Jacob’s grandfather died on 1 November 2009 and, in her will, left Jacob cash and watches worth $500,000. The watches had been bought by Jacob’s grandmother in August 1985 at a cost of $40,000, and its market value on 1 November 2009 was $150,000.

Jacob used the money from his grandfather and his savings to buy the following assets in January 2010:

• an apartment in Melbourne (cost was $360,000 plus $20,000 legal fees and stamp duty),
• a rare painting (cost was $50,000), and
• 2,000 bank shares (cost was $20 per share, plus $200 brokerage).

In 2019/20, Jacob disposed of these assets as follows:

• on 12 March 2020, he sold the apartment for $470,000 – he had lived in it all the time he owned it,
• on 1 April 2020, the painting was stolen from his apartment – he received $30,000 compensation from his insurance company,
• on 13 May 2020, Jacob sold 1000 bank shares for $30 per share (brokerage cost $150), and
• on 15 June 2020, he lost the watches, which wasn’t insured, when he left his briefcase on a train.

Question 1.

Prepare a report that explains the CGT consequences of these transactions

The following information is available for Vandal Corporation for 2019. There is no Beginning deferred taxes.                                                                                               

1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $3,540,000. This difference will reverse in equal amounts of $708,000 over the years 2020-2024.

2. Vandal accrues a loss and a related liability of $4,130,000 due to a pending litigation in 2019.         

3. Life insurance proceeds from a key executive is $20,650,000.                                            

4. Rent collected in advance on January 1, 2019, totaled $6,490,000 for a 4-year period. Of this amount, $1,622,500 was reported as earned at December 31, 2019 for book purposes.

5. The tax rates are 30% for 2019 and 20% for 2020 and subsequent years.   

6. Pretax Financial income for 2019 is $149,122,500. .                                              

7. The company was fined $7,375,000 for pollution.                    

8. No deferred taxes existed at the beginning of 2019.                                                                                 

Instructions:                                                                                    

(a) Compute taxable income for 2019 (8 points).                                                                                           

(b) Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2019 and 2020. Assume taxable income is $103,250,000 in 2020 (12 points).

(c) Prepare the income tax expense section of the income statement for 2019, beginning with "Income before income taxes." (6 points)                                                                          

Stevens Ltd is the leading retailer of Gym equipment. The following information occurred during May 2020. Stevens Ltd had an opening inventory balance of $8,400,000.

May

1            Returned to the suppliers $80,000 of the opening inventory and received cash.

12          Purchased additional inventory on credit from the supplier for $12,000,000.

18          Sold inventory for $6,000,000 cash (Cost price to Stevens Ltd $2,400,000).

19          Paid the suppliers the account from 12 May.

31          The closing stocktake at year-end revealed an inventory balance of $17,800,000.

Required:

1. Record the above information for the month of May 2020 in the general journal using the perpetual inventory method. Narrations are not required. Ignore GST. [6 marks]

2. Record the above information for the month of May 2020 in the general journal using the physical inventory method. Narrations are not required. Ignore GST. Journal entries should include the four closing entries to determine the cost of goods sold and ending inventory. [8 marks]

3. Present the Income Statement extract for Stevens Ltd using the periodic inventory method for the month ended 31 May 2020. [3 marks]

4. Briefly explain two advantages of the perpetual inventory method for Stevens Ltd. [2 marks]

Stevens Ltd is the leading retailer of Gym equipment. The following information occurred during May 2020. Stevens Ltd had an opening inventory balance of $8,400,000.

May

1            Returned to the suppliers $80,000 of the opening inventory and received cash.

12          Purchased additional inventory on credit from the supplier for $12,000,000.

18          Sold inventory for $6,000,000 cash (Cost price to Stevens Ltd $2,400,000).

19          Paid the suppliers the account from 12 May.

31          The closing stocktake at year-end revealed an inventory balance of $17,800,000.

Required:

1. Record the above information for the month of May 2020 in the general journal using the perpetual inventory method. Narrations are not required. Ignore GST. [6 marks]

2. Record the above information for the month of May 2020 in the general journal using the physical inventory method. Narrations are not required. Ignore GST. Journal entries should include the four closing entries to determine the cost of goods sold and ending inventory. [8 marks]

3. Present the Income Statement extract for Stevens Ltd using the periodic inventory method for the month ended 31 May 2020. [3 marks]

4. Briefly explain two advantages of the perpetual inventory method for Stevens Ltd. [2 marks]

I need this ASAP.

