ACCT 6011 Assignment #1 Answer Template

Part A: Movie Points

a. Record the year-end journal entry to recognize the loyalty program under both the revenue and the expense approach.

Description Debit Credit

Revenue A/C Dr $ 171,600
To Unearned Revenue A/C $ 171,600

( record loyalty program as per revenue )

Advertising Expense A/C Dr $ 51,480

To Liabilities A/C $ 51,480

( Record loyalty program as per expense)

Show work here:

Total Points Issued 345548
Total Points Redeemed (25152*7) -176064
Total Points Outstanding 169484
Points not Redeemed (345548/7) -49364
Points yet to be Redeemed 120120
Movies Yet to be awarded (120120/7) 17160

Movie's Revenue (17160*$10) $171,160

Movie's Cost (17160*$3) $51,480

b. Place only one "X" in each row in the table below in assessing whether the revenue or expense approach will have the mos
impact on the metric identified for 2020.

Revenue Expense Both Have the

Metric Approach Approach Same Impact
Earnings Per Share X
Warranty Expense X
Revenue X
Debt to Equity Ratio X
Return on Assets X

Part B: Bond Derecognition

a. Complete the amortization table below up to Dec. 31, 2020.

 Interest
Date Beginning Value Payment Expense
December 31, 2018 $ 957,876.36 $ 50,000.00 $ 57,472.58
December 31, 2019 $ 965,348.94 $ 50,000.00 $ 57,920.94
December 31, 2020 $ 973,269.88 $ 50,000.00 $ 58,396.19

b. Record the journal entry to record the derecognition of the bond.

Description Debit Credit

Bonds Payable A/C Dr $ 981,666
To Cash A/C $ 950,000
To Gain on retirement A/C $ 31,666

( To recors the derecognition of the bond)

c. Place only one "X" in each row below indicating the impact of the bond reacquisition journal entry on the following financia
metrics.

Positive Negative No Impact

Earnings Per Share X
Revenue X
Debt to Equity Ratio X
Return on Assets X

Part C: Share Reacquisition

a. Record the journal entry to record the reacquisition of th common shares.

Description Debit Credit

Common Shares A/C Dr (210000*$24) $ 5,040,000
Contributed Surplus A/C Dr $ 545,000
Retain Earnings A/C Dr $ 7,015,000
To Cash A/C (210000*$60) $ 12,600,000

( To record the re-acquisition of the common

Shares)

b. Place only one "X" in each row below indicating the impact of the share reacquisition journal entry on the following financi
metrics.
 Positive Negative No Impact
Earnings Per Share X
Revenue X
Debt to Equity Ratio X
Return on Assets X

Part D:

Calculate the dividend per share for the common shareholders.

Total Dividend $ 714,500

Less: Preferred Shares Dividend -$ 250,000
(250000*$1)

Common Shares Dividend $ 464,500

Original Outstanding Shares $ 9,500,000

Less: Re-acquisition -$ 210,000

Actual Outstanding Shares $ 9,290,000

Dividend Per Share $ 0.05

Part E:

Calculate the pension liability or asset that would be reported on EPL's statement of financial position. Assume that the curre
cost is credited at end of the year, that the contributions to the pension fund were made at December 31, 2017 and that there
payments to retirees (first year of operations).

Part F:
In the table below, indicate whether certain information discovered, or decisions made, in 2018 after the 2017 financial statem
issued would be considered a change in accounting policy, a change in estimate or an accounting error when preparing 2018 y
financial statements.

Change in Accounting
New Information Change in Policy Estimate Error

EPL decides that, going forward, it will change its

depreciation method for the machinery to units of
production rather than straight-line because it
better reflects how the equipment is being used.

EPL determines that the inventory count at

December 31, 2017 included $25,000 worth of
goods that were held on consignment from a
supplier.

EPL decides to enhance its Defined Benefit

Pension plan and as a result has to pay $4,000 for
past service costs related to 2017.
nd the expense approach.

e approach will have the most negative

Not
Determinable

Note:- Based on the nature of the loyalty Program and the entries made above,
none approach affects warranty Expense.
 Amortization Ending value
$ 7,472.58 $ 965,348.94
$ 7,920.94 $ 973,269.88
$ 8,396.19 $ 981,666.07

ntry on the following financial statement

Not
Determinable

ntry on the following financial statement

 Not
Determinable

ition. Assume that the current service

mber 31, 2017 and that there were no
fter the 2017 financial statements were
error when preparing 2018 year end