Question text

Computing Depreciation Expense.
Equipment costing $580,000, with an expected scrap value of $60,000 and an estimated useful life of 5 years, was purchased on January 1, 2012.

Calculate the depreciation expense for years 2012 to 2016 using: (a) the straight-line method and (b) the double-declining-balance method.

Round to the nearest whole number.

The gross estate of Raul, decedent, includes stock in Iris Corporation (E & P of $8,000,000) valued at $6,000,000. At the time of his death, Raul owned 60% of the Iris stock outstanding and he had a basis of $840,000 in the stock. The death taxes and funeral and administration expenses related to Raul’s estate amount to $2,000,000, and the adjusted gross estate is $16,000,000. The remainder of the Iris stock is owned by Monica, Raul’s daughter and sole heir of his estate. What are the tax consequences to Raul’s estate if Iris Corporation distributes $6,000,000 to the estate in redemption of all of its stock in the corporation

Question 1

The banking system plays a crucial role in carrying out monetary policy. Through the credit process within commercial banks, quantities of money are created for the economy.

a) In order to boost economic growth, the central bank of Country Y has injected $500 billion of new money into the banking system. If the required reserve ratio (RR) for bank deposits in Country Y is 20%, compute the maximum increase in money supply that the additional funds can create in the following scenarios:

i. Commercial banks in Country Y lend all their available funds to their loan customers under the current reserves requirement. At the same time, the public does not keep any cash on hand and deposit all their money to banks.

ii. Suppose the public keeps one third of their funds in form of cash and deposit the rest with their banks. In addition, commercial banks hold 5% excess reserves (ER) on top of the required reserve for the deposits they receive.

b )With reference to your answers in (a), explain in detail why a central bank in reality cannot control the exact amount of money in circulation with the practice of monetary policy.

Shoe-production equipment is purchased on January 1, 2020. The relevant data is as follows:

Equipment Cost $10,000

Estimated residual value -1,560

Accounting periods 5 years

Shoe-production equipment is purchased on January 1, 2020. The relevant data is as follows:

Equipment Cost $10,000

Estimated residual value -1,560

Accounting periods 5 years

Units produced 38,000 shoes

first year units produced are : 7000 CAD

first year units produced are : 5000 CAD

first year units produced are : 7000 CAD

first year units produced are : 6600 CAD

first year units produced are : 3000 CAD

1- Calculate the first year depreciation using the three methods usable

2- Calculate the accumulated depreciation using the three methods for the 3rd and 4th year.

Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below:

Required:

1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales.

2. The president believes that a $6,200 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $84,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income?

3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $34,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?

4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 0.80 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,500?

5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $54,000 each month.

a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.

b. Assume that the company expects to sell 20,100 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.)

c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,100)?

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016:

In year 2017, the following transactions affected its stockholders’ equity accounts.

Required:
1. Prepare journal entries to record each of these transactions for 2017.
2. Prepare a statement of retained earnings for the year ended December 31, 2017.
3. Prepare the stockholders' equity section of the company’s balance sheet as of December 31, 2017.

QUESTION 1.
Your company will receive AUD2,000,000 in 90 days. To convert this amount into USD, you contact a bank to sell AUD forward. Here is the information you got:

90-day forward rate: AUD1 = USD0.85

Today spot rate: AUD1 = USD0.90

After 90 days, market spot rate is AUD1 = USD0.92

If you choose to sell forward, how much USD will you receive?

QUESTION 2.
Your company will receive AUD2,000,000 in 90 days. To convert this amount into USD, you contact a bank to sell AUD forward. Here is the information you got:

90-day forward rate: AUD1 = USD0.85

Today spot rate: AUD1 = USD0.90

After 90 days, market spot rate is AUD1 = USD0.92

If you choose to sell forward then

QUESTION 3.
Your company will receive AUD2,000,000 in 90 days. To convert this amount into USD, you contact a bank to sell AUD forward. Here is the information you got:

90-day forward rate: AUD1 = USD0.85

Today spot rate: AUD1 = USD0.90

After 90 days, market spot rate is AUD1 = USD0.92

90-day Forward rate premium/discount is?

