Consider the following information:

1. On December 1, 2019, a U.S. firm plans to purchase a piece of equipment (with an asking price of 100,000 francs) in Switzerland during January of 2020. The transaction is probable, and the transaction is to be denominated in euros.
2. On December 1, 2019, the company enters into a forward contract to buy 100,000 Swiss francs for $1.01 on January 31, 2020.
3. Spot rates and the forward rates for January 31, 2020, settlement were as follows (dollars per Swiss franc):

   	Spot Rate	Forward Rate for 1/31/20
   December 1, 2019	$0.99	$1.01
   Balance sheet date (12/31/19)	$1.01	$1.02
   January 31 and February 1, 2020	$1.04

4. On February 1, the equipment was purchased for 100,000 Swiss francs.

Required:

1. Prepare all journal entries needed on December 1, December 31, January 31, and February 1 to account for the forecasted transaction, the forward contract, and the transaction to buy the equipment.
2. When should the company reclassify any amounts reported in other accumulated comprehensive income as a result of the cash flow hedge?

SS Moving Company reported $400,000 in credit sales in December 2020. The company has historically seen losses (bad debt) of approximately 1% of all credit sales. On December 31, 2020, the Accounts Receivable balance is $201,000. SS’s accountants prepared the following Aging of Accounts Receivable as of December 31, 2020:

--------------------------Number of days past due-----------------------------

Total Balance 0-30 31-60 61-90 Over 90 Accts.

Receivable $201,000 $60,000 $90,000 $50,000 $1,000

Estimated % uncollectible 1% 5% 15% 50%

Assuming that SS Moving Company uses the income statement approach (percentage of credit sales method) to record the bad debt expense each period, record the journal entry for December 2020 in each of the following scenarios (you need two journal entries and they can both be in the space provided).

A) The current balance in the Allowance for Doubtful Accounts is $3,000.

B) The current balance in the Allowance for Doubtful Accounts is $10,000. You should show your journal entries AND your calculations in this space...

THUMB Ltd, which manufactures a single product, is considering whether to use absorption costing or marginal costing to report its budgeted profit in its management accounts. The following information is available:

K /unit Direct materials 4.00

Direct labour 15.00

Total 19.00

Selling price 50.00

Fixed production overheads are budgeted to be K300,000 per month and are absorbed on an average activity level of 100,000 units per month. For the month of April 2020, sales are expected to be 100,000 units although production units will be 120,000 units. Fixed selling costs of K150,000 per month will need to be included in the budget as will the variable selling costs of K2.00 per unit. There are no opening inventories expected at 1 April 2020. Required: (a) Prepare the budgeted statement of profit or loss for the month of April 2020 for THUMB Ltd using absorption costing. Clearly show the valuation of any inventory figures. [6 Marks] (b) Prepare the budgeted statement of profit or loss for the month of April 2020 for THUMB Ltd using marginal costing. Clearly show the valuation of any inventory figures.

Olin Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The forecast income statement for the year ending December 31, 2020, is as follows:

The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 9% and incur fixed costs of $7,050,150.

Under the current policy of using a network of sales agents, calculate Olin Beauty Corporation’s break-even point in sales dollars for the year 2020.

Calculate the company's break-even point in sales dollars for the year 2020 if it hires its own sales force to replace the network of agents. (Round answer to the nearest whole dollar, e.g. 5,275.)

Here are comparative balance sheets for Velo Company.

Additional information:

Prepare a statement of cash flows for 2020 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000, or in parenthesis e.g. (15,000).)

The accounting department needs to forecast electricity expense for one of the buildings. The data for several months is supplied below. Be careful since the data is listed beginning with the most recent. The forecasting method to be used here is the linear regression. Please round your forecast to the nearest whole number.

1.

Which statement concerning lower-of-cost-or-net-realizable-value (LCNRV) is incorrect?

LCNRV is an example of a company choosing the accounting method that will be least likely to overstate assets and income.

The LCNRV basis is justified because of a decline in the selling price of the inventory item.

LCNRV is applied after one of the cost flow assumptions has been applied.

Under the LCNRV basis, market does not apply because assets are always recorded and maintained at cost.

2.

Ayayai Corp. sells six different products. The following information is available on December 31:

When applying the lower-of-cost-or-net-realizable-value rule to each item, what will Ayayai total ending inventory balance be?

