M&N company issues $20 million of ten-year, 7 per cent, semi-annual coupon debentures to public which pay interest each six months. The market also requires a rate of return of 7 per cent. Assume that the monies come in and the debentures are allocated on the same day 30 June 2020. Required: a) Provide the accounting entries at 30 June 2020, 31 December 2020. Narrations are required. b) Discuss what factors may cause a debenture is issued at discount, premium and par value. (7 marks. Word limit for part b: minimum 120 to maximum 250 words) please provide a unique answer than other.

On January 1, 2019 , Jerry Fallen transfers publicly traded debt securities with a fair market value of

$570,000 to a newly established inter vivos trust for which his 22 year old son, James, is the only

beneficiary. The cost of these securities to Jerry was $520,000. During 2019 , the securities earn and

receive interest of $32,000, all of which is distributed to James.

On January 1, 2020, the securities are transferred to James in satisfaction of his capital interest in the

trust. At this time, the fair market value of the securities has increased to $615,000. James sells all of

the securities for $615,000 on January 3, 2020.

Indicate the tax consequences for Jerry, James, and the trust, in each of the years 2019 and 2020

XYZ Corp. reported a per share book value of $12 in its balance sheet on December 31, 2019. Analysts are forecasting consensus earnings per share of $1.80 for 2020 and $2.40 for 2021. The required return for common equity is 10 percent. The dividend payout is expected to be 50 percent of earnings.

a) Calculate the intrinsic value per share in early 2020 with a forecast that residual earnings will grow at a long-term GDP growth rate of 4% after 2021.

b) What is the market’s forecast of the residual earnings growth rate after 2021 that is implied by the $36 market price in early 2020?

c) Briefly explain the advantages and disadvantages of the residual earnings valuation model.

Nash Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, Nash Company purchased 8,000 premiums at 75 cents each and sold 105,000 boxes of soap powder at $3.20 per box; 41,000 coupons were presented for redemption in 2020. It is estimated that 60% of the coupons will eventually be presented for redemption. Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2020. (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.) Account Titles and Explanation Debit Credit

Item B. Contingent Liability Facts: • You are auditing a very successful and highly profitable manufacturing company as of December 31, 2020. • The Company has always maintained adequate insurance in different areas. The Company has decided, effective January 1, 2021, not to purchase insurance against risk of loss that may result from injury to others, damage to the property of others, or interruption of its business operations. • The Company would like to record a $5,000,000 reserve as of December 31, 2020 for claims associated with future events which may occur. Required: 1. Should the Company record this $5,000,000 Reserve for Claims (a contingent liability) in its 12/31/2020 Financial Statements? Why or why not?

1. John and Mary had been married for 15 years before John died in a car accident on December 31, 2019. Mary and her son, Daze, age 27 in 2018, continued to live at home in 2019, 2020, 2021, and 2022. Daze worked part-time (earning $3,500 in each of the four years) and attended the university on a part-time basis. Mary provided more than 50% of Daze’s support for all four years. What is Mary’s filing status for 2019, 2020, 2021, and 2022?

2. Assuming the same situation as above except that Daze earned $4,500 in each of the four years, what is Mary’s filing status for 2019, 2020, 2021, and 2022?

On January 2, 2018, Upton, Inc., signed a ten-year lease for office space. Upton classified the lease as a finance lease. Upton has the option to renew the lease for an additional four-year period on or before January 2, 2022. During early January 2020, two years after occupying the leased premises, Upton made general improvements to the premises costing $400,000 and having an estimated useful life of 15 years. At December 31, 2020, Upton's intentions as to the exercise of the renewal option are uncertain because they depend upon future office space requirements.

  Upton should record amortization of leasehold improvements for 2020 at:

Keisy’s Topical Kids Inc. had the following information for 2019 and 2020:

Answer the following questions:

1. Compute the Current Ratio for 2019 and 2020.
2. What does the results of a current ratio measure?
3. Did the Current Ratio improve and is Keisy’s Topical Kids Inc. in good financial condition?
4. Are there weaknesses in using a current ratio?

Eric’s Excavations has a financial year which ends on the 30th June. Eric purchased a truck for $200,000 on 1 July 2019, and estimates that the asset will have a residual value of $50,000 and a useful life of 5 years. The truck was sold on 31 December 2020 for $160,000. Required: Calculate the annual depreciation on the truck for the year ended 30th June 2020 and prepare the adjusting journal entry for depreciation . Show an excerpt from the Balance Sheet as at 30^th June 2020 of the Non-current assets .

Prepare the journal entries to account for depreciation for the year ended 30 June 2021, calculate the gain/(loss) on sale of truck and make the journal entries to dispose of the truck .

Calculations of gain/(loss)