Questions
(Capital Gains and Losses – Introduction). In 2018, Steven Spielberg (single) has $5,000 of net short-term...

(Capital Gains and Losses – Introduction).

In 2018, Steven Spielberg (single) has $5,000 of net short-term capital loss and $17,000 of net long-term capital loss. In 2019, he has $2,000 of net short-term capital gain, $8,000 of net 28% long-term capital gain, and $4,000 of net 0%/15%/20% long-term capital gain.

Determine the type (short-term or long-term) and amount of capital loss to be carried forward to 2019 and 2020, respectively.

Very well organised, please how every step.

In: Accounting

Introduction: Case Study: Surgical Robot Arms Race In the greater Seattle-Tacoma area, an arms race continues...

Introduction:
Case Study: Surgical Robot Arms Race

In the greater Seattle-Tacoma area, an arms race continues between hospitals to gather the most modern technology available to use on their patients – currently this arms race’s primary device of choice – robotic surgical systems. Why robotic surgical systems? These systems in theory allow surgeons to be more precise in performing complex surgical procedures on patients. With greater precision comes a greater chance of successfully healing the patient as well as reducing the patient’s possibility for complications and recovery time. In addition to these benefits, hospitals through the use of superior technology can serve more patients and potentially reap greater benefits from insurance companies and patients for these advanced medical services.
The price of this superior care though comes at a cost to the patient (increased charges) as well as purchase costs to the hospital. One of the most popular robotic systems is called da Vinci and is manufactured and sold by Intuitive Surgical (http://www.intuitivesurgical.com/). The da Vinci was FDA approved in July 2000 and can currently perform urologic, gynecologic, colorectal, head and neck, cardiothoracic, and other general surgery procedures. As important as the device is the surgeon that is trained in the use of the system. The more repetitions on the robotic system, the more skillful the surgeon becomes.
Depending on the options that a hospital chooses to purchase, the cost of a da Vinci system can range between 1 million and 3 million dollars with the associated sales taxes. As with all surgical instruments, there are also disposable items needed during a surgery associated with equipment – specifically the da Vinci which must also be purchased. These items range from $1,000 to $3,000. Finally, as with many pieces of sophisticated electronic technology, it must be maintained. These maintenance costs can be upwards to $200,000 a year. In addition to these specific costs, hospitals must continue to maintain the surgical suites that this equipment occupies as well as utilize all other supplies that would be used in any surgical setting.

The Deal:
A local hospital in the Puget Sound area faced a dilemma in the medical arms race. Surrounding hospitals were purchasing and utilizing the da Vinci robot system. Management began to worry about the erosion of patients that would seek out this modern technology over more traditional surgical procedures. To this end, a strategic decision was made to acquire the da Vinci robotic surgical system. The following data was presented to an analyst in the Finance Department for review:

Table 1:
Quite often, analysts are provided leasing information by the leasing company. Hospitals may choose to purchase equipment outright or acquire equipment using a lease. Leases are generally considered operating or capital leases under current accounting rules. Hospitals may purchase equipment outright if they have sufficient capital (money that can be used to purchase equipment of significant amount – usually greater than $5,000). Otherwise, they may decide that if the interest rate of payments being charged is lower than their internal cost of capital (debt financing, equity financing, etc.), they may utilize the lease directly from the equipment seller.
Lease Term:
36 Months
Lease Payment:
$68,742.10
Purchase Price:
$1,900,000.00
Page 2 of 8

Given the information provided in Table 1:
1. What is the annual rate of interest being charged to the hospital? The total interest paid over the entire term of the lease?
2. Given this rate of interest, give some reasons on why or why not the hospital should accept this lease contract. Is this a good deal for the lessee?
3. Why would a hospital care whether it was a capital lease or an operating lease? When would one be an advantage over the other?

In: Accounting

Aspen Company estimates its manufacturing overhead to be $631,250 and its direct labor costs to be...

Aspen Company estimates its manufacturing overhead to be $631,250 and its direct labor costs to be $505,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2, had actual direct labor costs of $195,600. Job 2-2, which was completed, but not sold at the end of the year, had actual direct labor costs of $326,000. Job 2-3, which is still in work-in-process inventory, had actual direct labor costs of $130,400. Actual manufacturing overhead for year 2 was $801,900. Manufacturing overhead is applied on the basis of direct labor costs.

