Could you please help me with this homework assignment in the attached file?

Directions: 1) This simulation is a practice set. The primary objective is to help you review some of our course topics. 2) Ace Corporation's transactions and adjusting entries for 2013 are described on the Transactions sheet in this workbook. For multiple items, the Transactions sheet requires you to go to a different sheet in this workbook for details and to complete your supporting analysis. 3) Record all JEs and AJEs on the JournalEntries sheet. Then post these to the Ledger Accts sheet. The Trial Balance sheet has no requirements but is included to help you. After you complete the Ledger Accts sheet, you can complete the Balance Sheets & Income Stmt sheet and then the Stmt of Cash Flows sheet. Transactions and Adjusting Entries - Ace Corporation Ace Corporation engaged in the following transactions during 2013. Adjusting entries are needed for some of these transactions. Transactions and adjusting entries required are numbered (instead of dated). You must prepare the entries for each numbered item below on the JournalEntries sheet in this workbook. Amounts below are in thousands of dollars. Round your calculations to the nearest hundred dollars. You should include your analysis and/or calculations for certain items on the designated sheets in this workbook. Item # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Transaction or adjusting entry description Ace had credit sales during 2013. The inventory Ace sold on account (in Item #1) cost $1,900. Ace collected cash from customers on account. Ace paid cash to purchase office supplies. Ace counted office supplies on hand at 12/31/13 with cost of $116 Ace purchased inventory on account. Ace paid cash to vendors on account. Ace paid all income taxes owed as of 12/31/12 in March of 2013. Ace paid salaries to employees. No salaries were accrued as of 12/31/12, and no accrual is needed as of 12/31/13. Ace paid $50 for meals & entertainment expenses during 2013. Ace declared and paid dividends. Ace does not use a dividends account in its general ledger. Ace settled warranty claims by paying cash during 2013. Ace offers a 1-year warranty on its products and estimates warranty costs to be 2% of sales. Ace issued bonds on 7/1/13. Go to the Bonds worksheet to analyze these bonds and determine the entries Ace needs to make. 16 Ace issued a non-cash loan on 1/1/13 for the purchase of land. Go to the Non-cash loans worksheet to analyze this transaction and determine the entries Ace needs to make. Ace entered into 2 lease contracts on 1/1/13. Go to the Leases worksheet to analyze these leases and determine the entries Ace needs to make. 17 Ace had transactions with its trading and available-for-sale investments during 2013. Go to the Investments worksheet to analyze Ace's investments portfolios and determine the entries Ace needs to make. 18 AFTER you have completed Ace's accounting for all of the previous items, you are then ready to complete Ace's provision for income taxes. Go to the Income Taxes worksheet to complete Ace's income tax accounting. 15 $ in thousands Amount 3,600.00 1,900.00 2,250.00 164.00 116.00 1,868.00 1,943.00 14.00 349.00 50.00 500.00 70.00 Bonds Non-cash loans Leases Investments Income Taxes Name: Enter Your Group Member Names Here! Journal Entries CS#5 Requirement 1: Enter your group member names in cell B1. CS#5 Requirement: 2 Prepare the entries needed for each of the numbered items listed on the Transactions sheet in this workbook. Item # Totals Account Debit Credit 0 0 Ledger Accounts - Ace Corp. Enter Your Group Member Names Here! CS#5 Requirement: Post your journal entries to the proper ledger accounts on this sheet. Don't change any beginning balances or ending balance formulas. Cash Accounts Rec 1393.00 45.00 45.00 Merchandise Inventory 485.00 485.00 Office Supplies 18.00 Deferred Tax Assets 3.00 18.00 3.00 Prepaid Rent 0.00 0.00 1393.00 Investments-Trading FVA - Trading 66.00 1.00 66.00 1.00 Accumulated Deprec Investments-AFS