Part A
A $400,000 investment in a surface mount placement machine produces pre-tax revenue of $55970/yr for 10 years, at which time the SMP machine has a salvage value of $100,000. Based on a 25% income tax rate, a 12% after tax MARR, & SLN depreciation, what will be the ATPW (After Tax Present Worth) of the investment? $  

Part B
Brian a Temple graduate suggests using a 6% bond issue to pay for the investment from the previous example. What will the ATPW be? $  (remember that a bond pays interest only each year and is repaid in full at the end of the term.

I made a typo in the income range. If your income is less than 54000 your tax liability will be negative. This will not change the solution, and it makes sense because a negative tax liability does increase income by lowering the taxes paid on other income.

Explain the appropriate field work needed to review high-risk business transactions for cash and revenue.

1. What would you need to do in the field to investigate these?

2. Could you convey this information through charts or other supporting documentation?

Express Delivery is a rapidly growing delivery service. Last year, 80% of its revenue came from the delivery of mailing “pouches” and small, standardized delivery boxes (which provides a 20% contribution margin). The other 20% of its revenue came from delivering non-standardized boxes (which provides a 70% contribution margin). With the rapid growth of Internet retail sales, Express believes that there are great opportunities for growth in the delivery of non-standardized boxes. The company has fixed costs of $12,100,000.

(a) What is the company’s break-even point in total sales dollars? At the break-even point, how much of the company’s sales are provided by each type of service? (Use Weighted-Average Contribution Margin Ratio rounded to 4 decimal places e.g. 0.2552 and round final answers to 0 decimal places, e.g. 2,510.)

(b) The company’s management would like to hold its fixed costs constant but shift its sales mix so that 60% of its revenue comes from the delivery of non-standardized boxes and the remainder from pouches and small boxes. If this were to occur, what would be the company’s break-even sales, and what amount of sales would be provided by each service type? (Use Weighted-Average Contribution Margin Ratio rounded to 4 decimal places e.g. 0.2552 and round final answers to 0 decimal places, e.g. 2,510.)

During the year ended December 31, 2017, Kelly’s Camera Equipment had sales revenue of $170,000, of which $85,000 was on credit. At the start of 2017, Accounts Receivable showed a $10,000 debit balance, and the Allowance for Doubtful Accounts showed an $800 credit balance. Collections of accounts receivable during 2017 amounted to $68,000.

Use the following data for 2017 to answer the questions:

1. On December 10, 2017, a customer balance of $1,500 from a prior year was determined to be uncollectable, so it was written off.
2. On December 31, 2017, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year.

1. Prepare the required journal entries for the two events in December 2017.

2. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the balance sheet and income statement for 2017.

22. Dividend Revenue is never recorded for dividends received from an Equity Method Investment. 23. Under the equity method, the Equity Method Investment account is being adjusted for the investor’s share (ownership %) of changes in the investee company’s equity. When the investee company reports earnings, the investee company’s equity increases and the value of the Equity Method Investment on the investor’s balance sheet will ___________________. When the investee company pays dividends to its shareholders, the investee company’s equity decreases and the value of the Equity Method Investment on the investor’s balance sheet will ______________________. 24. Long-term investments in equity securities with controlling influence are accounted for using the ________________________________ method. 25. The controlling investor company is called the __________________, and the investee company is called the ______________________________

10. A company reported annual sales revenue of $1,800,000. During the year, accounts receivable decreased from a $56,000 beginning balance to a $48,000 ending balance. Accounts payable decreased from a $44,000 beginning balance to a $32,000 ending balance.

How much is cash received from customers for this year?

11. A company reported annual sales revenue of $2,580,000. During the year accounts receivable increased from a $56,000 beginning balance to a $76,000 ending balance. Accounts payable decreased from a $52,000 beginning balance to a $24,000 ending balance.

     How much is cash received from customers for the year?

12. A company reported cost of goods sold of $1,760,000 for the year. During the year, inventory increased from a $92,000 beginning balance to a $140,000 ending balance, and accounts payable increased from a $48,000 beginning balance to a $56,000 ending balance.

How much is the cash paid for merchandise purchased during the year?

13. A company reported annual income tax expense of $328000. during the year, income tax payable increased from a 248000$ beginning balance to a $35200 ending balance. How much is the cash paid for income taxes during the year?

CASE STUDIES - AHIMA 4.16 - COMPETENCY IV.3

you have just been hired as the revenue cycle manager at a local acute care hospital. one of the first items of business is to review the processes in place for the revenue cycle, and you are surprised to see that no external coding audits have been done for several years. when you ask the coding manager why no external audits have been performed, she explains that the HIM director was told by the director of finance that the cost would not justify the expenditure. You decide to request a meeting with the finance director to present a case defending the need for external audits. Draft a recommendation with your rationale as to the importance of external audits and reasoning for how the expense of external audits can be mitigated.

The Internal Revenue Service (IRS) annually processes more than 222 million tax returns. The returns are then converted into electronic records. The information contained in these records is protected by law and considered sensitive. Maintaining this type of information could make the IRS a target for computer hackers—individuals who attempt to gain unauthorized access to computers or computer networks.

The IRS has made significant efforts to secure the perimeters of its computer network from external cyberthreats. Because hackers cannot gain direct access to the IRS through these Internet gateways, they are likely to seek other methods. One such method is social engineering, which is the process of gaining information from people, often through deception, for the purpose of finding out about an organization’s computer resources. One of the most common tactics is to convince an organization’s employees to reveal their passwords.

In August 2001, with the assistance of a contractor, the IRS conducted social engineering tests on IRS employees. The IRS team placed calls to 100 IRS employees, asking them to change their passwords to what the team suggested. Of those employees called, 71 were willing to accommodate the team’s request.

The employees gave the following reasons for why they were willing to accommodate the request:

1. They were not aware of social engineering tactics or the security requirements to protect their passwords.
2. They were willing to assist in any way possible once the team members identified themselves as the IT help desk.
3. They were having network problems, and the call seemed legitimate.
4. Although they questioned the caller’s identity and could not locate the caller’s name, which was fictitious, in the global e-mail address book, they changed their passwords anyway.
5. They were hesitant, but their managers gave them approval to assist the team.

a. Were any of these reasons valid?

b. What could the IRS do to mitigate the vulnerability?