Bell has not yet recorded certain transactions and adjustments, and these omitted items are the focus of this assignment. Information pertaining to the omitted transactions and adjustments follows: Omitted Transactions T1. On December 31, 2019, Bell engaged in an exchange of buildings with AAA Co. The following information pertains to the building each company owned immediately before the exchange: Bell Co. Building cost Accumulated depreciation Fair value $268,524 52.213 99625 AAA Co. $237,361 39.715 175,672 1 In addition, Bell received $23,953 cash from AAA. Assume the exchange of buildings has commercial substance. Bell purchased equipment on December 31, 2019. The company gave a down payment of $4,800 and signed a 7-year promissory note for the balance due. The note requires Bell to make annual payments of $5,926 with the first payment due on December 31, 2020. The prevailing market rate of interest for comparable notes is 8%. On December 31, 2019, Bell engaged in an exchange of buildings with ZZZ Co. The following information pertains to the building each company owned immediately before the exchange: Bell Co. 777 Co. Building cost Accumulated depreciation Fair value $181.404 35.273 172,800 $209. 612 92371 147744 L In addition, Bell received $25,056 cash from ZZZ. Assume the exchange of buildings lacks commercial substance. Omitted Adjustments Al. Bell purchased its buildings in 2012 and its equipment in 2014. Bell uses the straight-line depreciation method. For the buildings, the company uses an estimated life of 36 years and no salvage value. For the equipment, it uses an estimated life of 9 years and no salvage value. Note - For the 2019 depreciation calculations, ignore the new fixed assets Bell acquired on December 31, 2019 (new equipment, and new buildings received in the two exchanges). Do consider the old buildings Bell gave in the two exchanges as the company used these assets for the full year. (Assume Bell computed the 2019 depreciation on them for TI and T3, but has not yet recorded the amounts.) A2. Bell estimates that 10.65% of the 2019 year-end Accounts Receivable balance will not be collected. gn Layout References Mailings Review View Help A3. On September 1, 2019, Bell purchased a 24-month insurance policy for $322,608 and paid the full cost of the policy in advance. The policy provides coverage through August 31, 2021 A4 On January 1, 2019, Bell received a promissory note from a customer as consideration in in inventory sale transaction Bell recorded the sale, but it has not yet recorded the interest earned on the note during 2019. The note is noninterest-bearing, and it calls for the customer to pay the $51,064 face value on the December 31, 2022 maturity date. The relevant market rate of interest on the issue date was 9% AS. On April 1, 2019, Bell signed a one-year lease for rental of additional warehouse space. On that date, Bell prepasd the full cost of the lease totaling $112,560. The prepayment covers the period April 1, 2019 through March 31, 2020. Bell's bookkeeper recorded the prepayment into the Rent Expense account. Give the adjusting entry needed when a company uses an expense approach to record a payment in advance The Notes Payable balance of $963,620 results from two loans the company has taken On February 1, 2018, Bell took a 10-year, 6%, $578,620 loan. The interest on this loan is payable annually, on each January 31. Also, On June 1, 2019, Bell took a 1-year, 7%, $385,000 construction loan (see A9 below). The interest on the construction loan is payable on the loan's maturity date, May 31, 2020. Note-Bell already recorded the interest paid on these loans in 2019. For this adjustment, consider any accrued interest on the loans at the December 31, 2019 reporting date. 33 The inventory figure in the trial balance above reflects use of a perpetual system and the FIFO cost flow method. At year-end 2019. Bell decides to adopt the LIFO method, specifically, the dollar-value LIFO cost method. The following information relates to the company's first time adoption of the new method:3333 Date December 31, 2018 December 31, 2019 Inventory at Year-End Prices $326,738 $126. 739 $384 590 Relevant Price Index 1 00 108 Give the FIFO-to-LIFO conversion entry needed at year end 2019. Assume the change in method does not affect any years prior to 2019. Once the company determines the Inventory balance under the new method (LIFO), it must consider the need for an inventory write down. Bell applies the write down procedure to the inventory as a whole. Information concerning the company's December 31, 2019 inventory follows: Net realizable value Normal profit margin Replacement cost 346.750 41,610 384.590 A9 On May 1, 2019, Bell hired a contractor to construct a new office building. The construction work commenced on June 1, 2019, and it is expected to continue through November 30, 2020, the estimated completion date. Bell made progress payments to the contractor in 2019 as follows: d to this PC Search s Review View Help Amount Date June 1 August 1 September 1 October 1 $ 57,000 261,000 154,500 233.500 3351.33 2 22 As stated in A6 above, Bell took a 1-year, 7%, $385,000 construction loan to help fund the work on this project. The company also has a 10-year, 6%, $578,620 loan that is not related to the construction project. Give the adjusting entry needed at December 31, 2019 to record the capitalization of interest for this project. A10. The company's income tax rate for the year is 30%. - Instructions - Complete the following three tasks relating to CP Bell Co.'s accounting process at year end 2019: (a) (b) Prepare the journal entries to record the omitted transactions (T1 through T3). Prepare the journal entries to record the omitted adjustments (A1 through