review the AICPA Code of Conduct and Sarbanes-Oxley. Review these two documents.  

What are your thoughts on these two? Write a discussion that compares and contrasts the requirements of the two documents. How do you think they are alike? Did you find any aspects in which you think they are different?

Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc., which manufactures greeting cards. Toto’s average annual net profit (before deduction of Mr. Lion’s salary) is $200,000. For each of the following cases, compute the income tax burden on this profit. (Ignore any payroll tax consequences.)

a. Mr. Lion’s salary is $100,000, and Toto pays no dividends.

b. Mr. Lion’s salary is $100,000, and Toto distributes its after-tax income as a dividend. Toto is an S corporation. Mr. Lion’s salary is $100,000, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent Section 199A deduction.

d.Toto is an S corporation. Mr. Lion draws no salary, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent Section 199A deduction.

e.Toto is an S corporation. Mr. Lion draws no salary, and Toto makes cash distributions of all its income to Mr. Lion. Assume Toto's ordinary income qualifies for the 20 percent Section 199A deduction.

Question 112.56 pts

Which of the following statements is false?

Taxes paid by a husband on a home owned by his wife are not deductible by the husband on the husband's separate tax return.

Special assessments paid to improve streets, sidewalks, and other like improvements are not deductible as real estate taxes even though they are assessed by a county or municipality for the public welfare.

If a taxpayer's mortgage requires his real estate taxes to be "escrowed," or included in the taxpayer's mortgage payment, the taxes are deductible and deemed paid when the taxpayer pays his mortgage payment.

Annual assessments paid to homeowner associations to maintain common areas are not deductible as real estate taxes.

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Question 122.56 pts

Which of the following statements is true?

A taxpayer may not deduct a late charge or penalty assessed by a lender when the fee or penalty is for specific services performed by the lender.

Prepayment penalties charged by a lender for paying off a mortgage earlier than its stated term are not deductible as home mortgage interest.

Losses to a taxpayer's residence due to fire, theft, and other casualty are not deductible unless the home is used for business purposes.

Losses to a taxpayer's residence resulting from deterioration over a period of time are deductible as casualty losses subject to certain dollar limitations.

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Question 132.56 pts

Which of the following is NOT a requirement to deduct a casualty loss on a taxpayer's residence?

The portion of the loss that is deducted must be uninsured (policy deductible) or unreimbursed by the insurance company.

For some years, only net losses exceeding ten percent of the taxpayer's adjusted gross income are tax deductible.

For tax years after 2018, in addition to the 10% adjusted gross income limitation, the first $500.00 of each casualty loss event is not allowed as a deduction similar to a "deductible" clause in an insurance policy.

For some years, generally, for a loss to be deductible as a casualty, the loss must result from a sudden unexpected event except for losses due to corrosive drywall.

A taxpayer, in 2018, may claim a personal casualty loss not attributable to federally declared disasters if it is to offset a personal casualty gain.

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Question 142.56 pts

Kate Harris had adjusted gross income in 2018 of $20,000. The following information pertains to her beach house which was destroyed by a hurricane in a federally declared disaster: Cost basis $90,000; value before the casualty $100,000; value after the hurricane $5,000; insurance recovery $85,000. Her city apartment was also broken into and a necklace with a cost of $3,000 and a value of $5,000 was stolen. She recovered $5,000 form the insurance company. What is her casualty loss deduction for 2018?

$900

$4,900

$5,000

$5,900

$7,900

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Question 152.56 pts

Karen Kurtz purchased a home for $380,000 during 2009, borrowing $300,000 of the purchase price, which was secured by a 20-year mortgage. In 2018, when the home was worth $425,000 and the balance of the first mortgage was $240,000, Karen obtained a second mortgage on the home in the amount of $130,000, using the proceeds to purchase a car and to pay off personal loans. For 2018, what amount of karen's $370,000 of mortgage debt will qualify for "qualified residence indebtedness"?

$240,000

$340,000

$370,000

$100,000

None of the above.

During its first year of operations, Cupola Fan Corporation issued 37,000 of $1 par Class B shares for $420,000 on June 30, 2018. Share issue costs were $2,200. One year from the issue date (July 1, 2019), the corporation retired 10% of the shares for $43,000.

