Assignment:
Question 1
A
ot Corp. issued a $270,000, three-year, zero-interest-bearing note payable to Athabasca Corp. for equipment on April 30, 2020. A
ot would normally pay interest at 6%. A
ot has a December 31 year-end and will repay the note with three equal yearly payments of $90,000. A
ot Corporation follows IFRS.
Instructions
Prepare the following journal entries for A
ot Corporation:
A. Record the note
B. December 31, 2020 interest accrual
C. April 30, 2021 payment
D. December 31, 2021 interest accrual
E. April 30, 2022 payment
As described in the Course Guide, use a Word table and co
ect journal entry format for all your journal entries. Round journal entry amounts to the nearest dollar. Round interest to the nearest full month.
May 30, 2020
Cash
3,000
Sales
3,000
30
Cost of goods sold
2,000
Cash
2,000
Example of a Word table for journal entries:
This question is easier to do if you make an amortization table in Excel. You do not need to provide the amortization table.
Question 2
Beartooth Appliances sells televisions for $1,900 each, which includes a 2-year assurance-type wa
anty that requires the company to perform periodic services and to replace defective parts. During 2020, Beartooth sold 600 televisions for cash. Based on experience, the company has estimated the total 2-year wa
anty costs to be $40. (Assume sales all occur on December 31, XXXXXXXXXXIn 2021, Beartooth Company incu
ed actual wa
anty costs relative to 2020 television sales of $13,000.
Beartooth also sells a five-year extended wa
anty for $300. Wa
anty expenditures are assumed to be zero in the first two years (since the assurance-type wa
anty covers these repairs) and then evenly over the final three years.
Of the 600 televisions sold in 2020, half the customers purchased the extended wa
anty. During 2023, Beartooth incu
ed $22,000 in wa
anty costs related to the 2020 television sales and the extended wa
anty. Beartooth Corporation follows IFRS.
Instructions
A. Prepare the entries for the sale of the televisions, including both wa
anties.
B. Prepare the entry for 2021 wa
anty costs. Use a date of May 30.
C. Prepare the 2023 entry for the wa
anty costs (use a date of May 30) and the December 31, 2023, adjusting entry for the extended wa
anty.
Question 3
On June 30, 2020, Helmer Corp. issued $500,000 in long-term bonds. The bonds will mature in 10 years and have a stated interest rate of 8%. The market rate at time of issue was 10%. The bonds pay interest semi-annually on June 30 and December 31. On September 30, 2022, Helmer decided to retire 20% of the bonds. At that time, the bonds were selling at 98. Helmer follows IFRS.
Instructions
(Round all values to the nearest dollar.)
A. Prepare all entries related to the issuance of the bonds and payments of interest to June 30, 2022.
B. Prepare the journal entries to record the partial retirement on September 30, 2022. This question is easier to do if you make an amortization table in Excel.
Question 4
Pennask Corporation follows IFRS. Below are independent situations:
A. During 2020, a factory worker was injured. The accident was partly the worker’s fault, and partly Pennask’s fault. The employee has sued Pennask Corp. for $600,000. The corporation’s legal counsel believes it is possible that Pennask will lose the lawsuit. If they lose, the estimated loss is $150,000 to $400,000.
B. During 2020, Pennask was sued for $2,500,000. The plaintiff is alleging
each of contract, and defense counsel believes an unfavourable outcome is more likely than not. A reliable measurement of the award to the plaintiff is between $600,000 and $1,800,000.
C. During 2020, Pennask sued another company. The corporation’s legal counsel believes it is likely that Pennask will be awarded damages of $1,000,000.
D. In November of 2020, one of Pennask’s factories caught fire and was destroyed. Insurance will cover the full loss except for a deductible on the policy of $400,000. Pennask is quite concerned that insurance premiums will increase substantially, perhaps even double.
Instructions
For each situation, fully discuss the co
ect accounting treatment, including any required disclosures. Provide an explanation for your answers. A reasonably thorough answer would be 50 to 70 words.
Question 5
On May 30, 2020, Rose Hill Corporation accepted subscriptions for 10,000 common shares. On that date, the shares were selling for $30 each. Subscribers paid 40% down and must pay the remainder in six months. On September 30, 2020, the balance of the subscription price was received, and the shares were issued.
Instructions
Prepare all journal entries related to the share subscriptions.
Question 6
Sahali Corp. issued 1,000,000 common shares at $13 a share during April 2014. On September 23, 2020, Sahali repurchased 50,000 shares for $17 a share.
Sahali is incorporated under the CBCA and therefore retired these shares.
Instructions
Prepare the journal entry to record the repurchase of the shares.