Required:

Prepare an entry to allocate over- or underapplied overhead to Work in Process, Finished Goods and Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

  • Record the allocation of over- or underapplied overhead.

Note: Enter debits before credits.

Transaction General Journal Debit Credit
1

In: Accounting

DataSpan, Inc., automated its plant at the start of the current year and installed a flexible...

DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.

Month
1 2 3 4
Throughput time (days) ? ? ? ?
Delivery cycle time (days) ? ? ? ?
Manufacturing cycle efficiency (MCE) ? ? ? ?
Percentage of on-time deliveries 85 % 80 % 77 % 74 %
Total sales (units) 2180 2087 1980 1905

Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:

Average per Month (in days)
1 2 3 4
Move time per unit 0.8 0.5 0.6 0.6
Process time per unit 3.1 2.9 2.8 2.6
Wait time per order before start of production 24.0 26.3 29.0 31.4
Queue time per unit 4.7 5.3 6.0 6.8
Inspection time per unit 0.5 0.6 0.6 0.5


Required:

1-a. Compute the throughput time for each month.

1-b. Compute the delivery cycle time for each month.

1-c. Compute the manufacturing cycle efficiency (MCE) for each month.

2. Evaluate the company’s performance over the last four months.

3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE.

3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.

In: Accounting

Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively....

Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below:

Alpha Beta
Direct materials $ 24 $ 12
Direct labor 23 26
Variable manufacturing overhead 22 12
Traceable fixed manufacturing overhead 23 25
Variable selling expenses 19 15
Common fixed expenses 22 17
Total cost per unit $ 133 $ 107

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.

13. Assume that Cane’s customers would buy a maximum of 87,000 units of Alpha and 67,000 units of Beta. Also assume that the raw material available for production is limited to 168,000 pounds. How many units of each product should Cane produce to maximize its profits?

Alpha:

Beta:

In: Accounting

a) A cash-basis business owner pays $2,300 for "in-house" lobbing expenses during the year. How much...

a) A cash-basis business owner pays $2,300 for "in-house" lobbing expenses during the year. How much can she deduct?

b) What is the annual dollar limit of deductible compensation for the top five most highly compensated executives of a publicly held corporation?

c) A taxpayer traveled to a neighboring state to investigate the purchase of two restaurants in 2014. She pays/incurs investigation expenses of $35,000. Assuming she was not in the restaurant business previously, how much can she deduct in 014 if she acquires them and begins operations on July 1st?

In: Accounting

Course: Theory of Interest (Actuarial Science) Chapter: Yield Rates Problem: This is a Multi-Part Question Joe's...

Course: Theory of Interest (Actuarial Science)

Chapter: Yield Rates

Problem: This is a Multi-Part Question

Joe's retirement scheme at work pays $500 at the end of each month. Joe puts his money in an account which earns a nominal 12% converted monthly, the interest is reinvested at a nominal 4% converted monthly. Carol's account also pays $500 at the end of each month, but she earns nominal 12% convertible monthly (principal and interest both earn 12%). After 20 years, Joe and Carol retire.

a) How much money will Carol have? Answer: $184,465.8246

b) How long will it be before Carol's account exceeds Joe's by $1,000,000? Answer: 355.0933299 months or 29.59111082 years

In: Accounting

Twenty metrics of liquidity, Solvency, and Profitability The comparative financial statements of Automotive Solutions Inc. are...

Twenty metrics of liquidity, Solvency, and Profitability

The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $66 on December 31, 20Y8.

