End of Chapter Exercise 9.2 Warren Ltd was organised on 2 Januaryr EU US, and proceeded to issue BELEIDE] 9% cumulative preference shares and 196,00...
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End of Chapter Exercise 9.2 Warren Ltd was organised on 2 Januaryr EU US, and proceeded to issue BELEIDE] 9% cumulative preference shares and 196,00fl ordinary:r shares. The preference shares were issued privater at a value of $2 each and the ordinary shares were issued to the public at $5 each, pavable in two instalments of $2.5D per share. The first instalment was pavable on application and the remaining instalment was pavable bv 3E] June EDIT. The call for the second and final instalment has not vet been made. Prepare the equity section of the balance sheet as at 3E] June 201?. Warren Ltd Balance sheet {equityr section} as at 3|] June EDI?

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Business Accounting ACCOUNTING 200536
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Q: Can you help me fill up the answer  all information is on the Attach file Name: TAX RETURN (CHAPTERS 5-8) Using the data shown on the following pages for HONG and LIAN CHANG, prepare the tax return either by hand or using the PDF fill-in forms and answer the following questions from your completed tax return: 1. What amount is reported as adjusted gross income? ______________________________ 2. What amount is reported as taxable income? ______________________________ 3. What amount is reported as total tax on line 44 of the 1040? ______________________________ 4. Is the taxpayer subject to the Alternative Minimum Tax (Yes or No)? _________________________ 5. How much in total credits can the taxpayer claim? ______________________________ 6. Is the taxpayer subject to the health care individual responsibility pmt? (Yes or No)? ____________ 7. What amount is reported as total payments? ______________________________ 8. How much is being deducted for taxes paid on Schedule A? ______________________________ 9. How much is being deducted for interest paid on Schedule A? _____________________________ 10. How much is being deducted for charitable contributions? ______________________________ 11. How much depreciation is being taken on the computer? ______________________________ 12. How much depreciation is being taken on the 2015 furniture? ____________________________ 13. How much depreciation is being taken on the 2013 furniture? ____________________________ 14. What is the net short-term capital gain or loss on Sched D? _____________________________ 15. What is the net long-term capital gain or loss on Sched D? _____________________________ Submission instructions: Using this page as a coversheet, please scan/print this page and the completed tax return to a single PDF file and upload the return through Canvas for grading on or before the due date noted in Canvas. Late returns will be subject to the late penalty and will only be accepted for 1 week beyond the due date. HONG and LIAN CHANG Hong and Lian Chang are both 36 years old and have been married for 10 years. Hong's social security number is 589-76-5432 and Lian's is 456-32-9876. They have two children, Jie (a daughter, SSN 414-56-7893, age 8) and Han (a son, SSN 634-56-7654, age 6). The family lives at 4562 S. 4880 E. Salt Lake City, UT 84145. Hong is an executive at Glenwood Corporation and his W-2 is attached. For health insurance, the family was covered under the Glenwood Corp group health insurance plan for the entire year. The Chang's have an account with Red Rock Investments. The 1099-DIV they received is attached. They also received a 1099-INT from their local bank, which is also attached. Red Rock Investments sent them a substitute Form 1099-B with the following information (basis was reported to the IRS): Security Description Date Date Sold Selling Price Adjusted Acquired Orange Inc 85 Shares common 5/11/2014 4/16/2015 2,870 Red Inc 45 Shares common 7/17/2003 7/31/2015 6,450 Purple Corp 110 Shares Preferred 12/8/2014 9/25/2015 11,980 Blue Inc Bonds 12/30/2004 1/2/2015 3,230 The Chang's 2014 return showed that they have a short-term capital loss carryover of $5,965. Basis 7,255 4,725 9,480 4,890 Lian is a bookkeeper and has a small accounting practice (Chang Accounting Services, business code 541213, EIN 98-7654321) that she operates on the cash basis. She issued all required Form(s) 1099 and her office is located at 2215 S. State Street, Salt Lake City, UT 84111. Her income and expenses for 2015 are as follows: Revenues Expenses Advertising Dues & Subscriptions Liability Insurance MACRS Depreciation (see below) Meals & Entertainment Office Expense Rent (office space) Taxes & Licenses Wages 111,300 2,850 1,700 5,750 ? 560 1,520 20,000 5,940 67,000 Lian does not know how much depreciation expense to record and would like you to calculate it for her and include the amounts on her return. She has the following information in her fixed asset records: 1. $7,748 in furniture was purchased on March 18, 2013. At the time of purchase, Lian did not take any bonus depreciation, nor did she elect to expense the purchase under Section 179. She used MACRS 200%. 2. A new business computer was purchased on March 4, 2015 for $3,400. Lian wants to take bonus and MACRS depreciation on the computer. 3. Some used office furniture was also purchased on June 18, 2015 for $2,560. If allowed, Lian wants to expense the used furniture fully under Section 179. 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Q: Hi There, I am back with another project - Would be great if you can kindly answer the questions in the attached doc FIN200 - Principles of Finance Assignment I Dear Students, Please find bellow the questions for the first assignment. This is an individual assignment and although I encourage you to discuss it with classmates, you are expected to submit your works individually before the deadline. Please try to follow the guidelines (e.g. word count) where appropriate and as much as possible. You are expected to submit all of your answers in one file prior to the stated deadline (in word or pdf). Q1. Why has an increasing share of household savings been channelled through financial intermediaries? Hint: Comment on the role of financial intermediaries. (250 words max) Q2. There are two very similar companies (Company A and Company B), both with an earnings before interest and tax (EBIT) of £600k. The total capital employed by these two companies is £5m: Company A is funded entirely by equity (all £5m) and has no debt on its balance sheet. Company B is funded by £3m of equity and £2m of debt, with an interest rate of 7% per year. The corporate tax rate is 25%. a) Calculate the interest paid to debtholders and the money left for shareholders after tax (both in £) for the two companies separately. b) Calculate the % return to shareholders under the two scenarios. c) Do the owners of the company benefit from employing debt in this case? Does this always hold? Explain. Hint: Comment on "Return on Capital Employed" (100 words max). Q3. Describe and illustrate, using simplified bank balance sheets, how a bank could find itself with a liquidity crisis and a capital reserve crisis (two different crises). Describe and explain the actions it can take to move back to more prudent liquidity and capital reserve levels after such crises. (300 words max + tables if required) Q4. Compare and contrast (describe and explain the relative advantages and disadvantages) of an overdraft versus a term loan versus project