Questions 2: Angle Co. reported the following results for the six months ended June 30, 2019.

Income before tax $1,150,000

Income tax provision, or expense 276,000

The tax provision was based on an expected effective tax rate of 24% for the year ended December 31, 2019.

Now Angle is reporting the following results for the 3 months and 9 months ended September 30, 2019:

3-Months 9-Months

Income before tax $2,761,000 $5,711,000

The best estimate of the effective tax rate for the year is 21%.

What amount of tax expense should be recognized for the quarter (the 3 months ended September 30) and the year-to-date period (9 months ended September 30)? Be sure to explain your calculations.

The following terms relate to independent bond issues:

620 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments

620 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments

790 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments

2,190 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments

Use the appropriate present value table:

PV of $1 and PV of Annuity of $1

Required:

Assuming the market rate of interest is 10%, calculate the selling price for each bond issue. If required, round your intermediate calculations and final answers to the nearest dollar.

Situation	Selling Price of the Bond Issue
a.	$
b.	$
c.	$
d.	$

Case 12-32 Make or Buy Decisions; Volume Trade-Off Decisions [LO12-1, LO12-3, LO12-5]

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of the company’s products is a heavy-duty corrosion-resistant metal drum, called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an automated welding machine that is used to make precision welds. A total of 2,000 hours of welding time is available annually on the machine. Because each drum requires 0.4 hours of welding machine time, annual production is limited to 5,000 drums. At present, the welding machine is used exclusively to make the WVD drums. The accounting department has provided the following financial data concerning the WVD drums:

WVD Drums
Selling price per drum			$	149.00
Cost per drum:
Direct materials	$52.10
Direct labor ($18 per hour)	3.60
Manufacturing overhead	4.50
Selling and administrative expense	29.80			90.00
Margin per drum			$	59.00

Management believes 6,000 WVD drums could be sold each year if the company had sufficient manufacturing capacity. As an alternative to adding another welding machine, management has considered buying additional drums from an outside supplier. Harcor Industries, Inc., a supplier of quality products, would be able to provide up to 4,000 WVD-type drums per year at a price of $138 per drum, which TufStuff would resell to its customers at its normal selling price after appropriate relabeling.

Megan Flores, TufStuff’s production manager, has suggested that the company could make better use of the welding machine by manufacturing bike frames, which would require only 0.5 hours of welding machine time per frame and yet sell for far more than the drums. Megan believes that TufStuff could sell up to 1,600 bike frames per year to bike manufacturers at a price of $239 each. The accounting department has provided the following data concerning the proposed new product:

Bike Frames
Selling price per frame			$	239.00
Cost per frame:
Direct materials	$99.40
Direct labor ($18 per hour)	28.80
Manufacturing overhead	36.00
Selling and administrative expense	47.80			212.00
Margin per frame			$	27.00

The bike frames could be produced with existing equipment and personnel. Manufacturing overhead is allocated to products on the basis of direct labor-hours. Most of the manufacturing overhead consists of fixed common costs such as rent on the factory building, but some of it is variable. The variable manufacturing overhead has been estimated at $1.35 per WVD drum and $1.90 per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired from the outside supplier.

Selling and administrative expenses are allocated to products on the basis of revenues. Almost all of the selling and administrative expenses are fixed common costs, but it has been estimated that variable selling and administrative expenses amount to $0.75 per WVD drum whether made or purchased and would be $1.30 per bike frame.

All of the company’s employees—direct and indirect—are paid for full 40-hour work weeks and the company has a policy of laying off workers only in major recessions.

As soon as your analysis was shown to the top management team at TufStuff, several managers got into an argument concerning how direct labor costs should be treated when making this decision. One manager argued that direct labor is always treated as a variable cost in textbooks and in practice and has always been considered a variable cost at TufStuff. After all, “direct” means you can directly trace the cost to products. “If direct labor is not a variable cost, what is?” Another manager argued just as strenuously that direct labor should be considered a fixed cost at TufStuff. No one had been laid off in over a decade, and for all practical purposes, everyone at the plant is on a monthly salary. Everyone classified as direct labor works a regular 40-hour workweek and overtime has not been necessary since the company adopted Lean Production techniques. Whether the welding machine is used to make drums or frames, the total payroll would be exactly the same. There is enough slack, in the form of idle time, to accommodate any increase in total direct labor time that the bike frames would require.

