Electronics Inc. buys and sells photocopy equipment that are used in businesses across Ontario. The company follow IFRS. Unit selling prices range from $10,000 to $100,000.

• Electronic Inc. delivers the photocopy equipment on October 15th, 2020, and completes the installation of the photocopy equipment on November 1^st, 2020.
• On December 31^st Centennial College pays for 2 months of maintenance services. The following December 31^st Centennial College pays for 10 months of maintenance services.

On November 15^th Centennial College informs Electronic Inc. that they will be not be able to pay their account that is due. The two parties enter into an agreement that the account will be converted into a non-interest bearing promissory note to be repaid in one year from now. The maturity value of the note is $67,098. Centennial College borrows fund at a rate of 6%. Electronic Inc. has various loans at 5% interest. The company’s yearend is December 31^st.

1. List the performance obligations?
2. Explain when the revenue should be recognized for each performance obligation under IFRS. Support your answer by explaining why it should be recognized at the time you selected.
3. Prepare the journal entries for 2020 and 2021. If there is no entry be sure to state, no entry. Hint remember to allocate the revenue among the different performance obligations and then use this information when you prepare the journal entries.

This article illustrates the political economy of international trade and the concept of comparative advantage. Explain Who are the "Winners" and "Losers" and why as described in this article, and the effect of "arbitrary government intervention" that circumvents the workings of free trade initiated by Senator Trent Lott as described in the article? Use the economic concept of comparative advantage in your explanation. (10 points). Due Dec 5

As a side note - why do a number of popular Maryland Restaurants advertise they only serve Maryland Crabmeat in their crab cakes???????

Check out the web site for the McConnell et al - Microeconomics 20th edition at http://www.mcconnell21e.com and access the Origin of the Idea link to Ricardo's concept of comparative advantage to further your understanding of comparative advantage.

Viet Catfish Case

Sixteen years after the end of the

Vietnam war, the United States and

Vietnam signed a free trade agreement.

In December 2001, Vietnam

agreed to lower import tariffs and

restrictions on U.S. investments in

that nation. In return, the U.S.

agreed to dismantle discriminatory

trade barriers on Vietnamese

exports.

The trade pact was an instant

success. Vietnamese exports to

the U.S. more than doubled in the

first year after the trade pact was

signed, led by exports of textiles,

seafood, shoes, furniture, and

commodities. U.S. investments

in Vietnam also surged.

Catfish farmers in the

Mississippi Delta weren’t happy

about this surge in Viet-U.S. trade.

In fact, they were downright angr y.

For well over a decade, catfish

farmers in Mississippi, Arkansas,

and Louisiana had been struggling

to preserve their profits. As

reported in Chapter 23 of The

Economy Today (Chapter 8 in

The Micro Economy Today) low

entry barriers kept persistent

pressure on prices and profits.

The early entrepreneurs in the

industry had to contend with a

stream of cotton farmers who

sought higher returns in catfish

farming. Despite an impressive

rise in market demand, prices

and profits stayed low as the

industry expanded.

Surging Imports

The Viet-U.S. pact intensified competitive

pressures on Delta catfish

farmers. In 1998, only 575,000

pounds of Vietnamese catfish were

imported into the United States,

mostly in the form of frozen fillets.

Viet imports surged to 20 million

pounds in 2001 and jumped again

to 34 million pounds last year.

That was more competition than

domestic catfish farmers could

bear. The price of frozen fillets fell

by 15 percent in 2001, to a low of

62 cents a pound. Prices kept

falling in 2002, hitting a low of 53

cents a pound at years end. With

average production costs of 65

cents a pound, U.S. catfish farmers

were incurring substantial economic

losses. Suddenly, cotton farming

started looking better again.

Comparative Advantage

Shifting domestic resources from

catfish farming back to cotton

farming is consistent with the

principle of comparative advantage.

Most farm-raised U.S. catfish

are grown in clay-lined ponds filled

with purified waters from underground

wells. The fish are fed

pellets containing soybeans and

corn and are subject to regular

USDA health inspections.

Vietnamese catfish, by contrast,

are grown in giant holding pens

suspended under the free-flowing

Mekong river and other waterways.

The Vietnamese production process is

much less expensive, giving Vietnam’s

catfish farmers an absolute advantage

over U.S. farmers. Given the relatively

high costs of cotton farming in

Vietnam, the Vietnamese also have

a decided comparative advantage in

catfish farming. Because of this, both

the U.S. and Vietnam could enjoy

more output if the U.S. specialized

in cotton farming and Vietnam

specialized in catfish farming. That

is exactly the kind of resource

reallocation the surging Vietnamese

catfish exports was causing.

Trade Resistance

The 13,000 workers in the U.S.

catfish industry don’t want to hear

about comparative advantage.

They simply want to keep their jobs.

And their employers want to regain

economic profits. They aren’t willing

to sacrifice their own well-being for

the sake of cheaper fish and so-called

gains from trade.

Economic theory may not be on

the side of the domestic catfish

industry, but U.S. politicians

certainly are. At the urging of Trent

Lott, the Senate majority leader

from Mississippi, the U.S. Congress

decided that of the 2,000 or so

varieties of catfish, only the North

American channel variety of catfish

could be labeled as “catfish.”