AUTOMOTIVE SOLUTIONS INC.
Comparative Income Statement
For the Years Ended December 31, 20Y8 and 20Y7
    20Y8     20Y7
Sales $5,409,300 $4,983,820
Cost of goods sold (2,124,300) (1,954,360)
Gross profit $3,285,000 $3,029,460
Selling expenses $(1,001,580) $(1,264,600)
Administrative expenses (853,200) (742,700)
Total operating expenses (1,854,780) (2,007,300)
Operating income $1,430,220 $1,022,160
Other revenue and expense:
    Other income 75,280 65,240
    Other expense (interest) (360,000) (198,400)
Income before income tax $1,145,500 $889,000
Income tax expense (137,500) (107,100)
Net income $1,008,000 $781,900


AUTOMOTIVE SOLUTIONS INC.
Comparative Statement of Stockholders’ Equity
For the Years Ended December 31, 20Y8 and 20Y7
20Y8 20Y7
Preferred
Stock
Common
Stock
Retained
Earnings
Preferred
Stock
Common
Stock
Retained
Earnings
Balances, Jan. 1 $950,000 $1,080,000 $4,510,450 $950,000 $1,080,000 $3,817,450
Net income 1,008,000 781,900
Dividends:
    Preferred stock (13,300) (13,300)
    Common stock (75,600) (75,600)
Balances, Dec. 31 $950,000 $1,080,000 $5,429,550 $950,000 $1,080,000 $4,510,450


AUTOMOTIVE SOLUTIONS INC.
Comparative Balance Sheet
December 31, 20Y8 and 20Y7
    Dec. 31, 20Y8     Dec. 31, 20Y7
Assets
Current assets:
Cash $1,152,130 $1,043,070
Temporary investments 1,743,770 1,728,520
Accounts receivable (net) 1,073,100 1,007,400
Inventories 803,000 613,200
Prepaid expenses 217,976 208,610
Total current assets $4,989,976 $4,600,800
Long-term investments 2,587,214 1,355,659
Property, plant, and equipment (net) 5,850,000 5,265,000
Total assets $13,427,190 $11,221,459
Liabilities
Current liabilities $1,467,640 $2,201,009
Long-term liabilities:
Mortgage note payable, 8%, due in 15 years $2,020,000 $0
Bonds payable, 8%, due in 20 years 2,480,000 2,480,000
Total long-term liabilities $4,500,000 $2,480,000
Total liabilities $5,967,640 $4,681,009
Stockholders' Equity
Preferred $0.70 stock, $50 par $950,000 $950,000
Common stock, $10 par 1,080,000 1,080,000
Retained earnings 5,429,550 4,510,450
Total stockholders' equity $7,459,550 $6,540,450
Total liabilities and stockholders' equity $13,427,190 $11,221,459

Determine the following measures for 20Y8. Round ratio values to one decimal place and dollar amounts to the nearest cent. For number of days' sales in receivables and number of days' sales in inventory, round intermediate calculations to the nearest whole dollar and final amounts to one decimal place. Assume there are 365 days in the year.

13. Asset turnover
14. Return on total assets %
15. Return on stockholders’ equity %
16. Return on common stockholders’ equity %
17. Earnings per share on common stock $
18. Price-earnings ratio
19. Dividends per share of common stock $
20. Dividend yield %

In: Accounting

The following information is taken from Smith Corporation's financial statements: December 31 2020   2019 Cash $100,000...

The following information is taken from Smith Corporation's financial statements:

December 31

2020   2019

Cash

$100,000

$ 27,000

Accounts receivable

95,000

80,000

Allowance for doubtful accounts

(4,500)

       (3,100)

Inventory

145,000

175,000

Prepaid expenses

7,500

6,800

Land

100,000

60,000

Buildings

287,000

244,000

Accumulated depreciation  

(35,000)

  (13,000)

Patents

    20,000   

————————

      $715,000

     35,000

————————

  $611,700

Accounts payable

$ 90,000

$ 84,000

Accrued liabilities

54,000

63,000

Bonds payable

135,000

60,000

Common stock

100,000

100,000

Retained earnings——appropriated

80,000

10,000

Retained earnings——unappropriated

271,000

302,700

Treasury stock, at cost

(15,000)

---———

$715,000

(8,000)

-————

$611,700

For 2020 Year

—————————————

Net income                  $63,300

Depreciation expense              22,000

Amortization of patents             5,000

Cash dividends declared and paid        25,000

Gain or loss on sale of patents         none

INSTRUCTIONS

Prepare a statement of cash flows for Smith Corporation for the year 2020. (Use the indirect method.)

In: Accounting

Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...

