Blue Leasing Company agrees to lease equipment to Kingbird Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $489,000, and the fair value of the asset on January 1, 2020, is $699,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $60,000. Kingbird estimates that the expected residual value at the end of the lease term will be 60,000. Kingbird amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Blue desires a 9% rate of return on its investments. Kingbird’s incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown. (Assume the accounting period ends on December 31.)
Calculate the amount of the annual rental payment required.
(Round present value factor calculations to 5 decimal
places, e.g. 1.25124 and the final answer to 0 decimal places e.g.
58,972.)
| Annual rental payment | $ |
In: Accounting
Answer separately:
1. The adjusted trial balance of Miller Company at December 31,
2020, includes the following accounts: Owner’s Capital $16,400,
Owner’s Drawings $7,000, Service Revenue $39,000, Salaries and
Wages Expense $16,000, Insurance Expense $2,000, Rent Expense
$4,000, Supplies Expense $1,500, and Depreciation Expense $1,300.
Prepare an income statement for the year.
2. Partial adjusted trial balance data for Miller Company is presented in the previous exercise. The balance in Owner’s Capital is the balance as of January 1. Prepare an owner’s equity statement for the year assuming net income is $14,200 for the year.
In: Accounting
Wildhorse Inc., a greeting card company, had the following
statements prepared as of December 31, 2020.
|
WILDHORSE INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$6,100 |
$6,900 |
||||
|
Accounts receivable |
61,900 |
50,600 |
||||
|
Short-term debt investments (available-for-sale) |
34,700 |
18,100 |
||||
|
Inventory |
40,000 |
59,400 |
||||
|
Prepaid rent |
5,000 |
4,000 |
||||
|
Equipment |
152,800 |
128,900 |
||||
|
Accumulated depreciation—equipment |
(34,900 |
) |
(25,100 |
) |
||
|
Copyrights |
46,100 |
50,400 |
||||
|
Total assets |
$311,700 |
$293,200 |
||||
|
Accounts payable |
$45,800 |
$40,100 |
||||
|
Income taxes payable |
3,900 |
6,000 |
||||
|
Salaries and wages payable |
8,100 |
4,000 |
||||
|
Short-term loans payable |
8,100 |
10,100 |
||||
|
Long-term loans payable |
59,900 |
69,400 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
55,900 |
33,600 |
||||
|
Total liabilities & stockholders’ equity |
$311,700 |
$293,200 |
||||
|
WILDHORSE INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$339,275 |
|||
|
Cost of goods sold |
174,600 |
|||
|
Gross profit |
164,675 |
|||
|
Operating expenses |
120,100 |
|||
|
Operating income |
44,575 |
|||
|
Interest expense |
$11,200 |
|||
|
Gain on sale of equipment |
2,000 |
9,200 |
||
|
Income before tax |
35,375 |
|||
|
Income tax expense |
7,075 |
|||
|
Net income |
$28,300 |
|||
Additional information:
| 1. | Dividends in the amount of $6,000 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows 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).)
In: Accounting
On January 1, 2020, Sandhill Company purchased 8% bonds having a maturity value of $400,000, for $433,699.52. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sandhill Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when 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.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Jan. 1, 2020 |
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.)
|
Schedule of Interest Revenue and Bond Premium
Amortization |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
|
|
Cash |
Interest |
Premium |
Carrying Amount |
|||||
|
1/1/20 |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/21 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/22 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/23 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/24 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/25 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
eTextbook and Media
Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when 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.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2020 |
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when 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.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2021 |
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2021 |
In: Accounting
On January 1, 2020, Flounder Company acquires $130,000 of Spiderman Products, Inc., 9% bonds at a price of $120,632. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Flounder Company a 12% yield. The bonds are classified as held-to-maturity.
(a)
Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. (Round answers to 0 decimal places, e.g. 2,500.)
|
Schedule of Interest Revenue and Bond Discount
Amortization |
||||||||
|---|---|---|---|---|---|---|---|---|
|
|
Cash |
Interest |
Bond Discount |
Carrying Amount |
||||
| 1/1/20 |
$enter a dollar amount |
$enter a dollar amount |
$enter a dollar amount |
$enter a dollar amount |
||||
| 1/1/21 |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
||||
| 1/1/22 |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
||||
| 1/1/23 |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
||||
eTextbook and Media
Attempts: 0 of 3 used
Using multiple attempts will impact your score.
20% score reduction after attempt 2
(b)
The parts of this question must be completed in order. This part will be available when you complete the part above.
(c) and (d)
The parts of this question must be completed in order. This part will be available when you complete the part above.
