Problem 15 Check course schedule for due date. Use the working papers provided.

The following data were taken from the records of Flexsteel Manufacturing Company for the year ended August 31, 2019.

Instructions

(a) Prepare a cost of goods manufactured schedule. (Assume all raw materials used were   direct materials.)

(b) Prepare an entire income statement through net income for the year ended August 31, 2019.

(c) Prepare the current asset section of the balance sheet at August 31, 2019.

What is the normal due date for the tax return of​ calendar-year taxpayers? What happens to the due date if it falls on a​ Saturday, Sunday, or​ holiday?

A. The normal due date for​ calendar-year individuals, partnerships and​ calendar-year corporations is April 30. The normal due date is delayed to the next Tuesday that is not a​ Saturday, Sunday or holiday. If the normal due date falls on​ Saturday, Sunday, or​ holiday, it is delayed to the next Tuesday.

B. The normal due date for individuals and partnerships is April 30. The normal due date for​ calendar-year corporations is March 31. The normal due date is delayed to the next Tuesday that is not a​ Saturday, Sunday or holiday. If the normal due date falls on​ Saturday, Sunday, or​ holiday, it is delayed to the next Tuesday.

C. The normal due date for​ individuals, partnerships and​ calendar-year corporations is April 15. If the normal due date falls on​ Saturday, Sunday, or​ holiday, it is delayed to the next day that is not a​ Saturday, Sunday, or holiday.

D. The normal due date for​ calendar-year individuals and C corporations is April 15. The normal due date for​ calendar-year partnerships and S corporations is March 15. If the normal due date is a​ Saturday, Sunday, or​ holiday, the normal due date is delayed to the next day that is not a​ Saturday, Sunday, or holiday.

Prepare summary journal entries to record the following transactions for a company in its first month of operations.

1. Raw materials purchased on account, $86,000.
2. Direct materials used in production, $38,500. Indirect materials used in production, $23,000.
3. Paid cash for factory payroll, $50,000. Of this total, $38,000 is for direct labor and $12,000 is for indirect labor.
4. Paid cash for other actual overhead costs, $7,375.
5. Applied overhead at the rate of 125% of direct labor cost.
6. Transferred cost of jobs completed to finished goods, $62,600.
7. Sold jobs on account for $90,000 g(2). The jobs had a cost of $62,600 g(1).

i-Tek Manufacturing, Inc., makes two types of industrial component parts—the B300 and the T500. An absorption costing income statement for the most recent period is shown:

Hi-Tek produced and sold 60,000 units of B300 at a price of $20 per unit and 12,700 units of T500 at a price of $40 per unit. The company’s traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company’s two product lines is shown below:

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek’s ABC implementation team concluded that $53,000 and $106,000 of the company’s advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company’s manufacturing overhead to four activities as shown below:

Required:

