On February 1, 2020, Tessa Williams and Audrey Xie formed a partnership in Ontario. Williams contributed $85,000 cash and Xie contributed land valued at $125,000 and a small building valued at $185,000. Also, the partnership assumed responsibility for Xie’s $135,000 long-term note payable associated with the land and building. The partners agreed to share profit or loss as follows: Williams is to receive an annual salary allowance of $95,000, both are to receive an annual interest allowance of 15% of their original capital investments, and any remaining profit or loss is to be shared equally. On November 20, 2020, Williams withdrew cash of $65,000 and Xie withdrew $50,000. After the adjusting entries and the closing entries to the revenue and expense accounts, the Income Summary account had a credit balance of $165,000.

Required:
1. Present general journal entries to record the initial capital investments of the partners, their cash withdrawals, and the December 31 closing of the Income Summary and withdrawals accounts.

2. Determine the balances of the partners’ capital accounts as of the end of 2020.

Complete the projected Balance Sheet and Income Statement for Metza Metza, Inc. at December 31, 2020, given the following information: (you must show step by step calculations ). Also prepare a Common-size analysis of the Balance Sheet and Income Statement. What was their beginning Retained Earnings (actual) account balance at January 1, 2020 given a planned 40% Dividend Payout on December 31, 2020?

Equity Multiplier                                             2.0x

                                    Current Ratio                                                                                          2.5:1

                                    Cash                                                                                                        5.0% of Sales

                                    Quick Asset Ratio                                                                                  1.3:1

                                    Times Interest Earned                                                                           4.0x

                                    Gross Profit Rate                                                                                  40.0% of Sales

                                    Marginal Tax Rate                                                                              50.0%

                                    Operating Expenses                                                                $140,000 + 10.0% of Sales

                                    Accounts Receivable Turnover                                                            6.0x

                                    Accounts Payable                                                                      $60,000.00

                                    Return on Assets                                                                                    3.75%

                                    Common Stock                                                                       $100,000.00

                                    Days Accounts Payable Outstanding                                                 60 days

Note: Operating expenses is comprised of both a fixed expense and a variable expense (referred to as a semi-variable expense)

n January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,155,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $840,000, retained earnings of $390,000, and a noncontrolling interest fair value of $495,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Net Income   Dividends Declared.   Inventory Purchases from Corgan

Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 40 percent of the current year purchases remain in Smashing's inventory.

1. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing.

1. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing.

On January 1, 2017, Eagle borrows $25,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of $7,381, consisting of accrued interest and principal on December 31 of each year from 2017 through 2020. (Round your intermediate calculations and final answers to the nearest dollar amount.)

Prepare the journal entries for Eagle to record the loan on January 1, 2017, and the four payments from December 31, 2017, through December 31, 2020.

• Eagle borrows $25,000 cash by signing a four-year, 7% installment note. Record the issuance of the note on January 1, 2017.

• 2

  Record the payment of the first installment payment of interest and principal on December 31, 2017.

• 3

  Record the payment of the second installment payment of interest and principal on December 31, 2018.

• 4

  Record the payment of the third installment payment of interest and principal on December 31, 2019.

• 5

  Record the payment of the fourth installment payment of interest and principal on December 31, 2020.

ABC Moving and Storage acquired a new truck for $100,000, paying $20,000 cash and signing a promissory note for the balance. According to the bill of sale, ABC also paid cash for sales tax of 8%, plus registration, tags and delivery fees of $400. The new truck is estimated to have a 5-year economic life and a residual (salvage) value of $8,400. ABC uses straight-line depreciation. Due to delays, the truck was not placed in service until April 1, 2020. ABC has a December 31 fiscal year.

Question

Refer to problem 1. The promissory note that ABC signed to pay for the balance of the truck is dated April 1, 2020. The interest rate is 6% and payment terms are $40,000 plus interest due on March 31, 2021 and the balance due, plus interest, on March 31, 2022. Prepare journal entries required on December 31, 2020, March 31, 2021, December 31, 2021 and March 31, 2022. Show calculations.

On January 1, 2020, Flanagin Corporation issued $5,000,000 face value, 8%, 10-year-bonds at $4,376,892. The price resulted in a 10% effective-interest rate on the bonds. Flanagin uses the effective interest method to amortize bond premium or discount. The bonds pay annual interest on each January 1.

Prepare the journal entry to record the following transactions:

The issuance of bonds on January 1, 2020.

Accrual of interest and amortization of the discount on December 31, 2020. (1.5 marks)

The payment of interest on January 1, 2021. (1 mark)

Accrual of interest and amortization of the premium on December 31, 2021. (1.5 marks)

Show the non-current liabilities section on the statement of financial position for the bond liability at December 31, 2021. (1 mark)

Compute the total cost of borrowing over the life of the bond. (1 mark)

How much would be bond interest expense on December 31, 2021 if the straight line method of amortization were used? (1 mark)

On January 1, 2020, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $1,152,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,210,000 and Retained Earnings of $60,500. The acquisition-date fair value of the 10 percent noncontrolling interest was $128,000. QuickPort attributed the $9,500 excess of NetSpeed's fair value over book value to a database with a five-year remaining life.

During the next two years, NetSpeed reported the following:

On July 1, 2020, QuickPort sold communication equipment to NetSpeed for $15,500. The equipment originally cost $18,200 and had accumulated depreciation of $4,200 and an estimated remaining life of three years at the date of the intra-entity transfer.

1. Compute the equity method balance in QuickPort's Investment in NetSpeed, Inc., account as of December 31, 2021.
2. Prepare the worksheet adjustments for the December 31, 2021, consolidation of QuickPort and NetSpeed.

Bonita Ltd. issues 8,100, $6 cumulative preferred shares at $62 each and 15,000 common shares at $30 each at the beginning of 2019. Each preferred share is convertible into two common shares. During the years 2020 and 2021, the following transactions affected Bonita's shareholders' equity accounts:

Journalize each of the transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.

Prepare the sales, production, and direct materials budgets by quarters for 2020.