agreemen 1, 20X1 w nanufactur
Q: Wolford Department Store is located in midtown Metropolis. During the past several years, net income...
A: Preparation of Income statement :- Particulars Amount Amount Sales revenue 1,157,120 Less: ...
Q: During 2017, Lyle company incurred P400,000 of research and development costs in its laboratory to d...
A: Above mentioned patent meets the recognition criteria of intangible assets , it is a self generated ...
Q: For each of the following situations involving single amounts, solve for the unknown. Assume that in...
A: Discounting: It implies to a process of converting the future value of cash flows into present value...
Q: On August 1, 2010, a company issues bonds with a par value of $600,000. The bonds mature in 10 years...
A: Total premium on bonds = Issue value of the bonds - Face value of the bonds Interest accrued at Dece...
Q: O’Connor Company’s income statement iriformation for 2019 and 2020 ( a sole proprietorship) is as fo...
A: Under cost accounting formulas, Cost of goods sold = Beginning Inventory + Purchases - Purchase Retu...
Q: Shamrock Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment t...
A: Journal entries:
Q: Multiple Choice produce 5 units and incur a loss of $50. be indifferent as to shutting down or produ...
A: Net income refers to the amount of profit earned by the company from selling its goods or providing ...
Q: Short-term notes payable: O Can replace an account payable O Can be issued in return for money borro...
A: Short-term notes payable are considered a negotiable instrument. In this one-party agree to pay a ce...
Q: Determine the future value of the following single amounts (FV of $1. PV of $1. FVA of $1. PVA of $1...
A: The future value is computed by multiplying the invested amount by the future value factor. The futu...
Q: Peak Manufacturing Inc.'s accounting records reflect the following inventories: Dec. 31, 2021 Dec. 3...
A: Raw materials used = Beginning raw materials + Raw materials purchased - Ending raw materials
Q: ABC Inc. began operations on July 1,2019. The company recognizes income from long term construction ...
A: Solution Concept When the income recognized in financial statement is greater than the income as per...
Q: 15 Factory security and assembly activities at an appliance manufacturing plant would be best classi...
A: Hi student Since there are multiple questions, we will answer only first question.
Q: The following information for Clark Enterprises is given below. December 31, 2021 Assets and obligat...
A:
Q: 6 Budgeted October ending Accounts Receivable (Net) would be: A. 2$ В. 97,500 113,500 298,500 311,50...
A: Disbursements are also written as payment. It is calculated by adding all the payments made during t...
Q: Lore Inc has finished a new virtual reality game, Sailor's Revenge. Management is now considering it...
A: Income statement is the summary showing net and gross gains and losses by deducting the costs from ...
Q: Oriole Company, a major retailer of bicycles and accessories, operates several stores and is a publi...
A: All operations that are not investing or financing are included in the cash flow from operating acti...
Q: Sort the following contribution margin income statement line items in the correct order from top dow...
A: The income statement shows the net income or net loss that is calculated by deducting the expenses f...
Q: Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round pr...
A: Lease refers to a contract between two parties under which one party who is the real owner of an ass...
Q: Exercise 8-50 (Algo) Job Costing and Process Costing (LO 8-7) Coastal Cycles makes three models of e...
A: A product's unit cost can be defined as the cost per unit of a single product. It is calculated by d...
Q: The following transactions are for Larkspur Company. On December 3, Larkspur Company sold $512,700 o...
A: Financial transactions are recorded via journal entries. You insert transaction details into your co...
Q: Eva received $60,000 in compensation payments from JAZZ Corporation during 2021. Eva incurred $5,000...
A: WN: Lesser of: (a) 20% of qualified business income [(20% x (3) = $55,000 x 20% = $11,000)] or (b) 2...
Q: The income statement debit column of the worksheet showed the following expenses: $1,000 Supplies Ex...
A: The income summary account is a temporary account created to close the other temporary accounts of t...
Q: Contingent liabilities must be recorded if: O The future event is probable and the amount owed can b...
A: Solution: Contingent liability is the liability that occurrence of which depends on the future event...
Q: Unlimited Doors showed supplies available during the year of $1,700. A count of the supplies on hand...
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in...