Required:
1. to 4. Prepare the journal entry to record the issuance of the shares, the declaration of a $2.70 per share dividend on December 1, 2018, the payment of the dividend on December 31, 2018 and the retirement of the shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

(Journal Entries):

Record the issuance of the shares.

Record the declaration of a $2.70 per share dividend on December 1, 2018.

Record the payment of the dividend on December 31, 2018.

Record the retirement of the shares.

Comparative statements of retained earnings for Renn-Dever Corporation were reported in its 2018 annual report as follows.

RENN-DEVER CORPORATION Statements of Retained Earnings
For the Years Ended December 31,	2018			2017			2016
Balance at beginning of year	$	7,011,452		$	5,696,552		$	5,864,552
Net income (loss)		3,448,700			2,340,900			(168,000	)
Deductions:
Stock dividend (35,500 shares)		248,500
Common shares retired (124,000 shares)					248,000
Common stock cash dividends		919,950			778,000			0
Balance at end of year	$	9,291,702		$	7,011,452		$	5,696,552

At December 31, 2015, common shares consisted of the following:

Common stock, 1,865,000 shares at $1 par	$	1,865,000
Paid-in capital—excess of par		7,460,000

Required:
Infer from the reports the events and transactions that affected Renn-Dever Corporation’s retained earnings during 2016, 2017, and 2018. Prepare the journal entries that reflect those events and transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

(Journal Entries):

Record transfer of net loss to retained earnings.

Record transfer of net income to retained earnings.

Record repurchase of shares for retirement.

Record declaration of cash dividend.

Record payment of cash dividend.

Record transfer of net income to retained earnings

Record issue of stock dividend.

Record declaration of cash dividend.

Record payment of cash dividend.

Prepare the journal entries for all transactions in August

Stacy's Company, owned by F. Stacy, started operations in August and completed the following transactions during the first month of operations.

August 1 F. Stacy invested $75,000 cash in the company

August 2The company purchased $45,000 in office equipment. It paid $15,000 in cash and signed a note payable promising to pay the $10,000 over the next three years

August 2 The company rented office space and paid $8,000 for the August rent

August 6 The company installed a new roof for a customer and immediately collected $9,000

August 7 The company paid a supplier $7,000 for roofing materials used on the August 6th job

August 8 The company purchased a $9,500 copy machine for office use on credit August 9 The company completed work for additional customers on credit in the amount of $26,000

August15 The company paid it's employees' salaries $2,700 for the first half of the month

August17 The company installed a new roof for a customer and immediately collected $3,900

August 20 The company received $10,000 in payments from the customers billed on August 9th

August 28 The company paid $1,500 on the copy machine purchased on August 8th. It will pay the remaining balance in September

August 31 The company paid it's employees' salaries $2,700 for the second half of the month

August 31 The company paid a supplier $5,300 for roofing materials used on the remaining jobs completed during August

August 31 The company paid $850 for this month's utility bill

The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2017:

Shareholders' Equity	($ in millions)
Common stock, 340 million shares at $1 par	$	340
Paid-in capital—excess of par		2,720
Paid-in capital—share repurchase		1
Retained earnings		2,400

Required:
1. During 2018, TNL Systems reacquired shares of its common stock and later sold shares in two separate transactions. Prepare the entries for both the purchase and subsequent resale of the shares assuming the shares are (a) retired and (b) viewed as treasury stock.

1. On February 5, 2018, TNL Systems purchased 8 million shares at $12 per share.
2. On July 9, 2018, the corporation sold 2 million shares at $14 per share.
3. On November 14, 2020, the corporation sold 2 million shares at $9 per share.

2. Prepare the shareholders’ equity section of TNL Systems’ balance sheet at December 31, 2020, comparing the two approaches. Assume all net income earned in 2018–2020 was distributed to shareholders as cash dividends.

(1A Journal Entries):

Record the purchase of 8 million shares at $12 per share assuming the shares are retired.

Record the sale of 2 million shares at $14 per share.

Record the sale of 2 million shares at $9 per share.

(1B Journal Entries):

Record the sale of 2 million shares at $9 per share.

