In a discussion of dramatic increases in coffee-bean prices, a

In a discussion of dramatic increases in coffee-bean prices, a Wall Street Journal article noted the following fact about Starbucks. Before this year’s bean-price hike, Starbucks added several defenses that analysts say could help it maintain earnings and revenue. The company last year began accounting for its coffee-bean purchases by taking the average price of all beans in inventory. Prior to this change, the company was using FIFO. Instructions Your client, the CEO of Superior Coffee, Inc., read this article and sent you an e-mail message requesting that you explain why Starbucks might have taken this action. Your response should explain what impact this change in accounting method has on earnings, why the company might want to do this, and any possible disadvantages of such a change.

The Feature Story described the dramatic effect that investment bulletin

The Feature Story described the dramatic effect that investment bulletin boards are having on the investment world. This exercise will allow you to evaluate a bulletin board discussing a company of your choice. 

Instructions

Go to the Yahoo! Finance website. Type in a company name (or use the index to find it) and then use the Conversations tab to answer the following questions. 

a. State the nature of each of these messages (e.g., offering advice, criticizing the company, predicting future results, ridiculing other people who have posted messages). 

b. For those messages that expressed an opinion about the company, was evidence provided to support the opinion? 

c. What eff ect do you think it would have on bulletin board discussions if the participants provided their actual names? Do you think this would be a good policy?

Using a financial calculator, solve for the unknowns in each

Using a financial calculator, solve for the unknowns in each of the following situations. 

a. On June 1, 2021, Jennifer Lawrence purchases lakefront property from her neighbor, Josh Hutcherson, and agrees to pay the purchase price in seven payments of $16,000 each, the first payment to be payable June 1, 2022.  What is the purchase price of the property? 

b. On January 1, 2021, Gerrard purchased 200 of the $1,000 face value, 8% coupon, 10-year bonds of Sterling Inc. The bonds mature on January 1, 2031, and pay interest annually beginning January 1, 2022. Gerrard purchased the bonds to yield 10.65%. How much did Gerrard pay for the bonds?

Data for debt investments are presented in EH.6. Assume instead

Data for debt investments are presented in EH.6. Assume instead that the investments are classified as available-for-sale debt securities with the same cost and fair value data as indicated in EH.6. The securities are considered to be a long-term investment. 

Instructions 

a. Prepare the adjusting entry at December 31, 2022, to report the securities at fair value. 

b. Show the statement presentation at December 31, 2022, after adjustment to fair value. 

c. Pam Jenks, a member of the board of directors, does not understand the reporting of the unrealized gains or losses on trading debt securities and available-for-sale debt securities. Write a letter to Ms. Jenks explaining the reporting and the purposes it serves. 

Data from EH.6

At December 31, 2022, the trading debt securities for Gwynn, Inc. are as follows. 

On December 31, 2021, the end of its first year

On December 31, 2021, the end of its first year of operations, Botani Associates owned the following securities that are held as long-term investments. 

On this date, the total fair value of the securities was equal to its cost. The securities are not held for influence or control over the investees. In 2022, the following transactions occurred. 

July 1 Received $2.00 per share semiannual cash on D Co. common stock. 

Aug. 1 Received $0.50 per share cash on C Co. common stock. 

Sept. 1 Sold 1,000 shares of D Co. common stock for cash at $9 per share. 

Oct. 1 Sold 300 shares of C Co. common stock for cash at $53 per share. 

Nov. 1 Received $1 per share cash on E Co. common stock. 

Dec. 15 Received $0.50 per share cash on C Co. common stock. 

31 Received $2.20 per share semiannual cash on D Co. common stock.

At December 31, the fair values per share of the common were C Co. $47, D Co. $7, and E Co. $24. These investments should be classifi ed as long-term. 

Instructions 

a. Journalize the 2022 transactions and post to the account Stock Investments. (Use the T-account form.) 

b. Prepare the adjusting entry at December 31, 2022, to show the securities at fair value. Botani has less than a 20% ownership interest in all these common (C Co., D Co., and E Co.). 

c. Show the presentation of the investments at 2022. These investments should be classified as long-term.