finance versus a syndicated loan versus hire purchase versus leasing. (350 words max - you might want to simple create a table and explain pros and cons) Q5. Explain the function of market makers, how they operate and what risks they face. (200 words max + tables if required) Q6. Explain the following key elements to insurance: (250 words max) (a) asymmetric information; (b) adverse selection; (c) moral hazard; (d) float. Q7. On 1 March 2011 a company raises finance by agreeing a six-month eurodollar loan for $12 million offered at an interest rate of 3.15 per cent. Calculate the cost of the loan in dollars. (a) on a 30/360-day count basis (180 days) (b) on a 365-day count, actual/365 basis (183 days) Q8. You purchase $2,000 worth of six-month US Treasury bills on the secondary market with a quoted yield per annum of 0.54 per cent. The bills have 26 days to maturity. How much would you pay? Use the actual/360-day count convention. Q9. The annualised yield on a repo with an initial sale value of £750,000 is 2.46 per cent. The repo has 39 days until maturity. (a) What will be the repurchase price? (b) If the days to maturity are 68, what will be its future purchase price? Use a 360-day count convention throughout. Q10. As a winner of a lottery you can choose one of the following prizes: 1) £1 million now. 2) £1.7 million at the end of five years. 3) £135,000 a year for ever, starting in one year. 4) £200,000 for each of the next ten years, starting in one year. If the time value of money is 9 per cent, which is the most valuable prize? Q11. What is the present value of £100 to be received in ten years' time when the interest rate (nominal annual) is 11 per cent and (a) annual discounting is used? (b) semi-annual discounting is used? Q12. Punter buys a car on hire purchase paying five annual instalments of £2,500, the first being an immediate cash deposit. Assuming an interest rate of 9 per cent is being charged by the hire-purchase company, how much is the current cash price of the car? Q13. Imagine that the market yield to maturity for three-year bonds in a particular risk class is 11 per cent. You buy a bond in that risk class which offers an annual coupon of 9 per cent for the next three years, with the first payment in one year. The bond will be redeemed at par (£100) in three years. How much would you pay for the bond? Q14. A bond will pay an annual 7.5 per cent coupon until maturity (the next coupon will be paid in one year). The bond matures in six years. (a) What will be the market price of the bond if yields to maturity for this risk class fall to 6.5 per cent? (b) What will be the market price of the bond if yields to maturity for this risk class rise to 12 per cent?
Q: Hi Tara03, Can you help me on one last outline please? Attached is the instructions and case. Thank you! Assignment Name Student Name Course Name Date Professor name Review the case study instructions in Week 2. Then, create an outline for the case study due in Week 7. The outline must contain the thesis statement which is the last 1 - 3 sentences of the introduction. The outline must also contain: An introduction with thesis statement. At least 5 body paragraphs specifically addressing the case study. questions A conclusion. A reference page with a minimum of 3 scholarly references. The paper must be formatted according to APA style. You must use at least 2 scholarly resources other than the textbook to support your claims. Complete case study 7-7 at the end of Chapter 7. The paper must be formatted according to APA style. You must use at least 2 scholarly resources other than the textbook to support your claims. The paper should be a minimum of 3 pages in length excluding the title pages and references and thoroughly address the case study questions. Case 7-7 Sunbeam Corporation One of the earliest frauds during the late 1990s and early 2000s was at Sunbeam. The SEC alleged in its charges against Sunbeam that top management engaged in a scheme to fraudulently misrepresent Sunbeam's operating results in connection with a purported "turnaround" of the company. When Sunbeam's turnaround was exposed as a sham, the stock price plummeted, causing investors billions of dollars in losses. The defendants in the action included Sunbeam's former CEO and chair Albert J. Dunlap; former principal financial officer Russell A. Kersh; former controller Robert J. Gluck; former vice presidents Donald R. Uzzi, and Lee B. Griffith; and Arthur Andersen LLP partner Phillip Harlow. The SEC complaint described several questionable management decisions and fraudulent actions that led to the manipulation of financial statement amounts in the company's 1996 yearend results, quarterly and year-end 1997 results, and the first quarter of 1998. The fraud was enabled by weak or nonexistent internal controls, inadequate or nonexistent board of directors and audit committee oversight, and the failure of the Andersen auditor to follow GAAS. The following is an excerpt from the SEC's AAER. 1393 issued on May 15, 2001: "From the last quarter of 1996 until June 1998, Sunbeam Corporation's senior management created the illusion of a successful restructuring of Sunbeam in order to inflate its stock price and thus improve its value as an acquisition target. To this end, management employed numerous improper earnings management techniques to falsify the Company's results and conceal its deteriorating financial condition. Specifically, senior management created $35 million in improper restructuring reserves and other "cookie jar" reserves as part of a year-end 1996 restructuring, which were reversed into income the following year. Also in 1997, Sunbeam's management engaged in guaranteed sales, improper "bill and hold" sales, and other fraudulent practices. At year-end 1997, at least $62 million of Sunbeam's reported income of $189 million came from accounting fraud. The undisclosed or inadequately disclosed acceleration of sales through "channel-stuffing" also materially distorted the Company's reported results of operations and contributed to the inaccurate picture of a successful turnaround." A brief summary of the case follows. Chainsaw Al Al Dunlap, a turnaround specialist who had gained the nickname "Chainsaw Al" for his reputation of cutting companies to the bone, was hired by Sunbeam's board in July 1996 to restructure the financially ailing company. He promised a rapid turnaround, thereby raising expectations in the marketplace. The fraudulent actions helped raise the market price to a high of $52 in 1997. Following the disclosure of the fraud in the first quarter of 1998, the price of Sunbeam shares dropped by 25 percent to $34.63. The price continued to decline as the board of directors investigated the fraud and fired Dunlap and the CFO. An extensive restatement of earnings from the fourth quarter of 1996 through the first quarter of 1998 eliminated one-half of the reported 1997 profits. On February 6, 2001, Sunbeam filed for Chapter 11 bankruptcy protection under U.S. Bankruptcy Court. Accounting Issues Cookie Jar Reserves The illegal conduct began in late 1996 with the creation of cookie jar reserves that were used to inflate income in 1997. Sunbeam then engaged in fraudulent revenue transactions that inflated the company's record-setting earnings of $189 million by at least $60 million in 1997. The transactions were designed to create the impression that Sunbeam was experiencing significant revenue growth, thereby further misleading the investors and financial markets. Channel