Required:

1. Would you be comfortable relying on the financial data provided by the accounting department for making decisions related to the WVD drums and bike frames?

2. Compute the contribution margin per unit. [assume direct labor is a fixed cost]

3. Compute the contribution margin per welding hour. [assume direct labor is a fixed cost]

4. Assuming direct labor is a fixed cost:

a. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured.

b. What is the increase (decrease) in net operating income that would result from this plan over current operations?

5. Compute the contribution margin per unit. [assume direct labor is a variable cost]

6. Compute the contribution margin per welding hour. [assume direct labor is a variable cost]

7. Assuming direct labor is a variable cost:

a. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. [Assume direct labor is a variable cost]

b. What is the increase (decrease) in net operating income that would result from this plan over current operations?

lIn Year 1, Jeff and Kim Jenson (married filing a joint return) have $200,000 of taxable income before considering the following transactions:

a. On March 2, Year 1, they sold a painting (art) for $100,000 that was purchased 15 years ago for $90,000.

b. A $12,000 loss on 11/1, Year 1 sale of bonds (acquired on 5/12, 5 years ago);

c. A $4,000 gain on 12/12, Year 1 sale of IBM stock (acquired on 2/5, Year 1);

d. A $17,000 gain on the 10/17, Year 1 sale of rental property. Of the $17,000 gain, $8,000 is reportable as gain subject to the 25% maximum rate and the remaining $9,000 is subject to the 15% maximum rate (the property was acquired on 8/2, 6 years ago. The acquiring date was after 1986);

e. A $12,000 loss on 12/20, Year 1 sale of bonds (acquired on 1/18, Year 1);

f. A $7,000 gain on 8/27, Year 1 sale of BH stock (acquired on 7/30, 10 years ago); and

g. A $11,000 loss on 6/14, Year 1 sale of QuikCo. Stock (acquired on 3/20, 5 years ago).

1) What is the amount and character of each transaction?

2) Complete the required netting procedures and calculate the Jenson's Year 1 taxable income after considering the above transactions.

3). What is Jenson’s Year 1 additional tax liability as a result of the above transactions?

E13-5 (Compensated Absences) Matt Broderick Company began operations on January 2, 2013. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 6 paid sick days annually. Vacation days may be taken after January 15 of the year following the year in which they are earned. Sick days may be taken as soon as they are earned; unused sick days accumulate. Additional information is as follows. Actual Hourly Vacation Days Used Sick Days Used Wage Rate by Each Employee by Each Employee 2013 2014 2013 2014 2013 2014 $10 $11 0 9 4 5 Matt Broderick Company has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when earned and to accrue sick pay when earned. E13-6 (Compensated Absences) Assume the facts in E13-5 except that Matt Broderick Company has chosen not to accrue paid sick leave until used, and has chosen to accrue vacation time at expected future rates of pay without discounting. The company used the following projected rates to accrue vacation time. Year in Which Vacation Projected Future Pay Rates Time Was Earned Used to Accrue Vacation Pay- 2013 $10.75 2014 11.60 Instructions (a) Prepare journal entries to record transactions related to compensated absences during 2013 and 2014. (b) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2013, and 2014.

You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company’s operations:

The cash balance on December 1 is $51,200.

Actual sales for October and November and expected sales for December are as follows:

	October		November		December
Cash sales	$	74,200	$	79,600	$	83,600
Sales on account	$	455,000	$	550,000	$	673,000

Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.

Purchases of inventory will total $346,000 for December. Thirty percent of a month’s inventory purchases are paid during the month of purchase. The accounts payable remaining from November’s inventory purchases total $177,000, all of which will be paid in December.

Selling and administrative expenses are budgeted at $473,000 for December. Of this amount, $75,000 is for depreciation.

A new web server for the Marketing Department costing $72,000 will be purchased for cash during December, and dividends totaling $17,500 will be paid during the month.

The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company’s bank to increase its cash balance as needed.

Required:

1. Calculate the expected cash collections for December.

2. Calculate the expected cash disbursements for merchandise purchases for December.

3. Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.

