Lease conversion from operating to corporation:

A company has borrowing cost of about 4% in 2014 and lease balance $4,300.

Please calculate the payment, discount factor, PV, interest, lease obligation and lease balance. (show work please)

X Company issued at par 4-year term bonds with a par value of $100,000, dated January 1, 2020, and bearing interest at an annual rate of 6 percent payable annually on December 31. At the time of issue, the market rate for such bonds is 9 percent. X amortizes the discount or premium using effective interest rate method.

Required:

1. Compute the selling price of bond.
2. Record the journal entry.
3. Prepare schedual of amortization.
4. Record the adjusting entries for all years.
5. Record the jornal entry of paying the principle at the end of period.

On April 22, 2016, Blossom Enterprises purchased equipment for $130,000. The company expects to use the equipment for 10,500 working hours during its 4-year life and that it will have a residual value of $12,000. Blossom has a December 31 year end and pro-rates depreciation to the nearest month. The actual machine usage was: 1,500 hours in 2016; 2,500 hours in 2017; 3,500 hours in 2018; 2,200 hours in 2019; and 1,000 hours in 2020.
Calculate depreciation expense for the life of the asset under straight-line method.diminshing balance .and unites of production

Answer question #1 of the Johnstown Foundry, Inc. Ethical Dilemma (found at the end of Chapter 10) in light of Romans 13:1-4.

Ethical Dilemma

Johnstown Foundry, Inc., with several major plants, is one of the largest makers of cast-iron water and sewer pipes in the U.S. In one of the nation’s most dangerous industries, Johnstown is perhaps one of the most unsafe, with four times the injury rate of its six competitors combined. Its worker death rate is six times the industry average. In a recent 7-year period, Johnstown’s plants were also found to be in violation of pollution and emission limits 450 times.

Workers who protest dangerous work conditions claim they are “bull’s-eyed”—marked for termination. Supervisors have bullied injured workers and intimidated union leaders. Line workers who fail to make daily quotas get disciplinary actions. Managers have put up safety signs after a worker was injured to make it appear that the worker ignored posted policies. They doctor safety records and alter machines to cover up hazards. When the government investigated one worker’s death recently, inspectors found the Johnstown policy “was not to correct anything until OSHA found it.”

Johnstown plants have also been repeatedly fined for failing to stop production to repair broken pollution controls. Three plants have been designated “high-priority” violators by the EPA. Inside the plants, workers have repeatedly complained of blurred vision, severe headaches, and respiratory problems after being exposed, without training or protection, to chemicals used in the production process. Near one Pennsylvania plant, school crossing guards have had to wear gas masks; that location alone has averaged over a violation every month for 7 years. Johnstown’s “standard procedure,” according to a former plant manager, is to illegally dump industrial contaminants into local rivers and creeks. Workers wait for night or heavy rainstorms before flushing thousands of gallons from their sump pumps.

Given the following scenarios, what is your position, and what action should you take?

1. On your spouse’s recent move to the area, you accepted a job, perhaps somewhat naively, as a company nurse in one of the Johnstown plants. After 2 weeks on the job, you became aware of the work environment noted above.
2. You are a contractor who has traditionally used Johnstown’s products, which meet specifications. Johnstown is consistently the low bidder. Your customers are happy with the product.
3. You are Johnstown’s banker.

d) You are a supplier to Johnstown.

NOTE: PLAGIRISM IS PROHIBITED

BUSINESS ETHICS

CASE STUDY:

Starbucks’ Mission: Social Responsibility and Brand Strength

Before Starbucks came onto the scene, coffee was considered a stodgy product largely consumed by older people in the United States. It did not have the cool-factor or the cache that it does today. Starbucks’ entry in the market largely changed how Americans consumed coffee and what they thought about coffee shops. It all started in the cold, gray climate of Seattle—the perfect setting for launching a warm beverage with international appeal. The target market was upper-income, middle-class, white-collar, single or newly married men and women with no children. Many of Starbucks’ early target market had likely experienced the coffee shop cultures of Europe, and found U.S. equivalent appealing. Quality and service were excellent and location became a critical issue. Starbucks’ flagship store is in Pike Place Market—a destination for the worldly, young and hip in Seattle. With its small space requirements, low inventory, and fast turnover, Starbucks was able to leverage its local success to rapidly expand into new markets before competitors were able to catch up. Due to its ubiquity, many people have strong opinions on Starbucks. Some worry that the chain pushes out local competition and that they have led to the homogenization of the coffee market. However, the most recent economic recession and the closing of hundreds of Starbucks stores has, for the time being, quieted these complaints.

No matter what one thinks of Starbucks, it is more involved in social causes and the care of its workers than many comparable chains. Starbucks is committed to employee well-being, as one can see in their employee health care system. Founder Howard Schulz made employee healthcare a priority after watching his father struggle with injuries because he had no access to employee healthcare or worker’s compensation. In large part because of its commitment to providing good wages and healthcare, Starbucks ranked 24th on Fortune’s Best Companies to Work For list in 2009.

