Company Delta is trying to decide which of the two IT systems to install. Syske 10 million euro and will increase operating profits by 5 million euro per year. Its useful life is five years. Because of rapid technological change, it will have no salvage walue of this time. System 2 costs 15 million euro and will increase operating profits by 8 million euro per year. Its useful life also 5 years, it also will have no salvage value. For tax purposes the company can depreciate either computer system on a straight-line basis.
a) Suppose the company's tax rate is 40% and its cost of capital for either IT system is 10 per cent.
Which system should it buy?
b) If no depreciation is allowed, which IT system is a better choice?

Balch acquired 80 percent of Birch's outstanding shares on January 1, 2016, in exchange for $369,000 in cash. The subsidiary's stockholders' equity accounts totaled $353,000 and the noncontrolling interest had a fair value of $92,250 on that day. However, a building (with a ten-year remaining life) in Birch's accounting records was undervalued by $19,000. Balch assigned the rest of the excess fair value over book value to Birch's patented technology (five-year remaining life).

At December 31, 2018, Balch owes Birch $19,000 for inventory acquired during the period.                                                                                                                                                         

The following separate account balances are for these two companies for December 31, 2018, and the year then ended.  Note: Parentheses indicate a credit balance.

complete the consolidation worksheet for December 31, 2018.

example of an s&p 500 company that uses activity-based costing, overall review of this company, advantages, and disadvantages specific with the firm.

Question Two The following balances were extracted from the books of Bashara Kabwa Enterprises, a wholesale business, as at 31 October 2018: Drawings 660,000 Trade receivables 990,000 Purchases 2,303,840 Sales returns 79,420 Capital 4,101,100 Trade payables 330,000 Sales 4,691,280 Purchases returns 120,340 Discount received 93,720 Provision for depreciation: Motor vehicles 176,000 Fixtures and fittings 63,800 Allowances for doubtful debts 44,000 15% bank loan 220,000 Salaries and wage 1,034,000 Discount allowed 54,560 Bank balance 568,260 Cash in hand 26,400 Electricity expenses 103,840 Rent and rates 54,560 Freehold premises (cost) 1,569,700 Fixtures and fittings (cost) 334,400 Motor vehicles (cost) 462,000 Stationery 34,320 Postage and telephone expenses 44,000 Insurance premiums 13,200 Bad debts written off 15,840 Motor vehicle expenses 84,920 Inventory (1 November 2017) 1,393,480 Interest on bank loan 16,500 Additional information: 1. The value of inventory as at 31 October 2018 was Sh. 1,036,400 2. Sales includes Sh. 300,000 worth of goods sold by Bashara Kabwa Enterprises agents, who are allowed 15% commission on such sales. This transaction has not been recorded in the books. 3. Depreciation is to be provided as follows: Fixtures and fittings – 10% per annum on reducing balance basis. Motor vehicle – 15% per annum on straight line basis. 4. Annual insurance premium amounted to Sh. 12,000. 5. As at 31 October 2017, there was a balance of Sh. 65,000 received from a customer in cash. 6. Salaries and wages were in arrears of Sh. 35,000 7. The Electricity bill for the month of October of Sh. 14,500 was received on 5 November 2018. 8. An allowance of 5% is to be maintained for doubtful debts. 9. Goods worth Sh. 48,840 had been distributed to potential customers as free samples. Required: a) Income statement for the year ended 31 October 2018 b) Statement of Financial position as at 31 October 2018 c) Error of commission :

Mr. and Mrs. Lovejoy are married with no dependent children. Mr. Lovejoy worked for Smart Tech Corporation January through March and for Computer Associates the remainder of the year. Mrs. Lovejoy finished her degree in November and immediately began as an associate with Smith and Weber. They report the following information for 2018. Use Individual Tax Rate Schedules and Standard Deduction Table.

Standard Deduction Table

1. Compute AGI.
2. Compute taxable income.
3. Compute net tax liability (after credits).

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO.

Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activity based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor $6.00 per direct labor-hour Machine processing $3.00 per machine-hour Machine setups $45.00 per setup Production orders $160.00 per order Shipments $115.00 per shipment Product sustaining $775.00 per product Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year 200 2,000 Direct labor-hours 1,100 50 Machine-hours 2,800 40 Machine setups 21 2 Production orders 21 2 Shipments 42 2 Product sustaining 2 2

Required: Determine the total overhead cost that would be assigned to each of the products listed above in the activity-based costing system.

