Buffalo Windows manufactures and sells custom storm windows for three-season porches. Buffalo also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be performed by other vendors. Buffalo enters into the following non-cancellable contract on July 1, 2020, with a local homeowner. The customer purchases windows for a price of $3,300 and chooses Buffalo to do the installation. Buffalo charges the same price for the windows regardless of whether it does the installation or not. The price of the installation service is estimated to have a fair value of $720. The customer pays Buffalo$2,880 (which equals the fair value of the windows, which have a cost of $2,000) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2020, Buffalo completes installation on October 15, 2020, and the customer pays the balance due.

Prepare the journal entries for Buffalo on July 1, September 1, and October 15, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round percentage allocations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)

Tara’s Treasures is authorized to sell 250,000 shares of 5%, $100 PAR Value Preferred Stock and 1,500,000 shares of COMMON stock, $4 par.

The Stockholder’s Equity Section Dec 31^st 2019:

Preferred Stock 5%, $100 Par 250,000 shares Authorized,

100,000 Shares Issued                                    $10,000,000

Common Stock, $4 Par, 1,500,000 Shares Authorized

500,000 Shares Issues & Outstanding $2,000,000

Paid in Capital in Excess of Par, Common        $3,000,000

Retained Earnings                                             $4,500,000

During 2020 Tara’s Treasures had the following transactions:

1. Jan 1, 2020: Tara declared the Preferred Dividend and a $2.50 Common Dividend, Date of Record Jan 15 and Payment Date Jan 30^th.
2. Jan 30^th: Paid the Dividend
3. Feb 1^st: Tara issued 50,000 shares of Common Stock for $10 per share.
4. Feb 15^th: Tara declares a 2 for 1 STOCK SPLIT for Common Stock
5. Mar 15^th: Tara DECLARES a 10% Common Stock Dividend, Record Date March 25^th, Payable April 1^st. The stock is valued at $12 per share.
6. April 1^st: Paid the Stock Dividend

Required:

1. Record entries a-f in the Journal and update the Stockholder’s Equity Balances
2. Prepare the Stockholder’s Equity Section at Dec 31^st 2020. Assume Tara reported Net Income of $750,000 for 2020.

The adjusted, pre-closing trial balance appears below for B. Counter, CPA, a sole proprietorship, at December 31, 2020. Accounts are listed in alphabetical order.

ACCOUNTS DR CR

Accounting Revenue (Income) 1,500 CR

Accounts Payable 8,700 CR

Accounts Receivable 500 DR

Buildings & Equipment 5,000 DR

Capital, January 1, 2020 12,900 CR

Cash (checking account) 4,100 DR

Insurance Expense 400 DR

Land 9,000 DR

Owner Withdrawals (Drawing) 1,000 DR

Prepaid Insurance Expense 800 DR

Supplies Expense 200 DR

Supplies on Hand 700 DR

Unearned Accounting Revenue 400 CR

Utilities Expense 400 DR

Wages Expense 1,400 DR

Totals 23,500 (debits) 23,500 (credits)

From the adjusted trial balance above, answer the questions below. Note that your best approach is to first prepare the three financial statements in a methodical and careful manner.

Questions:

1. What are total (gross) revenues on the 2020 income statement?

2. What are total expenses on the 2020 income statement?

3. What are total assets on the 12/31/20 balance sheet?

4. What are total liabilities on the 12/31/20 balance sheet?

5. True or False: If the goal of the business owner is to increase the equity in the business, the trend in the capital account is positive for the year.

The Kingbird Company issued $360,000 of 11% bonds on January 1, 2020. The bonds are due January 1, 2025, with interest payable each July 1 and January 1. The bonds were issued at 102.

Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Kingbird Company records straight-line amortization semiannually.

E5.16  

(Preparation of Partial Statement of Cash Flows—Operating Activities)

(LO 8, 9) The statement of income of Kneale Transport Inc. for the year ended December 31, 2020, reported the following condensed information:

Kneale's statement of financial position included the following comparative data at December 31:

Additional information:

Operating expenses include $70,000 in depreciation expense. The company follows IFRS. Assume that interest is treated as an operating activity for purposes of the statement of cash flows.