1. Compute the product margins for the B300 and T500 under the company’s traditional costing system.

2. Compute the product margins for B300 and T500 under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

City Racquetball Club (CRC) offers racquetball and other physical fitness facilities to its members. There are four of these clubs in the metropolitan area. Each club has between 1,800 and 2,500 members. Revenue is derived from annual membership fees and hourly court fees. The annual membership fees are as follows: Individual $ 40 Student $25 Family $95 The hourly court fees vary from $6 to $10 depending upon the season and the time of day (prime versus nonprime time). The peak racquetball season is considered to run from September through April. During this period, court usage averages 90 to 100 percent of capacity during prime time (5:00–9:00 p.m.) and 50 to 60 percent of capacity during the remaining hours. Daily court usage during the off-season (i.e., summer) averages only 20 to 40 percent of capacity. Most of CRC’s memberships have September expirations. A substantial amount of the cash receipts are collected during the early part of the racquetball season due to the renewal of the annual membership fees and heavy court usage. However, cash receipts are not as large in the spring and drop significantly in the summer months. CRC is considering changing its membership and fee structure in an attempt to change its cash receipts. Under the new membership plan, only an annual membership fee would be charged, rather than a membership fee plus hourly court fees. There would be two classes of membership as follows: Individual $250 Family $400 The annual fee would be collected in advance at the time the membership application is completed. Members would be allowed to use the racquetball courts as often as they wish during the year under the new plan. All future memberships would be sold under these new terms. Current memberships would be honored on the old basis until they expire. However, a special promotional campaign would be instituted to attract new members and to encourage current members to convert to the new membership plan immediately. The annual fees for individual and family memberships would be reduced to $200 and $300, respectively, during the two-month promotional campaign. In addition, all memberships sold or renewed during this period would be for 15 months rather than the normal one-year period. Current members also would be given a credit toward the annual fee for the unexpired portion of their membership fee, and for all prepaid hourly court fees for league play that have not yet been used. CRC’s management estimates that 60 to 70 percent of the present membership would continue with the club. The most active members (45 percent of the present membership) would convert immediately to the new plan, while the remaining members who continue would wait until their current memberships expire. Those members who would not continue are not considered active (i.e., they play five or fewer times during the year). Management estimates that the loss of members would be offset fully by new members within six months of instituting the new plan. Furthermore, many of the new members would be individuals who would play during the nonprime time. Management estimates that adequate court time will be available for all members under the new plan. If the new membership plan is adopted, it would be instituted on February 1, well before the summer season. The special promotional campaign would be conducted during March and April. Once the plan is implemented, annual renewal of memberships and payment of fees would take place as each individual or family membership expires. ​ ​ ​​ Your consulting firm has been hired to help CRC evaluate its new fee structure. Write a letter to the club’s president answering the following questions. 1. Will City Racquetball Club’s new membership plan and fee structure improve its ability to plan its cash receipts? Explain your answer. 2. City Racquetball Club should evaluate the new membership plan and fee structure completely before it decides to adopt or reject it. a) Identify the key factors that CRC should consider in its evaluation. b) Explain what type of financial analyses CRC should prepare in order to make a complete evaluation. 3 Explain how City Racquetball Club’s cash management would differ from the present if the new membership plan and fee structure were adopted. EXCEL SHEET

Championship Boxing, Inc. is a small manufacturer of cardboard boxes of all sizes. You have reported for your first day of work, and the company is in an uproar. Yearly financial statements are being prepared, but a computer malfunction of the company’s new BOX-9000 computer has inadvertently erased parts of the company’s balance sheet, along with almost all related data except the company’s statement of cash flows. The IT department is working to retrieve earlier backups, but estimates that the reconstruction of the data will take about 24 hours. Unfortunately, financial statements are to be presented at a stockholders’ meeting in one hour. The company uses the indirect method to prepare its statement of cash flows (rather than the direct method), so your new supervisor believes the missing data for the balance sheet can be prepared using the statement of cash flows. You are assigned this task, since you were top student in your business school class. Meanwhile, the supervisor will go to the stockholders’ meeting and give some introductory remarks. In addition to the statement of cash flows, the following data survived the computer mishap: A. The investments were sold for $280,000 cash. B. Equipment was acquired for $152,000 cash. C. Land was acquired for $326,000 cash. D. There were no disposals of equipment during the year. E. 12,500 shares of common stock were sold for cash during the year. F. There was a $96,000 debit to Retained Earnings for cash dividends declared.

Using the information on previous panels, complete the following comparative balance sheet.

Your supervisor has provided you with the following statement of cash flows, prepared using the indirect method. Recall that the statement of cash flows consists of three sections: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Review the statement, and then proceed to the next panel.

General Motors Corporation has invested in a project which is expected to payback the following cash

flows over the next four years. What is the present value of these cashflow if the discount rate is 15%?

Taxes are the way our government generates income. Although the richest Io/o of the people in our country pay 39% of the taxes and the bottom 50% combined pay only 2.9% combined, everyone wants things from the government. They want roads and bridges and schools and an army and welfare and Medicaid and concerts and ]..... To provide these things our government has to raise money and cut expenses. Which of the following laws help raise money? Which help cut expenses?

1)Deduction for contribution to the church

2) American Opportunity Credit for attending San Jacinto College

3) Deduction for gift to the American Red Cross

4) Child credit

5) Deduction for mortgage interest

6) Deduction for home equity loan

7) Deduction for savings bond interest used for higher education (2 things)

8) Deduction for health savings account

9) Deduction for student loan interest

10) Adoption credit

11) Earned Income credit

12) IRA deduction

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