Your colleague claims that all of the statements below regarding a partner’s sale or exchange of a partnership interest are true. Do you agree? If so, why? If not, why not?

a. The sale or exchange of a partner’s interest in a partnership usually results in a capital gain or loss.

b. Gain or loss recognized by the selling partner is the difference between the amount realized and the adjusted basis of the partner’s interest in the partnership.

c. The selling partner must include, as part of the amount realized, any partnership liability he/she is relieved of.

d. The installment method cannot be used by the partner who sells a partnership interest at a gain.

Prior to the financial recession in the late 2000s, some companies had built up significant cash balances. By 2010, discussions began about whether “cash hoarding” by firms was an appropriate activity or if it was hurting the economic recovery. Research this issue and answer the following questions:

• What are the advantages of having a large cash balance? Please describe and provide examples.
• What are the disadvantages of having a large cash balance? Please describe and provide examples.
• Research a publicly traded company that holds a sizable amounts of cash and liquid investments on their balance sheets. Describe the company, the balance and how that balance has varied over the past three years.

Diversified semiconductors sells perishable electronic components. some must be shipped and stored in reusable protective containers. customers pay a deposit for each container received. the deposit is equal to the containers cost. they receive a refund when the container is returned. during 2016, deposits collected on containers shipped where $850,000. deposits are forfeited if containers are not returned within 18 months. containers held by customers at January one 2016 represented deposits a $530,000. in 2016, $790,000 was refunded and deposits forfeited were $35,000.

1. prepare the appropriate journal entries for the deposits received and return during 2016.

2. determine the liability for refundable deposits to be reported on the December 31st 2016 balance sheet.

1. Financial information for Sigma Company is presented below. Calculate the following ratios for 2018:

(a) Inventory turnover.

(b) Accounts receivable turnover.

(c) Return on total assets.

(d) Times interest earned.

(e) Total asset turnover.

3. Xavier is starting an online business called ‘footbook’ that is a social networking website where people post pictures of their feet. Xavier has a lunch meeting with his sister to discuss whether she would like to invest in the business. He tells her “if I don’t hear from you by 2 Friday I will assume you agree to my offer.” Friday passes and Sally has not contacted Xavier. Can Xavier legally claim the investment money from Sally?

Current operating income for Bay Area Cycles Co. is $32,000. Selling price per unit is $100, the contribution margin ratio is 20%, and fixed expense is $128,000.

Required:

1. Calculate Bay Area Cycle’s per unit variable expense and contribution margin. How many units are currently being sold?

2. How many additional unit sales would be necessary to achieve operating income of $80,000?

1. A new operating system for an existing machine is expected to cost $710,000 and have a useful life of six years. The system yields an incremental after-tax income of $155,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,800.
2. A machine costs $570,000, has a $33,800 salvage value, is expected to last eight years, and will generate an after-tax income of $84,000 per year after straight-line depreciation.

Assume the company requires a 12% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

A new operating system for an existing machine is expected to cost $710,000 and have a useful life of six years. The system yields an incremental after-tax income of $155,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $21,800. (Round your answers to the nearest whole dollar.)

A machine costs $570,000, has a $33,800 salvage value, is expected to last eight years, and will generate an after-tax income of $84,000 per year after straight-line depreciation. (Round your answers to the nearest whole dollar.)

51. On January 1, a company issues bonds dated January 1 with a par value of $580,000. The bonds mature in 5 years. The contract rate is 6%, and interest is paid semiannually on June 30 and December 31. The market rate is 7% and the bonds are sold for $555,871. The journal entry to record the second interest payment using the effective interest method of amortization is:

• Debit Interest Expense $15,344.52; debit Discount on Bonds Payable $2,055.48; credit Cash $17,400.00.

• Debit Interest Expense $15,344.52; debit Premium on Bonds Payable $2,055.48; credit Cash $17,400.00.

• Debit Interest Expense $19,527.42; credit Discount on Bonds Payable $2,127.42; credit Cash $17,400.00.

• Debit Interest Payable $17,400.00; credit Cash $17,400.00.

• Debit Interest Expense $19,455.48; credit Discount on Bonds Payable $2,055.48; credit Cash $17,400.00.

58. Sweet Company’s outstanding stock consists of 1,800 shares of cumulative 5% preferred stock with a $100 par value and 11,800 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

The amount of dividends paid to preferred and common shareholders in year 3 is:

• $41,000 preferred; $0 common.