$312000

$300975

$300700

$300300

3. Use the following information regarding Skysong, Inc. and Kingbird, Inc. to answer the question “Which amount is equal to Skysong, Inc.'s "days in inventory" for 2022 (to the closest decimal place)?” (Use 365 days for calculation.)

35.8 days

34.4 days

39.7 days

42.9 days

4.

Use the following information regarding Cullumber Company and Oriole Company to answer the question “Which of the following is Cullumber Company's "cost of goods sold" for 2021 (to the closest dollar)?”

$264034

$263120

$248132

$247940

5.

Use the following information regarding Crane Company and Cullumber to answer the question “Which of the following is Cullumber's "cost of goods sold" for 2022 (to the closest dollar)?”

$260913

$240100

$172620

$240100

6.

The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as the

inventory reserve.

LIFO reserve.

FIFO reserve.

periodic reserve.

7.

The LIFO reserve is

the amount used to adjust inventory to historical cost.

the difference between the value of the inventory under LIFO and the value under average cost.

the difference between the value of the inventory under LIFO and the value under FIFO.

an amount used to adjust inventory to the lower of cost or market.

8.

Ayayai Corp. reported ending inventory at December 31, 2022 of $984000 under LIFO. It also reported a LIFO reserve of $172000 at January 1, 2022, and $246000 at December 31, 2022. Cost of goods sold for 2022 was $4018000. If Ayayai Corp. had used FIFO during 2022, its cost of goods sold for 2022 would have been

$4092000.

$4264000.

$3772000.

$3944000.

You work for a large accounting firm KMPG as a Senior Accountant. Your client Bear plc acquired shares in Wolf plc several years back and you are responsible for the preparation of the year end work.

The following are the Statements of financial position for Bear plc and Wolf plc as at 31 March 2020, together with the additional information provided below.

Notes to the above financial statements:

1. Wolf Plc acquired 84,000 ordinary shares in Wolf on 31 March 2017. They also acquired 15% of the preference shares.

2. At the date of acquisition, the retained earnings of Wolf plc were £205,000.

3. During the year, Bear sold goods to Wolf for £10,400 which included a mark-up on cost of 30%. At the end of the year, 50% of this stock was still held by Wolf plc.

4. At the date of acquisition, the land and buildings of Wolf plc had a fair value of £50,000 more than their book value. This fair value increase has not been incorporated into the statement of financial position for Wolf plc. Land accounts for 20% of this amount. Wolf acquired the building on 1 April 2012. The group policy is to depreciate buildings over a period of 50 years.

4. Wolf spent £42,000 on developing a new and innovative product. Wolf’s policy is to expense development costs, however, it is Bear’s policy to capitalise development costs (i.e. treat it as an asset). The following provides a breakdown of expenditure by Wolf:

Development costs up to 31 March 2017     £32,000

Development costs after 31 March 2017     £10,000

6. On the 31March 2020, an impairment test was carried out on the goodwill arising from the acquisition of Wolf plc. The report indicated that the goodwill needs to be written down by £10,000.

7. Wolf declared a dividend to its ordinary shareholders on 15 March 2020 which remained unpaid by 31 March 2020. Bear has not accounted for this income in their financial statements.

1. Prepare the consolidation schedule for Wolf plc at 31 March 2020.

2. Calculate the equity and non-controlling interest that will appear in the consolidated statement of financial position for the Bear Group plc at 31 March 2020.

c. Prepare a memorandum for the attention of the financial director of Bear Plc explaining why consolidated accounts are necessary and what are the criteria regarding exemption and exclusion from preparing consolidated accounts.

d. Prepare a memorandum for the financial director of Bear plc explaining the limitations of group accounts.

With the outbreak of COVID-19, many people in Hong Kong choose cooking at home instead of dining out to reduce the chance of contacting Coronavirus. At the same time, it is observed that many restaurants have closed down. Given that many restaurants cut their menu prices in this period, explain, with the aid of a supply-and-demand diagram, how the above changes affect the market for dining out meals in restaurants.

A chemist started to carry out column chromatography on a Friday afternoon, got to the point at which the two compounds being separated were about three-fourths of the way down the column. The stopcock was closed and the column capped so that no solvent was lost. On Monday, when she returns to continue the elution, do you think she can separate the two compounds? Explain your answer