Effect of Transactions on Current Position Analysis

Data pertaining to the current position of Lucroy Industries Inc. are as follows:

Cash	$402,500
Marketable securities	160,000
Accounts and notes receivable (net)	330,000
Inventories	700,000
Prepaid expenses	46,000
Accounts payable	190,000
Notes payable (short-term)	230,000
Accrued expenses	290,000

Required:

1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios to one decimal place.

a. Working capital	$
b. Current ratio
c. Quick ratio

2. Compute the working capital, the current ratio, and the quick ratio after each of the following transactions, and record the results in the appropriate columns. Consider each transaction separately and assume that only that transaction affects the data given. Round ratios to one decimal place.

Transaction	Working Capital		Current Ratio		Quick Ratio
a. Sold marketable securities at no gain or loss, $70,000.	$
b. Paid accounts payable, $140,000.
c. Purchased goods on account, $130,000.
d. Paid notes payable, $115,000.
e. Declared a cash dividend, $140,000.
f. Declared a common stock dividend on common stock, $45,000.
g. Borrowed cash from bank on a long-term note, $205,000.
h. Received cash on account, $125,000.
i. Issued additional shares of stock for cash, $570,000.
j. Paid cash for prepaid expenses, $12,000.

1.

Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below:

Minden Company Balance Sheet April 30
Assets
Cash	$	10,000
Accounts receivable		62,750
Inventory		32,750
Buildings and equipment, net of depreciation		219,000
Total assets	$	324,500
Liabilities and Stockholders’ Equity
Accounts payable	$	69,000
Note payable		22,700
Common stock		180,000
Retained earnings		52,800
Total liabilities and stockholders’ equity	$	324,500

The company is in the process of preparing a budget for May and has assembled the following data:

Sales are budgeted at $254,000 for May. Of these sales, $76,200 will be for cash; the remainder will be credit sales. One-half of a month’s credit sales are collected in the month the sales are made, and the remainder is collected in the following month. All of the April 30 accounts receivable will be collected in May.

Purchases of inventory are expected to total $137,000 during May. These purchases will all be on account. Forty percent of all purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the April 30 accounts payable to suppliers will be paid during May.

The May 31 inventory balance is budgeted at $45,000.

Selling and administrative expenses for May are budgeted at $98,400, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $5,550 for the month.

The note payable on the April 30 balance sheet will be paid during May, with $350 in interest. (All of the interest relates to May.)

New refrigerating equipment costing $8,700 will be purchased for cash during May.

During May, the company will borrow $27,400 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.

Required:

1. Calculate the expected cash collections for May.

2. Calculate the expected cash disbursements for merchandise purchases for May.

3. Prepare a cash budget for May.

4. Prepare a budgeted income statement for May.

5. Prepare a budgeted balance sheet as of May 31.

On August 15, 2018 Red Fish Blue Fish consigned 500 electronic play systems, costing $100 each, to Toys R You Company. The cost of shipping the play systems amounted to $1,250 and was paid by RedFish Blue Fish. On December 31, 2018 an account sales summary was received from the consignee,reporting that 420 play systems had been sold for $160 each. Remittance was made by the consignee for the amount due, after deducting a 20% commission.

Required

Calculate the following at December 31, 2018

.

1.The inventory value of the units unsold in the hands of the consignee.

2.The profit for the consignor for the units sold.

3.The amount of cash that will beremitted by the consignee.

Macy's, Inc. (NYSE:M) > Financials > Key Stats
In Millions of the trading currency, except per share items.	Currency:	Trading Currency		Conversion:	Today's Spot Rate
	Order:	Latest on Right		Units:	S&P Capital IQ (Default)
	Decimals:	Capital IQ (Default)		Dilution:	Basic
Key Financials¹
For the Fiscal Period Ending	12 months Jan-30-2016A	12 months Jan-28-2017A	12 months Feb-03-2018A	12 months Feb-02-2019A	LTM² 12 months Nov-02-2019A
Currency	USD	USD	USD	USD	USD
Total Revenue	27,079.0	26,564.0	25,641.0	25,739.0	25,449.0
Net Income	1,072.0	627.0	1,566.0	1,108.0	964.0
Total Assets	20,576.0	19,851.0	19,583.0	19,194.0	22,547.0
Total Liabilities	16,323.0	15,529.0	13,850.0	12,758.0	16,490.0
Total Equity	4,253.0	4,322.0	5,733.0	6,436.0	6,057.0
Total Debt	7,802.0	7,045.0	6,072.0	4,931.0	7,816.0