Q: Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful st...
A: High-low method is used to differentiate the fixed and variable cost from a limited amount of data. ...
Q: QUESTION 2 On May 1, 2018, Bodie Co. accepted a $9300 face value note as evidence of a loan it made ...
A: Interest revenue is the earnings that a person receives from any investment and this earnings is in ...
Q: Supplies Expense $1,000 Depreciation Expense 600 Salaries Expense 400 The journal entry to close the...
A: The journal entries are prepared to keep the record of day to day transactions of the business. The...
Q: Answer the following two related questions: 1- When treating loans as sales, using for example Speci...
A: Special Purpose Entity is a legally separate business that absorbs risk for a corporation. A SPE can...
Q: 8..new Carla Company has not yet prepared a statement of cash flows for the 2020 fiscal year. Com...
A: Statement of Cash Flow (Direct) - Statement of Cash Flow is the statement that shows movement of cas...
Q: PART 1 Exclusive Souvenirs Hut does customize, hand-crafted memorabilia for hotels, in which each ba...
A: e) Computation of gross profit earned on jobs after adjusting the manufacturing overhead Sales = $...
Q: How much is the Consolidated Shareholder's equity on December 31, 2022?
A: Consolidated stockholders equity is equivalent to total assets of parent and its subsidiary less all...
Q: Jean's an things is a factory which makes term clothing. At the end of the accounting year December ...
A: Cost of goods manufactured - Cost of Goods Manufactured is the total cost incurred to manufactured g...
Q: The fair values of assets and liabilities held by three reporting units and other information relate...
A: Goodwill impairment: Goodwill impairment is a charge recorded when goodwill carrying value exceeds i...
Q: On September 1, 20x1, an entity issues bonds with face amount of P8,000,000 for P9,105,022, includin...
A: A bond is a fixed-income security that represents a borrower's loan from a lender (typically corpora...
Q: If a manager at the company desired to determine the percentage
A: The percentage change in operating income depends on the operating leverage. Operating leverage is c...
Q: Given the following list of accounts with normal balances, what are the trial balance totals of the ...
A: Lets understand the basics. Trial balance is as the name suggest always balance each other. In other...
Q: 1. How much is the defined benefit cost taken to profit or loss for the year 2020? 2. How much is t...
A: Current Service cost shall increase with the increase in the present value of defined benefit obliga...
Q: Fudction: DATE; Formula: Add, Multiply, Divide; Cell Referencing Using Excel to Compute Interest and...
A: In the context of the given question, we can compute the interest and maturity date using the follow...
Q: how do compensation plans, including bonus structures, drive behavior?
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any ...
Q: Novak Corp. returned $330 of goods originally purchased on credit from Bridgeport Industries. Using ...
A: Periodic inventory is an accounting method of valuing stocks at regular intervals. Businesses physic...
Q: M5-12 (Algo) Preparing a Bank Reconciliation [LO 5-4] Use the following bank statement and T-account...
A: The bank reconciliation statement is prepared to adjust the balance of cash book and pass book for v...
Q: If bonds with a face value of $124000 are converted into common stock when the carrying value of the...
A: Each of these transactions requires a diary entry. It's vital to remember that we're looking at the ...
Q: You are the external auditor of National Detergent Company SAOG (NDC) is one of the leading manufact...
A: Introduction Financial statements includes collection of reports used to determine the financial po...
Q: Which of the following statements is (are) correct? (x) Part of the administrative burden of a tax...
A: A mortgage is a contract between borrower and a lender that provides the lender the right to take th...
Q: 1. What is a stakeholder management plan and its importance and purpose
A: Stakeholder management plan - It is the written document that outlines how our teams plan and manage...
Q: The following information relates to HAVE MERCY Company’s obligations as of December 31, 2019. For e...
A: Accounts payable is the current liability that is due within one operating cycle. One operating cycl...
Q: 21.15 A company starts in business on 1 January 2017, the financial year end being 31 December. You ...
A: Machinery - Machinery is fixed assets for the company. Company invest in such non current assets to ...
Q: Which of the following would be included in the Lease Receivable account? I. Guaranteed residual va...
