Retirement of debt. (Tables needed.) Steve Milner borrowed $120,000 on July 1, 2017. This amount plus accrued interest at 8% compounded semiannually is to be repaid in total on July 1, 2027. To retire this debt, Milner plans to contribute to a debt retirement fund five equal amounts starting on July 1, 2022 and continuing for the next four years. The fund is expected to earn 6% per annum.

Instructions Compute how much must be contributed each year by Steve Milner to provide a fund sufficient to retire the debt on July 1, 2027?

Problem 6-5 Julia Baker died, leaving to her husband Morgan an insurance policy contract that provides that the beneficiary (Morgan) can choose any one of the following four options. Money is worth 2.50% per quarter, compounded quarterly. Compute Present value if: Click here to view factor tables (a) $56,790 immediate cash. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value $ Link to Text Link to Text (b) $4,020 every 3 months payable at the end of each quarter for 5 years. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value $ Link to Text Link to Text (c) $19,080 immediate cash and $1,908 every 3 months for 10 years, payable at the beginning of each 3-month period. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value $ Link to Text Link to Text (d) $4,020 every 3 months for 3 years and $1,630 each quarter for the following 25 quarters, all payments payable at the end of each quarter. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value $ Link to Text Link to Text Which option would you recommend that Morgan exercise? Click if you would like to Show Work for this question: Open Show Work

Tami Tyler opened Tami’s Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler’s personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University.

Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter.

At this point, Ms. Tyler is manufacturing only one product—a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow:

Required:

1. Complete the following:

a. Compute the unit product cost under absorption costing.

b. What is the company’s absorption costing net operating income (loss) for the quarter?

c. Reconcile the variable and absorption costing net operating income (loss) figures.

3. During the second quarter of operations, the company again produced 31,800 units but sold 34,800 units. (Assume no change in total fixed costs.)

a. What is the company’s variable costing net operating income (loss) for the second quarter?

b. What is the company’s absorption costing net operating income (loss) for the second quarter?

c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter.

Munoz Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow:

Production of 860 sets of cutting shears, one of the company’s 20 products, took 250 labor hours and 9 setups and consumed 20 percent of the product-sustaining activities.

Required

1. Had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears?

2. How much overhead is allocated to the cutting shears using activity-based costing?

3. Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 860 units are produced. If direct product costs are $120 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system?

Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 860 units are produced. If direct product costs are $120 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (Round intermediate calculations and final answers to 2 decimal places.)

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Problem 4-4 The following account balances were included in the trial balance of Pronghorn Corporation at June 30, 2017. Sales revenue $1,589,100 Depreciation expense (office furniture and equipment) $7,364 Sales discounts 32,320 Property tax expense 7,162 Cost of goods sold 903,300 Bad debt expense (selling) 5,229 Salaries and wages expense (sales) 57,960 Maintenance and repairs expense (administration) 8,940 Sales commissions 98,100 Office expense 6,140 Travel expense (salespersons) 34,000 Sales returns and allowances 62,236 Delivery expense 23,400 Dividends received 39,100 Entertainment expense 15,050 Interest expense 18,310 Telephone and Internet expense (sales) 9,090 Income tax expense 92,300 Depreciation expense (sales equipment) 5,162 Depreciation understatement due to error—2014 (net of tax) 17,506 Maintenance and repairs expense (sales) 5,990 Dividends declared on preferred stock 9,280 Miscellaneous selling expenses 5,066 Dividends declared on common stock 37,000 Office supplies used 3,460 Telephone and Internet expense (administration) 3,018 The Retained Earnings account had a balance of $331,960 at July 1, 2016. There are 82,400 shares of common stock outstanding.

Using the multiple-step form, prepare an income statement for the year ended June 30, 2017. (Round earnings per share to 2 decimal places, e.g. 1.48.)
Prepare a retained earnings statement for the year ended June 30, 2017. (List items that increase adjusted retained earnings first.)
Using the single-step form, prepare an income statement for the year ended June 30, 2017. (Round earnings per share to 2 decimal places, e.g. 1.48.)
Prepare a retained earnings statement for the year ended June 30, 2017. (List items that increase adjusted retained earnings first.)

