034_F| N_RCQ uestion.pdf Case 3 (20 Points) - L05 On April 1, 2020, you were hired by Binus Inc., a closely held company, as a staff member of its newly created internal auditing department. While reviewing the company's records for 2018 and 2019, you discover that no adjustments have yet been made for the items listed below: 1. Interest income of $20,000 was not accrued at the end of 2018. It was recorded when received in January 2019. A computer costing $10,000 was expensed when purchased on July 1, 2018. It is expected to have a 4-year life with no residual value. The company typically uses straight-line depreciation for all fixed assets. Research costs of $45,000 were incurred early in 2018. They were capitalized and were to be amortized over a 3-year period. Amortization was recorded for 2018 and 2019. On January 2, 2018, Binus leased a building for 5 years at a monthly rental of $11,000. On that date, the company paid the following amounts, which were expensed when paid. Security deposit $35,000 First month's rent $11,000 Last month's rent 11 000 m The company received $60,000 from a customer at the beginning of 2018 for services that it is to perform evenly over a 3-year period beginning in 2018. None of the amount received was reported as unearned revenue at the end of 2018. Merchandise inventory costing $24,000 was in the warehouse at December 31, 2018, but was incorrectly omitted from the physical count at that date. The company uses the periodic inventory method. Required: Explain the problems for each items and prepare journal entries showing the adjustments that are required! Case 1 (20 Points) - L04 The following information is related to White Cofs pension plan: 2019 2020 Plan asset (fair value], Dec 31 2,796,000 3,396,000 Defined benefit obligation, Jan 1 2,800,000 3,292,000 Pension asset/ liability, Jan 1 560,000 {Cr} ? Service cost 240,000 360,000 Actual return on plan assets 96,000 120,000 Contributions 460,000 480,000 Accumulated benefit obligation, Dec 31 2,000,000 2,200,000 Discount (interest) rate 9% 9% Required: 3. Explain why White Co. has pension liability at the beginning and the end of the year! (5 points) b. Compute the pension expense for 2019 and 2020! (7.5 points) c. Prepare the journal entries for both years and explain thejournal that you make! (7.5 points) Case 2 (25 Points) L04 YOU Leasing Company agrees to lease machinery to ME Corporation on January 1, 2019. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $1,050,000, and the fair value of the asset on January 1, 2019, is $1,400,000. 3. At the end of the lease term, the asset reverts to the lessor and has a quaranteed residual value