Stuffing Eager to extend the selling season for its gas grills and to boost sales in 1996, CEO Dunlap's "turnaround year," the company tried to convince retailers to buy grills nearly six months before they were needed in exchange for major discounts. Retailers agreed to purchase merchandise that they would not physically receive until six months after billing. In the meantime, the goods were shipped to a third-party warehouse and held there until the customers requested them. These bill and hold transactions led to recording $35 million in revenue too soon. However, the auditors (Andersen) reviewed the documents and reversed $29 million. In 1997 the company failed to disclose that Sunbeam's 1997 revenue growth was, in part, achieved at the expense of future results. The company had offered discounts and other inducements to customers to sell merchandise immediately that otherwise would have been sold in later periods, a practice referred to as "channel stuffing." The resulting revenue shift threatened to suppress Sunbeam's future results of operations. Sunbeam either didn't realize or totally ignored the fact that by stuffing the channels with product to make one year look better, the company had to continue to find outlets for their product in advance of when it was desired by customers. In other words, it created a balloon affect in that the same amount or more accelerated amount of revenue was needed year after year. Ultimately, Sunbeam (and its customers) just couldn't keep up and there was no way to fix the numbers. Sunbeam's Shenanigans Exhibit 1 presents an analysis of Sunbeam's accounting with respect to Schilit's financial shenanigans. Red Flags Schilit points to red flags that existed at Sunbeam but either went undetected or were ignored by Andersen including the following: 1. Excessive charges recorded shortly after Dunlap arrived. The theory is that an incoming CEO will create cookie jar reserves by overstating expenses even though it reduces earnings for the first year based on the belief that increases in future earnings through the release of the reserves or other techniques make it appear that the CEO has turned the company around, as evidenced by turning losses into profits. Some companies might take it to an extreme and pile on losses by creating reserves in a loss year believing that it doesn't matter whether you show a $1.2 million loss for the year or a $1.8 million loss ($0.6 million reserve). This is known as the "big bath accounting." Exhibit 1 Sunbeam Corporation's Aggressive Accounting Techniques Technique Example Shenanigan Number Recorded bogus revenue Bill and hold sales No. 2 Released questionable reserves Cookie jar reserves No. 5 into income Inflated special charges Litigation reserve No. 7 2. Reserve amounts reduced after initial overstatement. Fluctuations in the reserve amount should have raised a red flag because they evidenced earnings management as initially record reserves were restored into net income. 3. Receivables grew much faster than sales. A simple ratio of the increase in receivables to the increase in revenues should have provided another warning signal. Schilit provides the following for Sunbeam's operational performance in Exhibit 2 that should have created doubts in the minds of the auditors about the accuracy of reported revenue amounts in relation to the collectibility of receivables as indicated by the significantly larger percentage increase in receivables when compared to revenues. Exhibit 2 Sunbeam Corporation's Operational Performance Operational Performance 9 months 9/97 9 months 9/96 ($ in millions) ($ in millions) Revenue $830.1 $715.4 Gross profit  231.1  123.1 Operating revenue  132.6    4.0 Receivables  309.1  194.6 Inventory  290.9  330.2 Cash flow from   (60.8)   (18.8) operations % Change   16%   86%  3215%   59%   12% N/A 4. Accrual earnings increased much faster than cash from operating activities. While Sunbeam made $189 million in 1997, its cash flow from operating activities was a negative 60.8 million. This is a $250 million difference that should raise a red flag even under a cursory analytical review about the quality of recorded receivables. Accrual earnings and cash flow from operating activity amounts are not expected to be equal but the differential in these amounts at Sunbeam seems to defy logic. Financial analysts tend to rely on the cash figure because of the inherent unreliability of the estimates and judgments that go into determining accrual earnings. Quality of Earnings No one transaction more than the following illustrates questions about the quality of earnings at Sunbeam. Sunbeam owned a lot of spare parts that were used to fix its blenders and grills when they broke. Those parts were stored in the warehouse of a company called EPI Printers, which sent the parts out as needed. To inflate profits, Sunbeam approached EPI at the end of December to sell it parts for $11 million and book an $5 million profit. EPI balked stating the parts were only worth $2 million, but Sunbeam found a way around that. EPI was persuaded to sign an "agreement to agree" to buy the parts for $11 million, with a clause letting EPI walk away in January 1998. In fact, the parts were never sold but the profit was posted anyway. Paine Webber, Inc. analyst Andrew Shore had been following Sunbeam since the day Dunlap was hired. As an analyst, Shore's job was to make educated guesses about investing clients' money in stocks. Thus, he had been scrutinizing Sunbeam's financial statements every quarter and considered Sunbeam's reported levels of inventory for certain items to be unusual for the time of year. For example, he noted massive increases in the sales of electric blankets in the third quarter of 1997, although they usually sell well in the fourth quarter. He also observed that sales of grills were high in the fourth quarter, which is an unusual time of year for grills to be sold, and noted that accounts receivable were high. On April 3, 1998, just hours before Sunbeam announced a first-quarter loss of $44.6 million, Shore downgraded his assessment of the stock. By the end of the day Sunbeam's stock prices had fallen 25 percent. Questions 1. Is there a difference between aggressive accounting and earnings management? Would the motivation for using the techniques described in this case influence whether they should be labeled as aggressive accounting or earnings management? Incorporate ethical considerations in your answer. 2. How did pressures for financial performance contribute to Sunbeam's culture, where quarterly sales were manipulated to influence investors? To what extent do you believe the Andersen auditors should have considered the resulting culture in planning and executing its audit? 3. Chapter 3 addresses issues related to corporate governance and ethical management. Given the facts of the case, identify deficiencies in ethics and corporate governance failures at Sunbeam. 4. Given the variety of income adjusting techniques described in the case that were used by Sunbeam to manipulated the numbers, do you think it was proper for the Andersen auditors to dismiss $2 million of the $5 million income from the sale of the spare parts inventory? What factors do you think Andersen should have considered in addition to materiality in making the determination? Optional Question 5. Why is it important for auditors to use analytical comparisons such as the ratios in the Sunbeam case to evaluate possible red flags that may indicate additional auditing is required?