Wellman Company acquired 30% of the outstanding common stock of

Wellman Company acquired 30% of the outstanding of Grinwold Inc. on January 1, 2022, by paying $1,800,000 for 60,000 shares. Grinwold declared and paid a $0.50 per share cash on June 30 and again on December 31, 2022. Grinwold reported net income of $800,000 for the year. 

Instructions 

a. Prepare the journal entries for Wellman Company for 2022, assuming Wellman cannot exercise signifi cant influence over Grinwold. (Use the cost method.) 

b. Prepare the journal entries for Wellman Company for 2022, assuming Wellman can exercise signifi – cant influence over Grinwold. (Use the equity method.) 

c. The board of directors of Wellman Company is confused about the diff erences between the cost and equity methods. Prepare a memorandum for the board that explains each method and shows in tabular form the account balances under each method at December 31, 2022.

These are two independent situations: 1. Sosey Cosmetics acquired 12% of

These are two independent situations: 

1. Sosey Cosmetics acquired 12% of the 300,000 shares of of Elite Fashion at a total cost of $14 per share on March 18, 2022. On June 30, Elite declared and paid a $75,000 On December 31, Elite reported net income of $244,000 for the year. At December 31, the market price of Elite Fashion was $16 per share. 

2. Williams Inc. obtained signifi cant infuence over Kasey by buying 25% of Kasey’s 30,000 outstanding shares of at a total cost of $11 per share on January 1, 2022. On June 15, Kasey declared and paid a cash of $35,000. On December 31, Kasey reported a net income of $120,000 for the year. 

Instructions 

Prepare all the necessary journal entries for 2022 for (a) Sosey Cosmetics and (b) Williams Inc.

In January 2022, the management of Northern Company concludes that

In January 2022, the management of Northern Company concludes that it has suffi cient cash to purchase some short-term investments in debt and stock securities. During the year, the following transactions occurred. 

Jan. 1 Purchased 70 $1,000, 8% TRC bonds for $70,000. Interest is payable annually on December 31. 

Feb. 1 Purchased 1,200 shares of LAF for $51,600. 

Mar. 1 Purchased 500 shares of NCL for $18,500. 

July 1 Received a cash of $0.80 per share on the LAF common stock. 

Aug. 1 Sold 200 shares of LAF at $42 per share. 

Sept. 1 Received $2 per share cash on the NCL common stock. 

Dec. 31 Received the annual interest on the TRC bonds. 

Dec. 31 Sold the TRC bonds for $75,700. 

At December 31, the fair values of the LAF and NCL common were $39 and $30 per share, respectively. These stock investments by Northern Company provide less than a 20% ownership interest. 

Instructions 

a. Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T-account form.) 

b. Prepare the adjusting entry at December 31, 2022, to report the investments at fair value. 

c. Show the presentation of investment securities at December 31, 2022. 

d. Identify the income statement accounts and give the statement classification of each account. 

Penn Farms is a grower of hybrid seed corn for

Penn Farms is a grower of hybrid seed corn for Bend Genetics It has had two exceptionally good years and has elected to invest its excess funds in bonds. The following selected transactions relate to bonds acquired as an investment by Penn Farms, whose fiscal year ends on December 31.

2022 Jan. 1 Purchased at par $600,000 of Dover 10-year, 7% bonds dated January 1, 2022, directly from the issuing The bonds pay interest annually on January 1. 

Dec. 31 Accrual of interest at year-end on the Dover bonds. 

Assume that all intervening transactions and adjustments have been properly recorded and the number of bonds owned has not changed from December 31, 2022, to December 31, 2024. 

2025 Jan. 1 Received the annual interest on the Dover bonds. 

Jan. 1 Sold $300,000 of Dover bonds at 110% of (110). 

Dec. 31 Accrual of interest at year-end on the Dover bonds.

Instructions
Journalize the listed transactions for the years 2022 and 2025.