In: Accounting
On January 1, 2020, the Hardin Company budget committee has
reached agreement on the following data for the 6 months ending
June 30, 2020.
| Sales units: | First quarter 5,400; second quarter 6,100; third quarter 7,900. | |
| Ending raw materials inventory: | 40% of the next quarter’s production requirements. | |
| Ending finished goods inventory: | 25% of the next quarter’s expected sales units. | |
| Third-quarter production: | 7,430 units. |
The ending raw materials and finished goods inventories at December
31, 2019, follow the same percentage relationships to production
and sales that occur in 2020. 5 pounds of raw materials are
required to make each unit of finished goods. Raw materials
purchased are expected to cost $6 per pound.
Prepare a production budget by quarters for the 6-month period ended June 30, 2020.
|
HARDIN COMPANY |
||||||
| Quarter | ||||||
|
1 |
2 |
Six |
||||
|
Required Production UnitsDirect Materials Per UnitDesired Ending Direct MaterialsTotal Materials RequiredDirect Materials PurchasesTotal Required UnitsExpected Unit SalesDesired Ending Finished Goods UnitBeginning Finished Goods UnitBeginning Direct Materials |
||||||
|
AddLess: Direct Materials PurchasesTotal Required UnitsExpected Unit SalesDesired Ending Direct MaterialsTotal Materials RequiredDirect Materials Per UnitRequired Production UnitsBeginning Finished Goods UnitBeginning Direct MaterialsDesired Ending Finished Goods Unit |
||||||
|
Total Required UnitsExpected Unit SalesBeginning Direct MaterialsBeginning Finished Goods UnitDirect Materials Per UnitDirect Materials PurchasesRequired Production UnitsTotal Materials RequiredDesired Ending Finished Goods UnitDesired Ending Direct Materials |
||||||
|
AddLess: Desired Ending Finished Goods UnitBeginning Finished Goods UnitTotal Required UnitsDirect Materials Per UnitRequired Production UnitsBeginning Direct MaterialsExpected Unit SalesDesired Ending Direct MaterialsDirect Materials PurchasesTotal Materials Required |
||||||
|
Desired Ending Direct MaterialsDirect Materials PurchasesTotal Required UnitsBeginning Direct MaterialsRequired Production UnitsDirect Materials Per UnitDesired Ending Finished Goods UnitTotal Materials RequiredBeginning Finished Goods UnitExpected Unit Sales |
||||||
eTextbook and Media
Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2020.
|
HARDIN COMPANY |
|||||||
|
Quarter |
|||||||
|
1 |
2 |
Six Months |
|||||
|
Cost Per PoundUnits to be ProducedDirect Materials PurchasesTotal Direct Labor CostTotal Materials RequiredDesired Ending Direct Materials (Pounds)Direct Labor Time Per UnitTotal Pounds Needed for ProductionTotal Required Direct Labor HoursTotal Cost of Direct Materials PurchasesDirect Materials Per UnitBeginning Direct Materials (Pounds)Direct Labor Cost Per Hour |
|||||||
|
Total Materials RequiredTotal Required Direct Labor HoursDirect Labor Cost Per HourDirect Labor Time Per UnitCost Per PoundDesired Ending Direct Materials (Pounds)Direct Materials PurchasesTotal Direct Labor CostTotal Pounds Needed for ProductionUnits to be ProducedBeginning Direct Materials (Pounds)Total Cost of Direct Materials PurchasesDirect Materials Per Unit |
|||||||
|
Direct Materials Per UnitTotal Materials RequiredDesired Ending Direct Materials (Pounds)Total Pounds Needed for ProductionCost Per PoundBeginning Direct Materials (Pounds)Direct Labor Cost Per HourTotal Required Direct Labor HoursTotal Cost of Direct Materials PurchasesDirect Labor Time Per UnitTotal Direct Labor CostDirect Materials PurchasesUnits to be Produced |
|||||||
|
AddLess: Units to be ProducedDirect Labor Cost Per HourDirect Materials PurchasesTotal Required Direct Labor HoursTotal Materials RequiredTotal Cost of Direct Materials PurchasesDirect Materials Per UnitDesired Ending Direct Materials (Pounds)Cost Per PoundBeginning Direct Materials (Pounds)Total Pounds Needed for ProductionTotal Direct Labor CostDirect Labor Time Per Unit |
|||||||
In: Accounting
1. On January 1, 2020, Scottsdale Company issued its 12% bonds in the face amount of $3,000,000, which mature on January 1, 2032. The bonds were issued for $$3,408,818 to yield 10%. Scottsdale uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. The 12/31/23 Premium on Bond Payable balance is:
(show computations)
In: Accounting
Gundy Company expects to produce 1,310,400 units of Product XX
in 2020. Monthly production is expected to range from 83,000 to
113,000 units. Budgeted variable manufacturing costs per unit are
direct materials $4, direct labor $8, and overhead $11. Budgeted
fixed manufacturing costs per unit for depreciation are $4 and for
supervision are $2.
