Brooks Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to have a salvage value at the end of its useful life. The following estimates were made of the cash flows. The company’s cost of capital is 5%. Option A Option B Initial cost $196,000 $291,000 Annual cash inflows $72,500 $82,500 Annual cash outflows $28,000 $25,600 Cost to rebuild (end of year 4) $49,100 $0 Salvage value $0 $8,500 Estimated useful life 7 years 7 years Click here to view PV table. Collapse question part (a) Compute the (1) net present value, (2) profitability index, and (3) internal rate of return for each option. (Hint: To solve for internal rate of return, experiment with alternative discount rates to arrive at a net present value of zero.) (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answers for present value and IRR to 0 decimal places, e.g. 125 and round profitability index to 2 decimal places, e.g. 12.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net Present Value Profitability Index Internal Rate of Return Option A $ % Option B $ %

The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 922,000 $ 266,000 $ 404,000 $ 252,000 Variable manufacturing and selling expenses 473,000 118,000 196,000 159,000 Contribution margin 449,000 148,000 208,000 93,000 Fixed expenses: Advertising, traceable 69,900 8,800 40,400 20,700 Depreciation of special equipment 43,500 20,500 7,800 15,200 Salaries of product-line managers 114,500 40,500 38,700 35,300 Allocated common fixed expenses* 184,400 53,200 80,800 50,400 Total fixed expenses 412,300 123,000 167,700 121,600 Net operating income (loss) $ 36,700 $ 25,000 $ 40,300 $ (28,600) *Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? 2. Should the production and sale of racing bikes be discontinued? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.

Freedom Co. purchased a new machine on July 2, 2016, at a total installed cost of $43,000. The machine has an estimated life of five years and an estimated salvage value of $6,700.

Required:

a-1. Calculate the depreciation expense for each year of the asset's life using Straight-line depreciation.

a-2. Calculate the depreciation expense for each year of the asset's life using Double-declining-balance depreciation.

b. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2016, under each method? (Note: The machine will have been used for one-half of its first year of life.)

c. Calculate the accumulated depreciation and net book value of the machine at December 31, 2017, under each method.

You are interested in establishing a small business. Write a paper between 1,000 and 1,500 words discussing your small-business idea. Include the following:

1. Discuss your business and the product or service your small business provides.

2. Identify which accounting method (i.e. cash versus accrual) you plan to use for your business. Why did you select this choice?

3. List six business transactions you expect to incur with your company. State which accounts (from your chart of accounts) are impacted.

4. Discuss how each business transaction (see point 3) impacts your income statement, balance sheet and statement of cash flow.

5. Select one organization type (sole proprietorship, partnership, C-corporation, and S-corporation) for your company and explain why you selected this option.

Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 27,900 yards of fabric costing $3.05 per yard and incurring direct labor costs of $17,496 for 3,240 hours of direct labor. The standard cost per pillowcase assumes 1.75 yards of fabric at $3.10 per yard, and 0.20 hours of direct labor at $5.95 per hour.

a. Compute both the price variance and quantity variance relating to direct materials used in the manufacture of pillowcases in May.

b. Compute both the rate variance and efficiency variance for direct labor costs incurred in manufacturing pillowcases in May.

(For all requirements, Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)

a. Materials price variance     1395.00    Favorable

Materials quantity variance    _______     Unfavorable

b. Labor rate variance           ________ Favorable

Labor efficiency variance      ________ Unfavorable

Pick a Canadian company listed on the Toronto Stock Exchange and find a revenue stream that you can apply the concepts of revenue recognition to the company chosen.

On December 31, year 0, your company issued a 3-year $80,000 bond with 4% coupons payable annually. Proceeds were $78,900. On January 1, year 3, your company repurchased all of the outstanding 4% bonds. Provide the financial statement amounts under each scenario market discount rate applied to the bond at January 1, year 3.

Provide an example of a group that you have worked as part of (in school or work) that you felt succeeded. Why do you feel that was?

Provide an example of a group that you have worked as part of (in school or work) that you felt was not successful, either in its mission or for you personally. Provide details.

Write two well developed paragraphs of 150-200 words in response to these prompts by Wednesday. Respond to at least one other student's response by Sunday.

Exercise 8-10 (Part Level Submission) Inventory information for Part 311 of Tamarisk Corp. discloses the following information for the month of June. June 1 Balance 302 units @ $15 June 10 Sold 197 units @ $36 11 Purchased 795 units @ $18 15 Sold 499 units @ $38 20 Purchased 499 units @ $20 27 Sold 296 units @ $41 Collapse question part (a) Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.

Problem 7-72BExpenditures After Acquisition

Objective 3Understand the concept of depreciation.

4Compute depreciation expense using various depreciation methods.

5Distinguish between capital and revenue expenditures.

Murray’s Fish Market, a store that specializes in providing fresh fish to the Nashville, Tennessee, area, installed a new refrigeration unit in January 2018 at a cost of $27,500. The refrigeration unit has an expected life of 8 years and a residual value of $500 when installed. As the fish market’s business increased, it became apparent that renovations were necessary so that the capacity of the refrigeration unit could be increased. In January 2020, Murray’s spent $18,785 to install an additional refrigerated display unit (that was connected to the original unit) and replace the refrigeration coils. After this addition and renovation, Murray’s Fish Market estimated that the remaining useful life of the original refrigeration unit was 12 years and that the residual value was now $1,000.