Harmer Inc. is now a successful company. In the early days (before it became profitable), it issued ISOs to its employees. Now Harmer is trying to decide whether to issue NQOs or ISOs to its employees. Initially, Harmer would like to give each employee 20 options (each option allows the employee to acquire one share of Harmer stock). For purposes of this problem, assume that the options are exercised in three years (three years from now) and that the underlying stock is sold in five years (five years from now). Assume that taxes are paid at the same time the income generating the tax is recognized. Also assume the following facts: (Leave no answer blank. Enter zero if applicable.)

• The after-tax discount rate for both Harmer Inc. and its employees is 10 percent.
• The Corporate tax rate is 21 percent.
• The Personal (employee) ordinary income rate is 37 percent.
• The Personal (employee) long-term capital gains rate is 20 percent.
• The Exercise price of the options is $7.
• The Market price of Harmer at date of grant is $5.
• The Market price of Harmer at date of exercise is $25.
• The Market price of Harmer at date of sale is $35.

Answer the following questions:

Problem 12-32 Part b

b. Assuming Harmer issues NQOs, what is Harmer’s tax benefit from the options for each employee in the year each employee exercises the NQOs? (Round your final answer to nearest whole dollar amount.)

c. Assuming Harmer issues ISOs, what is the tax benefit to Harmer in the year the ISOs are exercised?

d. Which type of option plan should Harmer’s employees prefer?

e. What is the present value of each employee’s after-tax cash flows from year 1 through year 5 if the employees receive ISOs? Use Exhibit 3.1. (Round your intermediate calculations and final anwser to 2 decimal places.)

f. What is the present value of each employee’s after-tax cash flows from year 1 through year 5 if the employees receive NQOs? Use Exhibit 3.1. (Round your intermediate calculations and final anwser to 2 decimal places.)

g. How many NQOs would Harmer have to grant to keep its employees indifferent between NQOs and 20 ISOs? (Do not round intermediate calculations. Round up your final answer to the next whole number.)

Cost of Production Report

Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at July 31:

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

Thank you!!

2. Assuming that the July 1 work in process inventory includes $12,180 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between June and July. If required, round your answers to the nearest cent.

The following transactions occurred for Mouawad Inc.

Identify the accounts affected and give the amounts by which they would be increased or decreased. (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.)

.

.

.

State the amount of any cash flow and whether cash is increased or decreased.

.

.

.

Identify how each item would be reported in Mouawad’s statement of cash flows.

Crossfire Company segments its business into two regions—East and West. The company prepared a contribution format segmented income statement as shown below:

Required:

1. Compute the companywide break-even point in dollar sales.

2. Compute the break-even point in dollar sales for the East region.

3. Compute the break-even point in dollar sales for the West region.

4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. Use the same format as shown above. What is Crossfire’s net operating income (loss) in your new segmented income statement?

5. Do you think that Crossfire should allocate its common fixed expenses to the East and West regions when computing the break-even points for each region?

During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows:

* $3 per unit variable; $249,000 fixed each year.

The company’s $34 unit product cost is computed as follows:

Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings.

Production and cost data for the first two years of operations are:

Required:

1. Using variable costing, what is the unit product cost for both years?

2. What is the variable costing net operating income in Year 1 and in Year 2?

3. Reconcile the absorption costing and the variable costing net operating income figures for each year.

10.The Fast & Furious Company produces two products: toy planes and toy race cars. They use departmental overhead rates for the two production departments: molding and finishing. Molding uses machine hours to assign overhead and Finishing uses direct labor hours. 50,000 planes and 250,000 race cars are produced. Please find the following data: Molding Finishing Total Estimated Overhead $250,000 $100,000 $350,000 Actual Overhead $240,000 $120,000 $360,000 Expected Direct Labor Hours planes 5,000 5,000 10,000 race cars 5,000 35,000 40,000 Expected Machine Hours planes 17,000 3,000 20,000 race cars 3,000 7,000 10,000 Actual Direct Labor Hours planes 4,500 5,300 10,000 race cars 5,500 34,500 40,000 Actual Machine Hours planes 16,500 3,500 20,000 race cars 3,200 6,800 10,000 What are the departmental overhead rates for the molding and finishing department respectively?

