Reference no: EM133112174
Question 1 - By December 31, 2020, PEI Potato Corp. had performed a significant amount of environmental consulting services for Spud Ltd. Spud was short of cash, and PEI Potato agreed to accept a $200,000, non-interest-bearing note due December 31, 2022, as payment in full. Spud is a bit of a credit risk and typically borrows funds at a rate of 12%. PEI Potato is much more creditworthy and has various lines of credit at 9%. PEO Potato Corp. reports under IFRS.
Required -
1. Prepare the journal entry to record the transaction on December 31, 2020, for PEI Potato Corp.
2. Assuming PEI Potato's fiscal year end is December 31, prepare the journal entry required at December 31, 2021.
3. Assuming PEI Potato's fiscal year end is December 31, prepare the journal entry required at December 31, 2022.
4. What are the amount and classification of the note on PEI Potato Corp.'s SFP as at December 31, 2021?
5. Assume instead that PEI Potato reports under ASPE and uses the straight-line method to amortize the discount on the note. What would the interest income be relating to the note for 2021 and 2022?
6. If an appropriate market rate of interest for the note receivable is not known, how should the transaction be valued and recorded on December 31, 2020?
Question 2 - Emerge Solutions Company deposits all receipts and makes all payments by cheque. The following information is available from the cash records:
MARCH 31 BANK RECONCILIATION
|
Balance per bank
|
$35,160
|
|
Add: Deposits in transit
|
4,200
|
|
Deduct: Outstanding cheques
|
(3,200)
|
|
Balance per books
|
$36,160
|
The month of April Results
|
|
Per Bank
|
Per Books
|
|
Balance April 30
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$38,000
|
$42,140
|
|
April deposits recorded
|
11,200
|
17,300
|
|
April cheques recorded
|
12,010
|
11,320
|
|
Items on bank statement but not in books:
|
|
|
|
Note collected by bank
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5,500
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-0-
|
|
Bank service charge
|
50
|
-0-
|
|
Customer's NSF cheque returned by the bank
|
1,800
|
-0-
|
Required -
1. Calculate the amount of the April 30:
a. Deposits in transit
b. Outstanding cheques
2. What is the April 30 adjusted cash balance? Show all work.
Question 3 - Almond Limited uses a periodic inventory system. On June 24, the company sold 600 units. The following additional information is available:
|
Units
|
Unit Cost
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Total Cost
|
|
June 1 inventory
|
200
|
$12
|
$2,400
|
|
June 30 purchase
|
400
|
14
|
5,600
|
|
June 23 purchase
|
400
|
15
|
6,000
|
|
TOTAL
|
1,000
|
|
$14,000
|
Required -
1. Calculate the June 30 inventory and the June cost of goods sold, using the weighted average cost formula. Round per-unit cost to two decimal places.
2. Calculate the June 30 inventory and the June cost of goods sold, using the FIFO formula.
3. Assume that 200 units sold on June 24 had a unit cost of $12; 300 had a unit cost of $14; and the remaining 100 units had a unit cost of $15. Calculate the June 30 inventory and the June cost of goods sold, using the specific identification method.
Question 4 - As noted in the table below, items are omitted in each of the following tabulations of income statement data for a business following ASPE.
Required - Fill in the amounts that are missing.
|
|
2018
|
2019
|
2020
|
|
Sales
|
$290,000
|
$(d)
|
$410,000
|
|
Sales returns
|
6,000
|
13,000
|
(g)
|
|
Net sales
|
(a)
|
347,000
|
(h)
|
|
Beginning inventory
|
20,000
|
32,000
|
(i)
|
|
Ending inventory
|
(b)
|
(e)
|
(j)
|
|
Purchases
|
(c)
|
260,000
|
298,000
|
|
Purchase returns and allowances
|
5,000
|
8,000
|
10,000
|
|
Transportation in
|
8,000
|
9,000
|
12,000
|
|
Cost of goods sold
|
238,000
|
(f)
|
303,000
|
|
Gross profit on sales
|
46,000
|
91,000
|
97,000
|