On December 31, 2012, Lunes Company collected $174,000 in unearned subscription revenue which is to be earned equally over the next three (3) years. Pretax financial income in 2012 amounted to $595,000. Lunes’ applicable tax rate is 34% in 2012. Recently enacted tax laws have indicated that Lunes’ tax rate will increase to 37% in 2013. There is no evidence to suggest any future tax rate changes beyond what is currently known.  

Background:

Gracious Industries is a private limited company with 35 employees and sales revenue of more than $10.5 million during the past year. It has been in business for over 40 years and supplies electronic parts to a number of different businesses, including hardware stores and supermarket. The company has experienced a growth in orders over the last few years for some of its new green product ranges. However, Gracious has recently lost some key accounts because of being unable to produce some of its products at a competitive price. Although the company hired an accountant who was keeping their books for them and producing the financial statements each year, the company thought they needed much more information to run their business efficiently. They felt that they needed to make an investment in an accounting software to take their business to the next level.

Required: You are required to prepare a report to evaluate and recommend an Enterprise Resource Planning (ERP) system for Gracious Industries. The report should include the following components:

 Business requirements o What are the key business processes for Gracious Industries? o What are the major control risks for the business processes of the company?

 Systems requirements o What are some of the possible ERP features and functionalities that the company should consider to achieve their business objectives and minimise the control risks?

 Software selection o Visit the websites of at least three (3) ERP vendors and provide a brief description of each vendor and its products.

 Vendor selection o Compare and contrast the features and functionalities of two ERP software packages offered by the three vendors described in the report. o Which one would be the most suitable vendor and ERP software package for the company and why?

Pay your taxes: According to the Internal Revenue Service, the proportion of federal tax returns for which no tax was paid was =p0.326. As part of a tax audit, tax officials draw a simple sample of =n140 tax returns. Use Cumulative Normal Distribution Table as needed. Round your answers to at least four decimal places if necessary.

Part 1 of 4

(a)What is the probability that the sample proportion of tax returns for which no tax was paid is less than 0.29?

Part 2 of 4

(b)What is the probability that the sample proportion of tax returns for which no tax was paid is between 0.36 and 0.43?

Part 3 of 4

(c)What is the probability that the sample proportion of tax returns for which no tax was paid is greater than 0.32?

Part 4 of 4

(d)Would it be unusual if the sample proportion of tax returns for which no tax was paid was less than 0.23?

You have purchased $320,000 of computer equipment that is in a CCA Class 10 (Canada Revenue Agency). Using the half-in-first-year rule, how much depreciation would occur in year 3?

19.       Which of the following terms describes the act of stealing cash revenue after it has been recorded in the accounting system?

            A) cash larceny

            B) register disbursement

            C) less cash scheme

            D) skimming

20.          Diana, a forensic accountant, obtained the financial statements of Ryer Inc. from its accountant. She noted that Ryer generated a profit of $152.7 million in the previous year. This is an example of

            A) third-party data.

            B) quantitative data.

            C) fourth-party data.

            D) qualitative data.

21.          Which of the following is an example of nonexistent data?

            A) The check slips for the month of June and July were misplaced. The bank maintains a copy of this at the client's request.

            B) Some entries were changed to reflect a higher value of assets. The invoices containing the original amount are yet to be altered.

            C) The client refused to divulge the details of the sale contract. The supplier does not have a copy of the contract.

            D) The company maintains documents supporting transactions only for three years. The transaction in question was made five years ago.

22.          Which of the following is an advantage of third-party data source?

            A) It can be obtained independently by the forensic accountant, without the assistance of the subject or engaging counsel.

            B) It is outside the subject's ability to manipulate.

            C) It is direct and accessible.

            D) It can give an insight on the environment in which the subject operates.

23.          If the opposing party fails to comply with discovery requests or does not have access to        the data, it may be necessary for the attorney to issue a

            A) writ.

            B) subpoena.

            C) order.

            D) search warrant.

24.          Which of the following is a feature of a normal distribution?

            A) It is positively skewed.

            B) Its mean, median, and mode are all equal.

            C) It is completely described by its median and variance.

            D) The normal distribution curve is s-shaped.

The following information is available for year 1 for Pepper Products:

   
All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 4 percent, but prices are expected to rise by 11 percent. Material costs per unit are expected to increase by 7 percent. Other unit variable manufacturing costs are expected to decrease by 6 percent per unit. Fixed cash costs are expected to increase by 3 percent.

Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 3 percent. Inventories are kept at zero. Pepper Products operates on a cash basis.

Required:

Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)

Company X is planning to add another project, which will generate $125,000 annual revenue for the company in the next 6 years, with operating costs of $50,500 per year. To take this new project, the company has to purchase a new equipment with a price of $168,000 and add additional $40,000 in net working capital. The equipment will be depreciated using 7-year MACRS depreciation method (7-year MACRS depreciation rates are showing below). The company thinks the equipment could be sold out by the end of year 6 for $20,000. With a tax rate of 35% and required return of 18%, should the company take this project or not? Why? (Please show both NPV and IRR decisions). 7-year MACRS 1. 14.29% 2. 24.49% 3. 17.49% 4. 12.49% 5. 8.93% 6. 8.92% 7. 8.93% 8. 4.46%

The organizations’ Controller has received a notice from the Canada Revenue Agency (CRA) advising that the organization will be changing from an Accelerated threshold 1 remitter to an Accelerated threshold 2 remitter effective with the first pay of the new year. The Controller has asked you to provide an explanation of why this change has occurred.

In addition, she wants to understand how this will impact the statutory remittance schedule. Using the Current Year calendar in the course material, provide specifics of when the remittances are due for the January and February bi-weekly payrolls starting with the first pay date of the new year which is Friday January 5^th.

list three tests of internal controls for each of the following: Revenue and cash receipts. Why do you think these controls are important?