Please fill in all of these amounts and show you arrived at your calculations.

Sage Co. sells $440,000 of 12% bonds on June 1, 2017. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2021. The bonds yield 8%. On October 1, 2018, Sage buys back $132,000 worth of bonds for $137,000 (includes accrued interest).

Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end.

Prepare all of the relevant journal entries from the time of sale until the date indicated. Give entries through December 1, 2019. (Assume that no reversing entries were made.) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

6/1/17 Cash-Debit Premium on Bonds Payable-Credit Bonds Payable-Credit

Interest Expense-Debit Premium on Bonds Payable-Debit Cash-Credit

Interest Expense-Debit Premium on Bonds Payable-Debit Interest Payable-Credit (3 entries)

Interest Expense-Debit Interest Payable-Debit Premium on Bonds Payable-Debit Cash-Credit  

I

Bonds Payable-Debit Premium on Bonds Payable-? Gain on Redemption of Bonds-? Cash-Credit

Bonds Payable-Debit Premium on Bonds Payable-? Gain on Redemption of Bonds-Debit Cash-Credit

3 Entries

3 Entries

4 Entries

12/1/19 3 Entries

Comparative financial statement data for Carmono Company follow:

For this year, the company reported net income as follows:

This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.

Required:

1. Using the indirect method, prepare a statement of cash flows for this year.

2. Compute Carmono’s free cash flow for this year.

SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system: Driver and guard wages $ 1,180,000 Vehicle operating expense 610,000 Vehicle depreciation 490,000 Customer representative salaries and expenses 520,000 Office expenses 380,000 Administrative expenses 680,000 Total cost $ 3,860,000 The distribution of resource consumption across the activity cost pools is as follows: Travel Pickup and Delivery Customer Service Other Totals Driver and guard wages 50 % 35 % 10 % 5 % 100 % Vehicle operating expense 70 % 5 % 0 % 25 % 100 % Vehicle depreciation 60 % 15 % 0 % 25 % 100 % Customer representative salaries and expenses 0 % 0 % 90 % 10 % 100 % Office expenses 0 % 20 % 30 % 50 % 100 % Administrative expenses 0 % 5 % 60 % 35 % 100 % Required: Complete the first stage allocations of costs to activity cost pools.

The accountant for Baird’s Dress Shop prepared the following cash budget. Baird’s desires to maintain a cash cushion of $24,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 1 percent per month.

Required

1. Complete the cash budget by filling in the missing amounts.

2. Determine the amount of net cash flows from operating activities Baird’s will report on the third quarter pro forma statement of cash flows.

3. Determine the amount of net cash flows from financing activities Baird’s will report on the third quarter pro forma statement of cash flows.

Complete the cash budget by filling in the missing amounts. (Any shortages or repayments should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.)

Determine the amount of net cash flows from both operating and financing activities Baird's will report on the third quarter pro forma statement of cash flows. (Round intermediate calculations and final answers to the nearest whole dollar amount.)

rev: 09_29_2016_QC_CS-63658

The following data represent the beginning inventory and, in order of occurrence, the purchases and sales of Las Lemus, Inc. for an operating period.

Assuming Las Lemus, Inc. uses weighted-average (periodic) inventory procedures, the ending inventory cost is:

At 30 June 2013, the financial statements of Detroit Ltd showed a building with a cost of $300,000 and accumulated depreciation of $150,000. The business uses the straight-line method to depreciate the building. When acquired, the building’s useful life was estimated at 50 years with no residual value. On 1 January 2019, Detroit Ltd completed structural improvements to the building costing $93,000 and paid with cash. As a result of the improvements, the useful life of the building was changed to 50 years from the date of the improvements. No change is expected in the residual value. Ignore GST.

Required:

1. Calculate the number of years the building had been depreciated to 30 June 2013.
2. Prepare the general journal entry to record the cost of the structural improvements on 1 January 2019
3. Prepare the general journal entry to record the building’s depreciation expense for the year ended 30 June 2019. Assume no depreciation had been recorded since 30 June 2018.