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Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French supplier for 1,000 cases of wine at a price of 200 euros per case. The total purchase price is 200,000 euros. Relevant exchange rates for the euro are as follows: Vino Veritas Company has an incremental borrowing rate of 12 percent (1 percent per month) and closes the books and prepares financial statements at September 30. a. Assume that the wine arrived on September 15, and the company made payment on October 31. There was no attempt to hedge the exposure to foreign exchange risk. Prepare journal entries to account for this import purchase. b. Assume that the wine arrived on September 15, and the company made payment on October 31. On September 15, Vino Veritas entered into a 45-day forward contract to purchase 200,000 euros. It properly designated the forward contract as a fair value hedge of a foreign currency payable. Prepare journal entries to account for the import purchase and foreign currency forward contract. c. Vino Veritas ordered the wine on September 15. The wine arrived and the company paid for it on October 31. On September 15, Vino Veritas entered into a 45-day forward contract to purchase 200,000 euros. The company properly designated the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate. Prepare journal entries to account for the foreign currency forward contract, firm commitment, and import purchase. d. The wine arrived on September 15, and the company made payment on October 31. On September 15, Vino Veritas purchased a 45-day call option for 200,000 euros. It properly designated the option as a cash flow hedge of a foreign currency payable. Prepare journal entries to account for the import purchase and foreign currency option. e. The company ordered the wine on September 15. It arrived on October 31, and the company made payment on that date. On September 15, Vino Veritas purchased a 45-day call option for 200,000 euros. It properly designated the option as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the spot rate. Prepare journal entries to account for the foreign currency option, firm commitment, and import purchase.

Q:

A company is considering the adoption of activity-based costing (ABC) system because the managers suspect that their traditional costing system distorts the product costs. This company produces and sells two products Standard and Deluxe. Their traditional costing system uses machine hours (MHs) as the allocation base for manufacturing overhead costs. The production managers decided that the major activities are Assembly, Machine setups, and Parts administration and determine the costs for each activity. They also identified how many MHs, setups, and parts each product requires. Additional information: Standard Deluxe Price $120 per unit $150 per unit Costs: Direct materials $32 per unit $36 per unit Direct labor (DL) $15 per unit $25 per unit Units produced 250,000 units 100,000 units Activity Assembly (MHs) 100,000 MHs 200,000 MHs Machine setups (setups) 100 setups 400 setups Parts administration (part types) 200 parts 200 parts Overhead Costs Assembly $1,200,000 Machine setups $600,000 Parts administration $300,000 Compared with the unit product cost calculated by the ABC system, what is the distortion (difference) created by the traditional costing system for Deluxe Product? The company is assumed to spend equal money on customer relations among its two customers A and B. Total costs of customer relations for these two customers are $10,000. Customer A placed an order as below. Using the ABC system, the customer margin of customer A is (choose the closest answer): Standard 100 units Deluxe 200 units

Q:

On September 1, 201X, Dan Potter opened an auto repair shop. Here is his chart of accounts: Assets Liabilities Equity 101 Cash 201 Accounts Payable 301 Dan Potter, Capital 102 Accounts Receivable 302 Dan Potter, Withdrawals 103 Shop Supplies 401 Repair Fees 104 Prepaid Rent 501 Training Expense 105 Tools & Equipment 502 Rent Expense 106 Accumulated Dep. Tools 503 Gas Expense 107 Vehicles 504 Wage Expense 108 Accumulated Dep Vehicles 505 Depreciation Expense 506 Wage Expense 507 Telephone Expense 508 Advertising Expense 509 Misc. Expense The following transactions were completed for the month of September: --------- 2021 September 1 – Dan Potter invested $13,000 in the auto repair shop along with $10,000 of tools and equipment September 1 – Rented and paid 5 months’ rent in advance to Acres of Velvet Property Management, $10,000. September 1 – Bought a truck on account from Mcfly’s Toyota Fort Worth, $17,000. September 4 – Purchased equipment from Don’s Tool Shed, for cash, $550. September 5 – Purchased additional equipment from Don’s Tool Shed, on account, $300. September 6 – Replaced Engine and transmission for Kate Tyson, $9,000. September 8 – Paid gas bill to Victor’s Gas Co., $55. September 15 – Paid Joey Johnston, auto shop employee, $1,000. September 17 – Completed repairs on Laura Lostseer’s 2020 Ferrari Portofino, $11,000, payment to be received October 8. September 20 – Dan Potter withdrew $5,000 to pay personal expenses. September 21 – Repaired Matthew Criss’s VW Bus, $6000. Sep 22 – Paid Victor’s Gas Co for gas bill, $85. Sep 24 – Paid Mcfly’s Toyota Fort Worth for shop supplies, $800. September 30 - Paid Joey Johnston, auto shop employee, $1000. September 30 – Paid Horizontical Mobile Inc September phone bill, $550. September 30 – Received advertising bill for September, $800, from Nuts and Boldts Magazine. The bill is to be paid on Oct 2. Required Work for September Journalize transactions and post to ledger accounts. Prepare a trial balance in the first two columns of the worksheet and complete the worksheet using the following adjustment data: One month’s rent had expired. An inventory shows $250 of shop supplies remaining. Depreciation on equipment, $260. Depreciation on vehicles, $510. Prepare a September income statement, statement of owner’s equity, and balance sheet. From the worksheet, journalize and post adjusting and closing entries (p. 3 of journal) Prepare a post-closure trial balance. During October, Dan’s Pretty Good Auto Repair completed these transactions: October 1 – Purchased additional equipment from Don’s Tool Shed, $750. October 2 – Paid Nuts and Boldts Magazine for September advertising, $800. October 3 – Repaired Dorothy Little’s Mercury Sable, $7200. October 6 – Paid gas bill to Victor’s Gas Co., $30. October 8 – Finished extensive upgrades to Mac Alexander’s Cadillac Escalade, $20,000. October 12 – Paid Perfectly Adequate Training LLC to send employees to mechanical training workshop, $550. October 15 – Paid Joey Johnston, auto shop employee, $1000. October 17 – Replaced the high-altitude battery and did a horn fluid flush in Montavious Montoya’s 1981 DeLorean, $2,400. Payment to be received on Nov 10. October 18 – Put a refurbished 3.99L V7 engine in Josh Farmer’s 2007 Dodge Nitro, $3900. October 22 – Sent a check to Scharich Charities for $105 to sponsor a local food bank. (This amount is not to be considered an advertising expense; it is a business expense and is posted to Misc. Expense) October 24 – Purchased parts for company vehicles from Mcfly’s Toyota Fort Worth, $610. October 28 – Dan Potter withdrew $2,100 from the business to pay personal expenses. October 30 – Paid Joey Johnston, auto shop employee, $1000. October 30 – Paid Horizontical Mobile phone bill, $550. October 30 – Received advertising bill for October, $800, from Nuts and Boldts Magazine. The bill is to be paid on Nov 2. Required Work for October: Journalize transactions in a genera journal (p. 4) and post to ledger accounts. Prepare a trial balance in the first two columns of a blank, fold-out worksheet located at the end of your textbook and complete the worksheet using the following adjustment data: One month’s rent had expired. Paid 5 months’ rent in advance on September 1, $10,000. An inventory shows $230 of shop supplies remaining. Depreciation on equipment, $190. Depreciation on vehicles, $300. Prepare an October income statement, statement of owner’s equity, and balance sheet. From the worksheet, journalize and post adjusting and closing entries (p. 6 of journal). Prepare a post-closing trial balance.

