What actions US Senate has taken for the 2020 market crash, are they working and how do you comment on those actions?

In 2017, the new CEO of Watsontown Electric Supply became concerned about the company’s apparently deteriorating financial position. Wishing to make certain that the grim monthly reports he was receiving from the company’s bookkeeper were accurate, the CEO engaged a CPA firm to examine the company’s financial records. The CPA firm discovered the following facts during the course of the engagement, which was completed prior to any adjusting or closing entries being prepared for 2017.

1. A new digital imaging system was acquired on January 5, 2016, at a cost of $5,000. Although this asset was expected to be in use for the next four years, the purchase was inadvertently charged to office expense. Per the company’s accounting manual, office equipment of this type should be depreciated using the straight-line method with no salvage value assumed.
2. A used truck, purchased on November 18, 2017, was recorded with this entry:
   
   To record truck expenditure:
   

   DR Vehicle Expense	$	18,000
   CR Cash				$	18,000

   
   Management plans to use this truck for three years and then trade it in on a new one. Salvage is estimated at $3,000. Watsontown has always used straight-line depreciation for fixed assets, recording a half-year of depreciation in the year the asset is acquired.
   

3. On July 1, 2017, the company rented a warehouse for three years. The lease agreement specified that each year’s rent be paid in advance, so a check for the first year’s rent of $18,000 was issued and recorded as an addition to the Buildings account.
4. Late in 2016, Watsontown collected $23,500 from a customer in full payment of his account. The cash receipt was credited to revenue. In 2017, Watsontown’s bookkeeper was reviewing outstanding receivables and noticed the outstanding balance. Knowing the customer in question had recently died, she wrote off the account. Because Watsontown seldom has bad debts, the company uses the direct write-off method whereby it charges Bad debts expense and credits Accounts receivable when an account is deemed uncollectible.
5. A three-year property and casualty insurance policy was purchased in January 2016 for $30,000. The entire amount was recorded as an insurance expense at the time.
6. On October 1, 2016, Watsontown borrowed $100,000 from a local bank. The loan terms specified annual interest payments of $8,000 on the anniversary date of the loan. The first interest payment was made on October 1, 2017, and expensed in its entirety.

Required:

Prepare any journal entry necessary to correct each error as well as any year-end adjusting entry for 2017 related to the described situation. Ignore income tax effects. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

In 2017, the new CEO of Watsontown Electric Supply became concerned about the company’s apparently deteriorating financial position. Wishing to make certain that the grim monthly reports he was receiving from the company’s bookkeeper were accurate, the CEO engaged a CPA firm to examine the company’s financial records. The CPA firm discovered the following facts during the course of the engagement, which was completed prior to any adjusting or closing entries being prepared for 2017.

1. A new digital imaging system was acquired on January 5, 2016, at a cost of $5,000. Although this asset was expected to be in use for the next four years, the purchase was inadvertently charged to office expense. Per the company’s accounting manual, office equipment of this type should be depreciated using the straight-line method with no salvage value assumed.
2. A used truck, purchased on November 18, 2017, was recorded with this entry:
   
   To record truck expenditure:
   

   DR Vehicle Expense	$	18,000
   CR Cash				$	18,000

   
   Management plans to use this truck for three years and then trade it in on a new one. Salvage is estimated at $3,000. Watsontown has always used straight-line depreciation for fixed assets, recording a half-year of depreciation in the year the asset is acquired.
   

3. On July 1, 2017, the company rented a warehouse for three years. The lease agreement specified that each year’s rent be paid in advance, so a check for the first year’s rent of $18,000 was issued and recorded as an addition to the Buildings account.
4. Late in 2016, Watsontown collected $23,500 from a customer in full payment of his account. The cash receipt was credited to revenue. In 2017, Watsontown’s bookkeeper was reviewing outstanding receivables and noticed the outstanding balance. Knowing the customer in question had recently died, she wrote off the account. Because Watsontown seldom has bad debts, the company uses the direct write-off method whereby it charges Bad debts expense and credits Accounts receivable when an account is deemed uncollectible.
5. A three-year property and casualty insurance policy was purchased in January 2016 for $30,000. The entire amount was recorded as an insurance expense at the time.
6. On October 1, 2016, Watsontown borrowed $100,000 from a local bank. The loan terms specified annual interest payments of $8,000 on the anniversary date of the loan. The first interest payment was made on October 1, 2017, and expensed in its entirety.

Required:

Prepare any journal entry necessary to correct each error as well as any year-end adjusting entry for 2017 related to the described situation. Ignore income tax effects. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

In 2017, the new CEO of Watsontown Electric Supply became concerned about the company’s apparently deteriorating financial position. Wishing to make certain that the grim monthly reports he was receiving from the company’s bookkeeper were accurate, the CEO engaged a CPA firm to examine the company’s financial records. The CPA firm discovered the following facts during the course of the engagement, which was completed prior to any adjusting or closing entries being prepared for 2017.

