Elements of the Income Statement for Hofstadter Experiments Ltd. follow:

Highlights of the Balance Sheet:

Required: (Round all answers to 2 decimal places).

1. Calculate the gross profit rate for both 2019 and 2020.
2. Did the gross profit rate improve or worsen from 2019 to 2020?
3. What was the Accounts Receivable Turnover ratio for 2020?
4. Explain what Accounts Receivable Turnover is in your own words.
5. What was the Return on Common Shareholders’ Equity for 2020?
6. What was the Current Ratio for 2020?
7. Is the current ratio calculated in f) adequate?

Elements of the Income Statement for Hofstadter Experiments Ltd. follow:

Highlights of the Balance Sheet:

Required:   (Round all answers to 2 decimal places).

1. Calculate the gross profit rate for both 2019 and 2020.
2. Did the gross profit rate improve or worsen from 2019 to 2020?
3. What was the Accounts Receivable Turnover ratio for 2020?
4. Explain what Accounts Receivable Turnover is in your own words.
5. What was the Return on Common Shareholders’ Equity for 2020?
6. What was the Current Ratio for 2020?
7. Is the current ratio calculated in f) adequate?

On 15 June 2020 Great Hall Pty Ltd reestablishes the account of one customer and records the collection of $2,200 in full payment of the account that had previously been written off. The present balance of the allowance for doubtful debts account is $1,000 CR.

After the above adjustment, Great Hall Pty Ltd assigns the following probability of uncollectible to each age group of receivables as at 30 June 2020 in the below table.

Required:

1. In the table above, estimate the total uncollectible receivables as at 30 June 2020.

Provide journal entries to record the recovery of the bad debt on 15 June 2020, and adjust the closing balance of the allowance for doubtful debts account on 30 June 2020.                                                                                  

An intensifying oil price war between Saudi Arabia and Russia has created “very painful” market conditions for the world’s largest crude oil producers. International benchmark Brent crude traded at $32.97 Thursday, down almost 8%, while U.S. West Texas Intermediate (WTI) stood at $30.40, around 7.8% lower. Oil prices have almost halved since the start of the year.
Last week, Saudi Arabia failed to secure Moscow’s support for deeper output cuts at a meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC plus. OPEC had proposed to deepen cuts by 1.5 million barrels per day and Russia was asked to cut an extra 300,000 bpd.
“There was no point in cutting until after everyone understood how sharply demand could fall. We cannot fight a falling demand situation when there is no clarity about where the bottom (of demand) is,” Pavel Sorokin, the Russia’s deputy energy minister, said.
“It is very easy to get caught in a circle when, by cutting once, you get into an even worse situation: oil prices would shortly bounce back before falling again as demand continued to fall.”
Cooperation between two (Saudi Arabia and Russia) of the world’s three largest oil producers — the third is the United States — appears to be at an end.
2How a Saudi-Russian Standoff Sent Oil Markets Into a Frenzy. 9th March 2020. New York Times
Russia to OPEC - deeper oil cuts won't work. 12th March 2020. Reuter
The losers — and even bigger losers — of an oil price war between Saudi Arabia and Russia. 12th March 2020. CNBC
a) With aid of diagram, explain how the fall in crude oil demand affect the output of OPEC plus members.
b) Discuss why Russia refuse to follow Saudi Arabia’s proposal to cut crude oil production with aid of diagram.

Facts: Opportunity Landscaping Inc. (Opportunity) appreciated your assistance in preparing their 2018 Federal income tax return. As a result, they have come to you for advice on acquiring new facilities for their manufacturing operations. They plan to take access to their new facilities on January 2, 2020.

The corporation has the opportunity to purchase an appropriate facility in suburban Chicago for $90,000,000 ($87,000,000 for the factory building; $3,000,000 for the land). If they purchase the facility, they would finance the acquisition via a 15-year mortgage at 3.5% interest with a $18,000,000 down payment (due at closing on January 2, 2020). The mortgage would be payable annually in arrears (i.e., the first mortgage payment would be due January 2, 2021). Real property taxes on the facility in 2020 would be $1,000,000 (the property taxes are also due annually in arrears with 2020 taxes due on January 2, 2021). Further, Opportunity estimates that property taxes will increase annually at a rate of 3% in years subsequent to 2020.

