Boreal Landscape Corp. (BLC) is a landscape design company located in North York, Ontario, that prepares its financial statements using ASPE and has a July 31 year end. BLC provides gardening supplies and products as well as full landscape design services for residential properties. BLC is currently working on a project that includes design and installation of landscaping for the Thompson family. The project began in May 2021. The Thompsons pay BLC on a monthly basis for the services and products provided, and have always been prompt with payments. On July 31, 2021, BLC set aside 1,000 square feet of stone for the Thompson project in its warehouse. The total cost of the stone was approximately $5,000, and it was oxnocted to bo instolled ot the amotimo in August BL
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- JustKitchens Inc. provides services to restaurants and hotels. The company supplies paper products, tableware, cookware, restaurant and kitchen equipment, and cleaning supplies. On January 2, 2019, Just-Kitchens enters into a contract with a local restaurant chain to provide its services for 3 years at a cost of 10,000 per year. The restaurant chain pays the total contract fee on January 2, 2019. JustKitchenss stand-alone selling price is also 10,000 per year. After 2 years, the restaurant asks to modify the contract. On January 2, 2021, the companies agree to reduce the fee for the third year to 9,000 in exchange for extending the contract for 2 additional years at a fee of 11,000 per year. This modification is agreed to by both parties, and on that date the restaurant chain pays for the additional 2 years of service. The 11,000 fee for the additional years is the same as JustKitchenss stand-alone price. Required: 1. How should JustKitchens account for the contract modification? 2. Prepare the journal entry that JustKitchens would make over the life of the contract.Smith & Sons is a CPA firm that provides proprietary software to its clients. One of its software packages sells for $150 and contains pre-programmed tutorials on basic accounting concepts. Another product sells for $3,000 and contains Smith & Sons’ archive of accounting standards and articles, which Smith & Sons updates on a weekly basis and downloads to archive users for the two years following purchase of the product. If a customer purchases both software packages on June 1, 2021, how much revenue should Smith & Sons recognize for the year?Marshall Co. is a management consulting company that incorporated on March 15, 2021 and has a December 31 year end. They began renting their office space on April 1st and immediately purchased furniture and fixtures for $46,900. They also purchased computer hardware for $9,000 (class 50 with 55% CCA rate). Marshall, the company president, also purchased a 2021 Land Rover for $134,000.Required: Determine the maximum CCA that can be taken in 2021.
- Gidi professional institute is constructing a tuition center at Aboabo that will take about 18 months to complete. The company commenced construction on 2 January, 2018. The following payments were made during the year: 31 January GH¢ 40,000,000 1 March GH¢90,000,000 30 June GH¢20,000,00031 October GH¢40,000,00030 November GH¢50,000,000The first payment on 31 January was funded from the company’s pool of debts. However, the company succeeded in raising Medium-Term Loan Notes for an amount of GH¢160,000,000 on 31 March 2018 at a simple interest rate of 9 percent per year, calculated and payable monthly in arrears.These funds were specifically used for the construction. Excess funds were temporarily invested at 6 percent monthly in arrears and payable in cash. The pool of debts was again used for a GH¢40,000,000 payment on 30 November 2018 which could not be funded from the Medium-Term Loan Notes. The construction project was temporarily halted for three weeks in May 2018 when…Wishbone, Inc., is preparing its year-end balance sheet and needs to determine how much of its assets/liabilities are current or noncurrent. For the following transactions, determine the amount that needs to be included in the balance sheet for the period ending December 31, Year 7, as current or noncurrent. Wishbone paid $16,000 for insurance on October 1, Year 6. Insurance is $500 per month due on the last day of the month. Wishbone pays its employees the Wednesday following the close of the 2-week pay period. Wishbone has 15 employees who each work 40 hours per week for $10 per hour. In Year 7, December 31 is the second Friday of a 2-week pay period. Wishbone has a $10,000 deferred tax asset recorded on its books as of December 31, Year 7. Wishbone expects $3,000 to be reversed in Year 8. During Year 7, Wishbone invested $6,000 in trading securities. It expects to sell half in Year 8 and the remaining half in Year 9. Wishbone purchased new equipment for $15,000 on January 1, Year…Pearl Inc. was incorporated in 2019 to operate as a financial service firm, with an accounting fiscal year ending April 30. Pearl’s primary product is a sophisticated online investment management system; its customers pay a fixed fee plus a usage charge for using the system.Pearl has leased a large, GenX computer system from the manufacturer. The lease calls for a monthly rental of $19,000 for the 144 months (12 years) of the lease term. The estimated useful life of the computer is 14 years.All rentals are payable on the first day of the month beginning with April 1, 2020, the date the computer was installed and the lease agreement was signed. The lease is non-cancelable for its 12-year term, and it is secured only by the manufacturer’s chattel lien on the GenX system.This lease is to be accounted for as a finance lease by Pearl, and the asset will be amortized by the straight-line method. Borrowed funds for this type of transaction would cost Pearl 6% per year (0.5% per month).…
