Other data:

Accrued but unrecorded and uncollected consulting fees earned at December 31 amount to: $27500.

The company determined that $16500 of previously unearned consulting fees had been earned at December 31.

Office supplies on hand at December 31 total $330

The company purchased all of its equipment when it first began business. At that time, the estimated useful life of the equipment was six years.

The company prepaid its nine-month rent agreement on June 1, 2020.

The company prepaid its six-month insurance policy on December 1, 2020

Accrued but unpaid salaries total $13200 at December 31,2020.

On September 1, 2020, the company borrowed $66000 by signing an eight-month, 4 percent note payable. The entire amount, plus interest, is due March 31, 2021.

Account                                                                                 Debit                             Credit

Cash                                                                                       304,150

Accounts Receivable                                                            99,000

Office supplies                                                                            880

Prepaid rent.                                                                           3,960

Unexpired insurance                                                              1,650

Office equipment                                                                  79,200

Accumulated depreciation: office equipment                                                        26,400

Accounts payable                                                                                                           4,400

Notes payable (due 3/1/12)                                                                                       66,000

Interest payable                                                                                                                 660

Income taxes payable                                                                                                    9,900

Dividends payable                                                                                                          3,500

Unearned consulting fees                                                                                           24,200

Capital stock                                                                                                                  220,000

Retained earnings                                                                                                         44,000

Dividends                                                                              3,500

Consulting fees earned                                                                                               550,000

Rent expense                                                                      16,170

Insurance expense                                                               2,420

Office supplies expense                                                      4,950

Depreciation expense: office equipment                      12,100

Salaries expense                                                                363,000

Utilities expense                                                                    5,280

Interest expense                                                                    3,300

Income taxes expense                                                        49,500

Totals                                                                                   949,060                      949,8060

Instructions:

1. Prepare the necessary adjusting journal entries on December 31, 2020. Also prepare an adjusted trial balance dated December 31, 2020 (20 points).
2. From the adjusted trial balance prepared in part a, prepare an income statement and statement of retained earnings for the year ended December 31, 2020. Also prepare the company’s balance sheet dated December 31, 2020 (20 points).
3. Prepare the necessary year-end closing entries (15 points).
4. Prepare an after-closing trial balance (15 points).
5. Compute the company’s average monthly insurance expense for January through November 2020 (5 points).

In a study on students’ intention to apply for graduate school, a researcher is interested in the difference between Sociology majors and Justice Studies majors at a large state university. The research hypothesizes that the proportion of sociology majors who intend to apply for graduate schools is higher than that of Justice Studies majors. To test this hypothesis, the research interviews 60 juniors and seniors majoring in sociology and 105 in Justice Studies majors. Of the 60 sociology majors, 35 say that they are considering applying; and of the 105 Justice majors, 40 say that are considering applying. Sociology Justice Studies N1 = 60 N2 = 105 f1 = 35 f2 = 40 Please test the hypothesis stated above (i.e. the proportion of sociology majors who are considering applying for graduate school is higher than the proportion of Justice Studies majors.) (10 points). (Note: this is a hypothetical research situation and none of the statistics presented in the above table is “real.”)

BOR CPAs, Inc. is a closely held corporation owned by three stockholders who used the initials of their last names to form the corporation’s name: Cyrus Bailey, John Ogden, and Samuel Rogers. The firm’s Certified Public Accountants (CPAs) perform audits of both public companies and privately owned companies. BOR’s CPAs also provide tax services to both individuals and businesses.

The corporation is divided into two profit centers: the Audit Division and the Tax Division. Each division is composed of two cost centers. The Audit Division is composed of two cost-center departments: Public Company Audits and Private Company Audits. The Tax Division is composed of two cost-center departments also: Individual Tax and Business Tax.

BOR, a decentralized organization, is interested in evaluating the performance of the two divisions. The stockholders are responsible for deciding on investment in the two divisions. Cyrus Bailey is in charge of the performance evaluation, and turns to you for assistance. Mr. Bailey is only interested in evaluating operations at the profit center (division) level, and not at the cost center (department) level.

Mr. Bailey is considering temporarily using some of the staff from the Tax Division to assist the Audit Division during the upcoming busy audit season, and would like to evaluate the effect of this on net income. The Tax Division is estimated to have 800 hours of excess capacity.