a.$12.50; $2.50 b.$25; $10 c.$8.33; $2 d.$25; $2.50

Current Situation
Milan Fashions is ultimately looking to expand its manufacturing operations and this means selling more of its products via the internet. The company saw it would have to do the following:
Expand their presence on the internet by enhancing the company’s website. This meant making it more interactive as well as innovative. Here a potential customer would have the ability to design a coat or outerwear online given the fabric, styles, and designs that the company had available. This would allow the customer to be creative and add more accessories to the coat and have an idea what the item would cost. This type of custom-made coat or outwear would allow the customer to have variety in their styles and design, and stay within their budget.
The enhancement of the online sales would also mean a possible creation of a customer service department to handle technical issues as well as customer complaints. These were bound to happen since there will always be some errors in the manufacturing process or with the online system.
The manufacturing operations would have to be enhanced and rearranged in order to handle unique customer orders. This meant having the variety of fabrics and materials available for the coats and outwear, the cutting of the fabrics and materials, and assembling, inspecting, and preparation for shipment of the order. With enough orders coming in, then there would be little to no idle time of the employees in the manufacturing facility.
The logistics could be handled by working with noted delivery companies which could ship the completed product from the manufacturing facility as soon as the item was completed. There would be an extra charge for delivery on rush orders.

Financial Information
Joseph and Thomas decided to first approach the bank where they had a line of credit and had received business loans in the past, First United. They had approached the bank on numerous occasions for small and large loans and this would be the largest they had ever applied for. After consulting with the relationship manager at the bank, Joseph and Thomas would need to provide the bank with their income statements and balance sheets from 2012 to 2016. From there the bank’s commercial lending officer and credit analyst would perform the following ratio analysis:
Current ratio Long-term debt-to-Equity ratio Debt-to-Equity ratio Total Debt ratio Financial leverage ratio Inventory turnover Fixed asset turnover Debt-to-Capital ratio Interest coverage ratio Return on Assets

Assignment:
First United Bank Paterson, New Jersey Serving the Greater Paterson Community since 1949
To: Associate Credit Analyst
From: Ralph Vicente – Senior Vice President, Commercial Loan Division
Date: March 9, 2017
Re: Milan Fashions Coat Company

The Milan Fashions Coat Company produces and sells to retail stores various types of coats and outerwear including women’s, children’s and men’s outer garments. They are looking to expand and diversify their product line and sell on-line so they are coming to us for a $3 million commercial loan. The company’s five most recent balance sheets and income statements were presented to First United in order to support their loan request. As you can see from the attached income statements and balance sheets from 2012 to 2016, they have had increases in net sales since 2012 but their net income has been up and down for the same time period.

The amount requested is broken down as:
Expand, enhance, and maintain company website $1,000,000
Expand and enhance manufacturing operations $1,500,000
Creation and maintenance of customer service center $500,000
Total loan request $3,000,000

Milan Fashions Coat Company has been a long-time client of the bank and borrowed funds from us on previous occasions. The company has grown in terms of sales, assets, and equity; however, this is the largest loan that the company has ever applied for in their entire history.

I would like you to analyze the company’s loan request and financial statements. You must provide the following:
A. Calculate the financial ratios for 2016 and 2015 comparing them to the industry norms found on the page following the financial statements.
B. Of the financial ratios that are used for the industry standard, which do you feel are most important when determining whether First United should approve the loan to Milan Fashions? What do you feel are the strong and weak points of the company in your financial analysis?
C. Based upon your financial ratio analysis, what questions would you like to propose to management to gain clarity on the business operations?
D. Based upon the financial ratio analysis you will have performed on Milan Fashions, would do you recommend that there should be an approval of the loan request? I want you to state your analysis in a detailed memorandum to me by Monday of next week. I would like to discuss your analysis and hear your ideas on Milan Fashions in a meeting on Tuesday. The clients will be in our offices next Friday to discuss their loan request. Please feel free to contact me if there are any questions on this matter.

