The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017.

(Hint: Interest must be accrued.)

Required:
1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end.
2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments.

On January 1, 2018, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction Company for $600 million cash. At the date of acquisition of the stock, Lake's net assets had a fair value of $800 million. Their book value was $700 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference. Lake’s net income for the year ended December 31, 2018, was $300 million. During 2018, Lake declared and paid cash dividends of $20 million. The buildings have a remaining life of 5 years.

Required:
1. Complete the table below and prepare all appropriate journal entries related to the investment during 2018, assuming Cameron accounts for this investment by the equity method.
2. Determine the amounts to be reported by Cameron.

You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2018. Your accounting group provided you the following information on the company's debt: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

1. On July 1, 2018, Moonlight Bay issued bonds with a face amount of $2,500,000. The bonds mature in 20 years and interest of 9% is payable semiannually on June 30 and December 31. The bonds were issued at a price to yield investors 10%. Moonlight Bay records interest at the effective rate.
2. At December 31, 2017, Moonlight Bay had a 10% installment note payable to Third Mercantile Bank with a balance of $550,000. The annual payment is $85,000, payable each June 30.
3. On January 1, 2018, Moonlight Bay leased a building under a finance lease calling for four annual lease payments of $50,000 beginning January 1, 2018. Moonlight Bay’s incremental borrowing rate on the date of the lease was 13% and the lessor’s implicit rate, which was known by Moonlight Bay, was 12%.

Required:
Calculate interest expense for the year ended December 31, 2018. (Round your answer to nearest whole dollar.)

The following information is provided by Exemplar Pty Ltd (tax rate 30%).

The company bench mark percentage is 80%

Taxable income of the company for the 2019/20 tax year was $90,000

The franking deficit tax paid on 7 July was applied against the 2018/19 tax liability (FDT).

Required

Prepare the franking account of Exemplar Pty Ltd for the 2019/20 franking year.

Calculate the company net tax payable/refundable for 2019/20

On January 1, 2018, LLB Industries borrowed $350,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. LLB entered into a two-year interest rate swap agreement on January 1, 2018, and designated the swap as a fair value hedge. Its intent was to hedge the risk that general interest rates will decline, causing the fair value of its debt to increase. The agreement called for the company to receive payment based on a 10% fixed interest rate on a notional amount of $350,000 and to pay interest based on a floating interest rate. The contract called for cash settlement of the net interest amount quarterly.|

Floating (LIBOR) settlement rates were 10% at January 1, 8% at March 31, and 6% June 30, 2018. The fair values of the swap are quotes obtained from a derivatives dealer. Those quotes and the fair values of the note are as indicated below.

Required:
1. Calculate the net cash settlement at March 31 and June 30, 2018.
2. Prepare the journal entries through June 30, 2018, to record the issuance of the note, interest, and necessary adjustments for changes in fair value.

he following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017. Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $530,000 at face value. Sep. 1 Acquired $1,290,000 of American Instruments' 10% bonds at face value. Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds. Oct. 2 Sold the Distribution Transformers bonds for $565,000. Nov. 1 Purchased $2,050,000 of M&D Corporation 6% bonds at face value. Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are: American Instruments bonds $ 1,243,000 M&D Corporation bonds $ 2,123,000 (Hint: Interest must be accrued.) Required: 1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end. 2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments.

At year-end 2018, Wallace Landscaping’s total assets were $1.20 million, and its accounts payable were $310,000. Sales, which in 2018 were $3.3 million, are expected to increase by 25% in 2019. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $515,000 in 2018, and retained earnings were $260,000. Wallace has arranged to sell $55,000 of new common stock in 2019 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2019. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 3%, and 55% of earnings will be paid out as dividends.

1. What was Wallace's total long-term debt in 2018? Do not round intermediate calculations. Round your answer to the nearest dollar.
   $  

   What were Wallace's total liabilities in 2018? Do not round intermediate calculations. Round your answer to the nearest dollar.
   $  

2. How much new long-term debt financing will be needed in 2019? (Hint: AFN - New stock = New long-term debt.) Do not round intermediate calculations. Round your answer to the nearest dollar.
   $  

The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017.

(Hint: Interest must be accrued.)

Required:
1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end.
2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments.