The Charleston Metropolitan Transit System (CMTS) is facing an extreme financial crisis. Although federal subsidies make up some of the deficits not covered by fares, it is also necessary to cover some of the costs through local tax collections. For the past four years, these costs have been met through local sales and property taxes. Assume that your firm, Derrick Cheatham, and John, has been asked to serve as a consultant on future financing of CMTS’s operating deficit. In that capacity, please answer the following questions.

a. What criteria would you recommend for judging alternative taxing mechanism for meeting CMTS deficits?

b. Using the criteria you have established in part (a) evaluate the current form of tax collections.

Assume that you are the CEO of a small publicly traded company. The operating performance of your company has fallen below market expectations, which is reflected in a depressed stock price. At your direction, your CFO provides you with the following recommendations that are designed to increase your company’s return on net operating assets (RNOA) and your operating cash flows, both of which will, presumably, result in improved financial performance and an increased stock price. , LO#2.1 #3.1 1. To improved net cash flows from operating activities, the CFO recommends that your company reduce inventories (raw material, work-in-process, and finished goods) and receivables (through selective credit granting and increased emphasis on collection of past-due accounts). 2. The CFO recommends that your company sell and lease back its office building. The lease will be structure so as to be classified as an operating lease under GAAP. The assets will, therefore, not be iincluded in the computation of the net ooperating assets (NOA), thus increasing RNOA. Evaluate each of the CFO recommendations. In your evaluation consider whether the recommendation will positively impact the operating pperformance of your company or whether it is cosmetic in nature.

1. On January 1, 2020, Ironman Steel issued $900,000, 8-year bonds for $990,000. The stated rate of interest was 9% and interest is paid annually on December 31.

   Required:

   Prepare the amortization table for Ironman Steel's bonds. If required, round your answers to nearest whole value. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "0".

   Ironman Steel
   Amortization Table
   Period	Cash Payment (Credit)	Interest Expense (Debit)	Premium on Bonds Payable (Debit)	Premium on Bonds Payable Balance	Carrying Value
   At issue	$	$	$	$	$
   12/31/20
   12/31/21
   12/31/22
   12/31/23
   12/31/24
   12/31/25
   12/31/26
   12/31/27					An amortization table helps calculate the proper amortization of bond premium or discount. They are particularly helpful when the effective interest rate method is used; however, this problem amortizes the premium using the straight-line method.

At the beginning of 2017, your company buys a $28,000 piece of equipment that it expects to use for 4 years. The equipment has an estimated residual value of 2,000. The company expects to produce a total of 200,000 units. Actual production is as follows: 45,000 units in 2017, 47,000 units in 2018, 53,000 units in 2019, and 55,000 units in 2020.


Required:

1. Determine the depreciable cost.
2. Calculate the depreciation expense per year under the straight-line method.
3. Use the straight-line method to prepare a depreciation schedule.
4. Calculate the depreciation rate per unit under the units-of-production method.
5. Use the units-of-production method to prepare a depreciation schedule.

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,400 per month plus $0.07 per car washed. The company expects to wash 8,000 cars in August and to collect an average of $6.70 per car washed.

The actual operating results for August appear below.

Required:

Complete the flexible budget performance report that shows the company’s activity variances and revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,400 per month plus $0.07 per car washed. The company expects to wash 8,000 cars in August and to collect an average of $6.70 per car washed.

The actual operating results for August appear below.

Required:

Complete the flexible budget performance report that shows the company’s activity variances and revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

If you were a loan officer at a bank and the owner approached you for a loan, what information would you require to help make your decision ?

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,100 per month plus $0.07 per car washed. The company expected to wash 8,200 cars in August and to collect an average of $6.60 per car washed. The company actually washed 8,300 cars.

The actual operating results for August appear below.

Required:

Compute the company's activity variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

129. Masters, Hardy, and Rowen are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period's ending capital account balances are Masters, $16,300, Hardy, $16,300, Rowen, $(3,300). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $29,300 in cash to be distributed. Rowen pays $3,300 to cover the deficiency in his account. The general journal entry to record the final distribution would be:

• Debit Masters, Capital $14,650; debit Hardy, Capital $14,650; credit Cash $29,300.

• Debit Masters, Capital $9,766; debit Hardy, Capital $9,767; debit Rowen, Capital $9,767; credit Cash $29,300.

• Debit Cash $29,300; debit Rowen, Capital $3,300; credit Masters, Capital $16,300; credit Hardy, Capital $16,300.

• Debit Masters, Capital $16,300; debit Hardy, Capital $16,300; credit Rowen, Capital $3,300; credit Cash $29,300.

• Debit Masters, Capital $16,300; debit Hardy, Capital $16,300; credit Cash $32,600.

130. Cox, North, and Lee form a partnership. Cox contributes $204,000, North contributes $170,000, and Lee contributes $306,000. Their partnership agreement calls for a 6% interest allowance on the partner's capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of $208,800 for its first year, what amount of income is credited to Lee's capital account?

• $74,360.

• $69,600.

• $66,200.

• $68,240.

• $56,000.

138. On January 1 of Year 1, Congo Express Airways issued $3,500,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,197,389 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $10,087 every six months. After accruing interest at year end, the company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue in the amount of:

• $3,340,063.

• $3,780,000.

• $3,782,437.

• $3,217,563.

• $3,902,500.