Instructions

a.  

Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2020, using the

• 1.indirect method and

• 2.direct method.

b.  

From the perspective of an external user of Kneale Transport's financial statements, discuss the usefulness of the statement of cash flows prepared using either the indirect or the direct method.

Use the unadjusted trial balance of Electric Bike on December 31, 2020.

Required:
1. Record adjusting entries for the following information.

a. The records show that the equipment was estimated to have a total estimated useful life of 10 years with a residual value at the end of its life of $14,090.
b. The balance in the Prepaid Insurance account was reviewed and it was determined that $325 was unused at December 31, 2020.
c. A review of the store supplies on December 31, 2020, revealed a balance on hand of $1,880; a similar examination of the office supplies showed that $710 had been used.
d. Accrued salaries payable, $1,600.
e. A count of the merchandise inventory revealed a balance on hand December 31, 2020, of $33,440.

2. Prepare a multiple-step income statement showing the expenses in detail.

Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Sage Hill Company. The following information relates to this agreement.

a) Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.)

b) Prepare all of the journal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.)

15/3 Boehm Corporation has had stable earnings growth of 6% a year for the past 10 years, and in 2019 Boehm paid dividends of $4 million on net income of $10 million. However, net income is expected to grow by 34% in 2020, and Boehm plans to invest $7.0 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2020 Boehm will return to its previous 6% earnings growth rate. Its target debt ratio is 36%. Boehm has 1 million shares of stock.

1. Calculate Boehm's dividend per share for 2020 under each of the following policies:
2. 1. Its 2020 dividend payment is set to force dividends per share to grow at the long-run growth rate in earnings. Round your answer to the nearest cent.

$ _______

2. It continues the 2019 dividend payout ratio. Round your answer to the nearest cent.

$_______  

3. It uses a pure residual policy with all distributions in the form of dividends (36% of the $7.0 million investment is financed with debt). Round your answer to the nearest cent.

$_______  

4. It employs a regular-dividend-plus-extras policy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual policy. What will the extra dividend be? Round your answer to the nearest cent.

$_______

A comparative balance sheet for Sarasota Corporation is presented as follows.

Additional information:

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

Determine Sarasota Corporation’s current cash debt coverage, cash debt coverage, and free cash flow. (Round current cash debt coverage and cash debt coverage to 2 decimal places., e.g. 0.67.)

Comment on its liquidity and financial flexibility.

liquidity. Its financial flexibility is .

No.1 Supermarkets Pty Ltd operates a corner store and provides you with the following detail to prepare their December 2020 Business Activity Statement. No.1 Supermarkets is registered for GST on a quarterly accrual basis. All amounts below are stated as GST inclusive where GST is applicable and No.1 Supermarkets Pty Ltd holds tax invoices where applicable. All invoices are dated during the period 1 October 2020 to 31 December 2020.

Receipts

               $

          440,000        Receipts from general grocery sales

          300,000        Receipts from sales of fruit and vegetables

25,000          Receipt from rental of the residential apartment above the shop

          5,000            Interest on Bank Deposits

          110,000        Receipts from Sale of alcohol

          6,000            Credit card fees for customers who used credit card

Payments

               $

          180,000        Purchase general groceries

          5,500            Maintenance cost for the residential apartments

          50,000          Salary paid to employees

          66,000          Purchase of fridges

          3,500            Rates on the shop building paid to the Council

1,400            Water expenses paid to Landlord as part of Rent

          22,000          Rent paid on the shop

          175,500        Purchase of fruit and vegetables from the growers

Discuss the GST implications of each of the above transactions. Advise No1. Supermarkets Pty Ltd of the Net GST payable/refundable for the December 2020 Business Activity Statement. Provide justification for your calculations using legislation, case law and rulings.`