Menlo Company distributes a single product. The company’s sales and expenses for last month follow:


Total Per Unit
Sales $ 302,000 $ 20
Variable expenses 211,400 14
Contribution margin 90,600 $ 6
Fixed expenses 72,600
Net operating income $ 18,000


Required:

1. What is the monthly break-even point in unit sales and in dollar sales?

2. Without resorting to computations, what is the total contribution margin at the break-even point?

3-a. How many units would have to be sold each month to attain a target profit of $40,800?

3-b. Verify your answer by preparing a contribution format income statement at the target sales level.

4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.

5. What is the company’s CM ratio? If sales increase by $88,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?

In: Accounting

Lindon Company is the exclusive distributor for an automotive product that sells for $32.00 per unit...

Lindon Company is the exclusive distributor for an automotive product that sells for $32.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $177,600 per year. The company plans to sell 20,900 units this year.

Required:

1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.)

2. What is the break-even point in unit sales and in dollar sales?

3. What amount of unit sales and dollar sales is required to attain a target profit of $81,600 per year?

4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.20 per unit. What is the company’s new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $81,600?

In: Accounting

Susan Lo picked up the phone and called her boss, Phil Takata, the vice president of...

Susan Lo picked up the phone and called her boss, Phil Takata, the vice president of marketing at Jewel Clasps Corporation: “Phil, I’m not sure how to go about answering the questions that came up at the meeting with the president yesterday.”
"What's the problem?"
“The president wanted to know the break-even point for each of the company’s products, but I am having trouble figuring them out.”
“I’m sure you can handle it, Susan. And, by the way, I need your analysis on my desk tomorrow morning at 8:00 sharp in time for the follow-up meeting at 9:00.”
Jewel Clasps Corporation makes three different types of jewelry clasps in its manufacturing facility in North Carolina. Data concerning these products appear below:
Gold Silver Copper
Annual sales volume 118,000 207,000 292,000
Unit selling price   $1.80.   $1.50   $1.40
Variable expense per unit $0.70 $0.80   $1.10
Total fixed expenses are $262,000 per year.
All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable numbers of customers.
The company has an extremely effective lean production system, so there are no beginning or ending work in process or finished goods inventories.
**TIP: To answer the questions below, it will be most helpful if you prepare segmented income statements as illustrated in your textbook
Required:
1. What is the company’s over-all break-even point in dollar sales?
2. Of the total fixed expenses of $262,000, $28,050 could be avoided if the Gold product is dropped, $120,400 if the Silver product is dropped, and $58,800 if the Copper product is dropped. The remaining fixed expenses of $54,750 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by going out of business entirely.
a. What is the break-even point in unit sales for each product?
b. If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company?

In: Accounting

Neptune Company produces toys and other items for use in beach and resort areas. A small,...

Neptune Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the company is anxious to produce and sell. The new toy will sell for $3.40 per unit. Enough capacity exists in the company’s plant to produce 30,200 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.14, and fixed expenses associated with the toy would total $56,578 per month.

The company's Marketing Department predicts that demand for the new toy will exceed the 30,200 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $2,829 per month. Variable expenses in the rented facility would total $2.38 per unit, due to somewhat less efficient operations than in the main plant.

Required:

1. What is the monthly break-even point for the new toy in unit sales and dollar sales.

2. How many units must be sold each month to attain a target profit of $12,546 per month?

3. If the sales manager receives a bonus of 15 cents for each unit sold in excess of the break-even point, how many units must be sold each month to attain a target profit that equals a 28% return on the monthly investment in fixed expenses?

(For all requirements, Round "per unit" to 2 decimal places, intermediate and final answers to the nearest whole number.)

In: Accounting

Question One. The costs incurred by Noriega Company to acquire land and construct a building were...

Question One.
The costs incurred by Noriega Company to acquire land and construct a building
were as follows:

i.

Land

k150,000,000

ii.

Construction insurance

k3,500,000

iii.

Delinquent tax paid on the land

k 5,000,000

iv.

Building construction contract

k 220,000,000

v.

Architect Fees

k2,000,000

vi.

Street and side Walk installation

k4,000,000

vii.

Excavation Costs

k3,100,000

viii.

