On January 1, 20X8 , Bond Corporation acquired 80 percent of Gale Company's voting stock. On the date of acquisition, the book value and fair value of Gale's net assets were equal. Bond uses the equity method of accounting for its ownership of Gale, and includes the amount of accumulated depreciation prior to acquisition in its elimination entries on the consolidation worksheet.

On December 31, 20X8, the trial balances of the two companies are as follows :

a)   What amount did Bond Corporation pay for its investment in Gale Company on January 1, 20X8?
b)   Prepare the elimination entries required to prepare the consolidated financial statements as of December 31, 20X8.
c)   Determine the amount reported on the consolidated financial statements as of December 31, 20X8 for retained earnings .
d)   Determine the amount reported on the consolidated financial statements as of December 31, 20X8 for depreciable assets.

Cliffhangers Company had the following product information for March 2019:

Selling Price $149 per unit
Direct Materials $35 per unit
Direct Labor $29 per unit
Variable Manufacturing Overhead $13 per unit

Variable selling $6 per unit

  
Fixed Manufacturing Overhead . $129,000

Fixed Selling $164,000
Production 5,800 units
Sales (units) 4,400 units

REQUIRED:

1. What is the product cost per unit under absorption costing?

2. What is the product cost per unit under variable costing?

3. Prepare an income statement using absorption costing.

4. Prepare an income statement using variable costing.

What are two methods of conducting business in the U.S. Compare the tax advantages and disadvantages. Provide examples to support the advantages and disadvantages identified.

Luo Inc. had the following statement of financial position at December 31, 2014 (amounts in thousands).

During 2015, the following occurred.

1. Luo liquidated its non-trading equity investment portfolio at a loss of ¥5,000.

2. A tract of land was purchased for ¥38,000.

3. An additional ¥30,000 in ordinary shares were issued at par.

4. Dividends totaling ¥10,000 were declared and paid to shareholders.

5. Net income for 2015 was ¥35,000, including ¥12,000 in depreciation expense.

6. Land was purchased through the issuance of ¥30,000 in additional bonds.

7. At December 31, 2015, Cash was ¥70,200, Accounts Receivable was ¥42,000, and Accounts Payable was ¥40,000.

Instructions

Prepare a statement of cash flows for the year 2015 for Luo.

Dan is Single, Age 47 and has a new business on 1/15/2018, he provides service for a summer camp for children.

Dan's 2018 transactions related to business:

Income    $100,000

Mortgage Interest 8,000

Property Taxes 3,000

Utilities    5,000

Supplies    7,000

Telephone fees 2,000

Estimated Federal Tax
Payments    15,000

Dan Purchased a commercial building on 2/1/2018 for $300,000 in which (building=80% of the cost and land= 30% of the cost).
Dan also purchased a computer for his business on 2/15/2018 for $2000. Dan does not take section 179 deduction or bonus depreciation.

Question 1) are the business expense deductions FOR AGI or FROM AGI ?
Question 2) List any non deductible expenses
Question 3) If Dan Sells the computer on 9/20/19 for $600, what is his gain of loss?

Discuss the successful application of the Balanced Scorecard of the computer industry or sector. Find and list the reasons for the success and at least two factors that posed a problem.

Valotic Tech Inc. sells electronics over the Internet. The Consumer Products Division is organized as a cost center. The budget for the Consumer Products Division for the month ended January 31 is as follows (in thousands):

Question not attempted.

During January, the costs incurred in the Consumer Products Division were as follows:

Question not attempted.

Financial data for Beaker Company for last year appear below:

The company paid dividends of $199,000 last year. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.

Required:

a. Compute the company's margin, turnover, and return on investment for last year.

b. The Board of Directors of Beaker Company has set a minimum required return of 45%. What was the company's residual income last year?

Activity-Based Budget

Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,350 for the Sleepeze, 12,280 for the Plushette, and 5,400 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

1. Salaries for his office (including himself at $65,000, a marketing research assistant at $41,400, and an administrative assistant at $27,450) are budgeted for $133,850 next year.
2. Depreciation on the offices and equipment is $22,750 per year.
3. Office supplies and other expenses total $23,500 per year.
4. Advertising has been steady at $22,850 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign.
5. Commissions on the Sleepeze and Plushette lines are 6 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores.
6. Last year, shipping for the Sleepeze and Plushette lines averaged $55 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress.