Q: Milestone One: Business Entity, Accounting Method, and Tax Laws In Module Two, you will submit a draft of your recommendation for the business entity you believe will meet the client's needs, based on your research. You will also select the accounting method that should be used to interpret the business transactions and for tax reporting. You will also need to summarize the tax law pertaining to the entity selected. This assignment will address Section I, Parts A, B, and C of the critical elements above. This milestone is graded with the Milestone One Rubric. I. Memorandum A. Use logical reasoning based on your tax research to explain why the client should choose your recommended business entity. Consider referencing appropriate tax code and regulations. B. Defend your business entity recommendation by describing the accounting method. Consider the advantages and disadvantages of the business entity based on the following: Cash basis vs. accrual The cost to prep the returns The tax benefits The limited liability protection Employee benefits C. Interpret the tax law pertaining to the type of business recommended and justify your recommendation using details consistent with tax law, code, and regulations. TAX 655 Final Project Guidelines and Rubric Overview The final project for this course is the creation of a memorandum with an appendix of supporting IRS forms and schedules. Working as an accounting associate in a financial organization requires the ability to apply accounting knowledge in unique ways. Being able to identify issues and communicate them effectively with members of your team and clients is essential for any financial career working in a privately held enterprise or working with privately held clients. In the final project, you will demonstrate your ability to communicate your tax efficient investment and business strategy recommendations to a client. Your proposed strategy could save the client and his family millions of dollars over time, so it is imperative that you utilize your tax research skills and maintain compliance with all governing rules and regulations. The project is divided into four milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Two, Four, Five, and Seven. The comprehensive memorandum with appendix will be submitted in Module Nine. The project will address the following course outcomes: Recommend appropriate taxable entities, based on comprehensive tax research, for new businesses resulting in optimum solutions that meet clients' desired economic outcomes Evaluate tax consequences between liquidating and non-liquidating corporate distributions for identifying their impact on clients' tax returns consistent with governing rules and regulations Apply best practices in accounting and moral reasoning for liquidating a business resulting in the best economic solution for the owner Illustrate solutions for addressing tax consequences resulting from gifts and inheritances, while maintaining compliance with governing rules and regulations Prepare appropriate tax returns as they apply to various business entities that result in the best economic solution for clients Prompt You are working as an accountant at a mid-size CPA firm. One of your clients is Bob Jones. Bob's personal information is as follows: DOB: October 10, 1952 SSN: 444-00-4444 Marital Status: Single Home Address: 5100 Lakeshore Drive, Pensacola, FL 32502 Bob has a very successful used car business located at 210 Ocean View Drive in Pensacola, Florida. Last year, you filed a Schedule C for Bob that had $1,200,000 in taxable income. The business will have an income growth rate of 10% per year over the next several years. Bob's personal wealth, including investments in land, stocks, and bonds, is about $14,000,000. Last year, he reported interest income of $20,000 and dividend income of $6,000. The $14,000,000 includes land worth $9,000,000 that Bob bought in 1966 for $450,000. The stocks and bonds have a tax basis of $1,200,000 and they are currently worth $5,000,000. All of the investments have been owned for more than a year. In addition to his investments, Bob paid $140,000 for his home in 1972 and it is now worth $600,000. The used car business is currently valued at $53,000,000 including the land and building, which are worth $41,000,000. Bob's tax basis in the land and building is $2,000,000 and $400,000, respectively. The inventory is worth $12,000,000, with a cost basis of $5,000,000; the remaining assets, which include office furniture and equipment, make up the remainder of the business's total value. The office furniture and equipment are fully depreciated. Bob wants your professional advice regarding whether he should continue to operate as a sole proprietor or convert the business to a partnership, an S corporation, or a C corporation. Based on one of the business entities selected, Bob wants to include Mandy—his daughter—in the business as an owner and manager with a possibility of 40% interest. One of his concerns is what would happen to his business after he passes away. Mandy's personal tax information is as follows: Mandy Jones DOB: June 30, 1990 SSN: 999-99-9999 Marital Status: Single Home Address: 5990 Langley Road, Pensacola, FL 35203 You will need to describe the tax and limited liability effects on a chosen business entity should Bob decide to reduce the amount of tax paid per year, as well as the protection of personal assets should there be a possible claim against the company's assets. Prepare a memorandum to the client, recommending a type of business entity, including an appendix of supporting IRS tax schedules and forms. Specifically, the following critical elements must be addressed: I. Memorandum A. Use logical reasoning based on your tax research to explain why the client should choose your recommended business entity. Consider referencing appropriate tax code and regulations. B. Defend your business entity recommendation by describing the accounting method. Consider the advantages and disadvantages of the business entity based on the following: 1. Cash basis vs. accrual 2. The cost to prep the returns 3. The tax benefits 4. The limited liability protection 5. Employee benefits C. Interpret the tax law pertaining to the type of business recommended and justify your recommendation using details consistent with tax law, code, and regulations. D. Explain the tax effect based on providing $180,000 per year for the client's salary and $70,000 per year for his daughter's salary if they withdraw cash from the business or pay dividends as appropriate. E. Justify the percentage of ownership the client's daughter should have in the business based on the type of business entity recommended. Consider the tax law in reference to the recommendation and how the decision will affect the daughter's tax return. F. Create a detailed tax planning proposal explaining how the client's family can experience tax savings should the client pass away. Cite relevant governing rules and regulations. G. Illustrate a strategic plan that addresses the need for a will in handling the estate. Detail what happens to the business, land, and investments consistent with tax codes and regulations. Consider extending the plan to address the client's estate tax, trust, and charitable contributions while minimizing estate tax. H. Recommend estate planning strategies consistent with tax codes and regulations for the purpose of reducing the taxable estate. Be sure to include gifting property to heirs in your response. I. Illustrate the best course of action if the client decides to leave the business in three years. Provide some advice to him should he decide to gift the business to his daughter or transfer the assets or common stock to her, depending on the business entity you have selected. J. Illustrate the best course of action if the client wishes to sell the business. Consider the tax consequences with regard to capital gains and losses, ordinary income issues, and selling an existing operating business. II. Conclusion A. Compare and contrast the advantages and disadvantages of the sole proprietorship, the partnership, the S corporation, and the C corporation as a tax vehicle that could meet the client's need for accounting information about the business. Consider providing justification for why the client would not necessarily choose the other business entities. B. Summarize the alternative involving the possibility of liquidating the business using rationale based on tax research, codes, and regulations. C. Summarize the alternative of transferring the business activity, providing justification based on tax research, codes, and regulations. III. Appendix: To further justify your professional advice regarding whether the client should continue to operate as a sole proprietor or convert the business to a partnership, an S corporation, or a C corporation, complete the appropriate tax schedules using the most current tax forms for the requirements below. A. Prepare Bob's Form 1040 with the appropriate tax schedules and Mandy's Form 1040 (based on the salary he wanted to pay her, $70,000 per year). Assume that you are filing the tax returns using sole proprietorship for the business entity and treating Mandy as an employee, regardless of your initial recommendation for this client. B. Prepare the appropriate forms in the event that the client decides to convert the business to a partnership, an S corporation, or a C corporation based on your recommendation. Also, include the tax effect, if any, of the money that the client and his daughter are taking from the business for their personal expenses. Include the owners' personal 1040 forms as well. C. Justify your recommendation using schedules and tax forms you completed by explaining how the forms and schedules result in the best economic solution for the client consistent with IRS code and regulations. Milestones Milestone One: Business Entity, Accounting Method, and Tax Laws In Module Two, you will submit a draft of your recommendation for the business entity you believe will meet the client's needs, based on your research. You will also select the accounting method that should be used to interpret the business transactions and for tax reporting. You will also need to summarize the tax law pertaining to the entity selected. This assignment will address Section I, Parts A, B, and C of the critical elements above. This milestone is graded with the Milestone One Rubric. Milestone Two: Tax Effects and Ownership Interest In Module Four, you will submit a draft explaining the tax effects of salaries if cash is withdrawn from a business. You must also explain the tax consequences of paying the owners based on the selected business entity, as well as the tax consequences for each individual's personal tax returns. This assignment will address Section I, Parts D and E of the critical elements. This milestone is graded with the Milestone Two Rubric. Milestone Three: Strategic Planning, Gift Taxes, and Disposing of a Business In Module Five, you will submit a draft of your tax planning proposal and strategic plan recommendation regarding the client's estate. You must also address the tax effects of selling the business prior to the death of the founder. This assignment will address Section I, Parts F through J of the critical elements. This milestone is graded with the Milestone Three Rubric. Milestone Four: Conclusion In Module Seven, you will submit a draft of your conclusion. You will compare and contrast the advantages of each type of business entity that the client may select, summarize the alternative involving the possibility of liquidating the business using rationale, and, finally, summarize the alternative of transferring the business activity providing justification based on tax research, code, and regulations. This assignment will address Section II of the critical elements. This milestone is graded with the Milestone Four Rubric. Final Submission: Memorandum With Appendix In Module Nine, you will complete all necessary tax forms according to Section III of the critical elements. You will then submit a comprehensive memorandum to the client that covers all critical elements and includes an appendix of IRS tax forms and schedules necessary to support your advice. You may also submit tax forms and schedules to illustrate the tax effects of continuing to operate the business as a sole proprietorship. The final submission should be a complete document containing all of the critical elements of the final project. Feedback gained during the course should be reflected in your final submission. This submission will be graded using the Final Project Rubric. Note: The textbook includes tax return forms for the prior year in the appendix because of publishing deadlines. Use the most current tax forms to arrive at your answers. Deliverables Milestone Deliverable Module Due Grading One Business Entity, Accounting Method, and Tax Laws Tax Effects and Ownership Interest Two Graded separately; Milestone One Rubric Four Graded separately; Milestone Two Rubric Five Graded separately; Milestone Three Rubric Seven Graded separately; Milestone Four Rubric Nine Graded separately; Final Project Rubric Two Three Four Strategic Planning, Gift Taxes, and Disposing of a Business Conclusion Final Submission: Memorandum With Appendix Final Project Rubric Guidelines for Submission: Submit your memorandum with standard formatting: 7-10 pages, double-spaced, in APA format, with one-inch margins, 12-point Times New Roman font, and an appendix containing electronic versions of the appropriate IRS tax schedules and forms. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Critical Elements Memo: Business Entity Exemplary Meets "Proficient" criteria and references appropriate tax code and regulations in justification (100%) Proficient Explains why the recommended entity is the most appropriate choice using logical reasoning (90%) Memo: Accounting Method Meets "Proficient" criteria and details cover the advantages and disadvantages (100%) Defends the decision to choose the recommended entity by describing the accounting method (90%) Needs Improvement Explains why the recommended entity is the most appropriate choice but details either lack relevance or are cursory (70%) Defends the decision to choose the recommended entity but details are inaccurate or cursory (70%) Not Evident Does not explain why the recommended entity is the most appropriate choice (0%) Does not defend the decision to choose the recommended entity (0%) Value 6 6 Memo: Tax Law Memo: Tax Effect on Cash Withdrawals or Dividends Memo: Percentage of Ownership Memo: Tax Planning Proposal Meets "Proficient" criteria and details illustrate versatility of thought when using tax law, code, and regulations (100%) Meets "Proficient" criteria and provides, in detail, more than one option (100%) Meets "Proficient" criteria and details explain how the decision will affect the client's daughter's tax return (100%) Meets "Proficient" criteria and details include relevant governing rules and regulations (100%) Memo: Strategic Plan Meets "Proficient" criteria and extends the plan to address the estate tax, trust, and charitable contributions while minimizing inheritance tax (100%) Memo: Estate Planning Strategies Meets "Proficient" criteria and details exemplify gift-giving strategies that reduce the taxable estate (100%) Memo: Gift or Transfer the Assets Meets "Proficient" criteria and provides justification of both the gifting and transferring of assets (100%) Interprets tax law pertaining to the selected business entity using tax law, code, and regulations as justification (90%) Explains the tax effect based on providing the client and his daughter salaries if they withdraw cash from the company or pay dividends (90%) Justifies the percentage of ownership the client's daughter should have based on the business recommended (90%) Creates a tax planning proposal explaining how the family can experience tax savings should the client pass away (90%) Illustrates a strategic plan that addresses the need for a will in handling the estate, which includes the business, land, and investments, consistent with governing code and regulations (90%) Recommends estate planning strategies consistent with governing code and regulations, including gifting property to heirs (90%) Illustrates the best course of action the client should take including