For its first year of operations, Altitude Inc. reports pretax GAAp income of 100,000 in 2020. Assume pretax GAAP income in 2021 and 2022 of 125,000 and 90,000, respectively. The enacted income tax rate in all years is 25%. The following additional information is available for the first three years of operation (with the exception of the one item in the 4th year): Prepaid rent in the amount of 20,000 was recored on December 31, 2020 for 2021 rent. A warranty accrual of 30,000 was recorded on December 31, 2020. The warranty was paid evenly over the years 2021-2023. The company recorded interest revenue of 500 each of three years on municipal bonds.

1. Compute the income tax payable each year for 2020, 2021, and 2022

2. Determined the balance of any Deferred Tax Assets or Deferred Tax Liabilities at the end of each year (2020, 2021, 2022)

3. Record the journal entries related to taxes in 2020, 2021, 2022

Tony and Suzie graduate from college in May 2021 and begin developing their new business. They begin by offering clinics for basic outdoor activities such as mountain biking or kayaking. Upon developing a customer base, they’ll hold their first adventure races. These races will involve four-person teams that race from one checkpoint to the next using a combination of kayaking, mountain biking, orienteering, and trail running. In the long run, they plan to sell outdoor gear and develop a ropes course for outdoor enthusiasts.

On July 1, 2021, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The articles of incorporation state that the corporation will sell 38,000 shares of common stock for $1 each. Each share of stock represents a unit of ownership. Tony and Suzie will act as co-presidents of the company. The following transactions occur from July 1 through December 31.

The following information relates to year-end adjusting entries as of December 31, 2021.

1. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $7,380.
2. Six months’ of the one-year insurance policy purchased on July 1 has expired.
3. Four months of the one-year rental agreement purchased on September 1 has expired.
4. Of the $1,900 of office supplies purchased on July 4, $320 remains.
5. Interest expense on the $30,000 loan obtained from the city council on August 1 should be recorded.
6. Of the $2,100 of racing supplies purchased on December 12, $180 remains.
7. Suzie calculates that the company owes $14,600 in income taxes.

The balance sheet is the accounting equation: Assets = Liabilities + Equity. Each asset and liability account is reported separately on the balance sheet.

DISCUSS how an organization can be vulnerable to fraud – use specific examples from a company that you are familiar with, but please do not identify the company by name. In your opinion, which is more important - prevention or detection? Or are they equal? Identify at least two ways that the company could have prevented and/or detected the fraud that you have identified. Discuss how the company’s reaction to instances of fraud can influence employees’ future actions. Your discussion should be 325-400 words.

Support your answer using a minimum of two professional or academic sources.

Penny Cookie Company offers credit terms to its customers. At the end of Year 1, accounts receivable totaled $120,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $12,000 at the beginning of Year 1 and $6,200 in receivables were written off during the year as uncollectible. Also, $600 in cash was received in December from a customer whose account previously had been written off. The company estimates bad debts by applying a percentage of 6% to accounts receivable at the end of the year.

1. Prepare journal entries to record the write-off of receivables, the collection of $600 for previously written off receivables, and the year-end adjusting entry for bad debt expense.

2. How would accounts receivable be shown in the Year 1 year-end balance sheet?

Orland Restaurants Inc. reports the following comprehensive income in its 2016 consolidated financial statements ($ in millions):

1.    In general, why do net earnings and comprehensive income differ?
2. How do foreign currency adjustments affect comprehensive income?
3.    During the year did the U.S. dollar strengthen or weaken vis-à-vis the foreign currencies that Orland uses?

Make or Buy

A restaurant bakes its own bread for a cost of $168 per unit (100 loaves), including fixed costs of $37 per unit. A proposal is offered to purchase bread from an outside source for $98 per unit, plus $7 per unit for delivery.

Prepare a differential analysis dated August 16, to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread, assuming fixed costs are unaffected by the decision. If an amount is zero, enter zero "0".

Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread.

Replace Equipment

A machine with a book value of $247,000 has an estimated six-year life. A proposal is offered to sell the old machine for $215,600 and replace it with a new machine at a cost of $283,600. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $49,600 to $39,700.

Prepare a differential analysis dated February 18, on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). If an amount is zero, enter zero "0". Use a minus sign to indicate a loss.

Should the company continue with the old machine (Alternative 1) or replace the old machine (Alternative 2)?