1. What is the ROA in last 5 years and the ROE in last 5 years?
2. What is theRevenue and revenue growth in last 5 years?
3. What is the Profit (net income) and profit growth in last 5 years?
4. What is the Financial leverage and financial leverage growth in last 5 years?
5. Any other financial information?

Lauprechta Inc. Company has the following employees on payroll: Semimonthly Payroll Withholding Allowances Marital Status Naila $ 5,800 4 Married Wilfred $ 5,000 3 Married Byron $ 3,200 1 Single Annie $ 3,600 2 Single

Prepare Form 941 including Schedule B for the second quarter of 2018. Assume that the payroll is consistent every pay period beginning in April through June 30, that pay days are the 15th and the last day of the month, and that all tax deposits were made on a timely basis as required. Lauprechta Inc.'s Employer Identification Number (EIN) is 36-1238975, and its address is 1825 Elkhart Way, Columbus, GA 31904.

Scribners Corporation produces fine papers in three production departments—Pulping, Drying, and Finishing. In the Pulping Department, raw materials such as wood fiber and rag cotton are mechanically and chemically treated to separate their fibers. The result is a thick slurry of fibers. In the Drying Department, the wet fibers transferred from the Pulping Department are laid down on porous webs, pressed to remove excess liquid, and dried in ovens. In the Finishing Department, the dried paper is coated, cut, and spooled onto reels. The company uses the weighted-average method in its process costing system. Data for March for the Drying Department follow:

Units	Pulping			Conversion
Work in process inventory, March 1	4,100	100	%		80	%
Work in process inventory, March 31	8,000	100	%		75	%
Pulping cost in work in process inventory, March 1				$	1,517
Conversion cost in work in process inventory, March 1				$	779
Units transferred to the next production department					140,300
Pulping cost added during March				$	56,320
Conversion cost added during March				$	32,870

No materials are added in the Drying Department. Pulping cost represents the costs of the wet fibers transferred in from the Pulping Department. Wet fiber is processed in the Drying Department in batches; each unit in the above table is a batch and one batch of wet fibers produces a set amount of dried paper that is passed on to the Finishing Department.

Required:

1. Compute the Drying Department's equivalent units of production for pulping and conversion in March.

2. Compute the Drying Department's cost per equivalent unit for pulping and conversion in March.

3. Compute the Drying Department's cost of ending work in process inventory for pulping, conversion, and in total for March.

4. Compute the Drying Department's cost of units transferred out to the Finishing Department for pulping, conversion, and in total in March.

5. Prepare a cost reconciliation report for the Drying Department for March.

Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows:

Windy Acres			Hillcrest Apartments
Yearly Aftertax Cash Inflow	Probability		Yearly Aftertax Cash Inflow	Probability
90,000	.2		95,000	.2
95,000	.2		100,000	.3
110,000	.2		110,000	.4
125,000	.2		120,000	.1
130,000	.2

Mr. Backster is likely to hold the apartment complex of his choice for about 30 years and will use this period for decision-making purposes. Either apartment can be purchased for $206,000. Mr. Backster uses a risk-adjusted discount rate approach when evaluating investments. His scale is related to the coefficient of variation (for other types of investments, he also considers other measures).

Coefficient of Variation	Discount rate
0–0.35	5%
0.35–0.40	8	(cost of capital)
0.40–0.50	12
Over 0.50	not considered

  

a.	Compute the risk-adjusted net present value for Windy Acres and Hillcrest. (Round "PV Factor" to 3 decimal places. Enter the answers in thousands of dollars. Do not round intermediate calculations. Round the final answers to nearest whole dollar.)

