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On January 1, 2014, Prince Corp. purchased a building for $1,800,000, with the intention of leasing it. The building is expected to have a 20-year life, no residual value, and will be depreciated on a straight-line basis. On April 1, 2014, under a cancell

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Q1;On January 1, 2014, Prince Corp. purchased a building for $1,800,000, with the intention of leasing it. The building is expected to have a 20-year life, no residual value, and will be depreciated on a straight-line basis. On April 1, 2014, under a cancellable lease, Prince leased the building to George Company for $540,000 a year ($45,000 a month) for a four-year period ending March 31, 2018. George paid $540,000 to Prince on April 1, 2014. During calendar 2014, Prince incurred $30,000 in maintenance and other executor costs under the provisions of the lease. This lease is properly classified as an operating lease by both parties.;Required;(a) What is the income before income taxes reported by Prince from this lease for the year ended December 31, 2014?;(b) What is the amount of rent, or lease expense reported by George from this lease for the year ended December 31, 2014?;Q2;Erica Corp. leases machinery on January 1, 2014, and records this as a finance (capital) lease. Seven annual lease payments of $140,000 are required the end of each year, starting December 31, 2014. The present value of the lease payments at 10% is $681,600.;Erica uses the effective interest method for the interest component of the lease payments. For all machinery, the company uses straight-line depreciation over eight years, with no residual value.;Required: (rounded to the nearest dollar);(a) Prepare a lease amortization schedule for 2014 and 2015.;(b) Prepare the general journal entries relating to this lease for 2014.;Q3;Wylie Inc. financed the purchase of production equipment by taking out a loan for $50,000 on February 1, 2013. The loan requires Wylie Inc. to make annual $18,360 payments of blended interest and principal on February 1 of the following three years, beginning February 1, 2014. The loan bears interest at the rate of 5%.;Required;(a) Prepare the debt amortization schedule for the bank loan payable over its term using effective interest method. Round to the nearest dollar.;(b) Prepare the journal entries required to record;1- The bank loan.;2- The interest for the fiscal year which ends January 31, 2014,and;3- The first payment on February 1, 2014.;(c) Prepare the partial statement of Financial Position/Balance Sheet presentation for the bank loan at January 31, 2014.;Q4;On June1, 2014 Bella Cooler Corp sold 10 year, $500,000 (face value) bonds for $438,800. The bonds have a stated interest rate of 8% and a yield rate of 10%, and pay interest annually on May 31 of each year. The bonds are to be accounted for using the effective interest method.;Required;(a) Record the bond issue on June 1, 2014.;(b) Construct a bond amortization schedule for this bond to indicate the amount of interest expense and discount amortization at each May 31. Include only the first four years. Make sure all columns and rows are properly labeled, and round to the nearest dollar.;Q5;For the month of April, Regina Sales Ltd. recorded $140,000 in sales, 40% of which were on account (terms N 30), and 60% of which were cash sales. The company is required to change 7% provincial sales tax (PST) and 5% Goods and Services Tax (GST) on all sales.;Required;Prepare one journal entry to record the company?s sales for April.;Q6;The total gross payroll of Luton Co. was $ 460,000 income taxes withheld were $110,000. The employment insurance is 1.88% for the employee and 1.4 times the employee premium for the employer. The CPP/QPP contributions are 4.95 for both employee and employer. The worksafeBC assessment is 1%.;Required;Prepare the journal entry (entries) for this payroll.;Q7;On January 1, 2014, Copeland Ltd. (a public company) had the following shareholders? equity account;Preferred shares, $5 non-cumulative, no par value;Unlimited number authorized, none issued;-;Common shares, no par value, unlimited number;authorized, 800,000 issued;$5,600,000;Contributed surplus;$100,000;Retained earnings;$1,223,000;Accumulated other comprehensive income;$142,000;The following selected transactions occurred during 2014;Jan 2, Issued 100,000 preferred shares at $25 per share.;Apr 8, Issued 130,000 common shares at $11 per share.;Dec 5, declared the annual cash dividend to preferred shareholders of record on December 20, payable January 1.;Dec 5, Board of Directors appropriated $100,000 of the retained earnings for a special project.;Dec 31, Net income for the year was $374,000.;Required;(a) Prepare the journal entries to record the transactions above.;(b) Prepare a Statement of Changes in Equity for the year ended December 31, 2014.;(c) Prepare the Equity section of the Balance Sheet/Statement of Financial Position, as at December 31, 2014.;Q8;Accu Tech Renovations Corp. (ATRC) was incorporated on January 1, 2018. At that time it issued 100,000 ordinary shares, 80,000, $20, 3% preferred shares ?A?, and 40,000, $20, 6% preferred shares ?B?. Net income for the year ended December 31, 2018 was $1,800,000. ATRC declares and pays total of $238,000 in dividends. Both the preferred shares series A and B are non-cumulative in nature. Series A must be fully paid their current entitlement before any monies are paid to the Series B shareholders.;Required;Compute basic EPS.

 

Paper#75089 | Written in 18-Jul-2015

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