On January 1, 2020, Crane Company leased equipment to Flynn Corporation. The following information pertains to this lease.

Both the lessor and the lessee’s accounting periods end on December 31.

*(e)

Prepare all the necessary journal entries for Flynn for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)

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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. Interest Expense for 2023 is:

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On January 1, 2020, Sunland Company leased equipment to Flynn Corporation. The following information pertains to this lease. 1. The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $2,000, while the expected residual value at the end of the lease is $6,000. 2. Equal rental payments are due on January 1 of each year, beginning in 2020. 3. The fair value of the equipment on January 1, 2020, is $180,000, and its cost is $150,000. 4. The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight-line basis. 5. Sunland set the annual rental to ensure a 5% rate of return. Flynn’s incremental borrowing rate is 6%, and the implicit rate of the lessor is unknown. 6. Collectibility of lease payments by the lessor is probable. Both the lessor and the lessee’s accounting periods end on December 31. Prepare all the necessary journal entries for Flynn for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.

Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Right-of-Use Asset Lease Liability (To record the lease) Lease Liability Cash (To record the lease payment) Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset) Interest Expense Interest Payable (To record interest expense)

Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the company’s Assembling Department is as follows.

The monthly budget amounts in the report were based on an expected production of 59,000 units per month or 708,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 57,000 units were produced.

(a) State the total monthly budgeted cost formula.

(b) Prepare a budget report for August using flexible budget data.

(c) In September, 63,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August.

Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the company’s Assembling Department is as follows.

The monthly budget amounts in the report were based on an expected production of 61,000 units per month or 732,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 59,000 units were produced.

(a) State the total monthly budgeted cost formula.

(b) Prepare a budget report for August using flexible budget data.

(c) In September, 65,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August.

Firm A uses a process-costing system. For September 2020, the company had the following activities:

Direct materials are placed into production at the beginning of the process. Beginning WIP is 100% complete as to direct materials and 30% complete as to conversion. All spoilage is detected at the end of the process. Normally, spoiled units are 10% of good units completed. Ending WIP is 60% completed as to conversion and 100% complete as to direct materials. The company decides to use the first-in, first-out (FIFO) method.

(26-1) Compute the physical units of normal spoilage and started and completed during current period. Then compute equivalent units for direct materials and conversion costs. (12 points)

(26-2) Summarize costs to account for and calculate cost per equivalent-unit for direct materials and conversion costs (Round cost per equivalent-unit calculations to the nearest hundredth). (4 points)

(26-3) Assign total costs (7 points)

(26-4) Calculate cost per good unit completed and normal spoilage rate. (4 points)

(26-5) Please briefly describe how does the job-costing system account for spoilage. (3 points)

(26-6) Please briefly explain why do we split completed units into completed units from beginning WIP and completed units from started and completed in current period under FIFO? (3 points)

Scuttlebutt Publishers Corporation was incorporated on June 1, 2020. The company had the following transactions during June:

Part A

a. Issued common stock for $10,000 cash

b. Purchased equipment for $6,000 on credit

c. Purchased $750 of supplies on credit. These are expected to last three months (record as unused supplies)

d. Paid two months of newspaper advertising for $500 (record as prepaid advertising expense)

e. Collected $12,000 of three‐month subscription revenue for its ONLINE REVIEW magazine, effective June 1 (record as unearned subscription revenue)

f. Paid the following expenses in cash: telephone, $350; rent for

June, $500

g. Collected $5,000 revenue in cash from advertisers for the June edition of ONLINE REVIEW magazine

h. Paid half of the equipment purchased June 1

i. Paid $2,000 for supplies purchased

j. Paid the following expenses in cash: telephone, $250; salaries,

$3,000

k. Received a $200 bill for electricity used during the month

(recorded as Utilities Expense).

Required:

1. Create general ledger T‐accounts for the following: Cash, Prepaid Advertising, Unused Supplies, Equipment, Accounts Payable, Unearned Subscriptions Revenue, Common Stock, Other Revenue, Rent Expense, Salaries Expense, Supplies Expense, Telephone Expense, and Utilities Expense. General ledger account numbers are not needed. (These are created on the template already.)

2. Prepare journal entries to record the June transactions. Descriptions are not needed.

3. Post the entries to general ledger T‐accounts and calculate balances at June 30, 2020.

Part B

At June 30, the following additional information is available.

l. The June portion of advertising paid in transaction (c) has expired.

m. One month of the subscriptions revenue collected June 5 has been earned.

n. A physical count indicates that $100 of supplies is still on hand.

o. $200 of commission expense is owed on the June portion of the subscriptions revenue.

p. Two days of salary for June 29 and 30 are unpaid, amounting to $600.

q. The equipment purchased in transaction (b) has an estimated useful life of 5 years.

r. Income taxes payable at June 30 amount to $50.

Required:

4. Open additional general ledger T‐accounts for the following: Accumulated

Depreciation – Equipment, Salaries Payable, Income Taxes Payable,

Subscription Revenue, Advertising Expense, Commissions Expense,

Depreciation Expense – Equipment, and Income Taxes Expense. (These are already setup on the template.)

5. Prepare all necessary adjusting entries at June 30, 2020. General ledger account numbers and descriptions are not necessary, but show depreciation calculations.

6. Post the entries to the general ledger T‐accounts and calculate balances.

7. Prepare an adjusted trial balance at June 30.

8. Assume that the company’s year‐end is June 30. Prepare an income statement, statement of changes in equity, and balance sheet.

9. Prepare closing entries.

10. Prepare a post-closing trial balance.

Marin Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Cullumber Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:

Click here to view factor tables.

Part 1

Prepare the journal entries on the books of Marin Leasing to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.)

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List of Accounts

Part 2

Assuming that Cullumber exercises its option to purchase the equipment on December 31, 2021, prepare the journal entry to record the sale on Marin Leasing’s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

On January 1, 2020, Ayayai Company purchased 8% bonds having a maturity value of $360,000, for $390,329.57. 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. Ayayai 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.)

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List of Accounts

Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.)

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List of Accounts

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.)

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List of Accounts

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.)

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Presented below are selected transactions at Blue Spruce Company for 2020.

Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Blue Spruce Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2019.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)