n 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

Westgate recognizes revenue over time according to the percentage of completion.

Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.
2-a. In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred).
2-b. In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred).
2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred).
3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract.
4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information.

5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information.

Selected accounts included in the property, plant, and equipment section of Pearl Corporation’s balance sheet at December 31, 2019, had the following balances.

Land $438,000

Land improvements 204,400

Buildings 1,606,000

Equipment 1,401,600

During 2020, the following transactions occurred.

1. A tract of land was acquired for $219,000 as a potential future building site.

2. A plant facility consisting of land and building was acquired from Mendota Company in exchange for 29,200 shares of Pearl’s common stock. On the acquisition date, Pearl’s stock had a closing market price of $37 per share on a national stock exchange. The plant facility was carried on Mendota’s books at $160,600 for land and $467,200 for the building at the exchange date. Current appraised values for the land and building, respectively, are $335,800 and $1,007,400.

3. Items of machinery and equipment were purchased at a total cost of $584,000. Additional costs were incurred as follows.

Freight and unloading $18,980

Sales taxes 29,200

Installation 37,960

4. Expenditures totaling $138,700 were made for new parking lots, streets, and sidewalks at the corporation’s various plant locations. These expenditures had an estimated useful life of 15 years.

5. A machine costing $116,800 on January 1, 2012, was scrapped on June 30, 2020. Double-declining-balance depreciation has been recorded on the basis of a 10-year life.

6. A machine was sold for $29,200 on July 1, 2020. Original cost of the machine was $64,240 on January 1, 2017, and it was depreciated on the straight-line basis over an estimated useful life of 7 years and a salvage value of $2,920.

(a) Calculate the balance at December 31, 2020 in each of the following balance sheet accounts. (Hint: Disregard the related accumulated depreciation accounts.)

Balance at December 31, 2020

Land?

Land Improvements?

Buildings?

Equipment?

Corporate Social Responsibility (CSR)

Mars Dump is a multinational company that is caught by the Emissions Trading Scheme (ETS).

Details of ETS are as follows:

It is a cap and trade scheme in which permits are traded in an active market. Its annual compliance period is from 1 July of the current period to 30 June of the following year.

Each participating company receives an allocation of free permits each year based on their reporting carbon emissions from the previous period. In the case of Mars Dump Ltd, permits to emit 36 000 tonnes of carbon dioxide equivalents have been issued on the first day of the current period (i.e. 1 July 2019) when the market price of a permit was $25 per tonne of carbon dioxide equivalents.

During the 2019/2020 financial year, Mars Dump emitted 37 000 tonnes of carbon dioxide equivalents, which exceeded its permitted emissions of 36 000 tones. This occurred despite the managers of Mars Dump estimating that it had emitted 19 000 tonnes of carbon dioxide equivalents by 31 March 2020 and was therefore on target to emit 36 000 tonnes by 30 June 2020. The market price of a permit is $27 on 31 March 2020. As a result of exceeding allowed emission levels, on 30 June 2020, Mars Dump purchased 1 000 permits at a market price of $33 per tonne. Mars Dump uses the cost model in accordance with AASB 138, and amortises any deferred income arising from the permits using the proportion of actual emissions to estimated total emissions.

Required

1. How can stakeholder theory be used to explain companies voluntarily undertaking corporate social responsibility reporting? Discuss.                                                                           
2. “There is no mandatory reporting of corporate social responsibility in Australia.” What is your understanding of this phrase? Explain.                                                              

The following information relates to Parramatta Hardware, a business owned by C. Patel for the last 2 years.

Other information:

1. Sales for the year 2020 was $1 774 000 and cost of goods sold was $1 132 000.
2. Purchases of inventory for the year were $1 090 000.
3. All purchases and sales of inventories were on credit.
4. Other expenses paid for the year 2020 was $415 000 and interest paid was $22 000.
5. Building extensions were paid for during the year, and a block of land, costing $150 000, was sold for $125 000 cash.
6. No plant was purchased or sold during the year.
7. During the year ended 30 June 2020, the owner had withdrawn $15 000 cash from the business.
8. Ignore GST

Required:

Prepare the statement of cash flows for Parramatta Hardware for the year ended 30 June 2020, using the direct method.

Pearl Inc., a greeting card company, had the following statements prepared as of December 31, 2020.

Additional information:

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).)

