On January 1, 2017, Pharoah Company purchased 12% bonds, having a maturity value of $320,000, for $344,260.74. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Pharoah Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2017 $342,000 2020 $330,700 2018 $329,700 2021 $320,000 2019 $328,700 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2017. (c) Prepare the journal entry to record the recognition of fair value for 2018.

The following is a four- year forecasted estimate for ABC limited.

Required

1. Estimate the fair market value of ABC limited at the end of 2018. Assume that after 2022 earnings before interest and tax will remain constant at Sh. 200 million, depreciation will equal capital expenditure in each year and working capital will not change. The weighted average cost of capital for the company is 11% and its tax rate is 30%.

2. Estimate the fair market value per share of the company’s equity at the end of 2018 if the company has 40 million shares outstanding and the market value of interest-bearing liabilities on the valuation date equals Sh. 300 million. (10 Marks)

West Coast Tours runs boat tours along the west coast of British Columbia. On March 5, 2020, it purchased, with cash, a cruising boat for $846,000, having a useful life of 10 years or 12,900 hours, with a residual value of $201,000. The company’s year-end is December 31.

Required:
Calculate depreciation expense for the fiscal years 2020, 2021, and 2022 by completing a schedule. (Note: Depreciation is calculated to the nearest month. Assume actual hours of service were: 2020, 750; 2021, 1,810; 2022, 1,565.)

Martinez Corporation prepared the following reconciliation for its first year of operations:

The temporary difference will reverse evenly over the next two years. The enacted tax rate for 2020 and future years is 20%. The amount reported as net deferred income taxes on Martinez's balance sheet at December 31, 2020, should be a Deferred Tax  of $   .

Provide whether the balance sheet account is a Deferred Tax "Asset" or "Liability" and the value.

A company's net income for 2020 is $50,000. It has 2,000 stock options outstanding. These options were issued during 2019, each exercisable for one share at $37. None has been exercised. 40,000 shares of common were outstanding during 2020. Suppose the average market price of the company’s stock during 2020 can be 44, 46, 27, or 54. For which average market price will these stock options be antidilutive? Please enter one (and only one) of the average market prices provided by the problem.

A company's net income for 2020 is $50,000. It has 2,000 stock options outstanding. These options were issued during 2019, each exercisable for one share at $37. None has been exercised. 40,000 shares of common were outstanding during 2020. Suppose the average market price of the company’s stock during 2020 can be 44, 46, 27, or 54. For which average market price will these stock options be antidilutive? Please enter one (and only one) of the average market prices provided by the problem.

• For 2020, Heidi, who is single has properly determined that her taxable income is $81,800, including $1,200 of unrecaptured § 1250 gain and $5,000 of 0%/15%/20% gain. Compute Heidi's tax liability (hint use capital gain table)
• Mort owns 500 shares of Pear, Inc. stock with an adjusted basis of $22,000. On July 28, 2020, he sells 100 shares for $3,000. On August 16, 2020, he purchases another 100 shares for $3,400. What are the tax consequences of these transactions?

1. During 2020, Waldo Inc. sold 10 acres of prime commercial zoned land to a builder for $5,000,000. The builder gave Waldo a $1,000,000 down payment and will pay the remaining balance of $4,000,000 to Waldo in 202 Waldo purchased the land in 2011 for $2,000,000. Using the installment method, how much profit will Waldo report for 2020?

1. $600,000
2. $1,000,000
3. $3,000,000

2. Using the same information as in the preceding question, how much profit will Waldo report for 2020 using the cost recovery method?

1. None
2. $600,000
3. $1000,000

Below is the income statement for Red Storm Cleaners for the year ended December 31, 2020. During 2020, dividends paid by Red Storm Cleaners were $1,100.  Write down the closing entries for Red Storm Cleaners.