Required information

[The following information applies to the questions displayed below.]

Fred currently earns $9,000 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate. His employer is willing to pay Fred $10,000 per month if he accepts the assignment. Assume that the maximum foreign-earned income exclusion for next year is $104,100.

a-1. How much U.S. gross income will Fred report if he accepts the assignment abroad on January 1 of next year and works overseas for the entire year?

a-2. If Fred’s employer also provides him free housing abroad (cost of $20,000), how much of the $20,000 is excludable from Fred’s income?

b. Suppose that Fred's employer has offered Fred a six-month overseas assignment beginning on January 1 of next year. How much U.S. gross income will Fred report next year if he accepts the six-month assignment abroad and returns home on July 1 of next year?

c-1. Suppose that Fred’s employer offers Fred a permanent overseas assignment beginning on March 1 of next year. How much U.S. gross income will Fred report next year if he accepts the permanent assignment abroad? Assume that Fred will be abroad for 305 days out of 365 days next year. (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

c-2. If Fred’s employer also provides him free housing abroad (cost of $16,000 next year), how much of the $16,000 is excludable from Fred’s income? Assume that Fred will be abroad for 305 days out of 365 days next year. (Use 365 days in a year. Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

Exercise 9-27

Presented below is information related to Sandhill Corporation. Price Index LIFO Cost Retail Inventory on December 31, 2017, when dollar-value LIFO is adopted 100 $36,600 $69,100 Inventory, December 31, 2018 110 ? 95,260 Compute the ending inventory under the dollar-value LIFO method at December 31, 2018. The cost-to-retail ratio for 2018 was 60%. Ending inventory under the dollar-value LIFO method at December 31, 2018

The general ledger of the Karlin Company, a consulting company, at January 1, 2021, contained the following account balances:

The following is a summary of the transactions for the year:

1. Service revenue, $134,000, of which $40,200 was on account and the balance was received in cash.
2. Collected on accounts receivable, $26,800.
3. Issued shares of common stock in exchange for $16,000 in cash.
4. Paid salaries, $49,000 (of which $10,000 was for salaries payable at the end of the prior year).
5. Paid miscellaneous expense for various items, $26,400.
6. Purchased equipment for $18,500 in cash.
7. Paid $3,250 in cash dividends to shareholders.

1. Accrued salaries at year-end amounted to $980.
2. Depreciation for the year on the equipment is $3,100.

Required:
Post the transactions, adjusting and closing entries into the appropriate t-accounts.

A company sells medical supplies to hospitals and healthcare facilities that are mostly located in the Michiana region. The company has 150 employees, and it is about to decide whether part of them should be encouraged to work remotely, and if so, how many employees should do that. There are many aspects to be analyzed such as productivity and collaboration, but you will focus on the costs of space and IT at the company’s main office versus the costs of working remotely.

The costs of office space include building rent and maintenance, utilities, cleaning, and insurance. The company estimates that those costs could be either one of three scenarios: (A) $60,000 per month for a building where all employees can be accommodated; (B) $50,000 per month for a building that can accommodate 100 employees; or (C) $40,000 per month for a building for 50 employees.

The main costs of IT include the lease, operation and maintenance of equipment (a desktop computer for each employee, and the office’s Wi-Fi access points, cabling, routers for the LAN/MAN) and a contract with a fixed Internet service provider. The equipment cost is $7,500 per month for scenario (A), $5,500 for (B) or $3,500 for (C). The cost with the fixed Internet service provider is (A) $5,000 per month for all employees; (B) $4,000 per month for 100 employees; or (C) $2,500 per month for 50 employees.

If some of the employees no longer work frequently at the central office, then the company can operate on a smaller office (i.e. B or C instead of A). On the other hand, the company will provide a laptop, smartphone and a cellular plan for each employee working remotely. The company already has a corporate cellular contract with Cerizon for some employees. If some employees are to work remotely, then the company will add them to the same contract. The contract includes the smartphones at no extra cost, and Cerizon charges $10 per GB for employees who use less than 5GB per month, $8 per GB for employees who use 5GB or more but less than 10GB per month, and $6 per GB for employees who use 10GB or more per month. The cost of each laptop is $1,000, which the company considers that depreciates linearly over its lifetime of 2 years.

