Drs. Glenn Feltham and David Ambrose began operations of their physical therapy clinic, called Northland Physical Therapy, on January 1, 2017. The annual reporting period ends December 31. The trial balance on January 1, 2018, was as follows (the amounts are rounded to thousands of dollars to simplify):
Account Titles Debit Credit
Cash $ 7
Accounts Receivable 3
Supplies 3
Equipment 10
Accumulated Depreciation $ 2
Software 6
Accumulated Amortization 2
Accounts Payable 5
Notes Payable (short-term) 0
Salaries and Wages Payable 0
Interest Payable 0
Income Taxes Payable 0
Deferred Revenue 0
Common Stock 15
Retained Earnings 5
Service Revenue 0
Depreciation Expense 0
Amortization Expense 0
Salaries and Wages Expense 0
Supplies Expense 0
Interest Expense 0
Income Tax Expense 0
Totals $ 29 $ 29
Transactions during 2018 (summarized in thousands of dollars) follow:
A. Borrowed $28 cash on July 1, 2018, signing a six-month note payable.
B. Purchased equipment for $31 cash on July 2, 2018.
C. Issued additional shares of common stock for $5 on July 3.
D. Purchased software on July 4, $3 cash.
E. Purchased supplies on July 5 on account for future use, $7.
F. Recorded revenues on December 6 of $61, including $8 on credit and $53 received in cash.
G. Recognized salaries and wages expense on December 7 of $36; paid in cash.
H. Collected accounts receivable on December 8, $9.
I. Paid accounts payable on December 9, $10.
J. Received a $3 cash deposit on December 10 from a hospital for a contract to start January 5, 2019.
Data for adjusting journal entries on December 31:
K. Amortization for 2018, $2.
L. Supplies of $3 were counted on December 31, 2018.
M. Depreciation for 2018, $4.
N. Accrued interest of $1 on notes payable.
O. Salaries and wages incurred but not yet paid or recorded, $3.
P. Income tax expense for 2018 was $4 and will be paid in 2019.
1. Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions (a)-(j), adjusting entries (k)-(p), and closing entry
2. Record the adjusting journal entries (K-P)
3. Post the adjusting entries from requirement 4 and prepare an adjusted trial balance.
4.
4-a. Prepare an income statement.
4-b. Prepare the statement of retained earnings.
4-c. Prepare the balance sheet.
5. Prepare the closing journal entry.
6. Post the closing entry from requirement 7 and prepare a post-closing trial balance.
7.
7-a. How much net income did the physical therapy clinic generate during 2018? What was its net profit margin?
7-b. Is the business financed primarily by liabilities or stockholders’ equity?
7-c. What is its current ratio?
In: Accounting
Altira Corporation uses a periodic inventory system. The
following information related to its merchandise inventory during
the month of August 2018 is available:
| Aug.1 | Inventory on hand—3,000 units; cost $6.50 each. |
| 8 | Purchased 12,000 units for $5.70 each. |
| 14 | Sold 9,000 units for $12.20 each. |
| 18 | Purchased 7,000 units for $5.20 each. |
| 25 | Sold 8,000 units for $11.20 each. |
| 31 | Inventory on hand—5,000 units. |
Required:
Determine the inventory balance Altira would report in its August
31, 2018, balance sheet and the cost of goods sold it would report
in its August 2018 income statement using each of the following
cost flow methods:
FIFO
Determine the inventory balance Altira would report in its August 31, 2018, balance sheet and the cost of goods sold it would report in its August 2018 income statement using the FIFO method. (Round "Cost per Unit" to 2 decimal places.)
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LIFO
Determine the inventory balance Altira would report in its August 31, 2018, balance sheet and the cost of goods sold it would report in its August 2018 income statement using the LIFO method. (Round "Cost per Unit" to 2 decimal places.)
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Average cost
Determine the inventory balance Altira would report in its August 31, 2018, balance sheet and the cost of goods sold it would report in its August 2018 income statement using the Average cost method. (Round "Average Cost per Unit" to 2 decimal places.)
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In: Accounting
On February 1, 2018 Cromley Motor Products issued 10% bonds, dated February 1, with a face amount of $90 million. The bonds mature on January 31, 2022 (4 years). The market yield for bonds of similar risk and maturity was 12%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $90,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31.use FVof 1$, PV of 1$ etc.)
Required: 1. Determine the price of the bonds issued on February 1, 2018
PRICE OF THE BOND ……
2a. prepare amortization schedules that indicate Cromley’s effective interest expense for each period during the term to maturity.
