1. The debits to Work in Process—Roasting Department for St. Arbucks Coffee Company for July 2016, together with information concerning production, are as follows:

   Work in process, July 1, 600 pounds, 40% completed				$1,944*
   	*Direct materials (600 X $2.8)	$1,680
   	Conversion (600 X 40% X $1.1)	$264
   		$1,944
   Coffee beans added during July, 19,000 pounds				52,250
   Conversion costs during July				22,512
   Work in process, July 31, 1,000 pounds, 40% completed				?
   Goods finished during July, 18,600 pounds				?

   All direct materials are placed in process at the beginning of production.

   a. Prepare a cost of production report, presenting the following computations:

   1. Direct materials and conversion equivalent units of production for July.
   2. Direct materials and conversion costs per equivalent unit for July.
   3. Cost of goods finished during July.
   4. Cost of work in process at July 31, 2016.

   If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

   St. Arbucks Coffee Company
   Cost of Production Report-Roasting Department
   For the Month Ended July 31, 2016
   Unit Information
   Units charged to production:
   Inventory in process, July 1
   Received from materials storeroom
   Total units accounted for by the Roasting Department
   Units to be assigned costs:
   		Equivalent Units
   	Whole Units	Direct Materials (1)	Conversion (1)
   Inventory in process, July 1
   Started and completed in July
   Transferred to finished goods in July
   Inventory in process, July 31
   Total units to be assigned costs
   Cost Information
   Costs per equivalent unit:
   		Direct Materials	Conversion
   Total costs for July in Roasting Department		$	$
   Total equivalent units
   Cost per equivalent unit (2)		$	$
   Costs assigned to production:
   	Direct Materials	Conversion	Total
   Inventory in process, July 1			$
   Costs incurred in July
   Total costs accounted for by the Roasting Department			$
   Cost allocated to completed and partially completed units:
   Inventory in process, July 1 balance			$
   To complete inventory in process, July 1	$	$
   Cost of completed July 1 work in process			$
   Started and completed in July
   Transferred to finished goods in July (3)			$
   Inventory in process, July 31 (4)
   Total costs assigned by the Roasting Department			$

   b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (June). If required, round your answers to the nearest cent.

   	Increase or Decrease	Amount
   Change in direct materials cost per equivalent unit		$
   Change in conversion cost per equivalent unit		$

Check My Work1 more Check My Work uses remaining.

1. The debits to Work in Process—Roasting Department for St. Arbucks Coffee Company for July 2016, together with information concerning production, are as follows:

   Work in process, July 1, 600 pounds, 40% completed				$1,944*
   	*Direct materials (600 X $2.8)	$1,680
   	Conversion (600 X 40% X $1.1)	$264
   		$1,944
   Coffee beans added during July, 19,000 pounds				52,250
   Conversion costs during July				22,512
   Work in process, July 31, 1,000 pounds, 40% completed				?
   Goods finished during July, 18,600 pounds				?

   All direct materials are placed in process at the beginning of production.

   a. Prepare a cost of production report, presenting the following computations:

   1. Direct materials and conversion equivalent units of production for July.
   2. Direct materials and conversion costs per equivalent unit for July.
   3. Cost of goods finished during July.
   4. Cost of work in process at July 31, 2016.

   If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

   St. Arbucks Coffee Company
   Cost of Production Report-Roasting Department
   For the Month Ended July 31, 2016
   Unit Information
   Units charged to production:
   Inventory in process, July 1
   Received from materials storeroom
   Total units accounted for by the Roasting Department
   Units to be assigned costs:
   		Equivalent Units
   	Whole Units	Direct Materials (1)	Conversion (1)
   Inventory in process, July 1
   Started and completed in July
   Transferred to finished goods in July
   Inventory in process, July 31
   Total units to be assigned costs
   Cost Information
   Costs per equivalent unit:
   		Direct Materials	Conversion
   Total costs for July in Roasting Department		$	$
   Total equivalent units
   Cost per equivalent unit (2)		$	$
   Costs assigned to production:
   	Direct Materials	Conversion	Total
   Inventory in process, July 1			$
   Costs incurred in July
   Total costs accounted for by the Roasting Department			$
   Cost allocated to completed and partially completed units:
   Inventory in process, July 1 balance			$
   To complete inventory in process, July 1	$	$
   Cost of completed July 1 work in process			$
   Started and completed in July
   Transferred to finished goods in July (3)			$
   Inventory in process, July 31 (4)
   Total costs assigned by the Roasting Department			$

   b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (June). If required, round your answers to the nearest cent.