Land, Bldg, & Equipment 0.00 0.00 FVA-AFS 0.00 658.00 92.00 0.00 658.00 92.00 Accounts payable 125.00 Income taxes payable 14.00 Bonds & Loans Payable 0.00 125.00 14.00 0.00 Deferred Tax Liability 27.60 Warranty Payable Interest Payable 9.00 0.00 9.00 0.00 Common Stock (no par) 1300.00 Retained Earnings 1219.00 Accum. Other Comp. Income 64.40 1300.00 1219.00 64.40 27.60 Leases Payable 0.00 0.00 Sales Revenue Cost of goods sold 0.00 Warranty expense 0.00 Supplies expense 0.00 Salaries expense 0.00 Gain/losses-Invmt Sales 0.00 Interest expense Meals/entertainment expense 0.00 Rent expense 0.00 Depreciation expense 0.00 UHGL-NI Deferred tax expense - NI Current tax expense Deferred tax expense - OCI 0.00 UHGL-OCI 0.00 Adjusted Trial Balance - Ace Corp. CS#5 NOTE: You do not have any requirements on this sheet. This is provided to help you check your postings and prepare the 12/31/13 balance sheet and 2013 income statement. Year-ended 12/31/13 (dollars in thousands) Account Cash Accounts Receivable Merchandise inventory Office supplies Prepaid rent Deferred tax assets Investments - Trading FVA - Trading Land, Building, & Equipment Accumulated depreciation Investments - AFS FVA - AFS Accounts payable Income taxes payable Warranty payable Interest payable Bonds and loans payable Deferred tax liability Leases payable Common stock Retained earnings Accumulated other comprehensive income Sales revenue Cost of goods sold Warranty expense Salaries expense Rent expense Supplies expense Meals & entertainment expense Depreciation Interest expense Gains/losses on investments sales Unrealized holding gains/losses - NI Unrealized holding gains/losses - OCI Current income tax expense Deferred income tax expense - NI Deferred income tax expense - OCI Totals Debit Credit 1393.00 45.00 485.00 18.00 0.00 3.00 66.00 1.00 0.00 0.00 658.00 92.00 125.00 14.00 9.00 0.00 0.00 27.60 0.00 1300.00 1219.00 64.40 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2760.00 2760.00 Balance Sheets & Income Stmts CS#5 Requirement: Complete the 12/31/13 Balance Sheet, the 2013 Income Statement, and the 2013 Comprehensive Income Statement Use cross-sheet cell references from your trial balance and formulas to complete these statements. Total assets at 12/31/13 should equal $4,251.50, and 2013 Net Income should equal $795.00. Cash on 12/31/13 should equal $2,094.20. Ace Corporation Balance Sheets (dollars in thousands, except per share data) 12/31/2013 Cash Accounts receivable Merchandise inventory Office supplies Prepaid rent Investments - Trading Deferred tax assets Total Current Assets 0.00 Property, plant, and equipment, net Ace Corporation Income Statement For the Year Ended 12/31/13 (dollars in thousands) 12/31/2012 1,393.00 45.00 485.00 18.00 0.00 65.00 3.00 2,009.00 0.00 Investments - Available-for-Sale Total Assets Accounts payable Income taxes payable Interest payable Warranty payable Total Current Liabilities Bonds and loans payable Leases payable Deferred tax liability Total Liabilities 750.00 0.00 2,759.00 0.00 125.00 14.00 0.00 9.00 148.00 0.00 0.00 27.60 175.60 0.00 Common stock (no par) Retained earnings 1,300.00 1,219.00 Accumulated other comprehensive income Total Liabilities and Stockholders' Equity 64.40 0.00 2,759.00 NOTE: For this assignment, report all of your bonds & loans payable and leases payable as long-term debt even though part of these balances on 12/31/13 are current liabilities. Sales revenue Cost of goods sold Gross profit (Enter as a positive # because of formula in cell G14) 0.00 Operating expenses: Warranty expense Salaries expense Rent expense Supplies expense Meals & entertainment expense Depreciation Total operating expenses Operating income Other income (loss): Interest revenue (expense) Gains (losses) on sales of investments Unrealized holding gains (losses) Other income (loss), net Income before income taxes Provision for income taxes Net Income 0.00 0.00 (Remember to enter revenue/gains as positive in this section; enter losses as negative in this section.) 