Dreyvins Coffee House Limited's bank statement for the month of November 2022 showed a balance per bank of $7,000. The company's general ledger Cash account showed a balance of $5,659 at November 30. Other information is as follows:
1.    Cash receipts for November 30 recorded on the company's books were $5,200, but this amount does not appear on the bank statement.
2.    The bank statement shows a debit memorandum for $40 for cheque printing charges.
3.    Cheque #119 payable in the amount of $248 to Holt Corporation was recorded in the general journal and cleared the bank for $248. A review of the accounts payable records shows a $36 credit balance in Holt’s account and that the total payment should have been for $284.
4.    The total amount of cheques outstanding at November 30 was $5,800.
5.    Cheque #138 was correctly written and paid by the bank for $409. The cash payment journal reflects an entry for Cheque #138 as a debit to Accounts Payable and a credit to Cash for $490.
6.    The bank returned an NSF cheque from a customer for $560.
7.    The bank statement included a deposit for $1,260, which represents the electronic collection of customer accounts which have not yet been recorded on the company’s books.
Instructions
(a)   Prepare a bank reconciliation for Seattle Coffee Limited at November 30, 2022.
(b)   Prepare any journal entries necessary as a result of the bank reconciliation.

For your fictitious healthcare service, you will create a balance sheet and income statement based upon the following financial transactions occurring during your start-up year:

6. May 1, 2020 through December 31, 2020: You use $30,000 in supplies to provide healthcare services to your patients each month. You record the use of supplies on the last day of each month.

7. June 1, 2020: You pay your suppliers $80,000 for supplies purchased on credit.

8. July 1, 2020: You receive payments from health insurance companies totaling $250,000.

9. August 1, 2020:

a. You purchase $160,000 of supplies on credit for use in caring for your patients.

b. You receive payments from health insurance companies totaling $320,000

10. September 1, 2020: You receive payments from health insurance companies totaling $225,000.

11. October 1, 2020: You receive payments from health insurance companies totaling $310,000.

Statement of Cash Flows

Jacoby Corporation, a merchandiser, recently completed its calendar year 2016 operations. For the year:

•  All sales are credit sales

•  All credits to Accounts Receivable reflect cash receipts from customers

•  All purchases of inventory are on credit

•  All debits to Accounts Payable reflect cash payments for inventory

•  Other expenses are paid in advance and are initially debited to Prepaid Expenses.

•  The company’s balance sheets and income statement follow.

  Jacoby Corporation Balance Sheet December 31, 2015 and 2016

ACG2071 - 2185

Jacoby Corporation Income Statement December 31, 2016

Page 1 of 2

Additional Information on Year 2011 Transactions

1. Thelossonthecashsaleofequipmentwas$2,100(detailsinb).

2. Sold equipment costing $51,000, with accumulated depreciation of $20,850, for $28,050 cash.

3. Purchased equipment costing $113,250 by paying $38,250 cash and signing a long-term note

   payable for the balance

4. Borrowed $6,000 cash by signing a short-term note payable.

5. Paid$45,000cashtoreducethelong-termnotespayable.

6. Issued 3,000 shares of common stock for $11 cash per share.

7. Declaredandpaidcashdividendsof$63,000.

Star Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1 are given below.

Because the videos differ in length and in complexity of production, the company uses a job-order costing system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to videos on the basis of camera-hours of activity. The company’s predetermined overhead rate for the year ($40 per camera-hour) is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. Any underapplied or overapplied overhead is closed to cost of goods sold. The following transactions were recorded for the year:

1. Film, costumes, and similar raw materials purchased on account, $208,500.
2. Film, costumes, and other raw materials issued to production, $219,500 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect).
3. Utility costs incurred (on account) in the production studio, $81,600.
4. Depreciation recorded on the studio, cameras, and other equipment, $90,000. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration.
5. Advertising expense incurred (on account), $155,500.
6. Salaries and wages paid in cash as follows:

7. Prepaid insurance expired during the year, $10,050 (70% related to production of videos, and 30% related to marketing and administrative activities).
8. Miscellaneous marketing and administrative expenses incurred (on account), $10,350.
9. Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,250 camera-hours of activity during the year.
10. Videos that cost $548,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment.
11. Sales for the year totaled $1,060,000 and were all on account.
12. The total cost to produce the videos that were sold according to their job cost sheets was $591,810.
13. Collections from customers during the year totaled $1,010,000.
14. Payments to suppliers on account during the year, $585,000.
15. Underapplied or overapplied overhead $__?__.

Required:

1. Prepare a transaction analysis that records all of the above transactions.

2. Prepare a schedule of cost of goods manufactured for the year.

3. Prepare a schedule of cost of goods sold for the year.

4. Prepare an income statement for the year.

For this activity, you have been hired as a team of consultants on a multi-year basis for a global washer and dryer manufacturer. They currently offer two core washer and dryer sets: a high-end model and an economic model. You are tasked to complete several calculations and present your findings to the company stakeholders. You may use any presentation software (Google Slides, Prezi, PowerPoint, etc.) and your completed presentation should consist of 12 – 15 slides. A copy of the final presentation will be submitted by each member of the group in Unit 7.