Suppose that Gene is considering three sales scenarios as follows:

Suppose Gene determines that next year's Sales Division activities include the following:

Research—researching current and future conditions in the industry

Shipping—arranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors

Jobbers—coordinating the efforts of the independent jobbers who sell the mattresses

Basic ads—placing print and television ads for the Sleepeze and Plushette lines

Ultima ads—choosing and working with the advertising agency on the Ultima account

Office management—operating the Sales Division office

The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table:

Additional information is as follows:

1. Depreciation on the office equipment belongs to the office management activity.
2. Of the $23,500 for office supplies and other expenses, $4,800 can be assigned to telephone costs which can be split evenly between the shipping and jobbers' activities. An additional $2,600 per year is attributable to Internet connections and fees, and the bulk of these costs (85 percent) are assignable to research. The remainder is a cost of office management. All other office supplies and costs are assigned to the office management activity.

Required:

1. Prepare an activity-based budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar.

2. On the basis of the budget prepared in Requirement 1, advise Gene regarding actions that might be taken to reduce expenses.

• Gene should focus on the most costly activities: salaries, Ultima advertising and commissions to jobbers.
• Gene should focus on the most costly activities: shipping, basic advertising and commissions to jobbers.
• Gene should focus on the most costly activities: shipping, Ultima advertising and commissions to jobbers.

Perry plc is a large conglomerate company structured on a divisional basis. It seeks to maximise investor wealth. Head office avoids day to day involvement in divisional affairs and only intervenes if performance is considered unsatisfactory. Divisional performance is measured by residual income.

One of Perry’s larger divisions operates a chain of high-class hotels throughout the United Kingdom. The division’s mission statement is ‘To be the hotel of the first choice for business users and tourists’. Although the chain has generally been popular with tourists it is not proving quite so popular with business users and conference organisers. Competition in the top segment of the hotel market is fierce, with customers expecting the highest standards of facilities, service, and catering. Over the last two years, the division has invested a large amount of money in modernising its hotels including the improvement of bedrooms and public rooms, installation of gymnasia and swimming pools and the information technology features required by business travelers. A large amount of money has also been spent on staff training to improve service levels and on a television advertising campaign to promote improved hotels to business users.

Head office is concerned that the performance of the hotel chain appears to have declined over the last few years despite this expenditure.

         The following figures are available

The cost of capital applicable to the hotel division is 20% per annum

Required:

1. Calculate the residual income for the hotel chain for each of the three years.
2. Discuss three advantages and four disadvantages of residual income as a divisional performance measure.                                                                                                     ( 7 marks)

Decision on transfer pricing

Materials used by the Instrument Division of XPort Industries are currently purchased from outside suppliers at a cost of $374 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $310 per unit.

Assume that a transfer price of $355 has been established and that 25,400 units of materials are transferred, with no reduction in the Components Division’s current sales.

a. How much would XPort Industries’ total income from operations increase?
$

b. How much would the Instrument Division’s income from operations increase?
$

c. How much would the Components Division’s income from operations increase?
$

d. Any transfer price will cause the total income of the company to increase , as long as the supplier division capacity is used  toward making materials for products that are ultimately sold to the outside.

Direct Materials and Direct Labor Variances

At the beginning of June, Kimber Toy Company budgeted 11,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows:

The standard materials price is $0.70 per pound. The standard direct labor rate is $10.00 per hour. At the end of June, the actual direct materials and direct labor costs were as follows:

There were no direct materials price or direct labor rate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Kimber Toy Company actually produced 9,900 units during June.

Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

“We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at MetroBank.” This statement by Beth Davies-Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm’s top management. Intercoastal is a small, rapidly growing wholesaler of consumer electronic products. The firm’s main product lines are small kitchen appliances and power tools. Marcia Wilcox, Intercoastal’s General Manager of Marketing, has recently completed a sales forecast. She believes the company’s sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month’s sales. Then Wilcox expects sales to remain constant for several months. Intercoastal’s projected balance sheet as of December 31, 20x0, is as follows:

Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20x1. In the process, the following information has been accumulated:

1. Projected sales for December of 20x0 are $600,000. Credit sales typically are 60 percent of total sales. Intercoastal’s credit experience indicates that 30 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month.
2. Intercoastal’s cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 50 percent of each month’s purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month’s projected cost of goods sold.
3. Hanson has estimated that Intercoastal’s other monthly expenses will be as follows:

In addition, sales commissions run at the rate of 2 percent of sales.

