Explain the constitutionality of taxation and summarize the Philippine Tax Law and Taxes..bases on latest "Trail" Law

1.

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2013 are as follows:

An end of the month (1/31/13) inventory showed that 140 units were on hand. If the company uses LIFO, what is the value of the ending inventory?

1.

Eneri Company's inventory records show the following data:

A physical inventory on December 31 shows 2,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method.
Under the FIFO method, the December 31 inventory is valued at

1. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2013:

What is total liabilities and stockholders' equity at December 31, 2013?

2.

The following information is for Sunny Day Real Estate:

The total dollar amount of assets to be classified as current assets is

Cost of Production Report

Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at July 31:

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

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1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory.

2. Assuming that the July 1 work in process inventory includes $11,600 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and July. If required, round your answers to the nearest cent.

Saira Morrow operates Dressage Riding Academy, Inc. The academy's primary sources of revenue are riding fees and lesson fees, which are provided on a cash basis. Saira also boards horses for owners, who are billed monthly for boarding fees. In a few cases, boarders pay in advance of expected use. For its revenue transactions, the academy maintains these accounts: Cash, Accounts Receivable, Unearned Service Revenue, and Service Revenue.

The academy owns 10 horses, a stable, a riding corral, riding equipment, and office equipment. These assets are accounted for in the following accounts: Horses, Buildings, and Equipment.

The academy employs stable helpers and an office employee, who receive weekly salaries. At the end of each month, the mail usually brings bills for advertising, utilities, and veterinary service. Other expenses include feed for the horses and insurance. For its expenses, the academy maintains the following accounts: Supplies, Prepaid Insurance, Accounts Payable, Salaries and Wages Expense, Advertising Expense, Utilities Expense, Maintenance and Repairs Expense, Supplies Expense, and Insurance Expense.

Saira's sole source of personal income is dividends from the academy. Thus, the corporation declares and pays periodic dividends. To account for stockholders' equity in the business and dividends, two accounts are maintained: Common Stock and Dividends.

During the first month of operations, an inexperienced bookkeeper was employed. Saira asks you to review the following eight entries of the 50 entries made during the month. In each case, the explanation for the entry is correct.

Instructions

(a)  

For each journal entry that is correct, so state. For each journal entry that is incorrect, prepare the entry that should have been made by the bookkeeper.

Vulcan Company’s contribution format income statement for June is as follows:

Management is disappointed with the company’s performance and is wondering what can be done to improve profits. By examining sales and cost records, you have determined the following:

1. The company is divided into two sales territories—Northern and Southern. The Northern Territory recorded $400,000 in sales and $228,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $168,000 and $130,000 are traceable to the Northern and Southern Territories, respectively. The rest of the fixed expenses are common to the two territories.

2. The company is the exclusive distributor for two products—Paks and Tibs. Sales of Paks and Tibs totaled $140,000 and $260,000, respectively, in the Northern territory during June. Variable expenses are 31% of the selling price for Paks and 71% for Tibs. Cost records show that $64,400 of the Northern Territory’s fixed expenses are traceable to Paks and $52,000 to Tibs, with the remainder common to the two products.

Required:

1-a. Prepare contribution format segmented income statements for the total company broken down between sales territories.

1-b. Prepare contribution format segmented income statements for the Northern Territory broken down by product line.

(2 pts) Accrual basis vs. basis – revenue and expense recognition: Suppose Capaldi Corp. provides travel services to customers and noted the following transactions for May 2018:

For each transaction, determine the amount of revenue or (expense), if any, that is recorded under accrual-basis accounting and under cash-basis accounting for May 2018. I have completed transaction a. for you as an example.

(2 pts) Accrual Based Accounting: Prepaid expenses – Depreciation of Fixed Assets. Moving On, Inc. purchases a new moving truck (e.g. ‘equipment’) for $56,000 on October 1^st, 2017. At the time of its purchase, the truck is expected to be used in operations for 4 years and will have no resale or scrap value at the end of its life. Assume Moving On, Inc. uses straight-line depreciation (i.e. the asset depreciates evenly) over the expected life of the truck.

Record the journal entry for the original purchase of the truck that occurs on October 1^st, 2017.

Record the adjusting entry to recognize Depreciation Expense on December 31, 2017.

What will the ending balance of the Accumulated Depreciation account be on December 31, 2018 (Assume the beginning balance of Accumulated Depreciation on January 1^st, 2017 is $0 and Moving On, Inc. has no other assets that depreciate)?

What will the net book value of the truck be on December 31, 2018?

(2 pts) Accrual Based Accounting: Deferred (unearned) revenues. Suppose that on November 29^th, 2017 a customer pays Ood Sphere, Ltd. $2,000 cash in advance for merchandise which will be delivered to the customer on December 5^th.

Record the journal entry for the original purchase of the merchandise that occurs on November 29^th, 2017.

Record the adjusting entry Ood Sphere, Ltd. should record on December 5^th to recognize sales revenue.

Suppose the cost of the merchandise sold (i.e. COGS) is $1,600. When should Ood Sphere, Ltd. record this expense? Why? Briefly explain your answer.

Veekay Company was organized on November 1 of the previous year. After seven months of start-up losses, management had expected to earn a profit during June, the most recent month. Management was disappointed, however, when the income statement for June also showed a loss. June’s income statement follows:

CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1, and the chair is manufactured in building 2. Monthly capacities and production levels are as follows:

The company will sell a desk only with a chair and can sell 500 desks per month. The units (desk with chair) sell for $327 each and have a variable cost of $134 each.

