Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join the LLC. Prior to admitting Lin, the assets of Alert Medical were revalued to reflect their current market values. The revaluation resulted in medical equipment being increased by $40,000. Prior to the revaluation, the equity balances for Abrams and Lipscomb were $154,000 and $208,000, respectively.

a. Provide the journal entry for the asset revaluation. For a compound transaction, if an amount box does not require an entry, leave it blank.

b. Provide the journal entry for the bonus under the following independent situations:

1. Lin purchased a 30% interest in Alert Medical, LLC, for $228,000. For a compound transaction, if an amount box does not require an entry, leave it blank.

2. Lin purchased a 25% interest in Alert Medical, LLC, for $124,000. For a compound transaction, if an amount box does not require an entry, leave it blank.

1.

Support Department Allocations And Cost Drivers

Varney Corporation, a manufacturer of electronics and communications systems, allocates Computing and Communications Services Department (CCS) costs to profit centers. The following table lists the types of services and cost drivers for each service. The table also includes the budgeted cost and quantity for each service for August.

One of the profit centers for Varney Corporation is the Communication Systems (COMM) division. Assume the following information for COMM:

• COMM has 2,500 employees, of whom 20% are office employees.
• All of the office employees have been issued a smartphone, and 95% of them have a computer on the network.
• One hundred percent of the employees with a computer also have an email account.
• The average number of help desk calls for August was 0.6 call per individual with a computer.
• There are 400 additional printers, servers, and peripherals on the network beyond the personal computers.

a. Compute the service allocation rate for each of CCS’s services for August.

b. Compute the allocation of CCS’s services to COMM for August.

2. Analyze McDonald’s Corporation

McDonald’s Corporation (MCD) operates company-owned and franchised restaurants in over 100 countries. The company operates primarily as a franchisor with approximately 85% of its current restaurants operated by franchisees. McDonald’s goal is to franchise approximately 95% of its restaurants in the long term.

McDonald’s operations are divided into the following segments:

• United States: Restaurants throughout the United States
• International Lead Markets: Restaurants in Australia, Canada, France, Germany, and the United Kingdom
• High Growth Markets: Restaurants in China, Italy, Korea, Poland, Russia, Spain, and Switzerland
• Foundational Markets & Corporate: Restaurants not contained in the preceding segments plus corporate activities

McDonald’s believes that the High Growth segment has significant potential for rapid growth and expansion. Recent data (in millions) for the first three primary segments are as follows:

a. Determine the profit margin for each of the three segments. Round to one decimal place.

b. Determine the investment turnover for the three segments. Round to two decimal places.

c. Use the DuPont formula to determine the return on investment for the three segments. Round to one decimal place.

*NOTE*: Please show all work for this.

Thanks!

Problem 14-23 Preparing a master budget for retail company with no beginning account balances LO 14-2, 14-3, 14-4, 14-5, 14-6 [The following information applies to the questions displayed below.] Rooney Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks: Problem 14-23 Part 1 Required October sales are estimated to be $240,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 25 percent per month. Prepare a sales budget. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts. The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month’s cost of goods sold. However, ending inventory of December is expected to be $13,200. Assume that all purchases are made on account. Prepare an inventory purchases budget. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases. Budgeted selling and administrative expenses per month follow: Salary expense (fixed) $ 19,200 Sales commissions 5 % of Sales Supplies expense 2 % of Sales Utilities (fixed) $ 2,600 Depreciation on store fixtures (fixed)* $ 5,200 Rent (fixed) $ 6,000 Miscellaneous (fixed) $ 2,400 *The capital expenditures budget indicates that Rooney will spend $219,200 on October 1 for store fixtures, which are expected to have a $32,000 salvage value and a three-year (36-month) useful life. Use this information to prepare a selling and administrative expenses budget. Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses. Rooney borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $24,000 cash cushion. Prepare a cash budget.

How can the provisions of the trust instrument be used as a planning tool?

Question 5

Certossi Service Ltd. uses straight-line depreciation. The company's fiscal year end is December 31. The following transactions and events occurred during their first three years of operations:

2014    Jul       1          Purchased equipment for $32,000 cash, with shipping costs of $2,000.

            Nov     3          Incurred ordinary repairs on the computer of $360.

            Dec     31        Recorded 2014 depreciation on the basis of a four-year life and estimated residual value of $200.

2015    Dec     31        Recorded 2015 depreciation.

2016    Jan      1          Paid $1,600 for a major upgrade of the equipment. This expenditure is expected to increase the operating efficiency and capacity of the equipment.

Instructions

Prepare journal entries to record the above events. (Show calculations.)

Question 6

Comparative statements of financial position for Campbell Inc. appear below:

CAMPBELL INC.

