The following information is an extract from the financial statements of Extreme-Experiences Pty Ltd.

a)    Calculate the following ratios for both 2019 and 2020.

b)    Comment on the Liquidity of Extreme-Experiences using the answers in part a).

c) Which ratio measures Solvency? Provide suggestions on how to improve the Solvency of Extreme-Experiences.

GCA Ltd reported the following information in its statement of financial position at 30 June 2020:

                   Plant                                                                    $650,000

                   Accumulated depreciation – plant                  (150,000)

                   Intangible assets                                               300,000

                   Accumulated amortisation                               (100,000)

                   Land                                                                    300,000

                   Total non-current assets                                  1,000,000

                   Cash                                                                    50,000

                   Inventory                                                             180,000

                   Total current assets                                          230,000

                   Total assets                                                       $1,230,000

                   Liabilities                                                             150,000

                   Net assets                                                          $1,080,000

At 30 June 2020, GCA Ltd analysed the internal and external sources of information that would indicate deterioration in the worth of its assets. It determined that there were indications of impairment. GCA Ltd calculated the recoverable amount of the assets to be $980,000.

Provide the journal entry for any impairment loss at 30 June 2020. Show all calculations.

During 2020, Skysong Company started a construction job with a contract price of $1,590,000. The job was completed in 2022. The following information is available.

Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.

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List of Accounts

Prepare all necessary journal entries for 2021

Martin MFG company uses balance sheet approach to calculate allowance for doubtful accounts and bad debt expense. Current policy is to reserve 20% gross accounts receivable as an allowance for uncollectible accounts.

Martin MFG company issued 10% stated rate bonds in 2020. Effective market rate of interest for these bonds is 8%.

Select all statements that are true regarding the information above. Ignore taxes and any cost of goods sold.

Reducing the percentage of gross accounts receivable reserved in the allowance for uncollectible accounts will increase net income

Increasing the percentage of gross accounts receivable reserved in the allowance for uncollectible accounts will increase net income

Reducing the amount of accounts receivable written off by $1,000 will increase net income

Increasing the amount of accounts receivable written off by $1,000 will increase net income

If given option to deliver inventory in either 2020 or 2021 waiting to deliver inventory to customers until 2021 will increase revenue in 2020

If given option to deliver inventory in either 2020 or 2021 delivering inventory to customers in 2020 will increase revenue in 2020

Using income statement approach to calculate bad debt expense will always result in lower bad debt expense versus the balance sheet approach

Using direct write off method to calculate bad debt expense will always result in lower bad debt expense versus the balance sheet approach

Increasing the stated rate of the bonds would have increased the price of the bonds at issuance

Increasing the market rate used to price the bonds would have increased the price of bonds at issuance

Present value of bonds issued is higher than face value

Present value of bonds issued is lower than face value

On January 1, 2020, Grouper Company sold 12% bonds having a maturity value of $550,000 for $591,698, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Grouper Company allocates interest and unamortized discount or premium on the effective-interest basis.

Correct answer iconYour answer is correct.

Prepare the journal entry at the date of the bond issuance. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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List of Accounts

Partially correct answer iconYour answer is partially correct.

Prepare a schedule of interest expense and bond amortization for 2020–2022. (Round answer to 0 decimal places, e.g. 38,548.)

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List of Accounts

Partially correct answer iconYour answer is partially correct.

Prepare the journal entry to record the interest payment and the amortization for 2020. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Exercise 240 On January 1, 2020, the Oriole Company had $2,990,000 of $10 par value common stock outstanding that was issued at par and Retained Earnings of $1,150,000. The company issued 146,000 shares of common stock at $16 per share on July 1. On December 15, the board of directors declared a 10% stock dividend to stockholders of record on December 31, 2020, payable on January 15, 2021. The market value of Oriole Company stock was $17 per share on December 15 and $17 per share on December 31. Net income for 2020 was $580,000. Journalize the issuance of stock on July 1 and the declaration of the stock dividend on December 15. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit choose a transaction date Prepare the stockholders' equity section of the balance sheet for Oriole Company at December 31, 2020. ORIOLE COMPANY Balance Sheet (Partial) December 31, 2020 select an opening section name select an opening section name select an opening section name select an opening section name $enter a dollar amount select an opening section name enter a dollar amount select an opening section name enter a subtotal of the two previous amounts select an opening section name enter a dollar amount select an opening section name enter a total amount for this subsection select an opening section name enter a dollar amount select an opening section name $enter a total amount for this section Need this part please. Prepare the stockholders' equity section of the balance sheet for Oriole Company at December 31, 2020.

New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect.

Nash Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 2020. Jim Alcide, controller for Nash, has gathered the following data concerning inventory.

At May 31, 2020, the balance in Nash’s Raw Materials Inventory account was $436,560, and Allowance to Reduce Inventory to Market had a credit balance of $29,710. Alcide summarized the relevant inventory cost and market data at May 31, 2020, in the schedule below.

Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Nash’s May 31, 2020, financial statements for inventory at lower-of-cost-or-market as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle. Assume Garcia uses LIFO inventory costing.

(a1) Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2020.

(a2) For the fiscal year ended May 31, 2020, determine the amount of the gain or loss that would be recorded due to the change in Allowance to Reduce Inventory to Market.

Jimmitz Inc. is a subsidiary of Krocker Gear. Jimmitz sells shoe accessories to Krocker at a 25% markup on cost. Information on these intercompany merchandise transactions is below:

Required

a. Prepare the working paper eliminating entries related to these intercompany transactions at December 31, 2020.

b. Krocker sold shoes containing Jimmitz’s shoe accessories during 2020.

What amount did Krocker and Jimmitz record as cost of goods sold for the shoe accessories in 2020?

$Answer

What amount should appear in consolidated cost of goods sold for these shoe accessories?

$Answer

Show how the eliminating entries in part a adjust Krocker’s cost of goods sold balance to the correct consolidated balance.

Woodcomb Ltd. has a March 31 year end and prepares adjusting journal entries annually.  For each of the following situations prepare the necessary adjusting journal entries for March 31, 2020. If no entry is required, clearly indicate by saying “No Entry”.

Show all calculations clearly and round to the dollar.  Do not show entries that are not adjusting journal entries.

1. The unadjusted trial balance at March 31, 2020 has a balance of $7,320 in the supplies account.  A physical count on March 31 shows $1,260 of supplies on hand.

2. On December 1, 2019, Woodcomb provided a $15,000 note receivable to a small business with a 5.5% interest rate.  This note is for a six-month term, maturing June 1, 2020, and at that time the full amount of the note plus all of the interest must be repaid.

3. The unadjusted unearned revenue account shows $11,200 outstanding.  An assessment was completed and it was found that at March 31, 2020 there was still $5,100 in services to be provided in April.

4. On May 28, 2019, Woodcomb paid $4,800 for a one-year insurance policy that was to begin on June 1, 2019.
   
5. Woodcomb purchased a vehicle costing $28,000 on Feb 1, 2020.  Management believes the vehicle will be used for 7 years.
   
6. Consulting services were provided to a customer between March 28 and 31 worth $1,950 but the employee who usually records the billing was on holidays until April 4, 2020.

7. To successfully complete a consulting engagement, Woodcomb organized renting a specific office machine for $550.  It was supposed to be delivered for use on March 25 but the machine was damaged and will not be available until April 8.

8. Woodcomb has paid $20,200 to the government for income tax installments this year.  The finalized financial statements now suggest that $26,100 is owed in total for the year.  This installment will be paid within 30 days.