Vietnamese catfish had to be labeled

as “basa” or “tra,” as in

the Vietnamese language.

To further discourage consumption

of imports, the Catfish Farmers of

America, an industry lobbying group,

ran advertisements warning American

consumers that “basa” and “tra” “float

a round in Third World rivers nibbling on

who knows what.” Arkansas

C o n g ressman Marion Berry warned that

Viet fish might even be contaminated by

Agent orange-- a defoliant sprayed over

the Vietnamese countryside by U.S.

f o rces during the Vietnam war. None of

these nontariff barriers halted the influx

of Viet catfish however.

Dumping Charges

U.S. catfish farmers decided to mount

a more direct attack on Viet catfish. The

Catfish Farmers of America filed a complaint

with the U.S. Department of

C o m m e rce, charging Vietnam of “dumping”

catfish on U.S. markets. Dumping

occurs when foreign producers sell their

p roducts abroad for less than the costs

of producing them or less than prices

in their own market.

On its face, the complaint seemed to

have no merit. Export prices were no

lower than domestic prices in Vi e t n a m .

Plus, Vietnamese farmers were evidently

e a rning economic profits. Hence, neither

form of dumping seemed plausible.

The Department of Commerce found a

loophole to resolve this contradiction.

C o m m e rce officials decided that

Vietnam was still not a “market econom

y.” As a “nonmarket economy” its

prices could not be regarded as re l i a b l e

indices of underlying costs. Instead, the

U.S. Department of Commerce would

have to independently assess the “true ”

costs of Vietnamese catfish production.

To determine the “true” costs of

Vietnamese catfish farming, U.S.

investigators went to Bangladesh!

Bangladesh is widely regarded as a

market economy, with a level of

development similar to Vi e t n a m ’s.

So Bangladesh prices were assigned

to Vietnamese farmers. With no fully

integrated firms and fewer natural

resource advantages, Bangladesh

ended up with hypothetical costs in

excess of Vietnamese prices. With this

“evidence” in hand, the Commerce

Department concluded in January 2003

that Vietnamese catfish were indeed

being dumped on U.S. markets.

Anti-Dumping Duties

To “level the playing field,” the

U.S. Commerce Department leveled

temporary import duties (tariffs) of

37-64 percent. Importers of Viet

catfish had to deposit these duties

into an escrow account until the

U.S. International Trade Commission

(ITC) reviewed the case. The ITC

must not only affirm the practice of

dumping, but must also determine

that U.S. catfish farmers have been

materially damaged by such unfair

foreign competition. If the ITC so

rules, then the duties become

permanent and payable. If the ITC

rejects the dumping or damage

charges, the duties are rescinded

and the escrowed payments are

refunded. The odds are never

good for foreign producers: The

Commerce department ruled in

favor of domestic producers 91

percent of the time and the ITC

concurred 80 percent of the time.

The catfish case was similarly

decided: on July 23 of this year

the ITC unanimously ruled that

Viet catfish had injured U.S.

catfish farmers. The temporary

duties of 37-64 percent were

made permanent and retroactive

to January.

This article illustrates the political economy of international trade and the concept of comparative advantage. Explain Who are the "Winners" and "Losers" and why as described in this article incorporating the concept of comparative advantage in your response, and the effect of "arbitrary government intervention" that circumvents the workings of free trade initiated by Senator Trent Lott as described in the article? Use the economic concept of comparative advantage in your explanation. (10 points)

The Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1982. In 2021, the company decided to change to the average cost method. Data for 2021 are as follows:

Additional information:

1. The company's effective income tax rate is 25% for all years.
2. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $162,000.
3. 7,400 units remained in inventory at the end of 2021.

Required:
1. Prepare the journal entry at the beginning of 2021 to record the change in principle.
2. In the 2021–2019 comparative financial statements, what will be the amounts of cost of goods sold and inventory reported for 2021?

Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In 2021, the company decided to switch to the average cost method. Data for 2021 are as follows:

Additional Information:

1. The company's effective income tax rate is 25% for all years.
2. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $144,900.
3. 12,700 units remained in inventory at the end of 2021.

Required:
1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method.
2. What is the effect of the change in methods on 2021 net income?

Thurston Howell IV is the sole heir to the Howell Enterprise fortune. He does not participate in the business, preferring to tend to his comic book collection. He does however own a large piece of the company.

Recently he had become concerned about how the company has performed specifically related to some transactions relating to stockholders’ equity.

