and no estimated residual value. The appropriate interest rate is 9%.

Click here to view factor tables.

Prepare Metlock’s 2019 and 2020 journal entries, assuming Metlock depreciates similar equipment it owns on a straight-line basis. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.)

On January 10, 2017, a fire destroyed a warehouse owned by NP Company. NP’s adjusted basis in the warehouse was $575,000. On March 12, 2017, NP received a $740,000 reimbursement from its insurance company. In each of the following cases:

1. Determine NP’s recognized gain on this property disposition. Assume that NP would elect to defer gain recognition when possible. NP’s board of directors decided not to replace the warehouse.
2. Determine NP’s recognized gain on this property disposition. Assume that NP would elect to defer gain recognition when possible. On January 2, 2019, NP paid $745,000 to acquire a warehouse to store its inventory.
3. Determine NP’s recognized gain on this property disposition. Assume that NP would elect to defer gain recognition when possible. On February 8, 2020, NP paid $745,000 to acquire a warehouse to store its inventory.

On January 1, 2018, Blossom Ltd. purchased equipment for $808,000. The equipment was assumed to have an 8-year useful life and no residual value, and was to be depreciated using the straight-line method. On January 1, 2020, Blossom's management became concerned that the equipment may have become obsolete. Management calculated that the undiscounted future net cash flows from the equipment was $580,750, the discounted future net cash flows was $515,100, and the current fair value of the equipment (after costs to sell) was $505,000.

1. Assuming that Blossom is a private Canadian company following ASPE, and uses the cost recovery impairment model. Record the journal entry to record the impairment loss, if any

2. Assuming that Blossom is a public Canadian company, and uses the rational entity impairment model. Record the journal entry to record the impairment loss, if any

class: Derivative Securities

. Company X wishes to borrow US dollars at a fixed rate of interest. Company Y wishes to borrow Japanese Yen at a fixed rate of interest. The amount required by the two companies is the same at current exchange rate. The companies are subject to the following interest rates:

Design a swap that will net a bank, acting as intermediary, 30 basis points per annum and will appear equally attractive to X and Y.

Q5. Briefly explain Delta, Theta, Gamma, and Vega.

Below is the leasing footnote disclouse from UPS 2015 10-K report:

The following table sets for the aggregate minimum lease payments under operating leases (in millions): The implicit interest rate is 7%

Year Operating LEase

2016 $324

2017 $263

2018 $197

2019 $125

2020 $84

After 2020 $252

What adjustments would be made to UPS's Balance Sheet to capitalize the operating leases at the end of 2015?

E13.13 (LO 3), AP The condensed financial statements of Ness Company for the years 2021 and 2022 are presented below.

Compute ratios.

Compute the following ratios for 2022 and 2021.

• a. Current ratio.
• b. Inventory turnover. (Inventory on December 31, 2020, was $340.)
• c. Profit margin.
• d. Return on assets. (Assets on December 31, 2020, were $1,900.)
• e. Return on common stockholders' equity. (Equity on December 31, 2020, was $900.)
• f. Debt to assets ratio.
• g. Times interest earned.

Problem 7-11 A Preparing a bank reconciliation and recording adjustments

CHECK FIGURE: 1. Adjusted book balance = $28,250

The following is information for Dundee Reality:

1. Balance per the bank statement dated October 31, 2020, is $26,830.
2. The balance of the Cash account on the company books as of October 31, 2020, is $5,575.
3. $14,680 of customer deposits were outstanding as of September 30; this amount has been deposited to Dundee’s account in October.
4. Cheques written in October that had not cleared the bank as of October 31 were:

#8700, $985

#8709, $12,600

#8801, $620

#8815, $145

5. The bank charged Dundee’s account for a $2,350 cheque of the E-Zone Networks; the cheque was found among the cancelled cheques returned with the bank statement.
6. Bank service charges for October amount to $65.
7. A customer’s cheque (Teresa Krant) for $7,050 had been deposited in the bank correctly but was recorded in the accounting records as $7,500.
8. Among the cancelled cheques in one for $260 given in payment of an account payable to Decker Company; the bookkeeper had recorded the cheque incorrectly at $620 in the company records.
9. The bank statement showed an electronic fund transfer of 22,880 for a customer payment. A bank service fee of $50 was charged.
10. A bank deposit of October 31 for $13,420 does not appear on the bank statement.

Required

1. Prepare a bank reconciliation statement as of October 31, 2020.
2. Prepare the necessary entries to make the Cash account agree with the bank reconciliation adjusted Cash balance as of October 31.

Analysis Component:

Identify the effects on the income statement and balance sheet if the entries in Part 2 were not recorded.

Q:Hearty Snacks Company sells its Paleo-Popcorn product to consumers through a distribution channel that consists of distributors (wholesalers) and retailers. The company has decided to set a margin of 40% on all its products. Retailers’ margins in the industry are typically 40%, and distributors’ margins average 25%. The company wants the retail price of the product to be $10. Answer the questions below.

(a) Given the information provided, fill in the missing numbers in the price chain below:

(b) Hearty Snacks’ advertising agency has proposed a new marketing campaign, and the CEO is considering raising the company’s margin to 50% in order to fund the campaign. Assuming that their cost (from the previous question) doesn’t change, and that the distributor and retailer margins in the industry remain the same, fill in the missing numbers below and indicate what the new retailer’s price to consumers will be.