Comprehensive General Fund Review

The Wayne City Council approved and adopted its general fund budget for 2020. The budget contained the following amounts:

During 2020, various transactions and events occurred which affected the general fund. The legal budgetary basis is used.

Required
For items 1–40, indicate whether the item should be debited (D), credited (C), or is not affected (N) in the general fund.

a. Items 1–5 involve recording the adopted budget

b. Items 6–10 involve recording the 2020 property tax levy. It was estimated that $500,000 would be uncollectible.

c. Items 11–15 involve recording encumbrances at the time purchase orders are issued.

d. Items 16–20 involve recording expenditures that had been previously encumbered in the current year.

e. Items 21–25 involve recording the transfer made to the Library debt service fund. No previous entries were made regarding this transaction.

f. Items 26–40 involve recording the closing entries (other than encumbrances) for 2020.

John and Jessica are married and have one dependent child, Liz. Liz is currently in college at State University. John works as a design engineer for a manufacturing firm while Jessie runs a craft business from their home. Jessica’s craft business consists of making craft items for sale at craft shows that are held periodically at various locations. Jessica spends considerable time and effort on her craft business and it has been consistently profitable over the years. John and Jessica own a home and pay interest on their home loan (balance of $220,000) and a personal loan to pay for Lizzie’s college expenses (balance of $35,000).

Neither John and Jessica is blind or over age 65, and they plan to file as married-joint. Based on their estimates, determine John and Jessica’s AGI and taxable income for the year and complete pages 1 and 2 of Form 1040 (through taxable income, line 43) and Schedule A. Assume that the employer portion of the self-employment tax on Jessie’s income is $808. Joe and Jessie have summarized the income and expenses they expect to report this year as follows:

Reporting Alternatives and International Harmonization Accounting procedures for business combinations historically have differed across countries. Pooling-of-interests, for many years a preferred method in the United States, was not acceptable in most countries. In some countries, accounting standards permit goodwill to be written off directly against stockholders’ equity at the time of a business combination.

Should U.S. companies care about accounting standards other than those that are generally accepted in the United States? Explain.

1. Name 3 new tax law changes as it relates to Individual Tax Payers?
2. Name 3 new tax law changes as it relates to Corporate Tax Payers?
3. What is the new “Pass thru” tax deduction? Which entities does it apply to?
4. Do you think that by reducing the corporate tax rate it will help or hurt the United States?

White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour.

The balance in the account Work in Process-Sifting Department was as follows on July 1:

The following costs were charged to Work in Process-Sifting Department during July:

During July, 15,500 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,100 units, 4/5 completed.

Chart of Accounts

1. Difend Cleaners has been considering the purchase of an industrial dry-cleaning machine. The existing machine may be sold for $100,000. The new machine will cost $350,000 and an additional cash investment in working capital of $100,000 will be required. The investment is expected to net $110,000 in additional cash inflows during the first year of acquisition and $250,000 each additional year of use. The new machine has a three-year life, and zero disposal value. Income taxes are not considered in this problem. The working capital investment will not be recovered at the end of the asset's life.
   
   What is the net present value of the investment, assuming the required rate of return is 20%? Would the company want to purchase the new machine?

A) $(62,600); yes

B) $(59,880); no

C) $59,880; yes

D) $62,600; no

2. Referring to the same facts for Difend Cleaners, what is the net present value of the investment, assuming the required rate of return is 10%? Would the company want to purchase the new machine?

A) $144,240 ; yes

B) $180,000 ; yes

C) $(180,000); no

D) $(144,240); no

1) Total marks: 10 marks

Mr Howe a junior partner of CPA fir, Dewey, CHeatem and Howe (DCH) is very excited about the opprtunities created by fair value relvaluation of non current assets. hr believes that there is an enormous opportunities for large firms to increase their book profits via the gains from such revaluations.

Required:

Mr Tu Dewie has asked you to review the AASB rules on the fair market revaluation of non current assets and to assess what profit enhancing opportunities may arise because of those rules.

Alternative Production Procedures and Operating Leverage
Assume Paper Mate is planning to introduce a new executive pen that can be manufactured using either a capital-intensive method or a labor-intensive method. The predicted manufacturing costs for each method are as follows:

Paper Mate's market research department has recommended an introductory unit sales price of $40. The incremental selling costs are predicted to be $500,000 per year, plus $2 per unit sold.

(a) Determine the annual break-even point in units if Paper Mate uses the:
1. Capital-intensive manufacturing method.

2. Labor-intensive manufacturing method.

(b) Determine the annual unit volume at which Paper Mate is indifferent between the two manufacturing methods.

2. Compute operating leverage for each alternative at a volume of 250,000 units. Round your answers two decimal places.

Capital-Intensive operating leverage

Labor-Intensive operating leverage

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $3 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow.

