When is the stated interest rate of a debt instrument presumed to be fair?View Solution: When is the

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When is the stated interest rate of a debt instrument presumed to be fair?View Solution:
When is the stated interest rate of a debt instrument

When an accountant testifies in court, the testimony may fall into two broad classes. Discuss them.

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When an accountant testifies in court, the testimony may fall into two broad classes. Discuss them.

 

Why is customer profitability analysis a vitally important topic Why is customer-profitability…

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Why is customer profitability analysis a vitally important topic
Why is customer-profitability analysis a vitally important topic to managers?

Why is customer profitability analysis a vitally important topic

1. Assume that last year (2011) A &A Products had a net operating loss of $50,000 and for this…

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1. Assume
that last year (2011) A &A Products had a net operating loss of $50,000 and
for this problem A & A Products reported tax expense for 2012 of $70,000.
Also assume that in 2010 A &A products had income of $10,000 and tax rate
of 20% (ignore any earlier years). This year A 7A products reported net income
of $70,000 and tax rate 20% . Prepare the entry that A & A should have made
in 2011. Prepare an entry for 2012 recording the effect on A & A products
books of the 2011 NOL.
2. On
January 1 of 2012 P&P Products purchased $1000000 of 8%, 5 year A7A
Products bonds on the open market for $960000. the bonds are dated and were
issued by A7A Products on January 1,2010. The bond pay each January 1st and
July 1st. The effective interest method is used. Make necessary entries for A
&A Products.
3. On
November 1,2012 P&P Products entered into an agreement whereby P&P
products accepted a discounted note payable for $2,000,000, (A7A Products
received cash) the terms were 0% interest (market rate of interest is6%) and
payable on May1 2013. Make all necessary entries on the books of A &A
Products for 2012.
4A A&a Products entered into a lease agreement with
P&P Products to purchase a piece of equipment on January 1, 2012. The terms
of the lease are :8%, 5 years lease with a 6 year useful life. The machine has
a fair value of $600,000. The residual value is zero. A&A products does not
know the interest rate that P&P product uses Assume the entries have not
yet been made on the books of A &A Products
Prepared a 5 year amortization schedule. Make all necessary
entries on the books of A & A Products for the first year.
4B Assume that the lessor (P&P Product) interest rate is
also 8% and that the lease qualifies as a direct financing lease, using the
above info in 4A. Prepare the lessor’s amortization table for the duration of
the lease and make all necessary entries on the books of P&P Products for
the first two years.

Prepare summary journal entries for 2007.

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Sales Under the Installment Method – The Dyson Company sells computer games to teenagers. Selected accounts included in the trial balance at December 31, 2007 and 2008 are as follows:

2006

2007

Installment accounts receivable, 2006

$80,000

$20,000

Installment accounts receivable, 2007

112,500

Allowance for doubtful installment accounts receivable, 2006

5,000

3,700

Allowance for doubtful installment accounts receivable, 2007

7,000

Deferred gross profit, 2006

16,000

3,500

Deferred gross profit, 2007

22,500

During 2007 installment method sales and cost of goods sold were $200,000 and $160,000, respectively. In 2007 the company repossessed games that had been sold in 2006 for $6,000 and on which $2,500 had been collected. The games were believed to be worth $1,000. No repossessions occurred on 2007 sales.

Required

Prepare summary journal entries for 2007.

evel Submission) On January 1, 2014, Thao Company purchased the following two machines for use in… 1 answer below »

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evel Submission) On January 1, 2014, Thao Company purchased the following two machines for use in its production process.
Machine A:The cash price of this machine was $51,000. Related expenditures included: sales tax $1,600, shipping costs $150, insurance during shipping $110, installation and testing costs $60, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Thao estimates that the useful life of the machine is 5 years with a $4,300 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.Machine B:The recorded cost of this machine was $108,800. Thao estimates that the useful life of the machine is 4 years with a $6,800 salvage value remaining at the end of that time period.

Warning

Don't show me this message again for the assignmentOk Cancel (a) Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. $2,125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
1.The journal entry to record its purchase on January 1, 2014.2.The journal entry to record annual depreciation at December 31, 2014.

Refer to the information in Exercise. Compute depreciation expense for year 2011 assuming the…

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Refer to the information in Exercise. Compute depreciation expense for year 2011 assuming the company uses the double-declining-balance method. In QS, On April 1, 2010, Bricen Backhoe Co. purchases a trencher for $253,000. The machines is expected to last five years and have a salvage value of $25,300. Compute depreciation expense for year 2011 assuming the company uses the straight-line method. View Solution:
Refer to the information in exercise compute depreciation expense for

1) What would cause income tax expense to increase?2) Why would an individual have to pay more incom

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1) What would cause income tax expense to increase?2) Why would an individual have to pay more income this year than last year?

For each of the following situations, calculate the amount of bond discount or premium, if any: a…

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For each of the following situations, calculate the amount of bond discount or premium, if any: a. Wolfe Co. issued $120,000 of 6 percent bonds at 101. b. Riley, Inc., issued $80,000 of 10-year, 8 percent bonds at 98. c. Rais, Inc., issued $200,000 of 15-year, 9 percent bonds at 102 ¼. d. Beaux Co. issued $400,000 of 20-year, 8 percent bonds at 99 ¾.

Discuss the differing effects of capitalized leases on balance sheet ratios, as compared to…

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Leases

The following note was provided by Adolph Coors Company in its 1997 annual

report:

NOTE 3:

Leases

The Company leases certain office facilities and operating equipment under cancelable and non-cancelable agreements accounted for as operating leases. On December 28, 1997, the minimum aggregate rental commitment under all non-cancelable leases was (in thousands): 1998, $5,403; 1999, $4,578; 2000, $3,124; 2001, $2,353; and $15,021 for years thereafter. Total rent expense was (in thousands) $13,870, $11,680, and $10,376 for years 1997, 1996, and 1995, respectively.

Required

a. Coors’ total liabilities in 1997 and 1996,respectively,were $675,515,000 and $647,049,000. Based on the information in Note 3, does it seem that the leases were a material component of these liabilities? If not, did the choice to capitalize or expense the lease payments have any material effect on Coors’ debt/asset ratios? Liquidity ratios? Asset turnover ratios?

b. Coors’ net income in 1997 and 1996, respectively, was $82,260,000 and $43,425,000. Again, based on the information in Note 3, was the rent expense a material component of net income? If so, did the choice of capitalizing or expensing the leases have a significant effect on Coors’ EPS? Return on Sales? ROE?

c. Discuss the differing effects of capitalized leases on balance sheet ratios, as compared to profitability ratios.