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?
In: Accounting
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.
In: Accounting
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:
As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances:
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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:
Required: Using the data above, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections: 2-a. Merchandise purchases budget: 2-b. Schedule of expected cash disbursements for merchandise purchases: 3. Cash budget: 4. Prepare an absorption costing income statement for the quarter ending March 31. 5. Prepare a balance sheet as of March 31. |
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In: Accounting
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:
| Annual revenues and costs: | |||
| Sales revenues | $ | 320,000 | |
| Variable expenses | $ | 180,000 | |
| Fixed out-of-pocket operating costs | $ | 82,000 | |
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.
In: Accounting
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?
In: Accounting
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.
In: Accounting
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.
In: Accounting
During its first year of operations, Cupola Fan Corporation
issued 37,000 of $1 par Class B shares for $420,000 on June 30,
2018. Share issue costs were $2,200. One year from the issue date
(July 1, 2019), the corporation retired 10% of the shares for
$43,000.
Required:
1. to 4. Prepare the journal entry to record the
issuance of the shares, the declaration of a $2.70 per share
dividend on December 1, 2018, the payment of the dividend on
December 31, 2018 and the retirement of the shares. (If no
entry is required for a transaction/event, select "No journal entry
required" in the first account field.)
(Journal Entries):
Record the issuance of the shares.
Record the declaration of a $2.70 per share dividend on December 1, 2018.
Record the payment of the dividend on December 31, 2018.
Record the retirement of the shares.
In: Accounting
Comparative statements of retained earnings for Renn-Dever
Corporation were reported in its 2018 annual report as
follows.
| RENN-DEVER CORPORATION Statements of Retained Earnings |
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| For the Years Ended December 31, | 2018 | 2017 | 2016 | ||||||
| Balance at beginning of year | $ | 7,011,452 | $ | 5,696,552 | $ | 5,864,552 | |||
| Net income (loss) | 3,448,700 | 2,340,900 | (168,000 | ) | |||||
| Deductions: | |||||||||
| Stock dividend (35,500 shares) | 248,500 | ||||||||
| Common shares retired (124,000 shares) | 248,000 | ||||||||
| Common stock cash dividends | 919,950 | 778,000 | 0 | ||||||
| Balance at end of year | $ | 9,291,702 | $ | 7,011,452 | $ | 5,696,552 | |||
At December 31, 2015, common shares consisted of the
following:
| Common stock, 1,865,000 shares at $1 par | $ | 1,865,000 |
| Paid-in capital—excess of par | 7,460,000 | |
Required:
Infer from the reports the events and transactions that affected
Renn-Dever Corporation’s retained earnings during 2016, 2017, and
2018. Prepare the journal entries that reflect those events and
transactions. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
(Journal Entries):
Record transfer of net loss to retained earnings.
Record transfer of net income to retained earnings.
Record repurchase of shares for retirement.
Record declaration of cash dividend.
Record payment of cash dividend.
Record transfer of net income to retained earnings
Record issue of stock dividend.
Record declaration of cash dividend.
Record payment of cash dividend.
In: Accounting
Prepare the journal entries for all transactions in August
Stacy's Company, owned by F. Stacy, started operations in August and completed the following transactions during the first month of operations.
August 1 F. Stacy invested $75,000 cash in the company
August 2The company purchased $45,000 in office equipment. It paid $15,000 in cash and signed a note payable promising to pay the $10,000 over the next three years
August 2 The company rented office space and paid $8,000 for the August rent
August 6 The company installed a new roof for a customer and immediately collected $9,000
August 7 The company paid a supplier $7,000 for roofing materials used on the August 6th job
August 8 The company purchased a $9,500 copy machine for office use on credit August 9 The company completed work for additional customers on credit in the amount of $26,000
August15 The company paid it's employees' salaries $2,700 for the first half of the month
August17 The company installed a new roof for a customer and immediately collected $3,900
August 20 The company received $10,000 in payments from the customers billed on August 9th
August 28 The company paid $1,500 on the copy machine purchased on August 8th. It will pay the remaining balance in September
August 31 The company paid it's employees' salaries $2,700 for the second half of the month
August 31 The company paid a supplier $5,300 for roofing materials used on the remaining jobs completed during August
August 31 The company paid $850 for this month's utility bill
In: Accounting
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31,
2017:
| Shareholders' Equity | ($ in millions) | ||
| Common stock, 340 million shares at $1 par | $ | 340 | |
| Paid-in capital—excess of par | 2,720 | ||
| Paid-in capital—share repurchase | 1 | ||
| Retained earnings | 2,400 | ||
Required:
1. During 2018, TNL Systems reacquired shares of
its common stock and later sold shares in two separate
transactions. Prepare the entries for both the purchase and
subsequent resale of the shares assuming the shares are (a) retired
and (b) viewed as treasury stock.
