For Each Independent Situation

question 13

Essay

For each independent situation:
1.Moosehead Pool and Skeet Com.'s debt to equity ratio is 1.6: 1 based on its draft financial statements for the year ended December 31,2016.This leverage ratio exceeds the 1.5:1 maximum stipulated in Moosehead's loan agreement pertaining to a $5,000,000 loan maturing on March 15,2019.The loan agreement stipulates that the loan becomes payable on demand upon breach of any of the loan covenants.Moosehead's creditors agreed on December 15,2016 to waive their right to demand payment until December 31,2017 for reason only that the firm's leverage ratio exceeds the stipulated maximum.
2.Guelph Piano Storage Inc.issued a $30,000,30-day,non-interest bearing note to Roland's Crating for storage bins.The market rate of interest for similar transactions is 2.5%.
3.On November 30,2014,Port Meadow Fertilizer Ltd.entered into a non-cancellable agreement to buy 10 tonnes of phosphorus for $1,600 per tonne for delivery on February 28,2015.Phosphorus is a key component of the custom fertilizer that Port Meadow produces.The market price of phosphorus is extremely volatile,as evident by the $1,175 per tonne that it could be acquired for on December 31,2014.Notwithstanding the premium price paid for the phosphorus,the company expects that fertilizer sales will remain profitable.Port Meadow's year-end is December 31,2014.
Required:
For each of the situations described above,prepare the required journal entry for the underlined entity.If a journal entry is not required,explain why.

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Definitions:

Extinction

The process of eliminating a behavior by withholding reinforcement.

Successive Approximation

An explanation for the acquisition of complex behavior. Behavior such as learning to speak will be reinforced only as it comes to approximate or approach the final desired behavior.

Variable-Ratio Reinforcement

A schedule of reinforcement where a response is rewarded after an unpredictable number of responses, leading to high and steady response rates.

Pavlov

Refers to Ivan Pavlov, a Russian physiologist best known for his research in classical conditioning with dogs.