Accounting Answers

On January 1, Year 1 Trinity Inc. leased equipment. The lease requires Trinity to make five annual payments of $13,000 beginning December 31, Year 1. Insurance was paid up front for the year at a cost of $800. There is a guaranteed residual value of $6000 and the asset is expected to be worth only $1000 at the end of the lease term, December 31, Year 5. The lease qualifies as a finance lease. The interest rate used is 9%. Present value factors for the 9% rate are as follows:

• For an annuity due with 5 payments 4.240
• For an ordinary annuity with 5 payments 3.890
• Present value of $1 for 5 periods 0.650 Assuming a seven-year life and a five-year lease term. How much is the amortization expense of the “right of use” asset on December 31, Year 1?
• 10,764
• 53,820 / 5 = 10,764
• Debit Amortization Expense $10,764
• Credit Right of Use Asset $10,764

For this question, how come we don't subtract 5000 from the $53,820 and then divide by 5.

The ledger of ITC Company contained the following account balances at December 31, 2019, the end of company's fiscal year.

Accounts Balances($)

Cash 12080

Accounts Receivable22300

Inventory 36500

Supplies 1080

Prepaid Rent 9490

Machinery 23400

Accumulated Depreciation-Machinery 9970

Equipment 62200

Accumulated Depreciation-Equipment 7560

Land 70000

Accounts Payable 9730

15% Debenture 31000

Common Stock ($ 2.5 par value) 40000

Additional Paid in Capital-Common Stock 42100

Retained Earnings 59300

Sales 547800

Sales Returns and Allowances 8000

Sales Discount 3400

Salaries Expense 75900

Cost of Goods Sold 385800

Loss from employee strike 4560

Wages Expense 7700

Rent Expense 12450

Interest Expense 3400

Advertising Expense 10000

Rent Revenue 3400

Other Administrative Expense 2600

From the above information, prepare the followings:

(a) Multistep income statement for the year ending December 31, 2019;

(b) Stockholder_s Equity Statement as at December 31, 2019; and

(c) Classified Balance Sheet as at December 31, 2019.

The ledger of ITC Company contained the following account balances at December 31, 2019, the end of company's fiscal year.

Accounts Balances ($)

Cash 12080

Accounts Receivable 22300

Inventory 36500

Supplies 1080

Prepaid Rent 9490

Machinery 23400

Accumulated Depreciation-Machinery 9970

Equipment 62200

Accumulated Depreciation-Equipment 7560

Land 70000

Accounts Payable 9730

15% Debenture 31000

Common Stock ($ 2.5 par value) 40000

Additional Paid in Capital-Common Stock 42100

Retained Earnings 59300

Sales 547800

Sales Returns and Allowances 8000

Sales Discount 3400

Salaries Expense 75900

Cost of Goods Sold 385800

Loss from employee strike 4560

Wages Expense 7700

Rent Expense 12450

Interest Expense 3400

Advertising Expense 10000

Rent Revenue 3400

Other Administrative Expense 2600

a. the liabilities of Holland company are 120,000$ and its stockholders' equity is 232,000. what is the amount of Holland company's total assets?b.the total assets of Holland company are 190,000$ and its stockholders' equity is 86,000$. What is the amount of its total liabilities?c.the total assets of Holland company are 600,00$ and its liabilities are equal to one-half of its total assets. What is the amount of Holland company's stockholders' equity?

The capital structure of ABC Pvt. Ltd is as follows:

Equity share capital (eachshareofRs.10) = Rs.16, 00,000

Debentures with a coupon rate of 10% = Rs. 10, 00,000

Reserves and surplus = Rs.15, 00,000

Revenue from the business activities for the company is Rs. 2.00 crores. Its variable cost is 10% of the revenue, fixed operating cost is Rs. 60 lakhs and the company pays income tax at a rate of 25%. (10Marks)

a. Calculate financial leverage, operating leverage and combined leverage for the company.

b. Determine the likely level of EBIT for EPS of (i) Rs.45, (ii) Rs.60, and(iii) Rs. 75.

Following information relates to Process A account 10000 Units introduced at Rs 20000 Material consumed Rs 5000 Manufacturing expenses Rs 2000 Direct Labour charges Rs 6000 Units transferred to next process B- 9500 It is bound that wastage in this process is 3% There is no realizable value of scrap Prepare the process account reflecting the value at which output will be transferred to the next process.

This pandemic situations has drawn the attention of a lot of individuals to actively watch and participant in the Indian financial market. As a life-long learner, you also decide to understand the fundamentals of certain companies listed on the stock exchanges in India. One of your friends advised you to look in to the various techniques of financial analysis, as one of the way of evaluating the financials of business entities. You are done with getting an understanding about various techniques of financial analysis. Elaborate any five of the said techniques for financial analysis.

2. a. Josh Smith has compiled some of the data of his business in order to analyze his position. The data are as follows.

Account Amount

Cash 3200

Inventory 2800

Checking account 800

Accounts payables 700

Short-term notes payables 2100

i. Calculate Josh’s liquidity ratios.

ii. Several of Josh’s friends are doing different business. They have told him that they have current ratio and quick ratio of about 1.8 and 1.1 respectively. How would you analyze Josh’s liquidity relative to his friends?

iii. What problem might you find in comparing these ratios? 3

General accounting practice is based on the accrual concept. Explain what this means and describe how this compares with the financial manager's focus on cash.