Just need 2a and 2b answered. Already have number one. Just included in case you needed it for part two.
1. On January 1, 2020, Hawkeye Air leased a new airplane for a term of 8 years. The expected life of the airplane is 20 years. There are no rights to purchase the asset at the end of the term, no bargain purchase option, and no residual value guarantee. The lease stipulates that Hawkeye Air makes annual payments of $550,000 beginning at the end of the first year (December 31, 2020). Hawkeye Air has an incremental borrowing rate of 6% and the fair market value of the airplane on January 1, 2020 is $6,250,000 (for simplicity, assume the lessor’s implicit rate is greater than 6%).
a. What journal entries related to the lease arrangement should be recorded during 2020 (assume Hawkeye Air’s fiscal year end is December 31).
b. Identify any effects the lease arrangement and the associated reporting would have on the balance sheet, income statement, and statement of cash flows for 2020.
c. What is the annual lease payment that results in a present value of minimum lease payments equal to 90% of the fair market value of the airplane ($6,250,000)?
2. Now assume that the lessor decided to require the lease payments at the beginning of the year as opposed to the end of the year. Also assume that the lease arrangement had a bargain purchase option under which the lessee could purchase the airplane at the end of the contract for $500,000.
a. What journal entries related to the lease arrangement should be recorded during 2020.
b. Identify any effects the lease arrangement and the associated reporting would have on the balance sheet, income statement, and statement of cash flows for 2020.
In: Accounting
On 1 July 2019, Vajra Ltd was incorporated and offered 2,500,000 ordinary shares to the public at an issue price of $4.00 per share, with $1.50 payable on application, and $1.50 upon allotment (due within one month of allotment) and $1.00 payable on another call to be made at a later date.
The issue is underwritten at a commission of $42,000.
By 31 July 2019, applications had been received for 2,450,000 shares. On 12 August 2019, shares were allotted, and the underwriter forwarded the application and allotment money due on the 50,000 shares less their commission. All remaining allotment money was received by 12 September 2019. On 30 September 2019, Vajra Ltd paid the legal costs (for company formation) of $6,200 and share issue cost of $4,600.
On 20 January 2020, the call was made, with money due by 29 February 2020. By 29 February 2020, all call money was received except for holders of 35,000 shares who failed to meet the call. On 31 March 2020, the shares on which call money was not received were forfeited.
On 9 April 2020, the forfeited shares were auctioned for $3.70 as fully paid. Share re-issue costs amounting to $8,500 were paid. The constitution provides for any surplus on resale, after satisfaction of unpaid instalments and any costs, to be returned to shareholders whose shares were forfeited. The refunds were made on 5 May 2020.
Required: Prepare the journal entries to record the transactions of Vajra Ltd up to and including that which took place on 30 June 2020. Show all relevant dates, narrations and workings.
In: Accounting
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In: Accounting
Tech Supplies Company, Incorporated, is a leading retailer specializing in consumer electronics. A condensed income statement and balance sheet for the fiscal year ended February 1, 2020, are shown below.
| Tech Supplies Company, Incorporated | |
| Balance Sheet | |
| At February 1, 2020 | |
| ($ in millions) | |
| Assets | |
|---|---|
| Current assets: | |
| Cash and cash equivalents | $ 2,106 |
| Accounts receivable (net) | 1,227 |
| Inventory | 5,064 |
| Other current assets | 418 |
| Total current assets | 8,815 |
| Long-term assets | 3,698 |
| Total assets | $ 12,513 |
| Liabilities and Shareholders’ Equity | |
| Current liabilities: | |
| Accounts payable | $ 5,100 |
| Other current liabilities | 3,775 |
| Total current liabilities | 8,875 |
| Long-term liabilities | 2,242 |
| Shareholders’ equity | 1,396 |
| Total liabilities and shareholders’ equity | $ 12,513 |
| Tech Supplies Company, Incorporated | |
| Income Statement | |
| For the Year Ended February 1, 2020 | |
| ($ in millions) | |
| Revenues | $ 39,593 |
|---|---|
| Costs and expenses | 38,166 |
| Operating income | 1,427 |
| Other income (expense)* | (78) |
| Income before income taxes | 1,349 |
| Income tax expense | 698 |
| Net income | $ 651 |
*Includes $197 of interest expense.
