The following data were adapted from a recent income statement of Procter & Gamble Company: (in millions) Sales $83,062 Operating costs: Cost of products sold $42,460 Marketing, administrative, and other expenses 25,314 Total operating costs $67,774 Income from operations $15,288 Assume that the variable amount of each category of operating costs is as follows: (in millions) Cost of products sold $23,778 Marketing, administrative, and other expenses 10,125 a. Based on the data given, prepare a variable costing income statement for Procter & Gamble Company, assuming that the company maintained constant inventory levels during the period. Procter and Gamble Company Variable Costing Income Statement (assumed) (in millions) $ $ $ Fixed costs: $ $ b. If Procter & Gamble reduced its inventories during the period, what impact would that have on the income from operations determined under absorption costing? If Procter & Gamble Company reduced its inventories during the period, then the cost of products sold would fixed costs allocated to the beginning inventories. Thus, the total fixed costs of products sold on the absorption costing income statement would be , and the income from operations would be .

Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 42,000 speaker sets:

Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $18.00 per set; annual fixed costs are anticipated to be $1,986,000. (In the following requirements, ignore income taxes.)

Required:

1. Calculate the company’s current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States.
2. Determine the break-even point in speaker sets if operations are shifted to Mexico.
3. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States.

1. If variable costs remain constant, by how much must fixed costs change?
2. If fixed costs remain constant, by how much must unit variable cost change?

4. Determine the impact (increase, decrease, or no effect) of the following operating changes.

Req.1

Calculate the company’s current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States. (Do not round intermediate calculations and round your final answers to nearest whole dollar.)

Req. 2

Determine the break-even point in speaker sets if operations are shifted to Mexico. (Do not round intermediate calculationsand round your final answer up to nearest whole number.)

Req. 3

Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States.

a. If variable costs remain constant, by how much must fixed costs change? (Round your intermediate unit calculations to the nearest whole number and round your final answers to the nearest whole dollar.)

b. If fixed costs remain constant, by how much must unit variable cost change? (Round your intermediate unit calculations to the nearest whole number and round your final answer to 2 decimal places.)

Req. 4

Determine the impact (increase, decrease, or no effect) of the following operating changes.

For this "IP" you will need to access the VT statute on Bankruptcy exemptions. After reviewing the statute and after considering the following facts, you will be asked to answer a few questions:

Imagine you are facing extreme financial distress due to job loss and an illness. You have incurred the following debts:

1. Mortgage of $75,000.00 on your home valued at $150,000.00.

2. Car debt of $5,000 on a car valued at $7,000.00.

3. Credit card debt of $10,000.00.

4. Hospital debt of $40,000.00.

5. Federal taxes incurred in the last year of $5,000.00.

6. Unsecured debt to cousin Arthur of $2,500.00.

7. Magazine subscription of $250.00.

8. Debt for a "repoed' car of $6,000.00.

9. Federal guaranteed school loan of $20,000.00

You have the following assets:

A. Your house with an equity value of $75,000.00.

B. Your car with an equity value of $2,000.00.

C. Cash of $2,000.00 (held in a bank account.)

D. Furniture and appliances valued at $2,500.00.

E. Roth IRA valued at $10,000.00.

F. Heirloom watch valued at $2,000.00.

ANSWER:

What debts can and cannot be discharged in a Chapter 7 bankruptcy?

What assets can the debtor keep?

Are there any assets that the debtor cannot keep?

What must the debtor allege and prove in order to discharge the student loans?

BE SURE TO CONSIDER THE "WILDCARD " EXEMPTION

On January 1st, 2000, Audrey Corporation issued $100,000 of 10% coupon rate bonds to yield an effective rate of 12%. Interest is paid semiannually on June 30th and December 31st. The bonds mature in 5 years ie on January 1, 2005. Audrey incurred $10,000 in issuance costs and has a September 30th fiscal year end.

1. Prepare the Journal entry that Audrey corporation would make on September 30th, 2001.

2. prepare Audrey's statement of cash flows for the fiscal year ended September 30th, 2001.

3. assume that on September 30, 2001, Audrey calls the bonds for 97. Prepare the journal entry to record the bond call.

4. prepare Audrey's statement of Cash flows for the fiscal year ended September 30, 2001 assuming the call took place.

Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6789 and 111-11-1112, respectively. Alice's birthday is September 21, 1971, and Bruce's is June 27, 1970. They live at 473 Revere Avenue, Lowell, MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Lowell, MA 01850 (employer identification number 98-7654321). Bruce 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 Byrds 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 Byrds 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 Byrds provided 60% of the total support of Bruce's widower father, Sam Byrd (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 Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $1,600,000 on December 28.

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

The Byrds had the following medical expenses for 2018:

The medical expenses for Sam represent most of the 60% that Bruce contributed toward his father's support.

Other relevant information follows:

• When they filed their 2017 state return in 2018, the Byrds paid additional state income tax of $900.
• During 2018, Alice and Bruce attended a dinner dance sponsored by the Lowell Police Disability Association (a qualified charitable organization). The Byrds paid $300 for the tickets. The cost of comparable entertainment would normally be $50.
• The Byrds contributed $5,000 to Lowell 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), Alice and Bruce 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 (estimated to be $65).
• In 2018, the Byrds received interest income of $2,750, which was reported on a Form 1099–INT from Second National Bank, 125 Oak Street, Lowell, MA 01850 (Employer Identification Number 98-7654322).
• The home mortgage interest was reported on Form 1098 by Lowell Commercial Bank, P.O. Box 1000, Lowell, MA 01850 (Employer Identification Number 98-7654323). The mortgage (outstanding balance of $425,000 as of January 1, 2018) was taken out by the Byrds on May 1, 2014.
• Alice's employer requires that all employees wear uniforms to work. During 2018, Alice spent $850 on new uniforms and $566 on laundry charges.
• Bruce paid $400 for an annual subscription to the Journal of Franchise Management and $741 for annual membership dues to his professional association.
• Neither Alice's nor Bruce's employer reimburses for employee expenses.
• The Byrds do not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax.
• All members of the Byrd family had health insurance coverage for all of 2018.
• This year the Byrds gave each of their children $2,000, which was then deposited into their Roth IRAs.
• Alice and Bruce paid no estimated Federal income tax. Neither Alice nor Bruce wants to designate $3 to the Presidential Election Campaign Fund.

Required:

Compute the Alice J. and Bruce M. Byrd's Federal income tax for 2018. by providing the following information that would be reported on Form 1040, Schedules A and B. If they have overpaid, they want the amount to be refunded to them.

Provide the following that would be reported on the Byrd's Form 1040:

1. Filing status and dependents: The taxpayers' filing status:
Married filing jointly

Indicate whether the following individuals can be claimed as a dependent by Alice and Bruce.
Cynthia:  No
Sam:   Yes
John:   Yes

2. Calculate taxable gross income.
$

3. Calculate the total deductions for AGI.
$

4. Calculate adjusted gross income.
$

5. Calculate the greater of the standard deduction or itemized deductions.
$

6. Calculate total taxable income.
$

7. Calculate the income tax liability.
$

8. Calculate any other taxes due.
$

9. Calculate the total tax credits available.
$

10. Calculate total withholding and tax payments.
$

11. Calculate the amount overpaid (refund):
$

12. Calculate the amount of taxes owed:

$

Provide the following that would be reported on the Alice and Bruce Byrd's Schedule A:

1. Calculate the deduction allowed for medical and dental expenses. (Round computations to the nearest dollar.)
$

2. Calculate the allowable deduction for taxes.
$

3. Calculate the deduction for interest.
$

4. Calculate the charitable deduction allowed.
$

5. Calculate total itemized deductions.
$

Laker Company has provided the following information for its most recent year of operation: Cash collected from customers totaled $99,300 Cash borrowed from banks totaled $42,700 Cash paid to employees totaled $23,300 Cash paid for interest expense totaled $3,100 Cash received from selling an investment in Husky stock totaled $73,000 Cash payments to banks for repayment of money borrowed totaled $9,700. (principal only) Cash paid for operating expenses totaled 11,200 Land costing $75,000 was sold for & $75,000 cash Cash paid for dividend payments to stockholders totaled $7,700 a. calculate Laker's net cash flow for financing activities, b. calculate Laker's net cash flow from investing activities

Amarillo Corporation has four divisions: the assembly division, the processing division, the machining division, and the packing division. All four divisions are under the control of the vice president of manufacturing. Each division has a manager and several departments that are directed by supervisors. The chain of command runs downward from vice president to division manager to supervisor. The processing division is composed of the paint and finishing departments. The May responsibility reports for the supervisors of these departments follow.

