Earnings per Share and Multiple-Step Income Statement
The following summarized data are related to Garner Corporation's operations:

Required
Prepare a multiple-step income statement for Garner Corporation. Include earnings per share disclosure at the bottom of the income statement. Garner Corporation has no preferred stock.

Nace Manufacturing Company (Use for Problems 8-12) Nace Manufacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2019. The 10-year lease requires lease payments of $4,000, beginning on January 1, 2019, and at each December 31 thereafter through 2027. The equipment is estimated to have a 10-year life, is depreciated on the straight-line basis and will have no residual value at the end of the lease term. Nace's incremental borrowing rate is 11%. Initial direct costs of $1,000 are incurred on January 1, 2019. Righteous Leasing acquired the asset just prior to the lease term at a cost of $27,000. Collection of all lease payments is reasonably assured. Problem 8 What is the proper classification of the lease to Nace? Problem 9 What is the amount of the lease liability recorded by Nace at the lease's commencement? Problem 10 What is the value of the right-of-use asset to Nace at the lease's commencement? Problem 11 Based on the above information, prepare an amortization table for the Nace Manufacturing's lease liability. Payment Interest Reduction Balance Commencement 1-Jan-19 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24 31-Dec-25 31-Dec-26 31-Dec-27 Problem 12 Based on the above information, prepare Nace Manufacturing's journal entries at the commencement of the lease, January 1 and December 31, 2019 payments, and amortization of the right-of-use asset.

filing 2019 tax returns, Scott and Glenna are married with two dependent children. They have $74,000 in wage income and $4,600 in interest income on some bonds they own. They have deductions for adjusted gross income of $4,000 and itemized deductions of $24,600. Neither of the children has any income. Determine the tax savings for the family if Scott and Glenna were to transfer the bonds to the children, both under 18.

The Welding Department of Healthy Company has the following production and manufacturing cost data for February 2017. All materials are added at the beginning of the process.

Prepare a production cost report for the Welding Department for the month of February. (Round unit costs to 2 decimal places, e.g. 2.25 and all other answers to 0 decimal places, e.g. 1,225.)

Quantities Physical Units Materials Conversion costs

Units to be acct for

WIP Feb 1 ?

Started into production ?

Total units ?

Units acct for

Transferred out ? ? ?

WIP Feb 28 ? ? ?

Total units ? ? ?

Costs Materials Conversion Costs Total

Unit costs

Total costs ? ? ?

Equivalent costs ? ? ?

Unit costs ? ? ?

Costs to be acct for

WIP Feb 1 ?

Started into production ?

Total costs ?

Cost reconciliation schedule

Costs acct for

Transferred out ?

Wip Feb 28 ?

Materials ?

Conversion costs ? ?

Total costs ?

Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income, causing the joint return year 2 tax liability to be understated by $4,000 and Crewella’s year 3 separate return tax liability to be understated by $6,000. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no answer blank. Enter 0 if applicable.)b. What is the maximum amount of tax that the IRS can require Jasper to pay for Crewella’s year 3 separate tax return?

21-21 (Objectives 21-1, 21-3, 21-5, 21-6, 21-7) The Frist Corporation has the following internal controls related to inventory:

• 1. Only authorized inventory warehousing personnel are allowed in inventory storage areas.
• 2. All inventory products are stored in warehousing areas that are segregated from other storage areas used to house equipment and supplies.
• 3. All inventory held on consignment at Frist Corporation is stored in a separate area of the warehouse.
• 4. The inventory purchasing system only allows purchases from pre-approved vendors.
• 5. The perpetual inventory system tracks the average number of days each inventory product number has been in the warehouse.
• 6. Microchips are embedded in each product and when inventory items are removed from the warehouse to shipping, radio-frequencies signal a deduction of inventory to the perpetual inventory system.
• 7. On a weekly basis, inventory accounting personnel take samples of inventory products selected from the perpetual inventory system and verify that the inventory is on-hand in the warehouse and that the quantities in the listing are correct.
• 8. On a weekly basis, inventory accounting personnel select inventory items on hand in the warehouse and verify that the item is included in the perpetual inventory listing at the correct amount.
• 9. The perpetual inventory system subtotals the quantity of inventory in the system and interfaces with the general ledger system on a daily basis to ensure quantities agree.
• 10. The perpetual inventory system will not accept inventory additions without the recording on a valid receiving report.

For each of the internal controls:

Required

• a. Identify the related transaction-related audit objective(s) affected by the control.
• b. Describe risks the control is designed to mitigate.
• c. Design a test of control to determine if the control is operating effectively.

