Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. In 2018, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries were prepared. The income tax rate is 40% for all years.

1. A five-year casualty insurance policy was purchased at the beginning of 2016 for $30,500. The full amount was debited to insurance expense at the time.
2. Effective January 1, 2018, the company changed the salvage values used in calculating depreciation for its office building. The building cost $574,000 on December 29, 2007, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $110,000. Declining real estate values in the area indicate that the salvage value will be no more than $27,500.
3. On December 31, 2017, merchandise inventory was overstated by $20,500 due to a mistake in the physical inventory count using the periodic inventory system.
4. The company changed inventory cost methods to FIFO from LIFO at the end of 2018 for both financial statement and income tax purposes. The change will cause a $915,000 increase in the beginning inventory at January 1, 2019.
5. At the end of 2017, the company failed to accrue $14,600 of sales commissions earned by employees during 2017. The expense was recorded when the commissions were paid in early 2018.
6. At the beginning of 2016, the company purchased a machine at a cost of $630,000. Its useful life was estimated to be ten years with no salvage value. The machine has been depreciated by the double-declining balance method. Its book value on December 31, 2017, was $403,200. On January 1, 2018, the company changed to the straight-line method.
7. Warranty expense is determined each year as 1% of sales. Actual payment experience of recent years indicates that 0.80% is a better indication of the actual cost. Management effects the change in 2018. Credit sales for 2018 are $3,100,000; in 2017 they were $2,800,000

Required:
For each situation:
1. Identify whether it represents an accounting change or an error. If an accounting change, identify the type of change. For accounting errors, choose "Not applicable".
2. Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2018 related to the situation described. Any tax effects should be adjusted for through Income tax payable or Refund income tax.

Garrett Toy Company incurred the following costs in April to produce job number TB78, which consisted of 1,000 teddy bears that can walk, talk, and play cards.

Direct Material:
4/1/20x0 Requisition number 101: 300 yards of fabric at $0.80 per yard
4/5/20x0 Requisition number 108: 600 cubic feet of stuffing at $0.20 per cubic foot

Direct Labor:
From employee time cards for 4/1/20x0 through 4/8/20x0: 600 hours at $11.00 per hour

Manufacturing Overhead:
Applied on the basis of direct-labor hours at $2.00 per hour.

Job number TB78 was completed on April 15. On April 30, 600 of the bears were shipped to a local toy store.

Required:
Prepare a job-cost record using the information given above.

Prepare a job-cost record.

Determine the direct material cost. (Round "Unit Price" to 2 decimal places.)

Determine the direct labor cost.

Determine the manufacturing overhead cost.

GARRETT TOY COMPANY

Cost Summary

Cost Item. Amount

Total direct material ?

Total direct labor ?

Total manufacturing overhead. ?

Total cost ?

Unit cost ?

Prepare a Shipping Summary. (Do not round intermediate calculations.)

Your boss approaches you in mid-December and requests that you pay certain employees their gross pay amount as if there were no deductions as their year-end bonuses. None of the employees have reached the Social Security wage base for the year. Required: What is the gross-up amount for each of the following employees? (The tax rate on bonuses is 22 percent. The Social Security (6.2%) and Medicare taxes (1.45%) must be added to this rate.) (Round your intermediate calculations and final answers to 2 decimal places.) Your boss approaches you in mid-December and requests that you pay certain employees their gross pay amount as if there were no deductions as their year-end bonuses. None of the employees have reached the Social Security wage base for the year. Required: What is the gross-up amount for each of the following employees? (The tax rate on bonuses is 22 percent. The Social Security (6.2%) and Medicare taxes (1.45%) must be added to this rate.) (Round your intermediate calculations and final answers to 2 decimal places.) mployee Regular Gross Pay per Period Grossed-up Amount Yves St. John $2,175 $2,008.61selected answer incorrect Kim Johnson $3,200 $2,955.20selected answer incorrect Michael Hale $3,120 $2,881.32selected answer incorrect

Question 1. Merino Plc 2019 and 2020 Balance Sheets included the following items:

Merino Plc Income Statement was as follows:

Required:

Prepare the STATEMENT OF CASH FLOWS for the year ended December 31, 2020. Additional information includes the following:

1. Equipment was purchased for $64,848 cash
2. Issued 3,360 common shares for cash at $28 per share
3. Declared and paid cash dividends during the year.

Conrad Playground Supply underwent a restructuring in 2018. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries are prepared.

1. Additional computers were acquired at the beginning of 2016 and added to the company’s office network. The $50,000 cost of the computers was inadvertently recorded as maintenance expense. Computers have five-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method.
2. Two weeks prior to the audit, the company paid $22,000 for assembly tools and recorded the expenditure as office supplies. The error was discovered a week later.
3. On December 31, 2017, merchandise inventory was understated by $88,000 due to a mistake in the physical inventory count. The company uses the periodic inventory system.
4. Two years earlier, the company recorded a 3% stock dividend (3,000 common shares, $1 par) as follows
5.    Retained earnings 3,000
6. Common stock 3,000

7. The shares had a market price at the time of $13 per share.

8. At the end of 2017, the company failed to accrue $124,000 of interest expense that accrued during the last four months of 2017 on bonds payable. The bonds, which were issued at face value, mature in 2022. The following entry was recorded on March 1, 2018, when the semiannual interest was paid, as well as on September 1 of each year:
9. 
   Interest expense 186,000
10. Cash 186,000
11. A three-year liability insurance policy was purchased at the beginning of 2017 for $75,000. The full premium was debited to insurance expense at the time.