4. Intercoastal’s president, Davies-Lowry, has indicated that the firm should invest $115,000 in an automated inventory-handling system to control the movement of inventory in the firm’s warehouse just after the new year begins. These equipment purchases will be financed primarily from the firm’s cash and marketable securities. However, Davies-Lowry believes that Intercoastal needs to keep a minimum cash balance of $25,000. If necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest rates will be 10 percent per year at the time of the equipment purchases. If a loan is necessary, Davies-Lowry has decided it should be paid off by the end of the first quarter if possible.
5. Intercoastal’s board of directors has indicated an intention to declare and pay dividends of $50,000 on the last day of each quarter.
6. The interest on any short-term borrowing will be paid when the loan is repaid. Interest on Intercoastal’s bonds is paid semiannually on January 31 and July 31 for the preceding six-month period.
7. Property taxes are paid semiannually on February 28 and August 31 for the preceding six-month period.

PLEASE PREPARE THE FOLLOWING:

1) Sales budget:

2) Cash receipts budget:

3) Purchases Budget

4) Cash disbursements budget:

5) Complete the first three lines of the summary cash budget. Then do the analysis of short-term financing needs in requirement (6). Then finish requirement (5).

6) Calculation of required short-term borrowing.

7) Prepare Intercoastal Electronics’ budgeted income statement for the first quarter of 20x1. (Ignore income taxes.)

8) Prepare Intercoastal Electronics’ budgeted statement of retained earnings for the first quarter of 20x1.

9) Prepare Intercoastal Electronics’ budgeted balance sheet as of March 31, 20x1. (Hint: On March 31, 20x1, Bond Interest Payable is $9,000 and Property Taxes Payable is $1,200.)

PLEASE HELP! THANK YOU!!

(Journal entries for a nonprofit)Fruits & Veggies, a nonprofit, conducts two types of programs: education and research. It does not use fund accounting. During 2018, the following transactions and events took place. Prepare journal entries for these transactions, identifying increases and decreases by net asset classification as appropriate.

1. Pledges amounting to $200,000 were received, to be used for any purpose designated by the trust-ees. Fruits & Veggies normally collects 90 percent of the amount pledged.

2. Fruits & Veggies collected $190,000 in cash on the amount pledged in the previous transaction. It wrote off the balance as uncollectible.

3. Ed Victor donated $5,000 cash in 2018, stipulating that it could be used for any purpose, but only during 2019.

4. Howard Gore donated $675,000, stipulating that the donation must be used solely to purchase a building that Fruits & Veggies could use for research.

5. Fruits & Veggies invested $20,000 of unrestricted resources in equity securities. Earnings on these resources amounted to $1,000 in 2018.

6. Late in the year, Fruits & Veggies used Howard Gore’s donation (see Transaction 4) and unre-stricted resources of $140,000 to purchase a building for research purposes.

7. The following services were donated to Fruits & Veggies:

a. Audit of the financial statements by an accounting firm—$5,000

b. Professional services by an advertising agency in connection with a fundraising campaign—$3,000

c. Ushering services at educational meetings, provided by high school students. If paid for, these services would cost $1,000.

8. At year-end, the investments referred to in Transaction 5 had a fair value of $22,000.

9. Fruits & Veggies conducted a fundraising campaign, the donations to be used solely for research into the health benefits of asparagus. Donations totaled $45,000 in cash.

10. The Board of Directors of Fruits & Veggies designated $35,000 for the acquisition of research equipment

(Identifying the appropriate net asset classification)For each of the following transactions, identify the net asset classification (without donor restrictions, with donor restrictions) that is affected in the nonprofit’s financial statements for the year ended De-cember 31, 2019. Both net asset classifications may be affected in some transactions. .E13-27. (Recording journal entries for nonprofits)Prepare journal entries to record the transactions in Exercise E13-26

1. Donor A gave a nonprofit a $50,000 cash gift in June 2019, stipulating that the nonprofit could not use the gift until 2020.

2. Donor B gave a nonprofit a $25,000 cash gift in July 2019, telling the nonprofit the gift could be used only for research on a specific project.

3. In response to a special fundraising campaign, whereby contributions could be used only for con-struction of a new warehouse, a large number of individuals promised to make cash contributions totaling $2 million in 2019. The nonprofit believes it will actually collect 80 percent of the promised cash.

4. Donor C gave a nonprofit several investments having a fair value of $3 million in March 2019. Donor C stipulated that the nonprofit must hold the gift in perpetuity, but it could use the income from the gift for any purpose the trustees considered appropriate. Between March and December, the investments produced income of $100,000.

5. Using the resources raised in Transaction 3, a nonprofit paid an architect $50,000 in 2019 to make preliminary designs for a new building