advice on gifting or transferring assets if he leaves the business in three years (90%) Interprets and justifies tax law pertaining to the selected business entity but details are either inaccurate or irrelevant (70%) Explains the tax effect based on providing the client and his daughter salaries but details are inaccurate or cursory (70%) Does not interpret and justify tax law pertaining to the selected business entity (0%) 6 Does not explain the tax effect based on providing the client and his daughter salaries (0%) 6 Justifies the percentage of ownership the client's daughter should have but details are irrelevant or cursory (70%) Creates a tax planning proposal but details are inaccurate or irrelevant (70%) Does not justify the percentage of ownership the client's daughter should have (0%) 6 Does not create a tax planning proposal (0%) 6 Illustrates a strategic plan that addresses the need for a will, but details lack coverage of business, land, or investments or are not consistent with governing code and regulations (70%) Recommends estate planning strategies but details are inaccurate or cursory (70%) Does not illustrate a strategic plan that addresses the need for a will (0%) 6 Does not recommend estate planning strategies (0%) 6 Illustrates a course of action the client should take if he leaves the business in three years but details are either inaccurate or irrelevant (70%) Does not illustrate the best course of action the client should take if he leaves the business in three years (0%) 6 Memo: Sell the Business Conclusion: Advantages and Disadvantages Conclusion: Liquidating the Business Conclusion: Transferring the Business Activity Meets "Proficient" criteria and addresses ordinary income issues, and capital gains and losses consistent with tax code and regulations (100%) Meets "Proficient" criteria and shows keen insight into the advantages and disadvantages of choosing the other business entities (100%) Meets "Proficient" criteria and is written in an appropriate voice for the target audience (100%) Meets "Proficient" criteria and is written in an appropriate voice for the target audience (100%) Appendix: Form 1040 and Tax Schedules Appendix: Forms to Convert the Business Appendix: Justification of Schedules and Tax Forms Meets "Proficient" criteria and references relevant IRS code and regulations (100%) Illustrates the best course of action if the client wishes to sell the business and includes tax consequences when selling an existing operating business (90%) Compares and contrasts advantages and disadvantages of all the business entities as tax vehicles to meet the client's needs (90%) Summarizes the alternative choice involving liquidating the business, using tax research, governing rules, and regulations (90%) Summarizes the alternative choice involving transferring the business activity using tax research, governing rules, and regulations (90%) Prepares the appropriate pages of Form 1040 and the tax schedules accurately and completely based on the sole proprietorship business entity (100%) Prepares the appropriate remaining forms for a partnership, S corporation, or C corporation accurately and completely (100%) Justifies the selected schedules and tax forms by explaining how the schedules and forms result in the best economic solution for the client (90%) Illustrates a course of action if the client wishes to sell the business, but details are inaccurate or cursory (70%) Does not illustrate a course of action if the client wishes to sell the business (0%) 6 Compares and contrasts advantages and disadvantages of all the business entities but details are either incomplete or inaccurate (70%) Summarizes the alternative choice involving liquidating the business but details are either unclear for target audience or cursory (70%) Summarizes the alternative choice involving transferring the business activity but details are either unclear or cursory (70%) Does not compare and contrast advantages and disadvantages of all the business entities (0%) 6 Does not summarize the alternative choice involving liquidating the business (0%) 6 Does not summarize the alternative choice involving transferring the business activity (0%) 6 Prepares the appropriate pages of Form 1040 and tax schedules based on the sole proprietorship business entity but details are either incomplete or inaccurate (70%) Prepares the appropriate remaining forms for a partnership, S corporation, or C corporation but details are incomplete or inaccurate (70%) Justifies the selection of the schedules and tax forms but details are either inaccurate or cursory (70%) Does not complete the appropriate pages of Form 1040 based on the sole proprietorship business entity (0%) 6 Does not prepare the appropriate remaining forms (0%) 6 Does not justify the selection of the schedules and tax forms (0%) 6 Articulation of Response Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-toread format (100%) Submission has no major errors related to citations, grammar, spelling, syntax, or organization (90%) Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas (70%) Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas (0%) Total 4 100% TAX 655 Milestone One Guidelines and Rubric You will submit a draft of your recommendation for the business entity that you believe will meet the client's needs, based on your research. You will also select the accounting method that should be used to interpret the business transactions and for tax reporting. You will also summarize the tax law pertaining to the entity selected. This assignment will address Section I, Parts A, B, and C of the critical elements of the final project. Specifically, the following critical elements must be addressed: I. Memorandum A. Use logical reasoning based on your tax research to explain why the client should choose your recommended business entity. Consider referencing appropriate tax code and regulations. B. Defend your business entity recommendation by describing the accounting method. Consider the advantages and disadvantages of the business entity based on the following: 1. Cash basis vs. accrual 2. The cost to prep the returns 3. The tax benefits 4. The limited liability protection 5. Employee benefits C. Interpret the tax law pertaining to the type of business recommended and justify your recommendation using details consistent with tax law, code, and regulations. Guidelines for Submission: Your paper must be submitted as a 1-2-page Microsoft Word document with double spacing, 12-point Times New Roman font, oneinch margins, and at least three sources cited in APA format. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Critical Elements Memo: Business Entity Memo: Accounting Method Proficient (100%) Explains why the recommended entity is the most appropriate choice using logical reasoning Defends the decision to choose the recommended entity by describing the accounting method Needs Improvement (75%) Explains why the recommended entity is the most appropriate choice but details either lack relevance or are cursory Defends the decision to choose the recommended entity but details are inaccurate or cursory Not Evident (0%) Does not explain why the recommended entity is the most appropriate choice Value 25 Does not defend the decision to choose the recommended entity 25 Memo: Tax Law Articulation of Response Interprets tax law pertaining to the selected business entity using tax law, code, and regulations as justification Submission has no major errors related to citations, grammar, spelling, syntax, or organization Interprets and justifies tax law pertaining to the selected business entity but details are either inaccurate or irrelevant Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Does not interpret and justify tax law pertaining to the selected business entity 25 Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas 25 Total 100%
