A multiple choice test has 27 questions with four choices each. The examinee gets 3 for each right asnwer and -1 for each wrong answer. If the examinee decided to randonly choose all the asnwers, what is her expecteed score?

A) 0

B) 1

C) 9

D) -3

11-27 (Objectives 11-3 , 11-4) The following are misstatements that can occur in the sales and collection cycle:

A customer number on a sales invoice was transposed and, as a result, charged to the wrong customer. By the time the error was found, the original customer was no longer in business.

A former computer operator, who is now a programmer, entered information for a fictitious sales return and ran it through the computer system at night. When the money came in, he took it and deposited it in his own account.

A nonexistent part number was included in the description of goods on a shipping document. Therefore, no charge was made for those goods.

A customer order was filled and shipped to a former customer, which had already filed for bankruptcy.

The sales manager approved the price of goods ordered by a customer, but he wrote down the wrong price.

A computer operator picked up a computer-based data file for sales of the wrong week and processed them through the system a second time.

For a sale, a data entry operator erroneously failed to enter the information for the salesman’s department. As a result, the salesman received no commission for that sale.

Several remittance advices were batched together for inputting. The cash receipts clerk stopped for coffee, set them on a box, and failed to deliver them to the data input personnel.

Required

Identify the transaction-related management assertion(s) to which the misstatement pertains.

Identify one automated control that would have likely prevented each misstatement

3-27. The Georgeville city government provides a wide variety of services to the community. Among
them is the protection provided by the police force. In order to provide that force, it spends $3 million
on salaries, $200,000 on vehicle costs, and $300,000 on supplies.
The police force expects to have 7,000 measurable actions, consisting of 1,000 arrests, 4,000 traffic
citations, and 2,000 responses to emergency calls. It has noted that the average cost for each one of these
actions is $429 if you simply divide the $3 million department cost by the 7,000 specific individual
actions. Some have argued that it is not cost-effective to give out traffic tickets since the $429 cost per
ticket exceeds the fine collected. The Georgeville Police Department is considering adopting a
performance budget. The performance areas would be arrests, citations, and emergency responses.
The Police Department believes that activities related to making arrests consume 30 percent of salaries
and 40 percent of supplies. Traffic citations consume 30 percent of salaries and 10 percent of supplies.
Emergency response takes up 15 percent of salaries and 25 percent of supplies. Additionally, it performs
many other activities that collectively take up 25 percent of salaries and 25 percent of supplies. The
Police Department also estimates that its vehicles are used 25 percent for arrests, 30 percent for
citations, andand 5 percent for emergency responses. How much money is budgeted for each arrest,
citation, and emergency response? Regardless of your answer, assume that the cost per traffic citation
exceeds the average fine collected. Should the police cease issuing citations? Why?

Given that the density of air at 0.987 bar and 27°C is 1.146 kg m⁻³, calculate the mole fraction and partial pressure of nitrogen and oxygen assuming the following conditions.

(a) air consists only of these two gases
mole fraction nitrogen
  
mole fraction oxygen
  
partial pressure nitrogen
  bar
partial pressure oxygen
  bar

(b) air also contains 1.0 mole percent Ar
mole fraction nitrogen
  
mole fraction oxygen
  
partial pressure nitrogen
  bar
partial pressure oxygen
  bar
partial pressure argon
  bar

(1)Janice made a $6,000 contribution to her traditional IRA account. Her employer, Worldwide publishing, offers a 401k that Janice contributes to.

(2)Sale of LMN publically traded stock on 8/15/2019 for $11,000 (originally purchased for $4,000 on 1/15/2015)

(3)Sale of QRS publically traded stock on 10/15/2019 for $2,000 (originally purchased for $6,000 on 12/15/2018)

(4)Sale of a boat on 5/15/2019 for $10,000 used for personal recreation (originally purchased for $20,000 on 6/15/2014)

(5)Janice inherited publically traded stock worth $30,000 from a deceased uncle on September 30, 2019

(6)Immediately after receiving this stock, Janice sold it for $30,000. This stock was originally purchased by his uncle on January 15th, 2016 for $23,000

Prepare the 2019 Federal income tax return for Janice Morgan. It is required that you submit both the (1) tax return and a (2) brief explanation for each line item on the return.

