Santana Rey created Business Solutions on October 1, 2020. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer. The following chart of accounts includes the account number used for each account and any balance as of December 31, 2020. Santana Rey decided to add a fourth digit with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts.

In response to requests from customers, S. Rey will begin selling computer software. The company will extend credit terms of 1/10, n/30, FOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Nos. 119, 413, 414, 415, and 502) are added to its general ledger to accommodate the company’s new merchandising activities. Its transactions for January through March follow.

The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation.

1. The March 31 amount of computer supplies still available totals $2,095.
2. Prepaid Insurance coverage of $699 expired during this three-month period.
3. Lyn Addie has not been paid for seven days of work at the rate of $155 per day.
4. Prepaid rent of $2,655 expired during this three-month period.
5. Depreciation on the computer equipment for January 1 through March 31 is $1,090.
6. Depreciation on the office equipment for January 1 through March 31 is $210.
7. The March 31 amount of merchandise inventory still available totals $574.

2. Post the journal entries in part 1 to the accounts in the company’s general ledger. Note: Begin with the ledger’s post-closing adjusted balances as of December 31, 2020.

A company is evaluating the purchase of Machine A. The new machine would cost $120,000 and would be depreciated for tax purposes using the straight-line method over an estimated ten-year life to its expected salvage value of $20,000. The new machine would require an addition of $30,000 to working capital. In each year of Machine A’s life, the company would reduce its pre-tax costs by $40,000. The company has a 12% cost of capital and is in the 35% marginal tax bracket. (using Excel)

a. Identify the incremental cash flows from investing in Machine A.

b. Calculate the investment’s net present value (NPV).

c. Calculate the investment’s internal rate of return (IRR).

d. Should the company purchase Machine A? Why or why not?

(Organizing cash flows, NPV, IRR) This problem follows Problem 13. It is now five years later. The company did buy Machine A, but just this week Machine β came on the market; Machine β could be purchased to replace Machine A. If acquired, Machine β would cost $80,000 and would be depreciated for tax purposes using the straight-line method over an estimated five-year life to its expected salvage value of $20,000. Machine β would also require $30,000 of working capital but would save an additional $20,000 per year in pre-tax operating costs. Machine A’s salvage value remains $20,000, but it could be sold today for $40,000.(USING EXCEL)

a. Identify the incremental cash flows from converting to Machine B.

b. Calculate this investment’s net present value (NPV).

c. Calculate this investment’s internal rate of return (IRR).

d. Should the company convert to Machine B? Why or why not?

Traditionally 35% of the students at Wortham University were in the Business College, 35% of the students were in the Liberal Arts College, and 30% of the students were in the Education College. To see whether or not the proportions have changed, a sample of 300 students was taken. Ninety of the sample students are in the Business College, 120 are in the Liberal Arts College, and 90 are in the Education College. The hypothesis is to be tested at the 5% level of significance. The critical value from the table equals

Why we use sampling techniques in research, suggest the most suitable sampling technique to obtain the necessary data, giving two reasons each for your choice. a) What support do faculty members require in the current covid 19 situation, from a University? b) Which advertisements do people remember watching talk shows? c) How are textile companies planning to respond to the introduction of new taxes?

Question 1

Mr. Chai sells various types of toys throughout Malaysia. Three of the accounts in the ledger of Mr. Chai indicated the following;

Balances at 1 January 2020:

(i)        Insurance paid in advance RM562

(ii)       Wages outstanding RM306

(iii)      Rent receivable, received in advance RM36

During 2020, Mr. Chai:

(i)           Paid for insurance RM1,019, by bank standing order

(ii)       Paid RM15,000 wages, in cash

(iii)      Received RM2,600 rent, by cheque, from the tenant

At 31 December 2020:

(i)           Insurance prepaid was RM345

(ii)       Wages accrued amounted to RM419

(iii)      Rent receivable in arrears was RM105

Required;

(a)       Prepare the prepaid insurance, accrued wages and rent receivable accounts for the year ended 31 December 2020.

(b)       Prepare the income statement extract showing clearly the amounts of insurance expense, wages expense and rent revenue for the year ended 31 December 2020.

