1. Taxpayer (“T”) a 59 year-old calendar year individual taxpayer purchased an annuity from an insurance company for $100,000 in 2019. The terms of the annuity were that the company would pay T $5,000 a year to T for the rest of T’s life. How much income will T include in T’s personal income tax return as a result of receiving the $5,000 payment

in 2020?   _____________

In 2050? ______________

Required information

Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products.

Prepare the appropriate journal entries for Macy Co. to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system, and purchases these units for resale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Please identify and describe Financial Controller occupations researched

Refer to the following article: Trentmann, Nina, "Danish Insulin Maker Novo Nordisk Cuts Jobs, Shifts R&D Spending; CFO says R&D savings will be reinvested in artificial intelligence, cloud services and automation technologies," Wall Street Journal, 01 Nov 2018 (Online). Drawing from what you have learned in this course as well as any other sources, provide a well labeled and clearly articulated answer -- with explanation and proper references -- to the following:

• • Using the accounting terminology used to date in this course, what kind (or classification) of costs are research and development costs, and where do they usually fit in a profit and loss (or income) statement?
  • Are research and development costs ever included in costs of goods manufactured? If not, why not? If so, to what extent and under what circumstances?
  • Why would it make sense to avoid the complete automation of cash management and accounts receivable tasks (i.e. to continue to use humans for some tasks(? Explain.
• Where appropriate, properly cite any readings, specific pages from any secondary source, or other sources that contributed to or that support your explanation.

E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 Skip to question [The following information applies to the questions displayed below.] Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost Inventory, December 31, prior year 2,800 $ 13 For the current year: Purchase, April 11 8,960 14 Purchase, June 1 7,850 19 Sales ($52 each) 10,960 Operating expenses (excluding income tax expense) $ 189,000 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO.

Nordbock Inc. reports the following outstanding bond issue on its December 31, 20Y1, balance sheet:

1,000,000, 7%, 10-year bonds that pay interest semiannually.

The bonds have been outstanding for five years and were originally issued at face amount. The company is considering redeeming these bonds on January 1, 20Y2, at 103 and issuing new $1,000,000, 5%, five-year bonds at their face amount. These bonds would pay interest semiannually on June 30 and December 31.

Write a brief memo to Liz Nolan, the chief financial officer, discussing the costs of redeeming the existing bonds, the proceeds from issuing the new bonds, and whether this is a good financial decision.

Wehrs Corporation has received a request for a special order of 9,500 units of product K19 for $46.40 each. The normal selling price of this product is $51.50 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows:

Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product K19 that would increase the variable costs by $6.10 per unit and that would require a one-time investment of $45,900 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order.

Required:

Determine the effect on the company's total net operating income of accepting the special order.

J.J. Heva Company is an American company that prepares its financial statements under US GAAP. In 2014, the company reported income of $5,000,000 wit stockholders’ equity of $40,000,000 on December 31, 2014. In anticipation of possible adoption of IFRS by the US companies, the management wishes to explore possible impacts of the conversion on the company’s financial statements. You are hired to prepare a reconciliation schedule to convert 2014 income as well as stockholders’ equity on December 31, 2014 from US GAAP basis to IFRS. The following information is provided by the company’s accounting department:

1. In 2012, the company’s pension plan was amended and consequently created a past service cost of $75,000.   Half of the past service cost was attributable to already vested employees who had an average remaining service life of 15 years, and half of the past service cost was attributable to non-vested employees who, on average, had two more years until vesting. The company has no retired employees.
2. In 2014, the company entered into a contract to provide engineering services to a long term customer over a 12-month period. The fixed price is $300,000 and the company    estimates with high degree of reliability that the project is 30 percent complete at the end of 2014.
3. The company publicly announced a restructuring plan in 2014 and created a valid expectation on the part of the employees to be terminated that the company will carry out the restructuring. The estimated cost of restructuring is $500,000. No legal obligation to restructure exists as of December 31, 2014.
4. Stock options were granted to key officers on January 1, 2014. The grant date fair value per option was $10, and a total of 9,000 options were granted. The options vest in equal installments over three years: one-third in 2013, one-third in 2014, and one-third in 2015. A straight line method is utilized to recognize compensation expense related to stock options.
5. On January 1, 2013, the company issued $10,000,000 of 5% bonds at par value that matures in five years on December 31, 2017. Costs incurred in issuing the bonds were $500,000. Interest is paid on bonds annually. Assume the effective interest rate is 6.193%.

Make sure your reconciliation statement is accompanied by an adequate explanation and reference for every one of your adjustments. Ignore income taxes.

Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The inventory as reported at the end of 2017 using LIFO would have been $17 million higher using FIFO.

Retained earnings reported at the end of 2016 and 2017 was $237 million and $257 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $247 million and $269 million, respectively. 2017 net income reported at the end of 2017 was $25 million (LIFO method) but would have been $27 million using FIFO. After changing to FIFO, 2018 net income was $33 million. Dividends of $7 million were paid each year. The tax rate is 40%.
  
Required:
1. Prepare the journal entry at the beginning of 2018 to record the change in accounting principle.
2. In the 2018–2017 comparative income statements, what will be the amounts of net income reported for 2017 and 2018?
3. Prepare the 2018–2017 retained earnings column of the comparative statements of shareholders’ equity.
  

YOU ARE A STAFF ACCOUNTANT AUDITING A “PRIVATE COMPANY” AND FIND A MISREPRESENTATION DURING REVENUE RECOGNITION TESTING. WHO IS THE FIRST PERSON YOU SHOULD INFORM ABOUT YOUR FINDING. WHO ARE THE OTHER PARTIES YOU WILL INFORM ABOUT THE MISREPRESENTATION IF THE FIRST PARTY DOES NOTHING ABOUT THE MISREPRESENTATION.

Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Marin's production, sales, and costs follows.

The amount of joint costs allocated to product DBB-3 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

Jamie and Cecilia Reyes are husband and wife and file a joint return. They live at 5677 Apple Cove Road, Boise, ID 83722. Jamie’s social security number is 412-34-5670 (date of birth 6/15/1967) and Cecilia’s is 412-34-5671 (date of birth 4/12/1969). They provide more than half of the support of their daughter, Carmen (age 23), social security number 412-34-5672 (date of birth 9/1/1993), who is a full-time veterinarian school student. Carmen received a $3,200 scholarship covering her room and board at college. She was not required to perform any services to receive the scholarship. Jamie and Cecilia furnish all of the support of Maria (Jamie’s grandmother), social security number 412-34-5673 (date of birth 11/6/1946), who is age 70 and lives in a nursing home. They also have a son, Gustavo (age 4), social security number 412-34-5674 (date of birth 3/14/2012). The Reyes and all of their dependents had qualifying health care coverage at all times during the tax year. Jamie’s W-2 contained the following information: Federal Wages (box 1) = $145,625.00 Federal W/H (box 2) = $ 16,112.25 Social Security wages (box 3) = $ 128,400.00 Social Security W/H (box 4) = $ 7,960.80 Medicare Wages (box 5) = $145,625.00 Medicare W/H (box 6) = $ 2,111.56 State Wages (box 16) = $145,725.00 State W/H (box 17) = $ 5,435.00 Page B-3 Other receipts for the couple were as follows: Dividends (all qualified dividends) $2,500 Interest income: Union Bank $ 220 State of Idaho—interest on tax refund 22 City of Boise school bonds 1,250 Interest from U.S. savings bonds (not used for educational purposes) 410 2015 federal income tax refund received in 2016 2,007 2015 state income tax refund received in 2016 218 Idaho lottery winnings 1,100 Casino slot machine winnings 2,250 Gambling losses at casino 6,500 Other information that the Reyeses provided for the 2016 tax year: Mortgage interest on personal residence $11,081 Loan interest on fully equipped motor home 3,010 Doctor’s fee for a face-lift for Mrs. Reyes 8,800 Dentist’s fee for a new dental bridge for Mr. Reyes 3,500 Vitamins for the entire family 110 Real estate property taxes paid $ 5,025 DMV fees on motor home (tax portion) 1,044 DMV fees on family autos (tax portion) 436 Doctors’ bills for grandmother 2,960 Nursing home for grandmother 10,200 Wheelchair for grandmother 1,030 Property taxes on boat 134 Interest on personal credit card 550 Interest on loan to buy public school district bonds 270 Cash contributions to church (all the contributions were in cash and none more than $250 at any one time) 6,100 Cash contribution to man at bottom of freeway off-ramp 25 Contribution of furniture to Goodwill—cost basis 4,000 Contribution of same furniture to listed above Goodwill—fair market value 410 Tax return preparation fee for 2015 taxes 625 Required Prepare a Form 1040,Schedule 1, Schedule A, and Schedule B, and Qualified Dividends for the completion of the Reyeses tax return. They do not want to contribute to the presidential election campaign and do not want anyone to be a third-party designee. For any missing information, make reasonable assumptions.

1. The table below summarizes the costs and benefits for a new online procurement system. Based on these estimates:
   1. Create a spreadsheet showing the Net Present Value for the costs and benefits listed. Use NPV values for the calculations below.
   2. Calculate the return on investment for this project.
   3. Calculate the payback period for this project.
   4. Calculate the internal rate of return for this project.
2. Based on these calculations would you recommend undertaking this project? Why? What factors other than financial metrics would you consider?
3. Identify 5 risks you think might impact this project and evaluate the importance of each of these risks?

Costs

Benefits

Reduce Operating Budget of $12,000,000 by 10% per year after year 3

SU Company signs an agreement on January 1, 2009, to lease equipment to Tiger Corporation. The following information relates to this agreement: The term of the non cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. The cost of the asset to the lessor is $245,000. The fair value of the asset on January 1, 2009, is $245,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $43,622, none of which is guaranteed. The agreement requires annual rental payments, beginning Jan. 1, 2009. Collectability of the lease payments is reasonably predictable. There are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor. The lessor’s rate of return is 10% and is known to the lessee. The lessee’s borrowing rate is 12%.

Please show clearly how to get present value(s).

A.) Calculate the annual rent payment.

B.) Prepare an amortization table

C.) Prepare all of the journal entries for the lessor for 2009 and 2010.

1.) Morse company has a sales budge of 75,000 units in July, 85,000 units in August and 70,000 units in September. Morse requires ending finished goods inventories equal to 40 percent of the following months sales. How many units should be budgeted for production in August? Assume that the beginning finished goods inventory in August was equal to the budgeted level.

2.)David Enterprise manufactures a product that requires three gallons of chemical XU-20 per unit. The cost of XU-20 is $30.00 per gallon. Davis maintains an ending inventory of XU-20 equal to 70 percent of the following month's production usage. Planned production for Davis is as follows: 6,000 units in June, 5,500 units in July and 7,200 units in August. What would be the cost of XU-20 budgeted to be purchased in July? Assume that beginning inventory of XU-20 in July was equal to the budgeted level.

3.)Rocky's Industrial Tool supply Company forecasts the following Total sales figures for the next 4 months. April $300,000- May $360,000- June $400,000- July $420,000. Cash sales average 30 percent of total sales and credit sales represent 70 percent of total sales. Credit sales are collected 80 percent in the months following sale and 20 percent two months following sale. The total estimated cash received in July would be: