Assume that in an annual audit of Sandhill Inc. at December 31, 2020, you find the following transactions near the closing date. Assuming that each of the amounts is material, state whether the merchandise should be included in the client’s inventory. Transactions 1. A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2020. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2021. select an option 2. Merchandise costing $5,740 was received on January 3, 2021, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2020, f.o.b. destination. select an option 3. A packing case containing a product costing $6,970 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked “Hold for shipping instructions.” Your investigation revealed that the customer’s order was dated December 18, 2020, but that the case was shipped and the customer billed on January 10, 2021. The product was a stock item of your client. select an option 4. Merchandise received on January 6, 2021, costing $1,394 was entered in the purchase journal on January 7, 2021. The invoice showed shipment was made f.o.b. supplier’s warehouse on December 31, 2020. Because it was not on hand at December 31, it was not included in inventory. select an option 5. Merchandise costing $1,476 was received on December 28, 2020, and the invoice was not recorded. You located it in the hands of the purchasing agent; it was marked “on consignment.” select an option

Templar Inc. is currently preparing its financial statements for 2020 and is currently working on its cash flow statement. Templar's balance sheets for 2020 is as follows:

In addition, during 2020, Templar:

• had net income of $31,000.
• sold land with a book value of $7,000 for a gain of $3,000.
• paid dividends of $8,000.
• issued common stock with a fair value of $50,000 in exchange for a building.
• purchased some equipment, but had no other activity related to property, plant and equipment besides the land sale and building purchase noted above (and depreciation).

Below, prepare Templar's 2020 full statement of cash flows, including all section headers and subtotals. (Don't worry about precise formatting; for each line, just put the text for that line followed by any amount necessary.) Use the indirect method for the operating cash flows section.

Computing Partial Period Depreciation under Multiple Depreciation Methods

To demonstrate the computations involved in several methods of depreciating a fixed asset, the following information is provided.

Required

Compute the annual depreciation using each of the following methods assuming that the asset was purchased on August 1, 2020.

a. Straight-line depreciation: Compute the annual depreciation rate and amount for each year.

b. Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amount for the first partial year assuming 4,500 service hours of actual operation.

c. Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amount for the first partial year assuming 9,000 units of output.

d. Sum-of-the-years’-digits method: Compute the depreciation amount for each year.

e. Double-declining-balance method: Compute the depreciation amount for each year.

On 1 July 2020 Tran’s Hardware Pty Ltd had an accounts receivable ledger balance of $75,000 debit and a credit balance in the allowance for doubtful debts ledger account of $15,000.

On 3 July Tran’s was contacted by Nails and Hammers Pty Ltd to notify that the business had been declared bankrupt and that they would not be able to pay the $5,500 owing to Tran’s Hardware from a previous credit sale made to them in June 2020.

The business received notification from Panda House Pty Ltd on 25 July 2020 that, $1,100 (GST inclusive) that had previously been written off as uncollectible in May 2020 would be paid in full in August 2020.

On 31 July 2020 Management reassessed the allowance for doubtful debts at year end and decided on a closing balance of $12,200 (GST exclusive) under the ageing of receivables approach.

Required:

1. Prepare journal entries for each of the above events. Narrations are not required.

b. The owners have approached you, the businesses accountant and asked if, for the financial year ending 30 June 2021, you would change to the direct write-off method for recording bad debts. How does changing the measurement of bad debts from the allowance method to the direct write-off method influence the usefulness of financial information? Ensure you reference the fundamental qualitative characteristics of information prescribed by the Conceptual Framework for Financial Reporting in your response.

Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows:

1. The inventory at January 1, 2019, had a retail value of $41,000 and a cost of $32,170 based on the conventional retail method.
2. Transactions during 2019 were as follows:

Sales to employees are recorded net of discounts.

3. The retail value of the December 31, 2020, inventory was $59,800, the cost-to-retail percentage for 2020 under the LIFO retail method was 74%, and the appropriate price index was 104% of the January 1, 2020, price level.
4. The retail value of the December 31, 2021, inventory was $47,080, the cost-to-retail percentage for 2021 under the LIFO retail method was 73%, and the appropriate price index was 107% of the January 1, 2020, price level.

1. Estimate ending inventory for 2019 using the conventional retail method. (Amounts to be deducted should be indicated with a minus sign.)

2. Estimate ending inventory for 2019 assuming Raleigh Department Store used the LIFO retail method. (Amounts to be deducted should be indicated with a minus sign.)

3. Assume Raleigh Department Store adopts the dollar-value LIFO retail method on January 1, 2020. Estimating ending inventory for 2020 and 2021.

Computing EPS: Simple Capital Structure

At the end of 2020, the records of Block Corporation reflected the following.

a. What EPS presentation is required—basic, diluted, or both?

b. Compute the required EPS amount(s).

• Note: Round earnings per share amount to two decimal places.

c. Compute the required EPS amount(s), assuming that the preferred stock is cumulative.

• Note: Round earnings per share amount to two decimal places.

Financial Statement Analysis

The financial statements of Gelato Corporation show the following information:

Statement of Financial Position

December 31, 2020

Assets 2020 2019

Cash $257,000 $263,000

Accounts receivable 128,000 163,000

Fair value through net income investments 120,000 119,000

Inventory 320,000 361,000

Plant assets (net) 398,000 418,500

Intangible assets 102,000 128,500

Total Assets $1,325,000 $1,453,000

Liabilities and Equity

Accounts payable $240,000 $303,500

Long-term debt 60,000 137,500

Share capital 293,000 293,000

Retained earnings 732,000 719,000

Total Liabilities and equity $1,325,000 $ 1,453,000

Income Statement

Year Ended December 31, 2020

2020 2019

Net sales $725,000 $703,000

Cost of goods sold   (474,000) (477,000)

Gross profit 251,000 226,000

Selling and admin expenses (126,000)    (100,000)

Other expenses, net (106,000) (99,000)

Income before income tax 19,000 27,000

Income tax (5,400) (8,100)

Net income $13,600 $18,900

REQUIRED: Show all calculations. Round percentages to one decimal place.

A. Using horizontal analysis, analyze Gelato Corporation’s change in liquidity, solvency, and profitability in 2020.

B. Using vertical analysis, analyze Gelato Corporation’s decline in net income in 2020

C. Identify at least two profitability ratios that are obtained from the vertical analysis performed in part (b). Is profitability improving or deteriorating based on these ratios? Briefly explain

Except for the earnings per share statistics, the 2019, 2020, and 2021 income statements for Ace Group Inc. were originally presented as follows:


Required:
1. Calculate the 11 missing amounts. (Loss should be indicated by a minus sign.)

Answer is complete and correct.

Presented below are the 2020 Income Statement and Balance Sheet for Riggins Online Store. Prepare a Cash Flow Statement as of December 31, 2020.

Additional Information for the 2020 fiscal year includes: 1) Cash dividends of $1,000 were declared and paid. 2) Equipment with a cost of $1,500 and accumulated depreciation of $1,000 was sold for $500.

Problem 5-7

Bramble Inc. had the following balance sheet at December 31, 2019.

During 2020, the following occurred.

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

Prepare the unclassified balance sheet as it would appear at December 31, 2020. (List Assets in order of liquidity.)

Compute Bramble’s free cash flow and current cash debt coverage for 2020. (Round current cash debt coverage to 2 decimal places, e.g. 0.56. Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)