Blenkinsop Manufacturing produces ChopNSlice, a multifunctional slicing and chopping kitchen tool. The following shows a summary of the manufacturing data for ChopNSlice for 2020. Selling price per unit $ 64 Variable manufacturing costs 38 Annual fixed manufacturing costs 201 060 Variable selling, distribution and administration costs 10 Annual fixed non-manufacturing costs 102 940 Annual volume 28 000 units.

a.Calculate the profit earned in 2020. (1 mark)

b. Blenkinsop Manufacturing has decided to introduce robots in part of the manufacturing production process with the changes taking place in 2021. The new production methods would bring about a decrease in variable costs per unit of $18 but would increase the fixed manufacturing costs by $150 000. How many units would need to be sold to earn the same profit as in 2020? Would you recommend the changes?

c. Prepare the Statement of Profit or Loss for (a) and (b).

Waterway 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 Waterway began business. The tax rates from 2019–2022 were enacted in 2019.

a.  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 Jennings expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year.

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

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

question 2

Hanson Bank agrees to lend $ 250,000 to Mishin Corp. on May 1, 2020 and the company signs a $ 250,000, three-month, 6% note maturing on August 1, 2020.

Instructions

Prepare the journal entry to record the cash received by Mishin Corp. on May 1, the entry to record interest expense at Mishin’s year-end of July 31 and the entry at maturity of the note.

Question # 3

Dividends on preferred shares

At December 31, 2020, Russia Inc. has outstanding the following shares:

       5,000, $ 3.20, no par value preferred shares with a carrying value of $ 200,000, and 40,000 no par value common shares with a carrying value of $ 600,000.

No dividends have been paid since December 31, 2017. The corporation now desires to distribute $ 120,000 in dividends.

Instructions

Calculate how much the preferred and common shareholders will receive if the preferred shares are cumulative and fully participating.

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.)