Part 1

As the controller of Lynbrook, Inc., you were asked to evaluate a potential bond issuance to raise funds to expend the company’s operations. Lynbrook is considering issuing a $10 million 5- year, 12 percent bonds payable on June 30, 2020. Interest would be payable semiannually on December 31 and June 30. Bond discounts and premiums would be amortized at each interest payment date using the straight-line method. The company's fiscal year ends at December 31.

Requirement:

a. Prepare an amortization table for each of the 10 semiannual periods, under each of the following assumptions:

1. The bonds were issued at 98. (round to the nearest dollar.) 2. The bonds were issued at 101. (round to the nearest dollar.)

2. Prepare the journal entry to record the issuance of the bonds on June 30, 2020 if Lynbrook issues the bonds at 98.

3. Prepare the journal entries necessary to record the semiannual bond interest payments on December 31, 2020 and June 30, 2021, if the bonds were issued at 101.

Part 2

The long-range strategic budgeting process also called for Lynbrook to borrow $2,000,000 cash on January 1, 2020 from Wells Fargo by signing a ten-year 6% installment note. The note requires equal payments of principal and interest on December 31 each year in the amount of $271,736.

Required

1. Prepare the journal entries required by Lynbrook on the following dates: a) December 31, 2020

b) December31,2021
2. Determine the total interest expense Lynbrook will recognize over the life of the note.

1. Calculate the cost of a Regular widget in 2020 using the traditional costing system.
2. Calculate the cost of a Regular widget in 2020 using the ABC system.
3. Explain why your results differ in questions 7 and 8. Be specific.
4. What characteristics of Company DEF suggest that changing to an ABC system might benefit it? Which costing system do you recommend Company DEF use? Why

The accounting department has also compiled the following data by product line for 2020:

Company DEF makes three types of widgets: Simple, Regular, and Deluxe. The company currently uses a traditional costing system with one indirect cost pool and machine hours as its allocation base; however, it is considering whether it should implement an activity-based costing (ABC) system in 2020. The accounting department has studied the indirect cost pool and developed the following cost pool data for use in an ABC system in 2020:

Crane Sports began operations on January 2, 2020. The following stock record card for footballs was taken from the records at the end of the year. Date Voucher Terms Units Received Unit Invoice Cost Gross Invoice Amount 1/15 10624 Net 30 51 $22 $1,122 3/15 11437 1/5, net 30 66 18 1,188 6/20 21332 1/10, net 30 91 17 1,547 9/12 27644 1/10, net 30 85 13 1,105 11/24 31269 1/10, net 30 77 12 924 Totals 370 $5,886 A physical inventory on December 31, 2020, reveals that 108 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Crane Football Shop uses the invoice price less discount for recording purchases.

1.) Compute the December 31, 2020, inventory using the FIFO method. (Round per unit and final answer to 2 decimal paces, e.g. 35.57.) Ending Inventory using the FIFO method $

2.)Compute the 2020 cost of goods sold using the LIFO method. (Round per unit and final answer to 2 decimal paces, e.g. 35.57.) Cost of Goods Sold using the LIFO method $

3.) What method would you recommend to the owner to minimize income taxes in 2020, using the inventory information for footballs as a guide?

Snowbird Inc. (Snowbird) manufactures and sells one model of sleds. Snowbird’s accountant gathered the following information to prepare the budget for 2020:

Snowbird has a policy of maintaining finished goods inventory at the end of each quarter equal to 5% of the following quarter’s projected sales. There were 150 sleds in finished goods inventory at the start of 2020, with a total cost of $45,000. Materials and labour requirements for the sleds are:

Direct materials inventory on the first day of 2020 was 1,000 board-metres. Direct materials were originally purchased at $33 per board-metre. Prices have now risen to

$34 per board-metre. The desired ending materials inventory is 10% of the following quarter’s projected production needs.

Snowbird’s direct labourers are paid $16 per hour. Variable manufacturing overhead is allocated at the rate of $15 per direct labour hour. Fixed manufacturing overhead costs are budgeted at $186,240 for 2020. Snowbird uses first-in, first-out to account for its inventory flow.