The financial statements of Amy Inc. appear below: Amy Inc Comparative Balance Sheet December 31, Assets 2020 2019 Cash....................................................................................... $ 36,000 $ 33,000 Short-term investments .......................................................... 28,000 30,000 Accounts receivable (net)....................................................... 80,000 60,000 Supplies ................................................................................. 8,000 10,000 Inventories.............................................................................. 115,000 80,000 Prepaid Expenses .................................................................. 6,000 5,000 Property, plant and equipment (net)....................................... 297,000 218,000 Total assets ..................................................................... $570,000 $436,000 Liabilities and stockholders' equity Accounts payable................................................................... $ 87,000 $ 73,000 Short-term notes payable ....................................................... 15,000 17,000 Long-term bonds payable....................................................... 80,000 20,000 Common stock, $2 par value.................................................. 100,000 100,000 Preferred Stock, $100 par value............................................. 90,000 90,000 Retained earnings .................................................................. 198,600 136,000 Total liabilities and stockholders' equity ............................ $570,000 $436,000 Amy Inc Income Statement For the Year Ended December 31, 2020 Net sales ................................................................................ $940,000 Cost of goods sold.................................................................. 545,000 Gross profit............................................................................. 395,000 Expenses Depreciation Expense....................................................... $5,400 Salaries Expense.............................................................. 202,000 Interest expense ............................................................... 39,500 Other Operating expenses................................................ 27,100 Total expenses ............................................................ 274,000 Income before income taxes .................................................. 121,000 Income tax expense ............................................................... 36,000 Net income............................................................................. $ 85,000 Additional information: a. During 2020, Amy Inc. paid $10,000 cash dividends to its preferred shareholders and $22,000 cash dividends to its common shareholders c. Trading price of the common stock on December 31, 2020, was $15 per share. Instructions Using the above information, compute the following ratios for 2020: 1.Current ratio 4. Accounts receivable turnover 7. Earnings per Share 2.Inventory turnover 5. Average collection period 8. Price-earnings ratio 3.Profit margin 6. Average days inventory on hand 9. Times interest earned

Metlock Inc., a greeting card company, had the following statements prepared as of December 31, 2020.

Additional information:

Prepare a statement of cash flows using the direct method.

Culver Inc., a greeting card company, had the following statements prepared as of December 31, 2020.

Additional information:

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).)

Problem 14-3A a

Condensed balance sheet and income statement data for Jergan Corporation are presented here.

Additional information:

(a)

Compute the following ratios for 2019 and 2020. (Round Asset turnover and Earnings per share to 2 decimal places, e.g. 1.65. Round payout ratio and debt to assets ratio to 0 decimal places, e.g. 18%. Round all other answers to 1 decimal place, e.g. 6.8 or 6.8%.)

1. Your company wants to launch a new product. The price will be $108 and the projected units sold will be 5,000 each of the next five years and then zero sales after that (i.e. life of five years). Variable costs per unit is $47 and fixed costs will be $36,000 per year. This project will need initial net working capital of $37,000, and NWC will then increase $7,000 per year through the end of year five. At that point 75% of NWC (no tax ramifications) will be returned to the company. Necessary equipment investment will be $900,000 and have a salvage value of 23%, net of tax. The depreciation will be straight-line over the life of this project. Your company’s current debt/equity ratio is 1.15 and this product is in line with the operations of the rest of your company. Your company is in the 21% tax bracket. Your equity investors demand a 13% return and your company’s bonds yield 5.3%. Even though no debt will be used, you still need to use your company’s WACC. Price is accurate within 5%, units sold within 3%, and variable & fixed costs within 2%. What is the NPV in the worst-case scenario?

2.In 2020 and 2019, your cash was 4,563 and 3,597, your accounts receivables were 7,531 and 6,423, and your inventory was 10,235 and 11,563. Similiarly, in 2020 and 2019 your accounts payable was 8,423 and 5,789, and your other current liabilities were 7,413 and 10,356. Lastly from the balance sheet, in 2020 and 2019 your net fixed assets were 74,562 and 71,246.

In 2020 your net sales were 111,425, your costs of good sold was 38,999, rent was 48,543, and depreciation was 2,015. You paid interest of 1,728 and your tax rate was 20.36%.

What is cash flow from assets (i.e. free cash flow) in 2020?