Vaughn reported the following pretax financial income (loss) for the years 2020–2022.

Pretax financial income (loss) and taxable income (loss) were the same for all years involved. The enacted tax rate was 20% for 2020-2022.

repare the journal entries for the years 2020–2022 to record income tax expense, income taxes payable, and the tax effects of the loss carryforward, assuming that based on the weight of available evidence, it is more likely than not that one-fifth of the benefits of the loss carryforward will not be realized. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Prepare the income tax section of the 2021 income statement beginning with the line “Income (loss) before income taxes.”. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Income Statement Partial

Sugar Ltd was involved in the following transactions during 1 July 2019 to 30 June 2020 financial period.

1. On 5 November 2019 the directors of the company decided to raise extra capital by issuing 2 million ordinary shares publicly at a price of $2 each share. The company received application monies of $4,800,000 for 2.4 million shares on 30 November.
2. The company decided to allot shares to applicants on the basis of 10 shares for every 12 shares applied for on 30 December.
3. On 30 December, the excess amounts paid on application were refunded to applicants after the allotment.
4. The funds raised were transferred to the company’s business account.
5. The company paid $300,000 interim dividends from prior retained earnings to ordinary shareholders on 7 February 2020.
6. The company issued 280,000 bonus shares at a price of $2 per share from general reserve on 30 June 2020.
7. The company earned $700,000 profit during the financial year ended 30 June 2020.

Required:

Provide journal entries to record the above transactions for 2019/2020 financial year. (Narrations are required)

Question 1 Accounting for Equity                                                                   

Sugar Ltd was involved in the following transactions during 1 July 2019 to 30 June 2020 financial period.

1. On 5 November 2019 the directors of the company decided to raise extra capital by issuing 2 million ordinary shares publicly at a price of $2 each share. The company received application monies of $4,800,000 for 2.4 million shares on 30 November.
2. The company decided to allot shares to applicants on the basis of 10 shares for every 12 shares applied for on 30 December.
3. On 30 December, the excess amounts paid on application were refunded to applicants after the allotment.
4. The funds raised were transferred to the company’s business account.
5. The company paid $300,000 interim dividends from prior retained earnings to ordinary shareholders on 7 February 2020.
6. The company issued 280,000 bonus shares at a price of $2 per share from general reserve on 30 June 2020.
7. The company earned $700,000 profit during the financial year ended 30 June 2020.

Required:

Provide journal entries to record the above transactions for 2019/2020 financial year. (Narrations are required)      

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.

Required 1: Depreciation Expense for:

Office Equipment-

Computer Equipment-

Required 2: Book value for:

Office equipment-

computer equipment-

Required 3:

Total asset turnover-

In this assignment, assume that the Sec. 179 and bonus depreciation tax apply to the 2020 tax year where applicable.

1. For a-d, determine the total depreciation amount for 2020 assuming the taxpayer opted out of Sec. 179 and bonus if they were available in the year of purchase. In addition, assume all taxpayers use a calendar year tax period and that the property mentioned was the only property purchased in the year of acquisition.
   
   

The following facts pertain to a non-cancelable lease agreement between Metlock Leasing Company and Ivanhoe Company, a lessee.

The collectibility of the lease payments by Metlock is probable.

1.Compute the amount of the lease receivable at commencement of the lease.

2.Prepare a lease amortization schedule for Metlock for the 5-year lease term.

3.Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2020 and 2021. The lessor’s accounting period ends on December 31. Reversing entries are not used by Metlock.

4.Suppose the collectibility of the lease payments was not probable for Metlock. Prepare all necessary journal entries for the company in 2020

On January 1, 2020, Mays Leasing Company leases equipment to Brick Co. The lease term is five years, with 5 equal annual payments of $160,000 each, beginning on 1/1/2020. The equipment has an estimated economic life of 8 years and the fair value on 1/1/2020 is $800,000. Brick agrees to guarantee $150,000 residual value at the end of the lease term. The expected value of the residual value is $50,000. At the termination of the lease, the equipment reverts to the lessor. Brick’s incremental borrowing rate is 10% and Brick knows that Mays’ implicit interest rate is 8%.

Present value factors:                        Ordinary Annuity         Annuity Due        A Single Sum

5 periods 8%                                3.99271                     4.31213                 0.68058

5 periods 10%                              3.79079                     4.16986                 0.62092

1. Use lease classification tests to determine the type of lease that Brick Co. has entered into.
2. Construct the lease amortization schedule for the first two payments made by Brick Co.
3. Prepare Brick’s journal entries that relate to the lease agreement for the following three dates: January 1, 2020, December 31, 2020, and January 1, 2021.

Grape Inc. had the following balance sheet at December 31, 2019:

Grape INC. BALANCE SHEET DECEMBER 31, 2019

Cash $ 31,000

Accounts payable $ 61,000

Accounts receivable 56,800

Notes payable (long-term) 76,000

Investments 86,000

Common stock 200,000

Plant assets (net) 138,500

Retained earnings 41,300

Land 66,000

Total assets and Total Liabilities and Stockholders' Equity $378,300 $378,300

During 2020, the following occurred:

1. Grape liquidated its available-for-sale investment portfolio at a gain of $15,000.

2. A tract of land was purchased for $61,000 cash.

3. An additional $15,200 in common stock was issued at par.

4. Dividends totaling $41,000 were declared and paid to stockholders.

5. Net income for 2020 was $46,000, including $8,000 in depreciation expense.

6. Land was purchased through the issuance of $195,000 in additional notes payable.

7. At December 31, 2020, Cash was $68,000, Accounts Receivable was $84,000, and Accounts Payable was $72,000.

Instructions (a) Prepare the balance sheet as it would appear at December 31, 2020 (b) Prepare a statement of cash flows for the year 2020 for Grape

On January 1, 2020, Cage Company contracts to lease equipment for 5 years, agreeing to make a payment of $120,987 at the beginning of each year, starting January 1, 2020. The leased equipment is to be capitalized at $550,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Cage’s incremental borrowing rate is 6%, and the implicit rate in the lease is 5%, which is known by Cage. Title to the equipment transfers to Cage at the end of the lease. The asset has an estimated useful life of 5 years and no residual value.

a/ Prepare the journal entries that Cage should record on January 1, 2020.

b/ Prepare the journal entries to record amortization of the leased asset and interest expense for the year 2020.

c/ Prepare the journal entry to record the lease payment of January 1, 2021, assuming reversing entries are not made

d/ What amounts will appear on the lessee’s December 31, 2020, balance sheet relative to the lease contract?

e/ How would the value of the lease liability in part b change if Cage also agreed to pay the fixed annual insurance on the equipment of $2,000 at the same time as the rental payments?

On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $430 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions):

Required:
1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion.
2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time.
3. Suppose the estimated costs to complete at the end of 2019 are $210 million instead of $140 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method.