Notes for Journal Entries:

1) Kuechly uses periodic inventory system and LIFO

2) All credit sales discounts are recorded using the net method – customers receive a 3 percent discount if they pay within 30 days.

3) Purchase discounts are recorded using the net method

4) All depreciation is straight line.

5) 2020 is first year of operation.

June 30 2020 -  Purchased land and a building.  A $200,000 cash down payment was required and a $800,000 note was accepted by the seller for the balance (12 percent interest payable each year on June 30). The fair value of the land at the date of purchase was deemed to be 300,000 and the fair value of the building was 900,000. The building has an estimated residual value of $0 and a useful life of 30 years.

October 1 2020 - Purchased equipment for in exchange for a $30,000 non-interest bearing note due in one year. The equipment has an estimated residual value of $2,000 and a useful life of 8 years. Note: Assume an effective interest rate of 8 percent.

What Adjusting Journal Entries should be made at 12/31/2020

Company Epsilon has two retail divisions, retail division #1 and retail division #2, which reported the following results for the year end of 2019. The required rate of return set for the retail divisions is 10%.

If no investment in made for 2020, both retail divisions are expected to maintain the same net operating income and average operating assets as of 2019. However, there is an opportunity in 2020 for Company Epsilon to invest in one of the two retail division. The investment would be of $15,000,000 and would generate additional net operating income of $2,400,000 per year.

Required:

1. Which division had the higher return on investment (ROI) in 2019 and why?

2. Which division had the higher residual income (RI) in 2019 and why?

3. If the managers of the retail divisions are evaluated based on return on investment (ROI), will the managers want to invest in 2020 and why?

4. If the managers of the retail divisions are evaluated based on residual income (RI), will the managers want to invest in 2020 and why?

Sheffield Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $595,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $903,000. The following data pertain to the construction period.

(a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter 0. Do not leave any fields blank.)

(b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter 0. Do not leave any fields blank.)

Bella's Bone World, Inc. is a thriving bone production business! As the chief bone examiner, Bella is performing simple valuations as a starting point to determining the overall value of her bone production business. Bells uses a 9% required rate of return for operations. She used her 2019 financial statements to calculated her residual operating income as $25 million and net operating assets were $82 million at the end of 2019. Her residual operating income is expected to stay the same level for 2020 because even during the pandemic, dogs eat bones. While Bella does not expect growth, she expects to maintain her financial position in 2020.

For this question, you need to do two calculations. First, forecast Bella's operating income for 2020. Then calculate the value of operations for Bella's Bone World.

Select the answer below that most closely matches your calculations.

The format of the answer is: 2020 operating income, Value of operations

$36.2 million, $402.22 million

$32.92 million, $299.27 million

$74.02 million, $672.91 million

None of the above

$32.38 million, $359.78 million

Morrisey Technologies Inc. ‘s 2019 financial statements are shown below:

Suppose that in 2020 sales increase by 10% over 2019 sales and that 2020 DPS will increase to $1.12. Construct the projected financial statements for 2020. Use AFN to balance the pro forma balance sheet. How much additional capital (AFN) will be required (assume that it will be obtained at the end of the year, giving the interest expense for 2020 remain unchanged)? Assume the firm operated at full capacity in 2019.

Tip: Instead of using the AFN formula, you need to prepare the projected income statement first, then determine the amount of increase in R/E, and prepare a projected balance sheet with the balancing figure be the AFN (added to the notes payable).

1. The table given below summarizes the 2019 income statement and end-year balance sheet of Drake’s Bowling Alleys. Drake’s financial manager forecasts a 10% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.40. Interest is forecasted at 5% of debt at the start of the year. At the end of 2018 debt was $2,400,000 and assets were $6,960,000. (10 points)

a. What is the expected level of assets at the end of 2020?

b. If the company pays out 50% of net income as dividends, how much cash will Drake need to raise in the capital markets in 2020? Assumes debt remains constant.

c. If Drake is unwilling to make an equity issue, what will be the debt ratio at the end of 2020?

(show all work)

Samuel whales Ltd has purchased a property in Wellington New Zealand on 20 July 2020 for NZD 3,200,000 and intended to use it as a showroom. The company borrowed NZD 2,000,000 to finance the purchase. The company plans to take the opportunity of the current low interest rate to expand its property acquisitions.

2) The company applied for Wages Subsidy scheme on 4 April and was granted 70,000. On 7 August, the ToL received a letter from the government requesting the company to pay back the Wages Subsidy with interests citing the reason that the company did not qualify.

3) The company was experiencing delays in its supply chain from overseas suppliers from March to May 2020, which resulted longer lead times in filling customer orders. On 31 July, a customer filed a lawsuit against the company suing for damages of $300, 000. Because of the delay, this customer could not open business on time and suffered income loss.

REQUIRED: For each of the above subsequent event:

a) Explain the potential impact on the 2020 financial statements.

b) Discuss audit procedures that may verify the potential impact on the 2020 financial statements.

An aging analysis of Pharoah Company’s accounts receivable at December 31, 2020 and 2021, showed the following:

Accounts Receivable
Number of Days Outstanding Estimated %Uncollectible 2021 2020
0–30 days 3% 126,000 155,000

31–60 days 7% 31,500 77,500
61–90 days 13% 63,000 46,500
Over 90 days 40% 94,500 31,000
Total    $315,000 $310,000

Additional information:

Record the following:

QUESTION FIVE

The cash balance of Bison Corporation was 14,426 as at October 31, 2020. The balance of bank statement on the same day was $9,926. Following summarizes the differences between bank and books:

1. Deposits in transit as at September 30 was $1,108.
2. Deposits recorded in the books and bank during October were 9,630 and $7,410.
3. Outstanding cheques as at October 31 amounted to $136.
4. Electronic receipts from customers totaled $814, but these receipts have not yet been recorded by Bison in October.
5. Interest revenue earned in October totaled $307 and it hasn’t been recorded by Bison.
6. The bank returned an NSF cheque in the amount of $2,211 that deposited on October 13. The cheque was a payment on a customer’s account.
7. The bank charged Bison $188 for services in October, including $158 for bank service changes and $30 for processing the NSF cheque.
8. The bank made a mistake in processing a payment of $522 as $552.

reconciliation as at October 31, 2020.

[Q1. ] Prepare any necessary journal entries for bank reconciliation as at October 31, 2020.

[Q2] What is the reconciled balance of cash as at October 31, 2020?

I already knew the answers. I want to know the solution to getting answers.

REQUIREMENT-1:

REQUIREMENT-2: