Reference no: EM131699035
Question 1: On January 30, 2017, Titan Techniques gave Master Motors a 90-day, 8%, $80,000 note payable to extend a past due account payable. Titan has a March 31 year end.
Instructions: Prepare the year-end adjusting entry to accrue interest and record payment of the note on April 22, 2017.
Question 2: Walters Accounting Company receives its annual property tax bill for the calendar year on May 1, 2018. The bill is for $32,000 and payable on June 30, 2018. Walters paid the bill on June 30, 2018. The company prepares quarterly financial statements and had initially estimated that its 2018 property taxes would be $30,000.
Instructions: Prepare All the required journal entries for 2018 related to the property taxes, including quarterly accruals.
Question 3: An inexperienced accountant for Trainer Company recorded the following transactions in the records of the company for the year ended December 31, 2017. The controller has questioned the appropriateness of the entries since she thinks that they have not been recorded in accordance with generally accepted accounting principles. Profit for the year, including the entries described below, is $200,000.
1. On January 1, the company president, an owner of the company, took a personal vacation trip to the Gaspé. The trip cost $3,000. The accountant recorded the entry as follows:
Travel Expense ............................................................................. 3,000
Accounts Payable........................................................................... 3,000
2. The company purchased on account a wastebasket on December 31 at a cost of $20. The accountant made the following entry:
Office Equipment........................................................................... 20
Accounts Payable.......................................................................... 20
3. Merchandise inventory which cost $14,000 had a current net replacement value of $22,000. The accountant made the following entry as a result:
Merchandise Inventory.................................................................. 8,000
Gain on fair value adjustment......................................................... 8,000
4. Equipment with a fair market value of $15,000 was acquired in a liquidation sale for cash at a cost of $10,000. The accountant recorded the transaction as follows:
Equipment..................................................................................... 15,000
Cash............................................................................................ 10,000
Gain on fair value adjustments .......................................................... 5,000
5. A customer's account receivable for $17,000 was uncollectible and the following entry was made:
Bad Debts Expense ...................................................................... 17,000
Accounts Receivable..................................................................... 17,000
Instructions: a) For each of the above entries, indicate the concept or constraint that was violated (no explanation is required).
b) Determine the correct profit for 2017.
Question 4: The following transactions occurred during 2017:
1. A television set is delivered to the customer in August. Six instalment payments of $200 per month begin the following January. Ignore interest considerations.
2. Goods are sold FOB shipping point. An item with a retail value of $10,000 is loaded onto the truck on May 31, but not unloaded until June 3 because the recipient delayed paying the freight bill until then. The vendor prepares and mails the invoice to the customer on
June 10.
3. A computer network system and related cables are delivered to the customer's premises on March 31. Installation is completed by April 30, after which the system is ready for use. The vendor provides monthly support and upgrades for 4 months following the month of installation (through August). The value of the system and cables is $50,000, the value of the installation services is $22,000 and the value of the monthly support totals $6,000.
4. Goods are sold FOB destination. An order with an invoice total of $3,500 is loaded onto the truck January 31 and delivered on February 1.
5. A customer prepays for 10 oil changes for a total of $300. During December, two oil changes are completed for this customer.
Instructions: Identify in which month revenue should be recognized in each situation. If revenue should be recognized in more than one month, calculate the amounts that apply to each relevant month.
Question 5: Quan Corporation is authorized to issue an unlimited number of common shares and 500,000 shares of preferred shares. During 2017, its first year of operation, the company had profit of $305,000. The following share transactions occurred:
Jun 1 Paid the province $1,800 for incorporation fees.
Jun 5 Issued 100,000 of $4 cumulative preferred shares at $22 per share.
Jul 25 Lawyers for the company accepted 250 common shares as payment for legal services provided in helping the company incorporate. The legal services are estimated to have a value of $4,500. The shares were actively trading at $20 per share.
Oct 18 Issued 45,000 common shares for land. The land had an asking price of $850,000. The shares are currently selling on a Toronto Stock Exchange at $18 per share.
Instructions: a) Journalize the transactions for Quan Corporation assuming the company follows IFRS.
b) Prepare the shareholders' equity section of the balance sheet at December 31, 2017.
Question 6: On January 1, 2017, Mandy Merchandise Ltd. has 25,000 common shared issued for a total of $62,500, and no other shares or contributed capital. During 2017, Mandy had the following transactions:
Jan 15 Issued 15,000 common shares for $2.50 each.
Mar 31 Settled an account for legal expenses by issuing 2,500 shares. The value of the legal services was $5,000.
Sep 30 Issued 9,000 shares in exchange for equipment with a fair value of $22,500.
Instructions: a) Record the transactions.
b) Calculate the total number issued and average cost per share of the common shares at the end of 2017.