(c)        Explain the effects on the financial statements of accounting for:

               (i)           the expenses accrued at year-end

               (ii)       the income received in advance at year end

(d)       Explain the purposes of accounting for:

              (i)           the expenses accrued at year end

              (ii)       the income received in advance at year end

(Total: 20 marks)

On May 1, 2018, Delta Airlines buys 100 SkyFlight Food Service, Inc. bonds for $1,015 each. Delta classifies this investment as available for sale. This is the first available for sale investment Delta has recorded and the only item that affects comprehensive income during this time period. During 2018, SkyFlight pays all bondholders $42 interest per bond. At the end of 2018, the bonds of Skyflight are trading for $1,020 each. During 2019, Skyflight pays all bondholders interest of $75 per bond. At the end of 2019, the bonds of Skyflight are trading for $1,014 per bond. On May 1, 2020, Delta Airlines sells all of its Skyflight bonds for $1,010 per bond. No interest was paid by Skyflight in 2020. Net income before anything to do with Skyflight (even the interest is not included) for Delta was $20 million in 2018, $16 million in 2019 and $18 million in 2020 after taxes. The tax rate is 20% for all years.

Requirements:

a. Show all the needed journal entries for the Skyflight stock from purchase to sale.

b. Show the statement of comprehensive income for 2018, 2019 and 2020.

c. If accumulated other comprehensive income is $500,000 at the beginning of 2018, what is the accumulated other comprehensive income at the end of 2018, 2019 and 2020

Garda World Security Corporation has the following shares, taken from the equity section of its balance sheet dated December 31, 2020.

*All shares were issued during 2018.

During its first three years of operations, Garda World Security Corporation declared and paid total dividends as shown in the last column of the following schedule.

Required:
Part A
1. Calculate the total dividends paid in each year to the preferred and to the common shareholders.

Total Dividend 2018$ 170,000

2019 $410,000

2020 $570,000

2. Calculate the dividends paid per share to both the preferred and the common shares in 2020. (Round the final answers to 2 decimal places.)

Part B
1. Calculate the total dividends paid in each year to the preferred shares and to the common shareholders assuming preferred shares are cumulative.

Total for three years$1,150,000

Total Dividend 2018$ 170,000

2019 $410,000

2020 $570,000

2. Calculate the dividends paid per share to both the preferred and the common shares in 2020 assuming preferred shares are cumulative. (Round the final answers to 2 decimal places.)

Kailee’s Cookery Pty Ltd sells ovens and access to online cooking classes. On 1 May 2020, Kailee’s Cookery Pty Ltd signs an agreement with Chef School to provide 15 weekly online cooking classes and five ovens. The contract price amounted to $66,000 (GST inclusive), on credit terms n/30 for the ovens and n/60 for the cooking classes. This amount also includes one free service of the oven to be performed six months after the delivery of the ovens to Chef School.

The stand-alone price for the 15 weekly online cooking classes is $33,000 (GST inclusive). The cooking classes will start on 18 May 2020.

The stand-alone price of the ovens is $55,000 (GST inclusive). The six-month service fee for the ovens is usually $1,100 (GST inclusive).

The ovens were delivered on 18 May 2020.

Chef School paid the full amount on 20 May 2020 for the ovens.

By 30 June 2020, 7 online cooking classes were delivered. Chef School has yet to make any payment for the online cooking classes.

Required:

With reference to AASB 15 Revenue from Contracts with Customers, apply the five-step process for revenue recognition in regards to the contract with Chef School. List each of the five steps and show any calculations

Marigold Inc. began operations in January 2018 and reported the following results for each of its 3 years of operations.

At December 31, 2020, Marigold Inc. capital accounts were as follows.

Marigold Inc. has never paid a cash or stock dividend. There has been no change in the capital accounts since Marigold began operations. The state law permits dividends only from retained earnings.

(a) Compute the book value of the common stock at December 31, 2020. (Round answers to 2 decimal places, e.g. $38.50.)

(b) Compute the book value of the common stock at December 31, 2020, assuming that the preferred stock has a liquidating value of $107 per share. (Round answers to 2 decimal places, e.g. $38.50.)