1. For your first assignment, management has provided the following revenue and cost information:

They want a better understanding of their business to make budgeting and sales goals decisions and have asked you to determine their:

1. Break-even quantities for each product line
2. Break-even quantities to earn $500,000 per year margin on the high-end line (at the current sales price)
3. Break-even quantities to earn $300,000 per year margin on the economical line (at the current sales price)

They expect the product lines to fully absorb the costs allocated to them.

Once you have determined these amounts, they have asked that you:

• present the information
• describe how you performed your calculations
• and explain what the results mean

2. Later, the company is considering the purchase of machinery and equipment to set up a line to produce a combination washer-dryer. They have given you the following information to analyze the project on a 5-year timeline:

• Initial cash outlay is $150,000, no residual value.
• Sales price is expected to be $2,250 per unit, with $595 per unit in labor expense and $795 per unit in materials.
• Direct fixed costs are estimated to run $20,750 per month.
• Cost of capital is 8%, and the required rate of return is 10%.
• They will incur all operational costs in Year 1, though sales are expected to be 55% of break-even.
• Break-even (considering only direct fixed costs) is expected to occur in Year 2.
• Variable costs will increase 2% each year, starting in Year 3.
• Sales are estimated to grow by 10%, 15%, and 20% for years 3 - 5.

They have asked you to calculate:

• The product’s contribution margin
• Break-even quantity
• NPV
• IRR

Once you have determined these amounts, they have asked that you present the information, describe how you performed your calculations, and explain what the results mean.

After you have completed the calculations and presented your work, management makes the investment.

• Explain how the project analyses do or do not support this decision.
• In either case, what are the factors that should have been considered in management’s decision?

3.  After the combo washer-dryer has been in production for a few years, you are asked to perform another analysis. You must evaluate the performance of all three product lines as management is concerned with the viability of the washer-dryer combination product. They provide you with the latest annual information by product:

You are asked to perform an analysis to determine whether to drop or keep the washer-dryer combination product and present your findings, including the steps taken to make your determination. You are also asked to evaluate if the costing methodology is appropriate and, if not, recommend alternative methods.

Please describe the circumstances of the case study and make the required recommendations. Explain your approaches to the problems, perform relevant calculations and analyses, and justify your recommendations. Evaluate the results and explain what each calculated value means. Ensure your work and conclusions are thoroughly supported.

Superior presentations will:

• Describe the circumstances.
• Perform all calculations correctly.
• Articulate how the calculations were performed.
• Evaluate the computations and explain their meanings.
• Make recommendations, supported by well-thought-out rationale and considering various factors that could impact the recommendations.

What is the calculation of benefits from the u.s social security program?

Hashem started a business that offers legal services on 1 December 2019. The following are transactions occurred during the month of December 2019:

1. Hashem brought in RM50,000 cash and office equipments worth RM12,000 into the business.
2. Bought a car for his own use worth RM112,000 by paying cash (company’s money) of RM12,000 and signing a note payable for the balance.
3. Provided legal services to a client worth RM7,000 and received cash of RM3,000 from the client.
4. Purchased office supplies worth RM2,000 cash.
5. Paid RM700 cash for advertising expenses for the months of December 2019.
6. Sent a bill totaling RM5,000 to a client for the legal service provided and yet to receive payment.
7. Received RM3,000 cash as an agreement to start work as a legal advisor for a company starting February 2020.
8. Paid RM3,600 cash for employees’ salary.
9. Paid RM2,400 cash for December office rental.
10. As at 31 December 2019, the office supplies used is RM400.

Based on the above information, you are required to:

Show the effects of all the above transactions in the accounting equation

Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $680,000 of total manufacturing overhead for an estimated activity level of 85,000 machine-hours.

During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:

Required:

1. Compute the underapplied or overapplied overhead.

2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. Assume that the company allocates any underapplied or over appliedoverhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?

Question 1: Hashem started a business that offers legal services on 1 December 2019. The following are transactions occurred during the month of December 2019: 1. Hashem brought in RM50,000 cash and office equipments worth RM12,000 into the business. 2. Bought a car for his own use worth RM112,000 by paying cash (company’s money) of RM12,000 and signing a note payable for the balance. 3. Provided legal services to a client worth RM7,000 and received cash of RM3,000 from the client. 4. Purchased office supplies worth RM2,000 cash. 5. Paid RM700 cash for advertising expenses for the months of December 2019. 6. Sent a bill totaling RM5,000 to a client for the legal service provided and yet to receive payment. 7. Received RM3,000 cash as an agreement to start work as a legal advisor for a company starting February 2020. 8. Paid RM3,600 cash for employees’ salary. 9. Paid RM2,400 cash for December office rental. 10. As at 31 December 2019, the office supplies used is RM400. Based on the above information, you are required to:

a) Show the effects of all the above transactions in the accounting equation.

b) Prepare the journal entries to record all transactions.

