Determination of whether a legal entity is a variable interest entity Assume a Legal Entity's capital structure consists of the following accounts: Short-term note payable $60,000 Long-term note payable 21,000 Mandatorily redeemable preferred stock 85,000 Common stock 30,000 Additional paid-in capital 60,000 Retained earnings 20,000 Total liabilities and equity $276,000 Note that FASB ASC 480 ("Distinguishing Liabilities from Equity") requires mandatorily redeemable preferred stock to be classified as a liability for financial reporting purposes. Unless otherwise indicated, each of the following parts of this question is independent: a. What is the maximum amount of expected losses that the Legal Entity can expect to sustain without being considered a variable interest entity (VIE)? 1. $276,000 2. $131,000 3. $195,000 4. $110,000 b. What is the maximum amount of expected losses that the Legal Entity can expect to sustain if the lender of the long term note payable is the sole shareholder of the Legal Entity? 1. $131,000 2. $276,000 3. $110,000 4. $195,000 c. What is the maximum amount of expected losses that the Legal Entity can expect to sustain if the long term note payable is convertible to common equity at the option of the holder of the note? Why? (Note that FASB ASC 470-20 ("Debt with Conversion and Other Features") requires convertible debt to be classified as a liability for financial reporting purposes.) 1. $110,000 2. $195,000 3. $131,000 4. $276,000

The uno company was formed on january 2, year 1, to sell a single product. over a 2-year period, uno’s acquisition costs have increased steadily. physical quantities held in inventory were equal to 3 months’ sales at december 31, year 1, and zero at december 31, year 2. assuming the periodic inventory system, the inventory cost method which reports the highest amount for each of the following is inventory december 31, year 1/ cost of sales year 2 a: lifo fifo b: lifo lifo c: fifo fifo d: fifo lifo

Assume that all of thurmond company’s sales are credit sales. it has been the practice of thurmond company to provide for uncollectible accounts expense at the rate of one-half of one percent of net credit sales. for the year 20x1 the company had net credit sales of $2,021,000 and the allowance for doubtful accounts account had a credit balance, before adjustments, of $630 as of december 31, 20x1. during 20x2, the following selected transactions occurred: jan. 20 the account of h. scott, a deceased customer who owed $325, was determined to be uncollectible and was therefore written off. mar. 16 informed that a. nettles, a customer, had been declared bankrupt. his account for $898 was written off. apr. 23 the $906 account of j. kenney & sons was written off as uncollectible. aug. 3 wrote off as uncollectible the $750 account of clarke company. oct. 20 wrote off as uncollectible the $1,130 account of g. michael associates. oct. 27 received a check for $325 from the estate of h. scott. this amount had been written off on january 20 of the current year. dec. 20 cater company paid $7,000 of the $7,500 it owed thurmond company. since cater company was going out of business, the $500 balance it still owed was deemed uncollectible and written off. required: prepare journal entries for the december 31, 20x1, and the seven 20x2 transactions on the work sheets provided at the back of this unit. then answer questions 8 and 9 on the answer sheet. t-accounts are also provided for your use in answering these questions. 8. which one of the following entries should have been made on december 31, 20x1?

Your debit card is stolen, and you report it to your bank within two business days. how much money can you lose at most? a. $500 b. $25 c. $50 d. $150