1. A new digital imaging system was acquired on January 5, 2016, at a cost of $5,000. Although this asset was expected to be in use for the next four years, the purchase was inadvertently charged to office expense. Per the company’s accounting manual, office equipment of this type should be depreciated using the straight-line method with no salvage value assumed.
2. A used truck, purchased on November 18, 2017, was recorded with this entry:
   
   To record truck expenditure:
   

   DR Vehicle Expense	$	18,000
   CR Cash				$	18,000

   
   Management plans to use this truck for three years and then trade it in on a new one. Salvage is estimated at $3,000. Watsontown has always used straight-line depreciation for fixed assets, recording a half-year of depreciation in the year the asset is acquired.
   

3. On July 1, 2017, the company rented a warehouse for three years. The lease agreement specified that each year’s rent be paid in advance, so a check for the first year’s rent of $18,000 was issued and recorded as an addition to the Buildings account.
4. Late in 2016, Watsontown collected $23,500 from a customer in full payment of his account. The cash receipt was credited to revenue. In 2017, Watsontown’s bookkeeper was reviewing outstanding receivables and noticed the outstanding balance. Knowing the customer in question had recently died, she wrote off the account. Because Watsontown seldom has bad debts, the company uses the direct write-off method whereby it charges Bad debts expense and credits Accounts receivable when an account is deemed uncollectible.
5. A three-year property and casualty insurance policy was purchased in January 2016 for $30,000. The entire amount was recorded as an insurance expense at the time.
6. On October 1, 2016, Watsontown borrowed $100,000 from a local bank. The loan terms specified annual interest payments of $8,000 on the anniversary date of the loan. The first interest payment was made on October 1, 2017, and expensed in its entirety.

Required:

Prepare any journal entry necessary to correct each error as well as any year-end adjusting entry for 2017 related to the described situation. Ignore income tax effects. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

A firm can produce orange juice in the US and ship it to Japan at a cost of $1.75/unit. They want to sell it with a 50% markup (50% higher than their cost), and the yen/US$ exchange rate is 111.11.

1) At what price would they sell it in Japan (in yen)?

2)What is their US$ profit?

Now suppose the $ appreciates from ¥/US$ 111.11 to ¥120/US$ prior to payment.

3) What is the new US$ revenue and profit?

4) How does it compare with what the company was expecting?

5) What might the company have done to protect itself?

Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2021 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 25% in all years. Any tax effects should be adjusted through the deferred tax liability account.

1. Fleming Home Products introduced a new line of commercial awnings in 2020 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 3% of sales. Sales of the awnings in 2020 were $4,100,000. Accordingly, warranty expense and a warranty liability of $123,000 were recorded in 2020. In late 2021, the company’s claims experience was evaluated, and it was determined that claims were far fewer than expected: 2% of sales rather than 3%. Sales of the awnings in 2021 were $4,600,000, and warranty expenditures in 2021 totaled $104,650.
2. On December 30, 2017, Rival Industries acquired its office building at a cost of $1,120,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However, plans were finalized in 2021 to relocate the company headquarters at the end of 2025. The vacated office building will have a salvage value at that time of $760,000.
3. Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2021 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1, 2021, is $750,000.
4. At the beginning of 2018, the Hoffman Group purchased office equipment at a cost of $396,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years’-digits method. On January 1, 2021, the company changed to the straight-line method.
5. In November 2019, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2020, Huggins had not reached a settlement with state authorities, but legal counsel advised Huggins that it was probable the company would have to pay $260,000 in penalties. Accordingly, the following entry was recorded:

Late in 2021, a settlement was reached with state authorities to pay a total of $416,000 in penalties.

6. At the beginning of 2021, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $511,000.

Required:
For each situation:
1. Identify the type of change.
2. Prepare any journal entry necessary as a direct result of the change, as well as any adjusting entry for 2021 related to the situation described.

Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2021 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 25% in all years. Any tax effects should be adjusted through the deferred tax liability account.

1. Fleming Home Products introduced a new line of commercial awnings in 2020 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 2% of sales. Sales of the awnings in 2020 were $2,600,000. Accordingly, warranty expense and a warranty liability of $52,000 were recorded in 2020. In late 2021, the company’s claims experience was evaluated, and it was determined that claims were far fewer than expected: 1% of sales rather than 2%. Sales of the awnings in 2021 were $3,100,000, and warranty expenditures in 2021 totaled $70,525.
2. On December 30, 2017, Rival Industries acquired its office building at a cost of $820,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However, plans were finalized in 2021 to relocate the company headquarters at the end of 2025. The vacated office building will have a salvage value at that time of $610,000.
3. Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2021 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1, 2021, is $600,000.
4. At the beginning of 2018, the Hoffman Group purchased office equipment at a cost of $231,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years’-digits method. On January 1, 2021, the company changed to the straight-line method.
5. In November 2019, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2020, Huggins had not reached a settlement with state authorities, but legal counsel advised Huggins that it was probable the company would have to pay $110,000 in penalties. Accordingly, the following entry was recorded:

Late in 2021, a settlement was reached with state authorities to pay a total of $251,000 in penalties.

