The comparative balance sheets of Coronado Inc. at the beginning and the end of the year 2020 are as follows.

Net income of $47,200 was reported, and dividends of $27,680 were paid in 2020. New equipment was purchased and none was sold.

Prepare a statement of cash flows for the year 2020. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

The following data are from the accounts of Color Corp. at December 31, 2020

Retained earnings, beginning balance--------------------------------------------------------- $900,000

Common stock, $____ par, 100,000 shares authorized, 50,000 shares issued -----------------1,000,000

Treasury stock, 1,000 shares --------------------------------------------------------------------20,000

Paid-in capital in excess of par – Common stock ---------------------------------------------400,000

Bonds Payable ----------------------------------------------------------------------------------200,000

Net income for 2020 (not included in retained earnings above)-----------------------------190,000

Dividends declared and paid during 2020 (not included in retained earnings above)-------80,000

Required:

1. Determine the value of the following items. Type/write your response after each item where indicated.
   1. Total retained earnings at end of 2020
   2. Total stockholders’ equity
   3. Average original selling price per share
   4. Par value per share of common stock   
   5. Cost per share of treasury stock
   6. Number of shares of common stock outstanding

2. Prepare the stockholders’ equity section of the balance sheet at December 31, 2020

Louise works in a foreign branch of her employer's business. She earned $5,000 per month throughout the relevant period. Which of the following is correct?

a.If Louise worked in the foreign branch from May 1, 2019 until October 31, 2020, she may exclude $40,000 from gross income in 2019 and exclude $50,000 in 2020.

b.If Louise began work in the foreign country on May 1, 2019, she must work through November 30, 2020 in order to exclude $55,000 from gross income in 2020 but none in 2019.

c.If Louise worked in the foreign branch from May 1, 2019 until October 31, 2020, she cannot exclude anything from gross income because she was not present in the country for 330 days in either year.

d.Louise will not be allowed to exclude any foreign earned income because she made less than $107,600.

Ivan Manufacturing purchased equipment and a delivery van on January 1, 2020. The equipment cost $95,000 and has an estimated useful life of 8 years with a residual value of $10,000.

The delivery van cost $125,000 and has an estimated life of 5 years or 200,000 kilometres and a residual value of $20,000. The delivery truck is expected to be driven 25,000 and 50,000 kilometres in 2019 and 2020, respectively.

Required

1. Ivan has decided to depreciate the equipment using either the straight-line method or double declining method. Calculate depreciation for the equipment for 2020 and 2021 using the straight-line method AND the double declining method.
2. Ivan has decided to depreciate the delivery van using the units-of-production method. Calculate depreciation for the delivery truck for 2020 and 2021.

On 30 June 2017 You Can Cook Pty Ltd purchased equipment at a cost of $625,000 (GST exclusive) with an estimated useful life of 10 years and no residual value. On 30 June 2020, the equipment had a carrying amount of $437 500.

On 30 June 2020 the same item of equipment was determined as having a recoverable amount of $350 000 and a remaining useful life of 7 years.

On 30 June 2023, the equipment was assessed as having a recoverable amount of $260 000 and a remaining useful life of 3 years.

All equipment is carried under the cost model.

Prepare the general journal entries to record the impairment of equipment and depreciation

under the cost model on 30 June 2020, 30 June 2023 and 30 June 2024.

Please note the depreciation expense for the equipment has not been recorded for the year 2020 (ended 30 June 2020).

Narrations are not required

The comparative balance sheets of Larkspur Inc. at the beginning and the end of the year 2020 are as follows.

Net income of $48,260 was reported, and dividends of $29,340 were paid in 2020. New equipment was purchased and none was sold.

Prepare a statement of cash flows for the year 2020. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Selected ledger account balances for Business Solutions follow.

Required:
1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2020. Compute amounts for the year ended December 31, 2020, for Depreciation expense—Office equipment and for Depreciation expense—Computer equipment (assume use of the straight-line method).
2. Given the assumptions in part 1, what is the book value of both the office equipment and the computer equipment as of December 31, 2020?
3. Compute the three-month total asset turnover for Business Solutions as of March 31, 2020.

Computing Diluted EPS: Convertible Bonds and Convertible Preferred Stock

Jones Corporation's capital structure follows.

During 2020, Jones declared and paid dividends of $3.00 per share on its preferred stock. The preferred shares are convertible in 44,000 shares of common stock. The 8% bonds are convertible into 66,000 shares of common stock. Net income for 2020 is $1,955,000. Assume that the income tax rate is 25%.

Required

a. Compute basic EPS for 2020.

b. Compute diluted EPS for 2020.

• Note: Round earnings per share amounts to two decimal places.

3. Problems and Applications Q3

A recent study found that the demand and supply schedules for flying disks are as follows:

Complete the first row of the following table by indicating the equilibrium price and the equilibrium quantity of flying disks in the absence of any price controls.

Flying disk manufacturers persuade the government that flying disk production improves scientists' understanding of aerodynamics and thus is important for national security. A concerned Congress votes to impose a price floor $1 above the equilibrium price.

Complete the second row of the previous table by indicating the new price and quantity of flying disks when Congress imposes a price floor $1 above the equilibrium price. Then indicate whether the price floor is binding or not binding.

Irate college students march on Washington and demand a reduction in the price of flying disks. An even more concerned Congress votes to repeal the price floor and impose a price ceiling $2 below the former price floor.

Complete the final row of the previous table by indicating the new price and quantity of flying disks when Congress imposes a price ceiling $2 below the former price floor. Then indicate whether the price ceiling is binding or not binding.