Reference no: EM133000735
Questions -
Q1. On February 10, 2020, while the December 31 2019 financial statements were under audit, BC Co., an IFRS reporting company, entered into a financing agreement with the Royal Bank of Canada (RBC), allowing BC Co. to borrow up to $ 4,000,000 at any time through 2022. Amounts borrowed under the agreement bear interest at 3% above the bank's prime interest rate and mature two years from the date of the loan. At December 31, 2019, BC Co. has $1,500,000 of notes payable to the Bank of Montreal (BMO) maturing March 15, 2020. The company intends to borrow $ 2,500,000 under the agreement with RBC and pay off the expected notes payable to BMO when they fall due. The agreement with RBC also requires BC Co. to maintain a working capital level of $9,000,000 and prohibits the payment of dividends on common shares without prior approval by RBC. From the above information only, what is the amount, with explanation as to why, of the total short-term debt BC Co. should report on the December 31, 2019 Statement of Financial Position?
Q2. BC Co. operates in a province with a 8% PST (Provincial Sales Tax) and 5% GST (Goods and Services Tax). For the month of May, BC Co. sold $120,000 worth of goods to customers with no tax exemptions, 40% of which were cash sales and the balance being on account receivable. Based on the above information, calculate the total debit to accounts receivable for the month of May.
Q3. BC Co., an IFRS compliant company, reported, at December 31, 2020, $800,000, 10% bonds payable which had a carrying value of $760,000. The bonds had originally been taken to market at a yield of 12% with interest payments each January 1 and July 1 and BC Co. applies an unamortized discount or premium account as need be. On July 2, 2021, BC Co. retired the entire bond issue at 102. Record the bond retirement.
Q4. On July 1, 2020, BC Co. issued $ 800,000, 4% bonds at 98, with interest payable semi-annually on April 1 and October 1. The bonds are dated April 1, 2020 and mature on April 1, 2027 and BC Co. applies unamortized discount or premium account as need be. Record the bond issue.
Q5. BC Co. was organized on January 1, 2020, with the following authorized share capital:
20,000 common shares, no par value
15,000, $ .10, cumulative preferred shares, no par value
During 2020, the corporation issued 10,000 common shares at net $7 per share and 10,000 preferred shares at net $28 per share. On December 20, 2020, subscriptions for 1,000 preferred shares were taken at a purchase price of $30. No deposits are required on the share subscriptions which are to be paid in full on January 2, 2021. Calculate the total share capital balance that BC Co. should report on its December 31, 2020, Statement of Financial Position.