Required:

Prepare the following budgets and schedules as part of the master budget for the first quarter of 2020:

1. Production budget
2. Direct materials purchase budget
3. Direct labour budget (
4. Manufacturing overhead budget
5. Ending finished goods inventory budget

Glaser Company carries the following investments on its books at December 31, 2020 and December 31, 2021. Available for-Sale securities are considered to be non-current. All securities were purchased and properly recorded during February 2020. You need to combine all trading and AFS securities into trading portfolio and AFS portfolio, respectively, while making the fair value adjustment entries.

Required:

• Prepare the necessary fair value adjusting journal entries for Glaser on December 31, 2020.
• Assume Glaser sold its investment in “B” for $125 on December 15, 2021; prepare journal entries for sales of investment on December 15 and fair value adjusting journal entries on December 31, 2021.

• Ignoring income taxes and assuming both the retained earnings and accumulated other comprehensive income have a balance of 0 on December 31, 2019, complete the following schedule:

Entity A is a manufacturer of consumer goods. On 1 January 2020, Entity A entered into a one-year contract to sell goods to a large global chain of retail stores. The customer committed to buy at least $90,000,000 of products in January. The contract required Entity A to make a non-refundable payment of $200,000 to the customer at the inception of the contract. The $200,000 payment is to compensate the customer for the changes required to its shelving to accommodate Entity A's products. Entity A duly paid this $200,000 to the customer on 3 January 2020.

Entity A transferred goods with an invoice price of $98,000,000 to the customer on 31 January 2020. The customer agreed to settle the outstanding amount by two payments, i.e. 40% and 60% of the outstanding amount on 18 February 2020 and 31 March 2020 respectively.

REQUIRED:

Provide journal entries for Entity A from 1 January 2020 to 31 March 2020 in accordance with relevant accounting standards.

ACCOUNT NAMES FOR INPUT:

| Plant | Machine | Motor van | Equipment | Land | Building | Inventory | Intangible assets |

| Bank | Payable | Receivable | Other income | Other expense | Interest expense | Interest revenue |

| Depreciation | Accum. depreciation | Impairment loss | Reversal of impairment loss | Goodwill |

| Loss on disposal | Gain on disposal | Restoration liability | Revaluation surplus | Revaluation deficit |

| Asset for product to be returned | Commission expense | Commission revenue | Revenue |

| Cost of sales | Refund liability | Contract asset | Contract liability | Retained earnings | No entry |

ANSWERS:

Journal Entries:

(I WILL LEAVE YOU A GREAT REVIEW!) Daisy D. Corporation has the following stockholders' equity on December 10, 2020:

On December 10, the market price of Daisy D. Corporation's common stock was $102 per share.

Required:

Part A: Give the general journal entry(s) required (if any) on December 10, 18, and 31 to record the following transactions in Workpaper #4.

1. On December 10, 2020, Daisy D. declared a $2 per share cash dividend, payable on December 31, to shareholders of record on December 18.
2. On December 10, 2020, Daisy D. declared a 7% stock dividend, distributable on December 31 to shareholders of record on December 18.
3. On December 10, 2020, Daisy D. declared a 200% stock dividend, distributable on December 31 to shareholders of record on December 18.
4. On December 10, 2020, Daisy D. declared a 5 for 1 stock split effective December 31, 2020.

Part B: For each transaction in part A, indicate the balances of the stockholders' equity accounts and other stockholders' equity information on December 31, 2020, assuming no other stockholders' equity transactions occurred. Treat each case independently--compute the new balances of each case based on the Current Balances.

Part C: If you are a shareholder in D. Daisy Corporation with 1,000 shares of stock, describe the effect that each transaction in Part A would have on you.

1. $2 per share cash dividend
2. 7% stock dividend
3. 200% stock dividend
4. 5 for 1 Stock Split.

Accounting Cycle Review 11-01 a,b, c1-c3

Morgan Company’s balance sheet at December 31, 2019, is presented below.

During January 2020, the following transactions occurred. (Morgan Company uses the perpetual inventory system.)

Adjustment data:

1. Prepare an adjusted trial balance at January 31, 2020. (Round answers to 0 decimal places, e.g. 5,275.)
2. Prepare an income statement. (Round answers to 0 decimal places, e.g. 5,275.)

3. Prepare an owner’s equity statement for the month ending January 31, 2020. (Round answers to 0 decimal places, e.g. 5,275.)
4. Prepare a classified balance sheet as of January 31, 2020. (List current assets in order of liquidity. Round answers to 0 decimal places, e.g. 5,275.)