0.00 0.00 (Enter debit as a positive # because of formula in cell G34) 0.00 Ace Corporation Comprehensive Income Statement For the Year Ended 12/31/13 (dollars in thousands) Net Income Other Comprehensive Income 0.00 Comprehensive Income 0.00 Statement of Cash Flows Enter Your Group Member Names Here! CS #5 Requirement: Complete the 2013 Statement of Cash Flows using the direct method for Operating Cash Flows. Don't forget any required disclosures! Use the comparative balance sheets and 2013 income statement you completed on the Balance Sheets & Income Stmt worksheet along with other information from your transaction analyses. You must include the appropriate descriptive language in Column A for the items you include in each section of the cash flows statement. Ace Corporation Statement of Cash Flows For the Year Ended 12/31/13 Cash flows from operating activities Net cash provided (used) by operating activities Cash flows from investing activities Net cash provided (used) by investing activities Cash flows from financing activities Net cash provided (used) by financing activities Net increase (decrease) in cash Cash, January 1, 2013 Cash, December 31, 2013 Reconciliation of Net Income to Net Operating Cash Flows: Supplemental Schedule of Noncash Investing and Financing Activities: 1,393.00 1,393.00 SHOW YOUR BONDS ANALYSIS ON THIS SHEET Enter Your Group Member Names Here! Your analysis should at least show the market interest rate and how you calculated the amounts for the 12/31/13 JE. Ace does not use premium or discount companion accounts for bonds. Amounts below are in thousands of dollars. Round your calculations to the nearest hundred dollars. Item #s for Journal Entries sheet 14a 14b Bonds payable were issued for $834 cash on 7/1/13. Bond terms are as follows: face value of $850, stated interest rate of 8%, coupon payments due on 6/30 and 12/31 each year for the next 6 years. You have 2 entries for these bonds: 14a and 14b. Issuance of the bonds on 7/1/13 Coupon payment on 12/31/13 Make sure you record your Journal Entries on the Journal Entries worksheet and post them to the Ledger Accounts. SHOW YOUR NON-CASH LOAN ANALYSIS ON THIS SHEET Enter Your Group Member Names Here! Your analysis should at least show how you calculated the amounts for the 12/31/13 JE. Amounts below are in thousands of dollars. Round your calculations to the nearest hundred dollars. Item #s for Journal Entries sheet 15a 15b Ace purchased land on 1/1/13 by issuing an installment loan with the following terms: face value of $78, stated rate of 5%, annual payments of $22 due each 12/31 for the next four years with first payment due on 12/31/13. The appropriate market rate for this loan is 8.6%. You have 2 entries for this loan: 15a and 15b. Issuance of the loan on 1/1/13 Installment payment on 12/31/13 Make sure you record your Journal Entries on the Journal Entries worksheet and post them to the Ledger Accounts. SHOW YOUR LEASES ANALYSES ON THIS SHEET Enter Your Group Member Names Here! Your analysis should at least show how you CLASSIFIED each lease. Amounts below are in thousands of dollars. Round your calculations to the nearest hundred dollars. Item #s for Journal Entries sheet 16a 16b Ace is the LESSEE in both Lease A and Lease B. Ace knows the lessor's implicit rate and uses that rate because its incremental borrowing rate equals or exceeds the implicit interest rate. Ace uses straight-line depreciation for all of its fixed assets. Inception date entries for both leases on 1/1/13 Year-end AJEs, if needed, for both leases Make sure you record your Journal Entries on the Journal Entries worksheet and post them to the Ledger Accounts. LEASE A DETAILS: Inception date of Lease A 1/1/2013 Required annual payments $8 Does not include executory costs. Payments due each 1/1 with first payment on 1/1/2013 Term of this lease 4 years No title transfer, no purchase option, asset reverts to lessor at lease-end date Estimated economic life of the leased equipment 10 years Residual value - not guaranteed $25 Fair value of the