The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2017:

Required:
1. During 2018, TNL Systems reacquired shares of its common stock and later sold shares in two separate transactions. Prepare the entries for both the purchase and subsequent resale of the shares assuming the shares are (a) retired and (b) viewed as treasury stock.

On February 5, 2018, TNL Systems purchased 6 million shares at $11 per share.

On July 9, 2018, the corporation sold 2 million shares at $13 per share.

On November 14, 2020, the corporation sold 2 million shares at $8 per share.

2. Prepare the shareholders’ equity section of TNL Systems’ balance sheet at December 31, 2020, comparing the two approaches. Assume all net income earned in 2018–2020 was distributed to shareholders as cash dividends.

C&S Marketing (CSM) recently hired a new marketing director, Jeff Otos, for its downtown Minneapolis office. As part of the arrangement, CSM agreed on February 28, 2018, to advance Jeff $70,000 on a one-year, 8 percent note, with interest to be paid at maturity on February 28, 2019. CSM prepares financial statements on June 30 and December 31.

Prepare the journal entry CSM will make when the note is established, accrue interest on June 30 and December 31, and the interest and principal payments on February 28, 2019. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your final answers to whole dollar amount.)

1. Record the receipt of a note on February 28, 2018 for a $70,000 loan to an employee.

2. Record the interest accrued on the note as of June 30, 2018.

3. Record the interest accrued on the note as of December 31, 2018.

4. Record the receipt of the payment for interest for the period ending February 28, 2019.

5. Record the receipt of the payment for the principal on the note’s maturity date.

Metlock Company has the following investments as of December 31, 2017: Investments in common stock of Laser Company $1,500,000 Investment in debt securities of FourSquare Company $3,140,000 In both investments, the carrying value and the fair value of these two investments are the same at December 31, 2017. Metlock’s stock investments does not result in significant influence on the operations of Laser Company. Metlock’s debt investment is considered held-to-maturity. At December 31, 2018, the shares in Laser Company are valued at $1,010,000; the debt investment securities of FourSquare are valued at $2,410,000. Assume that these investments are considered impaired. a)Prepare the journal entries for these two securities at December 31, 2018, assuming that they are permanently impaired b)Assuming the fair value of the Laser shares is $1,500,000 and the value of its debt investment is $2,900,000, what entries, if any, should be recorded in 2019 related to impairment? c)Prepare the journal entries at December 31, 2018, assuming these securities are not permanently impaired. (Ignore interest revenue entries. d)Assume that the debt investment in FourSquare Company was available-for-sale and the expected credit loss was $820,000. Prepare the journal entry to record this impairment on December 31, 2018.
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On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,425,000. During 2018, costs of $2,170,000 were incurred, with estimated costs of $4,170,000 yet to be incurred. Billings of $2,704,000 were sent, and cash collected was $2,420,000.

In 2019, costs incurred were $2,704,000 with remaining costs estimated to be $3,855,000. 2019 billings were $2,954,000, and $2,645,000 cash was collected. The project was completed in 2020 after additional costs of $3,970,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time.

Required:
1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.
2a. Prepare journal entries for 2018 to record the transactions described (credit "various accounts" for construction costs incurred).
2b. Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred).
3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018.
3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019.

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,400,000. During 2018, costs of $2,160,000 were incurred, with estimated costs of $4,160,000 yet to be incurred. Billings of $2,692,000 were sent, and cash collected was $2,410,000. In 2019, costs incurred were $2,692,000 with remaining costs estimated to be $3,840,000. 2019 billings were $2,942,000, and $2,635,000 cash was collected. The project was completed in 2020 after additional costs of $3,960,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years. 2a. Prepare journal entries for 2018 to record the transactions described (credit "various accounts" for construction costs incurred). 2b. Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred). 3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018. 3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019.

On June 30, 2018, Georgia-Atlantic, Inc., leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $779,224 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic’s incremental borrowing rate is 9%, the same rate IC used to calculate lease payment amounts. IC purchased the warehouse from Builders, Inc.. at a cost of $4.2 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:

1. What pretax amounts related to the lease would IC report in its balance sheet at December 31, 2018?

2. What pretax amounts related to the lease would IC report in its income statement for the year ended December 31, 2018? (For all requirements, enter your answers in whole dollars and not in millions. Round your final answers to nearest whole dollar.)

Problem 16-2 Shamrock Inc. issued $3,120,000 of convertible 10-year bonds on July 1, 2017. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $49,200, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Shamrock Inc.’s $100 par value common stock for each $1,000 of bonds. On August 1, 2018, $312,000 of bonds were turned in for conversion into common stock. Interest has been accrued monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. (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.) (a) August 1, 2018. (Assume the book value method is used.) (b) August 31, 2018. (c) December 31, 2018, including closing entries for end-of-year.

Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2015–2018 are as follows:

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,500,000. During 2018, costs of $2,200,000 were incurred, with estimated costs of $4,200,000 yet to be incurred. Billings of $2,740,000 were sent, and cash collected was $2,450,000.

In 2019, costs incurred were $2,740,000 with remaining costs estimated to be $3,900,000. 2019 billings were $2,990,000, and $2,675,000 cash was collected. The project was completed in 2020 after additional costs of $4,000,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time.

Required:
1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.
2a. Prepare journal entries for 2018 to record the transactions described (credit "various accounts" for construction costs incurred).
2b. Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred).
3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018.
3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019.

1a. PA Company is involved in a lawsuit brought by former employees. The employees are suing for a recovery of $350,000 for injury at work. The legal advisor is quite pessimistic about the lawsuit and believes that it is probable (more likely than not) that the company will lose the litigation and pay the full amount of the claim.

Required: Discuss the proper accounting treatment, including any required disclosure, for PA Company regarding the above ongoing litigation (no journal entry is required).

1b. PA Company sells computers for $1,500 each and gives each computer a two-year assurance-type warranty that requires the company to perform periodic maintenance services and to replace defective parts.

• On December 31, 2018, the company sold 700 computers on account.
• The computers sold have a cost of $1,000 each. The company adopts a perpetual inventory system.
• Based on past experience, the company has estimated that the total 2-year warranty costs for each computer are $90.
• In 2018, PA Company incurred none warranty costs related to the 2018 computer sales.
• The fiscal year-end is December 31.

Required: Prepare the journal entries for PA Company on December 31, 2018