Required:

1. Compute 1 year’s straight-line depreciation expense on the refrigeration unit before the addition and renovations.

2. Assume that 2 full years of straight-line depreciation expense were recorded on the refrigeration unit before the addition and renovations were made. Compute the book value of the refrigeration unit immediately after the renovations were made.

   Answer

3. Compute 1 year’s straight-line depreciation expense on the renovated refrigeration unit. Round your answer to the nearest dollar.

   Answer

Problem 7-74BDisposition of Operating Assets

Objective 7Describe the process of recording the disposal of a fixed asset.

Salva Pest Control disposed of four assets recently. Salva’s accounting records provided the following information about the assets at the time of their disposal:

The truck was sold for $2,450 cash, and the chemical testing apparatus was donated to the local high school. Because the pump was contaminated with pesticides, $500 in cash was paid to a chemical disposal company to decontaminate the pump and dispose of it safely. The furniture was taken to the local landfill.

Required:

1. Prepare a separate journal entry to record the disposition of each of these assets.

   Answer

2. CONCEPTUAL CONNECTION Explain how the disposals of the fixed assets would affect the current period financial statements.

Bruins Inc. has the following items in their current balance sheet:
Common Stock 10,000,000 shares authorized, $1,000,000 issued - $3,000,000
Capital Surplus - $9,000,000
Treasury Stock on Common   100,000 shares - $6,000,000
Cumulative Preferred Stock 500,000 authorized
[2%]  $100 par - $8,000,000
Treasury Stock on Preferred Stock 10000 shares - $6,000,000
Retained Earnings - $60,000,000

1. If Bruins Inc. were to provide for a 10% common stock dividend, then how many new shares are to be mailed to existing shareholders?
2. Assume in question [6] the market price of the common stock was $15 at the time of the stock dividend announcement. What is the journal entry to record the stock dividend?
3. Using the equity portion of the Bruins Inc. balance sheet above, determine the amount of the total equity in Bruins Inc.  Assume this question ignores the results of questions [1-7] above.
   
   I want the above questions answered: but the following is all of the information:
   Bruins Inc. wishes to announce a total cash dividend of $40,000,000.  How is this dividend to be split between the common and preferred stockholders?
   What is the dividend per share for common and preferred after the dividend distribution from question 1 above?
   Suppose Bruins Inc. was two years in the arrears in paying dividends to the preferred stockholders, then what is the dollar amount of the preferred and common shareholder dividend?
   How many Bruins common stock shares are outstanding?
   If Bruins Inc. announces a 4 for 1 stock split of the cumulative preferred then what is the new total amount of the preferred stock?
   If Bruins Inc. were to provide for a 10% common stock dividend, then how many new shares are to be mailed to existing shareholders?
   Assume in question [6] the market price of the common stock was $15 at the time of the stock dividend announcement. What is the journal entry to record the stock dividend?
   What is the impact of the 20% common stock dividend on the balance sheet? Assume this question ignores questions [1-9] above.
   Using the equity portion of the Bruins Inc. balance sheet above, determine the amount of the total equity in Bruins Inc.  Assume this question ignores the results of questions [1-7] above.
   What is the impact of the common and preferred cash dividend [$5,000,000 as per question 1 above] on the current balance sheet of Bruins Inc.?

Jeremy and Alyssa Johnson have been married for five years and do not have any children. Jeremy was married previously and has one child from the prior marriage. He is self-employed and operates his own computer repair store. For the first two months of the year, Alyssa worked for Office Depot as an employee. In March, Alyssa accepted a new job with Super Toys Inc. (ST), where she worked for the remainder of the year. This year, the Johnsons received $273,000 of gross income.

1. Expenses associated with Jeremy’s store include $44,500 in salary (and employment taxes) to employees, $50,400 of supplies, and $19,800 in rent and other administrative expenses.
2. As a salesperson, Alyssa incurred $2,180 in travel expenses related to her employment that were not reimbursed by her employer.
3. The Johnsons own a piece of raw land held as an investment. They paid $680 of real property taxes on the property and they incurred $290 of expenses in travel costs to see the property and to evaluate other similar potential investment properties.
4. The Johnsons own a rental home. They incurred $8,680 of expenses associated with the property.
5. Jeremy paid $4,680 for health insurance coverage for himself (not through an exchange). Alyssa was covered by health plans provided by her employer, but Jeremy is not eligible for the plan until next year.
6. Jeremy paid $2,680 in self-employment taxes ($1,340 represents the employer portion of the self-employment taxes).
7. Jeremy paid $5,360 in alimony and $3,270 in child support from his prior marriage (divorced in 2010).
8. The Johnsons donated $2,180 to their favorite charity.

Determine the Johnson's AGI given the above information:

Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors—home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow:

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last year’s net operating income of $32,800 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program.

The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided.

Required:

1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?

1-b. Should the Housekeeping program be discontinued?

2-a. Prepare a properly formatted segmented income statement.

2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services?

In your own words, explain the "just one" fallacy. In performing an analysis on differential cost how should you account for this phenomenon?