(a)   The partnership of Hanly, Ide, and Jen was dissolved. By August 1, 2006, all assets had been converted into cash and all partnership liabilities were paid. The partnership balance sheet on August 1, 2006 (with partner residual profit and loss sharing percentages) was as follows:

Cash   $   50,000       Hanly, capital(30%)   $   4,000
               Ide, capital(20%)       (60,000)
               Jen, capital(50%)       106,000
Total assets   $   50,000       Total equity   $   50,000

The value of partners' personal assets and liabilities on August 1, 2006 were as follows:
       Hanly       Ide       Jen
Personal assets   $   74,000   $   120,000   $   56,000
Personal liabilities       72,000       80,000       60,000
                      
(a)   Required:

Prepare the final statement of partnership liquidation.

In 2004 David Lee started Lee Manufacturing, a company dedicated to manufacturing simple yet efficient gas barbecues. The barbecues are made of aluminum and stainless steel and are priced at the middle of the market. David’s goal has always been to make a barbecue that cooks great food. This means, good quality parts, simple construction, even heat, no hot or cold spots, and a barbecue that will hold temperature from the lowest setting to the highest setting. David’s motto is “high quality for a fair price”. The company offers four basic grill sizes (models) and several options and accessories that can be added on to each model. Lee’s barbecues have been well received. Revenue and profits have grown steadily.

Based on the recommendation from his sales and marketing department Mr. Lee is considering broadening his product line by adding a new product line of Lee charcoal barbecues. These barbecues would be ideal for those cooks that like that distinct charcoal flavor or the nostalgia of barbecuing the old fashioned way. Mr. Lee has asked his sales and marketing team to come up with a sales forecast for units and pricing. He has also asked his manufacturing team to come up with alternatives for the production of the charcoal barbecues including what equipment is needed and what the projected costs would be.

The sales and marketing team hired Advanced Marketing Consultants to conduct a market survey. The total cost for this consulting was $37,500. The initial model would be a mid-sized kettle barbecue. Eventually, two more models would be added, a smaller version ideal for camping or apartment patios and a larger model for the serious cooks.

Based on the survey and their own experience the sales and marketing team has provided a sales forecast. The suggested price of the initial barbecue is $46.90 per barbecue. They would be sold to retailers with a suggested retail price of $69.95. This would provide retailers with a target margin of 33%. The barbecues would be sold by the company’s existing sales force to its existing customer base. Unit sales are forecast at 2,500 in year 1, 5,000 in year 2, 6,500 in year 3, 8,000 in year 4, and then increasing by 1,000 each year thereafter. Sales and marketing expenses are expected to be 10% of total revenue.

The production team forecasts that the fixed costs needed for the charcoal barbecue production line will be $65,000 per year. Variable costs for materials (sheet aluminum, grills, handles wheels, etc.) is expected to be $15.50 per unit. The variable labor costs will vary based on what equipment will be purchased.

There are two brands of equipment that could be purchased to manufacture the lids and bowls of the barbecue. The first is made by the Strong Metal Equipment company. The second is made by the Precision Industrial company.

The Strong brand is more expensive, but higher quality and more efficient. It will cost $125,000 plus an additional $9,000 for shipping and installation. The equipment would be depreciated to zero over 5 years using straight line depreciation. It is expected that the equipment would last for 8 years at which time it would be sold then for $27,500. Maintenance of the Strong equipment would cost $5,000 per year. Since the Strong equipment is more efficient the variable labor cost would be $9.00 per barbecue.

The Precision brand is less expensive. It will cost $95,000 plus an additional $8,000 for shipping and installation. The equipment would be depreciated to zero over 5 years using straight line depreciation. It is expected that the equipment would last for 8 years and would then be sold for $22,000. Maintenance of the Precision equipment would cost $8,000 per year. The variable labor cost with the Precision brand equipment would be $9.75 per barbecue.

The increase in working capital (accounts receivable and inventory) is expected to be $35,000 at the beginning of the project and will be the same for both machines. The company’s cost of capital is 14% and its tax rate is 40%. Since Mr. Lee’s production team believes that both brands of equipment will last for eight years David wants this analyzed as an eight year project.

David has always believed in buying quality so he is leaning towards the Strong brand equipment. But after hearing that you have learned about capital budgeting in your Finance class at UVU he wants to take advantage of your expertise. David has asked you to analyze his choices and give him some advice on which option would provide the best financial outcome for Lee Manufacturing.

Prepare an analysis and professional report for Mr. Lee. The report should be professionally written and include a letter (single spaced), plus attached schedules. The letter should explain what analytical techniques you are using, why you are using those techniques, what the results show, what you would recommend to Mr. Lee and why. Make sure that the letter is well organized and professionally written. Also make sure that the letter includes the following:

1. The cash flows associated with the different equipment brands for each year of the project.

2. The PB period, Discounted PB, IRR, MIRR, and NPV for the two alternatives.

3. Your recommendation of which brand of equipment should be purchased.

4. Attach to your letter schedules that show your analysis and your work. Ideally you will submit two files. A Word file with your letter and an Excel file with your analysis.