6. At the beginning of 2021, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $346,000.

Required:
For each situation:
1. Identify the type of change.
2. Prepare any journal entry necessary as a direct result of the change, as well as any adjusting entry for 2021 related to the situation described.
  

Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2021 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 25% in all years. Any tax effects should be adjusted through the deferred tax liability account.

a. Fleming Home Products introduced a new line of commercial awnings in 2020 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 4% of sales. Sales of the awnings in 2020 were $2,500,000. Accordingly, warranty expense and a warranty liability of $100,000 were recorded in 2020. In late 2021, the company’s claims experience was evaluated, and it was determined that claims were far fewer than expected: 3% of sales rather than 4%. Sales of the awnings in 2021 were $3,000,000, and warranty expenditures in 2021 totaled $68,250.

b. On December 30, 2017, Rival Industries acquired its office building at a cost of $800,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However, plans were finalized in 2021 to relocate the company headquarters at the end of 2025. The vacated office building will have a salvage value at that time of $600,000.

c. Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2021 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1, 2021, is $590,000.

d. At the beginning of 2018, the Hoffman Group purchased office equipment at a cost of $220,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years’-digits method. On January 1, 2021, the company changed to the straight-line method.

e. In November 2019, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2020, Huggins had not reached a settlement with state authorities, but legal counsel advised Huggins that it was probable the company would have to pay $100,000 in penalties. Accordingly, the following entry was recorded:

Late in 2021, a settlement was reached with state authorities to pay a total of $240,000 in penalties.

f. At the beginning of 2021, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $335,000.

Required:
For each situation:
1. Identify the type of change, change in accounting estimates or change in accounting principle
2. Prepare any journal entry necessary as a direct result of the change or any adjusting entry for 2021 related to the situation described

Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2021 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 25% in all years. Any tax effects should be adjusted through the deferred tax liability account.

1. Fleming Home Products introduced a new line of commercial awnings in 2020 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 2% of sales. Sales of the awnings in 2020 were $3,600,000. Accordingly, warranty expense and a warranty liability of $72,000 were recorded in 2020. In late 2021, the company’s claims experience was evaluated, and it was determined that claims were far fewer than expected: 1% of sales rather than 2%. Sales of the awnings in 2021 were $4,100,000, and warranty expenditures in 2021 totaled $93,275.
2. On December 30, 2017, Rival Industries acquired its office building at a cost of $1,020,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However, plans were finalized in 2021 to relocate the company headquarters at the end of 2025. The vacated office building will have a salvage value at that time of $710,000.
3. Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2021 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1, 2021, is $700,000.
4. At the beginning of 2018, the Hoffman Group purchased office equipment at a cost of $341,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years’-digits method. On January 1, 2021, the company changed to the straight-line method.
5. In November 2019, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2020, Huggins had not reached a settlement with state authorities, but legal counsel advised Huggins that it was probable the company would have to pay $210,000 in penalties. Accordingly, the following entry was recorded:

Late in 2021, a settlement was reached with state authorities to pay a total of $361,000 in penalties.

6. At the beginning of 2021, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $456,000.

1. Prepare any journal entry necessary as a direct result of the change, as well as any adjusting entry for 2021 related to the situation described. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Record journal entry as a direct result of the change.

Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2021 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 25% in all years. Any tax effects should be adjusted through the deferred tax liability account.

1. Fleming Home Products introduced a new line of commercial awnings in 2020 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 3% of sales. Sales of the awnings in 2020 were $3,800,000. Accordingly, warranty expense and a warranty liability of $114,000 were recorded in 2020. In late 2021, the company’s claims experience was evaluated, and it was determined that claims were far fewer than expected: 2% of sales rather than 3%. Sales of the awnings in 2021 were $4,300,000, and warranty expenditures in 2021 totaled $97,825.
2. On December 30, 2017, Rival Industries acquired its office building at a cost of $1,060,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However, plans were finalized in 2021 to relocate the company headquarters at the end of 2025. The vacated office building will have a salvage value at that time of $730,000.
3. Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2021 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1, 2021, is $720,000.
4. At the beginning of 2018, the Hoffman Group purchased office equipment at a cost of $363,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years’-digits method. On January 1, 2021, the company changed to the straight-line method.
5. In November 2019, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2020, Huggins had not reached a settlement with state authorities, but legal counsel advised Huggins that it was probable the company would have to pay $230,000 in penalties. Accordingly, the following entry was recorded:

Late in 2021, a settlement was reached with state authorities to pay a total of $383,000 in penalties.

6. At the beginning of 2021, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $478,000.

Required:
For each situation:
1. Identify the type of change.
2. Prepare any journal entry necessary as a direct result of the change, as well as any adjusting entry for 2021 related to the situation described.