PROJECT -
1. In February 20X4, Colton's Western Wear (CWW) invested excess cash in shares of PLZ Corporation, a publicly traded company with over 1,000,000 shares outstanding. CWW bought 2,700 shares at $11.65 per share. The shares were bought on speculation that they would increase in value, as analyst valuations for the next 12 months were that the shares would trade in the $31 to $36 range. Brokerage costs were $0.05 per share plus a flat fee of $29.00. The closing price of the shares and the dividends per share are as follows for the quarter-ends:
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Closing value on the stock exchange
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Dividend per share
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February 17, 20X4
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$11.65
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-
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March 31, 20X4
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$16.20
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$0.24
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June 30, 20X4
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$22.75
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$0.25
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September 30, 20X4
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$31.20
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$0.26
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December 31, 20X4
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$29.85
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$0.26
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The dividends were declared by the board of PLZ on the 15th of the months noted and were payable on the last day of the month.
2. In 20X2, CWW bought the mortgages on two properties in Edmonton. The company receives monthly payments that include principal and interest. One mortgage will be repaid in full in 14 years and the other in 18 years. CWW bought the mortgages with the intention of selling them at a profit when the financial conditions improve. However, both mortgagees are struggling financially, and the underlying value of the properties has declined. In December 20X4, CWW had the value of the mortgages appraised, and the appraisal showed a total impairment of $38,500 on the mortgages. Interest and principal have been properly recorded for this investment.
3. On July 1, 20X4, CWW bought 100,000 of General Company Inc.'s bonds for $250,000 plus brokerage costs of $145. The interest rate on the bonds is 7% per annum, which is equal to the market rate. Interest is paid on June 30 and December 31 each year. CWW intends to hold the bonds until they mature on June 30, 20X9. At year end, CWW had not yet received the semi-annual interest payment that was due on December 31, 20X4. The market value of the bonds was $254,500 on December 31, 20X4.
For items 4 and 5, see the schedule after item 5.
4. On January 1, 20X1, CWW bought the customer list of a retail store that was closing down for $10,000. The list was expected to have value for five years.
The half-year rule is applied in depreciating property, plant and equipment, including intangible assets. The company takes a half-year of depreciation in the year of acquisition and a half-year of depreciation in the year of disposal.
CWW has found that there is an active market for music customer lists in the Edmonton area. The company accounts for the customer list (an intangible asset) using the revaluation model. CWW tests intangible assets annually for impairment. At the end of 20X4, the customer list was found to have a fair value of $7,000. The customer list has never been found to be impaired. (Prior to revaluation of an asset at year end, close the updated accumulated amortization account to the asset.)
Capital assets held by CWW are tested on the basis of economic or other information that indicates that the value of the assets may be impaired. The company uses the elimination method to report assets accounted for using the revaluation model on the statement of financial position.
5. In October 20X4, the company bought a new delivery vehicle. The cost was $18,500. The vehicle is expected to have a five-year life and a $2,000 salvage value. On December 31, 20X4, the company sold the old delivery vehicle for $800; however, the journal entry to account for the sale of the vehicle has not been booked yet. On December 31, 20X4, the cash from the sale was deposited into CWW's bank account.
The transaction was journalized as follows:
DR Cash - 800
CR Gain on sale of equipment - 800
All capital assets up to December 31, 20X3, are shown in the schedule attached.
Required:
Submit the following in your response:
1. The adjusting journal entries with supporting calculations.
2. Adjusted trial balance.
3. The statement of comprehensive income.
4. The statement of changes in equity.
5. The statement of financial position.
While preparing the financial statements of CWW for the year ended December 31, 20X4, assume that income tax expense will remain unchanged for this scenario.
Attachment:- Assignment File.rar