A: As per IFRS 16, Leases Executory costs are the costs such as repair and maintenance cost, taxes and ...
Q: Mae Sy, widow, is a proprietor of Mae Beauty Brands which is a merchandising business. She acquired ...
A: Introduction As per the accounting standard, borrowing costs refer to the interest compo...
Q: Why does management need to evaluate variances and make adjustments? How often do you think a standa...
A: A variance is the difference between being an expected and actual quantity in accounting. Budgeting ...
Step by step
Solved in 2 steps
- Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6 years at 2,000 per month or to purchase the equipment for 25,000 (a price considerably less than the expected fair value) after the initial lease term of 4 years. Why would this lease qualify as a finance lease?Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).
- Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a 5-year, noncancelable, sales-type lease on January 1, 2019, for equipment that cost Lessor 375,000 (useful life is 5 years). The fair value of the equipment is 400,000. Lessor expects a 12% return on the cost of the asset over the 5-year period of the lease. The equipment will have an estimated unguaranteed residual value of 20,000 at the end of the fifth year of the lease. The lease provisions require 5 equal annual amounts, payable each January 1, beginning with January 1, 2019. Lessee pays all executory costs directly to a third party. The equipment reverts to the lessor at the termination of the lease. Assume there are no initial direct costs, and the lessor expects to be able to collect all lease payments. Required: 1. Show how Lessor should compute the annual rental amounts. 2. Prepare a table summarizing the lease and interest receipts that would be suitable for Lessor. 3. Prepare a table showing the accretion of the unguaranteed residual asset. 4. Prepare the journal entries for Lessor for the years 2019, 2020, and 2021.Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease on January 1, 2019, for nonspecialized equipment that cost the Landlord 280,000 (useful life is 6 years with no residual value). The fair value of the equipment is 300,000. The interest rate implicit in the lease is 14%. The 6-year lease requires 6 equal annual amounts payable each January 1, beginning with January 1, 2019. Tenant pays all executory costs directly to a third party on December 1 of each year. The equipment reverts to the lessor at the termination of the lease. Assume that there are no initial direct costs. Landlord expects to collect all rental payments. Required: 1. Next Level (a) Show how landlord should compute the annual rental amounts, (b) Discuss how the Tenant Company should compute the present value of the lease payments. What additional information would be required to make this computation? 2. Next Level Prepare a table summarizing the lease and interest receipts that would be suitable for Landlord. Under what conditions would this table be suitable for Tenant? 3. Assuming that the table prepared in Requirement 2 is suitable for both the lessee and the lessor, prepare the journal entries for both firms for the years 2019 and 2020. Use the straight-line depreciation method for the leased equipment. The executory costs paid by the lessee are in 2019: insurance, 700 and property taxes, 800; in 2020: insurance, 600 and property taxes, 750. 4. Next Level Show the items and amounts that would be reported on the comparative 2019 and 2020 income statements and ending balance sheets for both the lessor and the lessee, using the change in present value approach.Determining Type of Lease and Subsequent Accounting On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: The lease is noncancelable and has a term of 8 years. The annual rentals arc 35,000, payable at the beginning of each year. The interest rate implicit in the lease is 14%. Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for 1 at the end of the lease term, December 31, 2026. The cost of the equipment to the lessee is 150,000, and the fair value is approximately 185,100. Ballieu incurs no material initial direct costs. It is probable that Ballieu will collect the lease payments. Ballieu estimates that the fair value is expected to be significantly greater than 1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of 35,000 discounted at 14% is 185,090.68 (the 1 purchase option is ignored as immaterial). Required: 1. Next Level Identify the classification of the lease transaction from Ballices point of view. Give the reasons for your classification. 2. Prepare all the journal entries tor Ballieu for the years 2019 and 2020. 3. Discuss the disclosure requirements for the lease transaction in Ballices notes to the financial statements.