2. Prepare the shareholders’ equity section of TNL
Systems’ balance sheet at December 31, 2020, comparing the two
approaches. Assume all net income earned in 2018–2020 was
distributed to shareholders as cash dividends.
(1A Journal Entries):
Record the purchase of 8 million shares at $12 per share assuming the shares are retired.
Record the sale of 2 million shares at $14 per share.
Record the sale of 2 million shares at $9 per share.
(1B Journal Entries):
Record the sale of 2 million shares at $9 per share.
Record the sale of 2 million shares at $14 per share
Record the sale of 2 million shares at $9 per share.
In: Accounting
Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.50 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:
| Activity Cost Pool | Activity Measure | Activity for the Year | |
| Cleaning carpets | Square feet cleaned (00s) | 11,500 | hundred square feet |
| Travel to jobs | Miles driven | 67,000 | miles |
| Job support | Number of jobs | 1,900 | jobs |
| Other (organization-sustaining costs and idle capacity costs) | None | Not applicable | |
The total cost of operating the company for the year is $366,000 which includes the following costs:
| Wages | $ | 142,000 |
| Cleaning supplies | 28,000 | |
| Cleaning equipment depreciation | 16,000 | |
| Vehicle expenses | 39,000 | |
| Office expenses | 63,000 | |
| President’s compensation | 78,000 | |
| Total cost | $ | 366,000 |
Resource consumption is distributed across the activities as follows:
| Distribution of Resource Consumption Across Activities | ||||||||||
| Cleaning Carpets | Travel to Jobs | Job Support | Other | Total | ||||||
| Wages | 79 | % | 12 | % | 0 | % | 9 | % | 100 | % |
| Cleaning supplies | 100 | % | 0 | % | 0 | % | 0 | % | 100 | % |
| Cleaning equipment depreciation | 75 | % | 0 | % | 0 | % | 25 | % | 100 | % |
| Vehicle expenses | 0 | % | 84 | % | 0 | % | 16 | % | 100 | % |
| Office expenses | 0 | % | 0 | % | 60 | % | 40 | % | 100 | % |
| President’s compensation | 0 | % | 0 | % | 26 | % | 74 | % | 100 | % |
Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.
Required:
1. Prepare the first-stage allocation of costs to the activity cost pools.
2. Compute the activity rates for the activity cost pools.
3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 52-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.
4. The revenue from the Flying N Ranch was $135.00 (600 square feet @ $22.50 per hundred square feet). Calculate the customer margin earned on this job.
In: Accounting
Access the IFRS authoritative literature at the IASB website and after some research answer the following questions: In your initial post, answer what is the authoritative guidance for asset impairments? Briefly discuss the types of transactions to which the standard applies. In your reply post comment on your classmate's initial post and give several examples of events that would cause an asset to be tested for impairment. What is the best evidence of fair value? Describe alternative methods of estimating fair value.
In: Accounting
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:
| Beginning inventory | 0 | |
| Units produced | 41,000 | |
| Units sold | 36,000 | |
| Selling price per unit | $ | 85 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 2 |
| Fixed (per month) | $ | 563,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 17 |
| Direct labor cost per unit | $ | 7 |
| Variable manufacturing overhead cost per unit | $ | 2 |
| Fixed manufacturing overhead cost (per month) | $ | 820,000 |
Management is anxious to assess the profitability of the new camp cot during the month of May.
Required:
1. Assume that the company uses absorption costing.
a. Determine the unit product cost.
b. Prepare an income statement for May.
2. Assume that the company uses variable costing.
a. Determine the unit product cost.
b. Prepare a contribution format income statement for May.
In: Accounting
RWP #3 – Taxes
Obtain to the most recent 10-K's for Proctor & Gamble Co and Coca Cola Co and complete the table below for the most recent fiscal year end:
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P&G |
Coke |
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1 |
Total Income Taxes on Continuing Operations per IS |
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2 |
Accrued Income Taxes (Taxes Payable) per BS, if listed |
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3 |
Total DTA per BS, if listed |
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4 |
Total DTL per BS, if listed |
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5 |
Total Valuation Allowances |
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6 |
Statutory Tax Rate |
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7 |
Effective Tax Rate |
In: Accounting