1-a. Calculate the current ratio for Tech Supplies for its fiscal year ended February 1, 2020.
1-b. Calculate the acid-test ratio for Tech Supplies for its fiscal year ended February 1, 2020.
1-c. Calculate the debt to equity ratio for Tech Supplies for its fiscal year ended February 1, 2020.
1-d. Calculate the times interest earned ratio for Tech Supplies for its fiscal year ended February 1, 2020.
Note: For all requirements, round your answers to 2 decimal places.
In: Accounting
Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year.
K
Capital 83,887
Sales 259,870
Trade accounts payable 19,840
Returns outwards 13,407
Allowance for doubtful debts 512
Discounts allowed 2,306
Discounts received 1,750
Purchases 135,680
Returns inwards 5,624
Carriage outwards 4,562
Drawings 18,440
Carriage inwards 11,830
Rent, rates and insurance 25,973
Heating and lighting 11,010
Postage, stationery and telephone 2,410
Advertising 5,980
Salaries and wages 38,521
Bad debts 2,008
Cash in hand 534
Cash at bank 4,440
Inventory as at 1st April 2019 15,654
Trade accounts receivable 24,500
Fixtures and fittings - at cost 120,740
Prov. for depreciation on fixtures and fittings – 31/03/2020 63,020
Depreciation 12,074
The following additional information as at 31st March, 2020 is available:
(a) Inventory at the close of business was valued at K17,750
(b) Insurances have been prepaid by K1,120
(c) Heating and lighting is accrued by K1,360
(d) Rates have been prepaid by K5,435
(e) The allowance for doubtful debts is to be adjusted so that it is 3% of trade accounts receivable.
Required:
For the year 2020, prepare Mr Kumar’s:
[10 Marks]
[10 Marks]
[10 Marks]
[10 Marks]
[Total: 40 Marks]
In: Accounting
Question 4 [27]
The following bank reconciliation statement was prepared by the bookkeeper of Veggie Stores for January 2020. The financial year of the business ends in January each year.
|
Bank overdraft as per bank statement |
R35 000 |
|
Outstanding deposit on 10 January 2020 |
R12 900 |
|
28 January 2020 |
R10 000 |
|
Outstanding deposit: Cheque received from B Brother dated 24 February 2020 |
R1 800 |
|
Outstanding cheques: |
|
|
R7 000 |
|
R9 800 |
|
R4 800 |
|
Bank charges |
R570 |
|
Balance as per bank account in the General Ledger |
? |
Required:
Complete question 4.3 and 4.4 specifically in format below
4.3
|
Amount |
Error |
Corrective action |
(9)
4.4
|
Debit |
Credit |
|
(7)
In: Accounting
Question 4 [27]
The following bank reconciliation statement was prepared by the bookkeeper of Veggie Stores for January 2020. The financial year of the business ends in January each year.
|
Bank overdraft as per bank statement |
R35 000 |
|
Outstanding deposit on 10 January 2020 |
R12 900 |
|
28 January 2020 |
R10 000 |
|
Outstanding deposit: Cheque received from B Brother dated 24 February 2020 |
R1 800 |
|
Outstanding cheques: |
|
|
R7 000 |
|
R9 800 |
|
R4 800 |
|
Bank charges |
R570 |
|
Balance as per bank account in the General Ledger |
? |
Required:
Complete question 4.3 and 4.4 specifically in format below
4.3
|
Amount |
Error |
Corrective action |
(9)
4.4
|
Debit |
Credit |
|
(7)
In: Accounting
Question 3
A. J & B Company uses the percentage of sales approach to estimate its uncollectible accounts. The company’s annual sales for its first financial year of operations ending July 31, 2020 was $500,000, cash sales contributed to 2% of the overall sales and the accounts receivable balance at year end was $75,000. Based on industry expectations, it estimated that 3% of its credit sales would be uncollectible.
Required:
a. Calculate the bad debt expense at July 31, 2020.
b. Calculate the net receivable balance that would be reported in the Statement of Financial Position as at July 31, 2020.
B. Tosh and Sons Inc. uses the percentage of receivables approach to estimate its uncollectible accounts. The company had sales of $100,000 at the end of its financial year on June 30, 2020. The allowance for doubtful debts account had a debit balance of $400, the accounts receivable balance was $30,000 at year end and the company estimates the uncollectible percentages as follows:
Current (1 - 30 days) $15,000 0.5%
31 - 60 days $10,000 2.0%
61 - 90 days $3,000 10.0%
Over 90 days $2000 60.0%
Required:
a. Calculate the bad debt expense at June 30, 2020.
b. Prepare the necessary journal entry to record the bad debt expense for the year.