QUESTION 4. Your company will receive AUD2,000,000 in 90 days. To convert this amount into USD, you contact a bank to sell AUD forward. Here is the information you got:

90-day forward rate: AUD1 = USD0.85

Today spot rate: AUD1 = USD0.90

After 90 days, market spot rate is AUD1 = USD0.92

During that 90-day period:

The cartel

Consider a town in which only two residents, Hubert and Kate, own wells that produce water safe for drinking. Hubert and Kate can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water.

Suppose Hubert and Kate form a cartel and behave as a monopolist. The profit-maximizing price is

per gallon, and the total output is

gallons. As part of their cartel agreement, Hubert and Kate agree to split production equally. Therefore, Hubert's profit is

, and Kate's profit is

.

Suppose that Hubert and Kate have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly quantity. Then one night before going to sleep, Hubert says to himself, "Kate and I aren't the best of friends anyway. If I increase my production by 40 gallons, I can increase my profit even though her profit goes down. I will do that starting tomorrow."

After Hubert implements his new plan, the price of water   to

per gallon. Given Kate and Hubert's production levels, Hubert's profit becomes

and Kate's profit becomes

.

Because Hubert has deviated from the cartel agreement and increased his output of water by 40 gallons, Kate decides that she will also increase her production by 40 gallons.

After Kate increases her production, Hubert's profit becomes

, Kate's profit becomes

, and total profit (the sum of the profits of Hubert and Kate) is now

.

Note that Hubert and Kate started by behaving cooperatively. However, once Hubert decided to cheat, Kate decided to cheat as well. In other words, Kate's output decisions are based on Hubert's actions.

This behavior is an example of?

How is information technology changing the way farmers run their business?

Pesto Company posesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial value method to account for this investment. On January 1, 2014, Pesto sold 9 percent bonds payable with a 10 million dollar face value (maturing in 20 years) on the open market at a premium of 600,000. On January 1 2017, Salerno acquired 40 percent of these same bonds from an outside party at 96.6 percent of face value. Both companies use the straight line method of amortization. For 2018 consolidation what adjustment should be made to Pesto's beginning Retained earnings as a result of this bond acquisition? Please show step by step calculations

Journalize the following transaction:

Factory wages allocated: direct labor, $82,160; indirect labor $15,620

Debit for $

Debit    for $

Credit    for $

Cornerstone Exercise 7-18 (Algorithmic)
Acquisition Cost

Cox Company recently purchased a machine by paying $13,600 cash and signing a 6-month, 10% note for $10,000. In addition to the purchase price, Cox incurred the following costs related to the machine: freight charges, $720; interest charges, $500; special foundation for machine, $400; installation costs, $1,100.

Required: Determine the cost of the machine. ($25820 was wrong.)

Exercise 7-59 (Algorithmic)
Disposal of Tangible Capital Asset

Pacifica Manufacturing retired a computerized metal stamping machine on December 31, 2018. Pacifica sold the machine to another company and did not replace it. The following data are available for the machine:

The machine was sold for $182,000 cash. Pacifica uses the straight-line method of depreciation.

Required:

1. Prepare the journal entry to record depreciation expense for 2018.

2. Compute accumulated depreciation at December 31, 2018. $

3. Prepare the journal entry to record the sale of the machine. For those boxes in which no entry is required, leave the box blank.

Riverbed Company sells one product. Presented below is information for January for Riverbed Company.

Jan. 1       Inventory       111   units at $5 each
4       Sale       90   units at $8 each
11       Purchase       159   units at $6 each
13       Sale       130   units at $9 each
20       Purchase       149   units at $7 each
27       Sale       85   units at $11 each

Riverbed uses the FIFO cost flow assumption. All purchases and sales are on account.
      
Assume Riverbed uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 114 units. (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.)

