- Lotus Coffee Inc Background Information Larry Owns A Coffee Roasting Business Lotus Coffee Inc He Has Been Doing The 1 (315.7 KiB) Viewed 46 times
unsure of how to properly record the property taxes. The property
tax bill of $4,200 for the calendar year 2022 arrived on March 31,
2022 and is payable on June 30, 2022. How should he record the
entry for March 31, June 30, and December 31 given that the
business is doing annual adjusting entries? The company fiscal
year-end is also December 31.
Lotus Coffee Inc. is a private corporation that is authorized to
issue 300,000, $2.5 noncumulative preferred shares and an unlimited
number of common shares. Larry provides you with the following
information about Lotus Coffee Inc.’s equity at January 1,
2022:
Preferred shares (1,000 shares issued) $20,000
Common shares (11,500 shares issued) $115,000
Retained earnings $126,000
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2. Lotus Coffee Inc. needed some extra cash to repair one of the
broken roasters. On May 18, 2022, Lotus Coffee Inc. issued, to
Uncle Stan, 500 Preferred shares for $10,000 and 1,000 Common
shares for $12,000. The $22,000 was e-transferred to Lotus’ bank
account on the same day. Larry asks you to prepare the journal
entry related to issuing these shares.
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3. Larry has made his decision and Lotus Coffee Inc. issued
$50,000 of 4%, 3-year bonds on July 1, 2022. The bonds are dated
July 1 and pay interest semi-annually on June 30 and December 31.
The market interest rate was 5% for these bonds. Larry is surprised
that the amount of cash Lotus will receive for the bonds will be
different than $50,000. Why is this the case? How much cash will he
be able to borrow? Larry thinks it would be very helpful if you
could show him an effective-interest amortization table for the
life of these bonds. Also, he asks you to record the issuance of
the bonds and the December 31 payment. (Round all your calculations
to the nearest dollar.)
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4. Larry would really like to thank his uncle for investing in
his company, and would like to take a little money out for himself.
On October 5, 2022, he declares a cash dividend of $40,000 to the
shareholders of record on October 31, 2022, payable on November 14,
2022. Larry asks you to prepare the journal entries to record the
dividend. He would like you to show a calculation of how much he
and Uncle Stan will receive from this dividend.
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5. It is now year-end December 31, 2022. Larry was able to
prepare the Income Statement and was pleased with the Net Income of
$91,375. He asks you for a last bit of help to prepare the
Statement of Retained Earnings and the Shareholders' Equity section
of the Balance Sheet
Lotus Coffee Inc. Background Information Larry owns a coffee roasting business - Lotus Coffee Inc. He has been doing the bookkeeping for the business, but he has very little accounting experience. Larry is very grateful that you agreed to help him with his 2022 accounting questions. Images are used with permission from www.quocloccoffee.com Lotus Coffee imports raw specialty coffee beans from growers in Dak Lak, a province of Vietnam. Specialty coffee is considered to be Arabica coffees highest standard. To be recognized as specialty coffee, the beans must undergo strict evaluation: the growers must fully comply with the prescribed production process, from the stage of cultivation, to harvesting, preliminary treatment, preservation, etc. Once receiving the coffee bean shipment, Lotus Coffee implements strict standards in the roasting process. It then packages these fabulous beans for sale to consumers across Canada. Lotus Coffee packages all its beans into 454-gram packages.