Q:

PRACTICE SET: SHARE TRANSACTIONS The following are the shares related transaction of Hope Corporation for the year 2021. Prepare journal entries and use the Memo Entry method in recording share transactions. DATE JANUARY 1 JANUARY 10 JANUARY 15 JANUARY 30 FEBRUARY 15 FEBRUARY 28 MARCH 15 MARCH 31 APRIL 15 APRIL 30 MAY 15 MAY 31 JUNE 15 JUNE 30 JULY 15 JULY 31 TRANSACTIONS Received authorization from SEC to issue 100,000 shares at P100 par value Issued 1,000 shares at par value to Slim Shady. Issued 2,000 shares at P110 per share to Kobe. Paid legal fees incurred through issuance of 1,000 shares. The shares are trading on this day at P112, and the legal fees are normally billed by Atty Scam at P1,000 per hour. The company incurred a total of 100 hours. Issued 5,000 shares of stock to Khaleed for a land with a fair value of P800,000. The shares are currently trading at P120 on this day. Underwriter's fee incurred as a result of issuance is P20,000. Received subscriptions of P150 per share from the following investors: Shaq, 1,000 shares; Tim, 1,500 shares; and Tracy, 2,000 shares. Shaq and Tim paid 25% of their subscriptions, and Tracy paid 50% of his subscription. Reacquires the shares purchased by Slim Shady for P150,000. Issued 5,000 shares to Grock for a land with an unknown fair value. The shares are trading at P105 on this day. Shaq paid his subscription in full. Tim paid another 25% of his subscription. Reissues 500 shares in the treasury to Sun for P200 per share. Tim told Hope Corporation that he cannot pay the remaining balance of his subscription. A public auction was made in relation to Tim's delinquency, and Hope Corporation incurred advertising expense of P10,000. Tony, the highest bidder, paid the offer price for 500 shares. Reissues another 500 shares in the treasury to Ling for P110 per share. Wade subscribed 1,000 shares at P120 per share and paid 25% of the subscription as down payment. Tracy informs Hope Corporation that he can no longer pay for the remaining balance of his subscription due to financial difficulties.

Q:

George and Louise Jefferson are married and have 3 children living at home: Lionel, 10; Bentley, 12; and Florence, 19. Florence was a full-time college freshman in the fall of 2020. She earned wages of $7,500 but did not provide more than 50% of her own support. Loulse earned $64000 this year (2020), and had $1280 federal income taxes withheld from her pay. George has been unemployed ever since he became legally blind due to injuries sustained in an accident in 2017. In January of 2020 he began full-time study towards a Master's degree (he already had a 4-year degree). After two months off during the summer, he continued his studies in the Fall. He paid a total of $10500 tuition, and $900 for textbooks. Florence paid $2600 for tuition and $680 for textbooks. George and Louise's itemized deductions total $24550. They paid George's mother $4150 to watch the boys after school. Compute the following for George and Louise Jefferson. If any item does not apply to them, enter zero as the amount: Amount for Jeffersons Credit American Opportunity Credit Child Tax Credit Child & Dep. CARE Credit Earned Income Credit Foreign Tax Credit Lifetime Learning Credit Other Dependent Credit Adjusted Gross Income Deductions from AGI Taxable Income ncome Tax Nonrefundable Credits Balance after Nonrefundables Refundable Credits** Payments Balance due (Refund)*** Include only the strictly nonrefundable portion of credits that are partly refundable. Include the full nonrefundable amounts that are vailable, even if the total exceeds the tax liability. < Prev 53 of 551 Next >

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