The following is the stockholders’ equity of Piesco Corporation on October 1, 201X:

Figure 5

1. Journalize the transactions in general journal form.

2. Prepare the stockholders’ equity section of the balance sheet using the legal capital approach as of December 31, 201X.

The working papers that accompany this text have accounts to update ledger balances. Be sure to put in the beginning balances. Use the Blueprint as a guide to the setup of stockholders’ equity.

Oct. 3     Declared a $0.50 per shared dividend on the common stock and a $1.20 per share dividend on the preferred. (The Dividends Payable account will record amounts for both common and preferred, although companies could set up Common Dividend Payable and Preferred Dividend Payable accounts.)

Nov. 15     Dividends were paid that were declared on October 3.

Nov. 18     Purchased 340 shares of its own common stock at $14 per share.

Nov. 25     Reissued 90 shares at $17 per shared.

Nov. 26     Declared a 15% stock dividend on common. Market value of stock is $48 per share.

Dec. 29     Distributed stock dividend declared on November 26.

Dec. 30     Reissued 80 shares of treasury stock at $12 per share.

Dec. 31     Closed the Income Summary account, which had net income of $89,000, to Retained Earnings.

On October 1, 2017, Kingsway Broadcasting purchased for $410,000 the copyright to publish the music composed by a local Celtic group. Kingsway expects the music to be sold over the next five years. The company uses the straight-line method to amortize intangibles.

Required:
Prepare entries to record:
a. The purchase of the copyright. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)

b. The amortization for the year ended December 31, 2017, calculated to the nearest whole month. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)

On October 15, 2017, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2018, 32 million stock options were granted, exercisable for 32 million shares of Ensor's $1 par common stock. The options are exercisable between January 1, 2021, and December 31, 2023, at 90% of the quoted market price on January 1, 2018, which was $20. The fair value of the 32 million options, estimated by an appropriate option pricing model, is $3 per option. Ensor chooses the option to recognize forfeitures only when they occur.

Ten percent (3.2 million) of the options were forfeited when an executive resigned in 2019. All other options were exercised on July 12, 2022, when the stock’s price jumped unexpectedly to $31 per share.

Required:
1. When is Ensor’s stock option measurement date?
2. Determine the compensation expense for the stock option plan in 2018. (Ignore taxes.)
3. & 5. Prepare the necessary journal entries.

ABC Company Inc. is a new company that began operations on October 5th, 2019. The following are the only events that have occurred since the company’s inception.

REQUIRED:

Prepare the Journal Entries, T accounts, Trial Balance as of 12-31-19, Balance Sheet as of 12-31-19 and the Income Statement for the year ended December 31st for ABC Company Inc. Lastly, please prepare the closing entries and the post closing trial balance.

10-05-19    John Smith, Sole Shareholder of ABC Inc, contributed $80,000 to the company.

10-18-19     ABC Company Inc. paid rent for October 2019 through March of 2020 in the amount of $1200 per month

11-01-19     ABC Company Inc. bought a tractor for $78,000 They made a $15,000 down payment and are financing the rest.

11-08-19     ABC Company Inc. performed $70,000 of Landscaping services and was paid $45,000 immediately and expects to receive the balance at some point in the next 90 days.

11-14-19    ABC Company Inc. received a payment of $80,000 from XYZ Company for work that ABC Company will do over the next few months.

11-16-19     ABC Company Inc. bought office supplies for $1000 and paid Cash.

12-02 19    ABC Company Inc. paid salaries in the amount of $2500 for the pay period of November 15^th to November 30th

12-07-19     ABC Company Inc. received a payment for the work they performed on 11-08-19 in the amount of $5000

12-14-19     ABC Company Inc. made a $12,000 payment on the tractor that they purchased on 11-18-19 ($1,427 of the payment is for interest)

12-17 19     ABC Company Inc. paid salaries in the amount of $2500 for the pay period of December 1st to December 15^th.

12-18-19     ABC Company Inc. bought office supplies for $1200 on account.

12-20-19     ABC Company Inc. paid a utility bill for $600 and made a $150 insurance payment

12-22-19    John Smith, Sole Shareholder of ABC Inc, withdrew $3,000 from ABC Company.