Payment Number Cash Payment Effective Interest Increase in Balance Outstanding Balance
1
2
3
4
5
6
7
8
Totals
2b. Prepare amortization schedules that indicate Barnwell’s effective interest revenue for each interest period during the term to maturity. (Enter your answers in whole dollars.) Payment Number Cash Payment Effective Interest Increase in Balance Outstanding Balance
1
2
3
4
5
6
7
8
Totals
3. Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell’s investment on February 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) a. Record the issuance of the bonds by Cromley. On February 1, 2018 b. Record the Bond investment by Barnwell. On February 1, 2018 4. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
a. Record the payment of interest for Cromley Company., on July 31, 2018
b. Record the accrued interest for Cromley Company. On December 31, 2018
c. Record the payment of interest for Cromley Company, on January 31, 2019
d. Record the payment of interest for Cromley Company. On July 31, 2019
e. Record the accrued interest for Cromley Company. On December 31, 2019
f. Record the payment of interest for Cromley Company. On January 31, 2020
5. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
a. Record the payment of interest for Barnwell Company., on July 31, 2018
b. Record the accrued interest for Barnwell Company. . On December 31, 2018
c. Record the receipt of interest for Barnwell Company. on January 31, 2019
d. Record the receipt of interest for Barnwell Company. On July 31, 2019
e. Record the accrued interest for Barnwell Company. On December 31, 2019
f. Record the receipt of interest for Barnwell Company. On January 31, 2020
In: Accounting
QUESTION 1
Diandra Bhd is a manufacturer and supplier of men and women apparel. It operates in one district in northern area of Kedah. The company closes its account on every 31 December. The company owns a factory and a piece of land on which the factory stands. The land was acquired in 2013 for RM500,000 and the factory was built in early 2014 at a cost of RM950,000.
In recent years, there has been a boom of demand for both men and women apparel which require Diandra Bhd to store enough apparel to meet the demand. Due to that, Diandra Bhd has constructed a new warehouse next to the existing factory. It is expected that the cost of the new warehouse is RM1,000,000. On 28 February 2018, the company paid RM30,000 for the architect fees. In addition, the company paid RM20,000 to city council for the building permit on 5 March 2018. The construction of warehouse began on 8 March 2018 and the following expenditures were occurred during 2018:
Date Expenditure (RM)
1 April 270,000
7 June 280,000
20 July 120,000
1 October 100,000
30 November 30,000
The construction of the warehouse was completed on 31 January 2019. To finance the construction of the warehouse, Diandra Bhd borrowed with Xandra Bank RM450,000 on 1 April 2018 at the interest of 8% per annum. Other loan outstanding by Diandra Bhd are 10 %, RM400,000 bond payable and notes payable of RM300,000 with an interest rate of 12% per annum.
Diandra Bhd adopted revaluation model to account for its factory and used to revalue its factory every three year. The revalued amount of factory for the year ended 2016 was RM550,000. The company also conduct an impairment test every year if there is an indication of impairment. For 2015, the factory fair value less cost to sell is RM600,000 and value in use is RM670,000. The useful life of the factory building is 10 years and Diandra Bhd uses the sum-of-the-years digits method to account for the depreciation.
As an incentive from the government, Diandra Bhd also received RM250,000 grant in 2018 to buy a new sewing machine with modern technology which can boost its apparel production. The new sewing machine cost is RM500,000 with a useful life of 8 years. Due to shortage of power supply caused by lightning in December 2018, the machine broke down and the company spent RM50,000 to repair the machine. The repair involved an installation of a new software that is expected to increase the efficiency of the machine and able to produce more quantity of apparel.
REQUIRED:
(Round your answer to the whole number)
(a) Calculate interest to be capitalised for the construction of the warehouse during 2018 and 2019.
(b) Prepare journal entries to record interest capitalization for 2018 and 2019.
(c) Assume that there was no impairment loss recognised in 2014. Determine the amount of impairment loss for factory for the year ended 2015 (if any) and prepare the relevant journal entry (if any).
(d) Prepare the journal entries to record depreciation and revaluation of factory in 2016.
(e) Briefly explain government grants and discuss the accounting treatment for government grants in accordance with MFRS120 Accounting for Government Grants.
(f) Based on the amount of government grant received by Diandra Bhd, explain the effect of each accounting treatment to company’s financial statement.
(g) Explain the accounting treatment for the repair of sewing machine.
In: Accounting
Use the following comparative Balance Sheets, Income Statement, and additional information to prepare the 2018 Statement of Cash Flows for United Brands Corporation.
Required:
Prepare an entire Statement of Cash Flows (all three sections) using the indirect method for the Operating Activities section.
Prepare the Operating Activities section using the direct method.