The company also has a history of giving to charities that affect its primary stakeholders. As part of its commitment to ethics and sustainability, the company launched its Shared Planet website, which communicates to interested stakeholders all of the company’s ethics and sustainability initiatives. The company is also a large buyer of Fair Trade Certified coffee (although no longer the largest by far) and has partnered with Project Red to raise money for HIV/AIDs research.

In spite of its professed commitment to caring for workers and for social causes, such a large company will always be subject to criticisms. From complaints that Starbucks pushes smaller competitors out of markets, to those that its coffee drinks are excessively fatty and caloric, Starbucks is seemingly always in the news for something. It has even become a target for several lawsuits regarding compensation and dispensation of tips. Also, Starbucks Corp. has agreed to settle allegations from the National Labor Relations Board that it improperly fired a Michigan employee for participating in union activities. Instructors may ask students whether large companies attract such litigation or if Starbucks is changing its values as it has grown larger.

.

Discussion

1. Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy? ( 150 words)

2. Is Starbucks unique in being able to provide a high level of benefits to its employees?              

3. Do you think that Starbucks has grown rapidly because of its ethical and socially responsible activities or because it provides products and an environment that customers want? (150 words)

Mr. Chai sells various types of toys throughout Malaysia, three of the accounts in the ledger of Mr. Chai indicted the following:

Balance at 1 January 2020:

1. Insurance paid in advance RM562
2. Wages outstanding RM306
3. Rent rreceivable, received in advance RM36

During 2020, Mr. Chai:

1. Paid for insurance RM1019 by bank standing order
2. Paid RM15000 wages in cash
3. Received RM2600 rent by cheque from the Ferdy

At 31 December 2020:

1. Insurance prepaid was RM345
2. Wages accrued amounted to RM419
3. Rent receivable was RM106

Required:

1. Prepare the prepaid insurance, accrued wages and rent receivable accounts for the year ended 31 December 2020
2. Prepare the income statement extract showing clearly the amounts of insurance expense, wages expense and rent revenue for the year ended 31 December 2020
3. Explain the effects on the financial statements of accounting for:

1. The expenses accrued at year end
2. The income received in advance at year end

4. Explain the purpose of accounting for:

1. The expenses accrued at year end
2. The income received in advance at year end

Assume Target acquires a tract of land on January 1, 2020, for $106,000 cash. On December 31, 2020, the current market value of the land is $143,000. On December 31, 2021, the current market value of the land is $120,000. The firm sells the land on December 31, 2022, for $177,000 cash. Ignoring income taxes, complete the following items.

(a) Assuming valuation of the land at acquisition cost until sale of the land (Approach 1), indicate the dollar effect of the information on net income for: 1. 2020 2. 2021, and 3. 2022.

(b) Assuming valuation of the land at current market value and including market value changes each year in net income (Approach 2), indicate the dollar effect of the information on net income for: 1. 2020 2. 2021, and 3. 2022.

(c) Assuming valuation of the land at current market value but including unrealized gains and losses in accumulated other comprehensive income until sale of the land (Approach 3), indicate the dollar effect of the information on net income for: 1. 2020 2. 2021, and 3. 2022.

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)?

On January 1, 2020, Firm ABC (lessor) leased a building to Firm XYZ (lessee). The relevant information related to the lease is as follows.

1) The lease arrangement is for 3 years.

2) The building’s cost and fair value at commencement of the lease is $60,000. The building is depreciated on a straight-line basis. Its estimated economic life is 5 years with salvage value of $12,000 at the end of the lease. The residual value after 5 years is assumed to be zero.

3) The lease contains no renewal options. The building reverts to Firm ABC at the termination of the lease.

4) The implicit rate of Firm ABC (the lessor) is 6% and is known by Firm XYZ.

5) Both the lessor and the lessee are on a calendar-year basis.

(a) Prepare the journal entries that Firm XYZ should make in 2020

Dates 1/1/2020, 1/1/2020, 1/1/2021, 1/1/2022

Please include Lease Payment, Interest, Reduction of Lease Liability, Lease Liability

(b) Prepare the journal entries that Firm ABC should make in 2020

Question 5

Alto Imports ending inventory was assigned a cost of $14,600 as a result of a physical stock-take on 30 June 2020.

A review of the company’s records revealed the following information:

• Alto Imports had recorded a $2,900 invoice (excluding GST) from a supplier for goods shipped ExW on 26 June 2020. The goods were not included in the physical inventory count because they had not yet arrived at the warehouse of Alto Imports by 30 June.
• Alto Imports had recorded a $1,900 invoice (excluding GST) from a supplier for goods shipped DPP on 28 June 2020. The goods were not included in the physical inventory count because they had not yet arrived at the warehouse of Alto Imports by 30 June.
• Alto Imports had goods valued at $3,600 (excluding GST) out on consignment on 30 June 2020 that were included in the physical inventory count.

Required:

1. For each of the above, determine the effects on Alto Imports 30 June inventory account balances.

2. What is correct value of inventory on hand at 30 June 2020?