A10). Bell has not yet recorded certain transactions and adjustments, and these omitted items are the focus of this assignment. Information pertaining to the omitted transactions and adjustments follows: Omitted Transactions T1. On December 31, 2019, Bell engaged in an exchange of buildings with AAA Co. The following information pertains to the building each company owned immediately before the exchange: Bell Co. Building cost Accumulated depreciation Fair value $268,524 52.213 99625 AAA Co. $237,361 39.715 175,672 1 In addition, Bell received $23,953 cash from AAA. Assume the exchange of buildings has commercial substance. Bell purchased equipment on December 31, 2019. The company gave a down payment of $4,800 and signed a 7-year promissory note for the balance due. The note requires Bell to make annual payments of $5,926 with the first payment due on December 31, 2020. The prevailing market rate of interest for comparable notes is 8%. On December 31, 2019, Bell engaged in an exchange of buildings with ZZZ Co. The following information pertains to the building each company owned immediately before the exchange: Bell Co. 777 Co. Building cost Accumulated depreciation Fair value $181.404 35.273 172,800 $209. 612 92371 147744 L In addition, Bell received $25,056 cash from ZZZ. Assume the exchange of buildings lacks commercial substance. Omitted Adjustments Al. Bell purchased its buildings in 2012 and its equipment in 2014. Bell uses the straight-line depreciation method. For the buildings, the company uses an estimated life of 36 years and no salvage value. For the equipment, it uses an estimated life of 9 years and no salvage value. Note - For the 2019 depreciation calculations, ignore the new fixed assets Bell acquired on December 31, 2019 (new equipment, and new buildings received in the two exchanges). Do consider the old buildings Bell gave in the two exchanges as the company used these assets for the full year. (Assume Bell computed the 2019 depreciation on them for TI and T3, but has not yet recorded the amounts.) A2. Bell estimates that 10.65% of the 2019 year-end Accounts Receivable balance will not be collected. gn Layout References Mailings Review View Help A3. On September 1, 2019, Bell purchased a 24-month insurance policy for $322,608 and paid the full cost of the policy in advance. The policy provides coverage through August 31, 2021 A4 On January 1, 2019, Bell received a promissory note from a customer as consideration in in inventory sale transaction Bell recorded the sale, but it has not yet recorded the interest earned on the note during 2019. The note is noninterest-bearing, and it calls for the customer to pay the $51,064 face value on the December 31, 2022 maturity date. The relevant market rate of interest on the issue date was 9% AS. On April 1, 2019, Bell signed a one-year lease for rental of additional warehouse space. On that date, Bell prepasd the full cost of the lease totaling $112,560. The prepayment covers the period April 1, 2019 through March 31, 2020. Bell's bookkeeper recorded the prepayment into the Rent Expense account. Give the adjusting entry needed when a company uses an expense approach to record a payment in advance The Notes Payable balance of $963,620 results from two loans the company has taken On February 1, 2018, Bell took a 10-year, 6%, $578,620 loan. The interest on this loan is payable annually, on each January 31. Also, On June 1, 2019, Bell took a 1-year, 7%, $385,000 construction loan (see A9 below). The interest on the construction loan is payable on the loan's maturity date, May 31, 2020. Note-Bell already recorded the interest paid on these loans in 2019. For this adjustment, consider any accrued interest on the loans at the December 31, 2019 reporting date. 33 The inventory figure in the trial balance above reflects use of a perpetual system and the FIFO cost flow method. At year-end 2019. Bell decides to adopt the LIFO method, specifically, the dollar-value LIFO cost method. The following information relates to the company's first time adoption of the new method:3333 Date December 31, 2018 December 31, 2019 Inventory at Year-End Prices $326,738 $126. 739 $384 590 Relevant Price Index 1 00 108 Give the FIFO-to-LIFO conversion entry needed at year end 2019. Assume the change in method does not affect any years prior to 2019. Once the company determines the Inventory balance under the new method (LIFO), it must consider the need for an inventory write down. Bell applies the write down procedure to the inventory as a whole. Information concerning the company's December 31, 2019 inventory follows: Net realizable value Normal profit margin Replacement cost 346.750 41,610 384.590 A9 On May 1, 2019, Bell hired a contractor to construct a new office building. The construction work commenced on June 1, 2019, and it is expected to continue through November 30, 2020, the estimated completion date. Bell made progress payments to the contractor in 2019 as follows: d to this PC Search s Review View Help Amount Date June 1 August 1 September 1 October 1 $ 57,000 261,000 154,500 233.500 3351.33 2 22 As stated in A6 above, Bell took a 1-year, 7%, $385,000 construction loan to help fund the work on this project. The company also has a 10-year, 6%, $578,620 loan that is not related to the construction project. Give the adjusting entry needed at December 31, 2019 to record the capitalization of interest for this project. A10. The company's income tax rate for the year is 30%. - Instructions - Complete the following three tasks relating to CP Bell Co.'s accounting process at year end 2019: (a) (b) Prepare the journal entries to record the omitted transactions (T1 through T3). Prepare the journal entries to record the omitted adjustments (A1 through A10)