3. The classical dichotomy and the neutrality of money

The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction.

Amy spends all of her money on paperback novels and mandarins. In 2015, she earned $18.00 per hour, the price of a paperback novel was $9.00, and the price of a mandarin was $1.00.

Which of the following give the nominal value of a variable? Check all that apply.

Amy's wage is 2 paperback novels per hour in 2015.

Amy's wage is $18.00 per hour in 2015.

The price of a mandarin is $1.00 in 2015.

Which of the following give the real value of a variable? Check all that apply.

Amy's wage is $18.00 per hour in 2015.

Amy's wage is 18 mandarins per hour in 2015.

The price of a paperback novel is 9 mandarins in 2015.

Suppose that the Fed sharply increases the money supply between 2015 and 2020. In 2020, Amy's wage has risen to $36.00 per hour. The price of a paperback novel is $18.00 and the price of a mandarin is $2.00.

In 2020, the relative price of a paperback novel is   .

Between 2015 and 2020, the nominal value of Amy's wage   , and the real value of her wage   .

Monetary neutrality is the proposition that a change in the money supply   nominal variables and   real

The Lynbrook Rentals Company offers credit terms to all of its customers. At the end of 2019, accounts receivables totaled $3,400,000. During 2020 credit sales were $2,100,000 and cash collections from customers were $3,700,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $42,000 at the beginning of 2020 and $70,000 in receivables were written off during the year as uncollectible. In addition, $20,000 was collected from a customer whose account was written off in 2019. The allowance for uncollectible accounts is determined by an ageing of accounts receivable. An aging of accounts receivable at December 31, 2020, reveals the following:

Age Group 0-60 days 61-90 days 91-120 days Over 120 days

Required:

Percentage of Year-end Percent Receivable in Group Uncollectible

55% 5% 30 15 10 45 5 60

a. Prepare journal entries to record the write-off of receivables, collection of the accounts receivable previously written off, and the year-end adjusting entry for bad debt expense.
b. Show how accounts receivables would be presented in the 2020 year-end balance sheet?

On June 1, 2020, JetCom Inventors Inc. issued a $480,000 8%, three-year bond. Interest is to be paid semiannually beginning December 1, 2020.

Required:
a. Calculate the issue price of the bond assuming a market interest rate of 9%. (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.)

b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)

Part 1
Prepare journal entries to the following. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

a. Issuance of the bonds on June 1, 2020
b. Payment of interest on December 1, 2020
c. Adjusting entry to accrue bond interest and discount amortization on January 31, 2021
d. Payment of interest on June 1, 2021

Assume JetCom Inventors Inc. has a January 31 year-end.

Part 2
Show how the bonds will appear on the balance sheet under non-current liabilities at January 31, 2022. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

Errors and Adjusting Entries Use the following information to record necessary end of period journal entries:

A man came into Cutting Edge on 31 March 2020 to pay for repairs to his mower which he will bring in later. He paid $2,500 cash. The mower was arranged to be delivered to Cutting Edge on 10 April, 2020.

 Repair services of $6,250 were provided on 31 March 2020 but have not yet been recorded in the transactions. Payment has not yet been received.

 Billy-Bob did a count of the stock on hand of Workshop Supplies. He realised that only $5,500 of Workshop Supplies were used in March, instead of $7,000 as recorded on 31 March 2020 (in Practice Set 2).

 Jimmy-James’ last wages payment was on Friday 20 March. The next $1,000 fortnightly payment is on Friday 3 April. Jimmy-James only works Monday to Friday, being 10 days per fortnight.

 Annual insurance of $1,200 was paid on 1 February and recorded in the Prepaid Insurance account.

 From all sources of revenue (Sales Revenue and Service Revenue), $70,730 was cash sales.

 Add any other necessary adjusting entries based on the information provided under the accounting policies and procedures.

Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2018 through 2021 except for differences in depreciation on an operational asset. The asset cost $200,000 and is depreciated for income tax purposes in the following amounts: 2018 $ 66,000 2019 88,000 2020 30,000 2021 16,000 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows. 2018 2019 2020 2021 Accounting income before taxes and depreciation $ 110,000 $ 130,000 $ 120,000 $ 120,000 Assume the average and marginal income tax rate for 2018 and 2019 was 30%; however, during 2019 tax legislation was passed to raise the tax rate to 40% beginning in 2020. The 40% rate remained in effect through the years 2020 and 2021. Both the accounting and income tax periods end December 31. Required: Prepare the journal entries to record income taxes for the years 2018 through 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)