Phillips Company bought 40 percent ownership in Jones Bag Company on January 1, 20X1, at underlying book value. During the period of January 1, 20X1, through December 31, 20X3, the market value of Phillips' investment in Jones' stock increased by $2,000 each year. In 20X1, 20X2, and 20X3, Jones Bag reported the following:

The balance in Phillips Company’s investment account on December 31, 20X3, was $54,000.

Required:
In each of the following independent cases, determine the amount that Phillips paid for its investment in Jones Bag stock assuming that Phillips accounted for its investment by carrying the investment at fair value, or using the equity method.
  

Using fixed asset disclosure to compare companies'/Fixed asset turnover and average age of depreciable assets

The following PP & E information for fiscal year 2017 is available:

Required:

1. Estimate the total useful life, age and remaining useful life for each company.
2. Interpret the estimates. What items might effect comparisons across these companies
3. Calculate and compare fixed asset turnover for each company

or the following exercise, complete the calculations below. Evaluate different capital investment appraisal techniques by completing the calculations shown below: Bongo Ltd. is considering the selection of one of two mutually exclusive projects. Both would involve purchasing machinery with an estimated useful life of 5 years. Project 1 would generate annual cash flows (receipts less payments) of £200,000; the machinery would cost £556,000 with a scrap value of £56,000. Project 2 would generate cash flows of £500,000 per annum; the machinery would cost £1,616,000 with a scrap value of £301,000. Bongo uses straight-line depreciation. Its cost of capital is 15% per annum. Assume that all cash flows arise on the anniversaries of the initial outlay, that there are no price changes over the project lives, and that accepting either project will have no impact on working capital requirements. Assess the choice using the following methods by completing the calculations shown below: ARR NPV IRR Payback period Calculate the missing answers: Project 1 Project 2 ARR (see workings) 33% ??? NPV (£’000) ??? 210 IRR 25% ??? Payback Period (yrs) ??? 3.2 ARR workings (Project 1) Cash flows 200 Less: depreciation (see below) 100 Accounting profits 100 These profits are the same each year in this question. Annual depreciation (Cost – SV) / 5 (556,000 – 56,000) / 5 100 Average NBV of investments (556 + 56) /2 306 ARR

Cash Payback Period, Net Present Value Method, and Analysis

Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows:

Each project requires an investment of $317,000. A rate of 12% has been selected for the net present value analysis.

Required:

1a. Compute the cash payback period for each project.

1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar.

A 5-year annuity of ten $4500 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 12% compounded monthly, what is the value of this annuity five years from now? What is the value three years from now? What is the current value of the annuity?

I have calculate the PVa at t=9 is 73073.68, but I don't know how to do the next steps...

Please explain as clearly as possible

Thanks!!

The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Dux Company. Additional information from Dux’s accounting records is provided also.

Additional information from the accounting records:

1. A building that originally cost $116,000, and which was three-fourths depreciated, was sold for $24,000.
2. The common stock of Byrd Corporation was purchased for $24,000 as a long-term investment.
3. Property was acquired by issuing a 10%, seven-year, $74,000 note payable to the seller.
4. New equipment was purchased for $34,000 cash.
5. On January 1, 2018, bonds were sold at their $44,000 face value.
6. On January 19, Dux issued a 4% stock dividend (1,000 shares). The market price of the $10 par value common stock was $13 per share at that time.
7. Cash dividends of $68,000 were paid to shareholders.
8. On November 54,000 shares of common stock were repurchased as treasury stock at a cost of $27,000.

Required:
Prepare the statement of cash flows for Dux Company using the indirect method. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. (i.e., 10,000 should be entered as 10).))

Problem 4-2 Discontinued operations [LO4-4]

The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2018 and 2017:

On October 15, 2018, Jackson entered into a tentative agreement to sell the assets of one of its divisions. The division qualifies as a component of an entity as defined by GAAP. The division was sold on December 31, 2018, for $5,090,000. Book value of the division’s assets was $4,460,000. The division’s contribution to Jackson’s operating income before-tax for each year was as follows:

Assume an income tax rate of 20%.

Required: (In each case, net any gain or loss on sale of division with annual income or loss from the division and show the tax effect on a separate line)
1. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
2. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $5,090,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
3. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $3,930,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.