Question $1(20$ marks$)$

On May $31,2022,$ Ace Tractor Company sold a tractor to Joker Excavating in exchange for a $2-$year, $$500,000,$ non$-$interest$-$bearing note. Joker Excavating will make a $$300,000$ payment on May $31,2023$ and pay a lump$-$sum payment of $200,000$ on May $31,2024.$ Year end is December $31.$

Assume that your year$-$end adjusting entries are reversed. Do not show the reversal entry. If you do not know what a reversing journal entry is$,$ it is important that you find out before completing this question. Joker Excavating would normally pay an interest rate of $8\%.$

Required

Prepare all journal entries required for the note for the seller, Ace Tractor, from the initial sale to repayment. Count exact days for the year$-$end interest revenue adjustment. Calculate and journalize final amounts to the nearest dollar. Note that using the cash flow keys on your financial calculator is the easiest way to calculate the present value of this note. $(20$ marks$)$

Question $2(25$ marks$)$

On September $17,2022,$ AAA Security sold an alarm system to Wondermart in exchange for a $2-$year, $$600,000$ note bearing market interest at $7\%.$ Wondermart will repay the note in two equal payments. AAA Security follows IFRS and therefore uses the effective interest method. AAA Security does not use reversing entries. AAA Security has a December $31$ Year end.

Required

Calculate the payment. Prepare all journal entries required for the note for AAA Security, from the initial sale to full repayment. Count exact days for the year$-$end interest revenue adjustment. Round amounts to the nearest dollar. $(25$ marks$)$

Question $3(20$ marks$)$

Maple Supply Company, on December $20,2022,$ had a credit balance of $$1,700$ in its Allowance for Doubtful Accounts ledger account. On December $23,$ they decided that the account receivable for Hardy Corp. of $$2,400$ would never be paid, and they wrote it off. On December $31,$ Maple Supply Company aged their accounts receivable according to the following:

Estimated Percentage

Uncollectible

Current Accounts

$$160,000$

$1\%$

$130$ days past due

$20,000$

$3\%$

$3160$ days past due

$10,000$

$6\%$

$6190$ days past due

$5,000$

$12\%$

Over $90$ days past due

$8,000$

$30\%$

Total Accounts Receivable

$$203,000$

Required

Complete the following with the details provided.

Prepare the December $23$ journal entry. $(4$ marks$)$

Prepare the December $31,$ year$-$end adjusting entry for bad debts using the ageing of receivables method. $(10$ marks$)$

Assume that Maple Supply Company uses the Income Statement approach. Net credit sales are $$1,500,000.$ They believe that $0\mathrm{.}5\%$ of the sales will become bad debts. The Allowance for Doubtful Accounts account had the same balances and entries as in the December $23$ journal entry. Prepare the adjusting entry for the current year$$s provision for uncollectible accounts. Show supporting calculations. $(6$ marks$)$

Question $4(20$ marks$)$

Low Beam Construction Company was awarded a contract to construct a multi$-$storey office building in Vancouver, British Columbia at a total contract price of $$24,000,000.$ The estimated total costs for the project were $$18,000,000.$ The project was completed in $2024.$

The following outlines results over $3$ years:

$2022$

$2023$

$2024$

Cumulative total costs incurred

$$4,374,000$

$$11,960,000$

$$17,800,000$

Estimated additional costs

$13,122,000$

$6,440,000$

$0$

Progress billings

$6,200,000$

$12,200,000$

$5,600,000$

Collections on billings

$5,500,000$

$9,500,000$

$9,000,000$

Required

Prepare all journal entries required for the first $2$ years of this $3-$year project. Date your entries December $31,2022$ and December $31,2023.$ Use the percentage of completion method and the Contract Asset$/$Liability approach, as per IFRS $15.(20$ marks$)$

Question $5(15$ marks$)$

On July $5,$ Poorco sells $$90,000$ of receivables to Finco without recourse on a notification basis. The financing charge is $6\mathrm{.}5\%,$ and there is an $8\%$ holdback for sales discounts and returns.

Required

Complete the following with the details provided above.

For Poorco, prepare the journal entry to factor the receivables. $(10$ marks$)$

For Finco, prepare the journal entry to purchase the receivables. $(5$ marks$)$