The net realizable values presented below were estimated on 31 December 2019 and re-estimated on 31 May 2030 Cost Nei Role Value 31 December 2019 5520,000 SEX.000 Required: AI. Prepare the journal entries required at 31 December 2019 and 31 January 20, suming that the im entory is recorded LCNRV. using a perpetual inventory system and allowance court under the cost of goods sold method. (mark) A2. If the inventory is recorded a LCNRV, using a perpetual system and an allowancesco under the loss method instead, will the method provide a higher or lower gross profit and net income in the year? (4 marks) On1 January 2020. Arch lent to a borrower in exchange for a 3-year promissory note. The note has a principal value of $600,000 and a maturity date of 31 December 20122. . The note has a stated annual interest rate of focuperate), with interest payable at the end of each year starting 31 December 2000 . The market rate of interest for a note of similar risk is 10% Requirement B1. Calculate the present value of the promissory note on January 2000 rounded to the B2. Prepare the jumal entry to recogning the note on January 2000.mark) Parts marks The following transactions related to Arch took place in 2000 1. On 15 February 2000. Arch old some clectronic products at a price of 50.000. The customer was pren a cash discount of 32, . 60 ignore cost of goods sold Gross method is used to for cash 2. On1 March 2020, the customer settled 20% of the price by paying $1,700 cash within the discount period Requirement CI. Prepare Arch's journal entry for each of the above transactions I. 2. (Smrks) C2. Arch currently prepares a set of monthly financial statements for the managers operating decision-making. However, due to the amount of time required to check for the accuracy of the calculatices and jual citrics pecparod, it takes more than I wok's time before the monthly reports could be wailable for managers' use in the following monthTo shorten the preparation time, Arch is considering if these checking procedures shall be skipped. What trade-offs, in terms of qualitative characteristics of useful information, we inherent in this case Note: Your new shall cover two qualitative characteristics from fundamental ander enhancing qualities marks) Total for Question 1: 21 markt Question 2 (29 marks) Medici Corporation ("Medici") is preparing a meeting with its banker to discuss the renewal of a long-term debt. The following trial balance was taken from the books of Medici Corporation on 31 December 2020. Credit Debit S 12,000 40,000 7,000 S 1,800 44,000 4,800 105,000 Account Cash Accounts Receivable Note Receivable Allowance for Doubtful Accounts Inventory Prepaid Insurance Equipment Accumulated Depreciation Equipment Accounts Payable Dividends Payable Share Capital-Ordinary Retained Earnings Sales Revenue Cost of Goods Sold Salaries and Wages Expense Prepaid Rent Dividends Total 15,000 10.800 10,000 44,000 55,000 260,000 111,000 50,000 12,800 10,000 $396,600 $396,600 4. The trial balance above has not yet reflected below: 1. Insurance expired during the year, $2,000. 2. Estimated doubtful debts at the year-end, 11% of the accounts receivable (gross). No doubtful debt is expected regarding the note receivable. 3. Depreciation on equipment, 10% per year. Residual value is insignificant. Straight-line depreciation method is adopted. Interest at 5% is receivable on the note for one full year. 5. Rent expense for the year. (Two-year rental was prepaid on 1 January 2020 for $12,800.) 6. Accrued salaries and wages at 31 December 2020 is $5,800. Required: (a) Prepare the necessary adjusting entries. (12 marks) (b) Compute Medici's income: (i) before recording the adjusting entries; and (ii) after recording the adjusting entries. Explain why Medici's banker would prefer to wait for Medici to complete its year-end adjustment process before making a decision on the loan renewal. (5 marks) c) Prepare the necessary closing entries after adjustments. (12 marks) The net realizable values presented below were estimated on 31 December 2019 and re-estimated on 31 January 2020. Cost Net Realizable Value 31 December 2019 S520,000 $485,000 31 January 2020 520,000 585,000 Required: Al. Prepare the journal entries required at 31 December 2019, and 31 January 2020, assuming that the inventory is recorded at LCNRV, using a perpetual inventory system and an allowance account under the cost-of-goods-sold method. (4 marks) A2. If the inventory is recorded at LCNRV, using a perpetual system and an allowance account under the loss method instead, will the method provide a higher or lower gross profit and net income in the year? (4 marks) Part B (5 marks) On 1 January 2020, Arch lent to a borrower in exchange for a 3-year promissory note. The note has a principal value of $600,000 and a maturity date of 31 December 2022. The note has a stated annual interest rate of 8% (coupon rate), with interest payable at the end of each year starting 31 December 2020. The market rate of interest for a note of similar risk is 10%. Requirement: B1. Calculate the present value of the promissory note on 1 January 2020 (rounded to the nearest dollars). (3 marks) B2. Prepare the journal entry to recognize the note on 1 January 2020. (2 marks) The following transactions related to Arch took place in 2020. 1. On 15 February 2020, Arch sold some electronic products at a price of $50,000. The customer was given a cash discount of 3/20, 1/60 (ignore cost of goods sold). Gross method is used to account for cash discount. 2. On 1 March 2020, the customer settled 20% of the price by paying 89,700 cash within the discount period Requirement: Ci. Prepare Arch's journal entry for each of the above transactions 1 - 2. (5 marks) C2. Arch currently prepares a set of monthly financial statements for the managers' operating decision-making. However, due to the amount of time required to check for the accuracy of the calculations and journal entries prepared, it takes more than 1 week's time before the monthly reports could be available for managers' use in the following month. To shorten the preparation time, Arch is considering if these checking procedures shall be skipped. What trade-offs, in terms of qualitative characteristics of useful information, are inherent in this case? (Note: Your answer shall cover two qualitative characteristics from fundamental and/or enhancing qualities)