The unit for determining sales revenue in both divisions is the "engagement", which means the total agreed-upon work for a given client in either audit or tax for a given year. The company charges on average a fee of $75,000 per audit engagement, and $15,750 per tax engagement.

The company has its own Payroll Office, which provides payroll services to both divisions and will allocate its total expenses to the two divisions as service department charges.

The following chart shows some basic data for the company:

Mr. Bailey asks that you prepare Divisional Income Statements showing what 20Y1 results would have been had the Audit Division purchased all the excess capacity of the Tax Division, using a cost transfer price. The divisional managers tell you that, with the excess capacity of the Tax Division of 800 hours, the Audit Division can perform 4 more audits during the year, and the Audit Division would pay the Tax Division's internal hourly rate of $50.00 per hour for the additional hours required, with the Tax Division selling all its excess capacity to the Audit Division. The Tax Division would still be responsible for paying the salaries of their employees.

Complete the following Income Statements. Enter all amounts as positive numbers. If there is no amount or an amount is zero, enter “0”.

Shaded cells have feedback.

Mr. Bailey asks that you prepare Divisional Income Statements showing what 20Y1 results would have been had the Audit Division purchased all the excess capacity of the Tax Division, using a cost transfer price. The divisional managers tell you that, with the excess capacity of the Tax Division of 800 hours, the Audit Division can perform 4 more audits during the year, and the Audit Division would pay the Tax Division's internal hourly rate of $50.00 per hour for the additional hours required, with the Tax Division selling all its excess capacity to the Audit Division. The Tax Division would still be responsible for paying the salaries of their employees.

Complete the following Income Statements. Enter all amounts as positive numbers. If there is no amount or an amount is zero, enter “0”.

