Questions
Morning Star Ltd was registered on 1 July 2020, as a company with a constitution limiting...

Morning Star Ltd was registered on 1 July 2020, as a company with a constitution limiting the shares that could be offered to 5 000 000 Ordinary shares (including all classes) and 2 000 000 preference shares. The company issued a prospectus dated 1 July 2020 inviting the public to apply for 3 000 000 Ordinary A class shares at $3.00 per share. The terms of the shares on issue are $1.50 on application, $1.00 on allotment and $0.50 to be called within six months of allotment before 31 December 2020.

If the issue is oversubscribed the directors will make a pro-rata issue of shares and the excess application money will be applied to allotment and calls before any refunds will be given.

On 15 July, the directors also decided to issue 500 000 non-voting Ordinary B shares as fully paid to the promoters for a payment of $2.00 per share.

On 30 July, applications for the Ordinary A class shares closed. Applications for 4 500 000 shares in total had been received with applicants for 3 000 000 shares paying the full price and 1 500 000 shares paying only the application fee.

On 1 August, the Ordinary A class shares were allotted on a pro-rata basis with all allotment money owed paid by the 30 August.

The company paid share issue costs of $10,000 for the issuing of Ordinary A shares on 1 September. The share issue costs related to legal expenses associated with the share issue and fees associated with the drafting and advertising of the prospectus and share issue.

The call on the Ordinary A shares was made on 15 Septmber and due by 30 September. All call money was received except for the call on 100 000 shares. The directors met and forfeited the shares on 15 October. On 30 October, the forfeited shares were reissued at $2.40 fully paid to $3.00. Costs associated with reissuing the forfeited shares totalled $4,000. The remaining money was refunded to the defaulting shareholders on 15 November.

On 1 January 2021, Morning Star Ltd issued via a private placement semi-annual coupon debentures (which pay interest every 6 months) with a nominal value of $700,000. The debenture term is three years and the coupon rate is 8% per year. The market requires a rate of return of 10% per year. The money came in and the debentures were allotted on the same date. The first interest payment will occur on 30 June 2021.

On the same day (1 January), Monring Star issued 50,000 options for class A shares with an exercise price of $2.5 each. It costs $0.50 per option. These options expires on 30 June 2021.

The company issued via a private placement 400,000 redeemable preference shares of $2.00 each on 30 June 2021. The shares offer a fixed dividend of 7 per cent per annum. The shares are later redeemed to non-voting Ordinary Class B shares at the choice of the shareholders on 30 June 2022.

By 30 June 2021, 40,000 options were exercised. The remaining options are lapsed.

Prepare an extract of the statement of change in equity to show the composition and movement of the ordinary shares account of Morning Star Ltd as at 30 June 2021 and 30 June 2022. Please provide the opening balance, change in share capital and closing balance of each classes of shares.

In: Accounting

At the beginning of 2019, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods.

At the beginning of 2019, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods. The equipment was estimated to have a 10-year service life and no residual value. The straight-line depreciation method was used to measure depreciation for 2019 and 2020. Late in 2021, it became apparent that sales of the new frozen food line were significantly below expectations. The company decided to continue production for two more years (2022 and 2023) and then discontinue the line. 

At that time, the equipment will be sold for minimal scrap values. The controller, Heather Meyer, was asked by Harvey Dent, the company’s chief executive officer (CEO), to determine the appropriate treatment of the change in service life of the equipment. 

Heather determined that there has been an impairment of value requiring an immediate write-down of the equipment of $12,900,000. The remaining book value would then be depreciated over the equipment’s revised service life. 

The CEO does not like Heather’s conclusion because of the effect it would have on 2021 income. “Looks like a simple revision in service life from 10 years to 5 years to me,” Dent concluded. “Let’s go with it that way, Heather.” 