leased equipment on 1/1/13 $46 Lessor's implicit interest rate in this lease 9% LEASE B DETAILS: Inception date of Lease B 1/1/2013 Required annual payments $11.8 Does not include executory costs. Payments due each 1/1 with first payment on 1/1/2013 Term of this lease 5 years No title transfer, no purchase option, asset reverts to lessor at lease-end date Estimated economic life of the leased equipment 6 years Residual value - not guaranteed $2 Fair value of the leased equipment on 1/1/13 $51.3 Lessor's implicit interest rate in this lease 9% SHOW YOUR INVESTMENTS ANALYSES ON THIS SHEET Enter Your Group Member Names Here! Your analysis should at least show how you determined the UHGL amounts for each portfolio. Amounts below are in thousands of dollars. Round your calculations to the nearest hundred dollars. Item #s for Journal Entries sheet 17a 17b 17c 17d Ace held trading and available-for-sale investments at the start of 2013 - look at the Ledger Accounts for beginning balances in the investments-related accounts for each portfolio. All investments were in equity securities, and none of the stocks declared or paid dividends in 2013. Ace purchased trading investments during 2013 at a cost of $169. Ace sold trading investments costing $155 for $192 during 2013. Ace sold its entire AFS portfolio late in 2013 for $760. The fair value of Ace's trading portfolio as of 12/31/13 was $75. Because Ace sold all of its AFS securities, it has no AFS Investments at 12/31/13. Make sure you record your Journal Entries on the Journal Entries worksheet and post them to the Ledger Accounts. SHOW YOUR ACCOUNTING FOR INCOME TAXES ANALYSES ON THIS SHEET Enter Your Group Member Names Here! Your analysis should at least show how you determined the DTA and DTL balances and the amounts for Current Tax Expense, Deferred Tax Expense-NI, and Deferred Tax Expense-OCI. Amounts below are in thousands of dollars. Round your calculations to the nearest hundred dollars. CHECK FIGURES BEFORE YOUR TAX ANALYSIS: Net Income before income taxes = $1,235.30; Total Assets = $4,248.10 Enacted tax rates: 35% for 2013 and 40% for all future years beyond 2013 Item #s for Journal Entries sheet YOU NEED TO HAVE COMPLETED ALL PREVIOUS ANALYSES AND RECOGNITION BEFORE YOU START YOUR ACCOUNTING FOR INCOME TAXES! This is the last analysis to be performed to complete your year-end AJEs. Reconcile from Pre-tax Net Income to Taxable Income. Then recognize taxes payable for the current year. Did Ace have any permanent differences? What about temporary differences? NOTE: In addition to the GAAP depreciation expense on Ace's income statement, Ace can deduct an additional $10 of depreciation for taxes because it's using MACRS for tax. 18a Analyze the DTA or DTL related to the AFS Investments. Make sure you use Deferred tax expense-OCI in your AJE. Analyze the remaining items that have temporary basis differences that result in 12/31/13 DTAs or DTLs. Then prepare the AJE needed to complete your adjustments for DTAs and DTLs. 18b 18c Make sure you record your Journal Entries on the Journal Entries worksheet and post them to the Ledger Accounts. Details supporting the DTA and DTL balances as of 12/31/12: Investments-Trading: GAAP basis (fair value) = Tax basis (cost) = 65.00 66.00 12/31/12 basis difference 12/31/12 DTA related to this basis difference Future deductible amount because cost>fair value. Need DTA. Also note that this is the FVA-Trading 1.00 account balance! DTA is a current asset because Investments-Trading 0.30 is a current asset. Warranties payable: GAAP basis (net settlement value) = Tax basis (can't accrue for tax!) = 9.00 0.00 12/31/12 basis difference 12/31/12 DTA related to this basis difference Future deductible amount - can't deduct for tax until 9.00 we PAY. Need DTA. DTA is a current asset because Warranties Payable 2.70 is a current liability. 