Blossom Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement.
| 1. | The lease term is 6 years, with equal annual rental payments of $3,410 at the beginning of each year. | |
| 2. | Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. | |
| 3. | The building has a fair value of $18,900, a book value to Blossom of $11,900, and a useful life of 7 years. | |
| 4. | At the end of the lease term, Blossom and Walsh expect there to be an unguaranteed residual value of $2,975. | |
| 5. | Blossom wants to earn a return of 8% on the lease, and collectibility of the payments is probable. This rate is known by Walsh. |
(b) Using the original facts of the lease, show the journal entries to be made by both Blossom and Walsh in 2020. (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. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
In: Accounting
On January 1, 2020, Tamarisk Company acquires $110,000 of Spiderman Products, Inc., 9% bonds at a price of $99,611. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Tamarisk Company a 13% yield. The bonds are classified as held-to-maturity.
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 |
||||
Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest 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 |
||||
| (c) | Prepare the journal entry for the interest revenue and discount amortization under the straight-line method at December 31, 2021. | |
| (d) | Prepare the journal entry for the interest revenue and discount amortization under the effective-interest method at December 31, 2021. |
(Round answers to 0 decimal places, e.g. 2,500. 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.)
|
No. |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
(c) |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
(d) |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
enter an account title |
enter a debit amount |
enter a credit amount |
In: Accounting
On January 1, 2020, Drilling Company issued ten-year bonds with a face value of $10,000,000 and a stated interest rate of 4%, payable semiannually on June 30 and December 31. The bonds were sold to yield 3%.
Instructions
1-Calculate the issue price of the bonds.
2-Record the bond issuance
3-Record the first interest payment and use the straight line method to amortize the discount or premium.
In: Finance
Question 8
Queens Construction Company commences construction of a harbour on 1 July 2020. It signs a fixed-price contract for total revenue of $400 million. The project is expected to be completed by the end of June 2023. The expected cost at the commencement of construction was $300 million. The expected costs to complete a construction project can change throughout the project. The following data relates to the project:
|
2021 |
2022 |
2023 |
|
|
($ M) |
($ M) |
($ M) |
|
|
Costs for the year |
90 |
110 |
120 |
|
Costs incurred to date |
90 |
200 |
320 |
|
Estimated costs to complete |
210 |
120 |
- |
|
Progress billings during the year |
100 |
120 |
180 |
|
Cash collected during the year |
90 |
130 |
180 |
The contract is completed as expected on 30 June 2023. Queens Construction Company uses the percentage-of-completion method to account for its construction contract.
REQUIRED
Provide the numbers for the journal entries below. Assume the stage of completion can be reliably determined. Round the percentage complete (%) to one decimal place (i.e, 0.0%) if necessary. Complete the six blanks below. (You don't need to provide the numbers for "?")
-------------------------------------
Journal entry to record periodic income recognised for 2021, 2022, 2022
In: Accounting
Presented below is information related to equipment owned by Sheridan Company at December 31, 2020.
| Cost | $9,630,000 | |
| Accumulated depreciation to date | 1,070,000 | |
| Expected future net cash flows | 7,490,000 | |
| Fair value | 5,136,000 |
Assume that Sheridan will continue to use this asset in the future.
As of December 31, 2020, the equipment has a remaining useful life
of 4 years.
Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
Prepare the journal entry to record depreciation expense for 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
The fair value of the equipment at December 31, 2021, is $5,457,000. Prepare the journal entry (if any) necessary to record this increase in fair value. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
enter a credit amount |
In: Accounting
Presented below is information related to equipment owned by Bonita Company at December 31, 2020.
| Cost | $9,810,000 | |
| Accumulated depreciation to date | 1,090,000 | |
| Expected future net cash flows | 7,630,000 | |
| Fair value | 5,232,000 |
Bonita intends to dispose of the equipment in the coming year. It
is expected that the cost of disposal will be $21,800. As of
December 31, 2020, the equipment has a remaining useful life of 4
years.
Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
Prepare the journal entry (if any) to record depreciation expense for 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
The asset was not sold by December 31, 2021. The fair value of the equipment on that date is $5,777,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $21,800. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
In: Accounting
Presented below is information related to equipment owned by Bonita Company at December 31, 2020. Cost $9,810,000 Accumulated depreciation to date 1,090,000 Expected future net cash flows 7,630,000 Fair value 5,232,000 Bonita intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $21,800. As of December 31, 2020, the equipment has a remaining useful life of 4 years. Partially correct answer iconYour answer is partially correct. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 enter an account title to record the transaction on December 31, 2017 Loss on Impairment enter a debit amount 1090000 enter a credit amount enter an account title to record the transaction on December 31, 2017 Accumulated Depreciation-Equipment enter a debit amount enter a credit amount 1090000 eTextbook and Media List of Accounts Correct answer iconYour answer is correct. Prepare the journal entry (if any) to record depreciation expense for 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit enter an account title No Entry enter a debit amount 0 enter a credit amount enter an account title No Entry enter a debit amount enter a credit amount 0 eTextbook and Media List of Accounts Partially correct answer iconYour answer is partially correct. The asset was not sold by December 31, 2021. The fair value of the equipment on that date is $5,777,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $21,800. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
In: Accounting
Bumblebee Company estimates that 402,600 direct labor hours will
be worked during the coming year, 2020, in the Packaging
Department. On this basis, the following budgeted manufacturing
overhead cost data are computed for the year.
|
Fixed Overhead Costs |
Variable Overhead Costs |
|||||
|---|---|---|---|---|---|---|
| Supervision |
$89,280 |
Indirect labor |
$169,092 |
|||
| Depreciation |
73,440 |
Indirect materials |
80,520 |
|||
| Insurance |
26,040 |
Repairs |
40,260 |
|||
| Rent |
21,360 |
Utilities |
60,390 |
|||
| Property taxes |
22,440 |
Lubricants |
40,260 |
|||
|
$232,560 |
$390,522 |
|||||
It is estimated that direct labor hours worked each month will
range from 22,800 to 32,100 hours.
During October, 22,800 direct labor hours were worked and the
following overhead costs were incurred.
Fixed overhead costs: Supervision $7,440, Depreciation $6,120,
Insurance $2,125, Rent $1,780, and Property taxes $1,870.
Variable overhead costs: Indirect labor $10,566, Indirect
materials, $4,260, Repairs $2,240, Utilities $3,740, and Lubricants
$2,640.
Prepare a flexible budget report for October.
In: Accounting
On January 1, 2020, Indigo Company purchased 12% bonds having a maturity value of $310,000, for $333,502.59. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Indigo 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 |
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 |
|||||
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 |
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 |
enter a debit amount |
In: Accounting
Recording Goodwill upon Acquisition
On January 1, 2020, the balance sheet of Naperville Company (a sole proprietorship) was as follows.
| Assets | Liabilities | |||
| Accounts receivable (net of allowance) | $120,000 | Current | $76,000 | |
| Inventory | 180,000 | Noncurrent | 160,000 | $236,000 |
| Plant and equipment (net of depreciation) | 400,000 | Equity | ||
| Land | 60,000 | Owners’ equity | 524,000 | |
| Total | $760,000 | Total liabilities and owners’ equity | $760,000 |
On January 1, 2020, Chicago Corporation purchased all of the assets and assumed all of the liabilities listed on the above balance sheet for $580,000 cash. The assets, on date of purchase, were valued by Chicago Corporation as follows: accounts receivable (net), $100,000; inventory, $170,000; plant and equipment (net), $400,000; and land, $90,000. In addition, Chicago Corporation estimated purchased intangible assets of $4,000 for customer list and $16,000 for trade names (both previously unrecorded). The liabilities were valued at their carrying amounts.
Required
a. Compute the amount of goodwill included in the purchase price paid by Chicago Corporation.
$Answer
b. Provide the entry that Chicago Corporation should make to record the purchase of Naperville Company.
| Account Name | Dr. | Cr. |
|---|---|---|
| Accounts Receivable (net) | Answer | Answer |
| Inventory | Answer | Answer |
| Plant and Equipment (net) | Answer | Answer |
| Land | Answer | Answer |
| Intangible Asset—Customer List | Answer | Answer |
| Intangible Asset—Trade names | Answer | Answer |
| Goodwill | Answer | Answer |
| Current Liabilities | Answer | Answer |
| Noncurrent Liabilities | Answer | Answer |
| Cash | Answer | Answer |
c. What is the minimum amount of goodwill that Chicago Corporation can amortize at the end of 2020?
In: Accounting