- Sales-Type Lease with Guaranteed Residual Value Calder Company, the lessor, enters into a lease with Darwin Company, the lessee, to provide heavy equipment beginning January 1, 2017. The lease is appropriately classified as a sales-type lease. The lease terms, provisions, and related events are as follows: The lease is noncancelable, has a term of 8 years, and has no renewal or bargain purchase option. The annual rentals are 65,000, payable at the end of each year. The interest rate implicit in the lease is 15%. Darwin agrees to pay all executory costs directly to a third party. The cost of the equipment is 280,000. The fair value of the equipment to Calder is 308,021.03. Calder incurs no material initial direct costs. Calder expects that it will be able to collect all lease payments. Calder estimates that the fair value at the end of the lease term will be 50,000 and that the economic life the equipment is 9 years. This residual value is guaranteed by Darwin. The following present value factors are relevant: PV of an ordinary annuity n = 8, i = 15% = 4.487322 PV n = 8, i = 15% = 0.326902 PV n = 1, i = 15% = 0.869565 Required: 1. Determine the proper classification of the lease. 2. Prepare a table summarizing the lease receipts and interest income earned by Calder for this lease. 3. Prepare journal entries for Calder for the years 2019, 2020, and 2021. 4. Next Level Prepare partial balance sheets for December 31, 2019, and December 31, 2020, showing how the accounts should be reported. Use the present value of next years payment approach to classify the lease receivable as current and noncurrent. 5. Next Level Prepare partial balance sheets for December 31, 2019, and December 31, 2020, showing how the accounts should be reported. Use the change in present value approach to classify the lease receivable as current and noncurrent.In the third year of a 6-year finance lease, the portion of the lease payment applicable to the reduction of the lease liability should be: a. less than in the second year b. more than in the second year c. the same as in the fourth year d. more than in the fourth yearLessor Accounting Issues Ramsey Company leases heavy equipment to Terrell Inc. on March 1, 2019, on the following terms: 1. Twenty-four lease rentals of 2,950 at the beginning of each month are to be paid by Terrell, and the lease is noncancelable. 2. The cost of the heavy equipment to Ramsey was 55,000. 3. Ramsey uses an implicit interest rate of 18% per year and will account for this lease as a sales-type lease. Required: Prepare journal entries for Ramsey (the lessor) to record the lease contract on March 1, 2019, the receipt of the first two lease rentals, and any interest income for March and April 2019. (Round your answers to the nearest dollar.)
- Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides for it to lease computers from Appleton Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 5 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. The computers are not specialized for Sax. 2. The computers have an estimated life of 5 years, a fair value of 300,000, and a zero estimated residual value. 3. Sax agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. The annual payment is set by Appleton at 83,222.92 to earn a rate of return of 12% on its net investment. Sax is aware of this rate. Saxs incremental borrowing rate is 10%. 6. Sax uses the straight-line method to record depreciation on similar equipment. Required: 1. Next Level Examine and evaluate each capitalization criteria and determine what type of lease this is for Sax. 2. Calculate the amount of the asset and liability of Sax at the inception of the lease (round to the nearest dollar). 3. Prepare a table summarizing the lease payments and interest expense. 4. Prepare journal entries for Sax for the years 2019 and 2020.Lessee and Lessor Accounting Issues Diego Leasing Company agrees to provide La Jolla Company with equipment under a noncancelable lease for 5 years. The equipment has a 5-year life, cost Diego 25,000, and will have no residual value when the lease term ends. The fair value of the equipment is 30,000. La Jolla agrees to pay all executory costs (500 per year) throughout the lease period directly to a third party. On January 1, 2019, the equipment is delivered. Diego expects a 14% return on its net investment. The five equal annual rents are payable in advance starting January 1, 2019. Required: 1. Assuming this is a sales-type lease for the Diego and a finance lease for the La Jolla, prepare a table summarizing the lease and interest payments suitable for use by either party. 2. Next Level On the assumption that both companies adjust and close books each December 31, prepare journal entries relating to the lease for both companies through December 31, 2020, based on data derived in the table. Assume that La Jolla depreciates similar equipment by the straight line methodDetermining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement: 1. The agreement requires rental payments of 100,000 at the beginning of each year. 2. The cost and fair value of the building on January 1, 2019, is 2 million. The storage building has not been specialized for Caswell. 3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor. 5. Caswells incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate. 6. Executory costs of 7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year. Required: 1. Determine what type of lease this is for the lessee. 2. Prepare appropriate journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.