Required:

a. Is there a bottleneck at CompDesk in Building 1 or Building 2?

b. CompDesk’s production supervisors state they could increase building 1’s capacity by 100 desks per month by producing desks on the weekend. Producing on the weekend would not affect the sales price. Variable cost per unit would increase by $34 for those produced on the weekend because of the premium paid to labor. Fixed costs would also increase by $21,800 per month.

b-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.)

b-2. Should CompDesk produce desks on the weekend?

c. Independent of the situation in requirement (b), CompDesk could add additional equipment and workers to building 1, which would increase its capacity by 100 desks per month. This would not affect the sales price or variable cost per unit but would increase fixed costs by $15,900 per month.

c-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.)

c-2. Should CompDesk add the additional equipment and workers to building 1?

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 170 units at $42 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 295-unit purchase at $47 per unit; the second was a 365-unit purchase at $49 per unit. During the period, it sold 515 chairs

Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses

FIFO.

LIFO.

Weighted average.

Toxaway Company is a merchandiser that segments its business into two divisions—Commercial and Residential. The company’s accounting intern was asked to prepare segmented income statements that the company’s divisional managers could use to calculate their break-even points and make decisions. She took the prior month’s companywide income statement and prepared the absorption format segmented income statement shown below:

In preparing these statements, the intern determined that Toxaway’s only variable selling and administrative expense is a 10% sales commission on all sales. The company’s total fixed expenses include $60,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $86,000 of fixed expenses that would be avoided if the Commericial segment is dropped, and $64,000 of fixed expenses that would be avoided if the Residential segment is dropped.

Required:

1. Do you agree with the intern’s decision to use an absorption format for her segmented income statement?

2. Based on a review of the intern’s segmented income statement:

a. How much of the company’s common fixed expenses did she allocate to the Commercial and Residential segments?

b. Which of the following three allocation bases did she most likely used to allocate common fixed expenses to the Commercial and Residential segments: (a) sales, (b) cost of goods sold, or (c) gross margin?

3. Do you agree with the intern’s decision to allocate the common fixed expenses to the Commercial and Residential segments?

4. Redo the intern’s segmented income statement using the contribution format.

5. Compute the companywide break-even point in dollar sales.

6. Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division.

7. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $15,500 and $31,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the new break-even point in dollar sales for the Commercial Division and the Residential Division.

Blue Corp. had 1,800 units of part T on hand April 1, 2017, costing $8.00 each. During April, Blue made the following purchases of part T.

A physical count at April 30, 2017 showed 4,000 units of Part T on hand.

Using the FIFO method, what is the cost of part T inventory at April 30, 2017? Using the LIFO method, what is the inventory cost? Using the average-cost method, what is the inventory cost?

The December 31, 2018, inventory of Tog Company, based on a physical count, was determined to be $461,000. Included in that count was a shipment of goods received from a supplier at the end of the month that cost $61,000. The purchase was recorded and paid for in 2019. Another supplier shipment costing $25,500 was correctly recorded as a purchase in 2018. However, the merchandise, shipped FOB shipping point, was not received until 2019 and was incorrectly omitted from the physical count. A third purchase, shipped from a supplier FOB shipping point on December 28, 2018, did not arrive until January 3, 2019. The merchandise, which cost $91,000, was not included in the physical count and the purchase has not yet been recorded.

The company uses a periodic inventory system.

Required:
1. Determine the correct December 31, 2018, inventory balance and, assuming that the errors were discovered after the 2018 financial statements were issued, analyze the effect of the errors on 2018 cost of goods sold, net income, and retained earnings. (Ignore income taxes.)
2. Prepare a journal entry to correct the errors.

Required 1: Effect Amount

Correct End Inv

COGS

Net Income

Retained Earnings

3-44)

Scholes Systems supplies a particular type of office chair to large retailers such as Target, Costco, and Office Max. Scholes is concerned about the possible effects of inflation on its operations. Presently, the company sells 88,000 units for $60 per unit. The variable production costs are $30, and fixed costs amount to $1,480,000. Production engineers have advised management that they expect unit labor costs to rise by 20 percent and unit materials costs to rise by 15 percent in the coming year. Of the $30 variable costs, 50 percent are from labor and 25 percent are from materials. Variable overhead costs are expected to increase by 25 percent. Sales prices cannot increase more than 10 percent. It is also expected that fixed costs will rise by 6 percent as a result of increased taxes and other miscellaneous fixed charges.

The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 8 percent during the year.

Required:

a. Compute the volume in units and the dollar sales level necessary to maintain the present profit level, assuming that the maximum price increase is implemented. (Do not round intermediate calculations. Round up your answer for "Volume in units" to the nearest whole number and round your answer for "Sales" to the nearest whole dollar amount.)

b. Compute the volume of sales and the dollar sales level necessary to provide the 8 percent increase in profits, assuming that the maximum price increase is implemented. (Do not round intermediate calculations. Round up your answer for "Volume in units" to the nearest whole number and round your answer for "Sales" to the nearest whole dollar amount.)

c. If the volume of sales were to remain at 88,000 units, what price change would be required to attain the 8 percent increase in profits? Calculate the new price. (Round intermediate calculations of unit cost and final answer to 2 decimal places.)