United Brands Corporation
Balance Sheets
December 31, 2018 and 2017
($ in millions)
2018 2017 Incr (Decr)
ASSETS
Current Assets:
Cash $41 $20 $21
Accounts receivable 32 30 2
Inventory 46 50 (4)
Prepaid insurance 3 6 (3)
Property, Plant, & Equipment:
Land 80 60 20
Equipment 81 75 6
Less: Accumulated depreciation (16) (20) (4)
Total Assets $267 $221
LIABILITIES
Current Liabilities:
Accounts payable $26 $20 $6
Salaries payable 3 1 2
Income tax payable 6 8 (2)
Notes payable, current 34 47 (13)
Long-term Liabilities:
Notes payable, long-term 20 0 20
EQUITY
Common stock, $10 par, 50 million
shares authorized, 13 million issued in 2018,
10 million issued in 2017 $130 $100 $30
Paid-in capital in excess of par-common stock 29 20 9
Retained Earnings 19 25 (6)
Total Liabilities and Equity $267 $221
United Brands Corporation
Income Statement
for the year ended December 31, 2018
($ in millions)
Sales revenue $100
Cost of goods sold (60)
Gross profit $40
Operating expenses:
Salaries expense (13)
Depreciation expense (3)
Insurance expense (7)
Income from operations $17
Other income and expenses:
Interest expense (2)
Gain on sale of land 8
Loss on sale of equipment (2)
Income before income tax $21
Income tax expense (9)
Net income $12
Additional information for 2018 transactions:
All inventory is purchased on account, and the Accounts Payable account is used exclusively for inventory purchases.
A portion of the company land was sold for $18 million in cash. This land was originally purchased in a previous year for $10 million.
Land was purchased for $30 million cash for use as a parking lot.
Equipment was sold in 2018 that had an Accumulated Depreciation balance of $7 million on the date of sale. The equipment originally cost $14 million and was sold at a loss for cash. (HINT: You must determine the amount of cash received.)
In 2018, new equipment was acquired by issuing a 12%, five-year, $20 million note payable to the seller.
During 2018, $55 million of short-term (current) notes payable were paid in cash and $42 million of cash was borrowed in the form of short-term debt (current notes payable).
The increase in the common stock account is attributed to two transactions:
Issuance of a 10% stock dividend (1 million shares) when the market price was $13 per share.
Issuance of 2 million shares for cash when the market price was $13 per share.
Cash dividends were declared and paid to shareholders. (HINT: You must determine the amount of cash dividends paid.)
In: Accounting
a) Based on the information below, prepared a financial position of company ABC Sdn Bhd. as at 31.12.2019.
|
Items |
RM |
|
Inventories |
600,000 |
|
Retained earnings |
270,000 |
|
Long-term loan |
60,000 |
|
Tax payables |
180,000 |
|
Trade receivables |
780,000 |
|
Share capital |
240,000 |
|
Overdraft |
400,000 |
|
Furniture & Fittings |
270,000 |
|
Trade payables |
420,000 |
|
Other payables |
80,000 |
b) You are required to calculate and comments on the following:
(i) Non-current asset
(ii) Current asset
(iii) Current liabilities
(iv) Non-current liabilities
(v) Equity
(vi) Working capital
In: Finance
Answer each of the following statements True/False/Uncertain. Give a full explanation of your answer including graphs where appropriate. (When in doubt, always include a fully labeled graph.)
A) Consider the following three consumption bundles (X1,X2)=(10,10) ; (X1,X2)=(15,10) ; (X1,X2)=(3000,8). Non-satiation implies that (15,10) is preferred to (10,10) but does not imply that (3000,8) is preferred to (10,10).
B) It is not theoretically possible for two indifference curves to cross if the preference relations they are based on satisfy the assumptions of completeness, transitivity and non-satiation.
In: Economics
A bucket contains exactly 3 marbles, one red, one blue and one green.
A person arbitrarily pulls out each marble one at a time.
Given the following:
Which of the following statements is NOT true?
A.The probability of both events happening is 50%.
B.The probability of either of these events happening is 33%.
C.Event 1 is independent of Event 2.
D.The probability of Event 1 occurring is the same as the probability of Event 2 occurring.
In: Statistics and Probability
1. If a good has an externality do free markets markets maximize social welfare? Why or why not?
2. Suppose a politician proposes taxing a good. As an economist (trying to maximize social well-being), under what circumstances would you support the tax and why?
3. What is a market failure? Why is it important to study market failures?
4. Suppose a good is both non-rival and non-excludable. Do we expect the market to provide the desired amount of the good? Why or why not? If not, what can be done to reach the desired amount of the good?
In: Economics
Carolina issued a 15-year semi-annual non-callable bond five years ago. Bond has a $1,000 face value, coupon rate of 5% and it currently sells for $925. Carolina needs to issue 10-year semi-annual note. Note will be non-callable and is expected to get the same credit rating as outstanding bond issue. If Carolina wants to issue and sell new note at par, find approximate coupon rate that needs to be assigned to the note. (Hint: similar bonds/notes should be providing approximately same returns).
In: Finance