Tan Inc. operates with a December 31 year-end. During 2016, the following transactions occurred:

1.) January 1: Received a two-year, 5% loan for $80,000. Interest and principal are to be paid at maturity.

2.) February 1: Was approved for a line of credit of $50,000 with the bank. Interest of 7% will be charged on borrowed funds with appropriate interest paid as borrowings are repaid. Tan borrowed $10,000 on the line of credit.

3.) June 1: Repaid $5,000 on the line of credit, and accrued interest.

4.) November 1: Acquired equipment needed for the business and issued a one year Note Payable @4% for $30,000. Equipment has an 8 yr. life; Company uses S/Line depreciation.

Required:

1)   Record all journal entries necessary to report the above transactions.

Record all necessary adjusting entries as of December 31, 2016. (Adjusting entries are done annually.)

Show the Liabilities section of your Balance Sheet at December 31, 2016.

Required information

The following selected account balances are provided for Delray Mfg.

Prepare an income statement for Delray Mfg. (a manufacturer).

DELRAY MFG. Income Statement For Year Ended December 31, 2017 Cost of goods sold: Cost of goods available for sale Cost of goods sold Operating expenses: Total operating expenses Operating income

Problem 14-2 (Part Level Submission) Novak Co. is building a new hockey arena at a cost of $2,420,000. It received a downpayment of $540,000 from local businesses to support the project, and now needs to borrow $1,880,000 to complete the project. It therefore decides to issue $1,880,000 of 11%, 10-year bonds. These bonds were issued on January 1, 2016, and pay interest annually on each January 1. The bonds yield 10%. Collapse question part (a) Prepare the journal entry to record the issuance of the bonds on January 1, 2016. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit January 1, 2016 Cash Bonds Payable Premium on Bonds Payable

Question 2                                                                                                              [15 marks]

Phoenix Photography Companyexperienced a sharp decrease in NetIncome during the year 2016. MadeaPerry, the owner of the company,anticipates a need for a Bank loan in theyear 2017. Late in 2016, Perry instructedReunion Mann, the accountant, and friendof his to record a R10, 000 sale ofportraits to the Perry family even thoughthe photos will not be shot until January2017. Perry told Reunion not to makethe following December 31 2016adjusting entries

Salaries owed to employees              R 20000 Prepaidinsurance thathasexpired       2000

Required:

1.    Compute the overall effect of these transactions on the company’s reported income for 2016. Is the reported net incomeoverstated or understated.

2.    Why did Madea take these actions? Are they ethical? Give your reason, identifying the parties that benefitted and thosethat were harmed by Madea’sactions.

Use the ethical decision makingmodel which factor (economic, legalor ethical) seems to be takingprecedence? Identify the stakeholders and potential consequences to each.

3)  As a personal friend of Perry’s, what advice would you give to him?

The Booth Company's sales are forecasted to double from $1,000 in 2016 to $2,000 in 2017. Here is the December 31, 2016, balance sheet:

Booth's fixed assets were used to only 50% of capacity during 2016, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 6% and its payout ratio to be 40%. What is Booth's additional funds needed (AFN) for the coming year? Round your answer to the nearest dollar.

Roberts and Chou, CPAs, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been estimated for the year ending December 31, 2016:

The average billing rate for staff is $125 per hour, and the average billing rate for partners is $245 per hour.

Prepare a professional fees earned budget for Roberts and Chou, CPAs, for the year ending December 31, 2016.

Compute MACRS allowable for Oak Co. for its tax returns for 2015, 2016, 2017 and 2018.
All items were placed in service when purchased unless stated otherwise.
In February 2015 Oak purchased five Office desks (five year items) cost 40,000 each.  Because Oak made very little money in 2015 the accountants decided it would be best to decline all special write-offs in 2015.
In December 2017 Oak moved to a smaller office and put two of the desks out for garbage pick-up. 
On January 5, 2016 Oak purchased six fork lifts (five year items) for $100,000 each.  On August 28, 2016 Oak purchased a widget (ten year item) for 350,000.
On March 28, 2017 Oak purchased another fork lift, $100,000.  On November 20, 2017 Oak purchased a used super widget (also ten years) for $750,000.
Section 179 and special first year apply unless declined.

Exercise 18-23

At the end of 2016, Concord Corporation reported a deferred tax liability of $43,000. At the end of 2017, the company had $245,000 of temporary differences related to property, plant, and equipment. Depreciation expense on this property, plant, and equipment has been lower than the CCA claimed on Concord’s income tax returns. The resulting future taxable amounts are as follows:

The tax rates enacted as of the beginning of 2016 are as follows: 32% for 2016 and 2017; 31% for 2018 and 2019; and 26% for 2020 and later. Taxable income is expected in all future years.

Calculate the deferred tax account balance at December 31, 2017.

Prepare the journal entry for Concord to record deferred taxes for 2017.

Early in 2018, after the 2017 financial statements were released, new tax rates were enacted as follows: 30% for 2018 and 28% for 2019 and later.
Prepare the journal entry for Concord to recognize the change in tax rates.