   	Increase or Decrease	Amount
   Change in direct materials cost per equivalent unit		$
   Change in conversion cost per equivalent unit		$

Check My Work1 more Check My Work uses remaining.

Katie's Wedding Planning Service completed the following transactions: (10 MARKS)

a. Billed clients for service, $1,350.

b. Completed work for clients who paid $500 cash.

c. Received a bill for utilities to be paid later, $120. d. Collected cash on account from clients, $800.

e. Paid the amount due for utilities.

f. Withdrew $400 cash for personal use.

1. Alicia has been working for JMM Corp. for 32 years. Alicia participates in JMM’s defined benefit plan. Under the plan, for every year of service for JMM she is to receive 2 percent of the average salary of her three highest years of compensation from JMM. She retired on January 1, 2018. Before retirement, her annual salary was $570,000, $600,000, and $630,000 for 2015, 2016, and 2017. What is the maximum benefit Alicia can receive in 2018?

2.Brooklyn has been contributing to a traditional IRA for seven years (all deductible contributions) and has a total of $30,000 in the account. In 2018, she is 39 years old and has decided that she wants to get a new car. She withdraws $20,000 from the IRA to help pay for the car. She is currently in the 24 percent marginal tax bracket. What amount of the withdrawal, after tax considerations, will Brooklyn have available to purchase the car?

Activity-Based Budget

Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,600 for the Sleepeze, 12,700 for the Plushette, and 5,100 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

1. Salaries for his office (including himself at $64,250, a marketing research assistant at $36,350, and an administrative assistant at $25,650) are budgeted for $126,250 next year.
2. Depreciation on the offices and equipment is $18,550 per year.
3. Office supplies and other expenses total $23,350 per year.
4. Advertising has been steady at $19,400 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 10 percent of first-year Ultima sales for a print and television campaign.
5. Commissions on the Sleepeze and Plushette lines are 3 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores.
6. Last year, shipping for the Sleepeze and Plushette lines averaged $45 per unit sold. Gene expects the Ultima line to ship for $80 per unit sold since this model features a larger mattress.

Suppose that Gene is considering three sales scenarios as follows:

Suppose Gene determines that next year's Sales Division activities include the following:

Research—researching current and future conditions in the industry

Shipping—arranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors

Jobbers—coordinating the efforts of the independent jobbers who sell the mattresses

Basic ads—placing print and television ads for the Sleepeze and Plushette lines

Ultima ads—choosing and working with the advertising agency on the Ultima account

Office management—operating the Sales Division office

The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table:

Additional information is as follows:

1. Depreciation on the office equipment belongs to the office management activity.
2. Of the $23,350 for office supplies and other expenses, $4,600 can be assigned to telephone costs which can be split evenly between the shipping and jobbers' activities. An additional $2,300 per year is attributable to Internet connections and fees, and the bulk of these costs (75 percent) are assignable to research. The remainder is a cost of office management. All other office supplies and costs are assigned to the office management activity.

Required:

1. Prepare an activity-based budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar.

2. On the basis of the budget prepared in Requirement 1, advise Gene regarding actions that might be taken to reduce expenses.

On April 1, 2017, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month.

The company's chart of accounts follows:

Use the following information:

1. Two-thirds (or $150) of one month’s insurance coverage has expired.
2. At the end of the month, $600 of office supplies are still available.
3. This month’s depreciation on the computer equipment is $500.
4. Employees earned $370 of unpaid and unrecorded salaries as of month-end.
5. The company earned $2,300 of commissions that are not yet billed at month-end.

Required:
1. & 2. Prepare journal entries to record the transactions for April and post them to the ledger accounts in Requirement 6b. The company records prepaid and unearned items in balance sheet accounts.
3. Using account balances from Requirement 6b, prepare an unadjusted trial balance as of April 30.
4. Journalize and post the adjusting entries for the month and prepare the adjusted trial balance.
5a. Prepare the income statement for the month of April 30, 2017.
5b. Prepare the statement of retained earnings for the month of April 30, 2017.
5c. Prepare the balance sheet at April 30, 2017.
6a. Prepare journal entries to close the temporary accounts and then post to Requirement 6b.
6b. Post the journal entries to the ledger.
7. Prepare a post-closing trial balance.

The company Smart Inc. is a company that produces T-shirts in Toronto area. The results of the company which has been mediocre for the past couple of years have been presented in the annual financial statement.

Sales (1 million units x 16$) 16 000 000$

Fixed Costs (10 000 000)

Variable Costs (1 million units x 10$) (10 000 000)

Depreciation (3 000 000)

Annual Profit (loss) (7 000 000)

According to the experts, this loss has been caused by the poor performance of the equipment in the factory. They suggest to the board of directors to replace the old equipment by new ones. Considering following information, the board of directors asks you to evaluate this project for the company.