• $17,000 preferred; $24,000 common.

• $0 preferred; $41,000 common.

• $9,000 preferred; $32,000 common.

• $27,000 preferred; $14,000 common.

62. Marwick Corporation issues 12%, 5 year bonds with a par value of $1,030,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%. What is the bond's issue (selling) price, assuming the following Present Value factors:

• $819,244

• $1,030,000

• $1,109,518

• $1,507,201

• $552,799

65. Eastline Corporation had 11,500 shares of $5 par value common stock outstanding when the board of directors declared a stock dividend of 3,795 shares. At the time of the stock dividend, the market value per share was $15. The entry to record this dividend is:

• Debit Common Stock Dividend Distributable $56,925; credit Retained Earnings $56,925.

• Debit Retained Earnings $56,925; credit Common Stock Dividend Distributable $56,925.

• No entry is needed.

• Debit Retained Earnings $56,925; credit Common Stock Dividend Distributable $18,975; credit Paid-In Capital in Excess of Par Value, Common Stock $37,950.

• Debit Retained Earnings $18,975; credit Common Stock Dividend Distributable $18,975.

Chenango Industries uses 11 units of part JR63 each month in the production of radar equipment. The cost of manufacturing one unit of JR63 is the following:

Material handling represents the direct variable costs of the Receiving Department that are applied to direct materials and purchased components on the basis of their cost. This is a separate charge in addition to manufacturing overhead. Chenango Industries’ annual manufacturing overhead budget is one-third variable and two-thirds fixed. Scott Supply, one of Chenango Industries’ reliable vendors, has offered to supply part number JR63 at a unit price of $57,000.

Required:

1. If Chenango Industries purchases the JR63 units from Scott, the capacity Chenango Industries used to manufacture these parts would be idle. Should Chenango Industries decide to purchase the parts from Scott, the unit cost of JR63 would increase (or decrease) by what amount?
2. Assume Chenango Industries is able to rent out all its idle capacity for $87,000 per month. If Chenango Industries decides to purchase the 11 units from Scott Supply, Chenango’s monthly cost for JR63 would increase (or decrease) by what amount?
3. Assume that Chenango Industries does not wish to commit to a rental agreement but could use its idle capacity to manufacture another product that would contribute $171,000 per month. If Chenango’s management elects to manufacture JR63 in order to maintain quality control, what is the net amount of Chenango’s cost from using the space to manufacture part JR63?

Winner’s Circle, Inc. manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 3,400 medals each month. Current monthly production is 2,550 medals. The company normally charges $490 per medal. Variable costs and fixed costs for the current activity level of 75 percent of capacity are as follows:

Winner’s Circle has just received a special one-time order for 850 medals at $295 per medal. For this particular order, no variable marketing costs will be incurred. Cathy Donato, a management accountant with Winner’s Circle, has been assigned the task of analyzing this order and recommending whether the company should accept or reject it. After examining the costs, Donato suggested to her supervisor, Gerard LePenn, who is the controller, that they request competitive bids from vendors for the raw material as the current quote seems high. LePenn insisted that the prices are in line with other vendors and told her that she was not to discuss her observations with anyone else. Donato later discovered that LePenn is a brother-in-law of the owner of the current raw-material supply vendor.

1. 2-a. Compute both the new average unit cost and the incremental unit cost for the special order.
2. 2-b. Should Winner’s Circle, Inc. accept the special order?

The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows:

Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:

1. Equipment and land were acquired for cash.
2. There were no disposals of equipment during the year.
3. The investments were sold for $103,800 cash.
4. The common stock was issued for cash.
5. There was a $81,590 credit to Retained Earnings for net income.
6. There was a $46,330 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company’s two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a response to headquarters.

Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $326,400. During that time, the company produced 14,400 units of the M-008 and 2,400 units of the M-123. The direct costs of production were as follows. M-008 M-123 Total Direct materials $ 115,200 $ 96,000 $ 211,200 Direct labor 115,200 48,000 163,200

Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows. Activity Level Cost Driver Costs M-008 M-123 Total Number of machine-hours $ 154,900 8,000 2,000 10,000 Number of production runs 80,000 20 20 40 Number of inspections 91,500 15 35 50 Total overhead $ 326,400

Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product?

Share your understanding of a tax preparer’s professional responsibilities. What penalties, if any, can accrue to a tax preparer who makes errors on a company’s tax return? Does intent (malicious vs. accidental) change those penalties?