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.`

Facts

· Mortgage Principal at origination 1/1/2020: $10,000,000

· Annual Interest Rate at origination: 6%

· Term of Mortgage from origination 1/1/2020: 20 years

· Purchase Price: $10,000,000 on 1/1/2020

· The mall owner has stopped paying principal beginning April, 2021, and anticipates being unable to pay even the interest portion beginning September, 2021 unless the CDC allows less strict mask and social distancing requirements.

· The mall had a fair market value of $20 million on 1/1/2020, and expects a current appraisal to be at about $16 million.

· Ignore refinancing costs.

· The securitizations do not qualify for sale accounting, and the creditor retains legal title to the mortgage as well as a 10% participation in the mortgage.

· Today is August 31, 2021.

1.Create an amortization table that allows for an input each period of the amount that the borrower actually pays. Using the facts of the case, use the amortization table structure to find the principal amount owed as of September 1, 2021.

2.Create a separate restructured loan that is a reasonable alternative to the current unaffordable mortgage.

3.Create an amortization table for the restructured loan with the modifications and expected mortgage payments. If the creditor and borrower would have different accounting treatments for the loan, create an amortization table for the creditor and the borrower.

Facts
·       Mortgage Principal at origination 1/1/2020: $10,000,000
·       Annual Interest Rate at origination: 6%
·       Term of Mortgage from origination 1/1/2020: 20 years
·       Purchase Price: $10,000,000 on 1/1/2020
·       The mall owner has stopped paying principal beginning April, 2021, and anticipates being unable to pay even the interest portion beginning September, 2021 unless the CDC allows less strict mask and social distancing requirements.
·       The mall had a fair market value of $20 million on 1/1/2020, and expects a current appraisal to be at about $16 million.
·       Ignore refinancing costs.
·       The securitizations do not qualify for sale accounting, and the creditor retains legal title to the mortgage as well as a 10% participation in the mortgage.
·       Today is August 31, 2021.
1.Create an amortization table that allows for an input each period of the amount that the borrower actually pays. Using the facts of the case, use the amortization table structure to find the principal amount owed as of September 1, 2021.

2.Create a separate restructured loan that is a reasonable alternative to the current unaffordable mortgage.

3.Create an amortization table for the restructured loan with the modifications and expected mortgage payments. If the creditor and borrower would have different accounting treatments for the loan, create an amortization table for the creditor and the borrower.

Cupid's Kiss Limited (“CK”) was founded in early 1980s focusing on the manufacturing and trading of baby food and snacks in Hong Kong. After years of development, CK is now one of the well-known baby food producers in Asia. You are the audit manager-in-charge of the audit of CK’s financial statements for the year ended 30 September 2020. The audit is substantially completed. After reviewing the audit documentation, you and your audit partner are satisfied with the audit. There are no significant issues or difficulties encountered in the audit. It has been agreed with CK that the auditor’s report for the year ended 30 September 2020 will be authorised and approved in mid-November 2020. Just a week before the planned approval date of the auditor’s report, you read a news headline: “A popular product of Cupid's Kiss is proven to contain toxic ingredients with a high risk of causing health problems as the raw materials were contaminated. Cupid’s Kiss announced an immediate product recall.”

Required:
(a) Determine and explain whether Cupid’s Kiss toxic ingredients problem is an adjusting event or a non-adjusting event. Discuss its implications to its financial statements for the year ended 30 September 2020.

(b) Suggest relevant audit procedures in response to Cupid’s Kiss toxic ingredients problem.

(c) Determine and explain the auditor’s obligation to follow up on the toxic ingredients problem if the news is only known by the auditor after the issuance of the auditor’s report and the financial statements.

The following is the balance sheet of Korver Supply Company at December 31, 2020 (prior year).

Transactions during 2021 (current year) were as follows:

Additional Information:

The notes payable are dated June 30, 2020, and are due on June 30, 2022. Interest at 8% is payable annually on June 30. Depreciation on the furniture and fixtures for 2021 is $36,000. The furniture and fixtures originally cost $460,000.

Required:
Prepare a classified balance sheet at December 31, 2021, by updating ending balances from 2020 for transactions during 2021 and the additional information. The cost of furniture and fixtures and their accumulated depreciation are shown separately. (Amounts to be deducted should be indicated by a minus sign.)

On January 1, 2018, Winn Heat Transfer leased office space under a three year operating lease agreement. The arrangement specified three annual rent payments of $90,000 each, beginning December 31, 2018, and at each December 31 through 2020. The lessor, HVAC Leasing calculates lease payments based on an annual interest rate of 8%. Winn also paid a $300,000 advance payment at the beginning of the lease in addition to the first $90,000 rent payment. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $390,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value.

1. Record the beginning of the lease Jan 2018

2. Record the lease payment Jan 2018

3. Record the lease and interest payment Dec 2018

4.Record the amortization of the right to use asset Dec 2018

5.Record the depreciation expense for Winn 2018

6.Record the lease and interest payment 2019

7. Record the amortization of the right to use asset Dec 2019

8. Record the depreciation expense for Winn 2019

9.Record the lease and interest payment 2020

10. Record the amortization of the right to use asset Dec 2020

11. Record the depreciation expense for Winn 2020

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

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.)

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.)