Question 7
In each of the following independent cases, it is assumed that the corporation has outstanding 20,000, $0.80, prefe
ed shares, with a ca
ying value of $200,000, and 80,000 common shares, with a ca
ying value of $800,000.
You must show your work. Clearly label your calculations, and clearly label your answer and highlight it with bold print. Co
ect answers without showing how you a
ived at the solution will receive only part marks.
Instructions
A. Assume that the prefe
ed dividends are cumulative and non-participating, and prefe
ed dividends are paid up to date through 2019. At December 31, 2020, the board of directors wants to distribute $125,000 in dividends. How much will the prefe
ed shareholders receive? (2 marks)
B. Assume that the prefe
ed dividends are cumulative and non-participating. Although dividends have been paid regularly up to 2017, no dividends were declared in 2018 or 2019. At December 31, 2020, the board of directors wants to distribute $200,000 in dividends. How much will the prefe
ed shareholders receive? (3 marks)
C. Assume that the prefe
ed dividends are cumulative and fully participating. Although dividends have been paid regularly up to 2017, no dividends were declared in 2018 or 2019. At December 31, 2020, the board of directors wants to distribute $200,000 in dividends. How much will the prefe
ed shareholders receive? (5 marks)
Question 8
Rayleigh Corporation started 2020 with 600,000 common shares outstanding. Rayleigh follows IFRS. During 2020, Rayleigh completed the following share transactions:
June 30: Repurchased 100,000 shares
July 31: Issued 200,000 shares
August 31: 2 for 1 stock split
October 31: Issued 200,000 shares
Instructions
Calculate the weighted average number of shares outstanding for 2020. Use a table to show your calculations. Clearly indicate your final answer.
Question 9
For 2020, Westmount Corp. had 200,000 common shares outstanding for the full year. Westmount follows IFRS. Market prices of the common shares during 2020 were:
January 1: $45; Year’s average: $50; December 31: $52.
Westmount’s income tax rate is 40%.
During 2020, there were:
1. 40,000 outstanding stock options to buy common shares at $40 a share.
2. $3,000,000 of 6% convertible bonds issued at par. Each $1,000 bond is convertible into 20 common shares.
3. 20,000 prefe
ed shares each paying a $3 dividend and each convertible to 1 common share.
The corporation reported $900,000 net income for calendar 2020.
Instructions
Calculate basic and diluted earnings per share for 2020. Show all calculations for possible part marks. A
ange your answer as per the method used in the text.
Assignment
:
Question 1
A
ot Corp. issued a $270,000, three
-
year, zero
-
interest
-
earing note payable to Athabasca
Corp. for equipment on April 30, 2020. A
ot would norma
lly pay interest at 6%. A
ot has a
December 31 yea
-
end and will repay the note with three equal yearly payments of $90,000.
A
ot Corporation follows IFRS.
Instructions
Prepare the following journal entries for A
ot Corporation:
A.
Record the note
B.
Decembe
31, 2020 interest accrual
C.
April 30, 2021 payment
D.
December 31, 2021 interest accrual
E.
April 30, 2022 payment
As described in the Course Guide, use a Word table and co
ect journal entry format for all your
journal entries. Round journal entry amounts to the
nearest dollar. Round interest to the nearest
full month.
May 30, 2020
Cash
3,000
Sales
3,000
Assignment:
Question 1
A
ot Corp. issued a $270,000, three-year, zero-interest-bearing note payable to Athabasca
Corp. for equipment on April 30, 2020. A
ot would normally pay interest at 6%. A
ot has a
December 31 year-end and will repay the note with three equal yearly payments of $90,000.
A
ot Corporation follows IFRS.
Instructions
Prepare the following journal entries for A
ot Corporation:
A. Record the note
B. December 31, 2020 interest accrual
C. April 30, 2021 payment
D. December 31, 2021 interest accrual
E. April 30, 2022 payment
As described in the Course Guide, use a Word table and co
ect journal entry format for all your
journal entries. Round journal entry amounts to the nearest dollar. Round interest to the nearest
full month.
May 30, 2020 Cash 3,000
Sales 3,000
·
· Assignment Guidelines
Please take a few minutes to review these assignment guidelines and tips. It will save time and probably improve your grade.
· Before submitting your assignment, ensure that you have answered all parts of each of the assigned questions.
· Carefully read each question and answer only what is asked. Is the question asking you to provide an explanation? If so, provide one. If no explanation is required, do not provide one, since you will not be awarded marks for your extra effort.
· Answer the questions in the order asked, and clearly label each one.
· Follow the instructions in the question. If the instructions request that a specific format be used