Use the starting balance sheet, income statement, and the list of changes to answer the question.

Between January 1 and March 31, 2020:

1. Cash decreases by $300,000
2. Liabilities increase by $400,000
3. Paid-In Capital does not change
4. Dividends paid of $500,000

What is the value for Other Assets on March 31, 2020?

Note: Account change amounts are provided in dollars but the financial statement units are thousands of dollars.

Please specify your answer in the same units as the financial statements (i.e., enter the number from your updated balance sheet).

Prepare the journal entries for the following transactions.

1. DFC has total sales for the year of $2,256,000. Included in the total sales figure are $160,500 of cash sales. During the year, the firm received $2,052,000 of payments on account.  
2. During the year, the firm determined that accounts totaling $7,500 were uncollectible. Moreover, a $2,000 receivable written off during the year was subsequently collected. The $2,000 is not included in cash collections in “A.” above.
3. DFC uses the allowance method to record bad debts. Specifically, the firm uses the percentage of receivables method to compute the allowance for doubtful accounts. For the year ended May 31, 2020, DFC estimates the required allowance for doubtful accounts to be 8% of the gross accounts receivable balance at May 31, 2020.
4. DFC purchased $1,400,000 of additional inventory on account during the year. The purchases are charged to accounts payable. Total payments made on account for the year were $1,411,200. Inventory at May 31, 2020 totaled $117,000.

Course:Business Law

Frontier Entertainment Pty Ltd is a company that trades under the name “Concert Connections” (CC). In January of 2019, CC negotiated and arranged for an international acts to tour Australia in 2021.

On 15 September 2020, Tammy purchased from CC two tickets to the Ed Shearer concert in Brisbane on 07 January 2021. The reality is that as at 15 September 2020, due to the current COVID – 19 pandemic, it was highly unlikely that the Ed Shearer concert would proceed.

Jane purchased 3 tickets to the same concert as Tammy however unlike Tammy, Jane purchased her tickets in January of 2020, at a time when there was every

expectation that the Ed Shearer concert would proceed as expected as at that time, the future impact of the pandemic had not been fully realised.

Has CC acted in breach of the ACL by selling Tammy and/or Jane tickets to the Ed Shearer concert?
Explain your answer

Exercise 21-23 Assume that on January 1, 2020, Elmer’s Restaurants sells a computer system to Pharoah Finance Co. for $780,000 and immediately leases the computer system back. The relevant information is as follows.

1. The computer was carried on Elmer’s books at a value of $700,000.

2. The term of the non-cancelable lease is 3 years; title will not transfer to Elmer’s, and the expected residual value at the end of the lease is $550,000, all of which is unguaranteed.

3. The lease agreement requires equal rental payments of $115,490 at the beginning of each year.

4. The incremental borrowing rate for Elmer is 5%. Elmer is aware that Pharoah Finance Co. set the annual rental to insure a rate of return of 5%.

5. The computer has a fair value of $780,000 on January 1, 2020, and an estimated economic life of 10 years.

Prepare the journal entries for both the lessee and the lessor for 2020 to reflect the sale and leaseback agreement

1. Clover Co are manufacturing and selling commercial vacuum cleaners. They have gathered following expected information for the year 2020:

Other costs are estimated for the year 2020 based on the expected sales of 92,000 units. These costs are given below:

For the year 2020, showing all your working clearly, you are required to calculate:

1. the expected profit or loss                                      

2. breakeven point in units and sales revenue

3. margin of safety in units and % change

4. the profit/loss if the selling price is increased to £450 and sales quantity decreases by 20%    

5. the revised break-even point in units for (d)

6. explain the importance of computing break-even point for a Clover Co.

(Total 60 marks)

Bramble Corporation purchased a new machine for its assembly process on August 1, 2020. The cost of this machine was $150,900. The company estimated that the machine would have a salvage value of $15,900 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 22,500 hours. Year-end is December 31.

Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (Round depreciation rate per hour to 2 decimal places, e.g. 5.35 for computational purposes. Round your answers to 0 decimal places, e.g. 45,892.)

Tamarisk Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022.

Pretax financial income (loss) and taxable income (loss) were the same for all years since Tamarisk began business. The tax rates from 2019–2022 were enacted in 2019.

Prepare the journal entries for the years 2020–2022 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryforward. Assume that Tamarisk expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year.

Prepare the portion of the income statement, starting with “Operating loss before income taxes,” for 2020.

Prepare the portion of the income statement, starting with “Income before income taxes,” for 2021.

The spot price for gas today (March 19, 2020) is $1.661 MMBtu.  The futures price today for gas to be delivered in June 2021 is $2.245.  Your company is a gas purchaser/user and is interested in the hedging process.

1. You are a speculator and believe the price of gas will increase.  You have a chance to buy a June 2021 futures contract at $2.245.  Would you go short or go long on a June 2021 futures contract for 10,000 MMBtus?  

2. It is now December 31, 2020 On this day, the spot price for natural gas is $2.450 per MMBtu and the June 2021 futures price is $2.310 per MMBtu.  What is the amount of gain or loss related to your contract as of December 31, 2020?

3. As a speculator the last thing you want to do is either take delivery of or actually sell natural gas.  Explain how you would get out of the contract you purchased in part e. prior to the June 2021 delivery date.

Concord Corporation, a publicly-traded company, agreed to loan money to another company. On July 1, 2020, the company received a five-year promissory note with a face value of $505,000, paying interest at a face rate of 5% on July 1 each year. The note was issued to yield an effective interest rate of 6%. Concord used the effective interest method of amortization for discounts or premiums, and the company’s year-end is September 30.

1. Use 1. PV.1 Tables, 2. a financial calculator, or 3. Excel functions to arrive at the amount to record the note receivable.

2. Prepare a schedule of note premium / discount amortization schedule

3. Prepare the journal entries to record the issue of the note on July 1, 2020, and any required accrual entries at the company’s year-end on September 30, 2020. Finally, prepare the journal entry to record the first cash collection received on July 1, 2021 for Concord Corporation.