Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2017 with three assets: cash of 25,800 dinars, accounts receivable of 81,500 dinars, and land that cost 215,000 dinars when acquired on April 1, 2016. On January 1, 2017, Zugar has a 165,000 dinar note payable, and no other liabilities. On May 1, 2017, Zugar renders services to a customer for 135,000 dinars, which was immediately paid in cash. On June 1, 2017, Zugar incurred a 115,000 dinar operating expense, which was immediately paid in cash. No other transactions occurred during the year. Currency exchange rates for 1 dinar follow:

1. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the dinar is the subsidiary’s functional currency. What is the translation adjustment for this subsidiary for the year 2017?

2. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the U.S. dollar is the subsidiary’s functional currency. What is the remeasurement gain or loss for 2017?

3. Assume that Zugar is a foreign subsidiary of a U.S. multinational company. On the December 31, 2017, balance sheet, what is the translated value of the Land account? On the December 31, 2017, balance sheet, what is the remeasured value of the Land account?

(Input all amounts as positive.)

Albright Chemical Company currently operates three manufacturing plants in​Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are120,000metric tons per quarter​ (or 480,000 metric tons in 2018​). Albright management is investigating improved manufacturing techniques that will reduce annual carbon emissions to below 456,000metric tons so that the company can meet Environmental Protection Agency guidelines by 2019. Costs and benefits are as​ follows: Total cost to reduce carbon emissions $9 per metric ton reduced in 2019 below 480,000 metric tons Fine in 2019 if EPA guidelines are not met $423,000 Albright Management has chosen to use Kaizen budgeting to achieve its goal for carbon emissions. 1. If Albright reduces emissions by 2 % each​ quarter, beginning with the second quarter of 2018, will the company reach its goal of 456,000 metric tons by the end of 2019​? 2. What would be the net financial cost or benefit of their​ plan? Ignore the time value of money. 3. What factors other than cost might weigh into Albright​'s decision to carry out this​ plan? Requirement 1. If Albright reduces emissions by 2 % each​ quarter, beginning with the second quarter of 2018, will the company reach its goal of 456,000 metric tons by the end of 2019? ​(Round all intermediary calculations and the amounts you input in the cells to the nearest​ dollar.) Begin by calculating the quarterly emissions for each quarter through the end of 2019. Quarterly emissions Quarter (metric tons) 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 Will the company reach its goal of 456,000 metric tons by the end of 2019​? Yes, Albright will / No, Albright will not reach its goal of 456,000 metric tons by the end of 2019. Requirement 2. What would be the net financial cost or benefit of their​ plan? Ignore the time value of money. ​(Use parentheses or a minus sign to show a net​ benefit.) _______________ _______________ _______________ ________________ Net cost (benefit) of plan _________________ Requirement 3. What factors other than cost might weigh into Albright​'s decision to carry out this​ plan? Avoidance of the EPA fine should / should not be the​ company's sole motivation in carrying out this plan. Reducing carbon emissions has no impact on the environment is good for the environment, and will contribute to a smaller impact on climate change / is too costly and may not contribute to a smaller impact on climate change. Albright may be able to share this plan with the public to gain favorable publicity / petition the EPA for a waiver. Albright could choose to end this plan at the end of 2019​, and still avoid the EPA fine / pay the EPA fine​; ​however, company management has no obligation to reduce carbon emissions should / strive to continue reducing carbon emissions if they have the technology to do so.

Explain the auditors’ responsibilities when planning the audit

1. What is the balance in a bank account at the end of 10 years if $2,500 is deposited today and the account earnd 4% interest compounded annually? Quarterly?

2. If you deposit $10 in an account that pays 5% inteterst, compounded annually, how much will you have at the end of 10 years? 20 years? 50 years?

3. Suppose you deposit $100,000 in an account today that pays 6% interest, compounded annually. How long does it take before the balance in your account is $500,000?

7.  An intercompany sale took place whereby the book value exceeded the transfer price of a depreciable asset. Which statement is true for the year following the sale?

a A worksheet entry is made with a debit to retained earnings for an upstream transfer.

b A worksheet entry is made with a debit to retained earnings for a downstream transfer.

c A worksheet entry is made with a debit to investment in the subsidiary for a downstream transfer.

d A worksheet entry is made with a credit to retained earnings for an upstream transfer.

e No worksheet entry is necessary.

8. A net asset balance sheet exposure exists, and the foreign currency depreciates. Which of the following statements is true?

a There is no translation adjustment.

b There is a negative translation adjustment.

c There is a positive translation adjustment.

d There is a transaction loss.

e There is a transaction gain.