 

Required: 

1. What is the difference in before-tax income between the CEO’s and Heather’s treatment of the situation? 

2. Discuss Heather Meyer’s ethical dilemma.

 

 

In: Accounting

Each of the following situations occurred during 2021 for one of your audit clients:

Each of the following situations occurred during 2021 for one of your audit clients: 

1. An inventory write-down due to obsolescence. 

2. Discovery that depreciation expenses were omitted by accident from 2020’s income statement. 

3. The useful lives of all machinery were changed from eight to five years. 

4. The depreciation method used for all equipment was changed from the declining-balance to the straight-line method. 

5. Restructuring costs were incurred. 

6. The Stridewell Company, a manufacturer of shoes, sold all of its retail outlets. It will continue to manufacture and sell its shoes to other retailers. A loss was incurred in the disposition of the retail stores. The retail stores are considered a component of the entity. 

7. The inventory costing method was changed from FIFO to average cost. 

 

Require:

1. For each situation, identify the appropriate reporting treatment from the list below (consider each event to be material): 

a. As an unusual gain or loss 

b. As a prior period adjustment 

c. As a change in accounting principle 

d. As a discontinued operation 

e. As a change in accounting estimate 

f. As a change in accounting estimate achieved by a change in accounting principle 

2. Indicate whether each situation would be included in the income statement in continuing operations (CO) or below continuing operations (BC), or if it would appear as an adjustment to retained earnings (RE). Use the format shown below to answer requirements 1 and 2. 

Financial Statement Presentation Treatment (a-f) (CO, BC, or RE) Situation 1. 2. 3. 4. 5. 6. 7.

 

 

In: Accounting

After graduating from QCCUNY, you recently joined as a staff accountant in the controller’s office at...

After graduating from QCCUNY, you recently joined as a staff accountant in the controller’s office at Klax Company that provides warehousing services for companies in several Midwestern cities. The location, Dubuque, Iowa, has not been performing well due to increased competition and loss of several customers that have recently gone out of business. Your controller suspect that the plant and equipment may be impaired and wonder those assets should be written down. Given the company’s prior success, this issue has never arisen in the past, you have been asked to conduct some research on this issue with respect to the following by May 18, 2020. You believe this is a great opportunity for you to impress her with the knowledge of asset impairment that you acquired in your intermediate accounting course, and make your alma-mater and the professor proud of you by doing a great job and providing codification references for your responses.
1. What is the definition of impairment and what is the authoritative guidance for asset impairment? Briefly describe the scope of the standards (i.e., explain what types of transactions to which the standards applies).
2. Give several examples of events that would cause an asset to be tested for impairment.
3. Does it appear that Klax should perform impairment test? Explain.
4. What is the recoverable amount and what is the best evidence of fair value? Describe the alternative methods of estimating fair value.

In: Accounting

The following information is provided for Blossom’s Chocolate Company: BLOSSOM CHOCOLATE COMPANY Balance Sheet May 31...

The following information is provided for Blossom’s Chocolate Company:

BLOSSOM CHOCOLATE COMPANY
Balance Sheet
May 31
Assets 2021 2020
Cash $28,425 $47,500
Accounts receivable 89,700 79,500
Inventory 187,000 160,500
Prepaid expenses 6,200 7,700
Land 139,500 81,000
Equipment 322,000 202,000
Accumulated depreciation—equipment (80,200 ) (40,500 )
    Total assets $692,625 $537,700
Liabilities and Shareholders’ Equity
Accounts payable $43,300 $40,500
Dividends payable 7,700 6,200
Income taxes payable 3,400 7,200
Mortgage payable 134,000 80,500
Common shares 220,000 166,500
Retained earnings 284,225 236,800
    Total liabilities and shareholders’ equity $692,625 $537,700
Additional Information:
1. Profit for 2021 was $110,925.
2. Common shares were issued for $53,500.
3. Land with a cost of $53,500 was sold at a loss of $20,200.
4. Purchased land with a cost of $112,000 with a $58,500 down payment and financed the remainder with a mortgage note payable.
5. No equipment was sold during 2021.
6. Net sales for the year were $675,400.
7. Cost of goods sold for the year was $401,600.
8. Operating costs, including depreciation expense, were $99,500.
9. Interest expense was $6,200.
10. Income tax expense was $36,975.
11. Accounts payable is used for merchandise purchases.