Record the sale of 2 million shares at $14 per share

Record the sale of 2 million shares at $9 per share.

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.50 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

Activity Cost Pool	Activity Measure	Activity for the Year
Cleaning carpets	Square feet cleaned (00s)	11,500	hundred square feet
Travel to jobs	Miles driven	67,000	miles
Job support	Number of jobs	1,900	jobs
Other (organization-sustaining costs and idle capacity costs)	None	Not applicable

The total cost of operating the company for the year is $366,000 which includes the following costs:

Wages	$	142,000
Cleaning supplies		28,000
Cleaning equipment depreciation		16,000
Vehicle expenses		39,000
Office expenses		63,000
President’s compensation		78,000
Total cost	$	366,000

Resource consumption is distributed across the activities as follows:

Distribution of Resource Consumption Across Activities
	Cleaning Carpets		Travel to Jobs		Job Support		Other		Total
Wages	79	%	12	%	0	%	9	%	100	%
Cleaning supplies	100	%	0	%	0	%	0	%	100	%
Cleaning equipment depreciation	75	%	0	%	0	%	25	%	100	%
Vehicle expenses	0	%	84	%	0	%	16	%	100	%
Office expenses	0	%	0	%	60	%	40	%	100	%
President’s compensation	0	%	0	%	26	%	74	%	100	%

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 52-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $135.00 (600 square feet @ $22.50 per hundred square feet). Calculate the customer margin earned on this job.

Access the IFRS authoritative literature at the IASB website and after some research answer the following questions: In your initial post, answer what is the authoritative guidance for asset impairments? Briefly discuss the types of transactions to which the standard applies. In your reply post comment on your classmate's initial post and give several examples of events that would cause an asset to be tested for impairment. What is the best evidence of fair value? Describe alternative methods of estimating fair value.

High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:

Beginning inventory		0
Units produced		41,000
Units sold		36,000
Selling price per unit	$	85
Selling and administrative expenses:
Variable per unit	$	2
Fixed (per month)	$	563,000
Manufacturing costs:
Direct materials cost per unit	$	17
Direct labor cost per unit	$	7
Variable manufacturing overhead cost per unit	$	2
Fixed manufacturing overhead cost (per month)	$	820,000

Management is anxious to assess the profitability of the new camp cot during the month of May.

Required:

1. Assume that the company uses absorption costing.

a. Determine the unit product cost.

b. Prepare an income statement for May.

2. Assume that the company uses variable costing.

a. Determine the unit product cost.

b. Prepare a contribution format income statement for May.

RWP #3 – Taxes

Obtain to the most recent 10-K's for Proctor & Gamble Co and Coca Cola Co and complete the table below for the most recent fiscal year end:

		P&G	Coke
1	Total Income Taxes on Continuing Operations per IS
2	Accrued Income Taxes (Taxes Payable) per BS, if listed
3	Total DTA per BS, if listed
4	Total DTL per BS, if listed
5	Total Valuation Allowances
6	Statutory Tax Rate
7	Effective Tax Rate

Beacon Company is considering automating its production facility. The initial investment in automation would be $10.49 million, and the equipment has a useful life of 9 years with a residual value of $1,040,000. The company will use straight-line depreciation. Beacon could expect a production increase of 44,000 units per year and a reduction of 20 percent in the labor cost per unit.         

	Current (no automation)			Proposed (automation)
Production and sales volume	76,000 units			120,000 units
	Per Unit		Total	Per Unit		Total
Sales revenue	$	90	?	$	90	?
Variable costs
Direct materials	$	20		$	20
Direct labor		25			?
Variable manufacturing overhead		10			10
Total variable manufacturing costs		55			?
Contribution margin	$	35	?	$	40	?
Fixed manufacturing costs			$ 1,160,000			$ 2,190,000
Net operating income			?			?

4

Required:
1-a. Complete the following table showing the totals. (Enter all answers in whole dollars.)

         

1-b. Does Beacon Company favor automation?

        

	Yes
	No

2. Determine the project's accounting rate of return. (Round your answer to 2 decimal places.

3. Determine the project's payback period. (Round your answer to 2 decimal places.

7.

4. Using a discount rate of 14 percent, calculate the net present value (NPV) of the proposed investment. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollar. Round the final answer to nearest whole dollars.)