12-23-19    ABC Company did 20% of the work they were paid for on 11-14-19

12-31-19     Prepare the adjusting journal entry to accrue for salaries for the pay period of December 16^th to December 31^st in the amount of $2500

12-31-19     Prepare the adjusting journal entry that reflects that we have $900 of Office Supplies remaining as of 12-31-19

12-31-19     Prepare the adjusting journal entry to record depreciation on the tractor that was purchased on 11-01-2019 (Use Straight Line Depreciation, 5 year life, and $24,000 salvage value)

12-31-19     Prepare the adjusting journal entry to record the adjustment needed for prepaid rent and rent expense.

12-31-19     Prepare the adjusting journal entry to record $127 of interest earned on the company checking account.

12-31-19     Prepare the adjusting journal entry to record $684 of accrued interest owed on the tractor that was purchased on 11-18-19

2. On 10 October 2018, the entity purchased commercial goods at a price of 60,000 TL + VAT. VAT prepaid amount has been given as of March 31, 2019.

-The commercial goods purchased were sold for 78,000 TL + 18% VAT. The VAT remaining amount is written to the customer's current account.

-10% of the merchandise sold is returned by the buyer, and its cost is deducted from the buyer's current account.

- The company subject to receivables and debt securities in accordance with its accounting policy. The rediscount interest rate for 2018 has been set at 10%.

REQUESTED:                                                                                                15 points

Write the balances of the accounts related to this transaction as of 31.12.2018 in the table below.

HPP.       ACCOUNT NAME                                                      BALANCES

NO                                                                                                      2018

                                                                                                WILL                  BORROW

120 Buyers

121 Receivables

122 Rediscount of Receivables

320 Dealers

321 Debt Securities

Rediscount of 322 Debt Instruments

647 Rediscount Interest Income

657 Rediscount Interest Expenses

600 Domestic Sales

610 Returns from Sale

611 Sales Discounts

620 Cost of Products Sold

621 Cost of Commercial Goods Sold

3. Yıldırım A.Ş. On 1 October 2018, it issued bonds with a maturity of 200,000 TL and a 2-year maturity of 12%. All of the bonds were sold at nominal value. Interest payments will be made annually (30 September 2019, 30 September 2020).

REQUESTED:                                                                                                           20 points

Write the balances of the accounts related to this transaction as of 31.12.2018 and 31.12.2019 in the table below.

HPP.   ACCOUNT NAME BALANCES

NO

2018 2019

                                                                                                           DEBT          DUE          DEBT                  DUE

300 Bank Loans

303 Long Term Assist. Mother. Installments and Interests

304 Bonds Principal Debt Installment and Interests

305 Issued Bonds and Bills

308 Securities Issuance Differences

381 Expense Accruals

400 Bank Loans

405 Issued Bonds

408 Security Issue Difference

780 Financing Expenses

• Aurora and Oscar separated in 2017 and divorced in October 2019. She earned $40,000 in wages and paid more than half the cost of keeping up her home in 2019.
• Aurora and Oscar have a son, Milo, who is 17 years old and unmarried.
• Aurora signed Form 8332 (Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent) allowing Oscar to claim Milo in 2019.
• Milo is a full-time student working towards a degree in computer information systems. Milo lived on campus during the school year and spent the summer at home with his mother.
• Milo does not a have a felony drug conviction and is not a qualifying child for anyone except Aurora.
• Aurora paid $5,000 of Milo's tuition that was not covered by his scholarship.
• Aurora provided more than half of her son's support and all the cost of his room and board on campus.
• Milo's only income was $3,800 in wages and $400 of dividend income. He had no federal or state tax withholding.
• Aurora and Milo are U.S. citizens and have valid Social Security numbers.

12. Milo is Aurora’s qualifying child for the earned income credit.

True or False?

13. Milo is a qualifying person for Oscar to claim Head of Household filing status, credit for other dependents, and the earned income credit

True or False?

3. Fed is split over time of rate rise

In October​ 2009, the Fed was forecasting that unemployment will average 9.8 percent in 2010 and said the federal funds rate will remain​ "exceptionally low" for​ "an extended​ period." But some officials were beginning to worry about unwinding the​ $2 trillion in special credits that have boosted the monetary base and to wonder if the interest rate might need to start rising soon.

