Pharoah Company reports the following financial information before adjustments.

Prepare the journal entry to record bad debt expense assuming Pharoah Company estimates bad debts at (a) 4% of accounts receivable and (b) 4% of accounts receivable but Allowance for Doubtful Accounts had a $1,490 debit balance. (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 the amount is entered. Do not indent manually.)

Bryant leased equipment that had a retail cash selling price of $620,000 and a useful life of five years with no residual value. The lessor paid $540,000 to acquire the equipment and used an implicit rate of 8% when calculating annual lease payments of $143,780 beginning January 1, the beginning of the lease. Lease payments will be made January 1 each year of the lease. Incremental costs of consummating the lease transaction incurred by the lessor were $16,000. What is the effect of the lease on the lessor's earnings during the first year (ignore taxes)? (Input decreases to income as negative amounts. Round Interest revenue to the nearest whole dollar.)

The net income of Steinbach & Sons, a landscaping company, decreased sharply during 2016. Mort Steinbach, owner and manager of the company, anticipates the need for a bank loan in 2017. Late in 2016 Steinback instructs the company's accountant to record $20,000 service revenue for landscape services for the Steinbach family, even though the services will not performed until January 2017. Steinbach also tells the accountant not to make the following December 31, 2016 adjusting entries:

Salaries owed to employees $9,000
Prepaid Insurance that has expired $4,000

1. Why is Steinback taking this action? Is his action ethical? Give your reason.

In your own words, define the following terms and describe their differences. In addition, classify each account as A, L, SE, R, or E and state which financial statement(s) each account affects.

(a) Interest revenue, interest receivable, interest payable, cash interest paid, and cash interest received. To whom does your company pay interest? From whom does your company receive interest? Note the different counterparties.

(b) Rent expense, prepaid rent expense, rent payable, and cash paid for rent.

(c) Supplies expense, supplies, accounts payable, and cash paid for supplies.

Required: Provide brief written responses to the following questions:

1. How many Accounting Research Bulletins were issued?

2. What was the time period the above bulletins were issued?

3. What was the name of the organization that issued the bulletins?

4. What was the main purpose of the Accounting Principles Board?

5. How many members were on this board?

6. What were the reports they issued?

7. What lead to the replacement of the Accounting Principles Board?

8. What organization replaced the Accounting Principles Board?

9. When and why was the “SEC” Securities and Exchange Commission established?

10. Briefly explain the following principles:

a. Revenue Recognition

b. Expense Recognition

c. Full Disclosure

Morty Enterprises, is a new start-up company. Morty Enterprises has been preparing to begin operations for the past six months and is almost ready to start production. It has incurred significant costs but no revenue has yet to be earned. Organization costs such as legal fees and advertising have been capitalized as start-up costs. Morty Enterprises has expensed all payroll expenses, rent, and other similar costs as incurred—this has resulted in a significant loss being reported on the first year’s financial statements. Is Morty’s accounting treatment in accordance with GAAP?

This is an essay question, please answer it as detailed as possible. Thank you!

2. Computing Average Cost [LO3] K-Too Everwear Corporation can manufacture mountain climbing shoes for $33.18 per pair in variable raw material costs and $24.36 per pair in variable labor expense. The shoes sell for $170 per pair. Last year, production was 145,000 pairs. Fixed costs were $1,750,000.

a. What were the total production costs?

b. What is the marginal cost per pair?

c. What is the average cost?

d. If the company is considering a one-time order for an extra 5,000 pairs, what is the minimum acceptable total revenue from the order? Explain.

White Mountain Industrial is considering a project that would last for 2 years. The project would involve an initial investment of 107,000 dollars for new equipment that would be sold for an expected price of 78,000 dollars at the end of the project in 2 years. The equipment would be depreciated to 19,000 dollars over 4 years using straight-line depreciation. In years 1 and 2, relevant annual revenue for the project is expected to be 104,000 dollars per year and relevant annual costs for the project are expected to be 23,000 dollars per year. The tax rate is 50 percent and the cost of capital for the project is 7.94 percent. What is the net present value of the project?

Use the information below to prepare the closing entries in journal format and post to the ledger (T Accounts)

Adjusted Trial Balance

December 31, 2014

Debit Credit

Cash $28,000 debit

Accounts Receivable $10,000 debit

Prepaid Rent $6,000 debit

Accounts Payable $18,000 credit

Capital stock $34,000 credit

Equiptment $58,000 debit

Accumulated Depreciation $6,000 credit

Notes Payable $10,000 credit

Unerned Revenue $1,000 credit

Retained Earnings $7,500 credit

Sales $32,000 credit

Rent Expense $1,000 debit

Utlility Expense $5,000 debit

Dividends $500 debit

Totals $108,500 $108,500

M4-6 Recording Adjusting Journal Entries [LO 4-2] For each of the following transactions for the Sky Blue Corporation, prepare the adjusting journal entries required on October 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

a. Collected $3,300 rent for the period October 1 to December 31, which was credited to Unearned Revenue on October 1.

b. Paid $1,920 for a two-year insurance premium on October 1 and debited Prepaid Insurance for that amount.

c. Used a machine purchased on October 1 for $51,600. The company estimates annual depreciation of $5,160.