• The new equipments would increase the level of production and allow the company to avoid this loss entirely, but there is no projection concerning any profit. The purchase (including the installation) of the new equipment requires an initial investment for an amount of 18 000 000$. The old equipment can be sold in the beginning of project on the market for 1 500 000$ (For simplification, consider this amount as an exchange value).

• The new equipment will be sold for 2 000 000$ in 10 years (end of project). The purchase of the equipment requires a new issue of long term bonds with a coupon rate of 8% over 10 years. The project also requires major renovation of the old building for the amount of 500 000$ and an additional investment in heavy machinery for the total amount of 1 000 000$ at the end of 5^th year (Both amounts are depreciable with declining method under the tax law).
• The project requires the purchase of a land for 1 200 000$ which will be sold in 10 years (end of project) for 2 200 000$. Suppose that at this moment 50% of capital gains are tax-free under tax law.

• The company also has to build a new building for an amount of 2 400 000$ which will be sold at the end of the project for 3 200 000$. This amount is depreciable with declining method.

• The project also requires an additional investment in new Computers and furniture for a total amount of 400 000$ in the beginning of project. Computers and furniture have to be replaced by new ones after 5 years for the amount of 600 000$. The do not have any salvage value.

• At the present time, supplier account and client account are at 1 000 000$ each. The project would increase client account and decrease supplier account by 50%. All related accounts will return to zero at the end of project.

• At the present time, Smart Inc is renting a warehouse for the annual rent of 50 000$ (paid at the end of year). If the company undertakes the new project, they will need to cancel the lease of the old warehouse and to rent a larger warehouse for the annual rent of 200 000$ (to be paid annually at the end of each year). The cancellation of the old lease does not cause any penalty.

• The project also requires 5 new technicians today with annual salary of 60 000$ for each and 5 other technicians in 5 years for annual salary of 75 000$ each. Given the performance of new equipment, Smart Inc could lay off 80 employees whose annual salaries is 40 000$. The lay-offs will oblige the company to pay lay-off premiums in the amount of 10 000$ to each employee which will be tax deductible.

The corporate tax rate is at 40%. The new equipment and new heavy machinery are in the category with a depreciation of 20%, the major renovations are depreciated at 25%, the new building is depreciated at 10%, all items depreciations are calculated with decreasing (declining) method. The computers and furniture are depreciated by linear method at 20%. Investors require 12% return on this type of project. Given this information, answer the following questions:

Questions:

1. Identify ONE BY ONE each item of the investment and calculate separately the present value of the total investment in this project.
2. Identify ONE BY ONE and calculate separately the present value of each periodical cash flow (annual incomes and expenses) during the project.
3. Identify ONE BY ONE and calculate separately the present value of each cash flow of the end of the project.
4. Calculate the Net Present Value of this project (You just have to add up your responses in 1, 2 and 3 for this one).
5. Calculate the maximum price that Smart Inc can afford to invest in the new equipment in the beginning of project in order to keep the project profitable. (That means the additional investment at the end of 5^th year and other items in the initial investment remain the same).
6. Calculate the Operational Cash Flow (OCF) of the 3^rd year of this project.

El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at the end of each month. The November 30, 2018, reconciliation of the bank balance is as follows:

The company’s general ledger checking account showed the following for December:

The December bank statement contained the following information:

The checks that were processed by the bank in December include all of the outstanding checks at the end of November except for check #365. In addition, there are some December checks that had not been processed by the bank by the end of the month. Also, you discover that check #411 for $540 was correctly recorded by the bank but was incorrectly recorded on the books as a $450 disbursement for advertising expense. Included in the bank’s deposits is a $2,900 deposit incorrectly credited to the company’s account. The deposit should have been posted to the credit of the Los Gatos Company. The NSF checks have not been redeposited and the company will seek payment from the customers involved.

Required:
1. Prepare a bank reconciliation for the El Gato checking account at December 31, 2018.
2. Prepare any necessary adjusting journal entries indicated.

What trends did you notice? What implications do they have?

