On January 1, 2020, Sheffield Company purchased 8% bonds having a maturity value of $240,000, for $260,219.71. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sheffield Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

Using Excel to Construct event dummy (or binary) variables to represent three international events :

(i) The Asian financial crisis – one from Aug 1997 to Jul 1998, zero otherwise.

(ii) The Global Financial Crisis (GFC) – one from Feb 2007 to Feb 2009, zero otherwise.

(iii) Covid-19– one from Jan 2020 to Mar 2020, zero otherwise.

Comfort Company manufactures pillows. The 2020 operating budget is based on production of 1,000 pillows with 0.50 machine-hour allowed per pillow. Budgeted variable overhead per hour was $10. Actual production for 2020 was 750 pillows using 400 machine-hours. Actual variable costs were $9 per machine-hour.

Required: Calculate the variable overhead spending and efficiency variances.

Ingenuous Company acquired a building on January 1, 2020 for P9,000,000. At that date, the building had a useful life of 30 years.

On December 31, 2020, the fair value of the building was P9,600,000 and on December 31, 2021, the fair value is P9,800,000.

The building was classified as an investment property and accounted for under the cost model.

What amounts should be carried in the statement of financial position and recognized in profit or loss for 2021?

Choose an example of encryption software and start a thread in this forum. These two articles discuss a few: The Best Encryption Software of 2020 (Links to an external site.) and Best encryption software of 2020: Free, paid and business tools and services (Links to an external site.). Compare and contrast the encryption software discussed and include links to resources you found that helped you understand the software (and/or concept of encryption).

South Airlines purchased a 747 aircraft on January 1, 2019, at a cost of $35,000,000. The estimated useful life of the aircraft is 20 years, with an estimated salvage value of $5,000,000. Instructions

(a) Compute the depreciation for 2019 and 2020 using the straight-line method and the double-declining-balance method.

(b) under each method, what is the book value after two years on December 31, 2020?

BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below.

Click here to view the factor table.

Calculate the net present value and profitability index of each machine. Assume a 9% discount rate.

2. Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2020 sales forecast is as follows.

3. The January 1, 2020, inventory of HD-240 is 2,120 units. Management desires an ending inventory each quarter equal to 40% of the next quarter’s sales. Sales in the first quarter of 2021 are expected to be 25% higher than sales in the same quarter in 2020.

Prepare quarterly production budgets for each quarter and in total for 2020.

Rodriguez, Inc., is preparing its direct labor budget for 2020 from the following production budget based on a calendar year.

Each unit requires 1.80 hours of direct labor.

Prepare a direct labor budget for 2020. Wage rates are expected to be $18 for the first 2 quarters and $20 for quarters 3 and 4. (Round Direct labor time per unit answers to 2 decimal places, e.g. 52.50.)

Question 2
[25] Jenny is the owner of The Bride Boutique. The boutique sells well-known brands of wedding dresses and related products. Jenny recently attended a short course on financial management for SMEs. One of the topics covered in the programme was cash budgets. Jenny wants to implement cash budgeting for the boutique and she prepared a cash budget for the period April – June 2020. However, she is still concerned that she may not have prepared the cash budget correctly and requested your assistance to help her prepare the cash budget. At a meeting between Jenny and yourself, she provided you with the following information: Actual and forecasted sales and purchases for the period February – June 2020   February
(Actual) March (Actual) April (Forecast) May (Forecast) June (Forecast) Total sales R950 000 R1 050 000 R1 200 000 R1 350 000    R1 100 000 Total purchases R760 000 R892 500 R1 020 000 R945 000 R770 000
The boutique’s monthly cash sales are 60% of its total monthly sales, the balance being credit sales.  The boutique’s credit terms to customers require that the customers settle their credit purchases by paying 70% of their outstanding balances one month after the month of purchase and the remaining balances two months after the month of purchase.  The boutique pays 30% of its monthly purchases in cash and the rest of the monthly purchases are made on credit. Jenny has to pay her suppliers 40% of the credit purchases one month after the month of purchase and the outstanding balance two months after the month of purchase.  Jenny plans to replace some of the display cabinets in July 2020. A friend of hers who owns a jewellery shop will buy the cabinets from her for R15 000 in June 2020 and will pay her in cash.    The monthly wages and salaries are R12 000 and Jenny intends to grant an 8% increase in wages and salaries from May 2020.    The monthly rent for the boutique premises is R25 000 while the business insurance is R2 500 per month. The insurer advised that an insurance premium increase of 10% will take effect as from 1 June 2020.  Consumables average R1 500 per month and Jenny intends to spend R1 400, R2 500 and R1 500 on advertising in April, May, and June, respectively.  Jenny’s tax advisor informed her that the boutique will have to pay tax of R46 000 to SARS in April 2020. Required: Prepare a cash budget for The Bride Boutique for the period April – June 2020 using the format for a detailed cash budget as presented in the prescribed textbook.

MAJOR CASE STUDY

You have commenced work at Alfred’s Accountants, and Alfred has given you a series of tasks to perform.

The first task is as follows:

Alfred hands you a pre-adjustment trial balance of an organisation known as Radcliffe Rifles and a series of notes about Radcliffe Rifles. He then asks you to undertake a series of tasks:

RADCLIFFE RIFLES

Pre-Adjustment Trial Balance as at 30 June 2020

The following transactions have not yet been entered in the accounts.

• Depreciation of equipment is to be charged at the rate of 1% per annum on cost.
• Prepaid Rent expired during the period $5600.
• A customer paid a deposit of $5000, inventory will be delivered on 5 July 2020.
• Wages owing at 30 June 2020 were $850.
• Accounts payable paid $12500.
• Prepaid annual insurance $1200, policy commencing from 1 July 2020.
• Accounts receivable collected 7500.
• On 30 June 2020 office supplies on hand $400.
• Radcliffe Rifles rented out the basement of the premises for $2000 per month. The tenant has not yet paid the June rent.
• Bad debt written off $500.

Task 1.

Required:

Mr Alfred instructs you to prepare the journal entries necessary to record above transactions in the General Journal as at 30 June 2020. Narrations are not required.   

Task 2

Required:

Mr Alfred instructs you to prepare an Income Statement for the 6 months ending 30 June 2020.

Task 3

Required:

Mr Alfred instructs you to prepare a fully classified Balance Sheet (using a narrative or T form) as at 30 June 2020. (Note: must use a standard Balance Sheet format with appropriate headings)