1. Match the following situations with the correct test statistic distribution. Provide the correct test statistic you would use (or what type of test). Provide an explanation as to why this is the correct distribution or test. (2 points)

John from One Source Credit is trying to decide how many machines to buy. The processing time is 7.5 minutes per customer. One machine will have total fixed costs of $5,300 per day, two machines will have total fixed costs of $9,800 per day. Variable costs are $40 per customer, revenue is $80 per customer.

1. Determine the break-even point for one machine. a. 89 Customers per Day b. 133 Customers per Day c. 128 Customers per Day

2. Determine the break-even point for two machines. a. 223 Customers per Day b. 89 Customers per Day c. 245 Customers per day

3. If estimated demand is 260 customers per day and he wants a capacity cushion of 10%, how many machines would John need? Assume 12 hours per day operating time. a. One Machine b. Two Machines c. Three Machines

4. Lucy is analyzing her cookie production line. She knows that her Maximum Capacity is 140,000 cookies per day, and her Utilization Rate is 71%.. What is the Average Output of the production line? a. 197,183 b. 94,900 c. 99,400

5. If she wants to increase her effective capacity, she should: a. Have her employees take longer coffee breaks. b. Purchase more specialized equipment if there is cost justification to do so. c. Lobby for increased government regulation

2. The more complete the transfer, the more likely tax goals will be accomplished.

5. Larry just completed signing all the documents and transferring stocks and bonds worth $400,000 in trust to Martin. The irrevocable trust terms require the income to be accumulated or distributed to John and Jane in such portion as Martin thinks reasonable. When both John and Jane are deceased the trust is to terminate and the assets distributed to Wally. Wally's right to receive the assets upon termination make him the:

9. In UPC states an omitted child who is born after his or her parent's will was executed has better claim to a portion of the decedent's estate than an omitted child who was alive when it was executed.

10. In states that have adopted the UPC, a divorce automatically revokes an insurance beneficiary designation to the ex-spouse when such designation was made prior to the divorce.

11. Carl had four children, Martha, Terry, Ann, and Rick. Martha and Rick predeceased Carl. Martha has one child surviving. Rick has five surviving children. Terry has two surviving children and Ann has one surviving child. There are no great-grandchildren. If Carl's estate is left per capita at each generation to his issue, each of Rick's children will receive what fraction of Carl's estate?

12. Some community property states, such as California, allow property owned by the decedent to pass to a surviving spouse without being probated.

13. States adopting the UPC require a per capita at each generation distribution rather than per stirpes where there are issue surviving but no spouse.

14. For the all gift tax problems use the following annual exclusions: $10,000 for pre-2002; $11,000 for 2002 - 2005; $12,000 for 2006-2008. At the time these problems are written it is uncertain whether the exclusion will reach $12,000 in 2006 or 2007 but the guess is in 2006.

In 2005, Juantonio made a $1,250,000 gift ($1,240,000 taxable) to his brother and paid gift taxes of $. Two years later (2007) he gave his parents a home worth $754,000. Determine the gift tax for 2007:

15. For transfer taxes, a credit of $1 and a deduction of $1 imply the same tax saving.

16. For the all gift tax problems use the following annual exclusions: $10,000 for pre-2002; $11,000 for 2002 - 2005; $12,000 for 2006-2008. At the time these problems are written it is uncertain whether the exclusion will reach $12,000 in 2006 or 2007 but the guess is in 2006.

Maria died in 2006 leaving her entire estate to her three children. The value of her property was $3,340,000. The total debts and expenses deducted on the estate tax return were $220,000. The estate tax is:

17. In 2007, the estate tax for a taxable estate of $2,010,000 (with no prior taxable gifts) is $1,800, because subtracting the $2,000,000 applicable exclusion amount leaves just $10,000 subject to taxation at the marginal tax rate of 18 percent.

18. D transferred a term life insurance policy (on his own life) to the trustee of an irrevocable life insurance trust two years before he died. D had neither retained interests nor any power to appoint the corpus of the trust. The policy was worth only $100 when he transferred it. The trustee collected $7,000 when D died.

Select the letter corresponding to the IRC section which causes all or a portion of the property, or of the gift tax paid, to be included in the decedent's gross estate. If both 2035(a) and 2036 &/or 2038 apply select 2035(a). Note, IRC 2036 &/or 2038 are listed together because they often overlap.
(1)IRC section 2035(a) which requires inclusion of certain transfers made within three years of death.
(2)IRC section 2035(b) which requires grossing up of certain gift taxes.
(3)IRC section 2036 which requires inclusion of transfers with retained life estate, etc. or IRC section 2038 which requires inclusion of revocable transfers, etc.
(4)IRC section 2041 which requires inclusion of property over which one has a general power of appointment.
(5)None of the above apply and the property is not part of the decedent's gross estate.