Q: There are about 45 Questions which are to be solved.  If someone could please help that'd be great. Thanks! 1) Alaska Company sold 2,000 units in October at a price of $35 per unit. The variable cost is $20 per unit. Calculate the total contribution margin. A) $70,000 B) $30,000 C) $40,000 D) $20,000 2) Mendez Company provides the following information about its product: Targeted operating income Selling price per unit Variable cost per unit Total fixed costs $50,000 6.00 1.50 125,000 Mendez has a contribution margin ratio of A) 75% B) 100% C) 125% D) 25% 3) Trang Company provided the following manufacturing costs for the month of June. Direct labor cost Direct materials cost Equipment depreciation (straightline) Factory insurance Factory manager's salary Janitor's salary Packaging costs Property taxes $136,000 80,000 24,000 19,000 12,800 5,000 18,800 16,000 Calculate Trang's total fixed costs. A) $311,600 B) $52,800 C) $71,600 D) $76,800 4) The utility bill for Shobita Legal Services LLC consists of both fixed and variable costs. Using the 4-month data below apply the high-low method to answer the question. January February March April Total Minutes Bill 460 $3,000 200 $2,675 160 $2,625 300 $2,800 If Shobita uses 380 minutes in May, how much will the total bill be? A) $2,425 B) $2,478 C) $2,900 D) $3767 5) Sangeeta Industries is considering replacing an aging Evaporator that is presently used in its production process. The following information is available: Original cost Remaining useful life in years Current age in years Book value Current disposal value in cash Future disposal value in cash (in 5 years) Annual cash operating costs Old Replacemen Evaporator t Machine $55,000 $45,000 3 3 3 0 $33,000 $9,000 $0 8,500 $0 $3,500 Sunk costs would amount to A) $55,000 B) $33,000 C) $9,000 D) $45,000 6) Vatsala Company discloses its financial information as follows: Income from operations Interest expense Gains/(losses) on sale of equipment Net income Beginning assets Ending assets $200,000 45,000 (2,500) 152,500 2,600,000 3,200,000 Calculate return on investment based on the above information. A) 6.3% B) 5.3% C) 6.9% D) 7.2% 7) Venkat Inc. manufactures and sells pens for $5 each. Inez Corp. has offered Venkat Inc. $3 per pen for a one-time order of 3,500 pens. The total manufacturing cost per pen, using traditional costing, is $1 per unit, and consists of variable costs of $0.85 per pen and fixed overhead costs of $0.15 per watch. Assume that Venkat Inc. has excess capacity and that the special order would not adversely affect regular sales. What is the change in operating income that would result from accepting the special sales order? A) increase of $7,000 B) decrease of $7,000 C) increase of $7,525 D) decrease of $7,525 8) Mikhail Building Supplies Co. has a sales office which sells steel beams to property developers. It discloses its financial information as follows . Calculate the flexible budget variance for the steel beams? A) $1,850 U B) $3,000 F C) $10,000 U D) $1,500 F 9. Calculate the inventory turnover using the following data for the current year 2014 Net sales on account during 2014 $ 500,000 Cost of merchandise sold during 2014 330,000 Accounts receivable, Jan 1, 2014 45,000 Accounts receivable, December 31, 2014 35,000 Inventory, Jan 1, 2014 90,000 Inventory, December 31, 2014 110,000 a. 3.3 b. 8.3 c. 3.7 d. 3.0 10) Benjamin Nautical Company has several divisions which are investment centers. Data for the Sail Boat Division and the Yacht Trailer Division are shown here: Operating income Total assets at Jan 1 Total assets at Dec 31 Sail Boat Division $90,000 $670,000 $710,000 Yacht Division $36,000 $230,000 $220,000 Which of the following statements would be the most meaningful interpretation of this data? A) Performance of Sail Boat Division is better than that of Yacht Division because Sail Boat Division has higher assets. B) Yacht Division uses its assets more efficiently than Sail Boat Division because it has higher ROI. C) Sail Boat Division shows more efficient use of assets than Yacht Division because it has higher operating income. D) Sail Boat Division is more financially successful than Yacht Division because it shows an increase in assets 11. C K Venkat Chemicals estimates for July are as follows: Estimated inventory (units), July 1 8,500 Desired inventory (units), July 31 10,500 Expected sales volume (units), July 76,000 For each unit produced, the direct materials needed are: Direct material A ($5 per lb.) 3 lbs. Direct material B ($18 per lb.) 1/2 lb. Calculate the total direct materials purchases of materials A and B (assuming no beginning or ending material inventory) required for July productions: a. $1,080,000 for A; $648,000 for B b. $1,080,000 for A; $1,296,000 for B c. $1,170,000 for A; $702,000 for B d. $1,125,000 for A; $675,000 for B 12.Jackson Company had a finished goods inventory of 55,000 units on January 1. It's projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Jackson Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales. Calculate the budgeted production for January? a. 236,000 b. 181,000 c. 200,000 d. 219,000 13. Nebraska Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $240,000, $300,000, and $420,000, respectively, for September, October, and November. The company expects to sell 20% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 25% in the month following the sale, and the remainder in the following month. Calculate the cash collections in September from accounts receivable: a. $240,000 b. $134,400 c. $192,000 d. $168,000 14.Florida Company opened its doors on March 31 of the current year. Projected manufacturing costs for the first three months of business are $156,800, $195,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 of the estimated monthly manufacturing costs. Insurance was paid on March 31, and property taxes will be paid in November. Three-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month. Calculate the cash payments for manufacturing in the month of June : a. $14,600 b. $188,800 c. $217,600 d. $183,200 15.CK Venkat Chemicals releases the following data related to direct materials costs for November: Actual costs 4,600 pounds at $5.50 Standard costs 4,500 pounds at $6.00 Calculate the direct materials price variance? a. $2,250 favorable b. $2,250 unfavorable c. $2,300 favorable d. $1,700 unfavorable 16 CK Venkat Chemicals releases the following data relate to direct materials costs for November: Actual costs 4,600 pounds at $5.50 Standard costs 4,500 pounds at $6.00 Calculate the direct materials quantity variance? a. $550 unfavorable b. $600 favorable c. $550 favorable d. $600 unfavorable 17. CK Venkat Chemicals releases the following data related to direct labor costs for February: Actual costs 7,700 hours at $13 Standard costs 7,000 hours at $9 Calculate the direct labor time variance? a. $9,100 favorable b. $9,100 unfavorable c. $6,300 unfavorable d. $6,300 favorable 18. CK Venkat Chemicals releases the following data relate to direct labor costs for February: Actual costs 7,700 hours at $13 Standard costs 7,000 hours at $9 Calculate the direct labor rate variance? a. $28,000 favorable b. $28,000 unfavorable c. $30,800 favorable d. $30,800 unfavorable 19. The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours) 3 hours @ $.80 per hour Variable overhead 3 hours @ $2 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $8,000 The amount of the factory overhead volume variance is: a. $2,000 favorable b. $2,000 unfavorable c. $2,500 unfavorable d. $0 20.The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours) 3 hours @ $.80 per hour Variable overhead 3 hours @ $2 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $8,000 The amount of the total factory overhead cost variance is: a. $2,000 favorable b. $5,000 unfavorable c. $2,500 unfavorable d. $0 21. Balance sheet and income statement data indicate the following: Bonds payable, 10% (issued 1988 due 2012) Preferred 5% stock, $100 par (no change during year) Common stock, $50 par (no change during year) Income before income tax for year $1,000,000 300,000 2,000,000 350,000 Income tax for year 80,000 Common dividends paid 50,000 Preferred dividends paid 15,000 Based on the data presented above, what is the number of times bond interest charges were earned ? a. 3.7 b. 4.4 c. 4.5 d. 3.5 22) Kim Corporation has two major divisions: Northern Products and Southern Products. It provides the following information for the year 2014 Sales revenue Operating income Average total