12/31/12 DTA balance Investments-AFS: GAAP basis (fair value) = Tax basis (cost) = 12/31/12 basis difference 12/31/12 DTL related to this basis difference 12/31/12 DTL balance 3.00 750.00 658.00 Future taxable amount because fair value>cost. Need DTL. Also note that this basis difference 92.00 amount is the FVA-AFS account balance! DTL is a non-current liability because InvestmentsAFS is a non-current asset. Also note that 12/31/12 AOCI = $64.4 which is the cumulative, after-tax 27.60 unrealized gains on the AFS portfolio as of 12/31/12. Note that as of 12/31/12, the only basis difference that was a future taxable amount was from the AFS Investments. Ace didn't have any fixed assets on 27.60 12/31/12. For 18a, you need to reconcile pre-tax net income to taxable income. Pretax net income Taxable income (Note that cell B14's formula pull from the Income 0 Stmt.) (Note: Cell B20 has a formula. You may add lines in 0 the reconciliation as needed.) 1. EMC began operations during 2004. Taxable income in 2005 was $829,000. Basis differences as of 12/31/04 and 12/31/05 are as follows: Description of difference Property, Plant, & Equipment, net: GAAP basis Tax basis Basis difference 12/31/04 Investments - Trading GAAP basis (fair value) Tax basis (cost or amortized cost) Basis difference The enacted income tax rate is 40% for 2004 and all future years. 12/31/05 $1,102,000 1,000,000 $102,000 $785,000 903,000 ($118,000) $1,880,000 1,800,000 $80,000 $823,000 948,000 ($125,000) Requirement: Prepare the income tax journal entries that EMC should make for the year ended 12/31/05. 2. For the current year ($ in millions), Centipede Corp. had $80 in pretax accounting income. This included meals and entertainment expense of $8 and $20 in depreciation expense. For income tax purposes, MACRS depreciation amounted to $23. 1) What type of differences, permanent differences or temporary differences, does Centipede Corp. have for the current year? 2) Prepare Centipede's journal entry to recognize income taxes payable for the current year. Assume there were no other temporary or permanent differences. Centipede's tax rate for all relevant years is 40%. 3) Centipede's comparative balance sheets for two previous years show the following balances for deferred tax assets and liabilities: Deferred Tax Asset Deferred Tax Liability 12/31/06 $3 million $6 million 12/31/05 $1.4 million $4.8 million Prepare Centipede's deferred tax journal entry for the year ended 12/31/06. Note that you do not have enough information to determine how Centipede calculated its DTA and DTL balances. 1. EMC began operations during 2004. Taxable income in 2005 was $829,000. Basis differences as of 12/31/04 and 12/31/05 are as follows: Description of difference Property, Plant, & Equipment, net: GAAP basis Tax basis Basis difference 12/31/04 Investments - Trading GAAP basis (fair value) Tax basis (cost or amortized cost) Basis difference The enacted income tax rate is 40% for 2004 and all future years. 12/31/05 $1,102,000 1,000,000 $102,000 $785,000 903,000 ($118,000) $1,880,000 1,800,000 $80,000 $823,000 948,000 ($125,000) Requirement: Prepare the income tax journal entries that EMC should make for the year ended 12/31/05. 2. For the current year ($ in millions), Centipede Corp. had $80 in pretax accounting income. This included meals and entertainment expense of $8 and $20 in depreciation expense. For income tax purposes, MACRS depreciation amounted to $23. 1) What type of differences, permanent differences or temporary differences, does Centipede Corp. have for the current year? 2) Prepare Centipede's journal entry to recognize income taxes payable for the current year. Assume there were no other temporary or permanent differences. Centipede's tax rate for all relevant years is 40%. 3) Centipede's comparative balance sheets for two previous years show the following balances for deferred tax assets and liabilities: Deferred Tax Asset Deferred Tax Liability 12/31/06 $3 million $6 million 12/31/05 $1.4 million $4.8 million Prepare Centipede's deferred tax journal entry for the year ended 12/31/06. Note that you do not have enough information to determine how Centipede calculated its DTA and DTL balances