12. 
    Required:
    For each error, prepare any journal entry necessary to correct the error as well as any year-end adjusting entry for 2018 related to the situation described. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

A comparative balance sheet for Lomax Company containing data for the last two years is as follows:

The following additional information is available about the company’s activities during this year:

1. The company declared and paid a cash dividend this year.

2. Bonds with a principal balance of $400,000 were repaid during this year.

3. Equipment was sold during this year for $80,000. The equipment had cost $170,000 and had $64,000 in accumulated depreciation on the date of sale.

4. Long-term investments were sold during the year for $150,000. These investments had cost $68,000 when purchased several years ago.

5. The subsidiaries did not repay any outstanding loans during the year.

6. Lomax did not repurchase any of its own stock during the year.

The company reported net income this year as follows:

Required:

Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash outflows as negative amounts.)

Hackel Industries presents you with the following information.

Required:

Complete the table.

Word length: 2,500 words/excluding references References: Yes using either APA or AGLC style and include a reference list

Scenario:

James Strong is a managing director of ABC Pty Ltd, a large private Company that specialises in accounting services.

For the current income year, James has the following receipts and expenses:

a) Salary of $500,000

b) Rent from his apartment in London that derives $600 (equivalent) per week

c) An amount of $20,000 received by James for personal injury, $5,000 of this amount was for loss of salary

d) $5,000 incurred by James for undertaking a Graduate Certificate in Accounting.

e) Reimbursement of his telephone bill by ABC Pty Ltd.

f) Dividends of $20,000 received on his Telstra Share portfolio

g) A bottle of wine worth $2,000 he receives from the CEO of ABC Pty Ltd at Easter

Task: Your firm has been approached by James Strong to provide a letter of advice in relation to the tax implications of these amounts. You are to write a letter of advice that addresses these issues citing the relevant cases and legislation. At this time, you are not required to perform any calculations.

Dobson Construction specializes in the construction of commercial and industrial buildings. The contractor is experienced in bidding long-term construction projects of this type, with the typical project lasting fifteen to twenty-four months. The contractor uses the percentage-of-completion method of revenue recognition since, given the characteristics of the contractor's business and contracts, it is the most appropriate method. Progress toward completion is measured on a cost-to-cost basis. Dobson began work on a lump-sum contract at the beginning of 2019. As bid, the statistics were as follows: Contract price $4,000,000 Estimated costs $3,000,000 At the end of the first year, the following was the status of the contract: Billings to date $2,250,000 Costs incurred to date 1,200,000 Latest forecast total cost 3,000,000 Instructions

(a) Compute the percentage of completion on the contract at the end of 2019.

(b) Indicate the amount of gross profit that would be reported on this contract at the end of 2019.

(c) Make the journal entry to record the income (loss) for 2019 on Dobson's books.

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2017, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2017, follow.
  
Additional Information Items

1. An analysis of WTI's insurance policies shows that $3,335 of coverage has expired.
2. An inventory count shows that teaching supplies costing $2,891 are available at year-end 2017.
3. Annual depreciation on the equipment is $13,342.
4. Annual depreciation on the professional library is $6,671.
5. On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,300, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2018.
6. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $4,261 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.)
7. WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee.
8. The balance in the Prepaid Rent account represents rent for December.

2-a. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.
2-b. Prepare an adjusted trial balance.
  

Research a firm in the S & P 500 that uses activity-based costing.

Answer the following questions: 500 words

1. Present an overall summary of how ABC is used in this firm. Be specific.
2. Discuss the advantages and disadvantages of ABC. Again be specific and if possible relate this information to the firm that you researched.

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

Jimmie’s Fishing Hole has the following transactions related to its top-selling Shimano fishing reel for the month of June. Jimmie’s Fishing Hole uses a periodic inventory system.

At the beginning of 2017, your company buys a $34,400 piece of equipment that it expects to use for 4 years. The equipment has an estimated residual value of 4,000. The company expects to produce a total of 200,000 units. Actual production is as follows: 42,000 units in 2017, 53,000 units in 2018, 47,000 units in 2019, and 58,000 units in 2020.


Required:

1. Determine the depreciable cost.
2. Calculate the depreciation expense per year under the straight-line method.
3. Use the straight-line method to prepare a depreciation schedule.
4. Calculate the depreciation rate per unit under the units-of-production method.
5. Use the units-of-production method to prepare a depreciation schedule.

Question a.

Jack and his partner, Sally, separated 5 years ago. The written separation agreement requires Jack to make payments for the maintenance of Sally and their child. Payments were set at $250 per month for Sally and $150 per month for their child. In the current year Jack’s payments totaled $4,000. How much of the current year payments can Jack deduct on his current year personal tax return?

Question b.

With respect to moving expenses, an eligible relocation would include moving to a new work location to take up employment at that new location after being unemployed.

Menlo Company distributes a single product. The company’s sales and expenses for last month follow:

Required:

1. What is the monthly break-even point in unit sales and in dollar sales?

2. Without resorting to computations, what is the total contribution margin at the break-even point?

3-a. How many units would have to be sold each month to attain a target profit of $33,600?

3-b. Verify your answer by preparing a contribution format income statement at the target sales level.

4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.

5. What is the company’s CM ratio? If sales increase by $63,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?