Property Tax on land (pro to construction)

k1,600,000

ix.

Interest cost on loan to pay contract

k2,600,000


Requirements:
a. Determine the cost of land
b. Determine the cost of the building ( 3 Marks)
c. Assuming the residue value of the building is K60,000,000 and that the
economic life is Ten years, compute Noriega LTD Company’s depreciation
expense for Year 1, Year 2, Year 3 under the following methods
i. Straight line Method
ii. Double Declining Method
iii. The Sum of Years Digit (SYD) Method ( 2 Marks)
d. At the beginning of Year 4, Noriega LTD Company incurred an additional
Cost of K10, 000,000 in order to add a new wing to the building; as a result
the salvage value of the building is increased by k5, 000,000 and also
increased the remaining life of the building by 2 years.

i. Re- Calculate the depreciation for the next two years using the straight
line method. ( 3 Marks)

In: Accounting

Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales...

Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold.

Barbara Cheney, Pittman’s controller, has just prepared the company’s budgeted income statement for next year as follows:

Pittman Company
Budgeted Income Statement
For the Year Ended December 31
Sales $ 20,000,000
Manufacturing expenses:
Variable $ 9,000,000
Fixed overhead 2,800,000 11,800,000
Gross margin 8,200,000
Selling and administrative expenses:
Commissions to agents 3,000,000
Fixed marketing expenses 140,000 *
Fixed administrative expenses 1,960,000 5,100,000
Net operating income 3,100,000
Fixed interest expenses 700,000
Income before income taxes 2,400,000
Income taxes (30%) 720,000
Net income $ 1,680,000

*Primarily depreciation on storage facilities.

As Barbara handed the statement to Karl Vecci, Pittman’s president, she commented, “I went ahead and used the agents’ 15% commission rate in completing these statements, but we’ve just learned that they refuse to handle our products next year unless we increase the commission rate to 20%.”

“That’s the last straw,” Karl replied angrily. “Those agents have been demanding more and more, and this time they’ve gone too far. How can they possibly defend a 20% commission rate?”

“They claim that after paying for advertising, travel, and the other costs of promotion, there’s nothing left over for profit,” replied Barbara.

“I say it’s just plain robbery,” retorted Karl. “And I also say it’s time we dumped those guys and got our own sales force. Can you get your people to work up some cost figures for us to look at?”

“We’ve already worked them up,” said Barbara. “Several companies we know about pay a 7.5% commission to their own salespeople, along with a small salary. Of course, we would have to handle all promotion costs, too. We figure our fixed expenses would increase by $3,000,000 per year, but that would be more than offset by the $4,000,000 (20% × $20,000,000) that we would avoid on agents’ commissions.”

The breakdown of the $3,000,000 cost follows:

Salaries:
Sales manager $ 125,000
Salespersons 750,000
Travel and entertainment 500,000
Advertising 1,625,000
Total $ 3,000,000

“Super,” replied Karl. “And I noticed that the $3,000,000 equals what we’re paying the agents under the old 15% commission rate.”

“It’s even better than that,” explained Barbara. “We can actually save $92,000 a year because that’s what we’re paying our auditors to check out the agents’ reports. So our overall administrative expenses would be less.”

“Pull all of these numbers together and we’ll show them to the executive committee tomorrow,” said Karl. “With the approval of the committee, we can move on the matter immediately.”

Required:

1. Compute Pittman Company’s break-even point in dollar sales for next year assuming:

a. The agents’ commission rate remains unchanged at 15%.

b. The agents’ commission rate is increased to 20%.

c. The company employs its own sales force.


2. Assume that Pittman Company decides to continue selling through agents and pays the 20% commission rate. Determine the dollar sales that would be required to generate the same net income as contained in the budgeted income statement for next year.

3. Determine the dollar sales at which net income would be equal regardless of whether Pittman Company sells through agents (at a 20% commission rate) or employs its own sales force.

4. Compute the degree of operating leverage that the company would expect to have at the end of next year assuming:

a. The agents’ commission rate remains unchanged at 15%.

b. The agents’ commission rate is increased to 20%.

c. The company employs its own sales force.

Use income before income taxes in your operating leverage computation.

In: Accounting