In January 2021, Janeway Inc. doubled the amount of its outstanding stock by selling on the market an additional 10,000 shares to finance an expansion of the business. You propose that this information be shown by a footnote on the balance sheet as of December 31, 2020. The president objects, claiming that this sale took place after December 31, 2020, and therefore should not be shown. Explain your position.
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In January 2021, Janeway Inc. doubled the amount of its outstanding stock by selling on the market an additional 10,000 shares to finance an expansion of the business. You propose that this information be shown by a footnote on the
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- On December 12, 2021, an investment in equity securities costing $80,000 was sold for $100,000. The total of the sale proceeds was credited to the investment in equity securities account.Required:1. Prepare the journal entry to correct the error, assuming it is discovered before the books are adjusted or closed in 2021. (Ignore income taxes.)2. Prepare the journal entry to correct the error assuming it is not discovered until early 2022. (Ignore income taxes.)On January 1, 2021, the Apex Company exchanged some shares of common stock it had been holding as an investment for a note receivable. The note principal plus interest is due on January 1, 2022. The 2021 income statement reported $2,200 in interest revenue from this note and a $6,000 gain on sale of investment in stock. The stock’s book value was $16,000. The company’s fiscal year ends on December 31.Required:1. What is the note’s effective interest rate?2. Reconstruct the journal entries to record the sale of the stock on January 1, 2021, and the adjusting entry to record interest revenue at the end of 2021. The company records adjusting entries only at year-end.Ferraro, Inc. established a stock-appreciation rights (SARs) program on January 1, 2020, which entitles executives to receive cash at the date of exercise for the difference between the market price of the stock and the pre-established price of $20 on 5,000 SARs. The required service period is 2 years. The fair value of the SARs are determined to be $4 on December 31, 2020, and $9 on December 31, 2021. Compute Ferraro's compensation expense for 2020 and 2021.
- At December 31, 2019, Wayne Company owned note payable of P1,950,000, due March 15, 2020. Wayne expects to retire this debt with proceeds from the sale of 200,00o shares of its share capital. The shares were sold for P10 per share on March 1, 2020, prior to the issuance of the year-end financial statements. In Wayne's December 31, 2019 Statement of Financial Position, what amount of the note payable should be excluded from current liabilities?On January 1, 2018, the Apex Company exchanged some shares of common stock it had been holding as aninvestment for a note receivable. The note principal plus interest is due on January 1, 2019. The 2018 incomestatement reported $2,200 in interest revenue from this note and a $6,000 gain on sale of investment in stock. Thestock’s book value was $16,000. The company’s fiscal year ends on December 31.Required:1. What is the note’s effective interest rate?2. Reconstruct the journal entries to record the sale of the stock on January 1, 2018, and the adjusting entry torecord interest revenue at the end of 2018. The company records adjusting entries only at year-endMichael Inc., a publicly accountable entity, sells specialized equipment on December 31, 2020. The equipment could have been purchased for a cash price of $3,250,000 however, the purchaser opted to sign a note payable with the following terms: - interest payments of $75,000 on December 31, 2021, 2022, 2023 and 2024 and - a final payment of $3,500,000 on December 31, 2024. Required: i) ii) Prepare all journal entries relative to this note for Michael Inc. (the seller) for the years ending December 31, 2020 and 2021. If instead, Michael Inc. is a private company subject to ASPE, prepare the December 31, 2021 journal entry using the more simple method allowed under ASPE.
- Sage Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Sage and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,710 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $5,960 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Sage’s cash flow problems are due primarily to the company’s desire to finance a $297,780 plant expansion over the next 2 fiscal years through internally generated funds.The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years. Sage CorporationBalance SheetMarch 31 Assets 2021 2020 Cash $18,150 $12,590…On December 12, 2021, an equity investment costing $80,000 was sold for $100,000. The investment was carried in the balance sheet at $75,000, and was accounted for under the equity method. An error was made in which the total of the sale proceeds was credited to the investment account.Required:1. Prepare the journal entry to correct the error assuming it is discovered before the books are adjusted or closed in 2021. (Ignore income taxes.)2. Prepare the journal entry to correct the error assuming it is not discovered until early 2022. (Ignore income taxes.)The Josh Cutler Corporation provides restricted stock to certain executives. Under the plan, the company granted 30 million shares on January 1, 2024, which vest in four years. The fair value of the shares is $15.00. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the restricted stock. 2. & 3. Prepare the appropriate journal entries (if any).
- Ayayai Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Ayayai and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,970 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $5,970 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Ayayai’s cash flow problems are due primarily to the company’s desire to finance a $300,080 plant expansion over the next 2 fiscal years through internally generated funds.The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years. Ayayai CorporationBalance SheetMarch 31 Assets 2021 2020 Cash $18,120 $12,410…As part of its stock-based compensation package, International Electronics granted 61 million stock appreciation rights (SARs) to top officers on January 1, 2024. • At exercise, holders of the SARS are entitled to receive cash or stock equal in value to the excess of the market price at exercise over the share price at the date of grant. • The SARS cannot be exercised until the end of 2027 (vesting date) and expire at the end of 2029. • The $1 par common shares have a market price of $65 per share on the grant date. • The fair value of the SARS, estimated by an appropriate option pricing model, is $5.00 per SAR at January 1, 2024. • The fair value re-estimated at December 31, 2024, 2025, 2026, 2027, and 2028, is $6.00, $5.00, $6, $2.00, and $5.00, respectively. • All recipients are expected to remain employed through the vesting date. Required: .to 3. Prepare the appropriate journal entries pertaining to the SARS on January 1, 2024 and December 31, 2024-December 31, 2027. The SARS…Jupiter Bank decides to invest in trading securities in order to take advantage of short-term gains. The bank purchased the following securities for the year 2020. Jan. 15, 2020 Purchased 1,000 shares of Corbin Company common stock for $89 per share. May 23, 2020 Purchased 1500 shares of Petro Company common stock for $75 per share. At the end of 2020, Corbin Company's common stock was trading on the market at $93 per share, and Petro's common stock had a market price of $70 per share. Required: 1. Prepare journal entries to record the preceding information. 2. What is the unrealized holding gain or loss and where is it reported on the 2020 financial statements? Enter your answer as positive amount.