Journalizing

Please create the necessary journal entries to reflect the following transactions for company ABC

1. Purchased $3,000 worth of supplies on account
2. Paid employee salaries of $22,000
3. Repaid $10,000 of principal of an outstanding note payable
4. Received $800 of outstanding receivables
5. Paid a dividend of $1,000
6. Sold 400 shares of common stock for $5 per share
7. Sold $8,000 of merchandise for cash. The original cost of the inventory sold was $2,500
8. Recorded depreciation of $1,500 on existing fixed assets
1. Purchased $150,000 of new equipment. 20% was paid in cash and the rest was on account
10. Paid $1,200 cash for a 12-month workers compensation insurance policy
11. ABC company recognizes that $1,100 in inventory has been damaged and is now worth only $200
12. Lent $5,000 to a supplier

During Durton Company’s first two years of operations, the company reported absorption costing operating income as shown below. Production and cost data for the two years are given:

*$3 per unit variable; $250,000 fixed each year.

The company’s $34 unit product cost is computed as follows:

Required:

1. Prepare a variable costing income statement for each year in the contribution format.

2. Reconcile the absorption costing and variable costing operating income figures for each year. (Loss amounts should be indicated by a minus sign.)

Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

Required:

1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover.

2. Compute the residual income (loss) for each division.

3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return.

a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity?

b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity?

On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2019. Expenditures on the project were as follows: January 1, 2018 $ 1,310,000 March 1, 2018 1,020,000 June 30, 2018 1,220,000 October 1, 2018 1,020,000 January 31, 2019 333,000 April 30, 2019 666,000 August 31, 2019 963,000 On January 1, 2018, the company obtained a $3,700,000 construction loan with a 12% interest rate. The loan was outstanding all of 2018 and 2019. The company’s other interest-bearing debt included two long-term notes of $3,000,000 and $7,000,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2018 and 2019. Interest is paid annually on all debt. The company’s fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2018 and 2019 income statements.

Identifying Relevant Costs and Revenues
The Village of Bomont operates a power plant on a river that flows through town. The village uses some of this generated electricity to operate a water treatment plant and sells the excess electricity to a local utility. The city council is evaluating two alternative proposals:

• Proposal A calls for replacing the generators used in the plant with more efficient generators that will produce more electricity and have lower operating costs. The salvage value of the old generators is higher than their removal cost.

• Proposal B calls for raising the level of the dam to retain more water for generating power and increasing the force of water flowing through the dam. This will significantly increase the amount of electricity generated by the plant. Operating costs will not be affected.

Required
Presented are a number of cost and revenue items. Indicate in the appropriate columns whether each item is relevant or irrelevant to proposals A and B.

On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2019. Expenditures on the project were as follows: January 1, 2018 $ 1,310,000 March 1, 2018 1,020,000 June 30, 2018 1,220,000 October 1, 2018 1,020,000 January 31, 2019 333,000 April 30, 2019 666,000 August 31, 2019 963,000 On January 1, 2018, the company obtained a $3,700,000 construction loan with a 12% interest rate. The loan was outstanding all of 2018 and 2019. The company’s other interest-bearing debt included two long-term notes of $3,000,000 and $7,000,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2018 and 2019. Interest is paid annually on all debt. The company’s fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2018 and 2019 income statements.

Emmitt’s direct material cost is $9 per unit. The direct labor rate is $16 per hour and each units takes 1/4 hour to produce. Variable manufacturing overhead is $1 per unit and total budgeted fixed overhead is $7,800. A sales commission of $6 is paid on each unit. If Emmitt expects to produce 2,800 units and sell 1,160 units, what is the budget cost of goods sold per unit? Round your answer to the nearest 2 decimal places

Bertans has received a special order for 1,500 units of its product at a special price of $19. The product normally sells for $33 and has the following manufacturing costs:

Per unit

Direct materials $ 8

Direct labor $4

Variable manufacturing overhead $3

Fixed manufacturing overhead $2

Unit cost $17

Assume that Bertans' production is at full capacity. If Bertans accepts the order, what effect will the order have on the company’s short-term profit?

SEAT Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5 years; salvage value, $16,200 $503,700 Building, estimated service life, 30 years; no salvage value $648,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2018, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method.

(a) Prepare the journal entry to record depreciation expense for the equipment in 2018.

(b) Prepare the journal entry to record depreciation expense for the building in 2018