*Amarillo uses flexible budgets for performance evaluation.

Other pertinent cost data for May follow.

*Amarillo uses flexible budgets for performance evaluation.

Required

1. Prepare a responsibility report for the manager of the processing division.

2. Prepare a responsibility report for the vice president of manufacturing

3. Responsibility Report Vice President of Manufacturing For the Month Ended May 31 Controllable costs Budget Actual Variances Assembly division Fselected answer correct Processing division Uselected answer correct Machining division 580,000selected answer correct 592,800selected answer correct 12,800selected answer correct Uselected answer correct Packing division 829,900selected answer correct 811,400selected answer correct 18,500selected answer correct Fselected answer correct Other costs 256,000selected answer correct 266,120selected answer correct 10,120selected answer correct Uselected answer correct Total $3,235,720selected answer correct $3,229,420selected answer correct Fselected answer correct

Bento Corp took a $500,000 four-year 4% note receivable from a customer in connection with a major sale transaction. The note requires annual blended payment s to be paid at end of each year. The market interest rate is 4%.

1. Calculate the required blended payment. round to the nearest dollar.

2. Prepare a schedule that shows annual interest and the principal portion of the four payments.

3. Prepare journal entries to record the initial sale transaction and each payment.

Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter reveals the following.

(1) Compute the total variable cost per unit.

Compute the total variable cost per unit.

(2) Compute the total fixed costs.

Compute the total fixed costs.

(3) Compute the income from operations for sales volume of 12,000 units.

(4) Compute the income from operations for sales volume of 16,000 units.

Perform a horizontal analysis of the Balance Sheet.

Europa Publications, Inc. specializes in reference books that keep abreast of the rapidly changing political and economic issues in Europe. The results of the company’s operations during the prior year are given in the following table. All units produced during the year were sold. (Ignore income taxes.)

Required:

1-a. Prepare a traditional income statement for the company.

1-b. Prepare a contribution income statement for the company.

2. What is the firm’s operating leverage for the sales volume generated during the prior year?

3. Suppose sales revenue increases by 12 percent. What will be the percentage increase in net income?

4. Which income statement would an operating manager use to answer requirement (3)?

Req. 1-a.

Req. 1-b.

Req. 2

What is the firm’s operating leverage for the sales volume generated during the prior year? (Round your answer to 2 decimal places.)

Req. 3

Suppose sales revenue increases by 12 percent. What will be the percentage increase in net income? (Do not round intermediate calculations. Round your answer to 1 decimal place.)

Req. 4

Which income statement would an operating manager use to answer requirement (3)?

1. List the accounts of a merchandising company which employs a perpetual inventory system that will not appear in the financial statements of a service company. When listing the account names, indicate if it appears on the Income Statement or on the Balance Sheet..
2. Explain what sales discounts and a purchase discounts are. What account will a buyer credit for the amount of the purchase discount.
3. Why would a financial statement user prefer a multiple-step income statement instead of a single-step income statement.
4. Share any struggles you had with this chapter that you would like more clarification on.

Complete problem below and submit to your instructor. Write under the generally accepted auditing standards column the specific standard that was violated and how the action of Jones resulted in a failure to comply with each standard. Organize your answer as shown below; specifically with a column for the standard that was violated and a column for the required action. The paper should be 2-3 pages.

Problem:

John Clinton, owner of Clinton Company, applied for a bank loan and was informed by the banker that audited financial statements of the business had to be submitted before the bank could consider the loan application. Clinton then retained Arthur Jones, CPA, to perform an audit. Clinton informed Jones that audited financial statements were required by the bank and that the audit must be completed within three weeks. Clinton also promised to pay Jones a fixed fee plus a bonus if the bank approved the loan. Jones agreed and accepted the engagement.
The first step taken by Jones was to hire two accounting students to conduct the audit. He spent several hours telling them exactly what to do. Jones told the students not to spend time reviewing controls but instead to concentrate on proving the mathematical accuracy of the ledger accounts and summarizing the data in the accounting records that support Clinton Company’s financial statements. The students followed Jone’s instructions and after two weeks gave Jones the financial statements, which did not include any notes. Jones reviewed the statements and prepared an unqualified audit report. The report, however, did not refer to generally accepted accounting principles.

How do you see your new knowledge of Excel affecting you? It can be business or personal.