Score: 1/64

Question-----Which carmakers are most likely to benefit from the elimination of the North American Free Trade Agreement? Which will be most negatively impacted? Please help me answer question-+- Read article "It’s Not Just Ford: Trump’s Trade Barbs Threaten VW, Toyota Too" Ford Motor Co. was a favorite target of Donald Trump, who lambasted the company for producing cars south of the border throughout his campaign. Toyota Motor Corp., Volkswagen AG and other U.S. carmakers are just as exposed. Toyota and Nissan Motor Co., Japan’s largest automakers, were spared from Trump’s critique by name on the campaign trail. Yet, along with General Motors Co. and VW, they all rely on Mexican plants for millions of vehicles and a high volume of parts. That puts them at risk if the president-elect makes good on his threat to levy hefty taxes on cars assembled across the Rio Grande. “Trump could, or will, try to set up trade barriers,” said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen in Germany. “Automakers with U.S. factories will therefore be on the winning side. Mexico, the new El Dorado of the auto industry, could suffer.” Since 2010, nine global automakers, including GM, Ford and Fiat Chrysler Automobiles NV, have announced more than $24 billion in Mexican investments. VW’s Audi, BMW AG and Daimler AG each build or plan to assemble luxury vehicles, engines or heavy trucks in the low-cost country, which Trump says has benefited at the expense of the American voters who propelled him to victory. Output in Mexico may more than double this decade, from 2 million to 5 million vehicles, according to the Center for Automotive Research in Ann Arbor, Michigan. The Republican candidate and real-estate developer grabbed headlines during his campaign by threatening to slap a 35 percent tariff on any cars Ford builds in Mexico and ships back to the U.S. He called Ford’s plans for a new plant in Mexico “an absolute disgrace.” A levy would lead to higher prices and hurt demand, said Joe Spak, an analyst at RBC Capital Markets. Trump would “start a worldwide trade war” if he decides to end trade pacts and uses anti-dumping provisions to impose widespread tariffs on other countries, said Donald Grimes, an economist at the Institute for Research on Labor, Employment and the Economy at the University of Michigan. The North American Free Trade Agreement, for example, requires only six months’ notice of termination to Canada and Mexico and doesn’t specify that the president would need congressional approval, he said. Read more: Gadfly looks at which carmakers build the most vehicles in Mexico “These other countries would retaliate. Prices consumers would pay would increase sharply. The Federal Reserve would then increase interest rates. It would be ugly,” Grimes said. Despite that threat, U.S. automakers and the United Auto Workers union extended an olive branch to the president-elect. “We agree with Mr. Trump that it is really important to unite the country -- and we look forward to working together to support economic growth and jobs,” Ford said in a statement. The company’s plan to shift small-car production from a factory in Michigan to Mexico was attacked by Trump during his first answer of the initial debate with Democratic candidate Hillary Clinton in September. GM and Fiat Chrysler said in separate statements they would work with Trump and the new Congress on policies that support U.S. manufacturing. UAW President Dennis Williams, whose union endorsed Clinton, told reporters at a roundtable Thursday that “I’m prepared to sit down and talk to him on trade. NAFTA is a huge problem to the American people.” German executives attending an industry conference in Munich on Wednesday also expressed concerns about Trump’s views. BMW is building a new car plant in Mexico’s San Luis Potosi that’s due to start production in 2019, while Audi started assembling autos in San Jose Chiapa in September. “We need open trade,” said BMW CEO Harald Krueger. The luxury automaker ships many of the SUVs assembled at its South Carolina factory to markets around the world and in turn exports sedans and Mini cars to the U.S. from Europe. “We live off exports and imports. The U.S. market is fundamental for us.” NAFTA has created a “highly integrated” auto market in North America that is critical to the fortunes of all global carmakers operating in it, said Sean McAlinden, an automotive economist based in Ann Arbor. “To interrupt the flow of trade across either border, Canadian or Mexican, would really throw more than a monkey wrench into the machine,” McAlinden said. “It would create a very, very noncompetitive North American auto industry.” Conciliation Hopes Daimler CEO Dieter Zetsche and James Verrier, who heads supplier BorgWarner Inc., are among executives who held out hope that much of Trump’s trade talk was campaign rhetoric and would soften with the practicalities needed to govern. “Many things get said during the heat of an election campaign,” Zetsche said. “I hope and believe this is also the case here.” For Bob Lutz, the retired vice chairman of GM, Trump’s victory could ultimately help the auto industry if his advisers and Congress keep him from pushing his protectionist agenda too far. “He’s not a dictator,” Lutz said in an interview. “No one can go in and abrogate trade deals. There are some aspects of NAFTA that will probably be re-negotiated, but he will probably be talked out of his crazier ideas.” Rather than threaten Japan auto imports with tariffs, Trump has pointed to wealth generated from the cars being sold in the U.S. to bolster his argument for America to pay a smaller share of the costs related to stationing troops in its biggest Asian ally’s territory. “Japan is ripping us off with the cars,” Trump said at an Oct. 12 campaign event in Florida. In remarks to Ohio volunteers in July, he spoke of “massive ships” delivering vehicles to the U.S. from Japan, which he told Americans was “rich because of us.” Representatives for Toyota, Nissan and Honda Motor Co. declined to comment. Japan’s automakers have combined capacity to build about 1.36 million vehicles annually in Mexico and have announced plans for new plants capable of assembling another 430,000 vehicles a year. Models built or planned for Mexican production and sale in the U.S. include the Toyota Corolla, the Nissan Versa and Sentra, and the Honda Fit and HR-V. “If NAFTA is going to be up for discussion somewhere down the line, that would affect Japanese companies very much, especially auto-related investments in Mexico,” said Bob Takai, president and CEO of Sumitomo Global Research Co. “If the trading and investing is going to be very difficult because of the new presidency, we may go somewhere else.”

Gorman and Morton form a partnership on May 1, 2019. Gorman contributes cash of $59,000; Morton conveys title to the following properties to the partnership:

The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized.

According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula:

• Gorman receives a compensation allowance of $900 per month.
• All remaining profits and losses are split 30:70 between Gorman and Morton, respectively.
• Each partner can make annual cash drawings of $7,000 beginning in 2020.

Net income of $15,500 is earned by the business during 2019.

Steele is invited to join the partnership on January 1, 2020. Because of her business reputation and financial expertise, she is given a 40 percent interest for $63,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Steele a $3,000 compensation allowance per month and an annual cash drawing of $14,000. Remaining profits are now allocated:

All drawings are taken by the partners during 2020. At year-end, the partnership reports net income of $102,000.

