5. Imagine you're the Revenue Agent assigned to review Diana’s 2015 income tax return. She was a personal trainer, and has told you that she kept next to no records of her business expenses. When asked how she came up with the numbers listed for her expenses on the Schedule C for her business, she tells you that she just estimated the amounts. You talked to some of Elizabeth's clients and found out that she encourages all her clients to pay her in cash. Finally, a review of Elizabeth's bank account records shows that she deposited was paying personal expenses (like her apartment rent) from the bank account she set up for her personal training business.

You're preparing your report and the 30-day letter. Do you propose the accuracy-related penalty or the fraud penalty given the facts above, or no penalty at all? Explain your choice.

1. L&G's Lawn & Garden faces a demand curve of P=100-2Q and a marginal revenue for her product of 100-4Q.

a. what do you know about the elasticity of demand for this firm's output?

b. describe the industry structure and the nature of the firm's situation. Does it face competition? If so, what is the nature of that competition? Explain.

c. what is the profit maximization price and output for the firm which experiences constant marginal cost of $16? Why?

d. is there another market structure which would increase output and lower price? If so, what is the equilibrium price and quantity in the new market structure? Explain.

How does an MNE use innovation to a)create value, and b)increase revenue. Please give at least TWO specific examples for (a) and (b).

5- Research about the Internal Revenue Service (IRS) Accounting for Construction Contracts and explain how IRS determines the accounting method that can be used in a project. Discuss concepts such as a Small or Large Contractor.

FINANCIAL ACCOUNTING ( 5 multiple choice questions)

Chapter Revenue and Accounts Receivable :

1)On December 31, 20x5, you enter into a three year contract to build an office building for $19697757. At the end of 20x6, you incurred $6834251 of costs and expect to incur an additional $7626879 to complete the contract. How much revenue will you realize on this contract in 20x6?
Select one:
a. $2474801
b. $5236627
c. $17650656
d. $9309052

2)On December 31, 20x5, you enter into a three year contract to build an office building for $22055068. At the end of 20x6, you incurred $4231476 of costs and expect to incur an additional $8772453 to complete the contract. How much profit will you realize on this contract in 20x6?
Select one:
a. $2945239
b. $9051139
c. $6105900
d. $3017046

3)On January 1, 20x8, Myer Company’s allowance for doubtful accounts had a credit balance of $4319. Sales revenue for 20x8 was $985182 of which 80% was on credit. Historical data indicates that 3 percent of credit sales prove uncollectible. The company wrote off $7071 of accounts receivable during the year. What should the balance in the allowance account be after the adjusting entry for doubtful accounts is made?
Select one:
a. $16573 cr.
b. $12254 cr.
c. $20892 cr.
d. $12254 dr.

4) The following accounts were taken from Lane Co.’s unadjusted trial balance at December 31, 20x6:

Debit
Credit
Accounts Receivable
$339154

Allowance for doubtful accounts
2588

Net credit sales

$183769

Jessica estimates that 4.5% of the credit sales will become uncollectible. After adjustment at December 31, 20x6, what is the balance in the allowance for doubtful accounts?
Select one:
a. $10858
b. $5682
c. $15262
d. $8270

5)The following list of partial account balances is provided:

Sales returns and allowances
$461

Sales discounts
992

Sales revenue
61621

Allowance for doubtful accounts
934


What will be the net sales shown on the income statement?
Select one:
a. $59234
b. $60168
c. $61160
d. $60629

Sales revenue$745,000Cost of goods sold450,000Selling expenses58,000Administrative expenses72,000Loss on sale of equipment5,000Income tax expense64,000Shares of common stockOutstanding at January 115,000sharesAdditional issued at May 17,000sharesAdditional issued at November 12,000shares

Find earnings per share of common stock

Company ABC estimated revenue is 10 million in 2019 and 2% growth per year. Profit margin is stable annually and equals to 20%. Non-cash P&L items estimated at 12% of total sales. Company will purchase equipment at 2021 for 3 million. Interest expense is 800.000 annually and tax rate is 20%. Calculate FCFF for first 3 years. Explain the method you would use to calculate PV of future cash flows after year 3.

Using results, calculate value of the company if cost of capital is 5% and PV of future cash flows after year 3 is 14 million. Calculate the share price if there are 1 million outstanding shares. Would you invest in the company if market share price is 17$? Why?

With our understanding of revenue recognition lets see how we might apply the 5 step model to the following transaction that most of us have encountered. Lets say we visit our favorite phone store and sign up for new cell service. We sign up for and receive a new phone that would normally retail for $500 (cost to manufacture $380). We commit to a three year contract where we will have to pay back an amount that starts at $600 (to pay for the phone) but drops each month until it reaches zero at the end of 3 years (kind of like financing for the phone). We pay an activation fee of $35 along with the first month of service that will be $70 each month for the next 36 months. After one year of service, we will be eligible for $100 off the latest phone if we trade in the one year old phone for a new one. That rises to $200 after two years. You can describe how to apply the 5 step model to this transaction from the phone company side. Show journal entries when necessary to make sure this gets recorded (you do not have to show all of them just enough to get the idea).

Exercise 9-13 Revenue and Spending Variances [LO9-3]

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,000 per month plus $0.09 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.10 per car washed.

The actual operating results for August are as follows:

Required:

Calculate the company's revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)