Comparative Statements of Financial Position

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Assets

                                                                                                Dec. 31, 2016 Dec. 31, 2015

Cash                                                                                        $ 29,000         $15,000

Accounts receivable                                                                   28,000         19,000

Prepaid expenses                                                                         9,000         12,000

Merchandise inventory                                                               37,000         27,000

Long-term investments                                                               35,000         53,000

Equipment                                                                                   75,000         48,000

Accumulated depreciation—equipment                                   (26,000)        (22,000)

Total assets                                                                             $187,000         $152,000

Liabilities and Shareholders' Equity

Accounts payable                                                                   $ 21,000         $ 9,000

Mortgage payable                                                                       37,000         45,000

Common shares                                                                         40,000         23,000

Retained earnings                                                                       89,000         75,000

            Total liabilities and shareholders' equity                    $187,000         $152,000

Additional information regarding fiscal 2016:

1.         Profit for the year was $27,000.

2.         Cash dividends of $13,000 were declared and paid during the year.

3.         Long-term investments with a carrying amount of $53,000 were sold for $48,000 cash.

Instructions

Using the indirect method, prepare a statement of cash flows for the year ended December 31, 2016.

Solve the following problem.

Charts of Accounts:

Rowland Company is a small editorial services company owned and operated by Marlene Rowland. On August 31, 2018, the end of the current year, Rowland Company’s accounting clerk prepared the following unadjusted trial balance:

Rowland Company

UNADJUSTED TRIAL BALANCE

August 31, 2018

The data needed to determine year-end adjustments are as follows:

Discuss the relationships among the initial assessed control risk, test of controls, and substantive tests of transactions for cash disbursements, and the tests of details of cash balances. Provide one example in which the conclusions reached about internal controls in cash disbursements will affect the tests of cash balances.

Harper,  Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $242,500 in cash. The book value of Kinman's net assets on that date was $425,000, although one of the company's buildings, with a $62,800 carrying amount, was actually worth $119,050. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $125,000.

Kinman sold inventory with an original cost of $37,800 to Harper during 2017 at a price of $54,000. Harper still held $23,550 (transfer price) of this amount in inventory as of December 31, 2017. These goods are to be sold to outside parties during 2018.

Kinman reported a $44,200 net loss and a $23,100 other comprehensive loss for 2017. The company still manages to declare and pay a $16,000 cash dividend during the year.

During 2018, Kinman reported a $58,600 net income and declared and paid a cash dividend of $18,000. It made additional inventory sales of $122,000 to Harper during the period. The original cost of the merchandise was $76,250. All but 30 percent of this inventory had been resold to outside parties by the end of the 2018 fiscal year.

Prepare all journal entries for Harper for 2017 and 2018 in connection with this investment. Assume that the equity method is applied. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

Discuss the relationships among the initial assessed control risk, test of controls, and substantive tests of transactions for cash disbursements, and the tests of details of cash balances. Provide one example in which the conclusions reached about internal controls in cash disbursements will affect the tests of cash balances.

Serial Problem Business Solutions LO P1, P2, P3, P4, P5

Activity-Based Costing: Factory Overhead Costs

The total factory overhead for Bardot Marine Company is budgeted for the year at $1,314,700, divided into four activities: fabrication, $492,000; assembly, $220,000; setup, $325,950; and inspection, $276,750. Bardot Marine manufactures two types of boats: speedboats and bass boats. The activity-base usage quantities for each product by each activity are as follows:

Each product is budgeted for 3,500 units of production for the year.

a. Determine the activity rates for each activity.

b. Determine the activity-based factory overhead per unit for each product. Round to the nearest whole dollar.

How does Activity Based Costing differ from the traditional overhead allocation system ?

1. You are considering the acquisition of a small office building. The purchase price is $775,000. Seventy-five percent of the purchase price can be borrowed with a 30-year, 7.50% mortgage. Up-front financing costs will total 3.00% of the loan amount. The expected cash flows assuming a 5-year holding period are as follows:

The cash flow from the sale of the property is expected to be $1,000,000.

1. What is the net present value of this investment, assuming a 12.00% required rate of return on levered cash flows?
2. What is the levered internal rate of return?
3. What would you need to consider if the numbers in the chart above represented before tax cash flow?

x is a publicly held corporation with a subsidiary, S, of which X always has owned 100 percent of the outstanding stock. what is the total tax liability for X and S under each of the following sets of facts? in this problem, use all corporate tax rate brackets.

a) X has taxable income of $2.2 million and S has no income.

b) X has taxable income of $2 million and S has taxable income of $200,000

c) same as b) above, but S distributed $100,000 to X as a dividend.

d) same as c) above, but X has not always owned all of the stock of S, and the dividend is distributed out of earnings and profits of a taxable year of S during which S and X were not members of the same affiliated group.

e) same as c) above, but X ownes only 10 percent of the vote and value of S's stock at all times during the year.

f) same as c) above, but X and S file a consolidated return.

Department G had 2,280 units 25% completed at the beginning of the period, 12,500 units were completed during the period, 1,900 units were 20% completed at the end of the period, and the following manufacturing costs debited to the departmental work in process account during the period: Work in process, beginning of period $31,400 Costs added during period: Direct materials (12,120 units at $9) 109,080 Direct labor 75,000 Factory overhead 25,000 All direct materials are placed in process at the beginning of production and the first-in, first-out method of inventory costing is used. What is the total cost of 2,280 units of beginning inventory which were completed during the period (round unit cost calculations to four decimal places and round your final answer to the nearest dollar)? a. $42,513 b. $45,291 c. $31,400 d. $47,191