On January 1, 2021, Frank (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Frank, who makes the following payments directly to the partners:

Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Frank to a compensation allowance of $700 per month and an annual drawing of $6,000. Profits and losses are now assigned as follows:

For the year of 2021, the partnership earned a profit of $49,900, and each partner withdrew the allowed amount of cash.

Prepare schedules that determine the capital balances for the individual partners as of the end of each year 2019 through 2021.

A Meritorious Plan?

There are many ways that organizations can organize their pay plans; indeed, pay policies have been found to be one of the biggest differences between organizations. While it is usually a good idea to link pay and performance in some way, there are different approaches that can achieve this goal. Some companies prefer to link compensation strongly to individual performance, while others rely more heavily on team rewards.

In this exercise, please read the following min-case and answer the questions that follow.

Compu-Globo is an online marketing strategy company in Beachwood, Ohio. Three years after its founding, President Nick Morlan is ready to start hiring staff, as the company has expanded past the point where its two founders can keep up with customer demand. As a result, it will need to hire two marketing consultants and a graphic designer. Because Compu-Globo has never hired employees before, it is starting from scratch with regard to its pay policies. In college, Nick learned about various types of pay-for-performance schemes and is interested in developing one for use in his business. He knows about merit pay, which increases each employee's salary based on his or her individual performance. He also has experience with profit sharing from a previous job, in which employees receive bonuses based on the company's financial results.

While business has been good, cash is still tight and he is concerned with his company's ability to pay large salaries if market conditions affect demand. He is also unsure of his abilities to set up a well-developed performance system. The new staff will be required to work together on projects; the graphic designer in particular will have to cooperate with both the new hires and the founders of the company on a regular basis. Nick expects that the new hires will become an integral part of the company; he is more than doubling the staff and it will still only consist of five people total. The performance of each employee will have a substantial impact on the business's overall results.

While Nick can (and will) use multiple kinds of incentive pay, he will need to choose one to emphasize as he interviews, selects, and negotiates with new staff.

16.

value:
2.00 points

Which of these policies is most likely to lead to individual competition among Compu-Globo's new hires?

Profit sharing

Merit pay

Skill based

Gainsharing

References

Multiple ChoiceLearning Objective: 12-02 Describe the fundamental pay programs for recognizing employees' contributions to the organization's success.

Difficulty: 2 MediumLearning Objective: 12-03 List the advantages and disadvantages of the pay programs.

17.

value:
2.00 points

What will happen to the cost of a merit pay plan if Compu-Globo's business suffers?

He will still have to increase salaries if individual performance is good

It depends on the value of the company at that time

Payments will be reduced along with sales

18.

value:
2.00 points

Why is it important for Nick to have a well-developed performance appraisal system if merit pay is a substantial component of compensation?

Federal law has enacted legislation that requires employers to provide it

Merit pay increases are based on assessments of individual performance; the stakes of the appraisal are high with this system

Because individual appraisals and merit increases determine profit sharing outcomes

19.

value:
2.00 points

Which of these is a reason that Compu-Globo's employees might not be motivated by a profit-sharing plan?

If they feel that they have no impact on the overall results

If they pay out during the current time period, instead of being deferred

If it requires them to behave like owners, by doing what it takes to make the organization more effective

20.

value:
2.00 points

Which of these is most amenable to incentive pay, if Nick decides to go that route?

Jobs with significant interdependence on other employees

Jobs that are peripheral to the mission of the organization

Jobs in which performance can be measured as individual output, productivity, and sales

From research, it is known that the opinions of US parents on whether a college education is worth the expense is the following: strongly agree 55%, somewhat agree 30%, neither agree nor disagree 5%, somewhat disagree 6% strongly disagree 4%. An economist claims that the distribution of the opinions of the opinions of US teenagers is different from the distribution opinions of US parents. To test the economist randomly selected 200 US teenagers and asked each whether a college education is worth the expense. The table shows the results. At level of significance of 5%, is there enough evidence to support the economist’s claim?

The dividends paid by a corporation

An EEGGrrQq individual is mated with an EeGgRrQq individual. What is a likelihood that their one offspring has genotype EeGgRrqq?