Date
Account Titles and Explanation
Debit
Credit
Entry field with correct answer
Entry field with correct answer
Accounts Receivable
Entry field with correct answer
720
Entry field with correct answer
Entry field with correct answer
Sales Revenue
Entry field with correct answer
Entry field with correct answer
720
Entry field with correct answer
Entry field with correct answer
Purchases
Entry field with correct answer
954
Entry field with correct answer
Entry field with correct answer
Accounts Payable
Entry field with correct answer
Entry field with correct answer
954
Entry field with correct answer
Entry field with correct answer
Accounts Receivable
Entry field with correct answer
1170
Entry field with correct answer
Entry field with correct answer
Sales Revenue
Entry field with correct answer
Entry field with correct answer
1170
Entry field with correct answer
Entry field with correct answer
Purchases
Entry field with correct answer
1043
Entry field with correct answer
Entry field with correct answer
Accounts Payable
Entry field with correct answer
Entry field with correct answer
1043
Entry field with correct answer
Entry field with correct answer
Accounts Receivable
Entry field with correct answer
935
Entry field with correct answer
Entry field with correct answer
Sales Revenue
Entry field with correct answer
Entry field with correct answer
935
Jan. 31
Entry field with correct answer
Inventory
Entry field with correct answer
798
Entry field with correct answer
Entry field with correct answer
Cost of Goods Sold
Entry field with correct answer
1754
Entry field with correct answer
Entry field with correct answer
Purchases
Entry field with correct answer
Entry field with correct answer
1997
Entry field with correct answer
Inventory
Entry field with correct answer
Entry field with correct answer
555

SHOW LIST OF ACCOUNTS
SHOW SOLUTION
SHOW ANSWER
LINK TO TEXT

Incorrect answer.   Your answer is incorrect. Try again.
      
Compute gross profit using the periodic system.

Gross profit      
$Entry field with incorrect answer
1031

Partially correct answer.   Your answer is partially correct. Try again.
      
Assume Riverbed uses a perpetual system. Prepare all necessary journal entries. (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.)

Date
Account Titles and Explanation
Debit
Credit
Entry field with correct answer
Entry field with correct answer
Accounts Receivable
Entry field with correct answer
720
Entry field with correct answer
Entry field with correct answer
Sales Revenue
Entry field with correct answer
Entry field with correct answer
720
(To record the sale)
Entry field with correct answer
Cost of Goods Sold
Entry field with incorrect answer
360
Entry field with correct answer
Entry field with correct answer
Inventory
Entry field with correct answer
Entry field with incorrect answer
360
(To record the cost of inventory)
Entry field with correct answer
Entry field with correct answer
Inventory
Entry field with correct answer
954
Entry field with correct answer
Entry field with correct answer
Accounts Payable
Entry field with correct answer
Entry field with correct answer
954
Entry field with correct answer
Entry field with correct answer
Accounts Receivable
Entry field with correct answer
1170
Entry field with correct answer
Entry field with correct answer
Sales Revenue
Entry field with correct answer
Entry field with correct answer
1170
(To record the sale)
Entry field with correct answer
Cost of Goods Sold
Entry field with incorrect answer
Entry field with correct answer
Entry field with correct answer
Inventory
Entry field with correct answer
Entry field with incorrect answer
(To record the cost of inventory)
Entry field with correct answer
Entry field with correct answer
Inventory
Entry field with correct answer
1043
Entry field with correct answer
Entry field with correct answer
Accounts Payable
Entry field with correct answer
Entry field with correct answer
1043
Entry field with correct answer
Entry field with correct answer
Accounts Receivable
Entry field with correct answer
935
Entry field with correct answer
Entry field with correct answer
Sales Revenue
Entry field with correct answer
Entry field with correct answer
935
(To record the sale)
Entry field with correct answer
Cost of Goods Sold
Entry field with incorrect answer
805
Entry field with correct answer
Entry field with correct answer
Inventory
Entry field with correct answer
Entry field with incorrect answer
805
(To record the cost of inventory)

Incorrect answer.   Your answer is incorrect. Try again.
      
Compute gross profit using the perpetual system.

Gross profit      
$Entry field with incorrect answer

Using information from these web sites, along with other resources, prepare a report that addresses the following issues for your selected country: (1) compare and contrast the corporate governance principles of your selected country with the United States, (2) identify the relevant corporate governance parties and their roles, (3) describe recent challenges related to the corporate governance for your selected country, and (4) list and describe recent corporate governance activities in your selected country.

Exercise 7.10 Preparing a schedule of accounts receivable. LO 7-5

Post the entries in the general journal below to the Accounts Receivable account in the general ledger and to the appropriate accounts in the accounts receivable ledger for Calderone Company.

Assume the following account balances at January 1, 2019:

1. Prepare a schedule of accounts receivable for Calderone Company at January 31, 2019.
2. Should the total of your accounts receivable schedule agree with the balance of the Accounts Receivable account in the general ledger at January 31, 2019?