Describe the time lags in the operation of monetary policy and explain why they pose a challenge for the Fed in deciding when to start raising the federal funds rate target in a recession.

The time lag between the implementation of monetary policy and the resulting change in the inflation rate is approximately​ ______.

This poses a challenge for the Fed in deciding when to start raising the federal funds rate target in a recession because​ ______.

A. 1​ year; if the Fed raises the federal funds rate too​ soon, it could lengthen the recession

B. 2​ years; if the Fed raises the federal funds rate too​ soon, it could lengthen the recession

C. 2​ years; fiscal policy has a shorter lag time and monetary policy and fiscal policy are always coordinated

D. a few​ months; fiscal policy has a shorter lag time and monetary policy and fiscal policy are always coordinated

E. a few​ months; Congress must agree on monetary policy and they are not always in Washington when these decisions must be made

4. Fed is open to changing bond policy

Fed policymakers signaled for the first time that they could increase or decrease stimulation of the economy in the​ future, but not now.

What are the ripple effects and time lags that the Fed must consider in deciding when to increase or decrease stimulation of the​ economy?

Choose the statement that is correct.

A. When the Fed raises the federal funds​ rate, the inflation rate decreases about two years later.

B. When the Fed raises the federal funds​ rate, other​ short-term interest rates rise a few weeks later.

C. When the Fed lowers the federal funds​ rate, the exchange rate falls a few weeks later.

D. When the Fed raises the federal funds​ rate, the quantity of money decreases on the same day.

E. When the Fed lowers the federal funds​ rate, the supply of loanable funds increases up to a year later.

5. The U.S. economy is at full employment when strong economic growth in Asia increases the demand for​ U.S.-produced goods and services.

The Fed​ ______ face a tradeoff in the short run because​ ______.

A. does​ not; it will move both real GDP and the price level back to their desired levels

B. does​ not; it is impossible to decrease real GDP and the price level simultaneously

C. ​does; it must increase real GDP and decrease the price level simultaneously

D. does; it must decrease real GDP and increase the price level simultaneously

E. does​ not; a tradeoff is a​ long-run phenomena

6. The three ways in which the U.S. fiscal imbalance might be successfully addressed are​ _______.

A. raising income​ taxes, raising Social Security​ taxes, and cutting Social Security benefits

B. keep borrowing by selling government​ bonds, cutting Social Security​ benefits, and eliminate the Affordable Care Act

C. eliminating the generational​ imbalance, cutting other government​ spending, and raising Social Security taxes

D. raising income​ taxes, cutting other government​ spending, and keep borrowing by selling government bonds

7. Fiscal policy is the use of the federal budget to​ _______.

A. achieve the macroeconomic objectives of positive economic growth and zero unemployment

B. finance government activities

C. achieve the macroeconomic objectives of high and sustained economic growth and full employment

D. keep interest rates low and steady

8. A cut in the income tax rate​ ________ the tax wedge and​ ________ employment,​ saving, and investment.

A. does not​ change; increases   B. increases; increases C. ​decreases; does not change D. increases; decreases E. decreases; increases

9. Read Eye on Fiscal Stimulus.

How big was the fiscal stimulus package of​ 2008-2009, how many jobs was it expected to​ create, and how large was the multiplier implied by that​ expectation?

Did the stimulus​ work?

The fiscal stimulus package of 2008–2009 was​ ___？____.

The fiscal stimulus package of 2008–2009 was expected to create​ ____？___ jobs. The multiplier implied by that expectation is​ ___？____.

The stimulus​ _______ the expectations of the Obama administration because​ _______.

A. did not​ meet; Congress failed to spend all of the fiscal stimulus

B. met; 650,000 jobs were created by using a combination of discretionary and automatic fiscal policy

C. ​met; the multiplier was much smaller than 1.6

D. did not​ meet; the multiplier was much smaller than 1.6

On October 1, 2018, the Allegheny Corporation purchased machinery for $224,000. The estimated service life of the machinery is 10 years and the estimated residual value is $4,000. The machine is expected to produce 400,000 units during its life.

Required:
Calculate depreciation for 2018 and 2019 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service.

1. Straight line.
2. Sum-of-the-years’-digits.
3. Double-declining balance.
4. One hundred fifty percent declining balance.
5. Units of production (units produced in 2018, 20,000; units produced in 2019, 35,000).