As an alternative, a local real estate investor has offered to purchase the facility and lease it to the corporation. The investor would require Opportunity to sign a 7-year non-cancelable lease. The first lease payment of $3,700,000 would be due on January 2, 2020. Lease payments will increase by 4% each year during the term of the lease with the final lease payment due on January 2, 2026. In addition, the lease would require a refundable deposit of $1,850,000 (payment due on January 2, 2020) against significant damages to the facility; this deposit will be refunded to the corporation on January 2, 2027 (when the occupancy ends and assuming that there are no significant damages).

Opportunity must decide whether to lease or buy the facility. In order to make a proper decision, the corporation will assume that it could sell the facility (building and land) on January 2, 2027 for $100,000,000. Under this scenario, they would make their final mortgage and property tax payments on January 2, 2027 and then sell the facility.

Opportunity’s Federal corporate tax rate is 21% and it uses a 7% discount rate to compute the present value of its future cash flows. For purposes of this analysis, assume that all cash flows occur at the beginning of the respective year.

Required:

1. Based on the above facts, which option (lease or buy) minimizes Opportunity’s after-tax cost of obtaining the facility?

2. The local real estate investor has provided an option for Opportunity to consider. Under this option, a payment of $12,000,000 is due on January 2, 2020. If this payment is made, no deposit is required and the payment is deemed to cover the first three years of the lease. On January 2, 2023, lease payments resume with a $4,000,000 lease payment due (and a 4% increase in the lease payment each year for the remainder of the lease term). Is this an alternative that Opportunity should consider? Read and apply the materials in text Section 6-2d as part of your analysis.

3. Opportunity’s CFO is not certain that the current 21% Federal tax rate will be maintained over the next seven years. She feels that an increase in the Federal rate to around 30% is likely at some point in the near term. As a result, she would like to know how your analysis would be affected if the Federal income tax rate increased to 30% on January 1, 2025.

I have calculated and found that the NPV for the lease option is ($19,516,098). I have also used the PMT function on excel and found that the annual mortgage payments are $6,251,405 (15 years; $72 million; 3.5% interest rate). I need help computing the NPV for the buy option in order to decide which option is best.

Spike purchased on 6/15/2020 and placed in service on 9/1/2020 a new warehouse for $5,000,000.

(a) Determine the cost recovery deduction for 2020.​​

(b) Spike sold the warehouse on March 22, 2028. Determine the cost recovery deduction for 2028.

On January 1, 2020, Sandhill Ltd. had 570,000 common shares outstanding. During 2020, it had the following transactions that affected the common share account:

The company’s year end is December 31.

QUESTIONS:

A) Determine the weighted average number of shares outstanding as at December 31, 2020.

B) Assume that Sandhill earned net income of $3,227,000 during 2020. In addition, it had 100,000 of 8%, $100 par, non-convertible, non–cumulative preferred shares outstanding for the entire year. Because of liquidity limitations, however, the company did not declare and pay a preferred dividend in 2020.

Calculate earnings per share for 2020, using the weighted average number of shares determined above.

C) Assume that Sandhill earned net income of $3,227,000 during 2020. In addition, it had 100,000 of 8%, $100 par, non-convertible, cumulative preferred shares outstanding for the entire year. Because of liquidity limitations, however, the company did not declare and pay a preferred dividend in 2020.

Calculate earnings per share for 2020, using the weighted average number of shares determined above.

D) Assume that Sandhill earned net income of $3,227,000 during 2020. In addition, it had 100,000 of 8%, $100 par, non-convertible, non–cumulative preferred shares outstanding for the entire year. Because of liquidity limitations, however, the company did not declare and pay a preferred dividend in 2020. Assume that net income included a loss from discontinued operations of $405,000, net of applicable income taxes.

Calculate earnings per share for 2020.

LOCATION: Inpatient, Hospital

PATIENT: Simon Sulten

ATTENDING PHYSICIAN: Gary Sanchez, MD

SURGEON: Gary Sanchez, MD

PREOPERATIVE DIAGNOSES 1. Colostomy for obstructing colon cancer. 2. Cholelithiasis.

POSTOPERATIVE DIAGNOSES: Same as Preoperative.