Required:

a. If the number of hours of labor per 1,000 gallons is 60 for strawberry, 70 for vanilla, and 100 for chocolate, compute the total cost of 1,000 gallons of each flavor using plantwide allocation.

b. Charlene's department uses older, outdated machines. She believes that her department is being allocated some of the overhead of Department SV, which recently bought state-of-the-art machines. After she requested that overhead costs be broken down by department, the following information was discovered:

Using machine-hours as the department allocation base for Department SV and labor-hours as the department allocation base for Department C, compute the allocation rate for each.

c. Compute the cost of 1,000 gallons of each flavor of ice cream using the department allocation rates computed in requirement (b) if the number of machine-hours for 1,000 gallons of each of the three flavors of ice cream are as follows: strawberry, 60; vanilla, 70; and chocolate, 168. Direct labor-hours by product remain the same as in requirement (a).

Complete this question by entering your answers in the tabs below.

• Required A
• Required B
• Required C

If the number of hours of labor per 1,000 gallons is 60 for strawberry, 70 for vanilla, and 100 for chocolate, compute the total cost of 1,000 gallons of each flavor using plantwide allocation.

Swathmore Clothing Corporation grants its customers 30 days’ credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 3% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly.

At the end of 2017, accounts receivable were $590,000 and the allowance account had a credit balance of $54,000. Accounts receivable activity for 2018 was as follows:

The company’s controller prepared the following aging summary of year-end accounts receivable:

Required:
1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record a summary entry to record the monthly bad debt accrual.
2. Prepare the necessary year-end adjusting entry for bad debt expense. Record the year-end adjusting entry for bad debt expense.
3-a. What is total bad debt expense for 2018?

3-b. How would accounts receivable appear in the 2018 balance sheet?

How the Australian Government and the Australian Taxation Office assisted both businesses and taxpayers during the Covid-19 crisis.

In your essay, you should address questions such as:

1. What type of assistance was given to the taxpayers?
2. In your opinion, did the Government act swiftly enough?
3. In your opinions, was the assistance enough or could the Government have provided more?
4. Who benefited the most from the assistance provided and who missed out?
5. Overall do you think the assistance was effective?

1. Activity-Based Customer-Driven Costs

   Suppose that Stillwater Designs has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information about customer-related activities and costs for the most recent quarter:

   	JIT Distributors		Non-JIT Distributors
   Sales orders	1,100		110
   Sales calls	70		70
   Service calls	350		175
   Average order size	850		8,500
   Manufacturing cost/unit	$125		$125
   Customer costs:
   Processing sales orders	$3,130,000
   Selling goods	1,120,000
   Servicing goods	1,050,000
   Total	$5,300,000

   Required:

   1. Calculate the total revenues per distributor category, and assign the customer costs to each distributor type by using revenues as the allocation base. Selling price for one unit is $150. Round calculations to the nearest dollar.

   	JIT		Non-JIT
   Sales (in units)
   Sales	$		$
   Allocation	$		$

   2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar.

   	JIT		Non-JIT
   Ordering costs	$		$
   Selling costs	$		$
   Service costs	$		$
   Total	$		$

   For non JIT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent.

   $ per unit

   3. Assume that the JIT distributors are simply imposing the frequent orders on Stillwater Designs. No formal discussion has taken place between JIT customers and Stillwater Designs regarding the supply of goods on a JIT basis. The sales pattern has evolved over time. As an independent consultant, what would you suggest to Stillwater Designs' management?

   It sounds like the JIT buyers are switching their inventory carrying costs to Stillwater Designs without any significant benefit to Stillwater Designs. Stillwater Designs needs to   prices to reflect the additional demands on customer support activities. Furthermore, additional   may be needed to reflect the increased number of setups, purchases, and so on, that are likely occurring inside the plant. Stillwater Designs should also immediately initiate discussions with its JIT customers to begin negotiations for achieving some of the benefits that a JIT supplier should have, such as   contracts. The benefits of   contracting may offset most or all of the increased costs from the additional demands made on other activities.

How may I increase the net profit by $350,000 while factoring in both revenues and expenses?

Daube Industries’ operations for the month of October are summarized as follows: Provided $5,800 of services on account. Received $3,900 cash for services provided in October. Received $1,600 cash for services to be provided in November. Received $2,700 cash on account for service provided in September. Paid September’s warehouse rental bill on account in the amount of $1,400. Received October’s rental bill of $1,300; set it aside. Required: Prepare journal entries to record the transactions identified among activities (A) through (F). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Alaskan Fisheries, Inc., processes salmon for various distributors and it uses the weighted-average method in its process costing system. The company has two processing departments—Cleaning and Packing. Data relating to pounds of salmon processed in the Cleaning Department during July are presented below:

A total of 500,000 pounds of salmon were started into processing during July. All materials are added at the beginning of processing in the Cleaning Department.

Required:

Compute the Cleaning Department's equivalent units of production for materials and for labor and overhead in the month of July.