- Velocity, a publicly traded corporation with a calendar fiscal year, entered into an agreement with Wedding Planners, Inc. an wedding event planning company on September 15, 2021. The contract specifies that the services will begin on October 1, 2021. Velocity will design a marketing strategy to increase “hits” on Wedding Planners website by 40%. The contract will last for 3 months (though December 31, 2021). Wedding Planners promises to pay $25,000 at the beginning of each month for Velocity’s services with the first payment on October 1, 2021. At the end of the contract, Velocity will be entitled to an additional $10,000 bonus, depending on whether traffic on Wedding Planners’ website has increased by the desired 40%. At the inception of the contract, Velocity estimated there is a 80% chance that they will earn the $10,000 bonus and 20% likelihood they will not. These probabilities are based on past experience with similar projects and the company has significant…Velocity, a publicly traded corporation with a calendar fiscal year, entered into an agreement with Wedding Planners, Inc. a wedding event planning company on February 14, 2022. The contract specifies that the services will begin on March 1, 2022. Velocity will design a marketing strategy to increase “hits” on Wedding Planners website by 40%. The contract will last for 3 months (though May 31, 2022). Wedding Planners promises to pay $25,000 at the beginning of each month for Velocity’s services with the first payment on March 1, 2022. At the end of the contract, Velocity will be entitled to an additional $15,000 bonus, depending on whether traffic on Wedding Planners’ website has increased by the desired 40%. At the inception of the contract, Velocity estimated there is an 85% chance that they will earn the $15,000 bonus and 15% likelihood they will not. These probabilities are based on past experience with similar projects and the company has significant experience in these…Upon inception in 2019, AVX Corp. (AVX) set up its business in a small office building in Toronto and entered into an agreement with Executive Furniture Inc. to purchase office furniture for the building on a month-by-month basis (two sets of furniture per month), with the expectation that AVX would be hiring two new employees each month on average. As AVX experienced considerable growth throughout 2020, it hired 25 additional employees at the same time, and its office building was NO longer sufficient to meet its needs. On December 15, 2020, AVX moved out of its original office building and into a new, larger office. Due to configurations in the new office, AVX had to purchase a different type of office furniture (including stand-up desks) for all of its employees. AVX has been trying to negotiate with Executive Furniture Inc. to get out of the original purchase agreement, which requires AVX to pay $4,000 per month at the beginning of each month until December 2022, since AVX has…
- WCM Builders enters into a contract to build a shopping mall in 2019 for $6,000,000. Completion of the mall is expected to take 27 months and cost WCM $3,600,000. Upon signing the contract, WCM receives $600,000. During 2019, WCM incurs costs of $1,200,000 and receives a $1,000,000 progress payment. WCM’s forewoman estimates that the job is 50% complete at the end of 2019. How much income must WCM recognize in 2019 from the work done on the mall? Do not round intermediate computations. WCM will recognize $ of gross income from the contract in 2019.Love Company entered into a contract to construct a 10-storey building for P8,000,000. The following data were taken from the company’s files (see image below).1.What is the Percentage of completion in 2019?2.Using the same information above, how much is the cost incurred in 2019?3.Using the same information above, how much is the revenue to be recognized in 2020?4.Using the same information above, how much is the balance of the Construction in Progress at December 31, 2020?5. Using the same information above, how much is the income to be recognized in 2020?Tyler Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2020, Tyler entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $10,000 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $8,000. In addition, Walleye agrees to pay an additional $20,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract. Instructions a. Prepare the journal entries for Tyler in 2020 and 2021 related to this service contract. b. Prepare the journal entries for Tyler in 2022 related to the modified service contract, assuming a prospective approach. c. Repeat the…