Hyper Company had a beginning inventory on January 1 of 160 units of Product 4-18-19 at a cost of $20 per unit. During the year, the following purchases were made. Mar. 15 400 units at $23 Sept. 4 330 units at $26 July 20 250 units at $24 Dec. 2 100 units at $29 1,000 units were sold. Hyper Company uses a periodic inventory system.

Instructions

(a) Determine the cost of goods available for sale.

(b) Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost).

(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement?

Last year Drone Corporation was formed on January 1st. An S election was filed by March 15th of the same year. When the S election was filed it was missing a consent from one of the shareholders. The missing consent was filed on August 5th. Which of he following statements is correct?

A- The S election is valid for last year, if the shareholder was out of the country until August 1st.

B- The S election will be vaild beginning January 1st of the next year, if there was no reasonable cause for the late consent filing.

C- The S election is valid for last year, if the consent was late because the CPA thought that the client filed it and the client thought the CPA filed it.

D- Late consent is acceptable if there is reasonable cause for the delay and the interest of the government is not jeopardized.

E- All of the above are correct.

What other suggestions do you have related to avoiding audit failure?

Vertical Analysis of Income Statement The following comparative income statement (in thousands of dollars) for the two recent fiscal years was adapted from the annual report of Calvin Motorsports, Inc., owner and operator of several major motor speedways, such as the Atlanta, Texas, and Las Vegas Motor Speedways. Current Year Previous Year Revenues: Admissions $94,400 $107,580 Event-related revenue 138,768 147,189 NASCAR broadcasting revenue 169,448 160,881 Other operating revenue 69,384 73,350 Total revenue $472,000 $489,000 Expenses and other: Direct expense of events $93,928 $94,377 NASCAR purse and sanction fees 118,000 126,162 Other direct expenses 27,848 23,961 General and administrative 178,416 218,583 Total expenses and other $418,192 $463,083 Income from continuing operations $53,808 $25,917 a. Prepare a comparative income statement for these two years in vertical form, stating each item as a percent of revenues. Round to one decimal place. Enter all amounts as positive numbers. Calvin Motorsports, Inc. Comparative Income Statement (in thousands of dollars) For the Years Ended December 31 Current Year Amount Current Year Percent Prior Year Amount Prior Year Percent Revenues: Admissions $94,400 % $107,580 % Event-related revenue 138,768 % 147,189 % NASCAR broadcasting revenue 169,448 % 160,881 % Other operating revenue 69,384 % 73,350 % Total revenue $472,000 % $489,000 % Expenses and other: Direct expense of events $93,928 % $94,377 % NASCAR purse and sanction fees 118,000 % 126,162 % Other direct expenses 27,848 % 23,961 % General and administrative 178,416 % 218,583 % Total expenses and other $418,192 % $463,083 % Income from continuing operations $53,808 % $25,917 % b. While overall revenue some between the two years, the overall mix of revenue sources did change somewhat. The NASCAR broadcasting revenue as a percent of total revenue by 3 percentage points, while the percent of admissions revenue to total revenue by 2 percentage points. Overall, it appears that income from continuing operations has significantly improved because of .

Investment Reporting

O’Brien Industries Inc. is a book publisher.

Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows:

Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 32% of the outstanding shares of Jolly Roger Co.

The following selected investment transactions occurred during Year 2:

Required:

The comparative unclassified balance sheets for December 31, Year 2 and Year 1 are provided below. Determine the missing amounts in the unclassified balance sheet. Do not round interim calculations. Round final answers to nearest dollar. Use minus sign to indicate the negative amounts.

Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the following information relating to the franchise: a. A suitable location in a large shopping mall can be rented for $4,800 per month. b. Remodeling and necessary equipment would cost $396,000. The equipment would have a 10-year life and an $39,600 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation. c. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $510,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $91,000 per year for salaries, $5,600 per year for insurance, and $48,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 14.5% of sales.
Compute the payback period on the outlet

Alexa owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:

During the year, Alexa rented out the condo for 134 days. Alexa’s AGI from all sources other than the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive income. Assume there are 365 days in the year.

Assume that in addition to renting the condo for 134 days, Alexa uses the condo for 8 days of personal use. Also assume that Alexa receives $49,750 of gross rental receipts. Answer the following questions: (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

a. What is the total amount of for AGI deductions relating to the condo that Alexa may deduct in the current year? Assume she uses the IRS method of allocating expenses between rental and personal days. (Amounts to be deducted should be indicated with a minus sign.)

Alexa owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:

During the year, Alexa rented out the condo for 134 days. Alexa’s AGI from all sources other than the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive income. Assume there are 365 days in the year.

Assume that in addition to renting the condo for 134 days, Alexa uses the condo for 8 days of personal use. Also assume that Alexa receives $49,750 of gross rental receipts. Answer the following questions: (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

a. What is the total amount of for AGI deductions relating to the condo that Alexa may deduct in the current year? Assume she uses the IRS method of allocating expenses between rental and personal days. (Amounts to be deducted should be indicated with a minus sign.)

Explain the difference between committed fixed costs and discretionary fixed costs and give an example of each.

Why are more and more organizations in both manufacturing and nonmanufacturing industries adopting activity-based costing systems?

Analyze the major benefits and major weaknesses of traditional Activity-Based Costing (ABC) in determining accurate overhead costs over an ABC system.Provide a rationale for your response. Suggest the manner in which a business can achieve a competitive advantage in the marketplace through the use of ABC. Provide two (2) reasons to convince senior management that they should implement an ABC system.

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:

1. As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances:

Winthrop Company has an opportunity to manufacture and sell a new product for a five-year period. To pursue this opportunity, the company would need to purchase a piece of equipment for $125,000. The equipment would have a useful life of five years and zero salvage value. It would be depreciated for financial reporting and tax purposes using the straight-line method. After careful study, Winthrop estimated the following annual costs and revenues for the new product:

The company’s tax rate is 30% and its after-tax cost of capital is 16%.

Calculate the net present value of this investment opportunity.

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.