Purchases, Accounts Payable Subsidiary Account, and Accounts Payable Ledger Sterling Forest Landscaping designs and installs landscaping.

The landscape designers and office staff use office supplies, while field supplies (rock, bark, etc.) are used in the actual landscaping. Purchases on account completed by Sterling Forest Landscaping during October are as follows:

1. Oct. 2.		Purchased office supplies on account from Meade Co., $5,200.
   5.		Purchased office equipment on account from Peach Computers Co., $7,480.
   9.		Purchased office supplies on account from Executive Office Supply Co., $540.
   13.		Purchased field supplies on account from Yamura Co., $5,920.
   14.		Purchased field supplies on account from Omni Co., $780.
   17.		Purchased field supplies on account from Yamura Co., $14,080.
   24.		Purchased field supplies on account from Omni Co., $3,970.
   29.		Purchased office supplies on account from Executive Office Supply Co., $350.
   31.		Purchased field supplies on account from Omni Co., $5,190.

   Note: Posting references have been provided.

   Required:

   1. Insert the following balances in the general ledger as of October 1:

   14	Field Supplies	$10,590
   15	Office Supplies	2,430
   18	Office Equipment	35,720
   21	Accounts Payable	9,090

   After completing the recording of transactions in part 3, post the purchases journal to the accounts in the general ledger. If an amount box does not require an entry, leave it blank.

   GENERAL LEDGER
   					Balance
   Date	Item	Post. Ref.	Debit	Credit	Dr.	Cr.
   Account: Field Supplies #14
   Oct. 1	Balance	✔
   		P30
   Account: Office Supplies #15
   Oct. 1	Balance	✔
   		P30
   Account: Office Equipment #18
   Oct. 1	Balance	✔
   		P30
   Account: Accounts Payable #21
   Oct. 1	Balance	✔
   		P30

   2. Insert the following balances in the accounts payable subsidiary ledger as of October 1:

   Executive Office Supply Co.	$3,000
   Meade Co.	6,090
   Omni Co.	-
   Peach Computers Co.	-
   Yamura Co.	-

   After completing the recording of transactions in part 3, post to the creditor accounts in the accounts payable subsidiary ledger immediately after each entry. If an amount box does not require an entry, leave it blank.

   ACCOUNTS PAYABLE SUBSIDIARY LEDGER
   Date	Item	Post. Ref.	Debit	Credit	Balance
   Account: Executive Office Supply Co.
   Oct. 1	Balance	✔
   		P30
   		P30
   Account: Meade Co.
   Oct. 1	Balance	✔
   		P30
   Account: Omni Co.
   		P30
   		P30
   		P30
   Account: Peach Computers Co.
   		P30
   Account: Yamura Co.
   		P30
   		P30

   3. Journalize the transactions for October (in chronological order), using the purchases journal below (p. 30) similar to the one illustrated in this chapter. Post to the creditor accounts in the accounts payable subsidiary ledger (in part 2) immediately after each entry.

   4. Post the purchases journal to the accounts in the general ledger (in part 1). If an amount box does not require an entry, leave it blank.

   If no other account is needed in the "Other Accounts Dr." column select "No entry required".

   PURCHASES JOURNAL								PAGE 30
   Date	Account Credited	Post. Ref.	Accounts Payable Cr.	Field Supplies Dr.	Office Supplies Dr.	Other Accounts Dr.	Post. Ref.	Amount
   Oct. 2		✔
   Oct. 5		✔
   Oct. 9		✔
   Oct. 13		✔
   Oct. 14		✔
   Oct. 17		✔
   Oct. 24		✔
   Oct. 29		✔
   Oct. 31		✔
   Oct. 31
   								(✔)

   5a. What is the sum of the creditor balances in the subsidiary ledger at October 31?
   $

   5b. What is the balance of the accounts payable controlling account at October 31?
   $

   6. What type of e-commerce application would be used to plan and coordinate transactions with suppliers?

2. Which is NOT true of the QBI-Qualified Business Income Deduction? Caution: read all answers before you choose.

a. The QBI is 20%

b. The QBI doesn't reduce self-employment tax

c. The QBI doesn't reduce adjusted gross income

d. If married people, make more than $315,000 or single people make more than $157,500 there are many limitations on this deduction

e. The QBI can be used for sole proprietorships (schedule C), partnerships, or Sub S corporations.

f. All of the following are true.