PROCEDURES PERFORMED 1. Takedown colostomy with end-to-end colorectostomy. 2. Open cholecystectomy.

ANESTHESIA: General.

PROCEDURE: The patient was brought to the operating room, placed under general anesthesia, and prepped and draped sterilely. The previous midline was reopened with the #10 blade, and we excised the old scar. We carried our dissection through subcutaneous tissues using electrocautery. Midline fascia was divided sharply. We entered the peritoneal cavity and entered the midline fascia along the length of the incision. We took down numerous filmy adhesions and ran the small bowel from the terminal ileum to the ligament of Treitz, which appeared normal. First, we placed an Omni retractor and exposed the right upper quadrant. We identified the cystic duct and cystic artery and tied them off with 0 silk ties distally before transecting them. We then shelled the gallbladder from its fossa using electrocautery. We placed a pack up by the liver bed. We then identified the rectal stump and dissected this free. We then made an elliptical incision around the colostomy opening and carried our dissection down to fascia, freed up the stoma, and fired our TLC-75 stapler across the descending colon. We then sent the specimen to pathology. We mobilized the left colon along the avascular line of Toldt up and around the splenic flexure. Once we had adequate length we placed a Glassman clamp proximally on the rectum and distally on the descending colon. We then performed a two-layer, hand-sewn, end-to-end anastomosis with an outer layer of 3–0 silk Lembert and inner layer of running 3–0 Vicryl. There was a patent anastomosis, and we could easily milk contents through with no evidence of spilling. We then closed the fascia from the colostomy site with interrupted 0 Vicryl and running 0 PDS. We closed the skin with skin clips.

All sponge and needle counts were correct. The patient tolerated the procedure well and was taken to recovery in stable condition.

Abstracting & Coding Questions:

1. What was the approach?

2. What did the surgeon do with the existing colostomy?

3. What did the surgeon do with the intestinal opening left by removal of the colostomy?

4. What type of diagnosis code was reported for the resection of the colostomy?

5. What is a stoma?

6. What CPT code(s) would be reported for this case?

7. What ICD-10-CM code(s) would be reported for this case?

Case 4: Basma (formerly, Patricia) a recent convert to Islam, alleges that she was terminated from her job as a metal punch operator in a large metal fabrication plant because of her religion (Islam). Shortly after her conversion, she notified her supervisor, Ken, that her new faith requires her to dress according to hijab, "the correct standard of modesty." She also stated that this meant she could no longer wear pants, as required by the factory’s dress code. She further requested religious accommodation by being permitted to wear the jibaab (long and loose-fit coat or garment worn by some Moslem women) while at work.

Ken responded that this could not be done as OHSA and other safety regulations precluded anyone from working around the machinery in loose clothing. Basma, then said asked Ken if he could transfer her to another job. Ken told the only other jobs in the plant where industrial hoist and gantry crane operator and programmer/analyst. Ken informed her that since she possessed no programming skills, that she was not qualified for the programmer/analyst job. He then asked her if she could operate an industrial hoist/gantry crane, she responded that she could not.

When Basma showed up for work the next day in a jibaab, Ken told her to go home and return in the appropriate work attire. When she refused, she was terminated.

Basma immediately filed a complaint with the EEOC for religious accommodation. Her employer is a Title VII employer, but management contends that the dress code is essential to the safe and efficient operation of the mill, and the company has evidence that the dress code was imposed following several accidents in which loose shirts worn by employees were caught in the same type of mill machinery that Basma operates.

a. Can Basma establish a prima facie case for religious accommodation? Why? (5 points)

b. Has Ken violated Title VII? Why or why not? (4 points)

c. Given the above scenario, is there a reasonable religious accommodation for Basma? If so, what? (2 points)

Exercise 20-04

The following facts apply to the pension plan of Sheridan Inc. for the year 2020. Plan assets, January 1, 2020 $528,000 Projected benefit obligation, January 1, 2020 528,000 Settlement rate 8 % Service cost 43,400 Contributions (funding) 26,600 Actual and expected return on plan assets 51,600 Benefits paid to retirees 35,600 Using the preceding data, compute pension expense for the year 2020.

As part of your solution, prepare a pension worksheet that shows the journal entry for pension expense for 2020 and the year-end balances in the related pension accounts. (Enter all amounts as positive.)