Prepare a flexible manufacturing budget for the relevant range
value using 15,000 unit increments. (List variable
costs before fixed costs.)
|
GUNDY COMPANY |
|||||
|---|---|---|---|---|---|
|
Select an opening flexible manufacturing budget item Total CostsDepreciationSupervisionFinished UnitsTotal Fixed CostsOverheadDirect MaterialsFixed CostsActivity LevelVariable CostsDirect LaborTotal Variable Costs |
|||||
|
Select a budget item Direct MaterialsTotal CostsSupervisionTotal Fixed CostsFixed CostsDirect LaborOverheadActivity LevelTotal Variable CostsVariable CostsDepreciationFinished Units |
Enter a number |
Enter a number |
Enter an amount |
||
|
Select an opening name for section one SupervisionActivity LevelFinished UnitsVariable CostsTotal CostsFixed CostsOverheadTotal Fixed CostsDirect LaborTotal Variable CostsDepreciationDirect Materials |
|||||
|
Select a budget item Direct LaborDirect MaterialsTotal Variable CostsTotal CostsVariable CostsOverheadSupervisionActivity LevelFixed CostsFinished UnitsTotal Fixed CostsDepreciation |
$Enter a dollar amount |
$Enter a dollar amount |
$Enter a dollar amount |
||
|
Select a budget item Total Variable CostsDirect LaborDepreciationTotal Fixed CostsFixed CostsTotal CostsActivity LevelOverheadFinished UnitsSupervisionDirect MaterialsVariable Costs |
Enter a dollar amount |
Enter a dollar amount |
Enter a dollar amount |
||
|
Select a budget item Total Variable CostsTotal Fixed CostsTotal CostsDepreciationActivity LevelOverheadDirect MaterialsVariable CostsFixed CostsFinished UnitsDirect LaborSupervision |
Enter a dollar amount |
Enter a dollar amount |
Enter a dollar amount |
||
|
Select a closing name for section one Variable CostsSupervisionOverheadTotal Variable CostsFinished UnitsFixed CostsDirect MaterialsDepreciationTotal Fixed CostsDirect LaborActivity LevelTotal Costs |
$Enter a total amount for section one |
$Enter a total amount for section one |
$Enter a total amount for section one |
||
|
Select an opening name for section two Activity LevelFixed CostsDirect MaterialsTotal Variable CostsDirect LaborVariable CostsFinished UnitsTotal Fixed CostsSupervisionDepreciationTotal CostsOverhead |
|||||
|
Select a budget item Direct MaterialsDepreciationTotal Fixed CostsDirect LaborVariable CostsTotal Variable CostsSupervisionActivity LevelOverheadFinished UnitsTotal CostsFixed Costs |
Enter a dollar amount |
Enter a dollar amount |
Enter a dollar amount |
||
|
Select a budget item Fixed CostsSupervisionDepreciationTotal Fixed CostsVariable CostsTotal CostsDirect MaterialsActivity LevelFinished UnitsOverheadDirect LaborTotal Variable Costs |
Enter a dollar amount |
Enter a dollar amount |
Enter a dollar amount |
||
|
Select a closing name for section two Total Variable CostsFixed CostsDirect LaborVariable CostsFinished UnitsSupervisionDirect MaterialsTotal CostsActivity LevelTotal Fixed CostsDepreciationOverhead |
Enter a total amount for section two |
Enter a total amount for section two |
Enter a total amount for section two |
||
|
Select a closing flexible manufacturing budget item Finished UnitsTotal Fixed CostsDepreciationDirect MaterialsOverheadActivity LevelSupervisionVariable CostsTotal Variable CostsFixed CostsDirect LaborTotal Costs |
$Enter a total dollar amount |
$Enter a total dollar amount |
$Enter a total dollar amount |
||
In: Accounting
On January 1, 2020 company issued $ 1.5 million of five year, 6% convertible bonds at par value. Each $ 1000 bond is convertible into 100 common shares. A similar bond (without conversion feature) would have been issued at a market yield of 9%. In the same year on December 31, $ 2000,000 worth of bonds were converted to common shares.
Required: Calculate the value of the bond according to IFRS and ASPE and also show the journal entries. The measurement of the bond should be done according to IFRS and ASPE. Does this has any effect on the debt to equity ratio of the company.
In: Accounting
Beck Construction Company began work on a new building project
on January 1, 2020. The project is to be completed by December 31,
2022, for a fixed price of $171 million. The following are the
actual costs incurred and estimates of remaining costs to complete
the project that were made by Beck's accounting staff:
| Years | Actual costs incurred in each year | Estimated remaining costs to complete the project (measured at Dec. 31 of each year) |
||||
| 2020 | $ | 47 | million | $ | 94 | million |
| 2021 | $ | 79 | million | $ | 79 | million |
| 2022 | $ | 52 | million | $ | 0 | |
Required:
What amount of gross profit (or loss) would Beck record on this
project in each year, assuming that Beck recognizes revenue for
this project upon completion of the project? (Loss amounts
should be indicated with a minus sign. Enter your answers in
millions (i.e., 10,000,000 should be entered as
10).)
In: Accounting