Prepare a cash flow statement for the year using the direct method

In: Accounting

Case: You have just inherited a large sum of money and you are trying to determine...

Case:

You have just inherited a large sum of money and you are trying to determine how much you will get after retirement and how much you can spend now. For retirement you will deposit today (January 1,2015) 2,500,000 euros in a bank account paying 4.55% compounded annually. You do not plan on touching this deposit until you retire in five years (January 1, 2020) and you plan on living for 20 additional years and then drop dead on December 31, 2039.

During your retirement, you would like to receive income of 60,000 euros per year to be received the fist day of each year, with the first payment on January 1,2020, an the last payment on January 1, 2039. Complicating this objective is your desire to have one three-year fling, during which time you´d like to track down all the original members of Cold Play and get their autographs. To finance this, you want to receive additional 50,000 euros on January 1, 2035, 25,000 euros on January 1, 2036 and 8,000 euros on January 1, 2037.

Questions:

1.What will be your final savings balance by January 1, 2040?

2.What would be your final savings balance if you decided not to have the three-year fling ( without the 3 years of additional spending to get the autographs etc.) ?

In: Finance

Peru Industries began operations on January 1, 2020.

Problem 8-6A Recording accounts receivable transactions and bad debt adjustments LO1, 2, 3

Peru Industries began operations on January 1, 2020. During the next two years, the company completed a number of transactions involving credit sales, accounts receivable collections, and bad debts (assume a perpetual inventory system). These transactions are summarized as follows:

2020

  1. Sold merchandise on credit for $2,310,000, terms n/30 (COGS = $1,276,000).

  2. Wrote off uncollectible accounts receivable in the amount of $35,200.

  3. Received cash of $1,378,000 in payment of outstanding accounts receivable.

  4. In adjusting the accounts on December 31, concluded that 1.5% of the outstanding accounts receivable would become uncollectible.


2021

  1. Sold merchandise on credit for $3,024,000, terms n/30 (COGS = $1,646,000).

  2. Wrote off uncollectible accounts receivable in the amount of $54,800.

  3. Received cash of $2,282,000 in payment of outstanding accounts receivable.

  4. In adjusting the accounts on December 31, concluded that 1.5% of the outstanding accounts receivable would become uncollectible.

Company uses the allowance method to account for uncollectible.


Required:
Prepare journal entries to record Peru’s 2020 and 2021 summarized transactions and the adjusting entries to record bad debt expense at the end of each year. (Round your intermediate calculations and final answers to nearest whole dollar.)

In: Accounting

please answer the question : Explain fully, with examples, what dollar cost averaging is. What will...

please answer the question :

Explain fully, with examples, what dollar cost averaging is. What will happen (1) if the price of an investment trends down overtime; (2) trends up; (3) trends down then up; and (4) in real life? Use excel to model and graph the result.

In: Finance

There are some alternative bases for market segmentation (some examples are in our textbook). Look at...

There are some alternative bases for market segmentation (some examples are in our textbook). Look at your case analysis company. Detail how they currently (or should) break down their market segments. (What are the specific variables and how do they break down, specifically?) About 2 paragraphs.

In: Accounting

Write down the truth table fora 4-to-2 priority encoderhaving input W[3:0]and with priority levels in the...

Write down the truth table fora 4-to-2 priority encoderhaving input W[3:0]and with priority levels in the decreasing order (i.e., W[0]-Highest, ....., W[3]-Least). Write down the Verilog code for implementing   the same.

plz asap fast

In: Computer Science