8.

value:
1.53 points

Required information

5. Recalculate the NPV using a 9% discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollar. Round the final answer to nearest whole dollars.)

D- Some construction company has bought a product for $200,000 with a life of three years, and a salvage value of $10,000. Tabulate depreciation and book value using MACRS, Double Declining Balance and straight-line methods. Which method gives the company the largest depreciation after two years? please show and explain all steps

The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company:

	Burks				Foreman
Revenues	$	(400,000	)		$	(328,000	)
Expenses		220,000				239,000
Gain on sale of equipment		0				(29,000	)
Equity earnings of subsidiary		(66,000	)			0
Net income	$	(246,000	)		$	(118,000	)
Outstanding common shares		70,000				36,000

Additional Information

• Amortization expense resulting from Foreman’s excess acquisition-date fair value is $34,000 per year.
• Burks has convertible preferred stock outstanding. Each of these 8,000 shares is paid a dividend of $5 per year. Each share can be converted into five shares of common stock.
• Stock warrants to buy 16,000 shares of Foreman are also outstanding. For $15, each warrant can be converted into a share of Foreman’s common stock. The fair value of this stock is $20 throughout the year. Burks owns none of these warrants.
• Foreman has convertible bonds payable that paid interest of $44,000 (after taxes) during the year. These bonds can be exchanged for 25,000 shares of common stock. Burks holds 20 percent of these bonds, which it bought at book value directly from Foreman.

Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimal places.)

Below is Salem Company’s income statement for 2018 that was prepared by an inexperienced accountant. Salem Company Income Statement As of December 31, 2018 Revenues: Sales revenue ……………..…………………………………… $298,000 Wages payable…………..……………………………………….. 4,000 Gain on sale of investment…………………………………….. 5,250 Deferred revenue………………………………………………. 2,500 Interest payable………………………………………………… 1,000 Accumulated depreciation……………………………………… 10,000 Total revenues ………………………………………………….. $320,750 Less operating expenses: Selling expenses….……………………… …………………. $32,250 Research and development expense………………….…….. 4,750 Prepaid advertising …….…………………………………. 3,000 Indirect manufacturing labor cost..………………………… 16,200 Utilities expense..…. .....................………………………… 10,200 Direct manufacturing labor cost. ………………………..… 41,000 Factory equipment………………………………………….. 40,000 Insurance expense…………………….………………. …… 3,500 Restructuring costs………………………………………….. 4,000 Direct materials purchased………………………………..... 93,000 Interest expense……………………………………………. 1,750 Rent expense…..…………….………………. …………….. 18,000 Other factory indirect costs…………………………………. 3,000 Dividend paid………………………………………………. 1,500 Administrative expenses………………….…………………. 40,400 Short-term investment……………………………………… . 19,000 Total operating expenses …………………………………….. 331,550 Net operating loss …………………………………………….. ($10,800) a. Seventy percent (70%) of utilities expense and 80% of insurance expense are for factory operations. Apply the remaining utilities and insurance expenses equally to selling expense and administrative expenses. b. Sixty percent (60%) of the rent expense is associated with factory operations. Allocate the remaining rent equally to selling expense and administrative expenses. c. Factory equipment was purchased January 1, 2017. It was estimated that the useful life of the equipment is 10 years and the residual value, $4,000. The $10,000 accumulated depreciation above is for 2017. No depreciation was charged for 2018. The company uses the double-declining balance method of depreciation. d. Inventory balances are: January 1, 2018 December 31, 2018 Direct materials……………… $5,000 $6,600 Work-in-process …………….. $8,000 $10,000 Finished goods ……………… $25,000 $28,000 e. The company’s tax rate is 21%. The president is disappointed with the results of operations and has asked you to review the income statement and make a recommendation as to whether the company should look for a buyer for its assets. Required: 1. As one step in gathering data for the president, prepare a corrected schedule of cost of goods manufactured for the year ended December 31, 2018. 2. As a second step, prepare a new multiple-step income statement for the year ended December 31, 2018. 3. Calculate the cost of producing one unit if the company produced 120,000 units in 2018 (round your answer to two decimal points).