Here is the data relating to stockholders’ equity:

Howell Enterprises

Stockholders’ Equity

As of December 31, 2019

Common Stock, 2,000,000 shares outstanding                         10,000,000

Retained Earnings                                                                          7,500,000

Total Stockholders Equity                                                              17,500,000

Thurston currently owns 300,000 shares of Howell Enterprises

Here are the relevant transactions for 2020:

1. The company issued 500,000 shares @ $8.00 per share
2. The company purchased 100,000 shares @ $15 per share
3. The company declared a $2.50 per share cash dividend
4. The company declared a 2:1 stock split

Required

1. Calculate the book value per share as of December 31, 2019. (total equity / number of shares outstanding)
2. Calculate the total value of Thurston Howell IV’s stock as of December 31, 2019. (his shares x book value per share)
3. Calculate the percentage of the company that Mr. Howell owns as of December 31, 2019. (his shares / total number of shares outstanding)
4. Prepare journal entries for the transactions listed above
5. Calculate the ending balances in the equity accounts
6. Calculate the book value per share after the transactions have been recorded
7. Calculate the total value of Thurston Howell IV’s stock after the transactions have been recorded. (his shares x new book value per share)
8. Calculate the percentage of the company that Mr. Howell owns after the transactions have been recorded. (his shares x new total outstanding shares).
9. Calculate the amount of loss that Mr. Howell has suffered (if any) as a result of the above transactions. (compare #2 to # 7).
10. Write a summary in Word explaining your results. Which transactions caused Mr. Howell to lose money?

Record the transactions for 2020 and calculate the ending balances in all of the stockholders equity accounts.

Mr. Howell’s Investment

Turn in the summary with this page

Bonds Problem

Hartz Corporation had the following transactions relating to borrowings during 2020:

• Hartz issued $2,000,000 in ten-year 5% bonds when the price was 98 (Bond A). Interest is paid once a year.
• Hartz issued $2,000,000 in ten-year 5% bonds when the price was 102. (Bond B). Interest is paid once a year.
• Hartz issued $2,000,000 in ten -year 5% bonds that were issued at par (100) (Bond C). Interest is paid once a year

Required

• Calculate the amount of money received when the bonds were issued for each bond.
• Calculate the amount of cash paid on the interest date for each bond.
• Calculate the amount of interest expense for each bond.

Just need 2a and 2b answered. Already have number one. Just included in case you needed it for part two.

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)?

2. Now assume that the lessor decided to require the lease payments at the beginning of the year as opposed to the end of the year. Also assume that the lease arrangement had a bargain purchase option under which the lessee could purchase the airplane at the end of the contract for $500,000.

a. What journal entries related to the lease arrangement should be recorded during 2020.

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.

Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year.

K

Capital                                                                                               83,887

Sales                                                                                                  259,870

Trade accounts payable                                                                 19,840

Returns outwards                                                                            13,407

Allowance for doubtful debts                                                         512

Discounts allowed                                                                           2,306

Discounts received                                                                          1,750

Purchases                                                                                         135,680

Returns inwards                                                                               5,624

Carriage outwards                                                                           4,562

Drawings                                                                                           18,440

Carriage inwards                                                                             11,830

Rent, rates and insurance                                                             25,973

Heating and lighting                                                                        11,010

Postage, stationery and telephone                                               2,410

Advertising                                                                                        5,980

Salaries and wages                                                                         38,521

Bad debts                                                                                          2,008

Cash in hand                                                                                    534

Cash at bank                                                                                    4,440

Inventory as at 1^st April 2019                                                         15,654

Trade accounts receivable                                                             24,500

Fixtures and fittings - at cost                                                          120,740

Prov. for depreciation on fixtures and fittings – 31/03/2020     63,020

Depreciation                                                                                     12,074

The following additional information as at 31^st March, 2020 is available:

(a) Inventory at the close of business was valued at K17,750

(b) Insurances have been prepaid by K1,120

(c) Heating and lighting is accrued by K1,360

(d) Rates have been prepaid by K5,435

(e) The allowance for doubtful debts is to be adjusted so that it is 3% of trade accounts receivable.

Required:

For the year 2020, prepare Mr Kumar’s:

1. Unadjusted Trial Balance as at 31^st March, 2020.

                                                                                                                              [10 Marks]

2. General Journal recording the adjustments highlighted above.

                                                                                                                              [10 Marks]

3. Trading, Profit or Loss statement for the year ended 31^st March, 2020.

[10 Marks]

4. Statement of financial position as at 31^st March, 2020.

                                                                                                                              [10 Marks]

[Total: 40 Marks]

Question 4 [27]

The following bank reconciliation statement was prepared by the bookkeeper of Veggie Stores for January 2020. The financial year of the business ends in January each year.

Required:

1. Is the opening balance of R35 000 as per the bank statement a debit or a credit balance on the bank statement? Explain your answer.                                                                         (2)
2. Explain why the business has entered cheque no. 9753 in the bank reconciliation statement.                                                                                                                                       (3)
3. The business has made three other errors. Identify the amounts relating to these errors and explain why they are errors. Specify the corrective action that should be taken to correct these errors.                                                                                                                            (9)
4. Prepare a corrected bank reconciliation statement for January 2020.                         (7)
5. The owner is concerned about the outstanding deposit of R12 900. Explain why he is concerned.                                                                                                                     (2)
6. Propose TWO steps the owner should take to prevent things such as those described in Question 4.5 above from occurring again in the future.                                                (4)

Complete question 4.3 and 4.4 specifically in format below

4.3

                                                                                                                                                        (9)

4.4

                                                                                                                                                        (7)