Black Co. acquired 100% of Blue, Inc. on January 1, 2020. On that date, Blue had land with a book value of $38,000 and a fair value of $49,000. Also, on the date of acquisition, Blue had a building with a book value of $250,000 and a fair value of $460,000. Blue had equipment with a book value of $340,000 and a fair value of $280,000. The building had a 10-year remaining useful life and the equipment had a 5-year remaining useful life. How much total expense will be in the consolidated financial statements for the year ended December 31, 2020 related to the acquisition allocations of Blue

2. Deb is the sole shareholder of Timeless Corporation, a calendar year C corporation. In the current year, Trash earned taxable income of $250,000 and distributed $175,000 to Deb. Kyle is the sole shareholder of Swanky Corporation, an S corporation. In the current year, Swanky earned taxable income of $250,000 and distributed $175,000 to Kyle. Assume both Kyle and Deb are in the highest regular tax bracket (use 37%). Contrast the tax treatment of Timeless Corporation and Deb with the tax treatment of Swanky Corporation and Kyle.

Question 2

Required

Discuss generally why accountants need to understand data representation, basic data structures and coding schemes.  

Waterway Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye.

(a)

Calculate average-cost per unit. (Round answer to 4 decimal places, e.g. 2.7613.)

(b)

Compute cost of goods sold, assuming Waterway uses: (Round average cost per unit to 4 decimal places, e.g. 2.7631 and final answers to 0 decimal places, e.g. 6,548.)

Question 3

Identify and describe a minimum of four internal controls in a computer lab classroom.

Required

1. Classify each control as being preventive, corrective and/or detective. If the control is an information technology control, also classify the control as a general or application control.
2. Describe the risk(s) each control is intended to address.
3. Describe the operation of each control.
4. Identify and discuss a potential deficiency in at least one of the controls you have identified.

PLEASE MAKE SURE ALL NUMBERS MATCH UP AND ARE CORRECTLY CALCULATED

The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company.  

  
Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system.
  
Additional Information:

1. Store supplies still available at fiscal year-end amount to $1,750.
2. Expired insurance, an administrative expense, for the fiscal year is $1,400.
3. Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year.
4. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end.

Required:
1. Using the above information prepare adjusting journal entries:
2. Prepare a multiple-step income statement for fiscal year 2018.
3. Prepare a single-step income statement for fiscal year 2018.

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 $39,600?

3-b. Verify your answer by preparing a contribution format income statement at the target sales level. (confused on this)

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 $99,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?

Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2018. International Machines manufactured the equipment at a cost of $104,000. Manufacturers Southern's fiscal year ends December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Related Information:

Lease term2 years (8 quarterly periods)

Quarterly rental payments$18,200 at the beginning of each period

Economic life of asset2 years

Fair value of asset$135,990

Implicit interest rate8%

Required:
1. Show how International Machines determined the $18,200 quarterly lease payments.
2. Prepare appropriate entries for International Machines to record the lease at its beginning, January 1, 2018, and the second lease payment on April 1, 2018.

Problem 5-25 Prepare and Interpret Income Statements; Changes in Both Sales and Production; Lean Production [LO5-1, LO5-2, LO5-3]

Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Operating results for the first three years of activity were as follows (absorption costing basis):

In the latter part of Year 2, a competitor went out of business and in the process dumped a large number of units on the market. As a result, Starfax’s Sales dropped by 20% during Year 2 even though production increased during the year. Management had expected sales to remain constant at 50,000 units; the increased production was designed to provide the company with a buffer of protection against unexpected spurts in demand. By the start of Year 3, management could see that inventory was excessive and that spurts in demand were unlikely. To reduce the excessive inventories, Starfax cut back production during Year 3, as shown below:

Additional information about the company follows:

1. The company’s plant is highly automated. Variable manufacturing expenses (direct materials, direct labor, and variable manufacturing overhead) total only $4.00 per unit, and fixed manufacturing overhead expenses total $540,000 per year.  
2. Fixed manufacturing overhead costs are applied to units of product on the basis of each year’s production. That is, a new fixed manufacturing overhead rate is computed each year.
3. Variable selling and administrative expenses were $3 per unit sold in each year. Fixed selling and administrative expenses totaled $70,000 per year.
4. The company uses a FIFO inventory flow assumption.

Starfax’s management can’t understand why profits more than doubled during Year 2 when sales dropped by 20%, and why a loss was incurred during Year 3 when sales recovered to previous levels.

Required:

1. Prepare a contribution format variable costing income statement for each year.

2a. Compute the unit product cost in each year under absorption costing. (Round your answers to 2 decimal places.)

2b. Reconcile the variable costing and absorption costing net operating income (loss) figures for each year.

5b. If Lean Production had been used during Year 2 and Year 3 and the predetermined overhead rate is based on 50,000 units per year, what would the company's net operating income (loss) have been in each year under absorption costing? (Losses should be indicated by a minus sign.)

1. Would you be comfortable in Higgins’s job? Does the job of ethics officer appeal to you? Why, or why not?
2. Research a company that hires Ethics Officers? What did you find? (Use the Internet to do your research. Click on the website you found) What company did you research? Please include the link.
3. What qualities is the company that you researched looking for in an Ethics/Corporate Social Relations Officer?

1- The Statute of Limitations discharges a debt by operation of law unless the debtor reinstates the debt.

Select one:

True

False

2- When an anticipatory repudiation occurs, it is treated as a material breach of a contract.

Select one:

True

False

3-

Select one:

True

False

4- Anything less than complete performance is a material breach of contract.

Select one:

True

False

5- Any breach entitles the non-breaching party to sue for damages.

Select one:

True

False

EcoPak Ltd is a small private company, specialising in the manufacture of takeaway packaging, which offers an environmentally friendly alternative to disposable food containers. The business’s accountant Kate has prepared a draft version of EcoPak’s Balance Sheet and Income Statement for the financial year ended 30 June 2020. Kate knows she has made several mistakes in classifying the elements of the Balance Sheet and Income Statement because the income statement shows EcoPak has made a loss and the Balance Sheet doesn’t balance! Kate’s statements are shown below.

You are planning to acquire an asset for use in your business. Should you lease or purchase the asset? What do you feel the differences are between the two options. You may find it helpful to look outside the textbook for information on this. Try to keep it simple but try to describe some advantages and disadvantages to both options.

P13-12A The income statement and unclassified statement of financial position for E-Perform, Inc. follow:

Additional information:

1. Prepaid expenses and accrued liabilities relate to operating expenses.
2. An unrealized gain on held for trading investments of $14,000 was recorded.
3. New equipment costing $85,000 was purchased for $25,000 cash and a $60,000 long-term bank loan payable.
4. Old equipment having an original cost of $57,500 was sold for $1,500.
5. Accounts payable relate to merchandise creditors.
6. Some of the bank loan was repaid during the year.
7. A dividend was paid during the year.
8. Operating expenses include $46,500 of depreciation expense and a $7,500 loss on disposal of equipment.

Instructions

(a) Prepare the statement of cash flows, using the direct method.

(b) E-Perform's cash position more than doubled between 2017 and 2018. Identify the primary reason(s) for this significant increase.