Sam has a sole proprietorship and wants to transfer his asset of (fair market value $1.8 million, adjusted basis $ 300,000) with the associated debt ($500,000) to a new corporation. What is the tax consequences of these transactions? Must include your sources (Example, IRC)

2018

2019

Required:
1. Prepare journal entries to record these transactions and events and any year-end fair value adjustments to the portfolio of long-term available-for-sale securities. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations.)

********Word Choices for Journal Entry************

• No journal entry required
• Accounts receivable
• Cash
• Dividend revenue
• Earnings from investment
• Earnings from long-term investment
• Fair value adjustment—AFS (LT)
• Fair value adjustment—Available-for-sale (ST)
• Fair value adjustment—Trading
• Foreign exchange gain
• Foreign exchange loss
• Gain on sale of investments
• Interest receivable
• Interest revenue
• Long-term investments—AFS (Black & Decker)
• Long-term investments—AFS (Eastman Kodak)
• Long-term investments—AFS (J&J)
• Long-term investments—AFS (Mattel)
• Long-term investments—AFS (Microsoft)
• Long-term investments—AFS (Sara Lee)
• Long-term investments—AFS (Sony)
• Loss on sale of investments
• Sales
• Short-term investments—AFS (Black & Decker)
• Short-term investments—AFS (Eastman Kodak)
• Short-term investments—AFS (J&J)
• Short-term investments—AFS (Mattel)
• Short-term investments—AFS (Microsoft)
• Short-term investments—AFS (Sara Lee)
• Short-term investments—AFS (Sony)
• Unrealized gain—Equity
• Unrealized gain—Income
• Unrealized loss—Equity
• Unrealized loss—Income

LLC Net Income and Statement of Members' Equity

Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $315,000, $80,000, and $190,000, respectively. WLKT Partners contributed an additional $80,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $182,700 during 20Y2. The members’ equity accounts are also credited with 12% interest on each member's January 1 capital balance. Any remaining income is to be shared in the ratio of 4:3:3 among the three members. The revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $531,685, $61,685 and $470,000 respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.

a. Determine the division of income among the three members. If an amount box does not require an entry, leave it blank.

b. Prepare the journal entries to close the (1) net income and (2) withdrawals to the individual member equity accounts. For a compound entry, if an amount box does not require an entry, leave it blank.

c. Prepare a statement of members' equity for 20Y2. If an amount box does not require an entry, leave it blank.

d What are the advantages of an income-sharing agreement for the members of this LLC?

Without an income-sharing agreement, each member   be credited with an equal proportion of the total earnings, or one-third each. Separate contributions   be acknowledged in the income-sharing formula.

Distribution of Cash Upon Liquidation

Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $24,000 and $16,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $30,000.

a. What is the amount of a gain or loss on realization?

b. How should the gain or loss be divided between Hewitt and Patel?

c. How should the cash be divided between Hewitt and Patel? If an amount is zero, enter "0".

Explain the relationship between the number of units sold in a day in a fast food restaurant and each of the following: total fixed costs per unit of activity, total variable costs, variable cost per unit of activity, total costs, and average total cost per unit of activity.

Jack, age 66, and Jill, age 59, are married and file a joint return. During the year they received: o $262,000 in wages o $2,000 in interest on their savings account o $1,500 in interest from City of Boston Bonds They paid: o $3,000 in student loan interest o $8,000 in mortgage interest o $5,000 in charitable donations o $3,000 in real estate taxes o 4,000 in state income taxes They support Jack’s mother since she has no income. She lives in an assisted living center in town because she is legally blind. They also support their daughter Lauren who lives with them while she goes to school full-time. She is 26 years old and has a part-time job waitressing once a week where she earns $3,000. What is Jack and Jill’s taxable income and tax due/(refund)?

Two independent companies, Denver and Bristol, each own a warehouse, and Denver agrees to pay Bristol $2,000 to complete the exchange. The following information for the two warehouses is available:

Required:

Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes plantwide predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below:

Management finds the variation in quarterly unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product.

Required:

1. Assuming the estimated variable manufacturing overhead cost per unit is $0.40, what must be the estimated total fixed manufacturing overhead cost per quarter?

2. Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter?

3. What is causing the estimated unit product cost to fluctuate from one quarter to the next?

4. Assuming the company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year.

Auto Renovators2 is a leading classic car restoration company in Australia. The company has been well-known for renovating thousands of classic cars in Australia according to customers’ orders. In February, the company has worked on five jobs, numbered 301 to 305. Direct materials used, direct labour incurred in February were as shown in the following table.

Manufacturing overheads during February included indirect material ($ 1100), indirect labour ($ 2750), rent ($ 2000), depreciation ($ 1300), insurance ($ 250), utilities ($ 800), and other manufacturing costs ($ 400).