The text states, "Over sufficiently long time periods, net income equals cash inflows minus cash outflows, other than cash flows with owners." Demonstrate the accuracy of this statement in the following scenario: Two friends contributed $50,000 each to form a new business. The owners used the amounts contributed to purchase a machine for $100,000 cash. They estimated that the useful life of the machine was five years and the salvage value was $20,000. They rented out the machine to a customer for an annual rental of $25,000 a year for five years. Annual cash operating costs for insurance, taxes, and other items totaled $6,000 annually. At the end of the fifth year, the owners sold the equipment for $22,000, instead of the $20,000 salvage value initially estimated. (Hint: Compute the total net income and the total cash flows other than cash flows with owners for the five-year period as a whole.)

totals $ $ $ $

33. $____________Revenue:                                           37. $__________Supplies:                               

34. $____________Net Income:                                      38. $__________Total Assets:                        

35. $____________Issuance:                                           39. $__________Stockholders’ Equity:         

36. $____________Dividends:                                         40. $__________Total L & SE:        

Michelle J. and Fred M. Smith are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6789 and 111-11-1112, respectively. Michelle’s birthday is September 21, 1971, and Fred’s is June 27, 1970. They live at 473 Revere Avenue, Stony Brook, 01850. Michelle is the office manager for Stony Brook Dental Clinic, 433 Broad Street, Stony Brook, NY 01850 (employer identification number 98-7654321). Fred is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (employer identification number 11-1111111).


The following information is shown on their Wage and Tax Statements (Form W–2) for 2018.

The Smiths provide over half of the support of their two children, Cynthia (born January 25, 1994, Social Security number 123-45-6788) and John (born February 7, 1998, Social Security number 123-45-6786). Both children are full-time students and live with the Smiths except when they are away at college. Cynthia earned $6,200 from a summer internship in 2018, and John earned $3,800 from a part-time job.


During 2018, the Smiths provided 60% of the total support of Fred’s widower father, Sam Smith (born March 6, 1942, Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with his Social Security benefits. Sam died in November, and Fred, the beneficiary of a policy on Sam’s life, received life insurance proceeds of $1,600,000 on December 28.


The Smiths had the following expenses relating to their personal residence during 2018:

•                    When they filed their 2017 state return in 2018, the Smiths paid additional state income tax of $900.

•                    During 2018, Michelle and Fred attended a dinner dance sponsored by the Stony Brook Police Disability Association (a qualified charitable organization). The Smiths paid $300 for the tickets. The cost of comparable entertainment would normally be $50.

•                     The Smiths contributed $5,000 to Stony Brook Presbyterian Church and gave used clothing (cost of $1,200 and fair market value of $350) to the Salvation Army. All donations are supported by receipts, and the clothing is in very good condition.

•                     Via a crowdfunding site (gofundme.com), Michelle and Fred made a gift to a needy family who lost their home in a fire ($400). In addition, they made several cash gifts to homeless individuals downtown (estimatedto be $65).

•                     In 2018, the Smiths received interest income of $2,750, which was reported on a Form 1099–INT from Second National Bank, 125 Oak Street, Stony Brook, NY 01850 (Employer Identification Number 98-7654322).

•                     The home mortgage interest was reported on Form 1098 by Stony Brook Commercial Bank, P.O. Box 1000, Stony Brook, NY 01850 (Employer Identification Number 98-7654323). The mortgage (outstanding balance of $425,000 as of January 1, 2018) was taken out by the Smiths on May 1, 2014.

•                    Michelle’s employer requires that all employeeswear uniforms to work. During 2018, Michelle spent $850 on new uniforms and $566 on laundry charges.

•                     Fred paid $400 for an annual subscription to the Journal of Franchise Managementand $741 for annual membership dues to his professional association.

•                    Neither Michelle’s nor Fred’s employer reimburses for employee expenses.

•                     The Smiths do not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax.

•                     All members of the Smith family had health insurance coverage for all of 2018.

•                     This year the Smiths gave each of their children $2,000, which was then deposited into their Roth IRAs.

•                    Michelle and Fred paid no estimated Federal income tax. Neither Michelle nor Fred wants to designate $3 to the Presidential Election Campaign Fund.

REQUIRED: Tax Computation


Prepare their Federal and NYS tax returns. Compute net tax payable or refund due for Michelle and Fred Smith for 2018. If they have overpaid, they want the amount to be refunded to them. If you use tax forms for your computations, you will need Forms 1040 and Schedules A and B.


You must prepare Form 1040, Schedules A & B and any other appropriate forms and schedules.  You may use tax software such as ProConnect or TurboTax, or manually prepare their tax returns.

Prepare their Federal and NYS income tax returns. Assume they were NYS residents for the entire year

Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas:

Management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. Units sold and the related shipping expense over the last eight quarters follow:

Milden Company’s president would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter.

2. In the first quarter of Year 3, the company plans to sell 35,000 units at a selling price of $56 per unit. Prepare a contribution format income statement for the quarter. (Do not round your intermediate calculations.)