9. Cline, Watters, and Nettles formed a partnership on January 1, 20X1, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to

(1) an interest of 10% of the beginning capital balance each year;
(2) an annual compensation of $10,000 to Watter; and
(3) sharing the remainder of the income or loss in a ratio of 20% for Cline and 40% each for Watters and Nettles.

Net income was $150,000 in 20X1 and $180,000 in 20X2. Each partner withdrew $1,000 for personal use every month during 20X1 and 20X2.

What was Watters's capital balance at the end of 20X1?

a $150,000

b $160,000

c $165,000

d $201,000

e $213,000

Differential Analysis for a Discontinued Product

The condensed product-line income statement for Suffolk China Ware Company for the month of May is as follows:

Fixed costs are 12% of the cost of goods sold and 41% of the selling and administrative expenses. Suffolk China Ware assumes that fixed costs would not be materially affected if the Cups line were discontinued.

a. Prepare a differential analysis dated May 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

b. Should the Cups line be retained? Explain.
Yes or No

As indicated by the differential analysis in part (a), the income will __________ by $______ if the Cups line is discontinued.

______     8.      Assume the offer price for an IPO is set at $25 per share and the shares issued in the IPO is 10 million. The lead underwriter, however, sells 11.5 million shares to investors at the $25 offer price, planning to use the overallotment option, if needed, to satisfy its short position. Assume that the IPO firm’s stock starts trading on the stock exchange at either $23 per share or $27 per share. In which of these two possible stock prices will the lead underwriter most likely exercise its overallotment option?

A. If the stock starts trading at $23 per share.

B. If the stock starts trading at $27 per share.

______     1.      The following are four dates that are related to a firm’s regular quarterly cash dividend equal to $1 per share. Assume you want to receive the $1 dividend, but you don’t currently own the stock. What is the latest day that you can buy the stock and still ensure that you will receive the $1 dividend? (Assume all the days listed below and all the days given in the possible answers are business days in which the stock market is open.)

______     2.      Assume a company pays a $2.5 dividend. The stock’s price is $20 per share on the day before the stock’s ex-dividend day and $19 on the ex-dividend date. What is the stock’s return for this one-day period?

Diego Company manufactures one product that is sold for $73 per unit in two geographic regions—the East and West regions. The following information pertains to the company’s first year of operations in which it produced 56,000 units and sold 51,000 units.

The company sold 38,000 units in the East region and 13,000 units in the West region. It determined that $300,000 of its fixed selling and administrative expense is traceable to the West region, $250,000 is traceable to the East region, and the remaining $122,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only product.

14. Diego is considering eliminating the West region because an internally generated report suggests the region’s total gross margin in the first year of operations was $79,000 less than its traceable fixed selling and administrative expenses. Diego believes that if it drops the West region, the East region's sales will grow by 5% in Year 2. Using the contribution approach for analyzing segment profitability and assuming all else remains constant in Year 2, what would be the profit impact of dropping the West region in Year 2?

15. Assume the West region invests $46,000 in a new advertising campaign in Year 2 that increases its unit sales by 20%. If all else remains constant, what would be the profit impact of pursuing the advertising campaign?

13. Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions.

51-54. Eve, age 65 and single with no dependents, provided the following information for her 2018 income tax return: Gross income $55,000 Capital loss $ 4,000 Total itemized deductions $ 4,400

Eve's capital loss deduction to reach AGI is: a. $0. b. $3,000. c. $4,000. d. None of the above.

Eve's standard deduction, if it is used, is: a. $1,600. b. $13,600. c. $1,000. d. $12,000. e. None of the above.

Eve's personal exemption is: a. $4,150. b. $0. c. $5,750. d. $4,050. e. None of the above.

Eve's taxable income is: a. $38,400. b. $40,000. c. $40,050. d. $40,150. e. None of the above.

On January 1, 2017, Indigo Company purchased 12% bonds, having a maturity value of $320,000, for $344,260.74. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Indigo Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows.

(Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2017, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2017, follow. Additional Information Items An analysis of WTI's insurance policies shows that $3,071 of coverage has expired. An inventory count shows that teaching supplies costing $2,662 are available at year-end 2017. Annual depreciation on the equipment is $12,285. Annual depreciation on the professional library is $6,142. On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,500, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2018. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,540 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.) WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee. The balance in the Prepaid Rent account represents rent for December. WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017 Debit Credit Cash $ 26,038 Accounts receivable 0 Teaching supplies 10,013 Prepaid insurance 15,023 Prepaid rent 2,004 Professional library 30,043 Accumulated depreciation—Professional library $ 9,014 Equipment 70,087 Accumulated depreciation—Equipment 16,025 Accounts payable 34,565 Salaries payable 0 Unearned training fees 12,500 Common stock 15,000 Retained earnings 48,693 Dividends 40,059 Tuition fees earned 102,148 Training fees earned 38,055 Depreciation expense—Professional library 0 Depreciation expense—Equipment 0 Salaries expense 48,071 Insurance expense 0 Rent expense 22,044 Teaching supplies expense 0 Advertising expense 7,010 Utilities expense 5,608 Totals $ 276,000 $ 276,000 3-a. Prepare Wells Technical Institute's income statement for the year 2017. 3-b. Prepare Wells Technical Institute's statement of owner's equity for the year 2017. 3-c. Prepare Wells Technical Institute's balance sheet as of December 31, 2017.

Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $408,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $535,000 and the fair value of the 20 percent noncontrolling interest was $102,000. No excess fair value over book value amortization accompanied the acquisition.

The following selected account balances are from the individual financial records of these two companies as of December 31, 2018:

Protrade sells Seacraft a building on January 1, 2017, for $82,000, although its book value was only $51,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value.
Determine balances for the following items that would appear on consolidated financial statements for 2018:

Buildings (net)

Operating expenses

Net income attributable to non-controlling interest

Kurtz Fencing Inc. uses a job order cost system. The following data summarize the operations related to production for March, the first month of operations:

1. Journalize the entries to record the summarized operations. Record each item (items a-f) as an individual entry on March 31. Record item g as 2 entries. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month. For grading purposes enter transactions in alphabetical order. Determine the correct ending balance. The ending balance label is provided on the left side of the T account even when the ending balance is a credit. The unused cell on the balance line should be left blank.

3. Prepare a schedule of unfinished jobs to support the balance in the work in process account. Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries.

4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account. Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries.

Sabel Co. purchased assembly equipment for $836,000 on January 1, 2018. Sabel’s financial condition immediately prior to the purchase is shown in the following horizontal statements model.

The equipment is expected to have a useful life of 380,000 miles and a salvage value of $38,000. Actual mileage was as follows:

Required

1. Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation.
2. Assume that Sabel earns $248,000 of cash revenue during 2018. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in a financial statements model like the preceding one. The first event is recorded as an example.
3. Assume that Sabel sold the equipment at the end of the fifth year for $40,400. Calculate the amount of gain or loss on the sale.

Answer:

A-

B.

C.

Assume that Sabel sold the equipment at the end of the fifth year for $40,400. Calculate the amount of gain or loss on the sale.

Alberta Gauge Company, Ltd., a small manufacturing company in Calgary, Alberta, manufactures three types of electrical gauges used in a variety of machinery. For many years the company has been profitable and has operated at capacity. However, in the last two years, prices on all gauges were reduced and selling expenses increased to meet competition and keep the plant operating at capacity. Second-quarter results for the current year, which follow, typify recent experience.

Alice Carlo, the company’s president, is concerned about the results of the pricing, selling, and production prices. After reviewing the second-quarter results, she asked her management staff to consider the following three suggestions:

• Discontinue the R-gauge line immediately. R-gauges would not be returned to the product line unless the problems with the gauge can be identified and resolved.
• Increase quarterly sales promotion by $420,000 on the Q-gauge product line in order to increase sales volume by 15 percent.
• Cut production on the E-gauge line by 50 percent, and cut the traceable advertising and promotion for this line to $120,000 each quarter.

Jason Sperry, the controller, suggested a more careful study of the financial relationships to determine the possible effects on the company’s operating results of the president’s proposed course of action. The president agreed and assigned JoAnn Brower, the assistant controller, to prepare an analysis. Brower has gathered the following information.

• All three gauges are manufactured with common equipment and facilities.
• The selling and administrative expense is allocated to the three gauge lines based on average sales volume over the past three years.
• Special selling expenses (primarily advertising, promotion, and shipping) are incurred for each gauge as follows:

• The unit manufacturing costs for the three products are as follows:

• The unit sales prices for the three products are as follows:

• The company is manufacturing at capacity and is selling all the gauges it produces.

Required:

1. 2. Use the operating data presented for Alberta Gauge Company and assume that the president’s proposed course of action had been implemented at the beginning of the second quarter.

2. a. Calculate the net impact on income before taxes for each of the three suggestions.

3. b-1. Calculate contribution margin for R-gauge

4. b-2. Was the president correct in proposing that the R-gauge line be eliminated?

5. c-1. Calculate the contribution per direct-labor dollar for Q-gauge and E-gauge.

6. c-2. Was the president correct in promoting the Q-gauge line rather than the E-gauge line?