144. Caitlin, Chris, and Molly are partners and share income and losses in a 3:4:3 ratio. The partnership’s capital balances are Caitlin, $140,000; Chris, $100,000; and Molly, $120,000. Paul is admitted to the partnership on July 1 with a 20% equity and invests $180,000. The balance in Paul’s capital account immediately after his admission is:

• $108,000

• $72,000

• $360,000

• $540,000

• $180,000

Based on past experience, Maas Corp. (a U.S.-based company) expects to purchase raw materials from a foreign supplier at a cost of 1,500,000 francs on March 15, 2021. To hedge this forecasted transaction, on December 15, 2020, the company acquires a call option to purchase 1,500,000 francs in three months. Maas selects a strike price of $0.63 per franc when the spot rate is $0.63 and pays a premium of $0.005 per franc. The spot rate increases to $0.634 at December 31, 2020, causing the fair value of the option to increase to $13,000. By March 15, 2021, when the raw materials are purchased, the spot rate has climbed to $0.65, resulting in a fair value for the option of $30,000. The raw materials are used in assembling finished products, which are sold by December 31, 2021, when Maas prepares its annual financial statements.

1. Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials.

2. What is the overall impact on net income over the two accounting periods?

3. What is the net cash outflow to acquire the raw materials?

On December 31, 2017, American Bank enters into a debt restructuring agreement with Stellar Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $4,000,000 note receivable by the following modifications:

Assuming that the interest rate Stellar should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Stellar Company after the debt restructuring. (Round answers to 0 decimal places, e.g. 38,548.)

Prepare the interest payment entry for Stellar Company on December 31, 2019. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

What entry should Stellar make on January 1, 2021? (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Write a little scenario explaining a way that you could commit payroll/HR fraud.

Explain what types of internal controls could prevent that fraud from occurring.

Duff incorporated on January 1, 2015 after receiving authorization to issue 10,000 shares of $50 par value preferred stock and 100,000 shares of $10 par value common, with the former having an 8% cumulative dividend feature. During fiscal 2018, the company engaged in the following equity transactions: January 1 Issued 1,000 shares of preferred stock for $80 each. January 1 Issued 10,000 shares of common stock for $30 each. June 30 Bought 1,000 shares of common stock for the treasury at $40 each. December 31 Declared the 8% dividend on the preferred stock and a $1.00 per-share dividend on the common after determining its fiscal 2018 comprehensive income to be $500,000, of which, $510,000 represented net income.

Required—Prepare in good form the stockholders’ equity section for 2015

Elmo Clinic has identified three activities for daily maternity care: occupancy and feeding, nursing, and nursing supervision. The nursing supervision oversees 150 nurses, 25 of whom are maternity nurses (the other nurses are located in other care areas such as emergency room and intensive care). The nursing supervisor has three assistants, a secretary, several offices, computers, phones, and furniture. The three assistants spend 75% of their time on the supervising activity and 25% of their time as surgical nurses. They each receive a salary of $60,000. The nursing supervisor has a salary of $80,000. She spends 100% of her time supervising. The secretary receives the salary of $35,000 per year. Other costs directly traceable to the supervisory activity (depreciation, utilities, phone, etc.) average $170,000 per year.

Daily care output is measured as “patient days.” The clinic has traditionally assigned the cost of daily care by using a daily rate (a rate per patient day). Daily rates can differ between units, but within units the daily rates are the same for all patients. Under the traditional approach, the daily rate is computed by dividing the annual costs of occupancy and feeding, nursing, and a share of supervision by the unit’s capacity expressed in patient days. The cost of supervision is assigned to each care area based on the number of nurses. A single driver (patient days) is used to assign the costs of daily care to each patient.

A pilot study has revealed that the demands for nursing care vary within the maternity unit, depending on the severity of a patient’s case. Assume that the maternity unit has three levels of increasing severity: normal patients, cesarean patients, and patients with complications. The pilot study provided the following activity and cost information:

Activity                                            Annual Cost                     Activity Driver                                Annual Quantity

Occupancy and Feeding               $1,500,000                       Patient days                                    10,000

Nursing Care (maternity)             $1,200,000                       Hours of nursing care                  50,000

Nursing Supervision                                        ?                       Number of nurses                                  150

The pilot study also revealed the following information concerning the three types of patients and their annual demands:

Patient Type                                                 Patient Days Demanded                           Nursing Hours

Demanded

Normal                                                           7,000                                                              17,500

Cesarean                                                       2,000                                                              12,500

Complications                                              1,000                                                              20,000

Total                                                               10,000                                                           50,000

Required:

1. Calculate the maternity cost per patient day by using a functional-based approach. This is a traditional approach that costs maternity cases by patient day as a whole based on the total cost of maternity care.
2. Calculate the cost per patient day by using an activity-based approach. (Round rates and unit cost to two decimal places.) Assume two cost pools: occupancy and feeding and nursing care. Determine the cost per patient day by type of patient.
3. The hospital processes 1,250,000 pounds of laundry per year. The cost of laundering activity is $600,000 per year. In a functional-based cost system, the cost of the laundry department is assigned to each user department in proportion to the pounds of laundry produced. Typically, maternity produces 240,000 pounds per year. How much would this change the cost per patient day calculated in Requirement 1? Now, describe what information you would need to modify the calculation made in Requirement 2. Under what conditions would this activity calculation provide a more accurate cost assignment?

Beetroots (Pty) Ltd is a company that buys fresh veggies in bulk and sell it direct to the public after packaging it in smaller quantities.

The following cost data is available for six months:

The financial manager is of the opinion that the total cost for the month is related t the quantity of veggies that is packaged (measured in kilograms).

Required:

1.1 Compile a cost formula (cost function) by making use of the High-Low method.

1.2 Compile a cost formula (cost function) by making use of the Least-Square method (Simple Regression Analysis). SHOW ALL CALCULATIONS

1.3 Explain why there is a difference between the cost formula according to the High-Low method and the cost formula according to the Least-Square method, and advise the best method to use.

1.4 Calculate the budgeted cost for July and August according to both cost formulas if the expected quantity of veggies that will be packaged is 950kg and 1 020kg respectively.