	Net present value
Windy Acres	$
Hillcrest	$

b-1.	Which investment should Mr. Backster accept if the two investments are mutually exclusive?
	Hillcrest Windy Acres Both None

b-2.	Which investment should Mr. Backster accept If the investments are not mutually exclusive and no capital rationing is involved?
	Windy Acres Hillcrest Both None

Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:

	Xtreme			Pathfinder
Selling price per unit	$	125.00		$	91.00
Direct materials per unit	$	64.20		$	55.00
Direct labor per unit	$	16.00		$	10.00
Direct labor-hours per unit		1.6	DLHs		1.0	DLHs
Estimated annual production and sales		25,000	units		71,000	units

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Estimated total manufacturing overhead	$	2,331,000
Estimated total direct labor-hours		111,000	DLHs

Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)

Xtreme Pathfinder Total Product margin

2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):

	Estimated Overhead Cost			Expected Activity
Activities and Activity Measures				Xtreme	Pathfinder	Total
Supporting direct labor (direct labor-hours)	$	888,000		40,000	71,000	111,000
Batch setups (setups)		583,000		310	220	530
Product sustaining (number of products)		780,000		1	1	2
Other		80,000		NA	NA	NA
Total manufacturing overhead cost	$	2,331,000

2. Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.)

	Xtreme Pathfinder Total Product margin

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places.)

	Xtreme Pathfinder Total % of % of Amount Total Amount Amount Total Amount Amount Traditional Cost System % % % % % % Total cost assigned to products Xtreme Pathfinder Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: % % % % Indirect costs: % % % % % % Total cost assigned to products Costs not assigned to products: Total cost

The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $71 on December 31, 2016.

Blige Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2016 and 2015
			2016		2015
Retained earnings, January 1			$2,474,150		$2,101,950
Add net income for year			570,000		430,500
Total			$3,044,150		$2,532,450
Deduct dividends
	On preferred stock		$7,000		$7,000
	On common stock		51,300		51,300
		Total	$58,300		$58,300
Retained earnings, December 31			$2,985,850		$2,474,150

Blige Inc.
Comparative Income Statement
For the Years Ended December 31, 2016 and 2015
	2016		2015
Sales	$3,288,585		$3,025,500
Sales returns and allowances	16,360		10,630
Sales	$3,272,225		$3,014,870
Cost of goods sold	1,165,080		1,071,870
Gross profit	$2,107,145		$1,943,000
Selling expenses	$690,680		$861,540
Administrative expenses	588,355		505,990
Total operating expenses	1,279,035		1,367,530
Income from operations	$828,110		$575,470
Other income	43,590		36,730
	$871,700		$612,200
Other expense (interest)	224,000		123,200
Income before income tax	$647,700		$489,000
Income tax expense	77,700		58,500
Net income	$570,000		$430,500

Blige Inc.
Comparative Balance Sheet
December 31, 2016 and 2015
			Dec. 31, 2016		Dec. 31, 2015
Assets
Current assets
	Cash		$638,430		$599,200
	Temporary investments		966,270		992,970
	Accounts receivable (net)		613,200		576,700
	Inventories		467,200		365,000
	Prepaid expenses		120,775		119,840
		Total current assets	$2,805,875		$2,653,710
Long-term investments			1,820,240		1,046,746
Property, plant, and equipment (net)			3,080,000		2,772,000
Total assets			$7,706,115		$6,472,456
Liabilities
Current liabilities			$850,265		$1,388,306
Long-term liabilities
	Mortgage note payable, 8%, due 2021		$1,260,000		$0
	Bonds payable, 8%, due 2017		1,540,000		1,540,000
		Total long-term liabilities	$2,800,000		$1,540,000
Total liabilities			$3,650,265		$2,928,306
Stockholders' Equity
Preferred $0.7 stock, $50 par			$500,000		$500,000
Common stock, $10 par			570,000		570,000
Retained earnings			2,985,850		2,474,150
	Total stockholders' equity		$4,055,850		$3,544,150
Total liabilities and stockholders' equity			$7,706,115		$6,472,456

Required:

Determine the following measures for 2016, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

13. Rate earned on total assets		%
14. Rate earned on stockholders' equity		%
15. Rate earned on common stockholders' equity		%
16. Earnings per share on common stock	$
17. Price-earnings ratio
18. Dividends per share of common stock	$
19. Dividend yield		%