19. Tara transferred stock to her minor daughter using the state's Uniform Transfer to Minor's Act provisions to complete the gift. Six years later, while still acting as custodian of the gift, Tara died.

Select the letter corresponding to the IRC section which causes all or a portion of the property, or of the gift tax paid, to be included in the decedent's gross estate. If both 2035(a) and 2036 &/or 2038 apply select 2035(a). Note, IRC 2036 &/or 2038 are listed together because they often overlap.
(1)IRC section 2035(a) which requires inclusion of certain transfers made within three years of death.
(2)IRC section 2035(b) which requires grossing up of certain gift taxes.
(3)IRC section 2036 which requires inclusion of transfers with retained life estate, etc. or IRC section 2038 which requires inclusion of revocable transfers, etc.
(4)IRC section 2041 which requires inclusion of property over which one has a general power of appointment.
(5)None of the above apply and the property is not part of the decedent's gross estate.

20. Just eight months before he died, D transferred land with a small house on it to X. It was worth a little over $2 million at the time and D paid the $435,000 in gift taxes. Toxic waste was discovered on the land shortly before D died so it was valued at just $500,000 at the time of D's death.

Select the letter corresponding to the IRC section which causes all or a portion of the property, or of the gift tax paid, to be included in the decedent's gross estate. If both 2035(a) and 2036 &/or 2038 apply select 2035(a). Note, IRC 2036 &/or 2038 are listed together because they often overlap.
(1)IRC section 2035(a) which requires inclusion of certain transfers made within three years of death.
(2)IRC section 2035(b) which requires grossing up of certain gift taxes.
(3)IRC section 2036 which requires inclusion of transfers with retained life estate, etc. or IRC section 2038 which requires inclusion of revocable transfers, etc.
(4)IRC section 2041 which requires inclusion of property over which one has a general power of appointment.
(5)None of the above apply and the property is not part of the decedent's gross estate.

21. Ila transferred separate property term insurance policy on her life to the independent trustee of an irrevocable life insurance trust. The terms of the trust create a life estate for Ila's husband and remainder to their children. The policy had a face (proceeds) amount of $200,000. Ila continued to pay the premiums on the policy and died five years after the transfer. All, or a portion, of the proceeds are in Ila's estate because:

Select the letter corresponding to the IRC section which causes all or a portion of the property, or of the gift tax paid, to be included in the decedent's gross estate. If both 2035(a) and 2036 &/or 2038 apply select 2035(a). Note, IRC 2036 &/or 2038 are listed together because they often overlap.
(1)IRC section 2035(a) which requires inclusion of certain transfers made within three years of death.
(2)IRC section 2035(b) which requires grossing up of certain gift taxes.
(3)IRC section 2036 which requires inclusion of transfers with retained life estate, etc. or IRC section 2038 which requires inclusion of revocable transfers, etc.
(4)IRC section 2041 which requires inclusion of property over which one has a general power of appointment.
(5)None of the above apply and the property is not part of the decedent's gross estate.

22. A taxable gift of life insurance will arise at the insured's death whenever the insured, the owner, and the beneficiary are three different parties.

23. A commercial annuity contract purchased by Don and given to his niece, Bernice, is a gift partly of a present interest and partly of a future interest because payments are spread out over a period of years.

24. On January 1, 2006, Bell died. His will left "$120,000 to Sara Smith, but if she predeceases me, then to her issue by right of representation." On June 10, 2006, Sara wrote Bell's executor the following note, "I don't need Bell's money, give it my kids, Kevin, Diane, and David. Signed, Sara Smith" Kevin, Diane, and David are Sara's only children. Which of the following are true statements?

(1)If Sara had waited more than nine months after Bell's death, the law will not allow her to give up her right to the inheritance.
(2)Sara has made a taxable gift of $40,000 to each child, no annual exclusion is allowed, because the probate must close before the children get the money.
(3)Sara has made a taxable gift of $30,000 to each child, their interests vest immediately, hence an annual exclusion.
(4)The disclaimer is tax effective even though it directs the transfer, since the children are next in line anyway according to Bell's will.

25. In 2007, Max gave each to his three children property worth $130,000 ($390,000 total). His wife, Mindy, gave $6,000 of her own property to one of the children. Assuming gift splitting, and no other gifts, Max's gift tax return will report taxable gifts of