Exercise 17-05 (Video)

The current sections of Scoggin Inc.’s balance sheets at December 31, 2019 and 2020, are presented here.

Scoggin’s net income for 2020 was $153,200. Depreciation expense was $25,000.

Prepare the net cash provided by operating activities section of the company’s statement of cash flows for the year ended December 31, 2020, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

(Analysis of Percentage-of-Completion Financial Statements) In 2020, Steinrotter Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Steinrotter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2020, are shown below. Balance Sheet Accounts receivable $18,000 Construction in process $65,000 Less: Billings 61,500 Costs and recognized profit in excess of billings 3,500 Income Statement Income (before tax) on the contract recognized in 2020 $19,500 Instructions

a.   How much cash was collected in 2020 on this contract?

b.   What was the initial estimated total income before tax on this contract?

The inventory of Sunland Company on December 31, 2020, consists of the following items.

^a Part No. 121 is obsolete and has a realizable value of $1.00 each as scrap.

(a) Determine the inventory as of December 31, 2020, by the LCNRV method, applying this method to each item.

(b) Determine the inventory by the LCNRV method, applying the method to the total of the inventory.

On 1/04/2019, AUS Ltd enters into a binding agreement with a Canadian company to construct an item of machinery that manufactures spoons. The cost of the machinery is $400,000 Canadian Dollars. The construction of the machinery is completed on 1/06/2020 and shipped FOB Canada on that date. The debt is unpaid at 30 June 2020, which is also AUS Ltd’s end of reporting period. The exchange rates at the relevant dates are: • 01/04/2019 A$1.00 = C$1.10 • 30/06/2019 A$1.00 = C$1.05 • 01/06/2020 A$1.00 = C$1.02 • 30/06/2020 A$1.00 = C$1.00 Required: Provide the required journal entries for the above transactions. (7 marks, word limit: n/a) Please provide unique answer than others.

heffield Company purchased machinery on January 1, 2020, for $93,600. The machinery is estimated to have a salvage value of $9,360 after a useful life of 8 years.

New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect.

Compute 2020 depreciation expense using the sum-of-the-years'-digits method.

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New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect.

Compute 2020 depreciation expense using the sum-of-the-years'-digits method, assuming the machinery was purchased on April 1, 2020. (Round answer to 0 decimal places, e.g. 5,125.)

1. 14 marks Contract price $ 3,140,000 Total estimated construction cost at contract inception $ 2,305,000 2020 2021 2022 Total costs incurred to date $ 691,500 $ 1,540,500 $ 2,350,000 Estimated costs to complete $ 1,613,500 $ 829,500 $ - Customer billings to date $ 625,000 $ 2,175,000 $ 3,140,000 Collections to date $ 600,000 $ 1,790,000 $ 2,899,000 Required: 1. Calculate the gross profit that should be recognized for 2020, 2021, and 2022, using the percentage of completion method. 2. Prepare the journal entries required for the 2021 year assuming that the percentage of completion method is used. 3. Determine the gross profit to be recognized for 2020, 2021, and 2022, using the completed contract method. On February 1, 2020, Kenora Contractors agreed to construct a building. The project was scheduled to be finished in 2022. Information relating to the costs and billings for this contract is as follows:

Here is the unemployment summary from February, 2020 (pre-COVID19)

Data from February 2020:

Unemployed: 5.7 million

Employed: 158.8 million

Not in the Labor Force: 95.1 million

Unemployment rate: 3.5%

Labor force participation rate: 63.4%

Here is the unemployment summary from April, 2020

Data from April, 2020

Unemployed: 23.08 million

Employed: 133.4 million

Not in the Labor Force: 103.4 million

Unemployment rate: 14.7%

Labor force participation rate: 60.2%

1. Describe what happened between February and April using the unemployment and labor force participation rates. You must JUSTIFY these changes using rationale from this chapter. You must consider how we calculate unemployment and the labor force participation rate (look at the numbers that go into the calculations and not just the percentages).

Sheridan Corp. has a deferred tax asset account with a balance of $74,440 at the end of 2019 due to a single cumulative temporary difference of $372,200. At the end of 2020, this same temporary difference has increased to a cumulative amount of $450,400. Taxable income for 2020 is $757,900. The tax rate is 20% for all years. At the end of 2019, Sheridan Corp. had a valuation account related to its deferred tax asset of $44,800.

(a) Record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming that it is more likely than not that the deferred tax asset will be realized in full.

(b) Record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming that it is more likely than not that none of the deferred tax asset will be realized.

Obsidian Mining, Inc. issued a series of 5.2%, $200,000 bonds on April 1, 2020. The bonds will pay interest semi-annually on September 30 and March 31 and mature in 10 years. At the time of issuance, the market rate of interest was 4.8%.

Instructions

1. Record the journal entry for the issuance of the bonds on April 1, 2020.
2. Record the journal entry for the first interest payment on September 30, 2020.
3. Record the year-end accrual for interest on December 31, 2020.
4. What is the total cash paid for interest by Obsidian over the life of the bonds?
5. What is the total effective interest expense recognized by Obsidian over the life of the bonds?
6. Assume that Obsidian retires the bonds at 101 immediately after the 8th interest payment, when the carrying value of the bonds is $204,128. Record the journal entry to retire the bonds.