assets Target rate of return Northern Products Southern Products Division Division $140,000 $1,040,000 $46,400 $220,000 $300,000 $5,540,000 14.0% 14.0% Calculate the residual income for the Northern division. A) $5,500 B) $4,400 C) $2,500 D) $1,800 23) New York Inc. Inc. has a division that manufactures a component that sells for $150 and has a variable cost of $45. Another division of the company wants to purchase the component. Fixed cost per unit of component is $25. What is the minimum transfer price? Assume the division is operating at capacity? A) $150 B) $45 C) $55 D) $140 24) New York Inc. Inc. has a division that manufactures a component that sells for $150 and has a variable cost of $45. Another division of the company wants to purchase the component. Fixed cost per unit of component is $25. What is the maximum transfer price if the division is operating below its capacity? A) $70 B) $170 C) $150 D) $30 25) Fletcher Supplies Company has a sales office which sells concrete culvert pipe to property developers. The sales office is a revenue center and must prepare a monthly performance report. It has provided the following information. How much is the flexible budget variance for the 40 inch pipe? A) $1,850 U B) $3,000 F C) $10,000 U D) $1,500 F 26) Fletcher Supplies Company has a sales office which sells concrete culvert pipe to property developers. The sales office is a revenue center and must prepare a monthly performance report. Below is the partially completed performance report. The company uses management by exception to address flexible budget variances. On which variance would the company focus first? A) 40 inch B) 36 inch long C) 36 inch short D) 32 inch 27) Chesapeake Company provided the following manufacturing costs for the month of June. Direct labor cost Direct materials cost Equipment depreciation (straightline) Factory insurance Factory manager's salary Janitor's salary Packaging costs Property taxes $136,000 80,000 24,000 19,000 12,800 5,000 18,800 16,000 From the above information, calculate Chesapeake's total variable costs. A) $311,600 B) $62,300 C) $234,800 D) $38,400 28) Da Silva Company has variable costs of $0.60 per unit of product. In August, the volume of production was 24,000 units and units sold were 20,000. The total production costs incurred were $31,900. What are the fixed costs per month? A) $17,500 B) $19,900 C) $9,600 D) $14,400 29. Based on the following data, what is the quick ratio, rounded to one decimal point? Accounts payable Accounts receivable Accrued liabilities $ 30,000 65,000 7,000 Cash 20,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 20,000 Property, plant, and equipment Prepaid expenses 625,000 2,000 a. 2.4 b. 3.4 c. 2.1 d. 1.5 30.A company with working capital of $400,000 and a current ratio of 2.5 pays a $75,000 short-term liability. The amount of working capital immediately after payment is a. $475,000 b. $325,000 c. $400,000 d. $75,000 31. Based on the following data for the current year, what is the inventory turnover? Net sales on account during year $ 500,000 Cost of merchandise sold during year 330,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 110,000 a. 3.3 b. 8.3 c. 3.7 d. 3.0 32.The Rand Corporation began the current year with a retained earnings balance of $25,000. During the year, the company corrected an error made in the prior year. The error was due to the accountant failing to record depreciation expense of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and declared cash dividends of $5,000. Compute the year end retained earnings balance. a. $29,000 b. $35,000 c. $39,000 d. $45,000 33. Lazarus Consulting Services has 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, Lazarus declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend? a. $3,200 b. $6,400 c. $4,800 d. $8,800 34. Ignatius the Investor's Income for the period would not be affected by a. interest received on a temporary investment in bonds b. dividends received on a long-term investment in stock where the investor owns 10% of the investee's stock c. dividends received on a long-term investment in stock where the investor owns 30% of the investee's stock d. interest received on a long-term investment in bonds 35. Phan Company owns 28% of the common stock of San Company and accounts for the investment using the equity method. Assuming that Phan Company purchased the stock several years ago, the balance in the investment account would be equal to the cost of the a. investment b. investment plus Phan's share of San's net income earned since the investment was purchased c. investment plus the total amount of dividends Phan has received from San since the investment was purchased d. investment plus Phan's share of San's net income earned since the investment was purchased minus the total amount of dividends Phan has received from San since the investment was purchased 36.The Krebhel Company issued $100,000 of 12% bonds on May 1, 2006 at face value. The bonds pay interest semiannually on January 1 and July 1. The bonds are dated January 1, 2006, and mature on January 1, 2010. The total interest expense related to these bonds for the year ended December 31, 2006 is a. $2,000 b. $4,000 c. $8,000 d. 12,000 37.When the market rate of interest was 12%, Patel Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was a. $ 321,970 b. $1,000,000 c. $ 943,494 d. $621,524 38.When the market rate of interest was 11%, Shah Corporation issued $100,000, 8%, 10-year bonds that pay interest semiannually. Using the straight-line method, the amount of discount or premium to be amortized each interest period would be a. $4,000 b. $896 c. $17,926 d. $1,793 39. Bri Cheese Products Co. purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized by Bri from the sale? a. $0 b. $5,000 c. $2,500 d. $10,000 40.Bri Cheese Products Co. purchases 10,000 shares of its own $10 par common stock for $25 per share, recording it at cost. What will be the effect on Bri's total stockholders' equity? a. increase, $100,000 b. increase, $250,000 c. decrease, $100,000 d. decrease, $250,000 41. Below are selected T accounts from Bri Cheese Dairy with incomplete information: Work in Process Oct. 1 Balance 20,000 | Oct. 31 Goods 31 Direct | finished X materials 96,700 | 31 Direct | labor 201,000 | 31 Factory overhead | X| Finished Goods Oct. 1 Balance 52,000 | 31 Goods | finished 360,000 | If the balance of Work in Process at October 31 is $21,000, what was the amount of factory overhead applied in October by Bri? a. $63,300 b. $21,300 c. $42,300 d. $11,300 42. CK Venkat Chemicals had incurred labor costs incurred on account during this period. The amount was $225,000 including $195,000 for production orders and $30,000 for general factory use. In addition, factory overhead applied to production was $17,000. Which of the following entries will CK Venkat use to record the factory overhead applied to production. a. Work in Process 30,000 Factory Overhead b. Factory Overhead 30,000 17,000 Work in Process c. Work in Process Factory Overhead d. Factory Overhead Accounts Payable 17,000 17,000 17,000 30,000 30,000 43. Use the Direct Method for this problem. Baltimore Tourist Trinkets had cost of merchandise sold during the 2014 at $50,000. Merchandise inventories were $12,500 and $10,500 On January 1 2014 and December 31, 2014 respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Cash payments for merchandise total are a. $49,000 b. $47,000 c. $51,000 d. $53,000 44. Patriots Inc. had equipment with an original cost of $50,000 and accumulated depreciation of $20,000. This was sold at a loss of $7,000. As a result of this transaction, Patriot's cash would a. increase by $23,000 b. decrease by $7,000 c. increase by $43,000 d. decrease by $30,000 45. Littleton Co. can further process Product J to produce Product D. Product J is currently selling for $21 per pound and costs $15.75 per pound to produce. Product D would sell for $35 per pound and would require an additional cost of $8.75 per pound to produce. What is the differential revenue of producing Product D? a. $7 per pound b. $8.75 per pound c. $14 per pound d. $5.25 per pound The End!
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