Milan Fashions Income Statements As of December 31st, 2012, to 2016

Milan Fashions Balance Sheets As of December 31st, 2012, to 2016

Industry Financial Ratio Standards

What is the computations for the following answers? I can't figure this one out.

The following information relates to Hudson City for its fiscal year ended December 31, 2017. • During the year, retailers in the city collected $1,700,000 in sales taxes owed to the city. As of December 31, retailers have remitted $1,100,000. $200,000 is expected in January 2018, and the remaining $400,000 is expected in April 2018. • On December 31, 2016, the Foundation for the Arts pledged to donate $1, up to a maximum of $1 million, for each $3 that the museum is able to collect from other private contributors. The funds are to finance construction of the city-owned art museum. During 2017, the city collected $600,000 and received the matching money from the Foundation. In January and February 2018 it collected an additional $2,400,000 and also received the matching money. • During the year the city imposed license fees on street vendors. All vendors were required to purchase the licenses by September 30, 2017. The licenses cover the one-year period from October 1, 2017, through September 30, 2018. During 2017 the city collected $240,000 in license fees. • The city sold a fire truck for $40,000 that it had acquired five years earlier for $250,000. At the time of sale the city had charged $225,000 in depreciation. • The city received a grant of $2 million to partially reimburse costs of training police officers. During the year the city incurred $1,500,000 of allowable costs and received $1,200,000. It expects to incur an additional $500,000 in allowable costs in January 2018 and to be reimbursed for all allowable costs by the end of February 2018. Refer to the two lists that follow. Select the appropriate amounts from the lettered list for each item in the numbered list. An amount may be selected once, more than once, or not at all. 1. Amount of sales tax revenue that the city should recognize in its funds statements e. $40,000 2. Amount of sales tax revenue the city should recognize as revenue in government-wide statements m. $1,000,000 3. Increase in deferred inflows in funds statements from sales tax revenues not yet received e. $40,000 4. Contribution revenue from Foundation for the Arts to be recognized in funds statements h. $225,000 5. Contribution revenue from Foundation for the Arts to be recognized in government-wide statements h. $225,000 6. Revenue from license fees to be recognized in funds statements j. $400,000 7. Increase in general fund balance owing to sale of fire engine c. $15,000 8. Increase in net position (government-wide statements) owing to sale of fire engine c. $15,000 9. Revenue in fund statements from police training grant p. $1,500,000 10. Revenue in government-wide statements from police training grant p. $1,500,000

MCO Leather Goods manufactures leather purses. Each purse requires 3 pounds of direct materials at a cost of $4 per pound and 0.7 direct labor hours at a rate of $14 per hour. Variable manufacturing overhead is charged at a rate of $2 per direct labor hour. Fixed manufacturing overhead is $17,000 per month. The company’s policy is to end each month with direct materials inventory equal to 20% of the next month’s materials requirement. At the end of August the company had 4,180 pounds of direct materials in inventory. The company’s production budget reports the following.

(1) Prepare direct materials budgets for September and October.
(2) Prepare direct labor budgets for September and October.
(3) Prepare factory overhead budgets for September and October.

Jack & Mary Jones are married in December 30, 2018, they have no children or dependents. Their divorce became final on December 31, 2018. Of the Income earned, Jack’s total income is $500,000 but his taxable income is $425,000.  

1. What is Jack’s Filing Status for 2018?

2. What is their Marginal Tax Rate for 2018?

3. What is his Tax Liability for 2018?

4. What is his Average Tax Rate

5. What is his effective Tax Rate of taxable income?

6. If Jack discover he has an additional tax deduction of $40,000 what is his new Marginal Tax Rate?

7. What is his Tax Savings at the New Rate?