At the beginning of the month, management anticipated that overhead cost would be $ 9100 and total direct labour would amount to $ 6500. Overhead is allocated on the basis of direct labour dollars.

Jobs 301 to 303 were finished during the month; Jobs 304 and 305 is still in process. Jobs 301 to 303 were picked up and paid by customers for $ 6100, $ 4800, $ 3700.

Required

1.       Determine the company’s predetermined overhead rate.

2.       Prepare the journal entries to reflect the following: the incurrence of materials, labour, and actual overhead costs; the allocation of overhead; and the transfer of job costs to finished goods inventory and cost of goods sold (Note: Use summary entries where appropriate by combining individual job data).

3.       In your own words, describe the two different approaches to closing overapplied or underapplied overhead at the end of the month. How do you choose an appropriate method? Calculate the amount of overapplied or underapplied overhead to be closed and prepare an appropriate journal entry.

On January 1, 2018, Essence Communications issued $900,000 of its 10-year, 6% bonds for $777,687. The bonds were priced to yield 8%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the market interest rate for bonds of similar risk and maturity was 7%. The bonds are not traded on an active exchange. The decrease in the market interest rate was due to a 1% decrease in general (risk-free)interest rates. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

Required:
1. Using the information provided, estimate the fair value of the bonds at December 31, 2018.
2. to 4. Prepare the journal entry to record interest on June 30, 2018 (the first interest payment), on December 31, 2018 (the second interest payment) and to adjust the bonds to their fair value for presentation in the December 31, 2018, balance sheet.

1.

2. Record the interest expense on June 30, 2018
3. Record the interest expense on December 31, 2018
4. Record the fair value adjustment December 31, 2018

Six Measures of Solvency or Profitability

The following data were taken from the financial statements of Gates Inc. for the current fiscal year.

Assuming that long-term investments totaled $2,308,000 throughout the year and that total assets were $4,384,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place.

Special Order
Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 units of product that sell for $60 each. For the foreseeable future, regular sales volume should continue to equal normal capacity.

Notes:
1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units or fraction thereof until a maximum capacity of 10,000 units is reached.
2. Selling expenses consist of a 6% sales commission and shipping costs of 80 cents per unit. Glendale pays only three-fourths of the regular sales commission on sales totaling 501 to 1,000 units and only two-thirds the regular commission on sales totaling 1,000 units or more.

Glendale's sales manager has received a special order for 1,200 units from a large discount chain at a price of $36 each, F.O.B. factory. The controller's office has furnished the following additional cost data related to the special order:

1. Changes in the product's design will reduce direct material costs $1.50 per unit.
2. Special processing will add 20% to the per-unit direct labor costs.
3. Variable overhead will continue at the same proportion of direct labor costs.
4. Other costs should not be affected.

a. Present an analysis supporting a decision to accept or reject the special order. (Round computations to the nearest cent.)

b. What is the lowest price Glendale could receive and still make a profit of $3,600 before income taxes on the special order?

Round answer to two decimal places, if applicable.

$Answer

1. How can business process improvement management technique can benefit a company? What are the important aspects of business process improvement for a firm to succeed from an accounting and decision making standpoint?

ThreePoint Sports Inc. manufactures basketballs for the Women’s National Basketball Association (WNBA). For the first 6 months of 2020, the company reported the following operating results while operating at 80% of plant capacity and producing 120,300 units.

Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $243,000.

In July, normally a slack manufacturing month, ThreePoint Sports receives a special order for 10,000 basketballs at $29 each from the Greek Basketball Association (GBA). Acceptance of the order would increase variable selling and administrative expenses $0.73 per unit because of shipping costs but would not increase fixed costs and expenses.

(a) Prepare an incremental analysis for the special order. (Round all per unit computations to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

(b) Should ThreePoint Sports Inc. accept the special order?

(c) What is the minimum selling price on the special order to produce net income of $5.19 per ball? (Round answer to 2 decimal places, e.g. 15.25.)

Service Emphasis
The following analysis of selected data is for each of the two services Rockville Corporation provides.

In the Rockville's operation, labor capacity is the company's constraining resource. Each unit of G requires 3 hours of labor, and each unit of H requires 1 hours of labor. Assuming that all services can be sold at a normal price, prepare an analysis showing which of the two services should be provided with any unused productive capacity that Rockville might have.

A. Any unused capacity should be devoted to Service H, which has $2 less contribution margin per labor hour than does Service G.

B. Any unused capacity should be devoted to Service G, which has $2 more contribution margin per labor hour than does Service H.

C. Any unused capacity should be devoted to Service H, which has $2 more contribution margin per labor hour than does Service G.