C. During the financial year ending May 31, 2020 the Board of Directors of Chung Sa Corporation authorised the write off of a $3,000 two-year debt belonging to a previous customer Jap Inc. On July 2, 2020 Chung Sa Corporation received an electronic funds transfer from Jap Inc. in the amount of $3,000.
Required:
Prepare all necessary journal entries to record this transaction.
In: Accounting
5–5A Buono Adventures, which uses the perpetual inventory system, has the following account balances (in alphabetical order) on July 31, 2020:
| Accounts Payable....................................................................... | $ 21,600 |
| Accounts Receivable.................................................................. | 23,200 |
| Accumulated Amortization—Equipment.............................. | 64,600 |
| Cash.............................................................................................. | 8,400 |
| Cost of Goods Sold..................................................................... | 687,000 |
| E. Buono, Capital........................................................................ | 402,000 |
| E. Buono, Withdrawals.............................................................. | 92,000 |
| Equipment.............................. | 180,000 |
| Interest Earned.......................................................................... | 4,000 |
| Inventory.................................................................................... | 143,000 |
| Operating Expenses.................................................................. | 355,000 |
| Sales Discounts.......................................................................... | 10,300 |
| Sales Returns and Allowances................................................ | 32,900 |
| Sales Revenue............................................................................ | 1,045,200 |
| Supplies...................................................................................... | 14,600 |
| Unearned Sales Revenue.......................................................... | 9,000 |
Note: For simplicity, all operating expenses have been summarized in the account Operating Expenses.
Additional data at July 31, 2020:
A physical count of items showed $3,000 of supplies on hand. (Hint: Use the account Operating Expenses in the adjusting journal entry.)
An inventory count showed inventory on hand at July 31, 2020, of $140,000.
The equipment has an estimated useful life of eight years and is expected to have no scrap or residual value at the end of its life. (Hint: Use the account Operating Expenses in the adjusting journal entry.)
Unearned sales revenue of $5,600 was earned by July 31, 2020.
Required
Record all adjustments and closing entries that would be required on July 31, 2020.
Prepare the multi-step income statement and statement of owner’s equity for the year ended July 31, 2020, and the classified balance sheet in report format as at July 31, 2020.
3 4
Adjusting and closing the accounts of a merchandising company, and preparing a merchandiser’s financial statements under the perpetual inventory system
2. Net loss, $67,500
In: Accounting
The following information is available about Ancora Co. (Ancora): 1. Ancora's cash balance on December 31, 2019, was $70,000. 2. Actual sales for November and December 2019, and expected sales for January and February 2020, are as follows: November 2019 December 2019 January 2020 February 2020 (actual) (actual) (estimate) (estimate) Cash sales $ 75,000 $ 90,000 $ 60,000 $ 50,000 Credit sales 560.000 650,000 480,000 430,000 Sales on account are collected over a three-month period at the following rate: 30% collected in the month of sale, 50% collected in the month following sale and 17% collected in the second month following sale. The remaining 3% is uncollectable and is written off 3. Ancora's gross profit on sales is 35%. 4. Ancora's policy is to hold inventory at the end of the month equal to 40% of next month's budgeted sales. Inventory purchases in a given month are paid for as follows: 30% are paid in the month of purchase and 70% in the month following 5. Selling and administrative expenses are budgeted at $400,000 for January 2020. This amount includes $120,000 for depreciation 6 Equipment costing $150 000 was expected to be purchased for cash during January 2020 7 On December 15, 2019. Ancora declared a $100.000 dividend to be paid on January 15, 2020 8 Ancora must maintain a minimum cash balance of $50.000 An open line of credit is available from Ancora's bank. REQUIRED: Prepare Ancora's cash budget for the month of Jan 2020 and calculate Ancora's budgeted account receivable and accts payable closing balance at Jan 31, 20.
PLEASE PROVIDE TYPE WRITTEN ANSWER AND NOT HAND-WRITTEN SINCE IT'S HARD TO UNDERSTAND HAND WRITING.
In: Accounting