On June 1, 2020, JetCom Inventors Inc. issued a $480,000 8%, three-year bond. Interest is to be paid semiannually beginning December 1, 2020.

Required:
a. Calculate the issue price of the bond assuming a market interest rate of 9%. (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.)

b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)

Part 1
Prepare journal entries to the following. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

a. Issuance of the bonds on June 1, 2020
b. Payment of interest on December 1, 2020
c. Adjusting entry to accrue bond interest and discount amortization on January 31, 2021
d. Payment of interest on June 1, 2021

Assume JetCom Inventors Inc. has a January 31 year-end.

Part 2
Show how the bonds will appear on the balance sheet under non-current liabilities at January 31, 2022. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

Errors and Adjusting Entries Use the following information to record necessary end of period journal entries:

A man came into Cutting Edge on 31 March 2020 to pay for repairs to his mower which he will bring in later. He paid $2,500 cash. The mower was arranged to be delivered to Cutting Edge on 10 April, 2020.

 Repair services of $6,250 were provided on 31 March 2020 but have not yet been recorded in the transactions. Payment has not yet been received.

 Billy-Bob did a count of the stock on hand of Workshop Supplies. He realised that only $5,500 of Workshop Supplies were used in March, instead of $7,000 as recorded on 31 March 2020 (in Practice Set 2).

 Jimmy-James’ last wages payment was on Friday 20 March. The next $1,000 fortnightly payment is on Friday 3 April. Jimmy-James only works Monday to Friday, being 10 days per fortnight.

 Annual insurance of $1,200 was paid on 1 February and recorded in the Prepaid Insurance account.

 From all sources of revenue (Sales Revenue and Service Revenue), $70,730 was cash sales.

 Add any other necessary adjusting entries based on the information provided under the accounting policies and procedures.

Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2018 through 2021 except for differences in depreciation on an operational asset. The asset cost $200,000 and is depreciated for income tax purposes in the following amounts: 2018 $ 66,000 2019 88,000 2020 30,000 2021 16,000 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows. 2018 2019 2020 2021 Accounting income before taxes and depreciation $ 110,000 $ 130,000 $ 120,000 $ 120,000 Assume the average and marginal income tax rate for 2018 and 2019 was 30%; however, during 2019 tax legislation was passed to raise the tax rate to 40% beginning in 2020. The 40% rate remained in effect through the years 2020 and 2021. Both the accounting and income tax periods end December 31. Required: Prepare the journal entries to record income taxes for the years 2018 through 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

6.

The stockholders' equity account balances of Kay Corporation
for 2020 are given below:

                                     January 1      December 31
Common stock ......................   648,000         720,000
Paid-in capital – common stock ....   540,000         594,000
Treasury stock ....................   160,000          36,800
Paid-in capital – treasury stock ..     5,000            ?
Retained earnings .................   425,000            ?

The common stock account at January 1 consisted of 54,000 shares
that were outstanding at a $12 par value per share.

The treasury stock account at January 1 consisted of 10,000 shares
that had been re-acquired at a $16 cost per share.

During 2020, Kay Corporation entered into the following transactions:

March 23     Re-issued 2,400 of the treasury shares for $22 per share

June 9       Re-issued 3,700 of the treasury shares for $13 per share

August 15    Issued 6,000 shares of previously un-issued common stock

November 2   Re-issued 1,600 of the treasury shares for $14 per share

December 18  Declared and paid a $3.75 dividend per share on the
             outstanding shares of common stock

Kay Corporation reported a net income of $293,760 for 2020.

Calculate the retained earnings account balance at December 31, 2020.

Information for the economy of Pogo

2019

• Interest payments received from Foreign on Foreign assets owned by Pogo:                     $45M
• Interest payments paid to Foreign citizens on Pogo assets owned by Foreign:                   $48M
• Federal Reserve Bank of Pogo’s holding of interest-free Foreign assets, start of 2019:   $85M

2020

• Interest payments received from Foreign on Foreign assets owned by Pogo:                     $46M
• Interest payments paid to Foreign citizens on Pogo assets owned by Foreign:                   $52M
• Federal Reserve Bank of Pogo’s holding of interest-free Foreign assets, start of 2020:   $77M

Assumptions:            

• Interest rate on Foreign assets is 5% and the Interest rate on Pogo assets is 8% for both 2019 & 2020.
• Foreign central bank does not hold Pogo assets
• There are no Foreigners working in Pogo and no Pogo citizens working in Foreign during these years.

Questions:

1. What is Pogo’s international net worth at the start of 2019? Show your work.

2. What is Pogo’s current account, CA, in 2019. Show your work.

3. What is Pogo’s trade account, TA, in 2019. Show your work.

4. What is Pogo’s international net worth at the start of 2020? Show your work.

The Lynbrook Rentals Company offers credit terms to all of its customers. At the end of 2019, accounts receivables totaled $3,400,000. During 2020 credit sales were $2,100,000 and cash collections from customers were $3,700,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $42,000 at the beginning of 2020 and $70,000 in receivables were written off during the year as uncollectible. In addition, $20,000 was collected from a customer whose account was written off in 2019. The allowance for uncollectible accounts is determined by an ageing of accounts receivable. An aging of accounts receivable at December 31, 2020, reveals the following:

Age Group   Percentage of Year-end Receivable in Group Percent Uncollectible

0-60 days 55%   5%

61-90 days 30 15

91-120 days 10 45

Over 120 days 5 60

Required:

a. Prepare journal entries to record the write-off of receivables, collection of the accounts receivable previously written off, and the year-end adjusting entry for bad debt expense.
b. Show how accounts receivables would be presented in the 2020 year-end balance sheet?

5. Real versus nominal GDP

Consider a simple economy that produces two goods: pencils and oranges. The following table shows the prices and quantities of the goods over a three-year period.

Use the information from the preceding table to fill in the following table.

From 2019 to 2020, nominal GDP (Decreased/Increased), and real GDP(Decreased/Increased) .

The inflation rate in 2020 was (-47.5%, -0.5%, 47.5%, 52.5%, 190.5%) .

Why is real GDP a more accurate measure of an economy's production than nominal GDP?

- Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

- Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes.

-Real GDP is not influenced by price changes, but nominal GDP is.

Interest During Construction

Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available:

• Capitalization period: January 1, 2019, to June 30, 2020
• Expenditures on project:

  2019:
  	January 1	$ 516,000
  	May 1	477,000
  	October 1	648,000
  2020:
  	March 1	1,404,000
  	June 30	684,000

• Amounts borrowed and outstanding:
     $1.7 million borrowed at 10%, specifically for the project
     $8 million borrowed on July 1, 2018, at 12%
     $13 million borrowed on January 1, 2017, at 6%

Required:

Note: Round all final numeric answers to two decimal places.

1. Compute the amount of interest costs capitalized each year.

   Capitalized interest, 2019	$ fill in the blank 1
   Capitalized interest, 2020	$ fill in the blank 2

2. If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in 2020.

   $ fill in the blank 3

3. Since GAAP requires accrual accounting, if a company capitalizes interest during the construction period it will report   income than if it had not capitalized interest. In future periods, the same company will report   income than if it had not capitalized interest.